[NOTIFY] 72731,737
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended November 30, 1995
OR
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________ to ________________
Commission file number 1-9610
CARNIVAL CORPORATION
(Exact name of registrant as specified in its charter)
Republic of Panama 59-1562976
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3655 N.W. 87th Avenue, Miami, Florida 33178-2428
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (305) 599-2600
Securities registered pursuant to Section 12(b) of the Act:
Name of exchange on
Title of each class which registered
Class A Common Stock New York Stock
($.01 par value) Exchange, Inc.
4-1/2% Convertible New York Stock
Subordinated Notes due July 1, 1997 Exchange, Inc.
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 any definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. [ ].
The aggregate market value of the voting stock held by non-affiliates of
the Registrant is approximately $2,893,000,000 based upon the closing market
price on January 17, 1996 of a share of Class A Common Stock on the New York
Stock Exchange as reported by the Wall Street Journal.
At January 17, 1996, the Registrant had outstanding 229,898,013 shares
of its Class A Common Stock, $.01 par value and 54,957,142 shares of its
Class B Common Stock, $.01 par value.
DOCUMENTS INCORPORATED BY REFERENCE
The information described below and contained in the Registrant's 1995
annual report to shareholders to be furnished to the Commission pursuant to
Rule 14a-3(b) of the Exchange Act is shown in Exhibit 13 and is incorporated
by reference into this Form 10-K.
Part and Item of the Form 10-K
Part II
Item 5(a) and (b). Market for the Registrant's Common Equity and Related
Stockholder Matters - Market Information andHolders.
Item 6. Selected Financial Data
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Item 8. Financial Statements and Supplementary Data
The information described below and contained in the Registrant's 1996
definitive Proxy Statement, to be filed with the Commission is incorporated
by reference into this Form 10-K.
Part and Item of the Form 10-K
Part III
Item 10. Directors and Executive Officers of the Registrant.
Item 11. Executive Compensation.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
Item 13. Certain Relationships and Related Transactions.
PART I
Item 1. Business
A. General
Carnival Corporation was incorporated under the laws of the Republic of
Panama in November 1974. Carnival Corporation and subsidiaries (the
"Company") is the world's largest multiple-night cruise company based on the
number of passengers carried and revenues generated. The Company offers a
broad range of cruise products, offering contemporary cruises through
Carnival Cruise Lines ("Carnival" - a division of Carnival Corporation),
premium cruises through Holland America Line and luxury cruises through
Windstar Cruises and the Company's joint venture, Seabourn Cruise Line. As
of January 1996, the ten Carnival ships have an aggregate capacity of 16,796*
passengers with itineraries in the Caribbean and Mexican Riviera. As of
January 1996, the seven Holland America Line ships have an aggregate capacity
of 8,795 passengers with itineraries in the Caribbean and Alaska and through
the Panama Canal, as well as other worldwide itineraries. The three Windstar
ships, as of January 1996, have an aggregate capacity of 444 passengers with
itineraries in the Caribbean, the South Pacific, and the Mediterranean.
During 1995, Seabourn Cruise Line operated two 204 passenger cruise ships
with itineraries in the Caribbean, the Baltic, the Mediterranean and the Far
East. In January 1996, Seabourn entered into an agreement to acquire a third
204 passenger ship which will begin operation during 1996. In April 1995,
the Company sold its 49% equity interest in Epirotiki Line, a Greek cruise
operator, for $25 million.
The Company has signed agreements with a Finnish shipyard providing for
the construction of three additional 2,040-berth SuperLiners for Carnival
with delivery now expected in February 1996, March 1998 and November 1998.
Two additional 2,640-berth cruise vessels are under contract for construction
for Carnival from an Italian shipyard now scheduled for delivery in September
1996 and December 1998. The Company also has agreements with the same
Italian shipyard for one 1,266-berth cruise ship and one 1,320-berth cruise
ship for Holland America Line with delivery expected in April 1996 and
September 1997, respectively. In December 1995, the Company entered into an
agreement to charter the 1,146 passenger Carnival cruise ship, Festivale, to
Dolphin Cruise Line effective April 28,1996.
The Company also operates a tour business: Holland America Westours.
Holland America Westours markets sight-seeing tours both separately and as
part of Holland America Line cruise/tour packages. Holland America Westours
operates 16 hotels in Alaska and the Canadian Yukon, three luxury day-boats
offering tours to the glaciers of Alaska and the Yukon River, over 290 motor
coaches used for sight-seeing and charters in the states of Washington and
Alaska and in the Canadian Rockies and ten private domed rail cars which are
run on the Alaskan railroad between Anchorage and Fairbanks.
The Company and Airtours Plc, a United Kingdom public company in the
tour business, have been in discussions with regard to future cooperation
which could lead to the Company acquiring a stake of less than 30 percent of
the equity of Airtours Plc through a purchase of newly issued shares and a
partial offer to all existing shareholders. No assurance can be given that
any agreement will be reached.
* In accordance with industry practice all capacities indicated within this
document are calculated based on two passengers per cabin even though some
cabins can accommodate three or four passengers.
B. Cruise Ship Segment
Industry
The passenger cruise industry as it exists today began in approximately
1970. Over time, the industry has evolved from a trans-ocean carrier service
into a vacation alternative to land-based resorts and sight-seeing
destinations. According to Cruise Lines International Association ("CLIA"),
an industry trade group, approximately 500,000 North American passengers took
cruises in 1970 for three consecutive nights or more. CLIA estimates that
this number reached 4.5 million passengers in 1993, an average compound
annual growth rate of 10% since 1970. Also, according to CLIA, by the end of
1993 the number of ships in service totaled 139 with an aggregate capacity of
approximately 104,000 berths.
CLIA estimates that the number of passengers carried in North America
declined from 4.5 million in 1993 to 4.3 million in 1995. The Company
nevertheless has been able to increase the number of passengers it carried by
approximately 200,000 in each of the past two years. The number of berths in
the industry remained effectively flat totaling 105,000 berths on 126 ships
at the end of 1995. CLIA estimates that the number of cruise passengers
will grow to 4.7 million in 1996. CLIA also projects that by the end of
1996, North America will be served by 133 vessels having an aggregate
capacity of approximately 116,000 berths.
The following table sets forth the industry and Company growth over the
past five years based on passengers carried for at least three consecutive
nights:
<TABLE>
<CAPTION>
NORTH AMERICAN COMPANY CRUISE
CRUISE PASSENGERS
YEAR PASSENGERS* CARRIED
(Calendar) (Fiscal)
<S> <C> <C>
1995 4,300,000(est) 1,543,000
1994 4,448,000 1,354,000
1993 4,480,000 1,154,000
1992 4,136,000 1,153,000
1991 3,979,000 1,100,000
</TABLE>
- ------------------------------
*Source: CLIA.
- ------------------------------
From 1991 through 1995, the Company's average compound annual growth
rate in number of passengers carried was 8.8% versus the industry average of
2.0%.
The Company's passenger capacity has grown from 17,973 at November 30,
1991 to 26,035 at November 30, 1995. The delivery of the Statendam,
Sensation and Maasdam in 1993 increased capacity an additional 4,572 berths,
more than offsetting a decrease of 906 berths related to the sale of the
Mardi Gras. During 1994, net capacity increased by 2,369 berths due to the
delivery of the Fascination and Ryndam, net of the sale of the 937 berth
FiestaMarina. In 1995, with the delivery of the Imagination, capacity
increased 2,040 berths.
In spite of the cruise industry's growth since 1970, the Company
believes cruises represent only approximately 2% of the applicable North
American vacation market, defined as persons who travel for leisure purposes
on trips of three nights or longer involving at least one night's stay in a
hotel. Only an estimated 7% of the North American population has ever
cruised.
Cruise Ships and Itineraries
Under the Carnival Cruise Lines name, the Company operates ten ships
(collectively, the "Carnival Ships") which offer contemporary cruises. Nine
of the Carnival Ships were designed by and built for Carnival, including
eight SuperLiners which are among the largest in the cruise industry. The
tenth vessel, the Festivale, which was not built for Carnival, will be
chartered to Dolphin Cruise Line effective April 28, 1996. During 1995,
eight of the Carnival Ships operated in the Caribbean and two Carnival Ships
called on ports in the Mexican Riviera. During 1996 one of the Carnival
Ships, the Tropicale, will begin operating in Alaska during the summer season
and Carnival will also offer cruises through the Panama Canal and to the
Hawaiian Islands.
Through its subsidiary, HAL Antillen N.V. ("HAL"), the Company operates
ten cruise ships offering premium or luxury cruises. Seven of these ships,
the Rotterdam, the Nieuw Amsterdam, the Noordam, the Westerdam, the
Statendam, the Maasdam and the Ryndam are operated under the Holland America
Line name (the "HAL Ships"). The remaining three ships, the Wind Star, the
Wind Song and the Wind Spirit, are operated under the Windstar Cruises name
(the "Windstar Ships"). Six of the HAL Ships were designed by and built for
HAL. The three Windstar Ships were built for Windstar Sail Cruises, Ltd. (
"WSCL") between 1986 and 1988.
The HAL Ships offer premium cruises of various lengths, primarily in the
Caribbean, Alaska, Panama Canal, Europe, the Mediterranean, Hawaii, Mexico,
South Pacific, South America and the Orient. Cruise lengths vary from 3 to
98 days, with a large proportion being seven or ten days in length.
Periodically, the HAL Ships make longer grand cruises or operate on
short-term special itineraries. For example, in 1995, the Rotterdam made an
85-day world cruise, and a 34-day Grand South Pacific voyage. HAL will
continue to offer these special and longer itineraries in order to increase
travel opportunities for its customers and strengthen its cruise offerings in
view of the fleet expansion. The majority of the HAL Ships operate in the
Caribbean during fall to late spring and in Alaska during late spring to
early fall. The three Windstar Ships currently operate in the Caribbean, the
Mediterranean and the South Pacific.
The following table presents summary information concerning the
Company's ships. Areas of operation are based on 1995 itineraries and are
subject to change.
<TABLE>
<CAPTION>
YEAR
FIRST IN GROSS LENGTH
PRIMARY
COMPANY PAX REGISTERED AND AREAS
OF
NAME REGISTRY BUILT SERVICE CAP* TONS WIDTH
OPERATION
<S> <C> <C> <C> <C> <C> <C> <C>
Carnival Cruise Lines
Imagination Panama 1995 1995 2,040 70,367 855/104 Caribbean
Fascination Panama 1994 1994 2,040 70,367 855/104 Caribbean
Sensation Panama 1993 1993 2,040 70,367 855/104 Caribbean
Ecstasy Liberia 1991 1991 2,040 70,367 855/104 Caribbean
Fantasy Liberia 1990 1990 2,044 70,367 855/104 Bahamas
Celebration Liberia 1987 1987 1,486 47,262 738/92 Caribbean
Jubilee Panama 1986 1986 1,486 47,262 738/92 Mexican Riviera
Holiday Panama 1985 1985 1,452 46,052 727/92 Mexican Riviera
Tropicale Liberia 1982 1982 1,022 36,674 660/85 Caribbean
Festivale Bahamas 1961 1978 1,146 38,175 760/90 Caribbean
Total Carnival Ships Capacity.........16,796
Holland America Line
Ryndam Bahamas 1994 1994 1,266 55,451 720/101 Alaska,
Caribbean
Maasdam Bahamas 1993 1993 1,266 55,451 720/101 Europe,
Caribbean
Statendam Bahamas 1993 1993 1,266 55,451 720/101 Alaska,
Caribbean
Westerdam Bahamas 1986 1988 1,494 53,872 798/95 Canada,
Caribbean
Noordam Netherlands 1984 1984 1,214 33,930 704/89 Alaska,
Antilles("N.A.") Caribbean
Nieuw Amsterdam N.A. 1983 1983 1,214 33,930 704/89 Alaska,
Caribbean
Rotterdam N.A. 1959 1959 1,075 37,783 749/94 Alaska,
Hawaii
Total HAL Ships Capacity............. 8,795
Windstar Cruises
Wind Spirit Bahamas 1988 1988 148 5,736 440/52 Caribbean,
Mediterranean
Wind Song Bahamas 1987 1987 148 5,703 440/52 South Pacific
Wind Star Bahamas 1986 1986 148 5,703 440/52 Caribbean,
Mediterranean
Total Windstar Ships Capacity........ 444
Total Capacity..........................26,035
</TABLE>
________________________________________
* In accordance with industry practice passenger capacity is calculated based
on two passengers per cabin even though some cabins can accommodate three or
four passengers.
Cruise Ship Constructions
The Company is currently constructing five cruise ships to be operated
under the Carnival name and two cruise ships to be operated under the Holland
America Line name. The following table presents summary information
concerning ships under construction:
<TABLE>
<CAPTION>
LENGTH
EXPECTED PAX AND APPROXIMATE
VESSEL DELIVERY SHIPYARD CAP TONS WIDTH COST
<S> <C> <C> <C> <C> <C> <C>
(000's)
Carnival Cruise Lines
Inspiration February 1996 Masa-Yards 2,040 70,367 855/104 $ 270,000
Carnival Destiny September 1996 Fincantieri 2,640 101,000 886/116 400,000(1)
To Be Named February 1998 Masa-Yards 2,040 70,367 855/104 300,000
To Be Named November 1998 Masa-Yards 2,040 70,367 855/104 300,000
To Be Named December 1998 Fincantieri 2,640 101,000 886/116 415,000(1)
Total Carnival Ships Capacity 11,400 1,685,000
Holland America Line
Veendam April 1996 Fincantieri 1,266 55,451 720/101 225,000(1)
To Be Named September 1997 Fincantieri 1,320 62,000 780/106 235,000(1)
Total HAL Ships Capacity 2,586 460,000
Total 13,986 $2,145,000
</TABLE>
(1) Contracts denominated in a foreign currency and have been fixed into U.S.
Dollars through the use of forward currency contracts.
Other Cruise Activities
The Company has a 50% equity interest in a joint venture company
("Seabourn") which in April 1992 acquired the cruise operations of K/S
Seabourn Cruise Line. The Company also has a subordinated secured ten-year
loan of $15 million to Seabourn. During 1995, Seabourn operated two
ultra-luxury ships, which have an aggregate capacity of 408 passengers and
have itineraries in the Caribbean, the Baltic, the Mediterranean and the Far
East. In January 1996, Seabourn entered into an agreement to acquire a third
ship with a capacity of 204 which will begin operation during 1996.
Cruise Tariffs
Unless otherwise noted herein, brochure prices include round trip
airfare from over 175 cities in the United States and Canada. If a
passenger chooses not to have the Company provide air transportation, the
ticket price is reduced. Brochure prices vary depending on size and location
of cabin, the time of year that the voyage takes place, and when the booking
is made. The cruise brochure price includes a wide variety of activities and
facilities, such as a fully equipped casino, nightclubs, theatrical shows,
movies, parties, a discotheque, a health club and swimming pools on each
ship. The brochure price also includes numerous dining opportunities daily.
Brochure pricing information below is per person based on double
occupancy:
<TABLE>
<CAPTION>
AREA OF OPERATION CRUISE LENGTH PRICE RANGE
<S> <C> <C>
Carnival Cruise Lines
Caribbean 3-day $ 559--1,179
4-day 659--1,339
7-day 1,399--2,439
Mexico 3-day 559--1,179
4-day 659--1,339
7-day 1,399--2,439
Holland America Line (1)
Alaska 7-day $ 1,120--6,875
Caribbean 7-day 1,212--5,775
10-day 2,032--5,940
Europe 10- to 12-day 3,240--13,345
Panama Canal 10- to 22-day 2,185--14,840
Windstar Cruises (1)
Caribbean 7-day $ 2,995--3,195
Mediterranean 7- to 16-day 3,895--6,695
South Pacific 7-day 2,995--3,195
</TABLE>
- -----------------------------------------------------
(1) Prices represent cruise only
- -----------------------------------------------------
Brochure prices are regularly discounted through the Company's early
booking discount program and other promotions.
On-Board and Other Revenues
The Company derives revenues from certain on-board activities and
services including casino gaming, liquor sales, gift shop sales, shore tours,
photography and promotional advertising by merchants located in ports of
call.
The casinos, which contain slot machines and gaming tables including
blackjack, craps, roulette and stud poker are generally open only when the
ships are at sea in international waters. The Company also earns revenue
from the sale of alcoholic and other beverages. Certain onboard activities
are managed by independent concessionaires from which the Company collects a
percentage of revenues, while certain others are managed by the Company.
The Company receives additional revenue from the sale to its passengers
of shore excursions at each ship's ports of call. On the Carnival Ships,
such shore excursions are operated by independent tour operators and include
bus and taxi sight-seeing excursions, local boat and beach parties, and
nightclub and casino visits. On the HAL Ships, shore excursions are operated
by Holland America Westours and independent parties.
In conjunction with its cruise vacations on the Carnival Ships, the
Company sells pre- and post-cruise land packages. Such packages generally
include one, two or three-night vacations at locations such as Walt Disney
World in Orlando, Florida or resorts in the South Florida and the San Juan
Puerto Rico areas.
In conjunction with its cruise vacations on the HAL Ships, HAL sells
pre-cruise and post-cruise land packages which are more fully described
below. (See "Item 1. Business - Tour Segment")
Passengers
The following table sets forth the aggregate number of passengers carried
and percentage occupancy for the Company's ships for the periods indicated:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED NOVEMBER 30,
1995 1994 1993
<S> <C> <C> <C>
Number of Passengers 1,543,000 1,354,000 1,154,000
Occupancy Percentage* 105.0% 104.0% 105.3%
</TABLE>
- -----------------------------------------
*In accordance with industry practice, total capacity is calculated
based on two passengers per cabin even though some cabins can accommodate
three or four passengers. Occupancy percentages in excess of 100% indicate
that more than two passengers occupied some cabins.
- -----------------------------------------
The following table sets forth the actual occupancy percentage for all
cruises on the Company's ships during each quarter for the fiscal years ended
November 30, 1994 and November 30, 1995:
<TABLE>
<CAPTION>
OCCUPANCY
QUARTER ENDING PERCENTAGE
<S> <C>
February 28, 1994 100.2%
May 31, 1994 101.2
August 31, 1994 113.4
November 30, 1994 100.9
February 28, 1995 99.9
May 31, 1995 100.3
August 31, 1995 114.6
November 30, 1995 104.6
</TABLE>
Sales and Marketing
The Company markets the Carnival Ships as the "Fun Ships " and uses the
themes "Carnival's Got the Fun " and "The Most Popular Cruise Line in the
World ", among others.
Carnival advertises nationally directly to consumers on network
television and through extensive print media featuring its spokesperson,
Kathie Lee Gifford. Carnival believes its advertising generates interest in
cruise vacations generally and results in a higher degree of consumer
awareness of the "Fun Ships " concept and the "Carnival " name.
Substantially all of Carnival's cruise bookings are made through travel
agents, which arrangement is encouraged as a matter of policy. In fiscal
1995, Carnival took reservations from about 29,000 of approximately 45,000
travel agencies in the United States and Canada. Travel agents receive a
standard commission of 10% (15% in the State of Florida), plus the potential
of an additional commission based on sales volume. Moreover, because cruise
vacations are substantially all-inclusive, sales of Carnival cruise vacations
yield a significantly higher commission to travel agents than selling air
tickets and hotel rooms. During fiscal 1995, no one travel agency accounted
for more than 2% of Carnival's revenues.
Carnival engages in substantial promotional efforts designed to motivate
and educate retail travel agents about its "Fun Ships " cruise vacations.
Carnival employs approximately 90 field sales representatives and 30 in-house
service representatives to motivate independent travel agents and promote its
cruises. Carnival believes it has the largest sales force in the industry.
To facilitate access and to simplify the reservation process, Carnival
employs approximately 360 reservation agents to take bookings from
independent travel agents. Carnival's fully-automated reservation system
allows its reservation agents to respond quickly to book cabins on its ships.
Carnival has a policy of pricing comparable cabins (based on size, location
and length of voyage) on its various ships at the same rate ("common
rating"). Such common rate includes round-trip airfare, which means that any
passenger can fly from any one of over 140 cities in the United States and
Canada to ports of embarkation for the same price. Through common rating,
Carnival is able to offer customers a wider variety of voyages for the same
price, which the Company believes improves occupancy on all its cruises.
However, discounts from brochure prices may vary depending upon the ship,
itinerary, time of year and demand for each cruise.
Carnival's cruises generally are substantially booked several months in
advance of the sailing date. This lead time allows Carnival to adjust its
prices, if necessary, in relation to demand for available cabins, as
indicated by the level of advance bookings. Carnival's SuperSaver fares,
introduced several years ago, are designed to encourage potential passengers
to book cruise reservations earlier, which helps the Company to more
effectively manage yields (pricing and occupancy). Carnival's payment terms
require that a passenger pay approximately 15% of the cruise price within 7
days of the reservation date and the balance not later than 45 days before
the sailing date for 3- and 4-day cruises and 60 days before the sailing date
for 7-day cruises.
Carnival believes that its success is due in large part to its unique
product positioning within the industry. Carnival markets the Carnival Ship
cruises as vacation alternatives to land-based resorts and sight-seeing
destinations. Carnival seeks to attract passengers from the broad vacation
market, including those who have never been on a cruise ship before and who
might not otherwise consider a cruise as a vacation alternative. Carnival's
strategy has been to emphasize the cruise experience itself rather than
particular destinations, as well as the advantages of a prepaid,
all-inclusive vacation package. Carnival markets the Carnival Ship cruises
as the "Fun Ships " experience, which includes a wide variety of shipboard
activities and entertainment, such as full-scale casinos and nightclubs, an
atmosphere of pampered service and unlimited food.
The Company's products are positioned to offer contemporary, premium and
luxury cruises. Luxury cruises typically will have per diems of $300 or
higher. Premium cruises typically last 7 to 14 days or more at per diems of
$250 or higher. Contemporary cruises typically are 7 days or shorter in
length, are priced at per diems of $200 or less, and feature a casual
ambiance. The Company believes that the success and growth of the Carnival
cruises is attributable to its longstanding efforts to promote contemporary
cruise products.
The HAL and Windstar Ships offer premium and luxury cruises,
respectively. The Company believes that the hallmarks of the HAL experience
are beautiful ships and gracious attentive service. HAL communicates this
difference as "A Tradition of Excellence ", a reference to its long standing
reputation as a first class and grand cruise line.
Substantially all of HAL's bookings are made through travel agents,
which arrangement HAL encourages as a matter of policy. In fiscal 1995, HAL
took reservations from about 20,000 of approximately 45,000 travel agencies
in the U.S. and Canada. Travel agents receive a standard commission of
between 10% and 15%, depending on the specific cruise product sold, with the
potential for override commissions based upon sales volume. During 1995, no
one travel agency accounted for more than 1% of HAL's total revenue.
HAL has focused much of its sales effort at creating an excellent
relationship with the travel agency community. This is related to the HAL
marketing philosophy that travel agents have a large impact on the consumer
cruise selection process and will recommend HAL more often because of its
excellent reputation for service to both consumers and independent travel
agents. HAL solicits continuous feedback from consumers and the independent
travel agents making bookings with HAL to insure they are receiving excellent
service.
HAL's marketing communication strategy is primarily composed of
newspaper and magazine advertising, large scale brochure distribution and
direct mail solicitations to past passengers (referred to as "alumni") and
television. HAL engages in substantial promotional efforts designed to
motivate and educate retail travel agents about its products. HAL employs
approximately 50 field sales representatives, 15 teleaccount sales
representatives and 15 sales and service representatives to support the field
sales force. Carnival's approximately 90 field sales representatives also
promote HAL products. To facilitate access to HAL and to simplify the
reservation process for the HAL ships, HAL employs approximately 260
reservation agents to take bookings from travel agents. HAL's cruises
generally are booked several months in advance of the sailing date. The
Company also solicits current and former passengers of the Carnival Ships to
take future cruises on the HAL and Windstar Ships.
Windstar Cruises has its own marketing and reservations staff. Field
sales representatives for both HAL and Carnival act as field sales
representatives for Windstar. Marketing efforts are primarily devoted to a)
travel agent support and awareness, b) direct mail solicitation of past
passengers, and c) distribution of brochures.
Windstar's marketing efforts feature the distinctive nature of its
graceful, modern sail ships and the distinctive "casually elegant" experience
on "intimate itineraries" (apart from the normal cruise experience).
Windstar's philosophy is embodied in the phrase "180 degrees from ordinary".
Seasonality
The Company's revenue from the sale of passenger tickets for the
Carnival Ships is moderately seasonal. Historically, demand for Carnival
cruises has been greater during the periods from late December through April
and late June through August. Demand traditionally is lower during the
period from September through mid-December and during May. To allow for
full availability during peak periods, drydocking maintenance is usually
performed in September, October and early December. HAL cruise revenues are
more seasonal than Carnival's cruise revenues. Demand for HAL cruises is
strongest during the summer months when HAL ships operate in Alaska and
Europe and HAL obtains higher prices for these summer products. Demand for
HAL cruises is lower during the winter months when HAL ships sail in more
competitive markets.
Competition
Cruise lines compete for consumer disposable leisure time dollars with
other vacation alternatives such as land-based resort hotels and sight-seeing
destinations, and public demand for such activities is influenced by general
economic conditions.
Cruise ships operated by six other cruise lines offer year round
itineraries year round which are similar to those offered by the Carnival
Ships sailing from ports in Florida, California and Puerto Rico. Cruise
ships operated by an additional ten other cruise lines offer similar
itineraries from these ports on a seasonal basis. The HAL Ships are among
those which seasonally offer similar itineraries from these ports. Ships
operated by Royal Caribbean Cruise Line and Norwegian Cruise Line sail
regularly from Miami on itineraries quite similar to those of the Carnival
Ships. Ships operated by Royal Caribbean Cruise Line and Princess Cruises
embark from Los Angeles to the west coast of Mexico. Cruise lines such as
Norwegian Cruise Line, Royal Caribbean Cruise Line, Costa Cruise Lines,
Cunard and Princess Cruises offer voyages from San Juan to the Caribbean.
In Alaska, cruise ships operated by ten other cruise lines offer
itineraries similar to those offered by HAL. The largest of these cruise
lines in Princess Cruises.
In the Caribbean, cruise ships operated by 16 different cruise lines
offer itineraries similar to those offered by HAL. After Carnival, the
largest of these cruise lines are Princess Cruises, Royal Caribbean Cruise
Line, and Norwegian Cruise Line.
Governmental Regulation
The Ecstasy, Fantasy, Celebration and Tropicale are Liberian flagged
ships, the Festivale is a Bahamian flagged ship, and the balance of the
Carnival Ships are registered in Panama. The Ryndam, Maasdam, Statendam and
Westerdam are registered in the Bahamas, while the balance of the HAL Ships
are flagged in the Netherlands Antilles. The Windstar Ships are registered
in the Bahamas. The ships are subject to inspection by the United States
Coast Guard for compliance with the Convention for the Safety of Life at Sea
and by the United States Public Health Service for sanitary standards. The
Company is also regulated by the Federal Maritime Commission, which, among
other things, certifies ships on the basis of the ability of the Company to
meet obligations to passengers for refunds in case of non-performance. The
Company believes it is in compliance with all material regulations applicable
to its ships and has all licenses necessary to the conduct of its business.
In connection with a significant portion of its Alaska cruise operations, HAL
relies on a concession permit from the National Park Service to operate its
cruise ships in Glacier Bay National Park, which is periodically renewed.
There can be no assurance that the permits will continue to be renewed or
that regulations relating to the renewal of such permits, including
preference rights, will remain unchanged in the future.
The International Maritime Organization has adopted safety standards as
part of the "Safety of Life at Sea" ("SOLAS") Convention, applicable
generally to all passenger ships carrying 36 or more passengers. Generally,
SOLAS imposes enhanced vessel structural requirements designed to improve
passenger safety. The SOLAS requirements are phased in through the year
2010. However, certain stringent SOLAS fire safety requirements must be
implemented by 1997. Only two of the Company's vessels, Carnival's
Festivale, and HAL's Rotterdam are expected to be significantly affected by
the SOLAS 1997 requirements. The decision regarding the additional SOLAS
related investments for these two ships is expected to be made during 1996.
Public Law 89-777 administered by the Federal Maritime Commission
("FMC")requires most cruise line operators to establish financial
responsibility for nonperformance of transportation. The FMC's regulations
require that a cruise line demonstrate its financial responsibility through a
guaranty, escrow arrangement, surety bond, insurance or self-insurance.
Currently, the amount required must equal 110% of the cruise line's highest
amount of customer deposits over a two-year period up to a maximum coverage
level of $15 million, subject to a sliding scale. The FMC has proposed
elimination of the $15 million ceiling and revising the existing sliding
scale to require coverage for 110% of customer deposits up to $25 million and
additional coverage of either (i) 90% of amounts exceeding $25 million or
(ii) 75% of customer deposits in excess of $25 million and less than $50
million and 50% coverage of amounts in excess of $50 million. The FMC is
also considering elimination of the self-insurance provisions. The proposed
new regulations are viewed favorably by the Company and are not expected to
have a material effect on the Company. The FMC has received public comments
regarding the proposed regulations and may take final action at any time.
From time to time, various other regulatory and legislative changes have
been or may in the future be proposed that could have an effect on the cruise
industry in general.
Financial Information
For financial information about the Company's cruise ship segment with
respect to the three fiscal years ended November 30, 1995, see Note 10
"Segment Information" to the Company's Consolidated Financial Statements as
of November 30, 1995 in Exhibit 13 incorporated by reference into this
document.
C. Tour Segment
In addition to its cruise business, HAL markets sight-seeing tours
separately and as a part of cruise/tour packages under the Holland America
Westours name. Tour operations are based in Alaska, Washington State and
western Canada. Since a substantial portion of Holland America Westours'
business is derived from the sale of tour packages in Alaska during the
summer tour season, tour operations are highly seasonal.
Holland America Westours
Holland America Line-Westours Inc. ("Holland America Westours") is a
wholly-owned subsidiary of HAL. The group of subsidiaries which together
comprise the tour operations perform three independent yet interrelated
functions. During 1995, as part of an integrated travel program to
destinations in Alaska and the Canadian Rockies, the tour service group
offered 51 different tour programs varying in length from 7 to 19 days. The
transportation group and hotel group support the tour service group by
supplying facilities needed to conduct tours. Facilities include dayboats,
motor coaches, rail cars and hotels.
Three luxury dayboats perform an important role in the integrated Alaska
travel program offering tours to the glaciers and fjords of Alaska and the
Yukon River. The Fairweather cruises the Lynn Canal in Southeast Alaska, the
Yukon Queen cruises the Yukon River between Dawson City, Yukon Territory and
Eagle, Alaska and the Ptarmigan operates on Portage Lake in Alaska. The
three dayboats have a combined capacity of 489 passengers.
A fleet of over 290 motor coaches using the trade name Gray Line operate
in Alaska, Washington and western Canada. These motor coaches are used for
extended trips, city sight-seeing tours and charter hire. HAL conducts its
tours both as part of a cruise/tour package and as individual sight-seeing
products sold under the Gray Line name. In addition, HAL operates express
Gray Line motor coach service between downtown Seattle and the Seattle-Tacoma
International Airport.
Ten private domed rail cars, which are called "McKinley Explorers", run
on the Alaska railroad between Anchorage and Fairbanks, stopping at Denali
National Park.
In connection with its tour operations, HAL owns or leases motor coach
maintenance shops in Seattle, and at Juneau, Fairbanks, Anchorage, Skagway
and Ketchikan in Alaska. HAL also owns or leases service offices at
Anchorage, Fairbanks, Juneau, Ketchikan and Skagway in Alaska, at Whitehorse
in the Yukon Territory, in Seattle and at Vancouver in British Columbia.
Certain real property facilities on federal land are used in HAL's tour
operations pursuant to permits from the applicable federal agencies.
Westmark Hotels
HAL owns and/or operates 16 hotels in Alaska and the Canadian Yukon
under the name Westmark Hotels. Four of the hotels are located in Canada's
Yukon Territory and offer a combined total of 585 rooms. The remaining 12
hotels, all located throughout Alaska, provide a total of 1,649 rooms,
bringing the total number of hotel rooms to 2,234.
The hotels play an important role in HAL's tour program during the
summer months when they provide accommodations to the tour passengers. The
hotels located in the larger metropolitan areas remain open during the entire
year, acting during the winter season as centers for local community
activities while continuing to accommodate the traveling public. HAL hotels
include dining, lounge and conference or meeting room facilities. Certain
hotels have gift shops and other tourist services on the premises.
The hotels are summarized in the following table:
<TABLE>
<CAPTION>
OPEN DURING
HOTEL NAME LOCATION ROOMS 1995 SEASON
<S> <C> <C> <C>
Alaska Hotels:
Westmark Anchorage Anchorage 198 year-round
Westmark Inn Anchorage 90 seasonal
Westmark Inn Fairbanks 173 seasonal
Westmark Fairbanks Fairbanks 238 year-round
Westmark Juneau Juneau 105 year-round
The Baranof Juneau 193 year-round
Westmark Cape Fox Ketchikan 72 year-round
Westmark Kodiak Kodiak 81 year-round
Westmark Shee Atika Sitka 101 year-round
Westmark Inn Skagway Skagway 209 seasonal
Westmark Tok Tok 92 seasonal
Westmark Valdez Valdez 97 year-round
Canadian Hotels (Yukon Territory):
Westmark Inn Beaver Creek 174 seasonal
Westmark Klondike Inn Whitehorse 99 seasonal
Westmark Whitehorse Whitehorse 181 year-round
Westmark Inn Dawson 131 seasonal
</TABLE>
Thirteen of the hotels are owned by a HAL subsidiary. The remaining
three hotels, Westmark Anchorage, Westmark Cape Fox and Westmark Shee Atika
are operated under arrangements involving third parties such as management
agreements and leases.
For the hotels that operate year-round, the occupancy percentage for
1995 was 58.9%, and for the hotels that operate only during the summer
months, the occupancy percentage for 1995 was 76.7%.
Seasonality
The Company's tour revenues are extremely seasonal with a large majority
generated during the late spring and summer months in connection with the
Alaska cruise season. Holland America Westours' tours are conducted in
Washington, Alaska and the Canadian Rockies. The Alaska and Canadian Rockies
tours coincide to a great extent with the Alaska cruise season, May through
September. Washington tours are conducted year-round although demand is
greatest during the summer months. During periods in which tour demand is
low, HAL seeks to maximize its motor coach charter activity such as operating
charter tours to ski resorts in Washington and Canada.
Sales and Marketing
HAL tours are marketed both separately and as part of cruise-tour
packages. Although most HAL cruise-tours include a HAL cruise as the cruise
segment, other cruise lines also market HAL tours as a part of their cruise
tour packages and sight-seeing excursions. Tours sold separately are
marketed through independent travel agents and also directly by HAL,
utilizing sales desks in major hotels. General marketing for the hotels is
done through various media in Alaska, Canada and the continental United
States. Travel agents, particularly in Alaska, are solicited, and displays
are used in airports in Seattle, Washington, Portland, Oregon and various
Alaskan cities. Rates at Westmark Hotels are on the upper end of the scale
for hotels in Alaska and the Canadian Yukon.
Concessions
Certain tours in Alaska are conducted on federal property requiring
concession permits from the applicable federal agencies such as the National
Park Service or the United States Forest Service.
Competition
Holland America Westours competes with independent tour operators and
motor coach charter operators in Washington, Alaska and the Canadian Rockies.
The primary competitors in Alaska are Princess Tours (which owns
approximately 130 motor coaches and three hotels) and Alaska
Sightseeing/Trav-Alaska (which owns approximately 43 motor coaches). The
primary competitor in Washington is Gazelle (with approximately 18 motor
coaches). The primary competitors in the Canadian Rockies are Tauck Tours,
Princess Tours and Brewster Transportation.
Westmark Hotels compete with various hotels throughout Alaska, including
the Super 8 national motel chain, many of which charge prices below those
charged by HAL. Dining facilities in the hotels also compete with the many
restaurants in the same geographic areas.
Government Regulation
HAL's motor coach operations are subject to regulation both at the
federal and state levels, including primarily the U.S. Department of
Transportation, the Washington Utilities and Transportation Commission, the
British Columbia Motor Carrier Commission and the Alaska Transportation
Commission. Certain of HAL's tours involve federal properties and are
subject to regulation by various federal agencies such as the National Park
Service, the Federal Maritime Administration and the U.S. Forest Service.
In connection with the operation of its beverage facilities in the
Westmark Hotels, HAL is required to comply with state, county and/or city
ordinances regulating the sale and consumption of alcoholic beverages.
Violations of these ordinances could result in fines, suspensions or
revocation of such licenses and preclude the sale of any alcoholic beverages
by the hotel involved.
In the operation of its hotels, HAL is required to comply with
applicable building and fire codes. Changes in these codes have in the past
and may in the future, require substantial capital expenditures to insure
continuing compliance such as the installation of sprinkler systems.
Financial Information
For financial information about the Company's tour segment with respect
to the three fiscal years ended November 30, 1995, see Note 10 "Segment
Information" to the Company's Consolidated Financial Statements as of
November 30, 1995 in Exhibit 13 incorporated by reference into this document.
D. Employees
The Company's Carnival operations have approximately 1,300 full-time and
250 part-time employees engaged in shoreside operations. Carnival also
employs approximately 360 officers and approximately 7,200 crew and staff on
the Carnival Ships.
The Company's HAL operations have approximately 2,900 employees engaged
in shoreside, tour and hotel operations, of which approximately 1,500
employees hold part-time/seasonal positions. HAL also employs approximately
220 officers and approximately 3,300 crew and staff on the HAL Ships and
Windstar Ships. Due to the seasonality of its Alaska and Canadian
operations, HAL tends to increase its work force during the summer months,
employing significant additional full-time and part-time personnel. HAL has
entered into agreements with unions covering employees in certain of its
hotels and certain of its tour and ship employees.
The Company considers its employee relations generally to be good.
E. Suppliers
The Company's largest purchases are for airfare, advertising, fuel, food
and related items, hotel supplies and products related to passenger
accommodation. Although the Company chooses to use a limited number of
suppliers for most of its food and fuel purchases, most of the necessary
supplies are available from numerous sources at competitive prices. The use
of a limited number of suppliers enables the Company to obtain volume
discounts.
F. Insurance
The Company maintains insurance covering legal liabilities related to
crew, passengers and other third parties on the Carnival Ships and the HAL
Ships in operation through The Standard Steamship Owners Protection &
Indemnity Association (Bermuda) Limited (the "SSOPIA") and the Steamship
Mutual Underwriting Association Ltd. (the "SMUAL"). The amount and terms of
these insurances are governed by the rules of the foregoing associations.
The Company currently maintains insurance on the hull and machinery of
each vessel in amounts equal to the approximate market value of each vessel.
The Company maintains war risk insurance on each vessel which includes legal
liability to crew and passengers including terrorist risks for which coverage
would be excluded from SSOPIA or SMUAL. The coverage for hull and machinery
and war risks is effected with international markets, including underwriters
at Lloyds. The Company, as required by the FMC, maintains at all times two
$15 million performance bonds for the Carnival Ships, and the HAL and
Windstar Ships, respectively, to cover passenger ticket liabilities in the
event of a canceled or interrupted cruise. See "CRUISE SHIP SEGMENT -
Government Regulation" for a discussion of changes to the performance bond
requirements proposed by the FMC.
The Company maintains certain levels of self insurance for liabilities
and hull and machinery through the use of substantial deductibles. Such
deductibles may be increased in the future. The Company does not carry
coverage related to loss of earnings or revenues for its cruise operations.
The Company also maintains various insurance policies to protect the
assets, earnings and liabilities arising from the operation of HAL Westours.
Item 2. Properties
The Company's cruise ships are described in Section B of Item 1 under
the heading "Cruise Ship Segment". The properties associated with HAL's tour
operations are described in Section C of Item 1 under the heading "Tour
Segment".
Carnival's shoreside operations and corporate headquarters are located
at 3655 N.W. 87th Avenue, Miami, Florida, and consists of approximately
231,000 square feet of office space which the Company purchased in December
1994. In order to provide space for the future growth of Carnival and to
consolidate existing personnel, approximately 225,000 square feet of office
space is being constructed next to the existing facility with an estimated
completion date of July 1996. Carnival is also leasing approximately 60,000
square feet of office space at 5225 N.W. 87th Avenue, Miami, Florida until
the new facility is completed.
HAL headquarters are at 300 Elliott Avenue West in Seattle, Washington
in leased space in an office building. The lease is for approximately
120,000 square feet.
Item 3. Legal Proceedings
A purported class action suit was filed against the Company on September
19, 1995 and was subsequently dismissed by the court on jurisdictional
grounds on December 15,1995. The suit alleged that the Company had violated
the Florida Deceptive and Unfair Trade Practices Act by overcharging
passengers for port charges. The plaintiffs refiled their suit in the same
court on December 27, 1995 and modified the complaint to add various federal
law claims and a state fraud claim. The suit seeks declaratory relief to
enjoin the Company from further alleged overcharges and seeks compensatory
and punitive damages in an unspecified amount. The action is presently in
its early stages and it is not possible at this time to determine the outcome
of the litigation. Management of the Company intends to vigorously defend
the lawsuit.
The United States Attorney for the District of Alaska has commenced an
investigation to determine if a Holland America Line vessel discharged bilge
water, alleged to have contained oil or oily mixtures, at various locations
allegedly within United States territorial waters at various times during the
summer and early fall of 1994. It is unknown whether any proceedings will be
initiated and, if so, what violations will be alleged. To date, no penalties
have been sought or imposed. Management does not believe that the amount of
potential penalties will have a material impact on the Company.
During 1995, the Company received $40 million in cash and other
compensation from the settlement of litigation with Metra Oy, the former
parent company of Wartsila Marine Industries ("Wartsila"), related to losses
suffered in connection with the construction of three of the Company's cruise
ships. Of the $40 million, $6.2 million was used to pay related legal fees,
$14.4 million was recorded as other income and $19.4 million was used to
reduce the Company's cost basis of certain ships. The Company is continuing
to pursue claims in the bankruptcy proceedings in Finland to recover damages
suffered in connection with the construction of the three ships.
The Company is routinely involved in liability and other claims typical
of the cruise ship, hotel and tour businesses. After the application of
deductibles, a substantial portion of these claims are fully covered by
insurance. The Company is also involved from time to time in commercial,
regulatory and employment related disputes and claims. In the opinion of
management, such claims, if decided adversely, individually or in the
aggregate, would not have a material adverse effect upon the Company's
financial condition or results of operations.
Item 4. Submission of Matters to a Vote or Security Holders
None.
Executive Officers of the Registrant
Pursuant to General Instruction G(3), the information regarding
executive officers of the Company called for by Item 401(b) of Regulation S-K
is hereby included in Part 1 of this report.
The following table sets forth the name, age and title of each executive
officer. Titles listed relate to positions within Carnival Corporation
unless otherwise noted.
<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
Micky Arison 46 Chairman of the Board and Chief
Executive Officer
Gerald R. Cahill 44 Vice President--Finance
Robert H. Dickinson 53 President and Chief Operating Officer
of Carnival and Director
Howard S. Frank 54 Vice-Chairman, Chief Financial Officer
and Director
A. Kirk Lanterman 64 President and Chief Executive Officer of
Holland America Line-Westours Inc. and
Director
Lowell Zemnick 52 Vice President and Treasurer
Meshulam Zonis 62 Senior Vice President--Operations of
Carnival and Director
</TABLE>
Business Experience of Officers
Micky Arison, age 46, has been Chief Executive Officer since 1979 and
Chairman of the Board since 1990. He was President from 1979 to May 1993 and
has also been a director since June 1987. Prior to 1979, he served Carnival
for successive two-year periods as sales agent, reservations manager and as
Vice President in charge of passenger traffic. He is the son of Ted Arison,
Carnival Corporation's founder. He served on the Board of Directors of
Ensign Bank, FSB until August 30, 1990. On that date, the Office of Thrift
Supervision appointed the Resolution Trust Corporation receiver of Ensign
Bank.
Gerald R. Cahill, age 44, is a Certified Public Accountant and has been
Vice President-Finance since September 1994. Mr. Cahill was the chief
financial officer from 1988 to 1992 and the chief operating officer from 1992
to 1994 of Safecard Services, Inc. From 1979 to 1988 he held financial
positions at Resorts International Inc. and, prior to that, spent six years
with Price Waterhouse LLP.
Robert H. Dickinson, age 53, has been President and Chief Operating
Officer of Carnival since May 1993. From 1979 to May 1993, he was Senior
Vice President--Sales and Marketing of Carnival. He has also been a director
since June 1987.
Howard S. Frank, age 54, has been Vice-Chairman of the Board since
October 1993 and has been Chief Financial Officer and Chief Accounting
Officer since July 1, 1989 and a Director since 1992. From July 1989 to
October 1993 he was Senior Vice President-Finance. From July 1975 through
June 1989, he was a partner with Price Waterhouse LLP.
A. Kirk Lanterman, age 64, is a Certified Public Accountant and has been
President and Chief Executive Officer of Holland America Line-Westours Inc.
since January 1989 and a Director since 1992. From 1983 to January 1989, he
was President and Chief Operating Officer of Holland America Line-Westours
Inc. From 1979 to 1983, he was President of Westours which merged in 1983
with Holland America Line.
Lowell Zemnick, age 52, is a Certified Public Accountant and has been
Vice President since 1980 and Treasurer since September 1990. Mr. Zemnick
was the chief financial officer of Carnival from 1980 to September 1990 and
was the Chief Financial Officer of Carnival Corporation from May 1987 through
June 1989.
Meshulam Zonis, age 62, has been Senior Vice President--Operations of
Carnival since 1979. He has also been a director since June 1987. From 1974
through 1979, Mr. Zonis was Vice President--Operations of Carnival.
<PAGE>
PART II
Item 5.Market for the Registrant's Common Equity and Related
Stockholders Matters
A. Market Information
The information required by Item 201(a) of Regulation S-K, market
information, is shown in Exhibit 13 and is incorporated by reference into
this Annual Report on Form 10-K.
B. Holders
The information required by Item 201(b) of Regulation S-K, holders of
common stock, is shown in Exhibit 13 and is incorporated by reference into
this Annual Report on Form 10-K.
C. Dividends
Any dividend declared by the Board of Directors on the Company's Common
Stock will be paid concurrently at the same rate on the Class A Common Stock
and the Class B Common Stock. For its Class A Common Stock and Class B
Common Stock (collectively, the "Common Stock"), the Company declared cash
dividends of $.07 per share in each of the first three quarters of fiscal
1994, $.075 in the fourth quarter of fiscal 1994 and in the first three
quarters of fiscal 1995, and $.09 in the fourth quarter of fiscal 1995 and
first quarter of fiscal 1996. Payment of future quarterly dividends on the
Common Stock will depend, among other factors, upon the Company's earnings,
financial condition and capital requirements and certain tax considerations
of certain members of the Arison family and trusts for the benefit of Mr. Ted
Arison's children (the "Principal Shareholders"), some of whom are required
to include a portion of the Company's earnings in their taxable income,
whether or not the earnings are distributed (see "D. Taxation of the
Company"). The Company may also declare special dividends to all
stockholders in the event that the Principal Shareholders are required to pay
additional income taxes by reason of their ownership of the Common Stock,
either because of an income tax audit of the Company or the Principal
Shareholders or because of certain actions by the Company (such as a failure
by the Company to maintain its investment in shipping assets at a certain
level) that would trigger adverse tax consequences to the Principal
Shareholders under the special tax rules applicable to them.
While no tax treaty currently exists between the Republic of Panama and
the United States, under current law the Company believes that distributions
to its shareholders are not subject to taxation under the laws of the
Republic of Panama. Dividends paid by the Company will be taxable as
ordinary income for United States Federal income tax purposes to the extent
of the Company's current or accumulated earnings and profits, but generally
will not qualify for any dividends-received deduction.
Certain loan documents entered into by certain of HAL's subsidiaries
restrict the level of dividend payments by HAL's subsidiaries to HAL.
The payment and amount of any dividend is within the discretion of the
Board of Directors, and it is possible that the amount of any dividend may
vary from the levels discussed above. If the law regarding the taxation of
the Company's income to the Principal Shareholders were to change so that the
amount of tax payable by the Principal Shareholders were increased or
reduced, the amount of dividends paid by the Company might be more or less
than is currently contemplated.
D. Taxation of the Company
The following discussion summarizes the expected United States Federal
income taxation of the Company's current operations. State and local taxes
are not discussed. The discussion is based upon currently existing
provisions of the Internal Revenue Code of 1986, as amended (the "Code"),
existing and proposed regulations thereunder and current administrative
rulings and court decisions. All of the foregoing are subject to change and
any such change could affect the continuing validity of this discussion. In
connection with the foregoing, investors should be aware that the Tax Reform
Act of 1986 (hereinafter, the "1986 Tax Act") changed significantly the
United States Federal income tax rules applicable to the Company and certain
holders of its stock (including the Principal U.S. Shareholders). Although
the relevant provisions of the 1986 Tax Act are discussed herein, they have
not yet been the subject of extensive administrative or judicial
interpretation.
United States
Carnival Corporation is a Panamanian corporation, and its material
subsidiaries (other than subsidiaries engaged in the bus, hotel and tour
business of Holland America Line) are Panamanian, Liberian, Netherlands
Antilles, British Virgin Islands, and Bahamian corporations. Accordingly,
the Company's income from sources outside of the United States ("foreign
source income") generally is not subject to United States tax. Moreover, the
Company anticipates that, under current law, all or virtually all of its
income from sources within the United States ("United States Source Income")
that constitutes Shipping Income (as defined below) will be exempt from
United States corporate income taxation for as long as Carnival Corporation
and its subsidiaries meet the requirements of Section 883 of the Code.
Section 883 of the Code provides that income of a foreign corporation derived
from the international operation, or from the rental on a full or bareboat
basis, of ships ("Shipping Income") is exempt from United States taxation if
(1) the foreign country in which the foreign corporation is organized grants
an equivalent exemption to citizens of the United States and to corporations
organized in the United States (an "equivalent exemption jurisdiction") and
(2) the foreign corporation is a controlled foreign corporation ("CFC") as
defined in Section 957(a) of the Code (the "CFC Test"). The Company believes
that substantially all of its United States Source Income other than Holland
America Line's income from its bus, hotel and tour operations, currently
qualifies as Shipping Income, and that Panama, the Netherlands Antilles, the
British Virgin Islands, the Bahamas, and Liberia are equivalent exemption
jurisdictions. (Holland America Line's income from its hotel and tour
operations, is not Shipping Income, and, accordingly, is subject to United
States corporate income tax). If, however, Panamanian, Netherlands Antilles,
British Virgin Islands, Bahamian or Liberian law were to change adversely,
the Company would consider taking appropriate steps (including
reincorporating in another jurisdiction) so as to remain eligible for the
exemption from United States Federal income tax provided by Section 883 of
the Code.
A foreign corporation is a CFC when stock representing more than 50% of
such corporation's voting power or equity value is owned (or considered as
owned) on any day of its fiscal year by United States persons who each own
(or are considered as owning) stock representing 10% or more of the
corporation's voting power ("Ten Percent Shareholders"). Stock of the
Company representing more than 50% of the total combined voting power of all
classes of stock is owned by the Micky Arison 1994 "B" Trust (the "B
Trust"),which is a "United States Person", and thus the Company meets the
definition of a CFC. The B Trust is a U.S. trust whose primary beneficiary
is Micky Arison, the Company's Chairman of the Board. Accordingly, at the
corporate level, the Company expects that virtually all of its income (with
the exception of its United States source income from the operation of
transportation, hotel and tour business of HAL) will remain exempt from
United States Income taxes. The B Trust has entered into an agreement with
the Company that is designed to ensure, except under certain limited
circumstances, that stock possessing more than 50% of the Company's voting
power will be held by Ten Percent Shareholders until at least July 1, 1997.
Because the Company is a CFC, a pro rata share of the shipping earnings of
the Company, as well as certain other amounts, is includable in the taxable
income of any "Ten Percent Shareholder", as defined above.
A substantial portion of the Company's income will, as discussed below,
be treated as United States Source Income. If the Company were to fail to
meet the requirements of Section 883 of the Code with respect to any of its
United States Source Income (or if Section 883 of the Code were repealed),
some or all of the Company's Shipping Income that is United States Source
Income would become subject to a significant United States tax burden. Any
such United States Source Income that is considered to be "effectively
connected" with the conduct of a United States trade or business would be
subject not only to general United States Federal corporate income tax, but
also to a 30% "branch level" tax on effectively connected earnings and
profits (generally, adjusted taxable income reduced by taxes and adjusted for
the amount of the Company's earnings treated as reinvested in the Company's
United States business). Any such United States Source Income that is not
considered to be effectively connected with a United States trade or business
will instead be subject to a 4% tax on United States source gross
transportation income (or, possibly, to a 30% tax if any such income were
considered to be 100% United States Source Income under the rules described
below, which, as discussed below, the Company does not believe to be the case
with respect to any significant portion of its Shipping Income). The Company
believes that at least a significant portion of its United States Source
Income would probably be considered to be effectively connected with a United
States trade or business for this purpose.
Under amendments to the Code enacted as part of the 1986 Tax Act, the
Company's United States Source Income will include 50% of all transportation
income (including income derived from, or in connection with, the use or
hiring, or leasing for use of a cruise ship, or the performance of services
directly related to such use) attributable to transportation that begins or
ends in the United States, and 100% of such transportation income with
respect to transportation which begins and ends in the United States. The
legislative history of these rules suggests that a cruise which begins and
ends in United States ports, but which calls on one or more foreign ports
(including ports in possessions of the United States), will be treated as
transportation that begins or ends in the United States, rather than as
transportation that begins and ends in the United States, thus resulting in
no more (and, with respect to a cruise that calls on more than one foreign
port, possibly less) than 50% United States Source Income. There are,
however, no regulations or other authoritative interpretations of these new
rules, and, accordingly, the matter is not entirely free from doubt.
Under a provision of the Technical and Miscellaneous Revenue Act of
1988, Section 883 of the Code applies only to income derived from the
international operation of ships. The legislative history of that provision
indicates that Section 883 of the Code does not apply to Shipping Income that
is treated as 100% United States Source Income under the source of income
rules discussed in the preceding paragraph since it does not constitute
income from the international operation of a ship because it results from
transportation that is considered to begin and end in the United States;
accordingly, any such income may well be subject to United States corporate
tax unless another exception was applicable. As discussed in the preceding
paragraph, although the matter is not entirely free from doubt, the Company
does not believe that any significant portion of its Shipping Income from its
current operations is 100% United States Source Income under the applicable
provisions of the Code. Accordingly, the Company does not believe that the
1988 legislation significantly increases its United States corporate tax with
respect to its current operations.
Other Jurisdictions
The Company anticipates that its income will not be subject to
significant taxation under the laws of the Republic of Panama, Liberia, the
Netherlands Antilles, the British Virgin Islands or the Bahamas.
Item 6. Selected Financial Data
The information required by Item 6, selected financial data for the five
years ended November 30, 1995, is shown in Exhibit 13 and is incorporated by
reference into this Annual Report on Form 10-K.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The information required by Item 7, Management's Discussion and Analysis
of Financial Condition and Results of Operation, is shown in Exhibit 13 and
is incorporated by reference into this Annual Report on Form 10-K.
Item 8. Financial Statements and Supplementary Data
The financial statements, together with the report thereon of Price
Waterhouse LLP dated January 18, 1996, is shown in Exhibit 13 and is hereby
incorporated by reference into this Annual Report on Form 10-K.
Item 9. Disagreements on Accounting and Financial Disclosure
None.
PART III
Items 10, 11, 12 and 13. Directors and Executive Officers of the
Registrant, Executive Compensation, Security Ownership of Certain Beneficial
Owners and Management, and Certain Relationships and Related Transactions
The information required by Items 10, 11, 12 and 13 is incorporated by
reference to the Registrant's definitive Proxy Statement to be filed with the
Commission not later than 120 days after the close of the fiscal year except
that the information concerning the Registrant's executive officers called
for by Item 401(b) of Regulation S-K has been included in Part I of this
report.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form
8-K
(a) (1)-(2) Financial Statements and Schedules:
The financial statements shown in Exhibit 13 are hereby incorporated
herein by reference.
(3) Exhibits:
The exhibits listed on the accompanying Exhibit Index are filed or
incorporated by reference as part of this report and such Exhibit Index is
hereby incorporated herein by reference.
(b) No reports on Form 8-K were filed during the three months ended
November 30, 1995.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, in the City of
Miami, and the State of Florida on this 22nd day of January 1996.
CARNIVAL CORPORATION
By /s/ Micky Arison
Micky Arison
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange 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 dates indicated.
<TABLE>
<S> <C> <C>
/s/ Micky Arison Chairman of the Board, Chief January 22, 1996
Micky Arison Executive Officer and Director
/s/ Howard S. Frank Vice-Chairman, Chief Financial January 22, 1996
Howard S. Frank and Accounting Officer and Director
/s/Maks L. Birnbach Director January 21, 1996
Maks L. Birnbach
/s/ Richard G. Capen Director January 23, 1996
Richard G. Capen, Jr.
/s/ Robert H. Dickinson Director January 22, 1996
Robert H. Dickinson
____________________ Director January__, 1996
Shari Arison Dorsman
/s/ James Dubin Director January 22, 1996
James Dubin
/s/ A. Kirk Lanterman Director January 22, 1996
A. Kirk Lanterman
/s/ Modesto Maidique Director January 23, 1996
Modesto Maidique
____________________ Director January__, 1996
William S. Ruben
____________________ Director January__, 1996
Stuart Subotnick
/s/Sherwood M. Weiser Director January 22, 1996
Sherwood M. Weiser
/s/ Meshulam Zonis Director January 22, 1996
Meshulam Zonis
/s/Uzi Zucker Director January 22, 1996
Uzi Zucker
/TABLE
<PAGE>
<TABLE>
<CAPTION>
INDEX TO EXHIBITS
Page No. in
Sequential
Numbering
System
Exhibits
<S> <C>
3.1-Form of Amended and Restated Articles of Incorporation of the
Company.(1)
3.2-Form of By-laws of the Company.(2)
4.1-Revolving Credit Agreement dated July 1, 1993 between the Company and
Citibank N.A. and certain banks named therein as Amended and Restated as of
December 5, 1995.
4.2-Revolving Credit Agreement dated as of December 5, 1995 between the
Company and Citibank N.A. and certain banks named therein.
4.3-Indenture entered into by the Registrant and First Trust National
Association, as Trustee, relating to the 4-1/2% Convertible Subordinated
Notes Due July 1, 1997 and the Form of Notes.(3)
4.4-Form of Indenture dated as of March 1, 1993 between Carnival Cruise
Lines, Inc. and First Trust National Association, as Trustee, relating to the
Debt Securities, including form of Debt Security.(4)
4.5-Second Amended and Restated Shareholder Agreement dated September 26,
1994 by and among Carnival Corporation, Ted Arison, TAMMS Investment Company,
The Ted Arison Family Holding Trust No. 4, The Micky Arison "B" Trust, and
T.A. Limited. (5)
4.6-Letter Agreement dated July 11, 1989 between the Company and the Ted
Arison Irrevocable Trust.(6)
4.7-Agreement of the Company dated January 24, 1996 to furnish certain debt
instruments to the Securities and Exchange Commission.
10.1-Carnival Cruise Lines, Inc. Stock Option Plan.(7)
10.2-Carnival Cruise Lines, Inc. Restricted Stock Plan.(8)
10.3-Carnival Cruise Lines, Inc. Retirement Plan.(9)
10.4-Carnival Cruise Lines, Inc. Non-Qualified Retirement Plan.(10)
10.5-Carnival Cruise Lines, Inc. Key Management Incentive Plan.(11)
10.6-1993 Outside Directors' Stock Option Plan.(12)
10.7-1993 Carnival Cruise Lines, Inc. Restricted Stock Plan.(13)
10.8-Holland America Line-Westours Inc. 1994-1996 Key Management Incentive
Plan.
10.9-Amended and Restated Carnival Corporation 1992 Stock Option Plan.(14)
10.10-1994 Carnival Cruise Line Key Management Incentive Plan.(15)
10.11-Form of Deferred Compensation Agreement between the Company and each of
Harvey Levinson, Meshulam Zonis and Robert H. Dickinson.(16)
10.12-Stock Compensation Agreement dated February 1, 1991, between the
Company and Robert H. Dickinson.(17)
10.13-Consulting and Retirement Agreement between A. Kirk Lanterman and
Holland America Line-Westours, Inc.(18)
10.14-Consulting Agreement/Registration Rights Agreement dated June 14, 1991,
between the Company and Ted Arison.(19)
10.15-Indemnity Agreement between the Company and Ted Arison.(20)
10.16-First Amendment to Consulting Agreement/Registration Rights
Agreement.(21)
10.17-Consulting Agreement dated July 31, 1992, between the Company and
Arison Investments Ltd.(22)
10.18-Assignment and Assumption Agreement dated March 20, 1995 among Ted
Arison, Cititrust (Jersey) Limited, Royal Bank of Scotland Trust Company
(Jersey) Limited and the Company.
10.19-Shipbuilding Agreement dated January 12, 1993 between Futura Cruises,
Inc. and Fincantieri - Cantieri Navali Italiani S.p.A.*(23)
10.20-Shipbuilding Agreement dated December 23, 1993 between Kvaerner
Masa-Yards, Inc. and the Company.*(24)
10.21-Shipbuilding Agreement dated December 10, 1993 between Wind Surf
Limited and Fincantieri-Cantieri Navali Italiani S.p.A.*(25)
10.22-Shipbuilding Agreement dated January 14, 1995 between Utopia Cruises,
Inc. and Fincantieri-Cantieri Navali Italiani S.p.A.*(26)
10.23-Shipbuilding Agreement dated January 14, 1995 between Wind Surf Limited
and Fincantieri-Cantieri Navali Italiani S.p.A.*(27)
10.24-Shipbuilding Agreement dated December 7, 1994 between Carnival
Corporation and Kvaerner Masa-Yards, Inc.*(28)
10.25-Shipbuilding Agreement dated January 12, 1995 between Carnival
Corporation and Kvaerner Masa-Yards, Inc.*(29)
10.26-Shipbuilding Agreement dated March 25, 1992 between Carnival
Corporation and Kvaerner Masa-Yards, Inc.*(30)
10.27-Organization agreement dated February 25, 1994 between the Company and
the principals of The Continental Companies.(31)
10.28-Stock Purchase Agreement between Carnival Corporation and CHC
International.(32)
10.29-Stock Purchase Agreement between Carnival Corporation, Sherwood Weiser
and others.(33)
11.0-Statement regarding computation of per share earnings.
12.0-Ratio of Earnings to Fixed Charges
13.0-Portions of 1995 Annual Report incorporated by reference into 1995
Annual Report on Form 10-K
21-Subsidiaries of the Company.(34)
23.0-Consent of Price Waterhouse
27.0-Financial Data Schedule (for SEC use only)
28.1-Maks L. Birnbach Director's Agreement.(35)
28.2-William S. Ruben Director's Agreement.(36)
28.3-Stuart Subotnick Director's Agreement.(37)
28.4-Sherwood M. Weiser Director's Agreement.(38)
28.5-Uzi Zucker Director's Agreement.(39)
</TABLE>
* Portions of documents omitted pursuant to an order for confidential
treatment pursuant to Rule 24b-2 under the Securities Act of 1934, as
amended.
<TABLE>
<CAPTION>
Sequential
Numbering
System
Exhibits
<S> <C>
(1)Incorporated by reference to Exhibit No. 4.1 to the registrant's
Quarterly Report on Form 10-Q for the Quarter Ended February 28, 1995 (File
No. 1-9610), filed with the Securities and Exchange Commission.
(2)Incorporated by reference to Exhibit No. 3.2 to the registrant's
registration statement on Form S-1 (File No. 33-14844), filed with the
Securities and Exchange Commission.
(3)Incorporated by reference to Exhibit No. 4(a) and Exhibit No. 4(b) to the
registrant's Report on Form 8-K as filed with the Securities and Exchange
Commission on July 6, 1992.
(4)Incorporated by reference to Exhibit No. 4 on Form S-3 to the registrant's
registration statement on Form S-3 (File No. 33-53136), filed with the
Securities and Exchange Commission.
(5)Incorporated by reference to Exhibit 4.1 to the registrant's Quarterly
Report on Form 10-Q for the quarter ended August 31, 1994 (Commission File
No. 1-9610), filed with the Securities and Exchange Commission.
(6)Incorporated by reference to Exhibit No. 4.10 to the registrant's
registration statement on Form S-1 (File No. 33-31795), filed with the
Securities and Exchange Commission.
(7)Incorporated by reference to Exhibit No. 10.1 to the registrant's
registration statement on Form S-1 (File No. 33-14844), filed with the
Securities and Exchange Commission.
(8)Incorporated by reference to Exhibit No. 10.2 to the registrant's
registration statement on Form S-1 (File No. 33-14844), filed with the
Securities and Exchange Commission.
(9)Incorporated by reference to Exhibit No. 10.3 to the registrant's Annual
Report on Form 10-K for the fiscal year ended November 30, 1990 (Commission
File No. 1-9610), filed with the Securities and Exchange Commission.
(10)Incorporated by reference to Exhibit No. 10.4 to the registrant's Annual
Report on Form 10-K for the fiscal year ended November 30, 1990 (Commission
File No. 1-9610), filed with the Securities and Exchange Commission.
(11)Incorporated by reference to Exhibit No. 10.5 to the registrant's Annual
Report on Form 10-K for the fiscal year ended November 30, 1993 (Commission
File No. 1-9610), filed with the Securities and Exchange Commission.
(12)Incorporated by reference to Exhibit No. 10.6 to the registrant's Annual
Report on Form 10-K for the fiscal year ended November 30, 1993 (Commission
File No. 1-9610), filed with the Securities and Exchange Commission.
(13)Incorporated by reference to Exhibit No. 10.41 to the registrant's Annual
Report on Form 10-K for the fiscal year ended November 30, 1992 (Commission
File No. 1-9610), filed with the Securities and Exchange Commission.
(14)Incorporated by reference to Exhibit No. 10.29 to the registrant's
Annual Report on Form 10-K for the fiscal year ended November 30, 1994
(Commission File No. 1-9610), filed with the Securities and Exchange
Commission.
(15)Incorporated by reference to Exhibit No. 10.30 to the registrant's
Annual Report on Form 10-K for the fiscal year ended November 30, 1994
(Commission File No. 1-9610), filed with the Securities and Exchange
Commission.
(16)Incorporated by reference to Exhibit No. 10.17 to the registrant's
registration statement on Form S-1 (File No. 33-14844), filed with the
Securities and Exchange Commission.
(17)Incorporated by reference to Exhibit No. 10.43 to the registrant's Annual
Report on Form 10-K for the fiscal year ended November 30, 1991 (Commission
File No. 1-9610), filed with the Securities and Exchange Commission.
(18)Incorporated by reference to Exhibit No. 10.28 to the registrant's
Annual Report on Form 10-K for the fiscal year ended November 30, 1994
(Commission File No. 1-9610), filed with the Securities and Exchange
Commission.
(19)Incorporated by reference to Exhibit No. 4.3 to post-effective amendment
no. 1 on Form S-3 to the registrant's registration statement on Form S-1
(File No. 33-24747), filed with the Securities and Exchange Commission.
(20)Incorporated by reference to Exhibit No. 10.18 to the registrant's
registration statement on Form S-1 (File No. 33-14844), filed with the
Securities and Exchange Commission.
(21)Incorporated by reference to Exhibit No. 10.40 to the registrant's Annual
Report on Form 10-K for the fiscal year ended November 30, 1992 (Commission
File No. 1-9610), filed with the Securities and Exchange Commission.
(22)Incorporated by reference to Exhibit No. 10.39 to the registrant's Annual
Report on Form 10-K for the fiscal year ended November 30, 1992 (Commission
File No. 1-9610), filed with the Securities and Exchange Commission.
(23)Incorporated by reference to Exhibit No. 10.42 to the registrant's Annual
Report on Form 10-K for the fiscal year ended November 30, 1992 (Commission
File No. 1-9610), filed with the Securities and Exchange Commission.
(24)Incorporated by reference to Exhibit No. 10.39 to the registrant's Annual
Report on Form 10-K for the fiscal year ended November 30, 1993 (Commission
File No. 1-9610), filed with the Securities and Exchange Commission.
(25)Incorporated by reference to Exhibit No. 10.40 to the registrant's Annual
Report on Form 10-K for the fiscal year ended November 30, 1993 (Commission
File No. 1-9610), filed with the Securities and Exchange Commission.
(26)Incorporated by reference to Exhibit No. 10.23 to the registrant's
Annual Report on Form 10-K for the fiscal year ended November 30, 1994
(Commission File No. 1-9610), filed with the Securities and Exchange
Commission.
(27)Incorporated by reference to Exhibit No. 10.24 to the registrant's
Annual Report on Form 10-K for the fiscal year ended November 30, 1994
(Commission File No. 1-9610), filed with the Securities and Exchange
Commission.
(28)Incorporated by reference to Exhibit No. 10.25 to the registrant's
Annual Report on Form 10-K for the fiscal year ended November 30, 1994
(Commission File No. 1-9610), filed with the Securities and Exchange
Commission.
(29)Incorporated by reference to Exhibit No. 10.26 to the registrant's
Annual Report on Form 10-K for the fiscal year ended November 30, 1994
(Commission File No. 1-9610), filed with the Securities and Exchange
Commission.
(30)Incorporated by reference to Exhibit No. 10.27 to the registrant's
Annual Report on Form 10-K for the fiscal year ended November 30, 1994
(Commission File No. 1-9610), filed with the Securities and Exchange
Commission.
(31)Incorporated by reference to Exhibit 10.1 to the registrant's Quarterly
Report on Form 10-Q for the quarter ended February 28, 1994 (Commission File
No. 1-9610), filed with the Securities and Exchange Commission.
(32)Incorporated by reference to Exhibit No. 10.31 to the registrant's
Annual Report on Form 10-K for the fiscal year ended November 30, 1994
(Commission File No. 1-9610), filed with the Securities and Exchange
Commission.
(33)Incorporated by reference to Exhibit No. 10.32 to the registrant's
Annual Report on Form 10-K for the fiscal year ended November 30, 1994
(Commission File No. 1-9610), filed with the Securities and Exchange
Commission.
(34)Incorporated by reference to Exhibit No. 21 to the registrant's Annual
Report on Form 10-K for the fiscal year ended November 30, 1994 (Commission
File No. 1-9610), filed with the Securities and Exchange Commission.
(35)Incorporated by reference to Exhibit No. 28.1 to the registrant's Annual
Report on Form 10-K for the fiscal year ended November 30, 1990 (Commission
File No. 1-9610), filed with the Securities and Exchange Commission.
(36)Incorporated by reference to Exhibit No. 28.2 to the registrant's
registration statement on Form S-1 (File No. 33-14844), filed with the
Securities and Exchange Commission.
(37)Incorporated by reference to Exhibit No. 28.3 to the registrant's
registration statement on Form S-1 (File No. 33-14844), filed with the
Securities and Exchange Commission.
(38)Incorporated by reference to Exhibit No. 28.4 to the registrant's
registration statement on Form S-1 (File No. 33-14844), filed with the
Securities and Exchange Commission.
(39)Incorporated by reference to Exhibit No. 28.5 to the registrant's
registration statement on Form S-1 (File No. 33-14844), filed with the
Securities and Exchange Commission.
</TABLE>
U.S. $750,000,000
REVOLVING CREDIT AGREEMENT
DATED AS OF JULY 1, 1993
AMENDED AND RESTATED
AS OF DECEMBER 5, 1995
By And Among
CARNIVAL CRUISE LINES, INC.
now known as
CARNIVAL CORPORATION,
as Borrower,
and
CITIBANK, N.A.,
as Agent,
CIBC, INC., COMMERZBANK A.G., ATLANTA AGENCY
AND ROYAL BANK OF CANADA,
as Managing Agents,
BARNETT BANK OF SOUTH FLORIDA, N.A., CREDIT LYONNAIS CAYMAN
ISLAND BRANCH, THE DAI-ICHI KANGYO BANK, LIMITED, ATLANTA AGENCY,
FIRST UNION NATIONAL BANK OF FLORIDA, THE FUJI BANK, LIMITED, NEW
YORK BRANCH, THE INDUSTRIAL BANK OF JAPAN, LIMITED, ATLANTA
AGENCY, THE MITSUBISHI BANK, LIMITED - NEW YORK BRANCH,
NATIONSBANK OF FLORIDA, N.A., SAKURA BANK AND THE SUMITOMO BANK,
LIMITED, ATLANTA AGENCY,
as Co-Agents,
and
CITIBANK, N.A., BANCA DI ROMA - HOUSTON AGENCY, BANK OF HAWAII,
THE BANK OF NOVA SCOTIA, BARNETT BANK OF SOUTH FLORIDA, N.A.,
CIBC, INC., COMMERZBANK A.G., ATLANTA AGENCY, CREDIT LYONNAIS,
CAYMAN ISLAND BRANCH, THE DAI-ICHI KANGYO BANK, LIMITED, ATLANTA
AGENCY, FIRST UNION NATIONAL BANK OF FLORIDA, THE FUJI BANK,
LIMITED, NEW YORK BRANCH, THE INDUSTRIAL BANK OF JAPAN, LIMITED, ATLANTA
AGENCY, LANDESBANK HOLSTEIN-SCHLESWIG GIROZENTRALE, THE MITSUBISHI BANK,
LIMITED - NEW YORK BRANCH, MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
NATIONAL WESTMINSTER BANK PLC, NATIONSBANK OF FLORIDA, N.A., NORTHERN TRUST
COMPANY, ROYAL BANK
OF CANADA, SAKURA BANK, THE SANWA BANK LIMITED, ATLANTA AGENCY,
THE SUMITOMO BANK, LIMITED, ATLANTA AGENCY, SUNTRUST BANK,
MIAMI, N.A., UNITED STATES NATIONAL BANK OF OREGON AND THE YASUDA TRUST AND
BANKING COMPANY, LIMITED,
as Banks.<PAGE>
<TABLE>
<CAPTION>
Table of Contents
<S>
<C>
Page
PARTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
PRELIMINARY STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.01 Definitions. . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.02 Accounting Terms . . . . . . . . . . . . . . . . . . . .13
Section 1.03 Governing Language . . . . . . . . . . . . . . . . . . .13
Section 1.04 Computation of Time Periods. . . . . . . . . . . . . . .13
ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES . . . . . . . . . . . . . .13
Section 2.01 The A Advances . . . . . . . . . . . . . . . . . . . . .13
Section 2.02 Making the A Advances. . . . . . . . . . . . . . . . . .14
Section 2.03 The B Advances . . . . . . . . . . . . . . . . . . . . .15
Section 2.04 General Provisions . . . . . . . . . . . . . . . . . . .18
Section 2.05 Interest and Default Interest. . . . . . . . . . . . . .19
Section 2.06 Prepayments. . . . . . . . . . . . . . . . . . . . . . .22
Section 2.07 Increased Costs; Additional Interest . . . . . . . . . .24
Section 2.08 Payments and Computations. . . . . . . . . . . . . . . .25
Section 2.09 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . .26
Section 2.10 Fees . . . . . . . . . . . . . . . . . . . . . . . . . .29
Section 2.11 Borrower's Termination of Commitments. . . . . . . . . .31
ARTICLE III CONDITIONS OF LENDING. . . . . . . . . . . . . . . . . . . . . .31
Section 3.01 Conditions Precedent to Initial Advances . . . . . . . .31
Section 3.02 Conditions Precedent to Each A Borrowing . . . . . . . .32
Section 3.03 Conditions Precedent to Each B Borrowing . . . . . . . .33
Section 3.04 Additional Conditions to Each Borrowing. . . . . . . . .33
Section 3.05 Conditions Precedent to Initial Advances
to be Made on or After December 5, 1995 . . . . . . . . . . .34
ARTICLE IV REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . .35
Section 4.01 Representations and Warranties of
the Borrower. . . . . . . . . . . . . . . . . . . . . . . . .35
(a) Due Existence; Compliance . . . . . . . . . . . . . . . . . .35
(b) Corporate Authorities; No Conflicts . . . . . . . . . . . . .36
(c) Government Approvals and Authorizations . . . . . . . . . . .36
(d) Legal, Valid and Binding. . . . . . . . . . . . . . . . . . .36
(e) Financial Information . . . . . . . . . . . . . . . . . . . .36
(f) Litigation. . . . . . . . . . . . . . . . . . . . . . . . . .37
(g) Immunities. . . . . . . . . . . . . . . . . . . . . . . . . .37
(h) No Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . .37
(i) No Filing . . . . . . . . . . . . . . . . . . . . . . . . . .37
(j) No Defaults . . . . . . . . . . . . . . . . . . . . . . . . .38
(k) Margin Regulations. . . . . . . . . . . . . . . . . . . . . .38
(l) Investment Company Act. . . . . . . . . . . . . . . . . . . .38
(m) Taxes Paid. . . . . . . . . . . . . . . . . . . . . . . . . .38
(n) Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . .39
(o) Good Title. . . . . . . . . . . . . . . . . . . . . . . . . .39
(p) ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
(q) Tangible Net Worth. . . . . . . . . . . . . . . . . . . . . .39
(r) Solvency. . . . . . . . . . . . . . . . . . . . . . . . . . .39
ARTICLE V COVENANTS OF THE BORROWER. . . . . . . . . . . . . . . . . . . . .40
Section 5.01 Affirmative Covenants. . . . . . . . . . . . . . . . . .40
(a) Compliance with Laws. . . . . . . . . . . . . . . . . . . . .40
(b) Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . .40
(c) Financial Information; Defaults . . . . . . . . . . . . . . .40
(d) Financial Covenants . . . . . . . . . . . . . . . . . . . . .43
(e) Corporate Existence, Mergers. . . . . . . . . . . . . . . . .43
(f) Insurance . . . . . . . . . . . . . . . . . . . . . . . . . .44
(g) [Reserved]. . . . . . . . . . . . . . . . . . . . . . . . . .44
(h) [Reserved]. . . . . . . . . . . . . . . . . . . . . . . . . .44
(i) The Borrower's Stock. . . . . . . . . . . . . . . . . . . . .44
(j) [Reserved]. . . . . . . . . . . . . . . . . . . . . . . . . .44
(k) Solvency. . . . . . . . . . . . . . . . . . . . . . . . . . .44
(l) [Reserved]. . . . . . . . . . . . . . . . . . . . . . . . . .44
(m) Further Assurances. . . . . . . . . . . . . . . . . . . . . .45
Section 5.02 Negative Covenants . . . . . . . . . . . . . . . . . . .45
(a) Sale of Assets. . . . . . . . . . . . . . . . . . . . . . . .45
(b) [Reserved]. . . . . . . . . . . . . . . . . . . . . . . . . .45
(c) [Reserved]. . . . . . . . . . . . . . . . . . . . . . . . . .45
(d) [Reserved]. . . . . . . . . . . . . . . . . . . . . . . . . .45
(e) Limitation on Payment Restrictions
Affecting Subsidiaries. . . . . . . . . . . . . . . . . . . .45
(f) Transactions with Officers, Directors
and Shareholders. . . . . . . . . . . . . . . . . . . . . . .46
(g) Compliance with ERISA . . . . . . . . . . . . . . . . . . . .46
(h) Investment Company. . . . . . . . . . . . . . . . . . . . . .46
(i) [Reserved]. . . . . . . . . . . . . . . . . . . . . . . . . .46
(j) Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . .46
(k) [Reserved]. . . . . . . . . . . . . . . . . . . . . . . . . .47
(l) Organizational Documents. . . . . . . . . . . . . . . . . . .47
ARTICLE VI DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . . . .47
Section 6.01 Events of Default. . . . . . . . . . . . . . . . . . . .47
ARTICLE VII RELATION OF LENDERS; ASSIGNMENTS, DESIGNATIONS
AND PARTICIPATIONS. . . . . . . . . . . . . . . . . . . . . .49
Section 7.01 Lenders and Agent. . . . . . . . . . . . . . . . . . . .49
Section 7.02 Pro Rata Sharing . . . . . . . . . . . . . . . . . . . .50
Section 7.03 Setoff . . . . . . . . . . . . . . . . . . . . . . . . .50
Section 7.04 Approvals. . . . . . . . . . . . . . . . . . . . . . . .50
Section 7.05 Exculpation. . . . . . . . . . . . . . . . . . . . . . .51
Section 7.06 Indemnification. . . . . . . . . . . . . . . . . . . . .51
Section 7.07 Agent as Lender. . . . . . . . . . . . . . . . . . . . .52
Section 7.08 Notice of Transfer; Resignation;
Successor Agent . . . . . . . . . . . . . . . . . . . . . . .52
Section 7.09 Credit Decision; Not Trustee . . . . . . . . . . . . . .52
Section 7.10 Assignments, Designations and Participation. . . . . . .53
Section 7.11 Managing Agent; Co-Agent . . . . . . . . . . . . . . . .58
ARTICLE VIII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . .58
Section 8.01 Amendments . . . . . . . . . . . . . . . . . . . . . . .58
Section 8.02 Notices. . . . . . . . . . . . . . . . . . . . . . . . .58
Section 8.03 No Waiver; Remedies. . . . . . . . . . . . . . . . . . .59
Section 8.04 Costs, Expenses, Fees and Indemnities. . . . . . . . . .59
Section 8.05 [Reserved] . . . . . . . . . . . . . . . . . . . . . . .60
Section 8.06 Judgment . . . . . . . . . . . . . . . . . . . . . . . .60
Section 8.07 Consent to Jurisdiction; Waiver
of Immunities . . . . . . . . . . . . . . . . . . . . . . . .60
Section 8.08 Binding Effect; Merger; Severability;
GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . .61
Section 8.09 Counterparts . . . . . . . . . . . . . . . . . . . . . .62
Section 8.10 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . .62
TESTIMONIUM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .63
Schedule I - List of Applicable Lending Offices
Schedule II - Outstanding Principal Balance of A Advances
as of December 5, 1995
Exhibit A-1 - Form of Series A Note
Exhibit A-2 - Form of Series B Note
Exhibit B-1 - Form of Notice of Series A Borrowing
Exhibit B-2 - Form of Notice of Series B Borrowing
Exhibit C - Form of Assignment and Acceptance
Exhibit D - Form of Designation Agreement
Exhibit E-1 - Form of Opinion of General Counsel of the Borrower
Exhibit E-2 - Form of Opinion of Special Panamanian Counsel to the
Borrower
<PAGE>
AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
This Revolving Credit Agreement, dated as of July 1, 1993, amended and
restated as of December 5, 1995, is made and entered into by and among CARNIVAL
CRUISE LINES, INC. now known as CARNIVAL CORPORATION (the "Borrower"), a
corporation organized and existing under the laws of The Republic of Panama
("Panama"), and CITIBANK, N.A., a national banking association organized and
existing under the laws of the United States of America ("United States" or
"U.S."), and each of the other banks or other institutions whose names may
appear on the signature pages of this Agreement (each a "Bank" and,
collectively, the "Banks") or, if applicable, in the Register for whom Citibank,
N.A., subject to Article VII of this Agreement, acts as Agent, and subject to
Section 7.11 of this Credit Agreement as hereby amended and restated, each of
those certain Banks named in the cover page hereof acts as Managing Agent and
each of those certain other Banks named in the cover page hereof acts as
Co-Agent. Capitalized terms not otherwise herein defined shall have the
respective meanings set forth below in Section 1.01.
PRELIMINARY STATEMENTS
(1) The Borrower, the Agent and the Lenders therein named have
executed and delivered the Revolving Credit Agreement dated as of July 1, 1993
and Amendment No. 1 thereto dated as of June 15, 1994, and Advances have been
made.
(2) The Borrower desires to borrow from the Lenders upon the terms
and conditions set forth herein.
(3) The Lenders have agreed severally, but not jointly, each for the
aggregate amount and in the percentage interest (as to each Lender, the
"Percentage Interest") set forth opposite each Lender's name and signature,
below, or if applicable, in any relevant amendment hereto, or, if applicable,
in the Register, to provide credits upon the terms and conditions set forth
herein.
(4) The Borrower has requested and the Agent and the Lenders have
agreed, upon the terms and conditions of this Agreement, to extend the
Termination Date from June 15, 1999 to December 5, 2000, to reallocate the
Commitment among the Lenders, to add new banks as parties to this Agreement and
to make certain other amendments to this Agreement. In connection with this
Agreement as hereby amended and restated, inter alia, the outstanding Series A
Notes of the Borrower will be exchanged for Series A Notes issued in the form
of the Exhibit A-1 to this Agreement as amended and restated, reflecting the
Commitment of the Lenders as herein provided, and a Series B Note in the form
of Exhibit A-2 will be issued to each Lender first acceding to this Agreement
on the date hereof.
(5) The outstanding principal balance of A Advances owing each Lender
as of December 5, 1995, more particularly described in Schedule II hereto made
a part hereof, shall be prepaid in full not later than the first Interest
Payment Date of such A Advances falling after December 5, 1995.
(6) The Lenders have requested the Agent, and the Agent has agreed,
to act on behalf of the Lenders in accordance with the terms and conditions set
forth herein.
Now, therefore, the Borrower, the Lenders and the Agent hereby agree
among themselves as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. As used in this Agreement, each of the
following terms shall have the respective meaning set forth below (such
meanings, unless otherwise indicated, to apply to both the singular and plural
forms of the terms defined):
"Advance" means an A Advance or a B Advance.
"A Advance" means an advance by a Lender to the Borrower as part of
an A Borrowing and refers to a Base Rate Advance or a LIBOR Rate Advance, each
of which shall be a "Type" of A Advance.
"A Borrowing" means a borrowing consisting of simultaneous A Advances
of the same Type made by each of the Lenders pursuant to Section 2.01.
"Affiliate" means, with respect to any Person, any other Person
controlling, controlled by or under common control with, such Person. For
purposes of this definition, "control" (including, with correlative meanings,
the terms "controlling", "controlled by" and "under common control with"), as
applied to any Person, means the possession, directly or indirectly, of the
power to vote ten percent (10%) or more of the securities having voting power
for the election of directors of such Person, or otherwise to direct or cause
the direction of the management and policies of that Person, whether through the
ownership of voting securities or by contract or otherwise.
"Agent" shall mean Citibank, N.A., and any successor agent under this
Agreement.
"Agreement" means this Agreement, as it may be amended, supplemented
or otherwise modified from time to time.
"Applicable Lending Office" means, with respect to each Lender, such
Lender's Domestic Lending Office in the case of a Base Rate Advance, and such
Lender's Eurodollar Lending Office in the case of a LIBOR Rate Advance and, in
the case of a B Advance, the office of such Lender notified by such Lender to
the Agent as its Applicable Lending Office with respect to such B Advance.
"Assignment and Acceptance" means an assignment and acceptance entered
into by a Lender and an Eligible Assignee, and accepted by the Agent, in
substantially the form of Exhibit C hereto.
"B Advance" means an advance by a Lender to the Borrower as part of
a B Borrowing resulting from the auction bidding procedure described in Section
2.03.
"B Borrowing" means a borrowing consisting of simultaneous B Advances
from each of the Lenders whose offer to make one or more B Advances as part of
such borrowing has been accepted by the Borrower under the auction bidding
procedure described in Section 2.03.
"B Reduction" has the meaning specified in Section 2.01.
"Base Rate" means, for any Interest Period or any other period, a
fluctuating interest rate per annum as shall be in effect from time to time,
which rate per annum shall at all times be equal to the highest of:
(a) the rate of interest announced publicly by Citibank, N.A., in New
York, New York, from time to time, as its base rate;
(b) a rate equal to 1/2 of one percent per annum above the latest
three-week moving average of secondary market morning offering rates in the
United States for three-month certificates of deposit of major United
States money market banks, such three-week moving average determined weekly
on each Monday (or if such day is not a Business Day, on the next
succeeding Business Day) for the three-week period ending on the previous
Friday by Citibank, N.A., on the basis of such rates reported by
certificate of deposit dealers to and published by the Federal Reserve Bank
of New York or, if such publication shall be suspended or terminated, on
the basis of quotations for such rates received by Citibank, N.A., from
three New York certificate of deposit dealers of recognized standing
selected by Citibank, N.A., in either case adjusted to the nearest 1/4 of
one percent, or, if there is no nearest 1/4 of one percent, to the next
higher 1/4 of one percent; or
(c) a rate equal to 1/2 of one percent per annum above the then
current Federal Funds Rate.
"Base Rate Advance" means an A Advance or a B Advance which bears
interest at the Base Rate.
"Borrowing" means an A Borrowing or a B Borrowing.
"Business Day" means any day other than a Saturday, Sunday or any
other day on which commercial banks are required or authorized by law to close
in New York, New York, London, England or in the city where the Lending Office
is located.
"Capital Expenditures" mean the aggregate of all expenditures
(including that portion of leases which is capitalized on the consolidated
balance sheet of the Borrower and its Subsidiaries (or on the balance sheet of
any unconsolidated Subsidiary) and capitalized interest) by the Borrower and its
Subsidiaries that, in conformity with GAAP, should be, has been or should have
been included in the property, plant or equipment reflected in a consolidated
balance sheet of the Borrower and its Subsidiaries.
"Capital Lease" means, with respect to any Person, any lease of any
property (whether real, personal or mixed) by such Person as lessee that, in
accordance with GAAP, either would be required to be classified and accounted
for as a capital lease on a balance sheet of such Person or otherwise be
disclosed as such in a note to such balance sheet, other than, in the case of
the Borrower or a Subsidiary of the Borrower, any such lease under which the
Borrower or such Subsidiary is the lessor.
"Closing Date" means the day, but not later than July 1, 1993, on
which the respective parties hereto shall have executed and delivered this
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, and the regulations promulgated and rulings issued thereunder.
"Commitment" means the obligation of each Lender to lend the amounts
set forth in Section 2.01 hereof, as such amounts may be reduced from time to
time pursuant to this Agreement.
"Consolidated Cash Flow" means, in conformity with GAAP, net cash from
operations, as shown in the consolidated statements of cash flows of the
Borrower and its Subsidiaries excluding Specified Subsidiaries.
"Convert", "Conversion" and "Converted" each refers to a conversion
of Advances of one Type into Advances of another Type pursuant to Section
2.02(e) or 2.05(b)(ii) (E) or (F).
"Default" means any event or condition that, with the giving of
notice, the lapse of time or both, would become an Event of Default.
"Designated Bidder" means (i) an Eligible Assignee or (ii) a special
purpose corporation which is engaged in making, purchasing or otherwise
investing in commercial loans in the ordinary course of its business and that
issues (or the parent of which issues) commercial paper rated at least "Prime-1"
by Moody's Investors Services, Inc. or "A-1" by Standard & Poor's Corporation
or a comparable rating from the successor or either of them, that, in either
case, (x) is organized under the laws of the United States or any State thereof,
(y) shall have become a party hereto pursuant to Section 7.10(d), (e), (f) and
(z) is not otherwise a Lender.
"Designation Agreement" means a designation agreement entered into by
a Lender (other than a Designated Bidder) and a Designated Bidder, and accepted
by the Agent, in substantially the form of Exhibit D hereto.
"Dollars" and "$" mean the lawful and freely transferable currency of
the United States of America.
"Domestic Lending Office" means, with respect to any Lender, the
office of such Lender specified as its "Domestic Lending Office" opposite its
name on Schedule I hereto or in the Assignment and Acceptance pursuant to which
it became a Lender, or such other office of such Lender as such Lender may from
time to time specify to the Borrower and the Agent.
"Drawdown Date" shall mean the date an Advance is to be made to the
Borrower pursuant to this Agreement.
"Eligible Assignee" means (i) a commercial bank, savings and loan
institution, insurance company or financial institution organized under the laws
of the United States, or any State thereof, which bank has both assets in excess
of One Billion Dollars ($1,000,000,000) and combined capital and surplus in
excess of One Hundred Million Dollars ($100,000,000), or which insurance company
or financial institution has total assets in excess of One Billion Dollars
($1,000,000,000), (ii) a commercial bank organized under the laws of any other
country which is a member of the OECD or has concluded special lending
arrangements with the International Monetary Fund associated with its General
Arrangements to Borrow, or a political subdivision of any such country, which
bank has a combined capital and surplus (or the equivalent thereof under the
accounting principles applicable thereto) in excess of One Hundred Million
Dollars ($100,000,000), provided that such bank is acting through a branch or
agency located in the United States, the Cayman Islands or the country in which
it is organized or another country which is also a member of the OECD or has
concluded special lending arrangements with the International Monetary Fund
associated with its General Arrangements to Borrow, (iii) the central bank of
any country which is a member of the OECD or (iv) a finance company, insurance
company or other financial institution or a fund which is engaged in making,
purchasing or otherwise investing in commercial loans in the ordinary course of
its business, has total assets in excess of Five Hundred Million Dollars
($500,000,000), is doing business in the United States and is organized under
the laws of the United States, or any State thereof, or under the laws of any
member country of the OECD.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"ERISA Affiliate" means with respect to any Person, any trade or
business (whether or not incorporated) which is a member of a group of which
such Person is a member and which is under common control with such Person
within the meaning of Section 414 of the Code, as amended from time to time, and
the regulations promulgated and rulings issued thereunder.
"Eurodollar Lending Office" means, with respect to any Lender, the
office of such Lender specified as its "Eurodollar Lending Office" opposite its
name on Schedule I hereto or in the Assignment and Acceptance pursuant to which
it became a Lender (or, if no such office is specified, its Domestic Lending
Office), or such other office of such Lender as such Lender may from time to
time specify to the Borrower and the Agent.
"Event of Default" means any of the events specified as such in
Section 6.01 of this Agreement.
"Federal Funds Rate" means, for any period, a fluctuating interest
rate per annum equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.
"Fee Payment Date" means (i) the last day of the calendar quarter in
which the Closing Date occurs, and (ii) the last day of each successive and
respective calendar quarter thereafter to and including the Termination Date,
or such earlier date as the Commitment of the Lenders shall have been
terminated, and the principal of and interest on each Advance shall have been
paid, in full.
"GAAP" means at any time generally accepted United States accounting
principles at such time.
"HAL" means HAL Antillen N.V., a Netherlands Antilles corporation.
"HAL Subsidiaries" mean the Subsidiaries of HAL.
"Incorporation Jurisdictions" mean the respective jurisdictions of
incorporation or legal organization of the Borrower and each of its
Subsidiaries.
"Indebtedness" means (a) any liability of any Person (i) for borrowed
money, or under any reimbursement obligation related to a letter of credit or
bid or performance bond facility, or (ii) evidenced by a bond, note, debenture
or other evidence of indebtedness (including a purchase money obligation)
representing extensions of credit or given in connection with the acquisition
of any business, property, service or asset of any kind, including without
limitation, any liability under any commodity, interest rate or currency
exchange hedge or swap agreement (other than a trade payable or other current
liability arising in the ordinary course of business) or (iii) for obligations
with respect to (A) an operating lease, or (B) a lease of real or personal
property that is or would be classified and accounted for as a Capital Lease;
(b) any liability of others either for any lease, dividend or letter of credit,
or for any obligation described in the preceding clause (a) that (i) the Person
has guaranteed or that is otherwise its legal liability (whether contingent or
otherwise or direct or indirect, but excluding endorsements of negotiable
instruments for deposit or collection in the ordinary course of business) or
(ii) is secured by any Lien on any property or asset owned or held by that
Person, regardless whether the obligation secured thereby shall have been
assumed by or is a personal liability of that Person; and (c) any amendment,
supplement, modification, deferral, renewal, extension or refunding of any
liability of the types referred to in clauses (a) and (b), above.
"Insufficiency" means, with respect to any Plan, the amount, if any,
by which the present value of the vested benefits under such Plan exceeds the
fair market value of the assets of such Plan allocable to such benefits.
"Interest Payment Date" means with respect to any Advance comprising
part of the same Borrowing (1) the last day of each Interest Period, (2) the day
any principal amount of such Borrowing matures and becomes due and payable, (3)
the Termination Date, and (4) with respect to any A Advance, if the Interest
Period is longer than three (3) months, the last day of the third month
following such Borrowing.
"Interest Period" means, (A) for each A Advance comprising part of the
same A Borrowing, the period commencing on the date of such A Advance, or the
date of the Conversion of any A Advance into such an A Advance and ending on the
last day of the period selected by the Borrower or the Agent, as the case may
be, pursuant to this Agreement and, thereafter, each respective and successive
period commencing on the last day of the immediately preceding Interest Period
and ending on the last day of the period selected by the Borrower or the Agent,
as the case may be, subject to the provisions below. The duration of each such
Interest Period shall be (y), in the case of a Base Rate Advance, shall be such
period as the Agent shall notify the Borrower and (z), in the case of a LIBOR
Rate Advance, one, two, three or six months, in each case selected by the
Borrower or the Agent, as the case may be, pursuant to this Agreement and
(B) for each B Advance comprising part of the same B Borrowing, the
interest period or interest periods specified in the related Notice of B
Borrowing, or selected by the Agent, as the case may be, pursuant to this
Agreement
provided, however, with respect to each Advance that:
(i) no Interest Period relating to any Advance shall commence on or
end after the maturity date of such Advance;
(ii) Interest Periods commencing on the same date for A Advances
comprising part of the same A Borrowing shall be of the same duration;
(iii) no Interest Period shall end after the Termination Date; and
(iv) whenever the last day of any Interest Period would otherwise
occur on a day other than a Business Day, the last day of such Interest
Period shall be extended to occur on the next succeeding Business Day,
provided, in the case of any Interest Period for a LIBOR Rate Advance, that
if such extension would cause the last day of such Interest Period to occur
in the next following calendar month, the last day of such Interest Period
shall occur on the next preceding Business Day.
"Kloster" means Kloster Cruise Limited, a corporation organized and
existing under the laws of the Islands of Bermuda.
"Lenders" means the Banks listed on the signature pages hereof, each
Eligible Assignee that shall become a party hereto pursuant to Section 7.10(a),
(b) and (c) and, except when used in reference to an A Advance, an A Borrowing,
a Series A Note, a Commitment, the Termination Date or a related term, each
Designated Bidder.
"Lending Office" means the International Banking Facility of the Agent
in New York City, or any other office or affiliate of the Agent hereafter
selected and notified to the Borrower from time to time by the Agent.
"LIBOR Rate Advance" means an A Advance or a B Advance which bears
interest at the LIBOR Rate.
"LIBOR Rate" means, for an Interest Period for each LIBOR Rate Advance
comprising part of the same Borrowing, the rate determined by the Agent to be
the rate of interest per annum equal to the average (rounded upward to the
nearest whole multiple of 1/16 of 1% per annum, if such average is not such a
multiple) of the rate per annum at which deposits in United States Dollars are
offered by the principal office of each of the Reference Lenders in London,
England to prime banks in the London interbank market at 11:00 A.M. (London
time) two Business Days before the first day of such Interest Period for a term
equal to such Interest Period and in an amount substantially equal to such
portion of the Loan. The LIBOR Rate for an Interest Period shall be determined
by the Agent on the basis of applicable rates furnished to and received by the
Agent from the Reference Lenders two Business Days before the first day of such
Interest Period, subject, however, to the provisions of Section 2.05. If at any
time the Agent shall determine that by reason of circumstances affecting the
London interbank market (i) adequate and reasonable means do not exist for
ascertaining the LIBOR Rate for the succeeding Interest Period or (ii) the
making or continuance of any Loan at the LIBOR Rate has become impracticable as
a result of a contingency occurring after the date of this Agreement which
materially and adversely affects the London interbank market, the Agent shall
so notify the Lenders and the Borrower. Failing the availability of the LIBOR
Rate, the LIBOR Rate shall mean the Base Rate thereafter in effect from time to
time until such time as a LIBOR Rate may be determined by reference to the
London interbank market.
"Lien" means any lien, charge, easement, claim, mortgage, Option,
pledge, right of first refusal, right of usufruct, security interest, servitude,
transfer restriction or other encumbrance or any restriction or limitation of
any kind (including, without limitation, any adverse claim to title, conditional
sale or other title retention agreement, any lease in the nature thereof, and
any agreement to give any security interest).
"Loan" means the Advances to the Borrower by each Lender provided for
in Article II of this Agreement.
"Loan Documents" mean this Agreement and the Notes.
"Majority Lenders" means at any time Lenders holding at least 51% of
the then aggregate unpaid principal amount of the Series A Notes held by
Lenders, or, if no such principal amount is then outstanding, Lenders having at
least 51% of the Commitments (provided that, for purposes hereof, neither the
Borrower, nor any of its Affiliates, if a Lender, shall be included in (i) the
Lenders holding such amount of the A Advances or having such amount of the
Commitments or (ii) determining the aggregate unpaid principal amount of the A
Advances or the total Commitments).
"March 30, 1990 Loan Agreement" means that certain Loan Agreement
dated as of March 30, 1990 by and among the Borrower, Wind Surf Limited,
Citibank, N.A. as Agent and the banks therein named, as the same may be amended,
supplemented or otherwise modified from time to time.
"Moody's" has the meaning specified in Section 2.05(b)(ii)(B).
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which a Person or any ERISA Affiliate is making
or accruing an obligation to make contributions, or has within any of the
preceding three plan years made or accrued an obligation to make contributions.
"Multiple Employer Plan" means an employee benefit plan, other than
a Multiemployer Plan, subject to Title IV of ERISA to which a Person or any
ERISA Affiliate, and more than one employer other than such Person or ERISA
Affiliate, is making or accruing an obligation to make contributions or, in the
event that any such plan has been terminated, to which the Person or any ERISA
Affiliate made or accrued an obligation to make contributions during any of the
five plan years preceding the date of termination of such plan.
"Net Worth" means, at a particular date, all amounts which would, in
accordance with GAAP, be included in shareholders' equity on a consolidated
balance sheet of a company and its Subsidiaries as at such date.
"Note" means any of, and "Notes" mean all, the respective Series A
Notes and the Series B Notes, as any such note may be replaced, amended,
supplemented or otherwise modified from time to time.
"Notice of A Borrowing" has the meaning specified in Section 2.02(a).
"Notice of B Borrowing" has the meaning specified in Section 2.03(a).
"OECD" means the Organization for Economic Cooperation and
Development.
"Obligations" mean all obligations, including but not limited to, all
principal, interest, fees, expenses and other obligations set forth in
Article II and Section 8.04 hereof, of every nature of the Borrower from time
to time owed to the Agent, any of the Lenders, or all of them, under any of the
Loan Documents.
"Option" means (1) any right to buy or sell specific property in
exchange for an agreed upon sum, (2) any right to receive funds, the amount of
which is determined by reference to the value of capital stock or the purchase
price thereof, (3) any right of the type or kind referred to as a "phantom stock
right," and (4) any other right commonly known or referred to as an "option."
"PBGC" means the Pension Benefit Guaranty Corporation, or any entity
or entities succeeding to any or all its functions under ERISA.
"Percentage Interest" shall have the meaning set forth in Preliminary
Statement (2) of this Agreement.
"Person" means any individual, corporation, partnership, business
trust, joint venture, association, joint stock company, trust or other
unincorporated organization, whether or not a legal entity, or any government
or agency or political subdivision thereof.
"Plan" means, at any time, any employee pension benefit plan
maintained by a Person, any of its Subsidiaries, or any ERISA Affiliate of such
Person or its Subsidiaries, which employee pension benefit plan is covered by
Title IV of ERISA or is subject to the minimum funding standards of the Code.
"Reference Lender" means any of and "Reference Lenders" means each of
Citibank, N.A., National Westminster Bank Plc and The Bank of Nova Scotia.
"Register" shall have the meaning set forth in Section 7.10(g) of this
Agreement.
"S & P" has the meaning specified in Section 2.05(b)(ii)(B).
"Senior Debt" has the meaning specified in Section 2.05(b)(ii)(B).
"Series A Note" means any of, and "Series A Notes" mean all, the
respective Series A Notes of the Borrower, substantially in the form attached
hereto as Exhibit A-1, to be issued to evidence the indebtedness of the
Borrower, from time to time outstanding in respect of the A Advances, as any
such Series A Note may be replaced, amended, supplemented or otherwise modified
from time to time.
"Series B Note" means any of, and "Series B Notes" mean all, the
respective Series B Notes of the Borrower, substantially in the form attached
hereto as Exhibit A-2, to be issued to evidence the indebtedness of the Borrower
from time to time outstanding in respect of the B Advances, as any such Series
B Note may be replaced, amended, supplemented or otherwise modified from time
to time.
"Solvent" means with respect to any Person on a particular date, that
on such date (i) the fair market value of the assets of such Person is greater
than the total amount of liabilities (including the present or expected value
of contingent liabilities) of such Person, (ii) the present fair salable value
of the assets of such Person is greater than the amount that will be required
to pay the probable liabilities of such Person for its debts as they become
absolute and matured, (iii) such Person is able to realize upon its assets and
pay its debts and other liabilities, including contingent obligations, as they
mature, (iv) such Person does not have unreasonably small capital and (v) such
Person does not intend to or believe it will incur debts beyond its ability to
pay as they mature.
"Specified Subsidiary" means any of Kloster and its Subsidiaries, and
"Specified Subsidiaries" mean all of Kloster and its Subsidiaries.
"Subordinated Debt" has the meaning specified in Section
2.05(b)(ii)(B).
"Subsidiary" means, with respect to any Person, any corporation,
association, partnership or other business entity of which a majority of the
voting power entitled to vote in the election of directors, managers or trustees
thereof is at the time owned, directly or indirectly, by such Person or by one
or more other Subsidiaries, or by such Person and one or more other
Subsidiaries, or a combination thereof.
"Swaps Documents" mean the Swaps Agreement, the Swaps Guaranty and the
Swaps Security Agreement as defined in the March 30, 1990 Loan Agreement.
"Tangible Net Worth" means for any Person at any time (a) the sum, to
the extent shown on such Person's balance sheet, of (i) the amount of issued and
outstanding share capital, but less the cost of treasury shares, plus (ii) the
amount of surplus and retained earnings, less (b) intangible assets as
determined in accordance with GAAP.
"Termination Date" means December 5, 2000 or the earlier date of
termination of all the Commitments pursuant to Section 2.11 or 6.01 hereof.
"Termination Event" means (i) a "reportable event," as such term is
described in Section 4043 of ERISA (other than a "reportable event" not subject
to the provision for 30 day notice to the PBGC), or an event described in
Section 4068(f) of ERISA, or (ii) the withdrawal of the Borrower or any ERISA
Affiliate from a Multiple Employer Plan during a plan year in which it was a
"substantial employer," as such term is defined in Section 4001(a)(2) of ERISA,
or the incurrence of liability by the Borrower or any ERISA Affiliate under
Section 4064 of ERISA upon the termination of a Multiple Employer Plan, or
(iii) the filing of a notice of intent to terminate a Plan or the treatment of
a Plan amendment as a termination under Section 4041A of ERISA, or (iv) the
institution of proceedings to terminate a Plan by the PBGC under Section 4042
of ERISA, or (v) any other event or condition which might constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan.
"Total Capital" means the sum of the Total Debt and Tangible Net Worth
of the Borrower and its Subsidiaries excluding Specified Subsidiaries, but
excluding therefrom any Indebtedness or amounts due or received under the Swaps
Documents.
"Total Debt" means, at a particular date, the sum of (y) all amounts
which would, in accordance with GAAP, constitute short term debt and long term
debt of the Borrower and its Subsidiaries excluding Specified Subsidiaries as
of such date and (z) the amount of any Indebtedness outstanding on such date and
not included in the amounts specified in clause (y), singly or in the aggregate,
in excess of Fifty Million Dollars ($50,000,000), of any Person other than the
Borrower or any of its Subsidiaries excluding Specified Subsidiaries, which
Indebtedness (i) has been and remains guaranteed on such date by the Borrower
or any of its Subsidiaries excluding Specified Subsidiaries or is otherwise the
legal liability of the Borrower or any of its Subsidiaries excluding Specified
Subsidiaries (whether contingent or otherwise or direct or indirect, but
excluding endorsements of negotiable instruments for deposit or collection in
the ordinary course of business), or (ii) is secured by any Lien on any property
or asset owned or held by the Borrower or any of its Subsidiaries excluding
Specified Subsidiaries, regardless of whether the obligation secured thereby
shall have been assumed or is a personal liability of the Borrower or any of its
Subsidiaries excluding Specified Subsidiaries, provided, that the foregoing
shall not be interpreted to include any Indebtedness under the Swaps Documents.
"Transaction" means the extension of credit contemplated by the Loan
Documents.
"Type" shall mean, with respect to an Advance, a Base Rate Advance or
a LIBOR Rate Advance.
"Withdrawal Liability" shall have the meaning given such term under
Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP
consistently applied.
SECTION 1.03. Governing Language. All documents, notices and demands
and financial statements to be delivered by any Person to the Agent or any
Lender pursuant to this Agreement shall be in the English language.
SECTION 1.04. Computation of Time Periods. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and each of the words "to" and
"until" means "to but excluding".
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01. The A Advances. Upon the terms and subject to the
conditions set forth in this Agreement, each Lender agrees severally, but not
jointly, to make A Advances to the Borrower from time to time on any Business
Day during the period from the Closing Date until the Termination Date in an
aggregate amount not to exceed at any time outstanding the amount set opposite
such Lender's name on the signature pages hereof or, if applicable, the
signature pages of any relevant amendment hereto or, if such Lender has entered
into any Assignment and Acceptance, set forth for such Lender in the Register
maintained by the Agent, as such amount may be reduced pursuant to Section 2.11
(such Lender's "Commitment"), provided that the aggregate amount of the
Commitments of the Lenders shall be deemed used and reduced from time to time
to the extent of the aggregate amount of the B Advances then outstanding and
such deemed use and reduction of the aggregate amount of the Commitments shall
be applied to the Lenders ratably according to their respective Commitments
(such deemed use and reduction of the aggregate amount of the Commitments being
a "B Reduction"). Each A Borrowing shall be in an aggregate amount not less
than Twenty Million Dollars ($20,000,000) and an integral multiple of One
Million Dollars ($1,000,000) if in excess thereof and shall consist of A
Advances of the same Type made on the same day by the Lenders ratably according
to their respective Commitments. Within the limits of each Lender's Commitment,
the Borrower may from time to time borrow, prepay pursuant to Section 2.06(a)
and reborrow under this Section 2.01.
SECTION 2.02. Making the A Advances. (a) Each A Borrowing shall be
made on notice, given not later than 11:00 A.M. (New York City time) on the
third Business Day (on the first Business Day in the case of a Base Rate
Advance) prior to the date of the proposed A Borrowing, by the Borrower to the
Agent, which shall give to each Lender prompt notice thereof by telecopier,
telex or cable. Each such Borrower's notice of an A Borrowing (a "Notice of A
Borrowing") shall be by telecopier, telex or cable, confirmed immediately in
writing, substantially in the form of Exhibit B-1 hereto, specifying therein the
requested (i) Drawdown Date of such A Borrowing, (ii) Type of A Advances
comprising such A Borrowing, (iii) aggregate amount of such A Borrowing, and
(iv) in the case of an A Borrowing comprised of LIBOR Rate Advances, the initial
Interest Period for each such A Advance. Each Lender shall, before 11:00 A.M.
(New York City time) on the date of such A Borrowing, make available for the
account of its Applicable Lending Office to the Agent at its address referred
to in Section 8.02, in same day funds, such Lender's ratable portion of such A
Borrowing. After the Agent's receipt of such funds and upon fulfillment of the
applicable conditions set forth in Article III, the Agent will make such funds
available to the Borrower at the Agent's aforesaid address.
(b) The total amount of each A Advance to be made available by each
Lender shall never exceed the Commitment of such Lender, as adjusted by such
Lender's B Reduction, and shall be proportionate always to such Lender's
Percentage Interest set forth in the signature pages hereof or, if applicable,
in the Register.
(c) Unless the Agent shall have received written notice from a Lender
prior to the date of any A Borrowing that such Lender will not make available
to the Agent such Lender's ratable portion of such A Borrowing, the Agent may
assume that such Lender has made such portion available to the Agent on the date
of such A Borrowing in accordance with subsection (a) of this Section 2.02 and
the Agent may, in reliance upon such assumption, make available to the Borrower
on such date a corresponding amount. If and to the extent that such Lender
shall not have so made such ratable portion available to the Agent, such Lender
and the Borrower severally agree to repay to the Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to the Borrower until the date such amount is
repaid to the Agent, at (i) in the case of the Borrower, the interest rate
applicable at the time to A Advances comprising such A Borrowing and (ii) in the
case of such Lender, the Federal Funds Rate. If such Lender shall repay to the
Agent such corresponding amount, such amount so repaid shall constitute such
Lender's A Advance as part of such A Borrowing for purposes of this Agreement.
(d) The Borrower shall repay the principal amount of each A Advance
made by each Lender in accordance with the Series A Note payable to such Lender,
provided that the aggregate principal amount of any A Advance outstanding on the
Termination Date shall be paid on the Termination Date.
(e) The Borrower may on any Business Day, upon notice given to the
Agent not later than 11:00 A.M. (New York City time) on the third Business Day
prior to the date of the proposed Conversion and subject to the provisions of
Section 2.05, and so long as no Default or Event of Default has occurred and is
continuing, Convert all A Advances of one Type comprising the same A Borrowing
into Advances of another Type; provided, however, that any Conversion of any
LIBOR Rate Advances into Advances of another Type shall be made on, and only on,
the last day of an Interest Period for such LIBOR Rate Advances. Each such
notice of a Conversion shall, within the restrictions specified above, specify
(i) the date of such Conversion, (ii) the A Advances to be Converted, and (iii)
if such Conversion is into LIBOR Rate Advances, the duration of the Interest
Period for each such A Advance.
SECTION 2.03. The B Advances. (a) Each Lender severally agrees that
the Borrower may, in the manner set forth below, make B Borrowings under this
Section 2.03 from time to time on any Business Day during the period from the
Closing Date until the thirtieth day prior to the Termination Date; provided
that, following the making of each B Borrowing, the aggregate amount of the
Advances then outstanding shall not exceed the aggregate amount of the
Commitments of the Lenders (computed without regard to any B Reduction).
(i) The Borrower may request a B Borrowing under this Section 2.03
by delivering to the Agent, by telecopier, telex or cable, confirmed
immediately in writing, a notice of a B Borrowing (a "Notice of B
Borrowing"), substantially in the form of Exhibit B-2 hereto, specifying
the Drawdown Date and aggregate amount of the proposed B Borrowing, the
maturity date for repayment of each B Advance to be made as part of such
B Borrowing (which maturity date may not be earlier than seven (7) days
(thirty (30) days, in the case of floating interest rate borrowings) or
later than one hundred eighty (180) days after the date of such B Borrowing
or, in any event, later than the Termination Date), the Interest Payment
Date or Dates relating thereto, and any other terms to be applicable to
such B Borrowing, not later than 12:00 Noon in the case of floating
interest rate borrowings, or 12:00 Noon in the case of fixed interest rate
borrowings (New York City time) (A) at least one (1) Business Day prior to
the date of the proposed B Borrowing, if the Borrower shall specify in the
Notice of B Borrowing that the rates of interest to be offered by the
Lenders shall be fixed rates per annum and (B) at least four (4) Business
Days prior to the date of the proposed B Borrowing, if the Borrower shall
instead specify in the Notice of B Borrowing the basis to be used by the
Lenders in determining the rates of interest to be offered by them. The
Agent shall in turn promptly notify each Lender of each request for a B
Borrowing received by it from the Borrower by sending such Lender a copy
of the related Notice of B Borrowing.
(ii) Each Lender may, if, in its sole discretion it elects to do so,
irrevocably offer to make one or more B Advances to the Borrower as part
of such proposed B Borrowing at a rate or rates of interest specified by
such Lender in its sole discretion, by notifying the Agent (which shall
give prompt notice thereof to the Borrower), before 9:30 A.M. (New York
City time) (A) on the date of such proposed B Borrowing, in the case of a
Notice of B Borrowing delivered pursuant to clause (A) of paragraph (i)
above and (B) three (3) Business Days before the date of such proposed B
Borrowing, in the case of a Notice of B Borrowing delivered pursuant to
clause (B) of paragraph (i) above, of the minimum amount and maximum amount
of each B Advance which such Lender would be willing to make as part of
such proposed B Borrowing (which amounts may, subject to the proviso to the
first sentence of this Section 2.03(a), exceed such Lender's Commitment,
if any), the rate or rates of interest therefor and such Lender's
Applicable Lending Office with respect to such B Advance; provided that if
the Agent in its capacity as a Lender shall, in its sole discretion, elect
to make any such offer, it shall notify the Borrower of such offer before
9:00 A.M. (New York City time) on the date on which notice of such election
is to be given to the Agent by the other Lenders. If any Lender shall
elect not to make such an offer, such Lender shall so notify the Agent,
before 9:30 A.M. (New York City time) on the date on which notice of such
election is to be given to the Agent by the other Lenders, and such Lender
shall not be obligated to, and shall not, make any B Advance as part of
such B Borrowing; provided that the failure by any Lender to give such
notice shall not cause such Lender to be obligated to make any B Advance
as part of such proposed B Borrowing or result in any liability to any
party to this Agreement.
(iii) The Borrower shall, in turn, (A) before 11:00 A.M. (New York
City time) on the date of such proposed B Borrowing, in the case of a
Notice of B Borrowing delivered pursuant to clause (A) of paragraph (i)
above and (B) before 11:00 A.M. (New York City time) three (3) Business
Days before the date of such proposed B Borrowing, in the case of a Notice
of B Borrowing delivered pursuant to clause (B) of paragraph (i) above,
either:
(x) cancel such B Borrowing by giving the Agent notice to that
effect, or
(y) accept one or more of the offers made by any Lender or
Lenders pursuant to paragraph (ii) above, in the Borrower's sole
discretion, by giving notice to the Agent of the amount of each B
Advance (which amount shall be equal to or greater than the minimum
amount, and equal to or less than the maximum amount, notified to the
Borrower by the Agent on behalf of such Lender for such B Advance
pursuant to paragraph (ii) above) to be made by each Lender as part
of such B Borrowing, and reject any remaining offers made by Lenders
pursuant to paragraph (ii) above by giving the Agent notice to that
effect.
(iv) If the Borrower notifies the Agent that such B Borrowing is
cancelled pursuant to paragraph (iii)(x) above, the Agent shall give prompt
notice thereof to the Lenders and such B Borrowing shall not be made.
(v) If the Borrower accepts one or more of the offers made by any
Lender or Lenders pursuant to paragraph (iii)(y) above, the Agent shall in
turn promptly notify (A) each Lender that has made an offer as described
in paragraph (ii) above, of the date and aggregate amount of such B
Borrowing and whether or not any offer or offers made by such Lender
pursuant to paragraph (ii) above have been accepted by the Borrower, (B)
each Lender that is to make a B Advance as part of such B Borrowing, of the
amount of each B Advance to be made by such Lender as part of such B
Borrowing, and (C) each Lender that is to make a B Advance as part of such
B Borrowing, upon receipt, that the Agent has received forms of documents
appearing to fulfill the applicable conditions set forth in Article III.
The Agent shall allocate the principal amount of each B Borrowing among the
Lenders whose offers were accepted by the Borrower in ascending order based
upon the rate of interest offered, from the lowest to the highest such
interest rate offered by such Lenders. Each Lender that is to make a B
Advance as part of such B Borrowing shall, before 12:00 noon (New York City
time) on the date of such B Borrowing specified in the notice received from
the Agent pursuant to clause (A) of the preceding sentence or any later
time when such Lender shall have received notice from the Agent pursuant
to clause (C) of the preceding sentence, make available for the account of
its Applicable Lending Office to the Agent at its address referred to in
Section 8.02 such Lender's portion of such B Borrowing, in same day funds.
Upon fulfillment of the applicable conditions set forth in Article III and
after receipt by the Agent of such funds, the Agent will make such funds
available to the Borrower at the Agent's aforesaid address. Promptly after
each B Borrowing the Agent will notify each Lender of the amount of the B
Borrowing, the consequent B Reduction and the dates upon which such B
Reduction commenced and will terminate.
(b) Each B Borrowing shall be in an aggregate amount of not less than
Twenty Million Dollars ($20,000,000) and an integral multiple of One Million
dollars ($1,000,000) if in excess thereof and, following the making of each B
Borrowing, the Borrower shall be in compliance with the limitation set forth in
the proviso to the first sentence of subsection (a) above.
(c) Within the limits and on the conditions set forth in this Section
2.03, the Borrower may from time to time borrow under this Section 2.03, repay
or prepay the principal of any B Borrowing pursuant to subsection (d) below, and
reborrow under this Section 2.03, provided that a B Borrowing shall not be made
within three (3) Business Days following the date of any other B Borrowing.
(d) The Borrower shall repay to the Agent for the account of each
Lender which has made a B Advance, or each other holder of a Series B Note, on
the maturity date of each B Advance (such maturity date being that specified by
the Borrower for repayment of such B Advance in the related Notice of B
Borrowing delivered pursuant to subsection (a)(i) above and provided in the
Series B Note evidencing such B Advance), the then unpaid principal amount of
such B Advance, provided that, the aggregate principal amount of any B Advance
outstanding on the Termination Date shall be repaid on the Termination Date.
Except as specified in Section 2.06(d) the Borrower shall have no right to
prepay, in whole or in part, the principal amount of any B Advance unless, and
then only on the terms, if any, specified by the Borrower for such B Advance in
the related Notice of B Borrowing delivered pursuant to subsection (a)(i) above
and set forth in the Series B Note evidencing such B Advance.
(e) The indebtedness of the Borrower resulting from each B Advance
made to the Borrower as part of a B Borrowing shall be evidenced by the Series
B Note of the Borrower payable to the Lender making such B Advance.
SECTION 2.04. General Provisions. (a) The Borrower shall have no
right to borrow, and no Lender shall have any obligation to lend, any amount
whatsoever on or after the Termination Date.
(b) The failure of any Lender to advance its Commitment in respect
of any Advance shall not relieve it or any other Lender of the obligation to
advance its Commitment, but no Lender or the Agent shall be responsible for the
failure of any other Lender to advance its Commitment to the Borrower.
(c) Each Notice of A Borrowing sent, and each notice of acceptance
of a B Borrowing given, by the Borrower shall be irrevocable and binding on the
Borrower. If for any reason on the Drawdown Date for the Advance specified in
a Notice of A Borrowing or Notice of B Borrowing, as the case may be, the
Advance is not made as a result of any failure to fulfill on or before the
Drawdown Date the applicable conditions precedent, the Borrower shall indemnify
each Lender against any loss, cost or expense incurred by such Lender as a
result of such failure, including, without limitation, any loss, cost or expense
incurred by reasons of the liquidation or reemployment of deposits or other
funds acquired by such Lender to fund the Advance to be made by such Lender as
part of such borrowing.
SECTION 2.05. Interest and Default Interest. (a) The Borrower shall
pay interest on the unpaid principal amount of each Advance from the Drawdown
Date until the principal amount of the Advance is paid in full, payable on each
Interest Payment Date for each such Advance. Notwithstanding the preceding
sentence of this Section 2.05(a), all interest accrued on any Advance
outstanding on the Termination Date shall be paid on the Termination Date.
(b) As long as any A Advance shall be outstanding, and payment of the
principal thereof and interest thereon shall not be in default, interest on the
A Advance shall be payable at an interest rate which shall be adjusted, in
advance at the start of the first day of each Interest Period therefor, and
which shall be determined as follows:
(i) with respect to each Base Rate Advance, the Borrower shall pay
interest thereon at the rate of interest determined by the Agent to be the
Base Rate for the relevant Interest Period as specified in the related
Notice of Borrowing, provided that if the Borrower shall fail to elect an
Interest Period in its Notice of Borrowing as herein provided or if an
Event of Default has occurred and is continuing, the Agent shall elect the
relevant Interest Period, which may be one (1) day;
(ii) with respect to each LIBOR Rate Advance, the Borrower shall pay
interest in one or more tranches thereon at an interest rate equal to the
sum of (y) the LIBOR Rate plus (z) the applicable margin for the relevant
Interest Period, determined by the Agent and subject to periodic
adjustment, as provided below in this Section 2.05(b)(ii) or, if the LIBOR
Rate is unavailable for any such period, at the Base Rate:
(A) with respect to each Interest Period relating to a LIBOR Rate
Advance, the Borrower shall, by telex notice to be received by the Agent
by 11 A.M. New York time on a Business Day at least three (3) Business Days
prior to the commencement of each such successive period, elect an Interest
Period of one, two, three or six months duration and one or more but no
more than six tranches in total for all outstanding LIBOR Rate Advances,
provided no tranche shall be in an amount less than Twenty Million Dollars
($20,000,000); provided the Borrower shall select Interest Periods, and if
necessary shall select as the final Interest Period for each LIBOR Rate
Advance an Interest Period less than one month in duration, so that the
maturity date of each Advance shall be the last day of the Interest Period
for such Advance; provided that if the Borrower shall fail to elect an
Interest Period as herein provided, the relevant Interest Period shall be
three (3) months, provided further that so long as any Event of Default has
occurred and is continuing, the Agent shall elect the relevant Interest
Period, which may be less than one month;
(B) the interest payable on each LIBOR Rate Advance during each
successive Interest Period shall be adjusted from time to time by the Agent
as follows. Notice of such applicable interest rate shall be delivered by
the Agent to the Borrower and the Lenders not later than the second
Business Day of each Interest Period. The Borrower shall, not later than
three (3) Business Days prior to the commencement of each such successive
Interest Period, together with its notice pursuant to subparagraph (A)
above, deliver to the Agent all then-current ratings, if any, of the
Borrower's Senior Unsecured Debt and Unsecured Subordinated Debt ("Senior
Debt" and "Subordinated Debt", respectively) given by Moody's Investors
Service ("Moody's") and by Standard & Poor's Corporation ("S & P") during
such Interest Period or an officer's certificate that no such ratings were
issued. If the Agent determines that on the last Business Day of an
Interest Period (or on the Business Day preceding the Drawdown Date, in the
case of the initial LIBOR Rate Advance) the Borrower's Senior Debt was
rated
(i) BB+ or below by S & P and Ba1 or below by Moody's, the
applicable rate for the succeeding Interest Period shall be
.6625% over the LIBOR Rate,
(ii) BBB- by S & P or Baa3 by Moody's, the applicable
interest rate for the succeeding Interest Period shall be
.4125% over the LIBOR Rate,
(iii) BBB by S & P or Baa2 by Moody's, the applicable
interest rate for the succeeding Interest Period shall be
.35% over the LIBOR Rate,
(iv) BBB+ by S & P or Baa1 by Moody's, the applicable
interest rate for the succeeding Interest Period shall be
.275% over the LIBOR Rate,
(v) A- by S & P or A3 by Moody's, the applicable interest
rate for the succeeding interest period shall be .20% over
the LIBOR Rate, and
(vi) at least A by S & P or A2 by Moody's, the applicable
interest rate for the succeeding interest period shall be
.18% over the LIBOR Rate.
In the event that S & P and Moody's provide different ratings for such Senior
Debt, the Agent shall use the higher rating in determining the applicable
interest rate. In the event the Borrower has no rated Senior Debt but the
Borrower's Subordinated Debt has been rated, for purposes of determining the
applicable interest rate, the Agent shall assume a Senior Debt rating equivalent
to one subgrade higher than the actual Subordinated Debt rating given during
such period. In the event that during any Interest Period the Agent shall not
have received notification of ratings from the Borrower as aforesaid or if no
such ratings exist during any Interest Period, the applicable interest rate for
the succeeding Interest Period shall be one percent (1%) over the LIBOR Rate;
(C) each Reference Lender which is a Lender agrees to furnish to the
Agent timely information for the purpose of determining the LIBOR Rate.
If any one or more of the Reference Lenders shall not timely furnish such
information to the Agent for the purpose of determining the interest rate,
the Agent shall determine such interest rate on the basis of information
timely furnished by the remaining Reference Lenders;
(D) the Agent shall give prompt notice to the Borrower and the
Lenders of the applicable interest rate determined by the Agent for
purposes of Section 2.05(b) and the applicable rate, if any, furnished by
each Reference Lender for the purpose of determining the applicable LIBOR
Rate hereunder;
(E) If, with respect to any LIBOR Rate Advances, the Majority Lenders
notify the Agent that the LIBOR Rate for any Interest Period for such
Advances will not adequately reflect the cost to such Majority Lenders of
making, funding or maintaining their respective LIBOR Rate Advances for
such Interest Period, the Agent shall forthwith so notify the Borrower and
the Lenders, whereupon
(1) each LIBOR Rate Advance will automatically, on the last day
of the then existing Interest Period therefor, Convert into a Base
Rate Advance, and
(2) the obligation of the Lenders to make, or to Convert A
Advances into, LIBOR Rate Advances shall be suspended until the Agent
shall notify the Borrower and such Lenders that the circumstances
causing such suspension no longer exist; and
(F) On the date on which the aggregate unpaid principal amount of A
Advances comprising any A Borrowing shall be reduced, by payment or
prepayment or otherwise, to less than Twenty Million Dollars ($20,000,000),
such A Advances shall, if they are Advances of a Type other than Base Rate
Advances, automatically Convert into Base Rate Advances, and on and after
such date the right of the Borrower to Convert such A Advances into
Advances of a Type other than Base Rate Advances shall terminate; provided,
however, that if and so long as each such A Advance shall be of the same
Type and have the same Interest Period as A Advances comprising another A
Borrowing or other A Borrowings, and the aggregate unpaid principal amount
of all such A Advances shall equal or exceed Twenty Million Dollars
($20,000,000), the Borrower shall have the right to continue all such A
Advances as, or to Convert all such A Advances into, Advances of such Type
having such Interest Period.
(c) As long as any B Advance shall be outstanding, and payment of the
principal thereof and interest thereon shall not be in default, interest on the
B Advance shall be paid at the rate of interest for such B Advance specified by
the Lender making such advance in its notice with respect thereto delivered
pursuant to subsection (a)(ii) of Section 2.03 above, payable on the Interest
Payment Date or Dates specified by the Borrower for such B Advance in the
related Notice of B Borrowing delivered pursuant to subsection (a)(i) of Section
2.03 above, as provided in the Series B Note evidencing such B Advance. With
respect to any LIBOR Rate Advance comprising part of a B Borrowing, the
provisions of subsections (b)(ii)(A), (C) and (D) of Section 2.05 shall apply
to the selection of any Interest Period not specified in the related Notice of
B Borrowing given pursuant to Section 2.03, and further, the provisos of such
subsection (b)(ii)(A), and subsection (b)(ii)(F) in its entirety, shall apply
to each such B Borrowing.
(d) In the event that the Agent or any Lender does not receive on the
due date any sum due under this Agreement or any of the other Loan Documents in
accordance with the terms hereof or thereof, the Borrower shall pay to the Agent
and such Lenders, as the case may be, on demand, interest on such sum, from and
including the due date thereof to but not including the date of actual payment,
at a rate per annum determined by the Agent from time to time to be the sum of
(y) two and three-quarters per cent (2-3/4%) plus (z) the LIBOR Rate applicable
for any such period or, if the LIBOR Rate is inapplicable or unavailable, for
any such period, the Base Rate. Except as otherwise provided in the following
subsection (e), any such interest which is not paid when due shall be compounded
at the end of each Interest Period (both before and after any notice of demand)
by the Agent on behalf of the Lenders under this Agreement.
(e) Notwithstanding any provision contained in any of the Loan
Documents, no Lender nor the Agent shall ever be entitled to receive, collect,
or apply, as interest on the Obligations, any amount in excess of the maximum
rate of interest permitted to be charged by applicable law, and, in the event
any Lender or the Agent ever receives, collects, or applies as interest, any
such excess, such amount which would be excessive interest shall be applied to
the reduction of the Obligations then outstanding, and, if the Obligations then
outstanding are paid in full, any remaining excess shall forthwith be paid to
the Borrower. In determining whether or not the interest paid or payable, under
any specific contingency, exceeds the highest lawful rate, the Borrower and the
Lender or the Agent, as the case may be, shall, to the maximum extent permitted
under applicable law, (i) characterize any non-principal payment as an expense,
fee, or premium rather than as interest, (ii) exclude any voluntary prepayments
and the effects thereof, and (iii) spread the total amount of interest
throughout the entire contemplated term of the Obligations so that the interest
rate is uniform throughout the entire term of the Obligations.
SECTION 2.06. Prepayments. (a) The Borrower may, upon at least four
(4) Business Days notice to the Agent and the Lenders received by 10:00 A.M. New
York time, and subject always to the requirements of Section 8.04(b), prepay,
pro rata, the outstanding amount of each A Advance, in whole or in part,
together, in each case, with accrued interest to the date of such prepayment on
the amount prepaid, provided that no such partial prepayment shall be in a
principal amount of less than Twenty Million Dollars ($20,000,000) and integral
multiples of One Million Dollars ($1,000,000) if in excess thereof.
The outstanding principal balance of A Advances owing each Lender as
of December 5, 1995 shall be prepaid in full not later than the first Interest
Payment Date of such A Advances falling after December 5, 1995.
(b) The Borrower may not, except as permitted under subsection (d)
of this Section 2.06, prepay any B Advance, except that the Borrower shall
prepay such amounts when required pursuant to the provisions of this Agreement.
(c) If it shall become unlawful for any Lender to continue to fund
or maintain any Advance or to perform its obligations hereunder, such Lender
shall notify the Borrower and the Agent, and such Lender shall use all
reasonable efforts to change its lending office so that it can perform its
obligations hereunder; provided that such Lender shall not be obligated to
change its lending office if in its sole reasonable judgment it would be
disadvantageous to do so. If such Lender does not change its lending office
because it determines in its sole reasonable judgment that it is disadvantageous
to do so or because such change would not render such Advance lawful, then such
Lender shall notify the Agent and the Borrower, and shall make an Advance, and
the Borrower shall borrow such A Advance, at the Base Rate in an amount equal
to the amount of the Advance currently outstanding and made by such Lender to
the Borrower if in the sole reasonable judgment of such Lender such A Advance
can lawfully be extended at the Base Rate. Simultaneously with making such A
Advance at the Base Rate, the Advance then outstanding made available by such
Lender to the Borrower shall be repaid by the Borrower. If any Lender makes a
Base Rate Advance to the Borrower pursuant to subsection (c) of this Section
2.06, the Borrower may prepay such Advance, without penalty, at any time upon
five (5) Business Days notice. If despite such Lender's compliance with the
preceding provisions of this Section 2.06(c), or if the Borrower shall refuse
to borrow an A Advance at the Base Rate as herein provided, and if it shall
become unlawful for any Lender to fund or maintain any Advance or perform its
obligations hereunder, upon demand by such Lender, the Borrower shall prepay in
full the outstanding Advance made by such Lender, with accrued interest thereon
and all other amounts payable by the Borrower hereunder, and upon such demand
or any notice of prepayment the obligation of such Lender to make any Advance
to the Borrower shall terminate.
(d) If at any time the Borrower shall, or may reasonably be expected
to, be required to deduct and withhold, or indemnify any Lender with respect to,
any Taxes (as defined in Section 2.09) (in each case, as evidenced by an opinion
reasonably satisfactory in form and substance to the Agent and the Lenders from
independent tax counsel reasonably satisfactory to the Agent and the Lenders)
the Borrower may, upon at least four (4) Business Days notice to the Agent and
the Lenders, prepay at any time, pro rata, the outstanding principal amount of
each Advance, in whole or in part, together with accrued interest to the date
of prepayment on the amount prepaid and all other amounts then payable to the
Lenders by the Borrower; provided, that if such Taxes relate to payments to
fewer than all the Lenders (the "Affected Lenders"), the Borrower may, upon at
least four Business Days notice to the Agent and the Affected Lenders, prepay,
in whole or in part, pro rata (except as set forth in the following provision),
the outstanding principal amount of Advances made by the Affected Lenders, with
accrued interest thereon and all other amounts payable to the Affected Lenders
by the Borrower (without prepaying any portion of any Advance made by any Lender
that is not any Affected Lender); provided further, that if the rate of Taxes
with respect to any Affected Lender is higher than with respect to another
Affected Lender, the Borrower may prepay any portion of the Advance made by the
former Affected Lender without prepaying any portion of the Advance made by the
latter Affected Lender. The Agent shall give prompt written notice to the
Lenders of any prepayments made under this paragraph (d).
(e) Prepayments of any A Advance shall be applied against
installments of outstanding principal in inverse order of maturity.
SECTION 2.07. Increased Costs; Additional Interest. (a) If on or
after the Closing Date due to (i) the introduction of or any change (including,
without limitation, any change by way of imposition or increase of reserve or
capital adequacy requirements, but not including a change related to Taxes or
Excluded Taxes, as such terms are defined in Section 2.09 hereof) in, or in the
interpretation of, any law or regulation, or (ii) the compliance by any Lender
with any guideline or request (not including any guideline or request with
respect to Taxes or Excluded Taxes, but including, with respect to reserve and
capital adequacy requirements, those applicable laws, policies, guidelines and
directives and interpretations in effect on the Closing Date) from any central
bank or other governmental authority, whether or not having the force of law,
there shall be any increase in the cost to, or reduction in the return on
capital of any Lender in consequence of, any Lender of agreeing to make or
making, funding or maintaining an Advance, then the Borrower shall from time to
time, upon demand by such Lender, pay to the Lender additional amounts
sufficient to indemnify such Lender against such increased cost or reduction in
the return on capital.
(b) If any Lender shall determine in good faith that reserves under
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time, are required to be maintained by it in respect of, or
a portion of its costs of maintaining reserves under Regulation D is properly
attributable to, one or more of its Advances, such Lender shall give notice to
the Borrower, together with a certificate as described below in Section 2.07(c)
and the Borrower shall pay to such Lender additional interest on the unpaid
principal amount of each such Advance, payable on the same day or days on which
interest is payable on such Advance, at an interest rate per annum equal at all
times during each Interest Period for such Advance to the excess of (i) the rate
obtained by dividing the LIBOR Rate for such Interest Period by a percentage
equal to 100% minus the Reserve Percentage (defined in the next sentence), if
any, applicable during such Interest Period over (ii) the LIBOR Rate for such
Interest Period. The "Reserve Percentage" for any such period, with respect to
any Advance, means the reserve percentage applicable thereto under regulations
issued from time to time by the Board of Governors of the Federal Reserve System
(or any successor) for determining the maximum reserve requirement (including,
but not limited to, any emergency, supplemental or other marginal reserve
requirement) for a member bank of the Federal Reserve System in New York City
with respect to (i) liabilities or assets consisting of or including
eurocurrency liabilities, as defined in Regulation D of the Board of Governors
of the Federal Reserve System, as in effect from time to time, and having a term
equal to any such period, or (ii) any other category of liabilities which
includes deposits by reference to which the interest rate on such Advance is
determined and which have a term equal to any such period.
(c) A certificate as to the amount of any such increased cost,
increased interest or reduced return under this Section 2.07, submitted to the
Borrower and the Agent by such Lender, shall be conclusive and binding for all
purposes, absent manifest error. Before making any demand under this
Section 2.07, the Lender shall designate as to itself a different lending office
if such designation would avoid the need for, or reduce the amount of such
increased cost or interest, and will not, in the sole reasonable judgment of
such Lender, be otherwise disadvantageous to it.
SECTION 2.08. Payments and Computations. (a) The Borrower shall make
each payment hereunder and under any instrument delivered hereunder (except as
otherwise provided in any such instrument) not later than 12:00 noon New York
City time on the day when due in lawful and freely transferable United States
Dollars to the Agent at the Agent's office at 399 Park Avenue, New York, New
York 10043, for the account of the Lending Office in same day funds. The Agent
shall promptly disburse to the Lenders funds of such type as it shall have
received in the manner provided by this Agreement.
(b) The Borrower hereby authorizes the Agent and each Lender, if and
to the extent payment is not made when due hereunder or under any instrument
delivered hereunder, to charge from time to time against any or all of the
Borrower's accounts with the Agent or such Lender, as the case may be, any
amount so due. The Borrower further agrees that not later than 12:00 noon (New
York City time) on each day on which a payment is due hereunder with respect to
the Advance or under any Note, it will have in its account maintained with the
Agent in New York City a credit balance at least equal to the total amount so
due on such day.
(c) All computations of interest and fees shall be made by the Agent
and the Lenders on the basis of a year of 360 days (365 or 366 with respect to
Base Rate computations) for the actual number of days (including the first day
but excluding the last day) occurring in the period for which such amount is
payable.
(d) Whenever any payment to be made hereunder or under any instrument
delivered hereunder shall be stated to be due, or whenever the last day of any
Interest Period would otherwise occur on a day other than a Business Day, such
payment shall be made, and the last day of such Interest Period shall occur, on
the next succeeding Business Day, and any such extension of time shall in all
cases be taken into account in the computation of payment of interest due
hereunder or otherwise; provided, however, if such extension would extend the
maturity date of any Advance or would cause such payment to be made, or the last
day of any Interest Period relating to a LIBOR Rate Advance to occur, in a new
calendar month, payment shall be made, and the last day of any such Interest
Period shall occur, on the next preceding Business Day.
SECTION 2.09. Taxes. (a) Any and all payments made by the Borrower
hereunder or under any instrument delivered hereunder shall be made free and
clear of and without deduction for any present or future taxes, levies, imposts,
deductions, charges, or withholdings, and all liabilities with respect thereto,
excluding (i) taxes imposed on net income by, and other franchise taxes of, the
United States or any political subdivision thereof (including, without
limitation, branch profits taxes imposed by the United States under Section
884(a) of the Code or any successor provision thereto, or similar taxes imposed
by any political sub-division or taxing authority thereof or therein, including
Puerto Rico), other than any such taxes that would not have been imposed but for
the Borrower's incorporation or residence in the jurisdiction imposing the tax
or the situs of any property securing the Notes in the jurisdiction imposing the
tax, (ii) taxes imposed on net income by any other jurisdiction (other than
solely by reason of the Borrower's incorporation or residence in such
jurisdiction or the situs of any property securing the Notes in such
jurisdiction), (iii) in the case of any payment to any entity not organized
under the laws of the United States, any taxes imposed by the United States
under Section 871 or 881 of the Code or any successor provision thereto or by
means of withholding at the source, and (iv) in the case of any payment to the
Agent or any Lender, taxes (including taxes imposed by means of withholding at
the source) imposed by any jurisdiction other than the United States which would
not have been imposed but for the failure of the Agent or such Lender (as the
case may be) to execute and return to the Borrower any form of notification,
certification, statement or other document which the Borrower shall have
delivered to the Agent or such Lender (as the case may be) a reasonable period
of time before such payment is due and which the Agent or such Lender (as the
case may be) is able to execute and return to the Borrower in good faith without
incurring any additional costs, risks or other disadvantages; provided, however,
that clause (iii) shall not apply if such tax would not be imposed but for an
amendment to or a change in any applicable law or regulation or in the
interpretation thereof by any regulatory authority (including, without
limitation, any change in an applicable tax treaty), which amendment or change
is enacted, promulgated or otherwise comes into force after the Closing Date (a
"Change of Law"), but only to the extent that such Lender or Agent, as the case
may be, cannot, after notice from the Borrower, through reasonable efforts
eliminate or reduce the amount of taxes payable (without additional costs
(unless the Borrower agrees to bear such costs) or other disadvantages or risks
(tax or otherwise) to such Lender or the Agent) by reason of such Change of Law
(all such excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities are hereinafter referred to as "Excluded Taxes"; all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities are hereinafter referred to as "Taxes"). If the Borrower shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder or under such instrument, (i) the sum payable shall be increased as
may be necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 2.08) the
Lender or the Agent, as the case may be, receives an amount equal to the sum it
would have received had no such deductions been made, (ii) the Borrower shall
make such deductions and (iii) the Borrower shall pay the full amount deducted
to the relevant taxation authority or other authority in accordance with
applicable law.
(b) In addition, the Borrower agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or under any
instrument delivered hereunder, or from the execution, delivery or registration
of, or otherwise with respect to, this Agreement or any instrument delivered
hereunder excluding any such taxes, charges or similar levies which arise from
the execution, delivery or registration of any instrument in accordance with
Section 7.10 hereof (all such non-excluded taxes, charges or similar levies are
hereinafter referred to as "Other Taxes").
(c) The Borrower will indemnify the Agent and each Lender for the
full amount of Taxes and Other Taxes (plus any taxes imposed by any jurisdiction
on amounts payable under this Section 2.09) paid by the Agent or such Lender,
as the case may be, on any and all payments made hereunder or on any instrument
delivered hereunder and any liability (including penalties, interest and
expenses, which result from the failure of the Borrower to perform its
obligations under the Loan Documents) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted;
provided, however, that the Agent or such Lender, as the case may be, will
timely notify the Borrower of the assertion of liabilities for any such Taxes
or Other Taxes and, provided that the Borrower is not in default hereunder,
shall, at the Borrower's request and expense, contest any such asserted
liability. This indemnification shall be made within thirty (30) days from the
date the Agent or the Lender, as the case may be, makes written demand therefor
with appropriate supporting documentation.
(d) Within thirty (30) days after the date of any payment by the
Borrower of Taxes, the Borrower will deliver to the Agent and each Lender, the
original or a certified copy of a receipt evidencing payment thereof. If no
Taxes are payable in respect of any payment, then, at the reasonable request of
the Agent, the Borrower will deliver to the Agent and each Lender a certificate
from each appropriate taxing authority or any political subdivision thereof, or
an opinion of counsel reasonably acceptable to the Agent and each Lender, in a
form reasonably acceptable to the Agent and each Lender to the effect that there
is a reasonable basis to conclude that such payment is exempt from or not
subject to Taxes; provided, however, that neither the Agent nor any other Lender
shall request, and the Borrower shall not be required to furnish, any such
opinions or certificates more frequently than annually.
(e) If the Borrower is required by law to make any deductions or
withholding from any payment made by it to the Agent or a Lender hereunder with
respect to Taxes and is further required by this Section 2.09 to pay and pays
such Taxes, or otherwise reimburses or indemnifies the Agent or a Lender
hereunder with respect to Taxes, and if such Lender or the Agent, as the case
may be, in good faith but in its sole reasonable opinion, determines that it has
received or been granted a credit against or relief or remission for, or
repayment of, any tax paid or payable by it in respect of or calculated with
reference to any Taxes paid, reimbursed or indemnified pursuant to this
Section 2.09, then such Lender or the Agent shall, to the extent that it can do
so without prejudice to the retention of the amount of such credit, relief,
remission or repayment, pay to the Borrower such amount as such Lender or the
Agent, as the case may be, shall, in good faith but in its sole opinion, have
determined to be attributable to such deduction or withholding, reimbursement
or indemnification. Any payment made by such Lender or the Agent under this
clause shall be conclusive evidence of the amount due to the Borrower hereunder
and shall be accepted by and binding upon the Borrower in full and final
settlement of its rights of reimbursement hereunder in respect of the relevant
deduction or withholding. Nothing herein contained shall interfere with the
right of any Lender or the Agent to arrange its tax affairs in whatever manner
it thinks fit and, in particular, none of the Agent nor any Lenders shall be
under any obligation to claim credit, relief, remission or repayment from or
against its corporate profits or similar tax liability in respect of the amount
of such deduction or withholding in priority to any other claims, reliefs,
credits or deductions available to it, nor shall the Agent or any Lender be
obliged to disclose any information relating to its tax affairs or any
computations in respect hereof.
(f) Each Lender which is organized under the laws of a jurisdiction
outside the United States agrees (i) to complete and deliver to the Borrower,
on or before the first Drawdown Date (or, in the case of an assignment pursuant
to Section 7.10 on or before the effective date of such assignment) and (so long
as it remains eligible to do so) from time to time thereafter two duly executed
copies of (A) Internal Revenue Service Form 1001 (certifying that it is entitled
to benefits under an income tax treaty to which the United States is a party)
or (B) Internal Revenue Service Form 4224 (certifying that the income receivable
pursuant to this Agreement is effectively connected with the conduct of a trade
or business in the United States) or (C) Internal Revenue Service Form W-8
(certifying that it is a foreign person), together with a tax certificate,
substantially in the form of Attachment III to Exhibit C hereto, as appropriate,
and (ii) to complete and deliver to the Borrower from time to time, so long as
it is eligible to do so, any successor or additional forms required in order to
secure an exemption from, or reduction in the rate of, U.S. withholding tax.
Each Lender represents that each such form delivered on or before the date
hereof is, and covenants that each such form delivered after the date hereof
shall be, true, correct, and complete with respect to all amounts payable to
such Lender pursuant to this Agreement, and covenants that such form shall
remain true, correct, and complete with respect to all amounts payable to such
Lender pursuant to this Agreement unless and until such Lender notifies the
Borrower otherwise in writing.
(g) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
subsections (a) through (d) of this Section 2.09, and the agreements and
obligations of the Agent and the Lenders contained in subsections (e) and (f)
of this Section 2.09, shall survive the payment in full of the Obligations and
the expiry of the Loan Documents.
SECTION 2.10. Fees. (a) On each Fee Payment Date, the Borrower
shall pay the Agent, solely for the account of each Lender, a non-refundable
commitment fee (as to each Lender, its "Commitment Fee") of .05% per annum of
each such Lender's respective Commitment, payable from the Closing Date, in
arrears, on the average daily undrawn portion of the Commitment, subject to
adjustment as herein provided. The applicable percentage rate per annum (the
"Rate") used to calculate the Commitment Fee shall be adjusted from time to time
by the Agent as follows. Notice of the Rate as adjusted shall be delivered by
the Agent to the Lenders and the Borrower not later than the fifth Business Day
of each calendar quarter. If the Agent determines that on the last Business Day
of a calendar quarter, the Borrower had Senior Debt rated
(i) BBB- or below by S & P or Baa3 or below by Moody's, the Rate for the
succeeding quarter shall be .125%,
(ii) BBB by S & P or Baa2 by Moody's, the Rate for the succeeding quarter shall
be .05%,
(iii) BBB+ by S & P or Baa1 by Moody's, the Rate for the succeeding quarter
shall be .05%, and
(iv) at least A- by S & P or A3 by Moody's, the Rate for the succeeding quarter
shall be .02%.
In the event that S & P and Moody's provide different ratings for such Senior
Debt, the Agent shall use the higher rating in determining the Rate. In the
event the Borrower has no rated Senior Debt but the Borrower's Subordinated Debt
has been rated, for purposes of determining the Rate the Agent shall assume a
Senior Debt rating equivalent to one subgrade higher than the actual
Subordinated Debt rating given during such period. In the event that the Agent
shall not have received ratings from the Borrower pursuant to Sections
2.05(b)(ii)(B) or 5.01(c)(vi) or if no such ratings exist during any quarter,
the Rate for the succeeding quarter will be .25%. Notwithstanding anything to
the contrary contained in this Agreement or in any other agreement, each
Lender's Commitment Fee shall be solely for the account of such Lender.
Notwithstanding the foregoing terms of this Section 2.10(a), effective upon the
Borrower's payment in full of all Commitment Fees accrued to and including
December 5, 1995, this Section 2.10(a) shall be null and void.
(b) On each Fee Payment Date, the Borrower shall pay the Agent,
solely for the account of each Lender, a non-refundable facility fee (as to each
Lender, its "Facility Fee"), of .08% per annum of each such Lender's respective
Commitment (such Commitment, irrespective whether drawn or undrawn, but subject
to reduction by a notice of termination of Commitments delivered by the Borrower
pursuant to Section 2.11 hereof, as to each Lender, the "Facility"), payable
from the Closing Date, in arrears, on the average amount of the Facility,
subject to adjustment as herein provided. The applicable percentage rate per
annum (the "Facility Rate") used to calculate the Facility Fee shall be adjusted
from time to time by the Agent as follows. Notice of the Facility Rate as
adjusted shall be delivered by the Agent to the Lenders and the Borrower not
later than the fifth Business Day of each calendar quarter. If the Agent
determines that on the last Business Day of a calendar quarter the Borrower had
Senior Debt rated
(i) BBB- or below by S & P or Baa3 or below by Moody's, the Facility
Rate for the succeeding quarter shall be .1875%,
(ii) BBB by S & P or Baa2 by Moody's, the Facility Rate for the
succeeding quarter shall be .15%,
(iii) BBB+ by S & P or Baa1 by Moody's, the Facility Rate for the
succeeding quarter shall be .125%, and
(iv) A- by S & P or A3 by Moody's, the Facility Rate for the
succeeding quarter shall be .08%, and
(v) at least A by S & P or A2 by Moody's, the Facility Rate for the
succeeding quarter shall be .07%.
In the event that S & P and Moody's provide different ratings for such Senior
Debt, the Agent shall use the higher rating in determining the Facility Rate.
In the event the Borrower has no rated Senior Debt but the Borrower's
Subordinated Debt has been rated, for purposes of determining the Facility Rate,
the Agent shall assume a Senior Debt rating equivalent to one subgrade higher
than the actual Subordinated Debt rating given during such period. In the event
the Agent shall not have received ratings from the Borrower pursuant to Section
2.05(b)(ii)(B) or 5.01(c)(vi) or if no such ratings exist during any such
quarter, the Facility Rate for the succeeding quarter will be .375%.
Notwithstanding anything to the contrary contained in this Agreement or any
other agreement, each Lender's Facility Fee shall be solely for the account of
such Lender.
(c) The Borrower shall pay the Agent for its own account on the
earlier of the Closing Date or the Drawdown Date, and not later than the
anniversary of such date of each year thereafter so long as any Commitment or
amount payable by the Borrower hereunder remains outstanding, an annual
administration fee in an amount mutually agreed between them.
(d) The Borrower shall pay on the earlier of the Closing Date or the
Drawdown Date to each Lender for its own account the participation fee (the
"Participation Fee") specified in the Invitation to Offer of Citibank, N.A.
dated May 26, 1993.
SECTION 2.11. Borrower's Termination of Commitments. So long as no
Event of Default has occurred and is continuing, the Borrower may by notice
delivered to the Agent terminate the Commitment of the Lenders, ratably, in any
amount not less than Twenty Million Dollars ($20,000,000) and integral multiples
of One Million Dollars ($1,000,000) if in excess thereof, provided that no such
termination shall be effective until four (4) Business Days following receipt
by the Agent of such notice. Each notice of termination given pursuant to this
Section 2.11 shall be irrevocable and binding when given and shall permanently
reduce the Commitment of each Lender ratably in accordance with its Percentage
Interest. No amount of the Commitment for which a notice of termination has
been given by the Borrower shall be available for borrowing under this
Agreement. The Agent shall give each Lender prompt notice of each notice of
termination of Commitment received from the Borrower.
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Conditions Precedent to Initial Advances. The
obligation of each Lender (other than the Designated Bidders) to make its
initial Advance is subject to the condition precedent that the Agent shall have
received on or before the Drawdown Date of the initial Borrowing the following,
each dated such day, in form and substance satisfactory to the Agent and (except
for the Notes) in sufficient copies for each Lender:
(a) The Series A Notes and the Series B Notes payable to the Lenders,
respectively.
(b) Certified copies of the resolutions of the Board of Directors of
the Borrower approving this Agreement and the Notes, and of all documents
evidencing other necessary corporate action and governmental approvals, if
any, with respect to this Agreement and the Notes.
(c) A certificate of the Secretary or an Assistant Secretary of the
Borrower certifying the names and true signatures of the officers of the
Borrower authorized to sign this Agreement and the Notes and the other
documents to be delivered hereunder.
(d) A favorable opinion of Alan R. Twaits, general counsel of the
Borrower, and of Messrs. Tapia, Linares y Alfaro, special Panamanian
counsel to the Borrower, substantially in the form of Exhibits E-1 and E-2,
respectively, hereto and as to such other matters as any Lender through the
Agent may reasonably request. The Borrower hereby instructs each such
counsel to deliver its opinion to the Agent and the Lenders.
(e) A favorable opinion of Messrs. Haight, Gardner, Poor & Havens,
special New York counsel to the Agent and the Lenders, as to such matters
as any Lender through the Agent may reasonably request.
(f) A letter from the Process Agent, referred to and defined in
Section 8.07 of this Agreement, in which it agrees to act as Process Agent
for the Borrower and to deliver forthwith to the Borrower all process
received by it as such Process Agent.
(g) Evidence of payment by the Borrower of all applicable documentary
stamp taxes (if any) payable in connection with the authorization,
execution and delivery of each of the Loan Documents, and the performance
of the transactions hereby or thereby contemplated, or an opinion of
counsel that no such taxes are payable.
(h) (x) An irrevocable notice, effective on or before the Closing
Date, from the Borrower and Wind Surf Limited reducing the Commitment (as
therein defined) to an aggregate of $200,000 (Two Hundred Thousand Dollars)
pursuant to the terms of that certain letter agreement dated May 25, 1993
respecting the Consent and Amendment No. 2 to the March 30, 1990 Loan
Agreement, and (y) an irrevocable notice, effective on or before the
Closing Date, from the Borrower terminating the Commitment (as therein
defined) pursuant to the terms of Section 2.11 of the U.S.$300,000,000
Revolving Credit Agreement dated as of August 19, 1992 by and among the
Borrower, the Agent and the banks named therein, and repayment in full
prior to the Closing Date of all notes issued thereunder.
SECTION 3.02. Conditions Precedent to Each A Borrowing. The
obligation of each Lender to make an A Advance on the occasion of each A
Borrowing (including the initial A Borrowing) shall be subject to the further
conditions precedent that on the Drawdown Date of such A Borrowing (a) the
following statements shall be true, and the Agent shall have received for the
account of such Lender a certificate signed by a duly authorized officer of the
Borrower, dated the date of such A Borrowing, stating that (and each of the
giving of the applicable Notice of A Borrowing and the acceptance by the
Borrower of the proceeds of such A Borrowing shall constitute a representation
and warranty by the Borrower that on the date of such A Borrowing such
statements are true):
(i) The representations and warranties contained in Section 4.01 are
correct on and as of the date of such A Borrowing, before and after giving
effect to such A Borrowing and to the application of the proceeds
therefrom, as though made on and as of such date, and
(ii) No Default or Event of Default has occurred and is continuing,
or would result from such A Borrowing or from the application of the
proceeds therefrom;
and (b) the Agent shall have received such other approvals, opinions or
documents as any Lender (other than the Designated Bidders) through the Agent
may reasonably request.
SECTION 3.03. Conditions Precedent to Each B Borrowing. The
obligation of each Lender which is to make a B Advance on the occasion of a B
Borrowing (including the initial B Borrowing) to make such B Advance as part of
such B Borrowing is subject to the conditions precedent that (i) the Agent shall
have received the written confirmatory Notice of B Borrowing with respect
thereto and (ii) on the Drawdown Date of such B Borrowing the following
statements shall be true (and each of the giving of the applicable Notice of B
Borrowing and the acceptance by the Borrower of the proceeds of such B Borrowing
shall constitute representation and warranty by the Borrower that on the date
of such B Borrowing such statements are true):
(a) The representations and warranties contained in Section 4.01 are
correct on and as of the date of such B Borrowing, before and after giving
effect to such B Borrowing and to the application of the proceeds
therefrom, as though made on and as of such date,
(b) No Default or Event of Default has occurred and is continuing,
or would result from such B Borrowing or from the application of the
proceeds therefrom, and
(c) No event has occurred and no circumstance exists as a result of
which the information concerning the Borrower that has been provided to the
Agent and each Lender by the Borrower in connection herewith would include
an untrue statement of a material fact or omit to state any material fact
or any fact necessary to make the statements contained therein, in the
light of the circumstances under which they were made, not misleading.
SECTION 3.04. Additional Conditions to Each Borrowing. The
obligation of the Lenders to make each Advance shall be subject to the further
conditions precedent that on the Drawdown Date of such Advance:
(a) the Borrower shall have paid or caused to be paid when due (i) to
the Agent, and the Agent shall have received, the Commitment Fee and the
Facility Fee payable to each Lender, and the Participation Fee payable to
each Lender, and (ii) to the Agent its annual administration fee;
(b) no material adverse change shall have occurred since November 30,
1994, in the business, operations, properties, prospects or condition
(financial or otherwise) of the Borrower or its Subsidiaries excluding
Specified Subsidiaries;
(c) all corporate or other proceedings, and all documents,
instruments and other legal matters in connection with the transactions
contemplated by the Loan Documents and the Transaction shall be
satisfactory in form and substance to each of the Lenders (other than the
Designated Bidders) and the Agent and their counsel; and
(d) the Agent and each Lender (other than the Designated Bidders)
shall have received such other approvals, opinions, or documents as they
may reasonably request.
SECTION 3.05. Conditions Precedent to Initial Advances to be Made on
or After December 5, 1995. The obligation of each Lender (other than the
Designated Bidders) to make its initial Advance on or after December 5, 1995 is
subject to the condition precedent that the Agent shall have received on or
before the Drawdown Date of such initial Borrowing made on or before December
5, 1995 the following, each dated such day, in form and substance satisfactory
to the Agent in sufficient copies for each Lender:
(a) The outstanding Series A Notes dated prior to December 5, 1995
payable to the Lenders, respectively, exchanged for Series A Notes payable
to the Lenders, respectively, reflecting the Commitment, severally and in
the aggregate, as the case may be, provided by this Agreement as amended
and restated and a Series B Note issued to each Lender then first acceding
to this Agreement.
(b) Certified copies of the resolutions of the Board of Directors of
the Borrower ratifying this Agreement and the Notes to be issued, and of
all documents evidencing other necessary corporate action and governmental
approvals, if any, with respect to this Agreement as amended and restated
and the Notes to be issued, and evidence, dated as of a recent date, of the
good standing of the Borrower.
(c) A certificate of the Secretary or an Assistant Secretary of the
Borrower certifying the names and true signatures of the officers of the
Borrower authorized to sign this Agreement as amended and restated and the
Notes to be issued and the other documents to be delivered hereunder.
(d) A favorable opinion of Arnaldo Perez, acting general counsel of
the Borrower, and of Messrs. Tapia, Linares y Alfaro, special Panamanian
counsel to the Borrower, substantially in the form of Exhibits E-1 and E-2
to this Agreement, respectively, hereto, referring however to this
Agreement as amended and restated the Notes issued in respect of such
initial Borrowing on or after December 5, 1995, and as to such other
matters as any Lender through the Agent may reasonably request.
(e) A favorable opinion of Messrs. Haight, Gardner, Poor & Havens,
special New York counsel to the Agent and the Lenders, as to such matters
as any Lender through the Agent may reasonably request.
(f) A letter from the Process Agent, referred to and defined in
Section 8.07, in which it confirms its agreement to act as Process Agent
for the Borrower and to deliver forthwith to the Borrower all process
received by it as such Process Agent.
(g) Evidence of the good standing of the Borrower in the Republic of
Panama, dated as of a recent date.
The Borrower hereby authorizes each Lender, in its discretion, to add
to each Series B Note held by such Lender a legend to the effect that, "This
Promissory Note is one of the Series B Notes referred to in, and is subject to
the terms and provisions and entitled to the benefits of, the Credit Agreement
dated as of July 1, 1993, as amended and restated as of December 5, 1995, by and
among the Borrower, the Lender, the Agent and the other Lenders named therein."
The Borrower agrees upon the request of any Lender to exchange such Lender's
outstanding Series B Note for a new Series B Note issued by the Borrower
containing the foregoing legend. Following receipt of any such request of a
Lender, the Borrower will deliver such newly-issued Series B Note to the Agent
for forwarding to such Lender in exchange for the outstanding Series B Note held
by such Lender, which shall thereupon be returned to the Borrower.
Upon the execution and delivery of this Agreement as amended and
restated, the Agent shall supplement Schedule I hereto by adding thereto as to
each Lender first becoming a party to this Agreement as of such date, the name,
address and other information required in Schedule I in respect of each Lender's
Domestic Lending Office and Eurodollar Lending Office.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Borrower. The
Borrower represents and warrants as follows:
(a) Due Existence; Compliance. The Borrower is a corporation duly
incorporated, validly existing and in good standing, under the laws of
Panama and has all requisite corporate power and authority under such laws
to own or lease and operate its properties and to carry on its business as
now conducted and as proposed to be conducted, and to execute, deliver and
perform its obligations under the Loan Documents, to which it is, or will
be, a party. Each of the Borrower and its Subsidiaries excluding Specified
Subsidiaries is duly qualified or licensed to do business as a foreign
corporation and is in good standing, where applicable, in all jurisdictions
in which it owns or leases property (including vessels), or proposes to own
or lease property (including vessels), or in which the conduct of its
business, and the conduct of its business upon consummation of the
Transaction, requires it to so qualify or be licensed, except to the extent
that the failure to so qualify or be in good standing would have no
material adverse effect on the business, operations, properties, prospects
or condition (financial or otherwise) of the Borrower and its Subsidiaries
excluding Specified Subsidiaries or the ability of any such Person to
perform its obligations under any of the Loan Documents to which it is or
may be a party. Each of the Borrower and its Subsidiaries excluding
Specified Subsidiaries is in compliance in all material respects with all
applicable laws, rules, regulations and orders.
(b) Corporate Authorities; No Conflicts. The execution, delivery and
performance by the Borrower of this Agreement and the other Loan Documents
to which it is or will be, a party are within its corporate powers and have
been duly authorized by all necessary corporate and stockholder approvals
and (i) do not contravene its charter or by-laws or any law, rule,
regulation, judgment, order or decree applicable to or binding on the
Borrower or its Subsidiaries excluding Specified Subsidiaries and (ii) do
not contravene, and will not result in the creation of any Lien under, any
provision of any contract, indenture, mortgage or agreement to which any
of the Borrower or its Subsidiaries excluding Specified Subsidiaries is a
party, or by which it or any of its properties are bound.
(c) Government Approvals and Authorizations. No authorization or
approval (including exchange control approval) or other action by, and no
notice to or filing with, any governmental authority or regulatory body is
required for the due execution, delivery and performance by or enforcement
against the Borrower of the Loan Documents (except such as have been duly
obtained or made and remain in full force and effect).
(d) Legal, Valid and Binding. Each of the Loan Documents is, or upon
delivery will be, the legal, valid and binding obligation of the Borrower,
enforceable against the Borrower in accordance with its terms (except as
enforcement may be limited by bankruptcy, moratorium, insolvency,
reorganization or similar laws generally affecting creditors' rights as
well as the award by courts of relief in lieu of specific performance of
contractual provisions).
(e) Financial Information. Each of the consolidated annual audited
balance sheet of the Borrower as at November 30, 1992, and the consolidated
quarterly unaudited balance sheet of the Borrower as at February 28, 1993,
and the related statements of operations and statements of cash flows of
the Borrower and its Subsidiaries for the fiscal year or fiscal quarter
then ended, as the case may be, copies of which have been furnished
heretofore by the Borrower to the Agent, fairly present the consolidated
financial condition of the Borrower and its Subsidiaries as at such date
and the results of the operations of the Borrower and its Subsidiaries for
the period ended on such date, all in accordance with GAAP consistently
applied (subject, in the case of the February 28, 1993 statements to normal
year-end audit adjustments). Since November 30, 1992, there has been no
material adverse change in the business, operations, properties or
condition (financial or otherwise) of the Borrower or any of its
Subsidiaries excluding Specified Subsidiaries.
(f) Litigation. There is not pending nor, to the knowledge of the
Borrower upon due inquiry and investigation, threatened any action or
proceeding affecting any of the Borrower or its Subsidiaries, by or before
any court, governmental agency or arbitrator, which reasonably could be
expected (i) to materially adversely affect the assets, business,
properties, prospects, operations or condition (financial or otherwise) of
the Borrower and its Subsidiaries taken as a whole, or (ii) to prohibit,
limit in any way or materially adversely affect the consummation of the
Transaction contemplated by the Loan Documents, including, without
limitation, the ability of the Borrower or its Subsidiaries to perform its
obligations under this Agreement or any Note.
(g) Immunities. Neither the Borrower nor any of its Subsidiaries,
nor the property of any of them, has any immunity from jurisdiction of any
court or from any legal process (whether through service or notice,
attachment prior to judgment, attachment in aid of execution, execution or
otherwise) under the laws of the jurisdiction of its organization.
(h) No Taxes. There is no tax, levy, impost, deduction, charge or
withholding or similar item imposed (i) by Panama or the States of Florida
or New York, or by any political subdivision of any of the foregoing, on
or by virtue of the execution and delivery of these representations and
warranties, the execution or delivery or enforcement of this Agreement or
any Note or any other document to be furnished hereunder or thereunder,
provided with respect to Florida that each Note is executed outside Florida
and, subsequent to its execution outside Florida, that it is not brought
into Florida at any time, or (ii) by Panama or the States of Florida or New
York, or by any political subdivision of any of the foregoing, on any
payment to be made by the Borrower pursuant to this Agreement or any Note,
other than taxes on or measured by net income imposed by any such
jurisdiction in which the Lender has its situs of organization or a fixed
place of business.
(i) No Filing. To ensure the legality, validity, enforceability or
admissibility in evidence of this Agreement or any Note in each of Panama
and the States of Florida and New York, it is not necessary that this
Agreement or any Note, or any other document related to any thereof, be
filed or recorded with any court or other authority in such jurisdiction,
or that any stamp or similar tax be paid on or with respect to this
Agreement or any Note except to the extent provided in (h) above.
(j) No Defaults. There does not exist (i) any event of default, or
any event that with notice or lapse of time or both would constitute an
event of default, under any agreement to which any of the Borrower or any
of its Subsidiaries is a party or by which any of them may be bound, or to
which any of their properties or assets may be subject, which default would
have a material adverse effect on the Borrower and its Subsidiaries taken
as a whole, or would materially adversely affect their ability to perform
their respective obligations under this Agreement or any Note, or (ii) any
event which is or would result in a Default or Event of Default.
(k) Margin Regulations. No part of the proceeds of the Loan will be
used for any purpose that violates the provisions of any of Regulations G,
T, U or X of the Board of Governors of the Federal Reserve System or any
other regulation of such Board of Governors. None of the Borrower nor any
of its Subsidiaries is engaged in the business of extending credit for the
purpose of purchasing or carrying margin stock, within the meaning of
Regulations G, T, U and X issued by the Board of Governors of the Federal
Reserve System.
(l) Investment Company Act. The Borrower is not an "investment
company" or a company "controlled" by an "investment company" (as each of
such terms is defined or used in the Investment Company Act of 1940, as
amended).
(m) Taxes Paid. (i) Each of the Borrower and its Subsidiaries
excluding Specified Subsidiaries (A) has filed or caused to be filed, or
has timely requested an extension to file or has received from the relevant
governmental authorities an extension to file, all material tax returns
which are required to have been filed, and (B) has paid all taxes shown to
be due and payable on said returns or extension requests or on any material
assessments made against it or any of its properties, and all other
material taxes, fees or other charges imposed on it or any of its
properties by any governmental authority (other than those the amount or
validity of which is currently being contested in good faith by appropriate
proceedings and with respect to which appropriate reserves in conformity
with GAAP have been provided on its books); and (ii) no material tax liens
have been filed and no material claims are being asserted with respect to
any such taxes, fees or other charges other than those the amount or
validity of which is currently being contested in good faith by appropriate
proceedings and with respect to which appropriate reserves in accordance
with GAAP have been provided on its books; provided, however, that the
representations and warranties made in subdivisions (i)(A) and (i)(B) of
this paragraph (m) with respect to HAL and the HAL Subsidiaries acquired
on or about January 17, 1989 are limited to tax returns required to be
filed with respect to the period from January 1, 1989 through the date
hereof.
(n) Disclosure. No representation, warranty or statement made or
document or financial statement provided by the Borrower or any Affiliate
or Subsidiary thereof, in or pursuant to this Agreement or any Note, or in
any other document furnished in connection therewith, is untrue or
incomplete in any material respect or contains any misrepresentation of a
material fact or omits to state any material fact necessary to make any
such statement herein or therein not misleading.
(o) Good Title. The Borrower has good title to its properties and
assets, except for (i) as permitted under this Agreement, existing or
future Liens, security interests, mortgages, conditional sales arrangements
and other encumbrances either securing Indebtedness or other liabilities
of the Borrower or any of its Subsidiaries, or which the Borrower in its
reasonable business judgment has determined would not be reasonably
expected to materially interfere with the business or operations of the
Borrower and its Subsidiaries as conducted from time to time, and
(ii) minor irregularities therein which do not materially adversely affect
their value or utility.
(p) ERISA. (i) No Insufficiency or Termination Event has occurred
or is reasonably expected to occur, and no "accumulated funding deficiency"
exists and no "variance" from the "minimum funding standard" has been
granted (each such term as defined in Part III, Subtitle B, of Title I of
ERISA) with respect to any Plan (other than any Multiemployer Plan or Plan
that has been terminated and all the liabilities of which have been
satisfied in full prior to March 30, 1990) in which the Borrower or any of
its Subsidiaries excluding Specified Subsidiaries is a participant.
(ii) None of the Borrower nor any ERISA Affiliate excluding Specified
Subsidiaries has incurred, or is reasonably expected to incur, any
Withdrawal Liability to any Multiemployer Plan.
(iii) None of the Borrower nor any ERISA Affiliate excluding Specified
Subsidiaries has received any notification that any Multiemployer Plan in
which it is a participant is in reorganization or has been terminated,
within the meaning of Title IV of ERISA, and no such Multiemployer Plan is
reasonably expected to be in reorganization or to be terminated within the
meaning of Title IV of ERISA.
(q) Tangible Net Worth. As of February 28, 1993 (subject to normal
year-end audit adjustments with respect to the consolidated quarterly
unaudited balance sheet of the Borrower as of such date) the Tangible Net
Worth of the Borrower was not less than One Billion One Hundred Seventy
Million Dollars ($1,170,000,000).
(r) Solvency. The Borrower is, and on each date a Lender advances
funds to it in respect of the Loan will be, Solvent.
ARTICLE V
COVENANTS OF THE BORROWER.
SECTION 5.01. Affirmative Covenants. So long as an Advance or any
other Obligation shall remain unpaid or any Lender shall have any Commitment
under this Agreement, the Borrower shall, unless the Agent on behalf of the
Lenders shall otherwise consent in writing in accordance with Section 7.04,
comply with each of the following affirmative covenants:
(a) Compliance with Laws. The Borrower shall comply, and cause each
of its Subsidiaries to comply, in all material respects with all applicable
laws, rules, regulations and orders, and to pay when due all taxes,
assessments and governmental charges imposed upon it or upon its property,
except to the extent contested in good faith by appropriate proceedings and
for which adequate reserves in conformity with GAAP have been provided.
(b) Use of Proceeds. The Borrower shall use all proceeds of the
Notes for such general corporate purposes as may be permitted under
applicable law, including support for its commercial paper programs, if
any, except that subject to receipt by the Agent from the Borrower of
written notice, the Borrower may use proceeds of the Notes up to the Dollar
amount specified in the Borrower's said notice to the Agent solely to
satisfy the Borrower's payment obligations as described in such notice,
provided that neither the Agent nor any Bank shall have any responsibility
as to the use of such proceeds.
(c) Financial Information; Defaults.
(i) The Borrower shall promptly inform the Agent of any event which
is or may become a default or breach of the Borrower's
obligations under the Loan Documents or result in a Default or
Event of Default, or any event which materially adversely
affects its ability fully to perform any of its obligations
under any Loan Document, or any event of default which has
occurred and is continuing under any material agreement to which
the Borrower or any of its Subsidiaries is a party;
(ii) As soon as the same become available, but in any event within
120 days after the end of each of its fiscal years, the Borrower
shall deliver to the Agent on behalf of the Lenders (A) audited
consolidated financial statements of (1) the Borrower and (2)
Kloster, if required other than by the Agent or the Lenders and
(B) unaudited consolidated financial statements of Kloster if
audited financial statements are not so required. All such
audited consolidated financial statements of the Borrower shall
set forth, in comparative form the corresponding figures for the
preceding fiscal year (excluding, as to any Subsidiary acquired
after the Closing Date, corresponding information for the period
preceding its acquisition); all such audited consolidated
financial statements shall be accompanied by an opinion thereon
of independent certified public accountants of recognized
national standing acceptable to the Agent, which opinion shall
state that said financial statements fairly present the
consolidated financial condition and results of operations of
each of (1) the Borrower and (2) Kloster, if required other than
by the Agent or the Lenders, as at the end of, and for, such
fiscal year;
(iii) As soon as the same become available and in any event
within 75 days after the end of each fiscal quarter of each
of its fiscal years, the Borrower shall deliver to the
Agent on behalf of the Lenders (A) unaudited consolidated
statements of income, retained earnings and cash flow of
(1) the Borrower, and (2) Kloster, in each case for each
such quarterly period and for the period from the beginning
of its then current fiscal year to the end of such period,
and (B) related unaudited consolidated balance sheets of
(1) the Borrower and (2) Kloster, in each case as at the
end of each such quarterly period. Delivery of the
Borrower's quarterly financial statements containing
information required to be filed with the Securities and
Exchange Commission on Form 10-Q (as in effect on the
Closing Date) shall satisfy the requirements of the first
sentence of this Section 5.01(c)(iii) insofar as they
relate to the Borrower on a consolidated basis, provided
however that such requirements shall not be satisfied if
the Borrower makes no such filings or if there is a
material change after the Closing Date in the form or
substance of financial disclosures and financial
information required to be set forth in Form 10-Q. All
such unaudited consolidated financial statements shall be
accompanied by a certificate of a senior financial officer
of the Borrower, which certificate shall state that such
financial statements fairly present the consolidated
financial condition and results of the operations of each
of (1) the Borrower and (2) Kloster, as at the end of, and
for, such period (subject to normal year end audit
adjustments) in accordance with GAAP, consistently applied;
(iv) Together with the financial statements to be delivered to the
Agent on behalf of the Lenders from time to time pursuant to
clauses (ii) and (iii) of this Section 5.01(c), the Borrower
shall deliver to the Agent a certificate of a senior financial
officer of the Borrower, which certificate shall (A) state that
the consolidated financial condition and operations of the
Borrower and its Subsidiaries are such as to be in compliance
with all of the provisions of Sections 5.01(d) and (k) and
5.02(a) and (j) of this Agreement, (B) set forth in reasonable
detail the computations necessary to determine whether the
provisions of Sections 5.01(d) and (k) and 5.02(a) and (j) have
been complied with, and (C) state that no Default or Event of
Default has occurred and is continuing;
(v) As soon as the same become available, but in any event not later
than January 15th of each calendar year beginning January 1994,
the Borrower shall deliver to the Agent a five (5) year cash
flow projection and the related income statement and a balance
sheet for the Borrower;
(vi) Promptly upon their becoming available, the Borrower shall
deliver to the Agent copies of all registration statements and
periodic reports which each of the Borrower and Kloster shall
have filed with the Securities and Exchange Commission or any
national securities exchange or market and any ratings (and
changes thereto) of its debt by Standard & Poor's Corporation
and Moody's Investors Service;
(vii) Promptly upon the mailing thereof to its shareholders, the
Borrower shall deliver to the Agent copies of all financial
statements and reports so mailed;
(viii) As soon as reasonably possible, the Borrower shall deliver
to the Agent copies of all reports and notices which it or
any of its Subsidiaries files under ERISA with the Internal
Revenue Service, the PBGC, the U.S. Department of Labor or
the sponsor of a Multiemployer Plan, or which it or any of
its Subsidiaries receives from the PBGC or the sponsor of
a Multiemployer Plan related to (a) any Termination Event
and (b) with respect to a Multiemployer Plan, (x) any
Withdrawal Liability, (y) any actual or expected
reorganization (within the meaning of Title IV of ERISA),
or (z) any termination of a Multiemployer Plan (within the
meaning of Title IV of ERISA);
(ix) From time to time on request, the Borrower shall furnish the
Agent and any of the Lenders with such information and
documents, and provide access to the books, records and
agreements of the Borrower, or any Subsidiary or Affiliate of
the Borrower, as the Agent or any of the Lenders may reasonably
require. All certificates, materials and documents to be
furnished by the Borrower under this Section 5.01(c) shall be
provided to the Agent in such number of copies as the Agent may
reasonably request and shall be furnished promptly by the Agent
to the Lenders; and
(x) Notwithstanding the other terms of this Section 5.01(c), the
Borrower shall have no obligation to provide the materials and
information required by this Section 5.01(c) respecting Kloster
or any other Specified Subsidiary in the event such Person is
not a Subsidiary of the Borrower.
(d) Financial Covenants. The Borrower shall ensure that:
(i) the ratio of its Total Debt to Total Capital, tested quarterly,
shall be at all times less than sixty percent (60%) during the
period through November 29, 1993, fifty-five percent (55%)
during the period November 30, 1993 through November 29, 1994
and fifty percent (50%) commencing November 30, 1994 and at all
times thereafter;
(ii) at the end of each fiscal quarter, the amount of its
Consolidated Cash Flow shall be, as at the end of each of the
four fiscal quarters immediately preceding covenant testing, at
least 125% of the sum of (i) the aggregate amount of (x)
dividend payments, (y) scheduled principal loan repayments and
(z) scheduled Capital Lease payments made, in respect of the
Borrower, on a consolidated basis excluding the Specified
Subsidiaries, in the four fiscal quarters immediately preceding
covenant testing;
(iii) at the end of each month, the sum of the unencumbered cash
plus the current value of short term investments (in
conformity with GAAP) of the Borrower and its Subsidiaries
excluding Specified Subsidiaries shall equal at least Fifty
Million Dollars ($50,000,000);
(iv) the Tangible Net Worth of the Borrower and its Subsidiaries
excluding Specified Subsidiaries shall exceed, on a fiscal
quarterly basis, the sum of (A) Eight Hundred Thirty-Five
Million Dollars ($835,000,000) and (B) fifty percent (50%) of
cumulative consolidated net income (excluding any losses) of the
Borrower and its Subsidiaries excluding Specified Subsidiaries
beginning December 1, 1992.
(e) Corporate Existence, Mergers. The Borrower shall preserve and
maintain in full force and effect its corporate existence and rights and
those of its Subsidiaries, and not merge or consolidate with or into, or
convey, transfer, lease or otherwise dispose of (whether in one transaction
or in a series of transactions) all or substantially all of its assets
(whether now owned or hereafter acquired) to, or acquire all or
substantially all of the assets of, any Person or permit any of its
Subsidiaries to do so, except that (v) any Subsidiary of the Borrower other
than a Specified Subsidiary may merge or consolidate with or into the
Borrower if the surviving entity is the Borrower, or transfer assets to,
or acquire assets of the Borrower so long as such assets do not constitute
all or substantially all of the assets of the Borrower, (w) any Subsidiary
of the Borrower other than a Specified Subsidiary may merge or consolidate
with or into, or transfer assets to, or acquire assets of, any other
Subsidiary of the Borrower other than a Specified Subsidiary, (x) the
Borrower and its Subsidiaries may acquire all or substantially all of the
assets of any Person if the surviving entity is the Borrower or such
Subsidiary, as the case may be, (y) any Specified Subsidiary may merge or
consolidate with or into, or transfer assets to, the Borrower or any of its
Subsidiaries, provided that the Borrower or such Subsidiary other than a
Specified Subsidiary is the surviving entity and (z) the Borrower may cause
the change of its jurisdiction by way of merger or otherwise, upon consent
of the Majority Lenders, which consent shall not unreasonably be denied;
provided, further, SCC (as therein defined) may be dissolved by appropriate
proceedings as set forth in the March 30, 1990 Loan Agreement.
Notwithstanding the foregoing, neither Windstar Sail Cruises Ltd.,
Carnival's Crystal Palace Hotel Corporation Limited nor any of their
respective Subsidiaries shall (y) acquire any of the assets of the Borrower
or any of its other Subsidiaries or (z) merge or consolidate with or into
the Borrower or any of its other Subsidiaries unless the resulting entity
is the Borrower or one of the Borrower's Subsidiaries other than Windstar
Sail Cruises Ltd. or any of its Subsidiaries or Carnival's Crystal Palace
Hotel Corporation Limited or any of its Subsidiaries.
(f) Insurance. The Borrower shall, and shall cause each of its
Subsidiaries to, insure and keep insured, with financially sound and
reputable insurers, so much of its properties, in such amounts and against
such risks, as to all the foregoing, in each case, reasonably satisfactory
to the Lenders and as are usually and customarily insured by companies
engaged in a similar business with respect to properties of a similar
character (other than with respect to the Vessels referred to in the March
30, 1990 Loan Agreement which shall be insured as therein provided).
(g) [Reserved.]
(h) [Reserved.]
(i) The Borrower's Stock. The Borrower shall ensure that at all
times the number of the issued and outstanding shares of its capital stock
at least sufficient to elect a majority of the Borrower's board of
directors shall be beneficially owned, directly or indirectly, by Mr. Ted
Arison or the members of his immediate family, free and clear of Liens in
favor of any other Person.
(j) [Reserved.]
(k) Solvency. The Borrower shall procure that it is and shall be at
all times Solvent.
(l) [Reserved.]
(m) Further Assurances. The Borrower shall, from time to time upon
the request of any Lender, accept for cancellation any Note or Notes held
by and payable to such Lender, and thereupon the Borrower shall execute and
deliver to such Lender, payable to it and its registered assigns, a
substitute Note or Notes in like form and total aggregate amount as the
canceled Note or Notes, but in any denomination not smaller than Ten
Million Dollars ($10,000,000) or such lesser amount as such Lender may
request (but not less than Five Million Dollars ($5,000,000)) as shall
constitute the outstanding principal of all outstanding Notes held by such
Lender. The Borrower shall do all things necessary to maintain each of the
Loan Documents as legal, valid and binding obligations, enforceable in
accordance with their respective terms by the Agent and the Lenders. The
Borrower shall take such other actions and deliver such instruments as may
be necessary or advisable, in the opinion of the Agent on behalf of the
Lenders to protect the rights and remedies of the Agent and the Lenders
under the Loan Documents.
SECTION 5.02. Negative Covenants. So long as any Advance or any
other Obligation shall remain unpaid or any Lender shall have any Commitment,
the Borrower shall not, unless the Agent on behalf of the Lenders shall
otherwise consent in writing in accordance with Section 7.04:
(a) Sale of Assets. Unless permitted by Section 5.01(e), during any
fiscal year, sell or otherwise dispose of, or permit any of its
Subsidiaries to sell or dispose of, in one or more transactions, assets
with a book value in excess of Two Hundred Fifty Million Dollars
($250,000,000) (but excluding any sale or disposition of any or all of the
assets or capital stock of Kloster, Windstar Sail Cruises Ltd. or
Carnival's Crystal Palace Hotel Corporation Limited or any of their
respective Subsidiaries).
(b) [Reserved.]
(c) [Reserved.]
(d) [Reserved.]
(e) Limitation on Payment Restrictions Affecting Subsidiaries.
Create or otherwise cause or suffer to exist or become effective any
consensual encumbrance or restriction (other than those contained in or
permitted by or through any other provision of this Agreement or the other
Loan Documents or the March 30, 1990 Loan Agreement, including those
contained in documents existing on the Closing Date evidencing Indebtedness
permitted by any of the foregoing) on the ability of any Subsidiary to
(i) pay dividends or make any other distributions on such Subsidiary's
capital stock or pay any Indebtedness owed to the Borrower or any of its
Subsidiaries, (ii) make loans or advances to the Borrower or any of its
Subsidiaries, or (iii) transfer any of its property or assets to the
Borrower or any of its Subsidiaries.
(f) Transactions with Officers, Directors and Shareholders. Enter
or permit any of its Subsidiaries to enter into any transaction or
agreement, including but not limited to any lease, Capital Lease, purchase
or sale of real property, purchase of goods or services, with any
Subsidiary, Affiliate or any officer, or director of the Borrower or of any
such Subsidiary or Affiliate, or any record or known beneficial owner of
equity securities of any such Subsidiary, any known record or beneficial
owner of equity securities of any such Affiliate or the Borrower, or any
record or beneficial owner of at least five percent (5%) of the equity
securities of the Borrower, except on terms that are no less favorable to
the Borrower or the relevant Subsidiary than those that could have been
obtained in a comparable transaction by the Borrower or such Subsidiary
with an unrelated Person and except between Subsidiaries which are
consolidated for financial reporting purposes with the Borrower.
(g) Compliance with ERISA. Become party to any prohibited
transaction, reportable event, accumulated funding deficiency or plan
termination, all within the meaning of ERISA and the Code with respect to
any Plan as to which there is an Insufficiency, nor permit any Subsidiary
to do so (except with respect to a Multiemployer Plan if the foregoing
shall result from the act or omission of a Person party to such
Multiemployer Plan other than the Borrower or its Subsidiary).
(h) Investment Company. Be or become an investment company subject
to the registration requirements of the Investment Company Act of 1940, as
amended, or permit any Subsidiary to do so.
(i) [Reserved.]
(j) Liens. Create or incur, or suffer to be created or incurred or
come to exist, any Lien in respect of Indebtedness on any vessel or other
of its properties or assets of any kind, real or personal, tangible or
intangible, included in the Borrower's consolidated balance sheet excluding
Specified Subsidiaries in accordance with GAAP, nor shall the Borrower
permit any of its Subsidiaries excluding Specified Subsidiaries to do any
of the foregoing. Solely for purposes of the preceding sentence the term
"Lien" shall not include (i) Liens with respect to Indebtedness under the
Swaps Documents and (ii) other Liens in respect of Indebtedness up to an
amount not greater than
40% (during its fiscal years 1993 and 1994) and
35% (after its fiscal year 1994)
of the amount of total assets of the Borrower as shown on its consolidated
balance sheet excluding Specified Subsidiaries (but excluding the value of any
intangible assets) for the relevant period.
(k) [Reserved.]
(l) Organizational Documents. Amend its articles of incorporation
(or similar charter documents) or by-laws (except for such amendments as
shall not adversely affect the rights and remedies of the Agent or any
Lender).
ARTICLE VI
DEFAULT
SECTION 6.01. Events of Default. If any of the following events
("Events of Default") shall occur and be continuing:
(a) The Borrower shall fail to pay any Facility Fee or Commitment
Fee, or any installment of principal of an Advance, when due, or shall fail
to pay any interest on any such Advance or fee within two (2) days after
such interest shall become due; or
(b) Any representation or warranty made by or on behalf of the
Borrower under or in connection with this Agreement or any of the other
Loan Documents shall prove to have been incorrect in any material respect
when made; or
(c) The Borrower shall fail to perform or observe any other term,
covenant or agreement contained in this Agreement or any of the other Loan
Documents on its part to be performed or observed and, in each case, any
such failure shall remain unremedied for ten (10) days after written notice
thereof shall have been given to the Borrower by the Agent or any Lender;
or
(d) The Borrower or any of its Subsidiaries excluding Specified
Subsidiaries shall fail to pay any amount or amounts due in respect of
Indebtedness in the aggregate amount in excess of Twenty Million Dollars
($20,000,000) (but excluding Indebtedness resulting from the Advances) of
the Borrower or such Subsidiary when due (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise), and such failure
shall continue after the applicable grace period, if any, specified in the
agreement or instrument relating to such Indebtedness; or any other default
under one or more agreements or instruments relating to Indebtedness in the
aggregate amount in excess of Twenty Million Dollars ($20,000,000) (but
excluding Indebtedness resulting from the Advances) of the Borrower or such
Subsidiary, or any other event, shall occur and shall continue after the
applicable grace period, if any, specified in such agreement or instrument,
if the effect of such default or event is to accelerate, or to permit the
acceleration of, the maturity of such Indebtedness; or any such
Indebtedness shall be declared to be due and payable, or required to be
prepaid (other than by a regularly scheduled required prepayment), prior
to the stated maturity thereof; or
(e)(1) The Borrower or any of its Subsidiaries excluding Specified
Subsidiaries shall (A) generally not pay its debts as such debts become
due, (B) threaten to stop making payments generally, (C) admit in writing
its inability to pay its debts generally, (D) make a general assignment for
the benefit of creditors, (E) not be Solvent or (F) be unable to pay its
debts;
(2) Any proceeding shall be instituted in any jurisdiction by or
against the Borrower or any of its Subsidiaries excluding Specified
Subsidiaries (A) seeking to adjudicate it a bankrupt or insolvent, (B)
seeking liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or (C)
seeking the entry of an administration order, an order for relief, or the
appointment of a receiver, trustee, or other similar official, for it or
for any substantial part of its property, provided, that, in the case of
any such proceeding instituted against but not by the Borrower or any of
its Subsidiaries excluding Specified Subsidiaries, such proceeding shall
remain undismissed or unstayed for a period of forty-five (45) days or any
of the relief sought in such proceeding (including, without limitation, the
entry of an order for relief against it or the appointment of a receiver,
trustee, custodian or other similar official for it or any substantial part
of its property) shall be granted; or
(3) (A) The Borrower or any of its Subsidiaries excluding Specified
Subsidiaries shall take any corporate action to authorize any of the
actions set forth above in subparagraph (e)(2) of this Section 6.01, or (B)
any director, or if one or more directors are elected and acting, any two
directors of the Borrower or any of its Subsidiaries excluding Specified
Subsidiaries, or any Person owning directly, or indirectly, shares of
capital stock of the Borrower or any of its Subsidiaries excluding
Specified Subsidiaries in a number sufficient to elect a majority of
directors of the Borrower or any of its Subsidiaries, shall take any
preparatory or other steps to convene a meeting of any kind of the Borrower
or any of its Subsidiaries excluding Specified Subsidiaries, or any meeting
is convened or any other preparatory steps are taken, for the purposes of
considering or passing any resolution or taking any corporate action to
authorize any of the actions set forth above in subparagraph (e)(2) of this
Section 6.01; or
(f) One or more judgments or orders for the payment of money, singly
or in the aggregate, in excess of an amount equal to Ten Million Dollars
($10,000,000) shall be rendered against the Borrower or any of its
Subsidiaries excluding Specified Subsidiaries and either (i) enforcement
proceedings shall have been commenced by any creditor upon such judgment
or order or (ii) there shall have elapsed any period of ten (10)
consecutive days during which a stay of enforcement of such judgment or
order, by reason of a pending appeal or otherwise, shall not have been in
effect; or
(g) An extraordinary event shall occur, or a material adverse change
affecting the business or operations of the Borrower shall occur, which
situation or change gives reasonable grounds to conclude that the Borrower
will not, or will be unable to, perform or observe in the normal course its
obligations under this Agreement or the Loan Documents; or
(h) Micky Arison or Ted Arison (or, in the event of his death, a
member of his immediate family or another Person acceptable to the Lenders)
shall cease to own, directly or indirectly, shares of capital stock of the
Borrower entitled to elect directors, in a number of shares at least
sufficient to elect a majority of directors of the Borrower; or
(i) Any material provision of any of the Loan Documents after
delivery thereof shall for any reason cease to be valid and binding on the
parties thereto (other than the Lenders and the Agent), or any party
thereto (other than a Lender or the Agent) shall so state in writing;
then, and in any such event, the Agent on direction of the Majority Lenders
(i) shall, by notice to the Borrower, declare the Commitment to be terminated,
whereupon the same shall forthwith terminate, and (ii) shall, by notice to the
Borrower, declare each Advance and the Notes, and all interest thereon and all
other amounts payable under this Agreement, to be forthwith due and payable
(except that no notice shall be required upon the occurrence of an Event of
Default described in paragraph (e) of this Section 6.01) whereupon each Advance,
each Note, all such interest and all such amounts shall become and be forthwith
due and payable without presentment, demand, protest or further notice of any
kind, all of which are hereby expressly waived by the Borrower.
ARTICLE VII
RELATION OF LENDERS; ASSIGNMENTS, DESIGNATIONS
AND PARTICIPATIONS
SECTION 7.01. Lenders and Agent. The general administration of this
Agreement and the Loan Documents shall be by the Agent, and each Lender hereby
authorizes and directs the Agent to take such action (including without
limitation retaining lawyers, accountants, surveyors or other experts) or
forbear from taking such action as in the Agent's reasonable opinion may be
necessary or desirable for the administration hereof (subject to any direction
of the Majority Lenders and to the other requirements of Section 7.04 hereof).
The Agent shall inform each Lender, and each Lender shall inform the Agent, of
the occurrence of any Event of Default promptly after obtaining knowledge
thereof; however, unless it has actual knowledge of an Event of Default, each
of the Agent and the Lenders may assume that no Event of Default has occurred.
SECTION 7.02. Pro Rata Sharing. If any Lender shall obtain any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) on account of the A Advances made by it (other than
pursuant to Section 2.06(c), 2.07 or 2.09) in excess of its ratable share of
payments on account of the A Advances obtained by all the Lenders, such Lender
shall forthwith purchase from the other Lenders such participations in the A
Advances made by them as shall be necessary to cause such purchasing Lender to
share the excess payment ratably with each of them, provided, however, that if
all or any portion of such excess payment is thereafter recovered from such
purchasing Lender, such purchase from each Lender shall be rescinded and such
Lender shall repay to the purchasing Lender the purchase price to the extent of
such recovery together with an amount equal to such Lender's ratable share
(according to the proportion of (i) the amount of such Lender's required
repayment to (ii) the total amount so recovered from the purchasing Lender) of
any interest or other amount paid or payable by the purchasing Lender in respect
of the total amount so recovered. Any Lender so purchasing a participation from
another Lender pursuant to this Section 7.02 may, to the fullest extent
permitted by law, exercise all its rights of payment with respect to such
participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation.
SECTION 7.03. Setoff. Upon (i) the occurrence and during the
continuance of any Event of Default and (ii) the making of the request or the
granting of the consent specified by Section 6.01 to authorize the Agent to
declare the Notes due and payable pursuant to the provisions of Section 6.01,
each Lender is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Lender to or for the credit or the
account of the Borrower against any and all of the obligations of the Borrower
now or hereafter existing under this Agreement and any Note held by such Lender,
whether or not such Lender shall have made any demand under this Agreement or
such Note and although such obligations may be unmatured. Each Lender agrees
promptly to notify the Borrower after any such set-off and application made by
such Lender, provided that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of each Lender under this
Section are in addition to other rights and remedies (including, without
limitation, other rights of set-off) which such Lender may have.
SECTION 7.04. Approvals. Upon any occasion requiring or permitting
an approval of any amendment or modification or any consent, waiver, declaring
an Event of Default or taking any action thereafter, or any other action on the
part of the Agent or the Lenders under any of the Loan Documents, (1) action may
(but shall not be required to) be taken by the Agent for and on the behalf or
for the benefit of all Lenders, provided (A) that no other direction of the
Majority Lenders shall have been previously received by the Agent, and (B) that
the Agent shall have received consent of the Majority Lenders to enter into any
written amendment or modification of the provisions of any of the Loan
Documents, or to consent in writing to any material departure from the terms of
any Loan Documents by the Borrower or any other party thereto or (2) action
shall be taken by the Agent upon the direction of the Majority Lenders, and any
such action shall be binding on all Lenders; provided further, however, that
unless all of the Lenders (other than the Designated Bidders) agree in writing
thereto, no amendment, modification, waiver, consent or other action with
respect to this Agreement or any of the Series A Notes shall be effective which
(a) increases the Commitment or increases the Percentage Interest of any of the
Lenders, (b) reduces any commission, fee, the principal or interest owing to any
Lender in respect of the Series A Notes hereunder or the method of calculation
of any thereof, (c) extends the Termination Date or the date on which any sum
in respect of the Series A Notes is due hereunder, (d) releases any collateral,
guaranty or other security, (e) amends the provisions of this Section 7.04 or
the definition of Majority Lenders, or (f) waives any condition for Borrowing
set forth in Article III.
SECTION 7.05. Exculpation. The Agent shall not be liable or
answerable for anything whatsoever in connection with any of the Loan Documents
or other instrument or agreement required hereunder or thereunder, including
responsibility in respect of the execution, delivery, construction or
enforcement of any of the Loan Documents or any such other instrument or
agreement, or for any action taken or not taken by the Agent in any case
involving exercise of any power or authority conferred upon the Agent under any
thereof, except for its wilful misconduct or gross negligence, and the Agent
shall have no duties or obligations other than as provided herein and therein.
The Agent shall be entitled to rely on any opinion of counsel (including counsel
for the Borrower or any of its Subsidiaries) in relation to any of the Loan
Documents or any other instrument or agreement required hereunder or thereunder
and upon writings, statements and communications received from the Borrower or
any of its Subsidiaries (including any representation made in or in connection
with any Loan Document), or from any other party to any of the Loan Documents
or any documents referred to therein or any other Person, firm or corporation
reasonably believed by it to be authentic, and the Agent shall not be required
to investigate the truth or accuracy of any writing or representation, nor shall
the Agent be liable for any action it has taken or omitted in good faith on such
reliance.
SECTION 7.06. Indemnification. Each Lender (other than any
Designated Bidder) agrees to indemnify the Agent, except to the extent
reimbursed by the Borrower and except in the case of any suit by any Lender
against the Agent resulting in a final judgment against the Agent, ratably
according to the aggregate principal amount of the Series A Notes then held by
it (or if no Series A Notes are outstanding or if any such Series A Notes are
held by Persons which are not Lenders, ratably according to the amount of its
Commitment) against all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever (except to the extent the foregoing results from the Agent's
gross negligence or wilful misconduct) which may be imposed on, incurred by or
asserted against the Agent in any way relating to or arising out of (y) any of
the Loan Documents or any other instrument or agreement contemplated hereunder
or thereunder or (z) any action taken or omitted by the Agent under any of the
Loan Documents or such other instrument or agreement.
SECTION 7.07. Agent as Lender. The Agent shall, in its individual
capacity, have the same rights and powers hereunder as any other Lender and may
exercise the same as though it were not an agent; the term "Lenders" shall
include the Agent in its individual capacity to the extent of its Percentage
Interest. The Agent and its Subsidiaries and Affiliates may accept deposits
from, lend money to, and generally engage in any kind of banking, trust or other
business with the Borrower and its Subsidiaries and Affiliates, as if it were
not the Agent.
SECTION 7.08. Notice of Transfer; Resignation; Successor Agent. (a)
The Agent may deem and treat a Lender party to this Agreement as the owner of
such Lender's interest in any Loan and any other instrument or agreement
contemplated hereunder or thereunder for all purposes hereof unless and until
a written notice of the assignment or transfer thereof, executed by such Lender
and otherwise in compliance with the requirements of Section 7.10 hereof, shall
have been received and accepted by the Agent. The Agent shall resign if
directed by the Majority Lenders for any reason. The Agent may not resign at
any time, except that, upon written notice to the Lenders and the Borrower, the
Agent may resign if in its judgement there exist or may occur reasons related
to conflict of interest, a change in, or violation of, law or regulation or
interpretation thereof, or such other occurrence that may prevent or impede the
Agent in discharging its duties hereunder faithfully and effectively in
accordance with their terms.
(b) Any successor Agent shall be appointed by the Majority Lenders
and shall be a bank or trust company reasonably satisfactory to the Borrower (so
long as no Event of Default shall have occurred and be continuing) and the
Majority Lenders. If no successor Agent shall have been so appointed by the
Majority Lenders, and shall have accepted such appointment, within 30 days after
the retiring Agent's giving of notice of resignation or the Majority Lender's
removal of the Agent, then such retiring Agent may, on behalf of the Lenders,
appoint a successor Agent, which shall be a commercial bank organized under the
laws of the United States of America or of any State thereof and having a
combined capital and surplus of at least $50,000,000. Upon the acceptance of
any appointment as Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations under this Agreement. After any
retiring Agent's resignation or removal hereunder as Agent, the provisions of
this Article VII shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Agent under this Agreement.
SECTION 7.09. Credit Decision; Not Trustee. Each Lender represents
that it has made, and agrees that it shall continue to make, its own independent
investigation of the financial condition and affairs of the Borrower and its
Subsidiaries, and its own appraisal of the creditworthiness of the Borrower and
its Affiliates and Subsidiaries in connection with the making and performance
of this Agreement. The Agent has and shall have no duty or responsibility
whatsoever on the date hereof or, except as otherwise expressly provided in this
Agreement at any time hereafter, to provide any Lender with any credit or other
information. Nothing herein shall (nor shall it be construed so as to)
constitute the Agent a trustee for the Borrower or its Subsidiaries or impose
on it any duties or obligations other than those for which express provision is
made in this Agreement or under the other Loan Documents.
SECTION 7.10. Assignments, Designations and Participation. (a) Each
Lender (other than the Designated Bidders) may assign to one or more banks or
other entities all or a portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of its Commitment,
the Advances owing to it and the Note or Notes held by it); provided, however,
that (i) each such assignment shall be of constant, and not a varying,
percentage of all rights and obligations under this Agreement (other than any
right to make B Advances, B Advances owing to it or Series B Notes), (ii) unless
the Borrower shall otherwise agree with the assigning Lender, the amount of the
Commitment of the assigning Lender being assigned pursuant to each such
assignment (determined as of the date of the Assignment and Acceptance with
respect to such assignment) that is not to a then existing Lender hereunder, or
to a Designated Bidder designated by a then existing Bank hereunder shall in no
event be less than Ten Million Dollars ($10,000,000) or such lesser amount as
shall constitute all of such assigning Bank's Commitment and the outstanding
principal of Notes payable to it, (iii) each such assignment shall be to an
Eligible Assignee, and (iv) the parties to each such assignment shall execute
and deliver to the Agent, for its acceptance and recording in the Register, an
Assignment and Acceptance, together with any Note or Notes subject to such
assignment and a processing and recordation fee of $3,000; provided further,
however, that each such assignment that is not to a then existing Lender
hereunder, or to a Designated Bidder designated by a then existing Bank
hereunder (x) shall be subject to the consent of the Borrower, which consent
shall not unreasonably be denied and which consent shall be deemed given unless
the Borrower gives the assigning Lender and the Agent written notice of and a
reasonable basis for its denial not later than five (5) Business Days following
(i) telex, telecopy or cable notice given to the Borrower by the assigning
Lender or the Agent of the name of the proposed transferee, the amount of
Commitment to be assigned and such information as the Borrower may reasonably
request for purposes of making an informed judgment, and, if the proposed
transferee is organized under the laws of a jurisdiction outside the United
States, (ii) transmission to the Borrower by telecopy of any one of the
following documents, properly completed and executed by the proposed transferee:
Internal Revenue Service Form 1001 (or any successor form), certifying that the
proposed transferee is entitled to benefits under an income tax treaty which
will exempt from United States Federal income tax the income receivable by the
proposed transferee pursuant to this Agreement, or Internal Revenue Service Form
4224 (or any successor form), certifying that the income receivable by the
proposed transferee pursuant to this Agreement will be effectively connected
with the conduct of a trade or business in the United States, or Internal
Revenue Service Form W-8 (or any successor form) certifying that it is a foreign
person together with a tax certificate, substantially in the form of Attachment
III to the Assignment and Acceptance, as appropriate. Any consent to assignment
untimely or unreasonably denied by the Borrower shall be void and of no effect,
and shall not preclude or bar any assignment otherwise permitted by this Section
7.10(a). Any assignment or purported assignment not in compliance with this
Section shall be void and of no effect. Without regard to any of the other
terms of this Agreement or of any other agreement, any Lender may assign, as
collateral or otherwise, any of its rights (including, without limitation,
rights to payments of principal and/or interest on the Notes) under this
Agreement to any Federal Reserve Bank of the United States without notice to or
consent of the Borrower, the Agent or any other Person. In case of any
assignment pursuant to this Section 7.10(a), the assignee shall not be entitled
to receive the portion (if any) of any amount otherwise payable under Section
2.07 or 2.09 hereof which exceeds the amount which would have been payable under
Section 2.07 or 2.09 (as the case may be) to the assignor with respect to the
rights and obligation so assigned. In the case of a transfer of any Note from
the accounting records of the office of a Lender where such Note was originally
recorded to the accounting records of any other office of such Lender, or a
change in the location of the Lending Office from that designated as of the
Closing Date, such Lender or the Agent, as the case may be, shall not be
entitled to receive the portion (if any) of any amount otherwise payable under
Section 2.07 or 2.09 hereof which exceeds the amount which would have been
payable under Section 2.07 or 2.09 (as the case may be) to such Lender or the
Agent, as the case may be, if such transfer or change had not been made. In the
case of a change in location, from the Closing Date, of the Lending Office,
unless the Borrower shall consent to such change, the Borrower shall not be
required to remit to the Agent pursuant to Section 2.07 or 2.09 hereof any
amount that exceeds the amount which would have been payable under Section 2.07
or 2.09 (as the case may be) if such change in location had not occurred. Upon
such execution, delivery, acceptance and recording, from and after the effective
date specified in each Assignment and Acceptance, and delivery of the tax forms
and other documents referred to in Section 2.09 hereof, (x) the assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance and subject to the foregoing, have the rights and obligations of a
Lender hereunder and (y) the Lender assignor thereunder shall, to the extent
that rights and obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights and be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be party
hereto).
(b) By executing and delivering an Assignment and Acceptance, the
Lender assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than as provided
in such Assignment and Acceptance, such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in connection with this Agreement or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement or any other instrument or document furnished pursuant hereto;
(ii) such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of any of the Borrower
or its Subsidiaries or the performance or observance by any of the Borrower or
its Subsidiaries of any of its obligations under this Agreement or any other
instrument or document furnished pursuant hereto; (iii) such assignee confirms
that it has received a copy of this Agreement, together with copies of the
financial statements referred to herein Sections 4.01(e) and 5.01(c), and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and Acceptance;
(iv) such assignee will, independently and without reliance upon the Agent, such
assigning Lender or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement; (v) such
assignee confirms that it is an Eligible Assignee; (vi) such assignee appoints
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement as are delegated to the Agent by the
terms hereof, together with such powers as are reasonably incidental thereto;
and (vii) such assignee agrees that it will perform in accordance with their
terms all of the obligations which by the terms of this Agreement are required
to be performed by it as a Lender.
(c) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an assignee representing that it is an Eligible Assignee,
the Agent shall, if such Assignment and Acceptance has been completed and is in
substantially the form of Exhibit C hereto and has attached thereto the forms
referred to in paragraph 3(vii) thereof, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register
(including the transfer of Notes to such Eligible Assignee by the assigning
Lender) and (iii) give prompt notice and an execution counterpart thereof to the
Borrower. Within five (5) Business Days after its receipt of such notice, the
Borrower, at its own expense, shall execute and deliver to the Agent in exchange
for the surrendered Note or Notes a new Note or new Notes, as the case may be,
of the same Series to the order of such Eligible Assignee in an amount equal to
the Commitment assumed by it pursuant to such Assignment and Acceptance and a
new Series B Note in substantially the form of Exhibit A-2 hereto, as the case
may be, and if the assigning Lender has retained a Commitment hereunder, a new
Series A Note to the order of the assigning Lender in an amount equal to the
Commitment retained by it hereunder. Such new Series A Note or Series A Notes
shall be in an aggregate principal amount equal to the aggregate principal
amount of such surrendered Series A Note or Series A Notes, shall be dated the
effective date of such Assignment and Acceptance and shall otherwise be in
substantially the form of Exhibit A-1 hereto.
(d) In addition each Lender (other than the Designated Bidders) may
designate one or more banks or other entities to have a right to make B Advances
as a Lender pursuant to Section 2.03; provided, however, that (i) no such Lender
shall be entitled to make more than two such designations with respect to any
particular B Borrowing, (ii) each such Lender making one or more of such
designations shall retain the right to make B Advances as a Lender pursuant to
Section 2.03, (iii) each such designation shall be to a Designated Bidder and
(iv) the parties to each such designation shall execute and deliver to the
Agent, for its acceptance and recording in the Register, a Designation
Agreement. Upon such execution, delivery, acceptance and recording, from and
after the effective date specified in each Designation Agreement, the designee
thereunder shall be a party hereto with a right to make B Advances as a Lender
pursuant to Section 2.03 and the obligations related thereto.
(e) By executing and delivering a Designation Agreement, the Lender
making the designation thereunder and its designee thereunder confirm and agree
with each other and the other parties hereto as follows: (i) such Lender makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other instrument or document
furnished pursuant hereto; (ii) such Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of any of
the Borrower or its Subsidiaries or the performance or observance by any of the
Borrower or its Subsidiaries of any of its obligations under this Agreement or
any other instrument or document furnished pursuant hereto; (iii) such designee
confirms that it has received a copy of this Agreement, together with copies of
the financial statements referred to in Section 4.01(e) and 5.01(c) and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into the Designation Agreement; (iv) such
designee will, independently and without reliance upon the Agent, such
designating Lender or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement; (v) such
designee confirms that it is a Designated Bidder; (vi) such designee appoints
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement as are delegated to the Agent by the
terms hereof, together with such powers as are reasonably incidental thereto;
and (vii) such designee agrees that it will perform in accordance with their
terms all of the obligations which by the terms of this Agreement are required
to be performed by it as a Lender.
(f) Upon its receipt of a Designation Agreement executed by a
designating Lender and a designee representing that it is a Designated Bidder,
the Agent shall, if such Designation Agreement has been completed and is
substantially in the form of Exhibit D hereto, (i) accept such Designation
Agreement, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the Borrower. Within five (5) Business Days
after its receipt of such notice, the Borrower, at its own expense, shall
execute and deliver to the Agent a new Series B Note to the order of such
Designated Bidder in substantially the form of Exhibit A-2 hereto.
(g) The Agent shall maintain at its address referred to in
Section 8.02 of this Agreement a register for the recordation of the names and
addresses of the Lenders and, with respect to Lenders other than Designated
Bidders, the Commitment of, and principal amount of the Advance owing and each
Note payable to, each Lender from time to time and a copy of each Assignment and
Acceptance and Designation Agreement delivered to and accepted by it (the
"Register"). The entries in the Register shall be conclusive and binding for
all purposes, absent manifest error, and the Borrower, the Agent and the Lenders
may treat each Person whose name is recorded in the Register as a Lender
hereunder for all purposes of this Agreement. The Register shall be available
for inspection by the Borrower or any Lender at any reasonable time and from
time to time upon reasonable prior notice and each shall be entitled to make
copies thereof at its expense.
(h) Each Lender and the Agent may grant participations to one or more
banks or other entities in or to all or any part of its rights and obligations
under this Agreement (including, without limitation, all or a portion of its
Commitment and the Advance owing to it); provided, however, that,
notwithstanding the grant of any such participation by any Lender, such
participation, and the right to grant such a participation, shall be expressly
subject to the following conditions and limitations: (i) such Lender's
obligations under this Agreement (including without limitation, its Commitment
to the Borrower hereunder) shall remain unchanged, (ii) such Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations, (iii) such Lender shall remain the holder of any such Note and
Advance for all purposes of this Agreement, (iv) the Borrower, the Agent and the
other Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement,
(v) such Lender shall continue to be able to agree to any modification or
amendment of this Agreement or any waiver hereunder without the consent,
approval or vote of any such participant or group of participants, other than
modifications, amendments, and waivers which (a) postpone the Termination Date
or any date fixed for any payment of, or reduce any payment of, principal of or
interest on such Lender's Advance or any fees or other amounts payable under
this Agreement, or (b) increase the amount of such Lender's Commitment, or
(c) change the interest rate payable under this Agreement, or (d) release all
or substantially all of any collateral or guaranty, provided that if a Lender
agrees to any modification or waiver relating to items (a) through (d), the
Borrower, the Agent and each other Lender may conclusively assume that such
Lender duly received any necessary consent of each of its participants and
(vi) except as contemplated by the immediately preceding clause (v), no
participant shall be deemed to be or to have any of the rights or obligations
of a "Lender" hereunder.
(i) Any Lender may, in connection with any assignment, designation
or participation or proposed assignment, designation or participation pursuant
to this Section 7.10, disclose to the assignee, Designated Bidder or
participant, or proposed assignee, designated bidder or participant, any
information relating to the Borrower or its Subsidiaries furnished to such
Lender by or on behalf of the Borrower, provided that the Person receiving such
information undertakes not to disclose it to a third party except pursuant to,
and subject to the conditions provided in, this Section 7.10.
SECTION 7.11 Managing Agent; Co-Agent. Each of the Managing Agent
and Co-Agent shall have no duties, responsibilities, rights or liabilities as
Managing Agent or Co-Agent, as the case may be, under this Agreement or any of
the other Loan Documents and, other than as a Lender, shall not be liable or
answerable for anything whatsoever in connection with any of the Loan Documents
or other instrument or agreement required hereunder or thereunder, including
responsibility in respect of the execution, delivery, construction or
enforcement of any of the Loan Documents or any such other instrument or
agreement, or for any action taken or not taken by any Person with respect
thereto. Each of the Managing Agent and Co-Agent has and shall have no duty or
responsibility whatsoever on the date hereof or at any time hereafter, to
provide any Bank with any credit or other information. Nothing herein shall
(nor shall it be construed so as to) constitute the Managing Agent or Co-Agent
a trustee for the Borrower or its Subsidiaries or impose on it any duties or
obligations whatsoever under this Agreement, the other Loan Documents, or
otherwise.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Amendments. No amendment, supplement or modification
to this Agreement shall be enforceable against the Borrower unless the same
shall be in writing and signed by the Borrower. No amendment or waiver of any
provision of this Agreement or any instrument delivered hereunder, nor consent
to any departure by the Borrower therefrom, shall in any event be effective
unless the same shall be in writing and signed by the Agent and, to the extent
required by Section 7.04 hereof, the Majority Lenders or each Lender, as the
case may be, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
SECTION 8.02. Notices. All notices, demands and other communications
provided for hereunder shall be in writing (including telegraphic communication)
and mailed, telexed, telecopied or telegraphed or delivered, if to the Borrower
at its address set forth below its signature herein written; and if to a Lender
other than the Agent, at its address set forth below its signature herein
written; or, as to each party, at such other address as shall be designated by
such party in a notice to the other parties hereto. All such notices and
communications shall, when mailed, telexed, telecopied, or telegraphed, be
effective upon the earliest of (i) actual receipt, (ii) seven days from the date
when deposited in the mails, or (iii) when (on a Business Day and during normal
business hours at the addressee's address) transmitted by telecopy or telex or
delivered to the telegraph company, respectively, except that notices and
communications to the Agent or any Lender pursuant to Article II hereof shall
not be effective until received by the Agent or such Lender.
SECTION 8.03. No Waiver; Remedies. Regardless of any fact known or
investigation undertaken by the Agent or any Lender, no failure on the part of
the Agent or any Lender to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder preclude any other or further exercise thereof
or the exercise of any other right. The remedies herein provided are cumulative
and not exclusive of any remedies provided by law.
SECTION 8.04. Costs, Expenses, Fees and Indemnities. (a) The
Borrower agrees to pay on demand (i) in connection with the preparation,
execution, and delivery of this Agreement and the instruments and other
documents to be delivered hereunder, (y) the reasonable fees and out-of-pocket
expenses of Messrs. Haight, Gardner, Poor & Havens, as special counsel for the
Agent and the Lenders (and any local counsel retained by such firm) with respect
to the closing of the Transaction and (z) all other costs and expenses of the
Lenders and the Agent (other than any other legal fees and related expenses
incurred by them) and (ii) after the Closing Date, all costs and expenses in
connection with the administration of this Agreement and the other instruments
and documents to be delivered hereunder, including, without limitation, the
reasonable fees and out-of-pocket expenses of any counsel for the Agent or the
Lenders in connection with advice given the Agent or the Lenders, from time to
time, as to their rights and responsibilities under this Agreement and such
instruments and documents. The Borrower shall not be liable to any Lender in
respect of any costs or expenses incurred in connection with any assignment or
grant of participation under Section 7.10 hereof. The Borrower further agrees
to pay on demand all losses, costs and expenses, if any (including, without
limitation, reasonable counsel fees and expenses), in connection with the
enforcement of this Agreement and the instruments and other documents delivered
hereunder, including, without limitation, losses, costs and expenses sustained
as a result of a Default by the Borrower in the performance of its obligations
contained in this Agreement or any instrument or document delivered hereunder.
(b) If, for any reason, including maturity or demand of the Loan
under Article VI, or prepayment of the Loan, in whole or in part, the Agent or
any of the Lenders receives payment of principal of or interest an Advance on
any day other than the last day of the Interest Period for such Advance
permitted under this Loan Agreement the Borrower shall pay to the Agent on
behalf of the Lenders on demand any amounts required to compensate the Lenders
for any breakage costs (including cost or expense incurred by reason of the
liquidation or reemployment of deposits or other funds in respect of such
payment) and any additional losses, costs or expenses which any Lender may incur
as a result of such payment, provided that the Lender shall have delivered to
the Agent and the Borrower, as the case may be, a certificate as to the amount
of such breakage costs, additional losses, costs or expenses, which certificate
shall be binding, absent manifest error, except that the failure of the Lender
to provide such certificate shall in no way relieve the Borrower of its
obligations under this Section 8.04(b).
(c) The Borrower agrees to indemnify and hold harmless each of the
Lenders and the Agent, and its and their respective Affiliates, directors,
officers, employees, agents, representatives, counsel and advisors (each an
"Indemnified Party") from and against any and all claims, damages, losses,
liabilities and expenses (including, without limitation, reasonable fees and
disbursements of counsel and the costs of investigation and defense thereof)
which may be incurred by or asserted or awarded against any Indemnified Party,
in each case based upon, arising out of or in connection with or by reason of,
the Transaction, including, without limitation, any act or failure to act by the
Agent where such act or failure to act was taken pursuant to the Borrower's
request or any transaction contemplated by this Agreement or any Loan Document,
whether or not any Advance hereunder is made, except to the extent that such
claim, damage, loss, liability or expense results from the gross negligence or
willful misconduct of such Indemnified Party. The indemnities of this Agreement
shall survive the termination of this Agreement and the other Loan Documents.
SECTION 8.05. [Reserved.]
SECTION 8.06. Judgment. (a) If for the purposes of obtaining
judgment in any court it is necessary to convert a sum due hereunder or under
any instrument delivered hereunder in United States Dollars into another
currency, the parties hereto agree, to the fullest extent permitted by law, that
the rate of exchange used shall be that at which in accordance with normal
banking procedures the Agent or the Lender, as the case may be, could purchase
United States Dollars with such other currency on the Business Day preceding
that on which final judgment is given.
(b) The obligation of the Borrower in respect of any sum due from it
to the Agent or any Lender hereunder or under such instrument shall,
notwithstanding any judgment in a currency other than United States Dollars, be
discharged only to the extent that on the Business Day following receipt by the
Agent or such Lender of any sum adjudged to be so due in such other currency the
Agent or such Lender, as the case may be, may in accordance with normal banking
procedures purchase United States Dollars with such other currency; if the
United States Dollars so purchased are less than the sum originally due to the
Agent or such Lender, as the case may be, in United States Dollars, the Borrower
agrees, as a separate obligation and notwithstanding any such judgment, to
indemnify the Agent or such Lender, as the case may be, against such loss, and
if the United States Dollars so purchased exceed the sum originally due to the
Agent or such Lender in United States Dollars, the Agent or such Lender shall
remit such excess to the Borrower.
SECTION 8.07. Consent to Jurisdiction; Waiver of Immunities. (a)
The Borrower hereby irrevocably submits to the jurisdiction of any New York
State court sitting in New York County and to the jurisdiction of the United
States District Court for the Southern District of New York in any action or
proceeding arising out of or relating to this Agreement or the Notes, and the
Borrower hereby irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined in such New York State or Federal court.
The Borrower hereby irrevocably waives, to the fullest extent it may effectively
do so, the defense of an inconvenient forum to the maintenance of such action
or proceeding. The Borrower hereby irrevocably appoints C T Corporation System
(the "Process Agent"), with an office on the date hereof at 1633 Broadway, New
York, New York 10019, United States, as its agent to receive on behalf of itself
and its property service of copies of the summons and complaint and any other
process which may be served in any such action or proceeding. Such service may
be made by mailing or delivering a copy of such process to the Borrower in care
of the Process Agent (or any successor thereto, as the case may be) at such
Process Agent's above address (or the address of any successor thereto, as the
case may be), and the Borrower hereby irrevocably authorizes and directs the
Process Agent (and any successor thereto) to accept such service on its behalf.
The Borrower shall appoint a successor agent for service of process should the
agency of C T Corporation System terminate for any reason, and further shall at
all times maintain an agent for service of process in New York, New York, so
long as there shall be outstanding any Obligations under the Loan Documents.
The Borrower shall give notice to the Agent of any appointment of successor
agents for service of process, and shall obtain from each successor agent a
letter of acceptance of appointment and promptly deliver the same to the Agent.
As an alternative method of service, the Borrower also irrevocably consents to
the service of any and all process in any such action or proceeding by the
mailing of copies of such process to it at its address specified in Section 8.02
hereof. Without waiver of its rights of appeal permitted by relevant law, the
Borrower agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law.
(b) Nothing in this Section 8.07 shall affect the right of the Agent
or any Lender to serve legal process in any other manner permitted by law, or
affect the right of the Agent or any Lender to bring any action or proceeding
against the Borrower or their respective properties in the courts of any other
jurisdiction.
(c) To the extent that the Borrower has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property, the
Borrower hereby irrevocably waives such immunity in respect of its obligations
under this Agreement and the Notes.
SECTION 8.08. Binding Effect; Merger; Severability; GOVERNING LAW.
(a) This Agreement shall become effective when it shall have been executed by
the Borrower and the Agent and when the Agent shall have been notified by each
Bank that such Bank has executed it and thereafter this Agreement shall be
binding upon, and shall inure to the benefit of the Borrower, the Agent and each
Lender, and their respective successors and assigns, except that the Borrower
shall not have the right to assign its rights hereunder or any interest herein.
Each Lender may, to the extent permitted under this Agreement, assign to any
other financial institution all or any part of, or any interest in, the Lender's
rights and benefits hereunder and under any instrument delivered hereunder, and
to the extent of such assignment such assignee shall have the same rights and
benefits against the Borrower as it would have had if it were the Lender
hereunder.
(b) The Loan Documents, together with all attachments and exhibits
to each of them and all other documents referenced herein and therein, and
delivered hereunder and thereunder and pursuant hereto and thereto, constitute
the entire agreement among the parties with respect to the subject matter hereof
and thereof, and supersede all prior and contemporaneous written and oral
understandings and agreements related thereto among the parties.
(c) If any word, phrase, sentence, paragraph, provision or section
of the Loan Documents shall be held, declared, pronounced or rendered invalid,
void, unenforceable or inoperative for any reason by any court of competent
jurisdiction, governmental authority, statute, or otherwise, such holding,
declaration, pronouncement or rendering shall not adversely affect any other
word, phrase, sentence, paragraph, provision or section of the Loan Documents,
which shall otherwise remain in full force and effect and be enforced in
accordance with their respective terms.
(d) This Agreement has been delivered in New York, New York. THIS
AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND BE CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK.
SECTION 8.09. Counterparts. This Agreement may be executed in as
many counterparts as may be deemed necessary or convenient and by each party
hereto on separate counterparts, each of which, when so executed, shall be
deemed as original, but all such counterparts shall constitute but one and the
same agreement.
SECTION 8.10. WAIVER OF JURY TRIAL. BY ITS SIGNATURE BELOW WRITTEN
EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT,
THE LOAN DOCUMENTS HEREIN DESCRIBED OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY.
[THE REMAINDER OF THIS PAGE WAS INTENTIONALLY LEFT BLANK.]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
CITIBANK, N.A., as Agent CARNIVAL CORPORATION
(formerly
CARNIVAL CRUISE LINES, INC.)
By:______________________________
Title:
Address: 399 Park Avenue By:______________________________
Shipping Department Title:
8th Floor Address: 3655 N.W. 87th Avenue
New York, NY 10043 Miami, Florida 33178-2198
Attention: Chairman and
Telephone: (212) 559-5604 Chief Executive Officer
Telex: 425 727
Answerback: NY Telephone: (305) 599-2600
Telecopy: (212) 793-3588 Telex: 519206
Answerback: CARNOP
Telecopy: (305) 471-4700
________________________, _________________________,
as Managing Agent as Co-Agent
By:_____________________ By: _____________________
Title: Title:
Address: Address:
Telephone: Telephone:
Telex: Telex:
Answerback: Answerback:
Telecopy: Telecopy:
</TABLE>
U.S. $250,000,000
REVOLVING CREDIT AGREEMENT
DATED AS OF DECEMBER 5, 1995
By And Among
CARNIVAL CORPORATION,
as Borrower,
and
CITIBANK, N.A.,
as Agent,
CIBC, INC., COMMERZBANK A.G., ATLANTA AGENCY, AND ROYAL
BANK OF CANADA,
as Managing Agents,
BARNETT BANK OF SOUTH FLORIDA, N.A., CREDIT LYONNAIS CAYMAN
ISLAND BRANCH, THE DAI-ICHI KANGYO BANK, LIMITED, ATLANTA AGENCY,
FIRST UNION NATIONAL BANK OF FLORIDA, THE FUJI BANK, LIMITED, NEW
YORK BRANCH, THE INDUSTRIAL BANK OF JAPAN, LIMITED, ATLANTA
AGENCY, THE MITSUBISHI BANK, LIMITED - NEW YORK BRANCH,
NATIONSBANK OF FLORIDA, N.A., SAKURA BANK AND THE SUMITOMO BANK,
LIMITED, ATLANTA AGENCY,
as Co-Agents,
and
CITIBANK, N.A., BANCA DI ROMA - HOUSTON AGENCY, BANK OF HAWAII,
THE BANK OF NOVA SCOTIA, BARNETT BANK OF SOUTH FLORIDA, N.A.,
CIBC, INC., COMMERZBANK A.G., ATLANTA AGENCY, CREDIT LYONNAIS,
CAYMAN ISLAND BRANCH, THE DAI-ICHI KANGYO BANK, LIMITED, ATLANTA
AGENCY, FIRST UNION NATIONAL BANK OF FLORIDA, THE FUJI BANK,
LIMITED, NEW YORK BRANCH, THE INDUSTRIAL BANK OF JAPAN, LIMITED,
ATLANTA AGENCY, LANDESBANK HOLSTEIN-SCHLESWIG GIROZENTRALE,
THE MITSUBISHI BANK, LIMITED - NEW YORK BRANCH, MORGAN GUARANTY
TRUST COMPANY OF NEW YORK, NATIONAL WESTMINSTER BANK PLC,
NATIONSBANK OF FLORIDA, N.A., NORTHERN TRUST COMPANY, ROYAL
BANK OF CANADA, SAKURA BANK, THE SANWA BANK LIMITED, ATLANTA
AGENCY, THE SUMITOMO BANK, LIMITED, ATLANTA AGENCY, SUNTRUST
BANK, MIAMI, N.A., UNITED STATES NATIONAL BANK OF OREGON AND
THE YASUDA TRUST AND BANKING COMPANY, LIMITED,
as Banks.<PAGE>
<TABLE>
<CAPTION>
Table of Contents
<S>
<C>
Page
PARTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
PRELIMINARY STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.01 Definitions. . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02 Accounting Terms . . . . . . . . . . . . . . . . . . . .13
Section 1.03 Governing Language . . . . . . . . . . . . . . . . . . .13
Section 1.04 Computation of Time Periods. . . . . . . . . . . . . . .13
ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES . . . . . . . . . . . . . .13
Section 2.01 The A Advances . . . . . . . . . . . . . . . . . . . . .13
Section 2.02 Making the A Advances. . . . . . . . . . . . . . . . . .14
Section 2.03 The B Advances . . . . . . . . . . . . . . . . . . . . .15
Section 2.04 General Provisions . . . . . . . . . . . . . . . . . . .18
Section 2.05 Interest and Default Interest. . . . . . . . . . . . . .19
Section 2.06 Prepayments. . . . . . . . . . . . . . . . . . . . . . .23
Section 2.07 Increased Costs; Additional Interest . . . . . . . . . .24
Section 2.08 Payments and Computations. . . . . . . . . . . . . . . .25
Section 2.09 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . .26
Section 2.10 Fees . . . . . . . . . . . . . . . . . . . . . . . . . .29
Section 2.11 Borrower's Termination of Commitments; Extension
of Termination Date . . . . . . . . . . . . . . . . . . . . .30
Section 2.12 Conversion to Term Loan. . . . . . . . . . . . . . . . .31
ARTICLE III CONDITIONS OF LENDING. . . . . . . . . . . . . . . . . . . . . .33
Section 3.01 Conditions Precedent to Initial Advances . . . . . . . .33
Section 3.02 Conditions Precedent to Each A Borrowing . . . . . . . .34
Section 3.03 Conditions Precedent to Each B Borrowing . . . . . . . .34
Section 3.04 Additional Conditions to Each Borrowing. . . . . . . . .35
ARTICLE IV REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . .36
Section 4.01 Representations and Warranties of
the Borrower. . . . . . . . . . . . . . . . . . . . . . . . .36
(a) Due Existence; Compliance . . . . . . . . . . . . . . . . . .36
(b) Corporate Authorities; No Conflicts . . . . . . . . . . . . .36
(c) Government Approvals and Authorizations . . . . . . . . . . .36
(d) Legal, Valid and Binding. . . . . . . . . . . . . . . . . . .37
(e) Financial Information . . . . . . . . . . . . . . . . . . . .37
(f) Litigation. . . . . . . . . . . . . . . . . . . . . . . . . .37
(g) Immunities. . . . . . . . . . . . . . . . . . . . . . . . . .37
(h) No Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . .37
(i) No Filing . . . . . . . . . . . . . . . . . . . . . . . . . .38
(j) No Defaults . . . . . . . . . . . . . . . . . . . . . . . . .38
(k) Margin Regulations. . . . . . . . . . . . . . . . . . . . . .38
(l) Investment Company Act. . . . . . . . . . . . . . . . . . . .38
(m) Taxes Paid. . . . . . . . . . . . . . . . . . . . . . . . . .38
(n) Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . .39
(o) Good Title. . . . . . . . . . . . . . . . . . . . . . . . . .39
(p) ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
(q) Tangible Net Worth. . . . . . . . . . . . . . . . . . . . . .40
(r) Solvency. . . . . . . . . . . . . . . . . . . . . . . . . . .40
ARTICLE V COVENANTS OF THE BORROWER. . . . . . . . . . . . . . . . . . . . .40
Section 5.01 Affirmative Covenants. . . . . . . . . . . . . . . . . .40
(a) Compliance with Laws. . . . . . . . . . . . . . . . . . . . .40
(b) Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . .40
(c) Financial Information; Defaults . . . . . . . . . . . . . . .41
(d) Financial Covenants . . . . . . . . . . . . . . . . . . . . .43
(e) Corporate Existence, Mergers. . . . . . . . . . . . . . . . .44
(f) Insurance . . . . . . . . . . . . . . . . . . . . . . . . . .44
(g) [Reserved]. . . . . . . . . . . . . . . . . . . . . . . . . .45
(h) [Reserved]. . . . . . . . . . . . . . . . . . . . . . . . . .45
(i) The Borrower's Stock. . . . . . . . . . . . . . . . . . . . .45
(j) [Reserved]. . . . . . . . . . . . . . . . . . . . . . . . . .45
(k) Solvency. . . . . . . . . . . . . . . . . . . . . . . . . . .45
(l) [Reserved]. . . . . . . . . . . . . . . . . . . . . . . . . .45
(m) Further Assurances. . . . . . . . . . . . . . . . . . . . . .45
Section 5.02 Negative Covenants . . . . . . . . . . . . . . . . . . .45
(a) Sale of Assets. . . . . . . . . . . . . . . . . . . . . . . .45
(b) [Reserved]. . . . . . . . . . . . . . . . . . . . . . . . . .46
(c) [Reserved]. . . . . . . . . . . . . . . . . . . . . . . . . .46
(d) [Reserved]. . . . . . . . . . . . . . . . . . . . . . . . . .46
(e) Limitation on Payment Restrictions
Affecting Subsidiaries. . . . . . . . . . . . . . . . . . . .46
(f) Transactions with Officers, Directors
and Shareholders. . . . . . . . . . . . . . . . . . . . . . .46
(g) Compliance with ERISA . . . . . . . . . . . . . . . . . . . .46
(h) Investment Company. . . . . . . . . . . . . . . . . . . . . .46
(i) [Reserved]. . . . . . . . . . . . . . . . . . . . . . . . . .46
(j) Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . .47
(k) [Reserved]. . . . . . . . . . . . . . . . . . . . . . . . . .47
(l) Organizational Documents. . . . . . . . . . . . . . . . . . .47
ARTICLE VI DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . . . .47
Section 6.01 Events of Default. . . . . . . . . . . . . . . . . . . .47
ARTICLE VII RELATION OF LENDERS; ASSIGNMENTS, DESIGNATIONS
AND PARTICIPATIONS. . . . . . . . . . . . . . . . . . . . . .50
Section 7.01 Lenders and Agent. . . . . . . . . . . . . . . . . . . .50
Section 7.02 Pro Rata Sharing . . . . . . . . . . . . . . . . . . . .50
Section 7.03 Setoff . . . . . . . . . . . . . . . . . . . . . . . . .51
Section 7.04 Approvals. . . . . . . . . . . . . . . . . . . . . . . .51
Section 7.05 Exculpation. . . . . . . . . . . . . . . . . . . . . . .51
Section 7.06 Indemnification. . . . . . . . . . . . . . . . . . . . .52
Section 7.07 Agent as Lender. . . . . . . . . . . . . . . . . . . . .52
Section 7.08 Notice of Transfer; Resignation;
Successor Agent . . . . . . . . . . . . . . . . . . . . . . .52
Section 7.09 Credit Decision; Not Trustee . . . . . . . . . . . . . .53
Section 7.10 Assignments, Designations and Participation. . . . . . .53
Section 7.11 Managing Agent; Co-Agent . . . . . . . . . . . . . . . .58
ARTICLE VIII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . .59
Section 8.01 Amendments . . . . . . . . . . . . . . . . . . . . . . .59
Section 8.02 Notices. . . . . . . . . . . . . . . . . . . . . . . . .59
Section 8.03 No Waiver; Remedies. . . . . . . . . . . . . . . . . . .59
Section 8.04 Costs, Expenses, Fees and Indemnities. . . . . . . . . .59
Section 8.05 [Reserved] . . . . . . . . . . . . . . . . . . . . . . .61
Section 8.06 Judgment . . . . . . . . . . . . . . . . . . . . . . . .61
Section 8.07 Consent to Jurisdiction; Waiver
of Immunities . . . . . . . . . . . . . . . . . . . . . . . .61
Section 8.08 Binding Effect; Merger; Severability;
GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . .62
Section 8.09 Counterparts . . . . . . . . . . . . . . . . . . . . . .63
Section 8.10 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . .63
TESTIMONIUM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .64
Schedule I - List of Applicable Lending Offices
Exhibit A-1 - Form of Series A Note
Exhibit A-2 - Form of Series B Note
Exhibit A-3 - Form of Term Note
Exhibit B-1 - Form of Notice of Series A Borrowing
Exhibit B-2 - Form of Notice of Series B Borrowing
Exhibit C - Form of Assignment and Acceptance
Exhibit D - Form of Designation Agreement
Exhibit E-1 - Form of Opinion of Acting General Counsel of the Borrower
Exhibit E-2 - Form of Opinion of Special Panamanian Counsel to the
Borrower
Exhibit F - Form of Notice of Term Loan Conversion
/TABLE
<PAGE>
REVOLVING CREDIT AGREEMENT
This Revolving Credit Agreement, dated as of December 5, 1995, is made
and entered into by and among CARNIVAL CORPORATION (the "Borrower"), a
corporation organized and existing under the laws of The Republic of Panama
("Panama"), and CITIBANK, N.A., a national banking association organized and
existing under the laws of the United States of America ("United States" or
"U.S."), and each of the other banks or other institutions whose names may
appear on the signature pages of this Agreement (each a "Bank" and,
collectively, the "Banks") or, if applicable, in the Register for whom Citibank,
N.A., subject to Article VII of this Agreement, acts as Agent, and, subject to
Section 7.11 of this Agreement, each of those certain Banks named in the cover
page hereof acts as Managing Agent and each of those certain other Banks named
in the cover page hereof acts as Co-Agent. Capitalized terms not otherwise
herein defined shall have the respective meanings set forth below in Section
1.01.
PRELIMINARY STATEMENTS
(1) The Borrower desires to borrow from the Lenders upon the terms
and conditions set forth herein.
(2) The Lenders have agreed severally, but not jointly, each for the
aggregate amount and in the percentage interest (as to each Lender, the
"Percentage Interest") set forth opposite each Lender's name and signature,
below, or, if applicable, in any relevant amendment hereto, or, if applicable,
in the Register, to provide credits upon the terms and conditions set forth
herein.
(3) The Lenders have requested the Agent, and the Agent has agreed,
to act on behalf of the Lenders in accordance with the terms and conditions set
forth herein.
Now, therefore, the Borrower, the Lenders and the Agent hereby agree
among themselves as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. As used in this Agreement, each of the
following terms shall have the respective meaning set forth below (such
meanings, unless otherwise indicated, to apply to both the singular and plural
forms of the terms defined):
"Advance" means an A Advance or a B Advance.
"A Advance" means an advance by a Lender to the Borrower as part of
an A Borrowing and refers to a Base Rate Advance or a LIBOR Rate Advance, each
of which shall be a "Type" of A Advance.
"A Borrowing" means a borrowing consisting of simultaneous A Advances
of the same Type made by each of the Lenders pursuant to Section 2.01.
"Affiliate" means, with respect to any Person, any other Person
controlling, controlled by or under common control with, such Person. For
purposes of this definition, "control" (including, with correlative meanings,
the terms "controlling", "controlled by" and "under common control with"), as
applied to any Person, means the possession, directly or indirectly, of the
power to vote ten percent (10%) or more of the securities having voting power
for the election of directors of such Person, or otherwise to direct or cause
the direction of the management and policies of that Person, whether through the
ownership of voting securities or by contract or otherwise.
"Agent" shall mean Citibank, N.A., and any successor agent under this
Agreement.
"Agreement" means this Agreement, as it may be amended, supplemented
or otherwise modified from time to time.
"Applicable Lending Office" means, with respect to each Lender, such
Lender's Domestic Lending Office in the case of a Base Rate Advance, and such
Lender's Eurodollar Lending Office in the case of a LIBOR Rate Advance and, in
the case of a B Advance, the office of such Lender notified by such Lender to
the Agent as its Applicable Lending Office with respect to such B Advance.
"Assignment and Acceptance" means an assignment and acceptance entered
into by a Lender and an Eligible Assignee, and accepted by the Agent, in
substantially the form of Exhibit C hereto.
"B Advance" means an advance by a Lender to the Borrower as part of
a B Borrowing resulting from the auction bidding procedure described in Section
2.03.
"B Borrowing" means a borrowing consisting of simultaneous B Advances
from each of the Lenders whose offer to make one or more B Advances as part of
such borrowing has been accepted by the Borrower under the auction bidding
procedure described in Section 2.03.
"B Reduction" has the meaning specified in Section 2.01.
"Base Rate" means, for any Interest Period or any other period, a
fluctuating interest rate per annum as shall be in effect from time to time,
which rate per annum shall at all times be equal to the highest of:
(a) the rate of interest announced publicly by Citibank, N.A., in New
York, New York, from time to time, as its base rate;
(b) a rate equal to 1/2 of one percent per annum above the latest
three-week moving average of secondary market morning offering rates in the
United States for three-month certificates of deposit of major United
States money market banks, such three-week moving average determined weekly
on each Monday (or if such day is not a Business Day, on the next
succeeding Business Day) for the three-week period ending on the previous
Friday by Citibank, N.A., on the basis of such rates reported by
certificate of deposit dealers to and published by the Federal Reserve Bank
of New York or, if such publication shall be suspended or terminated, on
the basis of quotations for such rates received by Citibank, N.A., from
three New York certificate of deposit dealers of recognized standing
selected by Citibank, N.A., in either case adjusted to the nearest 1/4 of
one percent, or, if there is no nearest 1/4 of one percent, to the next
higher 1/4 of one percent; or
(c) a rate equal to 1/2 of one percent per annum above the then
current Federal Funds Rate.
"Base Rate Advance" means an A Advance, B Advance or Term Loan which
bears interest at the Base Rate.
"Borrowing" means an A Borrowing or a B Borrowing.
"Business Day" means any day other than a Saturday, Sunday or any
other day on which commercial banks are required or authorized by law to close
in New York, New York, London, England or in the city where the Lending Office
is located.
"Capital Expenditures" mean the aggregate of all expenditures
(including that portion of leases which is capitalized on the consolidated
balance sheet of the Borrower and its Subsidiaries (or on the balance sheet of
any unconsolidated Subsidiary) and capitalized interest) by the Borrower and its
Subsidiaries that, in conformity with GAAP, should be, has been or should have
been included in the property, plant or equipment reflected in a consolidated
balance sheet of the Borrower and its Subsidiaries.
"Capital Lease" means, with respect to any Person, any lease of any
property (whether real, personal or mixed) by such Person as lessee that, in
accordance with GAAP, either would be required to be classified and accounted
for as a capital lease on a balance sheet of such Person or otherwise be
disclosed as such in a note to such balance sheet, other than, in the case of
the Borrower or a Subsidiary of the Borrower, any such lease under which the
Borrower or such Subsidiary is the lessor.
"Closing Date" means the day, but not later than December 5, 1995, on
which the respective parties hereto shall have executed and delivered this
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, and the regulations promulgated and rulings issued thereunder.
"Commitment" means the obligation of each Lender to lend the amounts
set forth in Section 2.01 hereof, as such amounts may be reduced from time to
time pursuant to this Agreement.
"Consolidated Cash Flow" means, in conformity with GAAP, net cash from
operations, as shown in the consolidated statements of cash flows of the
Borrower and its Subsidiaries excluding Specified Subsidiaries.
"Convert", "Conversion" and "Converted" each refers to a conversion
of Advances of one Type into Advances of another Type pursuant to Section
2.02(e) or 2.05(b)(ii) (E) or (F).
"Default" means any event or condition that, with the giving of
notice, the lapse of time or both, would become an Event of Default.
"Designated Bidder" means (i) an Eligible Assignee or (ii) a special
purpose corporation which is engaged in making, purchasing or otherwise
investing in commercial loans in the ordinary course of its business and that
issues (or the parent of which issues) commercial paper rated at least "Prime-1"
by Moody's Investors Services, Inc. or "A-1" by Standard & Poor's Corporation
or a comparable rating from the successor or either of them, that, in either
case, (x) is organized under the laws of the United States or any State thereof,
(y) shall have become a party hereto pursuant to Section 7.10(d), (e), (f) and
(z) is not otherwise a Lender.
"Designation Agreement" means a designation agreement entered into by
a Lender (other than a Designated Bidder) and a Designated Bidder, and accepted
by the Agent, in substantially the form of Exhibit D hereto.
"Dollars" and "$" mean the lawful and freely transferable currency of
the United States of America.
"Domestic Lending Office" means, with respect to any Lender, the
office of such Lender specified as its "Domestic Lending Office" opposite its
name on Schedule I hereto or in the Assignment and Acceptance pursuant to which
it became a Lender, or such other office of such Lender as such Lender may from
time to time specify to the Borrower and the Agent.
"Drawdown Date" shall mean the date an Advance is to be made to the
Borrower pursuant to this Agreement.
"Eligible Assignee" means (i) a commercial bank, savings and loan
institution, insurance company or financial institution organized under the laws
of the United States, or any State thereof, which bank has both assets in excess
of One Billion Dollars ($1,000,000,000) and combined capital and surplus in
excess of One Hundred Million Dollars ($100,000,000), or which insurance company
or financial institution has total assets in excess of One Billion Dollars
($1,000,000,000), (ii) a commercial bank organized under the laws of any other
country which is a member of the OECD or has concluded special lending
arrangements with the International Monetary Fund associated with its General
Arrangements to Borrow, or a political subdivision of any such country, which
bank has a combined capital and surplus (or the equivalent thereof under the
accounting principles applicable thereto) in excess of One Hundred Million
Dollars ($100,000,000), provided that such bank is acting through a branch or
agency located in the United States, the Cayman Islands or the country in which
it is organized or another country which is also a member of the OECD or has
concluded special lending arrangements with the International Monetary Fund
associated with its General Arrangements to Borrow, (iii) the central bank of
any country which is a member of the OECD, (iv) a finance company, insurance
company or other financial institution or a fund which is engaged in making,
purchasing or otherwise investing in commercial loans in the ordinary course of
its business, has total assets in excess of Five Hundred Million Dollars
($500,000,000), is doing business in the United States and is organized under
the laws of the United States, or any State thereof, or under the laws of any
member country of the OECD, or (v) any other financial institution acceptable
to the Agent and designated by the Borrower pursuant to Section 2.11(b).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"ERISA Affiliate" means with respect to any Person, any trade or
business (whether or not incorporated) which is a member of a group of which
such Person is a member and which is under common control with such Person
within the meaning of Section 414 of the Code, as amended from time to time, and
the regulations promulgated and rulings issued thereunder.
"Eurodollar Lending Office" means, with respect to any Lender, the
office of such Lender specified as its "Eurodollar Lending Office" opposite its
name on Schedule I hereto or in the Assignment and Acceptance pursuant to which
it became a Lender (or, if no such office is specified, its Domestic Lending
Office), or such other office of such Lender as such Lender may from time to
time specify to the Borrower and the Agent.
"Event of Default" means any of the events specified as such in
Section 6.01 of this Agreement.
"Federal Funds Rate" means, for any period, a fluctuating interest
rate per annum equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.
"Fee Payment Date" means (i) the last day of each March, June,
September and December from and after the Closing Date, (ii) the Termination
Date, and (iii) the Term Loan Maturity Date or such earlier date as the
Commitment of the Lenders shall have been terminated, and the principal of and
interest on each Advance shall have been paid, in full.
"GAAP" means at any time generally accepted United States accounting
principles at such time.
"HAL" means HAL Antillen N.V., a Netherlands Antilles corporation.
"HAL Subsidiaries" mean the Subsidiaries of HAL.
"Incorporation Jurisdictions" mean the respective jurisdictions of
incorporation or legal organization of the Borrower and each of its
Subsidiaries.
"Indebtedness" means (a) any liability of any Person (i) for borrowed
money, or under any reimbursement obligation related to a letter of credit or
bid or performance bond facility, or (ii) evidenced by a bond, note, debenture
or other evidence of indebtedness (including a purchase money obligation)
representing extensions of credit or given in connection with the acquisition
of any business, property, service or asset of any kind, including without
limitation, any liability under any commodity, interest rate or currency
exchange hedge or swap agreement (other than a trade payable or other current
liability arising in the ordinary course of business) or (iii) for obligations
with respect to (A) an operating lease, or (B) a lease of real or personal
property that is or would be classified and accounted for as a Capital Lease;
(b) any liability of others either for any lease, dividend or letter of credit,
or for any obligation described in the preceding clause (a) that (i) the Person
has guaranteed or that is otherwise its legal liability (whether contingent or
otherwise or direct or indirect, but excluding endorsements of negotiable
instruments for deposit or collection in the ordinary course of business) or
(ii) is secured by any Lien on any property or asset owned or held by that
Person, regardless whether the obligation secured thereby shall have been
assumed by or is a personal liability of that Person; and (c) any amendment,
supplement, modification, deferral, renewal, extension or refunding of any
liability of the types referred to in clauses (a) and (b), above.
"Insufficiency" means, with respect to any Plan, the amount, if any,
by which the present value of the vested benefits under such Plan exceeds the
fair market value of the assets of such Plan allocable to such benefits.
"Interest Payment Date" means with respect to any Advance comprising
part of the same Borrowing (1) the last day of each Interest Period, (2) the day
any principal amount of such Borrowing matures and becomes due and payable, (3)
the Termination Date, (4) the Term Loan Maturity Date, and (5) with respect to
any A Advance or Term Loan, if the Interest Period is longer than three (3)
months, the last day of the third month following such Borrowing or the
Termination Date, as the case may be.
"Interest Period" means, (A) for each A Advance comprising part of the
same A Borrowing, the period commencing on the date of such A Advance, or the
date of the Conversion of any A Advance into such an A Advance and ending on the
last day of the period selected by the Borrower or the Agent, as the case may
be, pursuant to this Agreement and, thereafter, each respective and successive
period commencing on the last day of the immediately preceding Interest Period
and ending on the last day of the period selected by the Borrower or the Agent,
as the case may be, subject to the provisions below. The duration of each such
Interest Period shall be (y), in the case of a Base Rate Advance, shall be such
period as the Agent shall notify the Borrower and (z), in the case of a LIBOR
Rate Advance, one, two, three or six months, in each case selected by the
Borrower or the Agent, as the case may be, pursuant to this Agreement and
(B) for each B Advance comprising part of the same B Borrowing, the
interest period or interest periods specified in the related Notice of B
Borrowing, or selected by the Agent, as the case may be, pursuant to this
Agreement
provided, however, with respect to each Advance that:
(i) no Interest Period relating to any Advance shall commence on or
end after the maturity date of such Advance;
(ii) Interest Periods commencing on the same date for A Advances
comprising part of the same A Borrowing shall be of the same duration;
(iii) no Interest Period shall end after the Termination Date; and
(iv) whenever the last day of any Interest Period would otherwise
occur on a day other than a Business Day, the last day of such Interest
Period shall be extended to occur on the next succeeding Business Day,
provided, in the case of any Interest Period for a LIBOR Rate Advance, that
if such extension would cause the last day of such Interest Period to occur
in the next following calendar month, the last day of such Interest Period
shall occur on the next preceding Business Day.
"Kloster" means Kloster Cruise Limited, a corporation organized and
existing under the laws of the Islands of Bermuda.
"Lenders" means the Banks listed on the signature pages hereof, each
Eligible Assignee that shall become a party hereto pursuant to Section 7.10(a),
(b) and (c) and, except when used in reference to an A Advance, an A Borrowing,
a Series A Note, a Commitment, the Termination Date or a related term, each
Designated Bidder.
"Lending Office" means the International Banking Facility of the Agent
in New York City, or any other office or affiliate of the Agent hereafter
selected and notified to the Borrower from time to time by the Agent.
"LIBOR Rate Advance" means an A Advance, B Advance or Term Loan which
bears interest at the LIBOR Rate.
"LIBOR Rate" means, for an Interest Period for each LIBOR Rate Advance
comprising part of the same Borrowing, the rate determined by the Agent to be
the rate of interest per annum equal to the average (rounded upward to the
nearest whole multiple of 1/16 of 1% per annum, if such average is not such a
multiple) of the rate per annum at which deposits in United States Dollars are
offered by the principal office of each of the Reference Lenders in London,
England to prime banks in the London interbank market at 11:00 A.M. (London
time) two Business Days before the first day of such Interest Period for a term
equal to such Interest Period and in an amount substantially equal to such
portion of the Loan. The LIBOR Rate for an Interest Period shall be determined
by the Agent on the basis of applicable rates furnished to and received by the
Agent from the Reference Lenders two Business Days before the first day of such
Interest Period, subject, however, to the provisions of Section 2.05. If at any
time the Agent shall determine that by reason of circumstances affecting the
London interbank market (i) adequate and reasonable means do not exist for
ascertaining the LIBOR Rate for the succeeding Interest Period or (ii) the
making or continuance of any Loan at the LIBOR Rate has become impracticable as
a result of a contingency occurring after the date of this Agreement which
materially and adversely affects the London interbank market, the Agent shall
so notify the Lenders and the Borrower. Failing the availability of the LIBOR
Rate, the LIBOR Rate shall mean the Base Rate thereafter in effect from time to
time until such time as a LIBOR Rate may be determined by reference to the
London interbank market.
"Lien" means any lien, charge, easement, claim, mortgage, Option,
pledge, right of first refusal, right of usufruct, security interest, servitude,
transfer restriction or other encumbrance or any restriction or limitation of
any kind (including, without limitation, any adverse claim to title, conditional
sale or other title retention agreement, any lease in the nature thereof, and
any agreement to give any security interest).
"Loan" means the Advances to the Borrower by each Lender provided for
in Article II of this Agreement, including any such amounts converted to Term
Loans pursuant to Section 2.12.
"Loan Documents" mean this Agreement and the Notes.
"Majority Lenders" means at any time Lenders holding at least 51% of
the then aggregate unpaid principal amount of the Series A Notes or Term Notes
held by Lenders, or, if no such principal amount is then outstanding, Lenders
having at least 51% of the Commitments (provided that, for purposes hereof,
neither the Borrower, nor any of its Affiliates, if a Lender, shall be included
in (i) the Lenders holding such amount of the A Advances or Term Notes or having
such amount of the Commitments or (ii) determining the aggregate unpaid
principal amount of the A Advances or Term Notes or the total Commitments).
"March 30, 1990 Loan Agreement" means that certain Loan Agreement
dated as of March 30, 1990 by and among the Borrower, Wind Surf Limited,
Citibank, N.A. as Agent and the banks therein named, as the same may be amended,
supplemented or otherwise modified from time to time.
"Moody's" has the meaning specified in Section 2.05(b)(ii)(B).
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which a Person or any ERISA Affiliate is making
or accruing an obligation to make contributions, or has within any of the
preceding three plan years made or accrued an obligation to make contributions.
"Multiple Employer Plan" means an employee benefit plan, other than
a Multiemployer Plan, subject to Title IV of ERISA to which a Person or any
ERISA Affiliate, and more than one employer other than such Person or ERISA
Affiliate, is making or accruing an obligation to make contributions or, in the
event that any such plan has been terminated, to which the Person or any ERISA
Affiliate made or accrued an obligation to make contributions during any of the
five plan years preceding the date of termination of such plan.
"Net Worth" means, at a particular date, all amounts which would, in
accordance with GAAP, be included in shareholders' equity on a consolidated
balance sheet of a company and its Subsidiaries as at such date.
"Note" means any of, and "Notes" mean all, the respective Series A
Notes, the Series B Notes, and Term Notes, as any such note may be replaced,
amended, supplemented or otherwise modified from time to time.
"Notice of A Borrowing" has the meaning specified in Section 2.02(a).
"Notice of B Borrowing" has the meaning specified in Section 2.03(a).
"Notice of Term Loan Conversion" has the meaning specified in Section
2.12.
"Notice of Term Loan Rollover" has the meaning specified in Section
2.12.
"OECD" means the Organization for Economic Cooperation and
Development.
"Obligations" mean all obligations, including but not limited to, all
principal, interest, fees, expenses and other obligations set forth in
Article II and Section 8.04 hereof, of every nature of the Borrower from time
to time owed to the Agent, any of the Lenders, or all of them, under any of the
Loan Documents.
"Option" means (1) any right to buy or sell specific property in
exchange for an agreed upon sum, (2) any right to receive funds, the amount of
which is determined by reference to the value of capital stock or the purchase
price thereof, (3) any right of the type or kind referred to as a "phantom stock
right," and (4) any other right commonly known or referred to as an "option."
"PBGC" means the Pension Benefit Guaranty Corporation, or any entity
or entities succeeding to any or all its functions under ERISA.
"Percentage Interest" shall have the meaning set forth in Preliminary
Statement (2) of this Agreement.
"Person" means any individual, corporation, partnership, business
trust, joint venture, association, joint stock company, trust or other
unincorporated organization, whether or not a legal entity, or any government
or agency or political subdivision thereof.
"Plan" means, at any time, any employee pension benefit plan
maintained by a Person, any of its Subsidiaries, or any ERISA Affiliate of such
Person or its Subsidiaries, which employee pension benefit plan is covered by
Title IV of ERISA or is subject to the minimum funding standards of the Code.
"Reference Lender" means any of and "Reference Lenders" means each of
Citibank, N.A., National Westminster Bank Plc and The Bank of Nova Scotia.
"Register" shall have the meaning set forth in Section 7.10(g) of this
Agreement.
"S & P" has the meaning specified in Section 2.05(b)(ii)(B).
"Senior Debt" has the meaning specified in Section 2.05(b)(ii)(B).
"Series A Note" means any of, and "Series A Notes" mean all, the
respective Series A Notes of the Borrower, substantially in the form attached
hereto as Exhibit A-1, to be issued to evidence the indebtedness of the
Borrower, from time to time outstanding in respect of the A Advances, as any
such Series A Note may be replaced, amended, supplemented or otherwise modified
from time to time.
"Series B Note" means any of, and "Series B Notes" mean all, the
respective Series B Notes of the Borrower, substantially in the form attached
hereto as Exhibit A-2, to be issued to evidence the indebtedness of the Borrower
from time to time outstanding in respect of the B Advances, as any such Series
B Note may be replaced, amended, supplemented or otherwise modified from time
to time.
"Solvent" means with respect to any Person on a particular date, that
on such date (i) the fair market value of the assets of such Person is greater
than the total amount of liabilities (including the present or expected value
of contingent liabilities) of such Person, (ii) the present fair salable value
of the assets of such Person is greater than the amount that will be required
to pay the probable liabilities of such Person for its debts as they become
absolute and matured, (iii) such Person is able to realize upon its assets and
pay its debts and other liabilities, including contingent obligations, as they
mature, (iv) such Person does not have unreasonably small capital and (v) such
Person does not intend to or believe it will incur debts beyond its ability to
pay as they mature.
"Specified Subsidiary" means any of Kloster and its Subsidiaries, and
"Specified Subsidiaries" mean all of Kloster and its Subsidiaries.
"Subordinated Debt" has the meaning specified in Section
2.05(b)(ii)(B).
"Subsidiary" means, with respect to any Person, any corporation,
association, partnership or other business entity of which a majority of the
voting power entitled to vote in the election of directors, managers or trustees
thereof is at the time owned, directly or indirectly, by such Person or by one
or more other Subsidiaries, or by such Person and one or more other
Subsidiaries, or a combination thereof.
"Swaps Documents" mean the Swaps Agreement, the Swaps Guaranty and the
Swaps Security Agreement as defined in the March 30, 1990 Loan Agreement.
"Tangible Net Worth" means for any Person at any time (a) the sum, to
the extent shown on such Person's balance sheet, of (i) the amount of issued and
outstanding share capital, but less the cost of treasury shares, plus (ii) the
amount of surplus and retained earnings, less (b) intangible assets as
determined in accordance with GAAP.
"Term Loan" means any of, and "Term Loans" mean all, the Advances
converted to term loans on the Termination Date pursuant to Section 2.12.
"Term Loan Maturity Date" means the date, not later than the
anniversary of the Termination Date then in effect, specified as the Term Loan
Maturity Date by the Borrower pursuant to Section 2.12 or such earlier date all
Term Loans become due and payable pursuant to Section 6.01.
"Term Note" means any of, and "Term Notes" mean all, the respective
Term Notes of the Borrower, substantially in the form attached hereto as Exhibit
A-3, to be issued to evidence the indebtedness of the Borrower from time to time
outstanding in respect of the Advances, which pursuant to Section 2.12, have
been converted to Term Loans, as such Term Notes may be replaced, amended,
supplemented or otherwise modified from time to time.
"Termination Date" means December 3, 1996 or any such extended
termination date as provided in Section 2.11(b), or the earlier date of
termination of all the Commitments pursuant to Section 2.11(a) or 6.01 hereof.
"Termination Event" means (i) a "reportable event," as such term is
described in Section 4043 of ERISA (other than a "reportable event" not subject
to the provision for 30 day notice to the PBGC), or an event described in
Section 4068(f) of ERISA, or (ii) the withdrawal of the Borrower or any ERISA
Affiliate from a Multiple Employer Plan during a plan year in which it was a
"substantial employer," as such term is defined in Section 4001(a)(2) of ERISA,
or the incurrence of liability by the Borrower or any ERISA Affiliate under
Section 4064 of ERISA upon the termination of a Multiple Employer Plan, or
(iii) the filing of a notice of intent to terminate a Plan or the treatment of
a Plan amendment as a termination under Section 4041A of ERISA, or (iv) the
institution of proceedings to terminate a Plan by the PBGC under Section 4042
of ERISA, or (v) any other event or condition which might constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan.
"Total Capital" means the sum of the Total Debt and Tangible Net Worth
of the Borrower and its Subsidiaries excluding Specified Subsidiaries, but
excluding therefrom any Indebtedness or amounts due or received under the Swaps
Documents.
"Total Debt" means, at a particular date, the sum of (y) all amounts
which would, in accordance with GAAP, constitute short term debt and long term
debt of the Borrower and its Subsidiaries excluding Specified Subsidiaries as
of such date and (z) the amount of any Indebtedness outstanding on such date and
not included in the amounts specified in clause (y), singly or in the aggregate,
in excess of Fifty Million Dollars ($50,000,000), of any Person other than the
Borrower or any of its Subsidiaries excluding Specified Subsidiaries, which
Indebtedness (i) has been and remains guaranteed on such date by the Borrower
or any of its Subsidiaries excluding Specified Subsidiaries or is otherwise the
legal liability of the Borrower or any of its Subsidiaries excluding Specified
Subsidiaries (whether contingent or otherwise or direct or indirect, but
excluding endorsements of negotiable instruments for deposit or collection in
the ordinary course of business), or (ii) is secured by any Lien on any property
or asset owned or held by the Borrower or any of its Subsidiaries excluding
Specified Subsidiaries, regardless of whether the obligation secured thereby
shall have been assumed or is a personal liability of the Borrower or any of its
Subsidiaries excluding Specified Subsidiaries, provided, that the foregoing
shall not be interpreted to include any Indebtedness under the Swaps Documents.
"Transaction" means the extension of credit contemplated by the Loan
Documents.
"Type" shall mean, with respect to an Advance, a Base Rate Advance or
a LIBOR Rate Advance.
"Withdrawal Liability" shall have the meaning given such term under
Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP
consistently applied.
SECTION 1.03. Governing Language. All documents, notices and demands
and financial statements to be delivered by any Person to the Agent or any
Lender pursuant to this Agreement shall be in the English language.
SECTION 1.04. Computation of Time Periods. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and each of the words "to" and
"until" means "to but excluding".
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01. The A Advances. Upon the terms and subject to the
conditions set forth in this Agreement, each Lender agrees severally, but not
jointly, to make A Advances to the Borrower from time to time on any Business
Day during the period from the Closing Date until the Termination Date in an
aggregate amount not to exceed at any time outstanding the amount set opposite
such Lender's name on the signature pages hereof or, if applicable, the
signature pages of any relevant amendment hereto or, if such Lender has entered
into any Assignment and Acceptance, set forth for such Lender in the Register
maintained by the Agent, as such amount may be reduced pursuant to Section 2.11
(such Lender's "Commitment"), provided that the aggregate amount of the
Commitments of the Lenders shall be deemed used and reduced from time to time
to the extent of the aggregate amount of the B Advances then outstanding and
such deemed use and reduction of the aggregate amount of the Commitments shall
be applied to the Lenders ratably according to their respective Commitments
(such deemed use and reduction of the aggregate amount of the Commitments being
a "B Reduction"). Each A Borrowing shall be in an aggregate amount not less
than Twenty Million Dollars ($20,000,000) and an integral multiple of One
Million Dollars ($1,000,000) if in excess thereof and shall consist of A
Advances of the same Type made on the same day by the Lenders ratably according
to their respective Commitments. Within the limits of each Lender's Commitment,
the Borrower may from time to time borrow, prepay pursuant to Section 2.06(a)
and reborrow under this Section 2.01.
SECTION 2.02. Making the A Advances. (a) Each A Borrowing shall be
made on notice, given not later than 11:00 A.M. (New York City time) on the
third Business Day (on the first Business Day in the case of a Base Rate
Advance) prior to the date of the proposed A Borrowing, by the Borrower to the
Agent, which shall give to each Lender prompt notice thereof by telecopier,
telex or cable. Each such Borrower's notice of an A Borrowing (a "Notice of A
Borrowing") shall be by telecopier, telex or cable, confirmed immediately in
writing, substantially in the form of Exhibit B-1 hereto, specifying therein the
requested (i) Drawdown Date of such A Borrowing, (ii) Type of A Advances
comprising such A Borrowing, (iii) aggregate amount of such A Borrowing, and
(iv) in the case of an A Borrowing comprised of LIBOR Rate Advances, the initial
Interest Period for each such A Advance. Each Lender shall, before 11:00 A.M.
(New York City time) on the date of such A Borrowing, make available for the
account of its Applicable Lending Office to the Agent at its address referred
to in Section 8.02, in same day funds, such Lender's ratable portion of such A
Borrowing. After the Agent's receipt of such funds and upon fulfillment of the
applicable conditions set forth in Article III, the Agent will make such funds
available to the Borrower at the Agent's aforesaid address.
(b) The total amount of each A Advance to be made available by each
Lender shall never exceed the Commitment of such Lender, as adjusted by such
Lender's B Reduction, and shall be proportionate always to such Lender's
Percentage Interest set forth in the signature pages hereof or, if applicable,
in the Register.
(c) Unless the Agent shall have received written notice from a Lender
prior to the date of any A Borrowing that such Lender will not make available
to the Agent such Lender's ratable portion of such A Borrowing, the Agent may
assume that such Lender has made such portion available to the Agent on the date
of such A Borrowing in accordance with subsection (a) of this Section 2.02 and
the Agent may, in reliance upon such assumption, make available to the Borrower
on such date a corresponding amount. If and to the extent that such Lender
shall not have so made such ratable portion available to the Agent, such Lender
and the Borrower severally agree to repay to the Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to the Borrower until the date such amount is
repaid to the Agent, at (i) in the case of the Borrower, the interest rate
applicable at the time to A Advances comprising such A Borrowing and (ii) in the
case of such Lender, the Federal Funds Rate. If such Lender shall repay to the
Agent such corresponding amount, such amount so repaid shall constitute such
Lender's A Advance as part of such A Borrowing for purposes of this Agreement.
(d) The Borrower shall repay the principal amount of each A Advance
made by each Lender in accordance with the Series A Note payable to such Lender,
provided that the aggregate principal amount of any A Advance outstanding on the
Termination Date shall be paid on the Termination Date, except as otherwise
provided with respect to any such outstanding principal amounts converted,
pursuant to Section 2.12 hereof, to Term Loans, which shall be repaid as
provided in the Term Notes on the Term Loan Maturity Date.
(e) The Borrower may on any Business Day, upon notice given to the
Agent not later than 11:00 A.M. (New York City time) on the third Business Day
prior to the date of the proposed Conversion and subject to the provisions of
Section 2.05, and so long as no Default or Event of Default has occurred and is
continuing, Convert all A Advances of one Type comprising the same A Borrowing
into Advances of another Type; provided, however, that any Conversion of any
LIBOR Rate Advances into Advances of another Type shall be made on, and only on,
the last day of an Interest Period for such LIBOR Rate Advances. Each such
notice of a Conversion shall, within the restrictions specified above, specify
(i) the date of such Conversion, (ii) the A Advances to be Converted, and (iii)
if such Conversion is into LIBOR Rate Advances, the duration of the Interest
Period for each such A Advance.
SECTION 2.03. The B Advances. (a) Each Lender severally agrees that
the Borrower may, in the manner set forth below, make B Borrowings under this
Section 2.03 from time to time on any Business Day during the period from the
Closing Date until the thirtieth day prior to the Termination Date; provided
that, following the making of each B Borrowing, the aggregate amount of the
Advances then outstanding shall not exceed the aggregate amount of the
Commitments of the Lenders (computed without regard to any B Reduction).
(i) The Borrower may request a B Borrowing under this Section 2.03
by delivering to the Agent, by telecopier, telex or cable, confirmed
immediately in writing, a notice of a B Borrowing (a "Notice of B
Borrowing"), substantially in the form of Exhibit B-2 hereto, specifying
the Drawdown Date and aggregate amount of the proposed B Borrowing, the
maturity date for repayment of each B Advance to be made as part of such
B Borrowing (which maturity date may not be earlier than seven (7) days
(thirty (30) days, in the case of floating interest rate borrowings) or
later than one hundred eighty (180) days after the date of such B Borrowing
or, in any event, later than the Termination Date), the Interest Payment
Date or Dates relating thereto, and any other terms to be applicable to
such B Borrowing, not later than 12:00 Noon in the case of floating
interest rate borrowings, or 12:00 Noon in the case of fixed interest rate
borrowings (New York City time) (A) at least one (1) Business Day prior to
the date of the proposed B Borrowing, if the Borrower shall specify in the
Notice of B Borrowing that the rates of interest to be offered by the
Lenders shall be fixed rates per annum and (B) at least four (4) Business
Days prior to the date of the proposed B Borrowing, if the Borrower shall
instead specify in the Notice of B Borrowing the basis to be used by the
Lenders in determining the rates of interest to be offered by them. The
Agent shall in turn promptly notify each Lender of each request for a B
Borrowing received by it from the Borrower by sending such Lender a copy
of the related Notice of B Borrowing.
(ii) Each Lender may, if, in its sole discretion it elects to do so,
irrevocably offer to make one or more B Advances to the Borrower as part
of such proposed B Borrowing at a rate or rates of interest specified by
such Lender in its sole discretion, by notifying the Agent (which shall
give prompt notice thereof to the Borrower), before 9:30 A.M. (New York
City time) (A) on the date of such proposed B Borrowing, in the case of a
Notice of B Borrowing delivered pursuant to clause (A) of paragraph (i)
above and (B) three (3) Business Days before the date of such proposed B
Borrowing, in the case of a Notice of B Borrowing delivered pursuant to
clause (B) of paragraph (i) above, of the minimum amount and maximum amount
of each B Advance which such Lender would be willing to make as part of
such proposed B Borrowing (which amounts may, subject to the proviso to the
first sentence of this Section 2.03(a), exceed such Lender's Commitment,
if any), the rate or rates of interest therefor and such Lender's
Applicable Lending Office with respect to such B Advance; provided that if
the Agent in its capacity as a Lender shall, in its sole discretion, elect
to make any such offer, it shall notify the Borrower of such offer before
9:00 A.M. (New York City time) on the date on which notice of such election
is to be given to the Agent by the other Lenders. If any Lender shall
elect not to make such an offer, such Lender shall so notify the Agent,
before 9:30 A.M. (New York City time) on the date on which notice of such
election is to be given to the Agent by the other Lenders, and such Lender
shall not be obligated to, and shall not, make any B Advance as part of
such B Borrowing; provided that the failure by any Lender to give such
notice shall not cause such Lender to be obligated to make any B Advance
as part of such proposed B Borrowing or result in any liability to any
party to this Agreement.
(iii) The Borrower shall, in turn, (A) before 11:00 A.M. (New York
City time) on the date of such proposed B Borrowing, in the case of a
Notice of B Borrowing delivered pursuant to clause (A) of paragraph (i)
above and (B) before 11:00 A.M. (New York City time) three (3) Business
Days before the date of such proposed B Borrowing, in the case of a Notice
of B Borrowing delivered pursuant to clause (B) of paragraph (i) above,
either:
(x) cancel such B Borrowing by giving the Agent notice to that
effect, or
(y) accept one or more of the offers made by any Lender or
Lenders pursuant to paragraph (ii) above, in the Borrower's sole
discretion, by giving notice to the Agent of the amount of each B
Advance (which amount shall be equal to or greater than the minimum
amount, and equal to or less than the maximum amount, notified to the
Borrower by the Agent on behalf of such Lender for such B Advance
pursuant to paragraph (ii) above) to be made by each Lender as part
of such B Borrowing, and reject any remaining offers made by Lenders
pursuant to paragraph (ii) above by giving the Agent notice to that
effect.
(iv) If the Borrower notifies the Agent that such B Borrowing is
cancelled pursuant to paragraph (iii)(x) above, the Agent shall give prompt
notice thereof to the Lenders and such B Borrowing shall not be made.
(v) If the Borrower accepts one or more of the offers made by any
Lender or Lenders pursuant to paragraph (iii)(y) above, the Agent shall in
turn promptly notify (A) each Lender that has made an offer as described
in paragraph (ii) above, of the date and aggregate amount of such B
Borrowing and whether or not any offer or offers made by such Lender
pursuant to paragraph (ii) above have been accepted by the Borrower, (B)
each Lender that is to make a B Advance as part of such B Borrowing, of the
amount of each B Advance to be made by such Lender as part of such B
Borrowing, and (C) each Lender that is to make a B Advance as part of such
B Borrowing, upon receipt, that the Agent has received forms of documents
appearing to fulfill the applicable conditions set forth in Article III.
The Agent shall allocate the principal amount of each B Borrowing among the
Lenders whose offers were accepted by the Borrower in ascending order based
upon the rate of interest offered, from the lowest to the highest such
interest rate offered by such Lenders. Each Lender that is to make a B
Advance as part of such B Borrowing shall, before 12:00 noon (New York City
time) on the date of such B Borrowing specified in the notice received from
the Agent pursuant to clause (A) of the preceding sentence or any later
time when such Lender shall have received notice from the Agent pursuant
to clause (C) of the preceding sentence, make available for the account of
its Applicable Lending Office to the Agent at its address referred to in
Section 8.02 such Lender's portion of such B Borrowing, in same day funds.
Upon fulfillment of the applicable conditions set forth in Article III and
after receipt by the Agent of such funds, the Agent will make such funds
available to the Borrower at the Agent's aforesaid address. Promptly after
each B Borrowing the Agent will notify each Lender of the amount of the B
Borrowing, the consequent B Reduction and the dates upon which such B
Reduction commenced and will terminate.
(b) Each B Borrowing shall be in an aggregate amount of not less than
Twenty Million Dollars ($20,000,000) and an integral multiple of One Million
dollars ($1,000,000) if in excess thereof and, following the making of each B
Borrowing, the Borrower shall be in compliance with the limitation set forth in
the proviso to the first sentence of subsection (a) above.
(c) Within the limits and on the conditions set forth in this Section
2.03, the Borrower may from time to time borrow under this Section 2.03, repay
or prepay the principal of any B Borrowing pursuant to subsection (d) below, and
reborrow under this Section 2.03, provided that a B Borrowing shall not be made
within three (3) Business Days following the date of any other B Borrowing.
(d) The Borrower shall repay to the Agent for the account of each
Lender which has made a B Advance, or each other holder of a Series B Note, on
the maturity date of each B Advance (such maturity date being that specified by
the Borrower for repayment of such B Advance in the related Notice of B
Borrowing delivered pursuant to subsection (a)(i) above and provided in the
Series B Note evidencing such B Advance), the then unpaid principal amount of
such B Advance, provided that, the aggregate principal amount of any B Advance
outstanding on the Termination Date shall be repaid on the Termination Date,
except as otherwise provided with respect to any such outstanding principal
amounts converted, pursuant to Section 2.12 hereof, to Term Loans, which shall
be repaid as provided in the Term Notes on the Term Loan Maturity Date. Except
as specified in Section 2.06(d) the Borrower shall have no right to prepay, in
whole or in part, the principal amount of any B Advance unless, and then only
on the terms, if any, specified by the Borrower for such B Advance in the
related Notice of B Borrowing delivered pursuant to subsection (a)(i) above and
set forth in the Series B Note evidencing such B Advance.
(e) The indebtedness of the Borrower resulting from each B Advance
made to the Borrower as part of a B Borrowing shall be evidenced by the Series
B Note of the Borrower payable to the Lender making such B Advance.
SECTION 2.04. General Provisions. (a) The Borrower shall have no
right to borrow, and no Lender shall have any obligation to lend, any amount
whatsoever on or after the Termination Date.
(b) The failure of any Lender to advance its Commitment in respect
of any Advance shall not relieve it or any other Lender of the obligation to
advance its Commitment, but no Lender or the Agent shall be responsible for the
failure of any other Lender to advance its Commitment to the Borrower.
(c) Each Notice of A Borrowing, Notice of Term Loan Conversion and
Notice of Term Loan Rollover sent, and each notice of acceptance of a B
Borrowing given, by the Borrower shall be irrevocable and binding on the
Borrower. If for any reason on the Drawdown Date for the Advance specified in
a Notice of A Borrowing or Notice of B Borrowing, or on the Termination Date in
respect of a Term Loan, as the case may be, the Advance or Term Loan is not made
as a result of any failure to fulfill on or before the Drawdown Date or the
Termination Date, as the case may be, the applicable conditions precedent, the
Borrower shall indemnify each Lender against any loss, cost or expense incurred
by such Lender as a result of such failure, including, without limitation, any
loss, cost or expense incurred by reasons of the liquidation or reemployment of
deposits or other funds acquired by such Lender to fund the Advance or the Term
Loan to be made by such Lender as part of such borrowing.
SECTION 2.05. Interest and Default Interest. (a) The Borrower shall
pay interest on the unpaid principal amount of each Advance from the Drawdown
Date until the principal amount of the Advance is paid in full, payable on each
Interest Payment Date for each such Advance. The Borrower shall pay interest
on the unpaid principal amount of each Term Loan from the Termination Date until
the principal amount of each such Term Loan is paid in full, payable on each
Interest Payment Date for each such Term Loan. Notwithstanding the two
preceding sentences of this Section 2.05(a), (i) all interest accrued on any
Advance outstanding on the Termination Date shall be paid on the Termination
Date, and (ii) all interest accrued on any Term Loan outstanding on the Term
Loan Maturity Date shall be paid on the Term Loan Maturity Date.
(b) As long as any A Advance or Term Loan, as the case may be, shall
be outstanding, and payment of the principal thereof and interest thereon shall
not be in default, interest on the A Advance or Term Loan, as the case may be,
shall be payable at an interest rate which shall be adjusted, in advance at the
start of the first day of each Interest Period therefor, and which shall be
determined as follows:
(i) with respect to each Base Rate Advance, the Borrower shall pay
interest thereon at the rate of interest determined by the Agent to be the
Base Rate for the relevant Interest Period as specified in the related
Notice of Borrowing, Notice of Term Loan Conversion or Notice of Term Loan
Rollover, as the case may be, provided that if the Borrower shall fail to
elect an Interest Period in its Notice of A Borrowing, Notice of Term Loan
Conversion or Notice of Term Loan Rollover, as the case may be, as herein
provided or if an Event of Default has occurred and is continuing, the
Agent shall elect the relevant Interest Period, which may be one (1) day;
(ii) with respect to each LIBOR Rate Advance, the Borrower shall pay
interest in one or more tranches thereon at an interest rate equal to the
sum of (y) the LIBOR Rate plus (z) the applicable margin for the relevant
Interest Period, determined by the Agent and subject to periodic
adjustment, as provided below in this Section 2.05(b)(ii) or, if the LIBOR
Rate is unavailable for any such period, at the Base Rate:
(A) with respect to each Interest Period relating to a LIBOR Rate
Advance, the Borrower shall, by telex notice to be received by the Agent
by 11 A.M. New York time on a Business Day at least three (3) Business Days
prior to the commencement of each such successive period, elect an Interest
Period of one, two, three or six months duration and one or more but no
more than six tranches in total for all outstanding LIBOR Rate Advances,
provided no tranche shall be in an amount less than Twenty Million Dollars
($20,000,000); provided the Borrower shall select Interest Periods, and if
necessary shall select as the final Interest Period for each LIBOR Rate
Advance an Interest Period less than one month in duration, so that the
maturity date of each Advance shall be the last day of the Interest Period
for such Advance; provided that if the Borrower shall fail to elect an
Interest Period as herein provided, the relevant Interest Period shall be
three (3) months, provided further that so long as any Event of Default has
occurred and is continuing, the Agent shall elect the relevant Interest
Period, which may be less than one month;
(B) the interest payable on each LIBOR Rate Advance during each
successive Interest Period shall be adjusted from time to time by the Agent
as follows. Notice of such applicable interest rate shall be delivered by
the Agent to the Borrower and the Lenders not later than the second
Business Day of each Interest Period. The Borrower shall, not later than
three (3) Business Days prior to the commencement of each such successive
Interest Period, together with its notice pursuant to subparagraph (A)
above, deliver to the Agent all then-current ratings, if any, of the
Borrower's Senior Unsecured Debt and Unsecured Subordinated Debt ("Senior
Debt" and "Subordinated Debt", respectively) given by Moody's Investors
Service ("Moody's") and by Standard & Poor's Corporation ("S & P") during
such Interest Period or an officer's certificate that no such ratings were
issued. If the Agent determines that on the last Business Day of an
Interest Period (or on the Business Day preceding the Drawdown Date, in the
case of the initial LIBOR Rate Advance) the Borrower's Senior Debt was
rated
(i) A- or below by S & P or A3 or below by Moody's, the applicable
interest rate for the succeeding interest period shall be .22% over the
LIBOR Rate, and
(ii) at least A by S&P or A2 by Moody's, the applicable interest rate
for the succeeding interest period shall be .195% over the LIBOR Rate.
In the event that S & P and Moody's provide different ratings for such Senior
Debt, the Agent shall use the higher rating in determining the applicable
interest rate. In the event the Borrower has no rated Senior Debt but the
Borrower's Subordinated Debt has been rated, for purposes of determining the
applicable interest rate, the Agent shall assume a Senior Debt rating equivalent
to one subgrade higher than the actual Subordinated Debt rating given during
such period. In the event that during any Interest Period the Agent shall not
have received notification of ratings from the Borrower as aforesaid or if no
such ratings exist during any Interest Period, the applicable interest rate for
the succeeding Interest Period shall be one percent (1%) over the LIBOR Rate;
(C) each Reference Lender which is a Lender agrees to furnish to the
Agent timely information for the purpose of determining the LIBOR Rate.
If any one or more of the Reference Lenders shall not timely furnish such
information to the Agent for the purpose of determining the interest rate,
the Agent shall determine such interest rate on the basis of information
timely furnished by the remaining Reference Lenders;
(D) the Agent shall give prompt notice to the Borrower and the
Lenders of the applicable interest rate determined by the Agent for
purposes of Section 2.05(b) and the applicable rate, if any, furnished by
each Reference Lender for the purpose of determining the applicable LIBOR
Rate hereunder;
(E) If, with respect to any LIBOR Rate Advances, the Majority Lenders
notify the Agent that the LIBOR Rate for any Interest Period for such
Advances will not adequately reflect the cost to such Majority Lenders of
making, funding or maintaining their respective LIBOR Rate Advances for
such Interest Period, the Agent shall forthwith so notify the Borrower and
the Lenders, whereupon
(1) each LIBOR Rate Advance will automatically, on the last day
of the then existing Interest Period therefor, Convert into a Base
Rate Advance, and
(2) the obligation of the Lenders to make, or to Convert A
Advances into, LIBOR Rate Advances shall be suspended until the Agent
shall notify the Borrower and such Lenders that the circumstances
causing such suspension no longer exist; and
(F) On the date on which the aggregate unpaid principal amount of A
Advances comprising any A Borrowing shall be reduced, by payment or
prepayment or otherwise, to less than Twenty Million Dollars ($20,000,000),
such A Advances shall, if they are Advances of a Type other than Base Rate
Advances, automatically Convert into Base Rate Advances, and on and after
such date the right of the Borrower to Convert such A Advances into
Advances of a Type other than Base Rate Advances shall terminate; provided,
however, that if and so long as each such A Advance shall be of the same
Type and have the same Interest Period as A Advances comprising another A
Borrowing or other A Borrowings, and the aggregate unpaid principal amount
of all such A Advances shall equal or exceed Twenty Million Dollars
($20,000,000), the Borrower shall have the right to continue all such A
Advances as, or to Convert all such A Advances into, Advances of such Type
having such Interest Period.
(c) As long as any B Advance shall be outstanding, and payment of the
principal thereof and interest thereon shall not be in default, interest on the
B Advance shall be paid at the rate of interest for such B Advance specified by
the Lender making such advance in its notice with respect thereto delivered
pursuant to subsection (a)(ii) of Section 2.03 above, payable on the Interest
Payment Date or Dates specified by the Borrower for such B Advance in the
related Notice of B Borrowing delivered pursuant to subsection (a)(i) of Section
2.03 above, as provided in the Series B Note evidencing such B Advance. With
respect to any LIBOR Rate Advance comprising part of a B Borrowing, the
provisions of subsections (b)(ii)(A), (C) and (D) of Section 2.05 shall apply
to the selection of any Interest Period not specified in the related Notice of
B Borrowing given pursuant to Section 2.03, and further, the provisos of such
subsection (b)(ii)(A), and subsection (b)(ii)(F) in its entirety, shall apply
to each such B Borrowing.
(d) In the event that the Agent or any Lender does not receive on the
due date any sum due under this Agreement or any of the other Loan Documents in
accordance with the terms hereof or thereof, the Borrower shall pay to the Agent
and such Lenders, as the case may be, on demand, interest on such sum, from and
including the due date thereof to but not including the date of actual payment,
at a rate per annum determined by the Agent from time to time to be the sum of
(y) two and three-quarters per cent (2-3/4%) plus (z) the LIBOR Rate applicable
for any such period or, if the LIBOR Rate is inapplicable or unavailable, for
any such period, the Base Rate. Except as otherwise provided in the following
subsection (e), any such interest which is not paid when due shall be compounded
at the end of each Interest Period (both before and after any notice of demand)
by the Agent on behalf of the Lenders under this Agreement.
(e) Notwithstanding any provision contained in any of the Loan
Documents, no Lender nor the Agent shall ever be entitled to receive, collect,
or apply, as interest on the Obligations, any amount in excess of the maximum
rate of interest permitted to be charged by applicable law, and, in the event
any Lender or the Agent ever receives, collects, or applies as interest, any
such excess, such amount which would be excessive interest shall be applied to
the reduction of the Obligations then outstanding, and, if the Obligations then
outstanding are paid in full, any remaining excess shall forthwith be paid to
the Borrower. In determining whether or not the interest paid or payable, under
any specific contingency, exceeds the highest lawful rate, the Borrower and the
Lender or the Agent, as the case may be, shall, to the maximum extent permitted
under applicable law, (i) characterize any non-principal payment as an expense,
fee, or premium rather than as interest, (ii) exclude any voluntary prepayments
and the effects thereof, and (iii) spread the total amount of interest
throughout the entire contemplated term of the Obligations so that the interest
rate is uniform throughout the entire term of the Obligations.
SECTION 2.06. Prepayments. (a) The Borrower may, upon at least four
(4) Business Days notice to the Agent and the Lenders received by 10:00 A.M. New
York time, and subject always to the requirements of Section 8.04(b), prepay,
pro rata, the outstanding amount of each A Advance including outstanding amounts
under Term Notes, in whole or in part, together, in each case, with accrued
interest to the date of such prepayment on the amount prepaid, provided that no
such partial prepayment shall be in a principal amount of less than Twenty
Million Dollars ($20,000,000) and integral multiples of One Million Dollars
($1,000,000) if in excess thereof.
(b) The Borrower may not, except as permitted under subsection (d)
of this Section 2.06, prepay any B Advance, except that the Borrower shall
prepay such amounts when required pursuant to the provisions of this Agreement.
(c) If it shall become unlawful for any Lender to continue to fund
or maintain any Advance or to perform its obligations hereunder, such Lender
shall notify the Borrower and the Agent, and such Lender shall use all
reasonable efforts to change its lending office so that it can perform its
obligations hereunder; provided that such Lender shall not be obligated to
change its lending office if in its sole reasonable judgment it would be
disadvantageous to do so. If such Lender does not change its lending office
because it determines in its sole reasonable judgment that it is disadvantageous
to do so or because such change would not render such Advance lawful, then such
Lender shall notify the Agent and the Borrower, and shall make an Advance, and
the Borrower shall borrow such A Advance, at the Base Rate in an amount equal
to the amount of the Advance currently outstanding and made by such Lender to
the Borrower if in the sole reasonable judgment of such Lender such A Advance
can lawfully be extended at the Base Rate. Simultaneously with making such A
Advance at the Base Rate, the Advance then outstanding made available by such
Lender to the Borrower shall be repaid by the Borrower. If any Lender makes a
Base Rate Advance to the Borrower pursuant to subsection (c) of this Section
2.06, the Borrower may prepay such Advance, without penalty, at any time upon
five (5) Business Days notice. If despite such Lender's compliance with the
preceding provisions of this Section 2.06(c), or if the Borrower shall refuse
to borrow an A Advance at the Base Rate as herein provided, and if it shall
become unlawful for any Lender to fund or maintain any Advance or perform its
obligations hereunder, upon demand by such Lender, the Borrower shall prepay in
full the outstanding Advance made by such Lender, with accrued interest thereon
and all other amounts payable by the Borrower hereunder, and upon such demand
or any notice of prepayment the obligation of such Lender to make any Advance
to the Borrower shall terminate.
(d) If at any time the Borrower shall, or may reasonably be expected
to, be required to deduct and withhold, or indemnify any Lender with respect to,
any Taxes (as defined in Section 2.09) (in each case, as evidenced by an opinion
reasonably satisfactory in form and substance to the Agent and the Lenders from
independent tax counsel reasonably satisfactory to the Agent and the Lenders)
the Borrower may, upon at least four (4) Business Days notice to the Agent and
the Lenders, prepay at any time, pro rata, the outstanding principal amount of
each Advance, in whole or in part, together with accrued interest to the date
of prepayment on the amount prepaid and all other amounts then payable to the
Lenders by the Borrower; provided, that if such Taxes relate to payments to
fewer than all the Lenders (the "Affected Lenders"), the Borrower may, upon at
least four Business Days notice to the Agent and the Affected Lenders, prepay,
in whole or in part, pro rata (except as set forth in the following provision),
the outstanding principal amount of Advances made by the Affected Lenders, with
accrued interest thereon and all other amounts payable to the Affected Lenders
by the Borrower (without prepaying any portion of any Advance made by any Lender
that is not any Affected Lender); provided further, that if the rate of Taxes
with respect to any Affected Lender is higher than with respect to another
Affected Lender, the Borrower may prepay any portion of the Advance made by the
former Affected Lender without prepaying any portion of the Advance made by the
latter Affected Lender. The Agent shall give prompt written notice to the
Lenders of any prepayments made under this paragraph (d).
(e) Prepayments of any A Advance shall be applied against
installments of outstanding principal in inverse order of maturity.
SECTION 2.07. Increased Costs; Additional Interest. (a) If on or
after the Closing Date due to (i) the introduction of or any change (including,
without limitation, any change by way of imposition or increase of reserve or
capital adequacy requirements, but not including a change related to Taxes or
Excluded Taxes, as such terms are defined in Section 2.09 hereof) in, or in the
interpretation of, any law or regulation, or (ii) the compliance by any Lender
with any guideline or request (not including any guideline or request with
respect to Taxes or Excluded Taxes, but including, with respect to reserve and
capital adequacy requirements, those applicable laws, policies, guidelines and
directives and interpretations in effect on the Closing Date) from any central
bank or other governmental authority, whether or not having the force of law,
there shall be any increase in the cost to, or reduction in the return on
capital of any Lender in consequence of, any Lender of agreeing to make or
making, funding or maintaining an Advance, then the Borrower shall from time to
time, upon demand by such Lender, pay to the Lender additional amounts
sufficient to indemnify such Lender against such increased cost or reduction in
the return on capital.
(b) If any Lender shall determine in good faith that reserves under
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time, are required to be maintained by it in respect of, or
a portion of its costs of maintaining reserves under Regulation D is properly
attributable to, one or more of its Advances, such Lender shall give notice to
the Borrower, together with a certificate as described below in Section 2.07(c)
and the Borrower shall pay to such Lender additional interest on the unpaid
principal amount of each such Advance, payable on the same day or days on which
interest is payable on such Advance, at an interest rate per annum equal at all
times during each Interest Period for such Advance to the excess of (i) the rate
obtained by dividing the LIBOR Rate for such Interest Period by a percentage
equal to 100% minus the Reserve Percentage (defined in the next sentence), if
any, applicable during such Interest Period over (ii) the LIBOR Rate for such
Interest Period. The "Reserve Percentage" for any such period, with respect to
any Advance, means the reserve percentage applicable thereto under regulations
issued from time to time by the Board of Governors of the Federal Reserve System
(or any successor) for determining the maximum reserve requirement (including,
but not limited to, any emergency, supplemental or other marginal reserve
requirement) for a member bank of the Federal Reserve System in New York City
with respect to (i) liabilities or assets consisting of or including
eurocurrency liabilities, as defined in Regulation D of the Board of Governors
of the Federal Reserve System, as in effect from time to time, and having a term
equal to any such period, or (ii) any other category of liabilities which
includes deposits by reference to which the interest rate on such Advance is
determined and which have a term equal to any such period.
(c) A certificate as to the amount of any such increased cost,
increased interest or reduced return under this Section 2.07, submitted to the
Borrower and the Agent by such Lender, shall be conclusive and binding for all
purposes, absent manifest error. Before making any demand under this
Section 2.07, the Lender shall designate as to itself a different lending office
if such designation would avoid the need for, or reduce the amount of such
increased cost or interest, and will not, in the sole reasonable judgment of
such Lender, be otherwise disadvantageous to it.
SECTION 2.08. Payments and Computations. (a) The Borrower shall make
each payment hereunder and under any instrument delivered hereunder (except as
otherwise provided in any such instrument) not later than 12:00 noon New York
City time on the day when due in lawful and freely transferable United States
Dollars to the Agent at the Agent's office at 399 Park Avenue, New York, New
York 10043, for the account of the Lending Office in same day funds. The Agent
shall promptly disburse to the Lenders funds of such type as it shall have
received in the manner provided by this Agreement.
(b) The Borrower hereby authorizes the Agent and each Lender, if and
to the extent payment is not made when due hereunder or under any instrument
delivered hereunder, to charge from time to time against any or all of the
Borrower's accounts with the Agent or such Lender, as the case may be, any
amount so due. The Borrower further agrees that not later than 12:00 noon (New
York City time) on each day on which a payment is due hereunder with respect to
the Advance or under any Note, it will have in its account maintained with the
Agent in New York City a credit balance at least equal to the total amount so
due on such day.
(c) All computations of interest and fees shall be made by the Agent
and the Lenders on the basis of a year of 360 days (365 or 366 with respect to
Base Rate computations) for the actual number of days (including the first day
but excluding the last day) occurring in the period for which such amount is
payable.
(d) Whenever any payment to be made hereunder or under any instrument
delivered hereunder shall be stated to be due, or whenever the last day of any
Interest Period would otherwise occur on a day other than a Business Day, such
payment shall be made, and the last day of such Interest Period shall occur, on
the next succeeding Business Day, and any such extension of time shall in all
cases be taken into account in the computation of payment of interest due
hereunder or otherwise; provided, however, if such extension would extend the
maturity date of any Advance or would cause such payment to be made, or the last
day of any Interest Period relating to a LIBOR Rate Advance to occur, in a new
calendar month, payment shall be made, and the last day of any such Interest
Period shall occur, on the next preceding Business Day.
SECTION 2.09. Taxes. (a) Any and all payments made by the Borrower
hereunder or under any instrument delivered hereunder shall be made free and
clear of and without deduction for any present or future taxes, levies, imposts,
deductions, charges, or withholdings, and all liabilities with respect thereto,
excluding (i) taxes imposed on net income by, and other franchise taxes of, the
United States or any political subdivision thereof (including, without
limitation, branch profits taxes imposed by the United States under Section
884(a) of the Code or any successor provision thereto, or similar taxes imposed
by any political sub-division or taxing authority thereof or therein, including
Puerto Rico), other than any such taxes that would not have been imposed but for
the Borrower's incorporation or residence in the jurisdiction imposing the tax
or the situs of any property securing the Notes in the jurisdiction imposing the
tax, (ii) taxes imposed on net income by any other jurisdiction (other than
solely by reason of the Borrower's incorporation or residence in such
jurisdiction or the situs of any property securing the Notes in such
jurisdiction), (iii) in the case of any payment to any entity not organized
under the laws of the United States, any taxes imposed by the United States
under Section 871 or 881 of the Code or any successor provision thereto or by
means of withholding at the source, and (iv) in the case of any payment to the
Agent or any Lender, taxes (including taxes imposed by means of withholding at
the source) imposed by any jurisdiction other than the United States which would
not have been imposed but for the failure of the Agent or such Lender (as the
case may be) to execute and return to the Borrower any form of notification,
certification, statement or other document which the Borrower shall have
delivered to the Agent or such Lender (as the case may be) a reasonable period
of time before such payment is due and which the Agent or such Lender (as the
case may be) is able to execute and return to the Borrower in good faith without
incurring any additional costs, risks or other disadvantages; provided, however,
that clause (iii) shall not apply if such tax would not be imposed but for an
amendment to or a change in any applicable law or regulation or in the
interpretation thereof by any regulatory authority (including, without
limitation, any change in an applicable tax treaty), which amendment or change
is enacted, promulgated or otherwise comes into force after the Closing Date (a
"Change of Law"), but only to the extent that such Lender or Agent, as the case
may be, cannot, after notice from the Borrower, through reasonable efforts
eliminate or reduce the amount of taxes payable (without additional costs
(unless the Borrower agrees to bear such costs) or other disadvantages or risks
(tax or otherwise) to such Lender or the Agent) by reason of such Change of Law
(all such excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities are hereinafter referred to as "Excluded Taxes"; all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities are hereinafter referred to as "Taxes"). If the Borrower shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder or under such instrument, (i) the sum payable shall be increased as
may be necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 2.08) the
Lender or the Agent, as the case may be, receives an amount equal to the sum it
would have received had no such deductions been made, (ii) the Borrower shall
make such deductions and (iii) the Borrower shall pay the full amount deducted
to the relevant taxation authority or other authority in accordance with
applicable law.
(b) In addition, the Borrower agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or under any
instrument delivered hereunder, or from the execution, delivery or registration
of, or otherwise with respect to, this Agreement or any instrument delivered
hereunder excluding any such taxes, charges or similar levies which arise from
the execution, delivery or registration of any instrument in accordance with
Section 7.10 hereof (all such non-excluded taxes, charges or similar levies are
hereinafter referred to as "Other Taxes").
(c) The Borrower will indemnify the Agent and each Lender for the
full amount of Taxes and Other Taxes (plus any taxes imposed by any jurisdiction
on amounts payable under this Section 2.09) paid by the Agent or such Lender,
as the case may be, on any and all payments made hereunder or on any instrument
delivered hereunder and any liability (including penalties, interest and
expenses, which result from the failure of the Borrower to perform its
obligations under the Loan Documents) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted;
provided, however, that the Agent or such Lender, as the case may be, will
timely notify the Borrower of the assertion of liabilities for any such Taxes
or Other Taxes and, provided that the Borrower is not in default hereunder,
shall, at the Borrower's request and expense, contest any such asserted
liability. This indemnification shall be made within thirty (30) days from the
date the Agent or the Lender, as the case may be, makes written demand therefor
with appropriate supporting documentation.
(d) Within thirty (30) days after the date of any payment by the
Borrower of Taxes, the Borrower will deliver to the Agent and each Lender, the
original or a certified copy of a receipt evidencing payment thereof. If no
Taxes are payable in respect of any payment, then, at the reasonable request of
the Agent, the Borrower will deliver to the Agent and each Lender a certificate
from each appropriate taxing authority or any political subdivision thereof, or
an opinion of counsel reasonably acceptable to the Agent and each Lender, in a
form reasonably acceptable to the Agent and each Lender to the effect that there
is a reasonable basis to conclude that such payment is exempt from or not
subject to Taxes; provided, however, that neither the Agent nor any other Lender
shall request, and the Borrower shall not be required to furnish, any such
opinions or certificates more frequently than annually.
(e) If the Borrower is required by law to make any deductions or
withholding from any payment made by it to the Agent or a Lender hereunder with
respect to Taxes and is further required by this Section 2.09 to pay and pays
such Taxes, or otherwise reimburses or indemnifies the Agent or a Lender
hereunder with respect to Taxes, and if such Lender or the Agent, as the case
may be, in good faith but in its sole reasonable opinion, determines that it has
received or been granted a credit against or relief or remission for, or
repayment of, any tax paid or payable by it in respect of or calculated with
reference to any Taxes paid, reimbursed or indemnified pursuant to this
Section 2.09, then such Lender or the Agent shall, to the extent that it can do
so without prejudice to the retention of the amount of such credit, relief,
remission or repayment, pay to the Borrower such amount as such Lender or the
Agent, as the case may be, shall, in good faith but in its sole opinion, have
determined to be attributable to such deduction or withholding, reimbursement
or indemnification. Any payment made by such Lender or the Agent under this
clause shall be conclusive evidence of the amount due to the Borrower hereunder
and shall be accepted by and binding upon the Borrower in full and final
settlement of its rights of reimbursement hereunder in respect of the relevant
deduction or withholding. Nothing herein contained shall interfere with the
right of any Lender or the Agent to arrange its tax affairs in whatever manner
it thinks fit and, in particular, none of the Agent nor any Lenders shall be
under any obligation to claim credit, relief, remission or repayment from or
against its corporate profits or similar tax liability in respect of the amount
of such deduction or withholding in priority to any other claims, reliefs,
credits or deductions available to it, nor shall the Agent or any Lender be
obliged to disclose any information relating to its tax affairs or any
computations in respect hereof.
(f) Each Lender which is organized under the laws of a jurisdiction
outside the United States agrees (i) to complete and deliver to the Borrower,
on or before the first Drawdown Date (or, in the case of an assignment pursuant
to Section 7.10 on or before the effective date of such assignment) and (so long
as it remains eligible to do so) from time to time thereafter two duly executed
copies of (A) Internal Revenue Service Form 1001 (certifying that it is entitled
to benefits under an income tax treaty to which the United States is a party)
or (B) Internal Revenue Service Form 4224 (certifying that the income receivable
pursuant to this Agreement is effectively connected with the conduct of a trade
or business in the United States) or (C) Internal Revenue Service Form W-8
(certifying that it is a foreign person), together with a tax certificate,
substantially in the form of Attachment III to Exhibit C hereto, as appropriate,
and (ii) to complete and deliver to the Borrower from time to time, so long as
it is eligible to do so, any successor or additional forms required in order to
secure an exemption from, or reduction in the rate of, U.S. withholding tax.
Each Lender represents that each such form delivered on or before the date
hereof is, and covenants that each such form delivered after the date hereof
shall be, true, correct, and complete with respect to all amounts payable to
such Lender pursuant to this Agreement, and covenants that such form shall
remain true, correct, and complete with respect to all amounts payable to such
Lender pursuant to this Agreement unless and until such Lender notifies the
Borrower otherwise in writing.
(g) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
subsections (a) through (d) of this Section 2.09, and the agreements and
obligations of the Agent and the Lenders contained in subsections (e) and (f)
of this Section 2.09, shall survive the payment in full of the Obligations and
the expiry of the Loan Documents.
SECTION 2.10. Fees. (a) [Reserved.]
(b) On each Fee Payment Date, the Borrower shall pay the Agent,
solely for the account of each Lender, a non-refundable facility fee (as to each
Lender, its "Facility Fee"), of .06% per annum of each such Lender's respective
Commitment (such Commitment, irrespective whether drawn or undrawn, but subject
to reduction by a notice of termination of Commitments delivered by the Borrower
pursuant to Section 2.11 hereof, as to each Lender, the "Facility"), payable
from the Closing Date, in arrears, on the average amount of the Facility,
subject to adjustment as herein provided. The applicable percentage rate per
annum (the "Facility Rate") used to calculate the Facility Fee shall be adjusted
from time to time by the Agent as follows. Notice of the Facility Rate as
adjusted shall be delivered by the Agent to the Lenders and the Borrower not
later than the fifth Business Day of each calendar quarter. If the Agent
determines that on the last Business Day of a calendar quarter the Borrower had
Senior Debt rated
(i) A- or below by S & P or A3 or below by Moody's, the Facility Rate
for the succeeding quarter shall be .06%, and
(ii) at least A by S & P or A2 by Moody's, the Facility Rate for the
succeeding quarter shall be .055%.
In the event that S & P and Moody's provide different ratings for such Senior
Debt, the Agent shall use the higher rating in determining the Facility Rate.
In the event the Borrower has no rated Senior Debt but the Borrower's
Subordinated Debt has been rated, for purposes of determining the Facility Rate,
the Agent shall assume a Senior Debt rating equivalent to one subgrade higher
than the actual Subordinated Debt rating given during such period. In the event
the Agent shall not have received ratings from the Borrower pursuant to Section
2.05(b)(ii)(B) or 5.01(c)(vi) or if no such ratings exist during any such
quarter, the Facility Rate for the succeeding quarter will be .375%.
Notwithstanding anything to the contrary contained in this Agreement or any
other agreement, each Lender's Facility Fee shall be solely for the account of
such Lender.
(c) The Borrower shall pay the Agent for its own account on the
earlier of the Closing Date or the Drawdown Date, and not later than the
anniversary of such date of each year thereafter so long as any Commitment or
amount payable by the Borrower hereunder remains outstanding, an annual
administration fee in an amount mutually agreed between them.
SECTION 2.11. Borrower's Termination of Commitments; Extension of
Termination Date. (a) So long as no Event of Default has occurred and is
continuing, the Borrower may by notice delivered to the Agent terminate the
Commitment of the Lenders, ratably, in any amount not less than Twenty Million
Dollars ($20,000,000) and integral multiples of One Million Dollars ($1,000,000)
if in excess thereof, provided that no such termination shall be effective until
four (4) Business Days following receipt by the Agent of such notice. Each
notice of termination given pursuant to this Section 2.11(a) shall be
irrevocable and binding when given and shall permanently reduce the Commitment
of each Lender ratably in accordance with its Percentage Interest. No amount
of the Commitment for which a notice of termination has been given by the
Borrower shall be available for borrowing under this Agreement. The Agent shall
give each Lender prompt notice of each notice of termination of Commitment
received from the Borrower.
(b) So long as no Default or Event of Default has occurred and is
continuing, and provided the Borrower has not exercised any of its rights under
Section 2.12 hereof or issued any Term Note, the Borrower may by notice
delivered to the Agent no fewer than forty-five (45), and no more than sixty
(60), days prior to the Termination Date then in effect, request that such
Termination Date be extended to a date falling three hundred sixty-four (364)
days after the Termination Date (the "Extended Termination Date") with respect
to all or a pro rata portion of the Commitments of all Lenders. The Agent shall
notify the Lenders of any such request promptly upon receipt from the Borrower.
Each Lender shall, no fewer than twenty-nine (29), and no more than forty-five
(45), days prior to the Termination Date then in effect, notify the Borrower and
the Agent in writing, of its election to approve or not approve the extension
requested in such extension request (the failure of any Lender to respond being
deemed a negative response). Notwithstanding any provision of this Agreement
to the contrary, any notice by any Lender of its approval to extend the
Termination Date shall be revocable by such Lender in its sole and absolute
discretion at any time on or prior to the date (the "Last Response Date") which
is twenty-nine (29) days prior to the Termination Date then in effect. If, by
the Last Response Date, Lenders constituting the Majority Lenders shall not have
irrevocably approved the extension of the Termination Date requested in such
extension request, the Termination Date shall not be extended pursuant to such
extension request. If, by the Last Response Date, Lenders (the "Consenting
Lenders") constituting the Majority Lenders shall have irrevocably approved the
extension of the Termination Date requested in the Borrower's extension request,
the Termination Date (with respect to the Consenting Lenders and with respect
to such percentage of their respective Commitments as to which the Borrower
requested an extension) shall automatically and without any further action by
any Person be extended (effective upon the Termination Date then in effect) for
the period specified in such extension request to the Extended Termination Date
and with respect to such percentage of the Commitments as to which the Borrower
requested an extension. The Commitment of any Lender which has not irrevocably
consented to such extension by the Last Response Date (an "Objecting Lender"),
and any percentage of the Commitments of Consenting Lenders as to which the
Borrower did not request an extension, shall expire on the Termination Date in
effect on the date of such extension request (such Termination Date, the
"Commitment Expiration Date"), and on the Commitment Expiration Date all
outstanding Advances of the Objecting Lenders, together with interest thereon
and, in the case of any Objecting Lender, any fees and other amounts accrued
hereunder for the account of such Objecting Lender, shall be paid in full by the
Borrower. Notwithstanding the extension of Commitments of the Consenting
Lenders to the Extended Termination Date, all outstanding Advances of such
Consenting Lenders made prior to the Commitment Expiration Date shall be paid
in full on such date together with interest thereon, by the Borrower for the
account of such Consenting Lenders. The Agent shall promptly notify (y) the
Lenders and the Borrower of any extension of the Termination Date pursuant to
this Section 2.11(b) and (z) the Borrowers and any other Lender of any Lender
which becomes an Objecting Lender. In the event that by the Last Response Date
the Agent receives from Consenting Lenders constituting the Majority Lenders
approval of the extension request but in an amount less than the amount
requested by the Borrower, the Borrower shall have the opportunity to designate
to the Agent one or more financial institutions willing to become a party to
this Agreement as a consenting lender as herein provided on the Termination Date
in a principal amount up to any such deficit, provided however that each such
financial institution must be acceptable to the Agent in its sole discretion,
such acceptance not to be unreasonably denied or withheld. Each Objecting
Lender shall cooperate with the Agent in assigning all of its rights and
obligations hereunder to a Consenting Lender or such other financial institution
willing to become a Consenting Lender as provided herein in Sections 2.11(b) and
7.10. The decision of Agent as to the apportionment of Commitments among
Consenting Lenders on the Termination Date shall be final, provided that any
assignment of the Objecting Lenders' rights and obligations hereunder pursuant
to this Section 2.11(b) shall be apportioned by the Agent, first, pro rata among
willing Consenting Lenders, if any, and thereafter to such other financial
institution designated by the Borrower and acceptable to the Agent.
SECTION 2.12. Conversion to Term Loan. So long as the Borrower
shall have fulfilled all the conditions set forth in this Section 2.12, and so
long as no Default or Event of Default has occurred and is continuing, on the
Termination Date the Borrower shall have the option, exercisable upon delivery
to the Agent, on or before three (3) Business Days prior to the Termination
Date, of a notice (a "Notice of Term Loan Conversion") in the form of Exhibit
F, to convert the outstanding principal balance of each Note due on the
Termination Date to a Term Loan on the terms and conditions set forth below:
(i) Term Notes. The Term Loan of each Lender to the Borrower shall
be evidenced by a Term Note executed by the Borrower which shall (A) be
dated as of the Termination Date, (B) be in an amount equal to the unpaid
principal balance of the Loan of such Lender as of such date, (C) bear
interest at a rate selected in accordance with this Section 2.12, (D) be
payable to such Lender, at the Lending Office of the Agent, (E) be in
renewal and extension of such Lender's Series A and/or Series B Note and
(F) be in the form of Exhibit A-3 attached hereto with blanks approximately
completed in conformity herewith. The Borrower shall specify in its Notice
of Term Loan Conversion the Term Loan Maturity Date of the Term Loans,
which shall be a day falling no later than the anniversary of the
Termination Date. The Borrower electing to convert one or more Advances
to Term Loans shall deliver to the Agent a Term Note for each such Term
Loan contemporaneously with the delivery of the Notice of Term Loan
Conversion provided for in this Section 2.12, which Term Note shall be
delivered by the Agent to the relevant Lender in exchange for the related
Series A and/or Series B Note, which shall be delivered to the Agent and
forwarded to the Borrower.
(ii) Principal and Interest Payments on Term Notes. Interest on the
Term Notes shall be payable in accordance with Section 2.05. The unpaid
principal amount of the Term Notes and all accrued but unpaid interest
thereon, shall be payable on the Term Loan Maturity Date.
(iii) Interest Options. The Borrower shall have the option of
having all or any portion of the Term Loans bear interest at the Base Rate
or the LIBOR Rate (each, an "Interest Option").
(A) At Time of Borrowing. The Borrower shall, in its Notice of
Term Loan Conversion, give the Agent notice of the initial Interest
Option and Interest Period (subject to the provisions of the
definition of such term) selected with respect to each Advance of the
Borrower to be converted into a Term Loan on the Termination Date.
(B) At Expiration of Interest Periods. Prior to the end of each
Interest Period the Borrower in respect of a Term Loan shall give
written notice (a "Notice of Term Loan Rollover") to the Agent of the
Interest Option which shall be applicable to such Term Loan upon the
expiration of such Interest Period. Such Notice of Term Loan Rollover
shall be given to the Agent (y) in the case of a LIBOR Rate selection,
as provided in Section 2.05(b)(ii)(A), and (z) in the case of a Base
Rate selection, by telex notice to be received by the Agent not later
than 11:00 A.M. New York time on a Business Day that is at least two
(2) Business Days prior to the termination of such Interest Period.
Such Term Loan Rollover Notice shall also specify the length of the
succeeding Interest Period (subject to the provisions of the
definition of such term), selected by the Borrower with respect to
each Term Loan. Each Notice of Term Loan Rollover shall be
irrevocable and effective upon notification thereof to the Agent. If
the required Notice of Term Loan Rollover shall not have been timely
received by the Agent in accordance with this paragraph, the Borrower
shall be deemed to have converted such Loan into a Base Rate Advance
on the last day of the applicable Interest Period and the Agent shall
promptly notify the Borrower of such conversion.
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Conditions Precedent to Initial Advances. The
obligation of each Lender (other than the Designated Bidders) to make its
initial Advance is subject to the condition precedent that the Agent shall have
received on or before the Drawdown Date of the initial Borrowing the following,
each dated such day, in form and substance satisfactory to the Agent and (except
for the Notes) in sufficient copies for each Lender:
(a) The Series A Notes and the Series B Notes payable to the Lenders,
respectively.
(b) Certified copies of the resolutions of the Board of Directors of
the Borrower approving this Agreement and the Notes, and of all documents
evidencing other necessary corporate action and governmental approvals, if
any, with respect to this Agreement and the Notes, and evidence, dated as
of a recent date, of the good standing of the Borrower in Panama.
(c) A certificate of the Secretary or an Assistant Secretary of the
Borrower certifying the names and true signatures of the officers of the
Borrower authorized to sign this Agreement and the Notes and the other
documents to be delivered hereunder.
(d) A favorable opinion of Arnaldo Perez, acting general counsel of
the Borrower, and of Messrs. Tapia, Linares y Alfaro, special Panamanian
counsel to the Borrower, substantially in the form of Exhibits E-1 and E-2,
respectively, hereto and as to such other matters as any Lender through the
Agent may reasonably request. The Borrower hereby instructs each such
counsel to deliver its opinion to the Agent and the Lenders.
(e) A favorable opinion of Messrs. Haight, Gardner, Poor & Havens,
special New York counsel to the Agent and the Lenders, as to such matters
as any Lender through the Agent may reasonably request.
(f) A letter from the Process Agent, referred to and defined in
Section 8.07 of this Agreement, in which it agrees to act as Process Agent
for the Borrower and to deliver forthwith to the Borrower all process
received by it as such Process Agent.
(g) Evidence of payment by the Borrower of all applicable documentary
stamp taxes (if any) payable in connection with the authorization,
execution and delivery of each of the Loan Documents, and the performance
of the transactions hereby or thereby contemplated, or an opinion of
counsel that no such taxes are payable.
SECTION 3.02. Conditions Precedent to Each A Borrowing. The
obligation of each Lender to make an A Advance on the occasion of each A
Borrowing (including the initial A Borrowing) shall be subject to the further
conditions precedent that on the Drawdown Date of such A Borrowing (a) the
following statements shall be true, and the Agent shall have received for the
account of such Lender a certificate signed by a duly authorized officer of the
Borrower, dated the date of such A Borrowing, stating that (and each of the
giving of the applicable Notice of A Borrowing and the acceptance by the
Borrower of the proceeds of such A Borrowing shall constitute a representation
and warranty by the Borrower that on the date of such A Borrowing such
statements are true):
(i) The representations and warranties contained in Section 4.01 are
correct on and as of the date of such A Borrowing, before and after giving
effect to such A Borrowing and to the application of the proceeds
therefrom, as though made on and as of such date, and
(ii) No Default or Event of Default has occurred and is continuing,
or would result from such A Borrowing or from the application of the
proceeds therefrom;
and (b) the Agent shall have received such other approvals, opinions or
documents as any Lender (other than the Designated Bidders) through the Agent
may reasonably request.
SECTION 3.03. Conditions Precedent to Each B Borrowing. The
obligation of each Lender which is to make a B Advance on the occasion of a B
Borrowing (including the initial B Borrowing) to make such B Advance as part of
such B Borrowing is subject to the conditions precedent that (i) the Agent shall
have received the written confirmatory Notice of B Borrowing with respect
thereto and (ii) on the Drawdown Date of such B Borrowing the following
statements shall be true (and each of the giving of the applicable Notice of B
Borrowing and the acceptance by the Borrower of the proceeds of such B Borrowing
shall constitute representation and warranty by the Borrower that on the date
of such B Borrowing such statements are true):
(a) The representations and warranties contained in Section 4.01 are
correct on and as of the date of such B Borrowing, before and after giving
effect to such B Borrowing and to the application of the proceeds
therefrom, as though made on and as of such date,
(b) No Default or Event of Default has occurred and is continuing,
or would result from such B Borrowing or from the application of the
proceeds therefrom, and
(c) No event has occurred and no circumstance exists as a result of
which the information concerning the Borrower that has been provided to the
Agent and each Lender by the Borrower in connection herewith would include
an untrue statement of a material fact or omit to state any material fact
or any fact necessary to make the statements contained therein, in the
light of the circumstances under which they were made, not misleading.
SECTION 3.04. Additional Conditions to Each Borrowing. The
obligation of the Lenders to make each Advance shall be subject to the further
conditions precedent that on the Drawdown Date of such Advance:
(a) the Borrower shall have paid or caused to be paid when due (i) to
the Agent, and the Agent shall have received, the Facility Fee payable to
each Lender, and (ii) to the Agent its annual administration fee;
(b) no material adverse change shall have occurred since November 30,
1994, in the business, operations, properties, prospects or condition
(financial or otherwise) of the Borrower or its Subsidiaries excluding
Specified Subsidiaries;
(c) all corporate or other proceedings, and all documents,
instruments and other legal matters in connection with the transactions
contemplated by the Loan Documents and the Transaction shall be
satisfactory in form and substance to each of the Lenders (other than the
Designated Bidders) and the Agent and their counsel; and
(d) the Agent and each Lender (other than the Designated Bidders)
shall have received such other approvals, opinions, or documents as they
may reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Borrower. The
Borrower represents and warrants as follows:
(a) Due Existence; Compliance. The Borrower is a corporation duly
incorporated, validly existing and in good standing under the laws of
Panama and has all requisite corporate power and authority under such laws
to own or lease and operate its properties and to carry on its business as
now conducted and as proposed to be conducted, and to execute, deliver and
perform its obligations under the Loan Documents, to which it is, or will
be, a party. Each of the Borrower and its Subsidiaries excluding Specified
Subsidiaries is duly qualified or licensed to do business as a foreign
corporation and is in good standing, where applicable, in all jurisdictions
in which it owns or leases property (including vessels), or proposes to own
or lease property (including vessels), or in which the conduct of its
business, and the conduct of its business upon consummation of the
Transaction, requires it to so qualify or be licensed, except to the extent
that the failure to so qualify or be in good standing would have no
material adverse effect on the business, operations, properties, prospects
or condition (financial or otherwise) of the Borrower and its Subsidiaries
excluding Specified Subsidiaries or the ability of any such Person to
perform its obligations under any of the Loan Documents to which it is or
may be a party. Each of the Borrower and its Subsidiaries excluding
Specified Subsidiaries is in compliance in all material respects with all
applicable laws, rules, regulations and orders.
(b) Corporate Authorities; No Conflicts. The execution, delivery and
performance by the Borrower of this Agreement and the other Loan Documents
to which it is or will be, a party are within its corporate powers and have
been duly authorized by all necessary corporate and stockholder approvals
and (i) do not contravene its charter or by-laws or any law, rule,
regulation, judgment, order or decree applicable to or binding on the
Borrower or its Subsidiaries excluding Specified Subsidiaries and (ii) do
not contravene, and will not result in the creation of any Lien under, any
provision of any contract, indenture, mortgage or agreement to which any
of the Borrower or its Subsidiaries excluding Specified Subsidiaries is a
party, or by which it or any of its properties are bound.
(c) Government Approvals and Authorizations. No authorization or
approval (including exchange control approval) or other action by, and no
notice to or filing with, any governmental authority or regulatory body is
required for the due execution, delivery and performance by or enforcement
against the Borrower of the Loan Documents (except such as have been duly
obtained or made and remain in full force and effect).
(d) Legal, Valid and Binding. Each of the Loan Documents is, or upon
delivery will be, the legal, valid and binding obligation of the Borrower,
enforceable against the Borrower in accordance with its terms (except as
enforcement may be limited by bankruptcy, moratorium, insolvency,
reorganization or similar laws generally affecting creditors' rights as
well as the award by courts of relief in lieu of specific performance of
contractual provisions).
(e) Financial Information. Each of the consolidated annual audited
balance sheet of the Borrower as at November 30, 1994, and the consolidated
quarterly unaudited balance sheet of the Borrower as at August 31, 1995,
and the related statements of operations and statements of cash flows of
the Borrower and its Subsidiaries for the fiscal year or fiscal quarter
then ended, as the case may be, copies of which have been furnished
heretofore by the Borrower to the Agent, fairly present the consolidated
financial condition of the Borrower and its Subsidiaries as at such date
and the results of the operations of the Borrower and its Subsidiaries for
the period ended on such date, all in accordance with GAAP consistently
applied (subject, in the case of the August 31, 1995 statements to normal
year-end audit adjustments). Since November 30, 1994, there has been no
material adverse change in the business, operations, properties or
condition (financial or otherwise) of the Borrower or any of its
Subsidiaries excluding Specified Subsidiaries.
(f) Litigation. There is not pending nor, to the knowledge of the
Borrower upon due inquiry and investigation, threatened any action or
proceeding affecting any of the Borrower or its Subsidiaries, by or before
any court, governmental agency or arbitrator, which reasonably could be
expected (i) to materially adversely affect the assets, business,
properties, prospects, operations or condition (financial or otherwise) of
the Borrower and its Subsidiaries taken as a whole, or (ii) to prohibit,
limit in any way or materially adversely affect the consummation of the
Transaction contemplated by the Loan Documents, including, without
limitation, the ability of the Borrower or its Subsidiaries to perform its
obligations under this Agreement or any Note.
(g) Immunities. Neither the Borrower nor any of its Subsidiaries,
nor the property of any of them, has any immunity from jurisdiction of any
court or from any legal process (whether through service or notice,
attachment prior to judgment, attachment in aid of execution, execution or
otherwise) under the laws of the jurisdiction of its organization.
(h) No Taxes. There is no tax, levy, impost, deduction, charge or
withholding or similar item imposed (i) by Panama or the States of Florida
or New York, or by any political subdivision of any of the foregoing, on
or by virtue of the execution and delivery of these representations and
warranties, the execution or delivery or enforcement of this Agreement or
any Note or any other document to be furnished hereunder or thereunder,
provided with respect to Florida that each Note is executed outside Florida
and, subsequent to its execution outside Florida, that it is not brought
into Florida at any time, or (ii) by Panama or the States of Florida or New
York, or by any political subdivision of any of the foregoing, on any
payment to be made by the Borrower pursuant to this Agreement or any Note,
other than taxes on or measured by net income imposed by any such
jurisdiction in which the Lender has its situs of organization or a fixed
place of business.
(i) No Filing. To ensure the legality, validity, enforceability or
admissibility in evidence of this Agreement or any Note in each of Panama
and the States of Florida and New York, it is not necessary that this
Agreement or any Note, or any other document related to any thereof, be
filed or recorded with any court or other authority in such jurisdiction,
or that any stamp or similar tax be paid on or with respect to this
Agreement or any Note except to the extent provided in (h) above.
(j) No Defaults. There does not exist (i) any event of default, or
any event that with notice or lapse of time or both would constitute an
event of default, under any agreement to which any of the Borrower or any
of its Subsidiaries is a party or by which any of them may be bound, or to
which any of their properties or assets may be subject, which default would
have a material adverse effect on the Borrower and its Subsidiaries taken
as a whole, or would materially adversely affect their ability to perform
their respective obligations under this Agreement or any Note, or (ii) any
event which is or would result in a Default or Event of Default.
(k) Margin Regulations. No part of the proceeds of the Loan will be
used for any purpose that violates the provisions of any of Regulations G,
T, U or X of the Board of Governors of the Federal Reserve System or any
other regulation of such Board of Governors. None of the Borrower nor any
of its Subsidiaries is engaged in the business of extending credit for the
purpose of purchasing or carrying margin stock, within the meaning of
Regulations G, T, U and X issued by the Board of Governors of the Federal
Reserve System.
(l) Investment Company Act. The Borrower is not an "investment
company" or a company "controlled" by an "investment company" (as each of
such terms is defined or used in the Investment Company Act of 1940, as
amended).
(m) Taxes Paid. (i) Each of the Borrower and its Subsidiaries
excluding Specified Subsidiaries (A) has filed or caused to be filed, or
has timely requested an extension to file or has received from the relevant
governmental authorities an extension to file, all material tax returns
which are required to have been filed, and (B) has paid all taxes shown to
be due and payable on said returns or extension requests or on any material
assessments made against it or any of its properties, and all other
material taxes, fees or other charges imposed on it or any of its
properties by any governmental authority (other than those the amount or
validity of which is currently being contested in good faith by appropriate
proceedings and with respect to which appropriate reserves in conformity
with GAAP have been provided on its books); and (ii) no material tax liens
have been filed and no material claims are being asserted with respect to
any such taxes, fees or other charges other than those the amount or
validity of which is currently being contested in good faith by appropriate
proceedings and with respect to which appropriate reserves in accordance
with GAAP have been provided on its books; provided, however, that the
representations and warranties made in subdivisions (i)(A) and (i)(B) of
this paragraph (m) with respect to HAL and the HAL Subsidiaries acquired
on or about January 17, 1989 are limited to tax returns required to be
filed with respect to the period from January 1, 1989 through the date
hereof.
(n) Disclosure. No representation, warranty or statement made or
document or financial statement provided by the Borrower or any Affiliate
or Subsidiary thereof, in or pursuant to this Agreement or any Note, or in
any other document furnished in connection therewith, is untrue or
incomplete in any material respect or contains any misrepresentation of a
material fact or omits to state any material fact necessary to make any
such statement herein or therein not misleading.
(o) Good Title. The Borrower has good title to its properties and
assets, except for (i) as permitted under this Agreement, existing or
future Liens, security interests, mortgages, conditional sales arrangements
and other encumbrances either securing Indebtedness or other liabilities
of the Borrower or any of its Subsidiaries, or which the Borrower in its
reasonable business judgment has determined would not be reasonably
expected to materially interfere with the business or operations of the
Borrower and its Subsidiaries as conducted from time to time, and
(ii) minor irregularities therein which do not materially adversely affect
their value or utility.
(p) ERISA. (i) No Insufficiency or Termination Event has occurred
or is reasonably expected to occur, and no "accumulated funding deficiency"
exists and no "variance" from the "minimum funding standard" has been
granted (each such term as defined in Part III, Subtitle B, of Title I of
ERISA) with respect to any Plan (other than any Multiemployer Plan or Plan
that has been terminated and all the liabilities of which have been
satisfied in full prior to March 30, 1990) in which the Borrower or any of
its Subsidiaries excluding Specified Subsidiaries is a participant.
(ii) None of the Borrower nor any ERISA Affiliate excluding Specified
Subsidiaries has incurred, or is reasonably expected to incur, any
Withdrawal Liability to any Multiemployer Plan.
(iii) None of the Borrower nor any ERISA Affiliate excluding Specified
Subsidiaries has received any notification that any Multiemployer Plan in
which it is a participant is in reorganization or has been terminated,
within the meaning of Title IV of ERISA, and no such Multiemployer Plan is
reasonably expected to be in reorganization or to be terminated within the
meaning of Title IV of ERISA.
(q) Tangible Net Worth. As of August 31, 1995 (subject to normal
year-end audit adjustments with respect to the consolidated quarterly
unaudited balance sheet of the Borrower as of such date) the Tangible Net
Worth of the Borrower was not less than Two Billion Dollars
($2,000,000,000).
(r) Solvency. The Borrower is, and on each date a Lender advances
funds to it in respect of the Loan will be, Solvent.
ARTICLE V
COVENANTS OF THE BORROWER
SECTION 5.01. Affirmative Covenants. So long as an Advance or any
other Obligation shall remain unpaid or any Lender shall have any Commitment
under this Agreement, the Borrower shall, unless the Agent on behalf of the
Lenders shall otherwise consent in writing in accordance with Section 7.04,
comply with each of the following affirmative covenants:
(a) Compliance with Laws. The Borrower shall comply, and cause each
of its Subsidiaries to comply, in all material respects with all applicable
laws, rules, regulations and orders, and to pay when due all taxes,
assessments and governmental charges imposed upon it or upon its property,
except to the extent contested in good faith by appropriate proceedings and
for which adequate reserves in conformity with GAAP have been provided.
(b) Use of Proceeds. The Borrower shall use all proceeds of the
Notes for such general corporate purposes as may be permitted under
applicable law, including support for its commercial paper programs, if
any, except that subject to receipt by the Agent from the Borrower of
written notice, the Borrower may use proceeds of the Notes up to the Dollar
amount specified in the Borrower's said notice to the Agent solely to
satisfy the Borrower's payment obligations as described in such notice,
provided that neither the Agent nor any Bank shall have any responsibility
as to the use of such proceeds.
(c) Financial Information; Defaults.
(i) The Borrower shall promptly inform the Agent of any event which
is or may become a default or breach of the Borrower's
obligations under the Loan Documents or result in a Default or
Event of Default, or any event which materially adversely
affects its ability fully to perform any of its obligations
under any Loan Document, or any event of default which has
occurred and is continuing under any material agreement to which
the Borrower or any of its Subsidiaries is a party;
(ii) As soon as the same become available, but in any event within
120 days after the end of each of its fiscal years, the Borrower
shall deliver to the Agent on behalf of the Lenders (A) audited
consolidated financial statements of (1) the Borrower and (2)
Kloster, if required other than by the Agent or the Lenders and
(B) unaudited consolidated financial statements of Kloster if
audited financial statements are not so required. All such
audited consolidated financial statements of the Borrower shall
set forth, in comparative form the corresponding figures for the
preceding fiscal year (excluding, as to any Subsidiary acquired
after the Closing Date, corresponding information for the period
preceding its acquisition); all such audited consolidated
financial statements shall be accompanied by an opinion thereon
of independent certified public accountants of recognized
national standing acceptable to the Agent, which opinion shall
state that said financial statements fairly present the
consolidated financial condition and results of operations of
each of (1) the Borrower and (2) Kloster, if required other than
by the Agent or the Lenders, as at the end of, and for, such
fiscal year;
(iii) As soon as the same become available and in any event
within 75 days after the end of each fiscal quarter of each
of its fiscal years, the Borrower shall deliver to the
Agent on behalf of the Lenders (A) unaudited consolidated
statements of income, retained earnings and cash flow of
(1) the Borrower and (2) Kloster, in each case for each
such quarterly period and for the period from the beginning
of its then current fiscal year to the end of such period,
and (B) related unaudited consolidated balance sheets of
(1) the Borrower and (2) Kloster, in each case as at the
end of each such quarterly period. Delivery of the
Borrower's quarterly financial statements containing
information required to be filed with the Securities and
Exchange Commission on Form 10-Q (as in effect on the
Closing Date) shall satisfy the requirements of the first
sentence of this Section 5.01(c)(iii) insofar as they
relate to the Borrower on a consolidated basis, provided
however that such requirements shall not be satisfied if
the Borrower makes no such filings or if there is a
material change after the Closing Date in the form or
substance of financial disclosures and financial
information required to be set forth in Form 10-Q. All
such unaudited consolidated financial statements shall be
accompanied by a certificate of a senior financial officer
of the Borrower, which certificate shall state that such
financial statements fairly present the consolidated
financial condition and results of the operations of each
of (1) the Borrower and (2) Kloster, as at the end of, and
for, such period (subject to normal year end audit
adjustments) in accordance with GAAP, consistently applied;
(iv) Together with the financial statements to be delivered to the
Agent on behalf of the Lenders from time to time pursuant to
clauses (ii) and (iii) of this Section 5.01(c), the Borrower
shall deliver to the Agent a certificate of a senior financial
officer of the Borrower, which certificate shall (A) state that
the consolidated financial condition and operations of the
Borrower and its Subsidiaries are such as to be in compliance
with all of the provisions of Sections 5.01(d) and (k) and
5.02(a) and (j) of this Agreement, (B) set forth in reasonable
detail the computations necessary to determine whether the
provisions of Sections 5.01(d) and (k) and 5.02(a) and (j) have
been complied with, and (C) state that no Default or Event of
Default has occurred and is continuing;
(v) As soon as the same become available, but in any event not later
than January 15th of each calendar year beginning January 1994,
the Borrower shall deliver to the Agent a five (5) year cash
flow projection and the related income statement and a balance
sheet for the Borrower;
(vi) Promptly upon their becoming available, the Borrower shall
deliver to the Agent copies of all registration statements and
periodic reports which each of the Borrower and Kloster shall
have filed with the Securities and Exchange Commission or any
national securities exchange or market and any ratings (and
changes thereto) of its debt by Standard & Poor's Corporation
and Moody's Investors Service;
(vii) Promptly upon the mailing thereof to its shareholders, the
Borrower shall deliver to the Agent copies of all financial
statements and reports so mailed;
(viii) As soon as reasonably possible, the Borrower shall deliver
to the Agent copies of all reports and notices which it or
any of its Subsidiaries files under ERISA with the Internal
Revenue Service, the PBGC, the U.S. Department of Labor or
the sponsor of a Multiemployer Plan, or which it or any of
its Subsidiaries receives from the PBGC or the sponsor of
a Multiemployer Plan related to (a) any Termination Event
and (b) with respect to a Multiemployer Plan, (x) any
Withdrawal Liability, (y) any actual or expected
reorganization (within the meaning of Title IV of ERISA),
or (z) any termination of a Multiemployer Plan (within the
meaning of Title IV of ERISA);
(ix) From time to time on request, the Borrower shall furnish
the Agent and any of the Lenders with such information and
documents, and provide access to the books, records and
agreements of the Borrower, or any Subsidiary or Affiliate
of the Borrower, as the Agent or any of the Lenders may
reasonably require. All certificates, materials and
documents to be furnished by the Borrower under this
Section 5.01(c) shall be provided to the Agent in such
number of copies as the Agent may reasonably request and
shall be furnished promptly by the Agent to the Lenders;
and
(x) Notwithstanding the other terms of this Section 5.01(c),
the Borrower shall have no obligation to provide the
materials and information required by this Section 5.01(c)
respecting Kloster or any other Specified Subsidiary in the
event such Person is not a Subsidiary of the Borrower.
(d) Financial Covenants. The Borrower shall ensure that:
(i) the ratio of its Total Debt to Total Capital, tested quarterly,
shall be at all times less than fifty percent (50%);
(ii) at the end of each fiscal quarter, the amount of its
Consolidated Cash Flow shall be, as at the end of each of the
four fiscal quarters immediately preceding covenant testing, at
least 125% of the sum of (i) the aggregate amount of (x)
dividend payments, (y) scheduled principal loan repayments and
(z) scheduled Capital Lease payments made, in respect of the
Borrower, on a consolidated basis excluding the Specified
Subsidiaries, in the four fiscal quarters immediately preceding
covenant testing;
(iii) at the end of each month, the sum of the unencumbered cash
plus the current value of short term investments (in
conformity with GAAP) of the Borrower and its Subsidiaries
excluding Specified Subsidiaries shall equal at least Fifty
Million Dollars ($50,000,000);
(iv) the Tangible Net Worth of the Borrower and its Subsidiaries
excluding Specified Subsidiaries shall exceed, on a fiscal
quarterly basis, the sum of (A) Eight Hundred Thirty-Five
Million Dollars ($835,000,000) and (B) fifty percent (50%) of
cumulative consolidated net income (excluding any losses) of the
Borrower and its Subsidiaries excluding Specified Subsidiaries
beginning December 1, 1992.
(e) Corporate Existence, Mergers. The Borrower shall preserve and
maintain in full force and effect its corporate existence and rights and
those of its Subsidiaries, and not merge or consolidate with or into, or
convey, transfer, lease or otherwise dispose of (whether in one transaction
or in a series of transactions) all or substantially all of its assets
(whether now owned or hereafter acquired) to, or acquire all or
substantially all of the assets of, any Person or permit any of its
Subsidiaries to do so, except that (v) any Subsidiary of the Borrower other
than a Specified Subsidiary may merge or consolidate with or into the
Borrower if the surviving entity is the Borrower, or transfer assets to,
or acquire assets of the Borrower so long as such assets do not constitute
all or substantially all of the assets of the Borrower, (w) any Subsidiary
of the Borrower other than a Specified Subsidiary may merge or consolidate
with or into, or transfer assets to, or acquire assets of, any other
Subsidiary of the Borrower other than a Specified Subsidiary, (x) the
Borrower and its Subsidiaries may acquire all or substantially all of the
assets of any Person if the surviving entity is the Borrower or such
Subsidiary, as the case may be, (y) any Specified Subsidiary may merge or
consolidate with or into, or transfer assets to, the Borrower or any of its
Subsidiaries, provided that the Borrower or such Subsidiary other than a
Specified Subsidiary is the surviving entity and (z) the Borrower may cause
the change of its jurisdiction by way of merger or otherwise, upon consent
of the Majority Lenders, which consent shall not unreasonably be denied;
provided, further, SCC Swedish Cruiseship Consortium K.B. may be dissolved
by appropriate proceedings. Notwithstanding the foregoing, neither
Windstar Sail Cruises Ltd., Carnival's Crystal Palace Hotel Corporation
Limited nor any of their respective Subsidiaries shall (y) acquire any of
the assets of the Borrower or any of its other Subsidiaries or (z) merge
or consolidate with or into the Borrower or any of its other Subsidiaries
unless the resulting entity is the Borrower or one of the Borrower's
Subsidiaries other than Windstar Sail Cruises Ltd. or any of its
Subsidiaries or Carnival's Crystal Palace Hotel Corporation Limited or any
of its Subsidiaries.
(f) Insurance. The Borrower shall, and shall cause each of its
Subsidiaries to, insure and keep insured, with financially sound and
reputable insurers, so much of its properties, in such amounts and against
such risks, as to all the foregoing, in each case, reasonably satisfactory
to the Lenders and as are usually and customarily insured by companies
engaged in a similar business with respect to properties of a similar
character.
(g) [Reserved.]
(h) [Reserved.]
(i) The Borrower's Stock. The Borrower shall ensure that at all
times the number of the issued and outstanding shares of its capital stock
at least sufficient to elect a majority of the Borrower's board of
directors shall be beneficially owned, directly or indirectly, by Mr. Ted
Arison or the members of his immediate family, free and clear of Liens in
favor of any other Person.
(j) [Reserved.]
(k) Solvency. The Borrower shall procure that it is and shall be at
all times Solvent.
(l) [Reserved.]
(m) Further Assurances. The Borrower shall, from time to time upon
the request of any Lender, accept for cancellation any Note or Notes held
by and payable to such Lender, and thereupon the Borrower shall execute and
deliver to such Lender, payable to it and its registered assigns, a
substitute Note or Notes in like form and total aggregate amount as the
canceled Note or Notes, but in any denomination not smaller than Ten
Million Dollars ($10,000,000) or such lesser amount as such Lender may
request (but not less than Five Million Dollars ($5,000,000)) as shall
constitute the outstanding principal of all outstanding Notes held by such
Lender. The Borrower shall do all things necessary to maintain each of the
Loan Documents as legal, valid and binding obligations, enforceable in
accordance with their respective terms by the Agent and the Lenders. The
Borrower shall take such other actions and deliver such instruments as may
be necessary or advisable, in the opinion of the Agent on behalf of the
Lenders to protect the rights and remedies of the Agent and the Lenders
under the Loan Documents.
SECTION 5.02. Negative Covenants. So long as any Advance or any
other Obligation shall remain unpaid or any Lender shall have any Commitment,
the Borrower shall not, unless the Agent on behalf of the Lenders shall
otherwise consent in writing in accordance with Section 7.04:
(a) Sale of Assets. Unless permitted by Section 5.01(e), during any
fiscal year, sell or otherwise dispose of, or permit any of its
Subsidiaries to sell or dispose of, in one or more transactions, assets
with a book value in excess of Two Hundred Fifty Million Dollars
($250,000,000) (but excluding any sale or disposition of any or all of the
assets or capital stock of Kloster, Windstar Sail Cruises Ltd. or
Carnival's Crystal Palace Hotel Corporation Limited or any of their
respective Subsidiaries).
(b) [Reserved.]
(c) [Reserved.]
(d) [Reserved.]
(e) Limitation on Payment Restrictions Affecting Subsidiaries.
Create or otherwise cause or suffer to exist or become effective any
consensual encumbrance or restriction (other than those contained in or
permitted by or through any other provision of this Agreement or the other
Loan Documents, including those contained in documents existing on the
Closing Date evidencing Indebtedness permitted by any of the foregoing) on
the ability of any Subsidiary to (i) pay dividends or make any other
distributions on such Subsidiary's capital stock or pay any Indebtedness
owed to the Borrower or any of its Subsidiaries, (ii) make loans or
advances to the Borrower or any of its Subsidiaries, or (iii) transfer any
of its property or assets to the Borrower or any of its Subsidiaries.
(f) Transactions with Officers, Directors and Shareholders. Enter
or permit any of its Subsidiaries to enter into any transaction or
agreement, including but not limited to any lease, Capital Lease, purchase
or sale of real property, purchase of goods or services, with any
Subsidiary, Affiliate or any officer, or director of the Borrower or of any
such Subsidiary or Affiliate, or any record or known beneficial owner of
equity securities of any such Subsidiary, any known record or beneficial
owner of equity securities of any such Affiliate or the Borrower, or any
record or beneficial owner of at least five percent (5%) of the equity
securities of the Borrower, except on terms that are no less favorable to
the Borrower or the relevant Subsidiary than those that could have been
obtained in a comparable transaction by the Borrower or such Subsidiary
with an unrelated Person and except between Subsidiaries which are
consolidated for financial reporting purposes with the Borrower.
(g) Compliance with ERISA. Become party to any prohibited
transaction, reportable event, accumulated funding deficiency or plan
termination, all within the meaning of ERISA and the Code with respect to
any Plan as to which there is an Insufficiency, nor permit any Subsidiary
to do so (except with respect to a Multiemployer Plan if the foregoing
shall result from the act or omission of a Person party to such
Multiemployer Plan other than the Borrower or its Subsidiary).
(h) Investment Company. Be or become an investment company subject
to the registration requirements of the Investment Company Act of 1940, as
amended, or permit any Subsidiary to do so.
(i) [Reserved.]
(j) Liens. Create or incur, or suffer to be created or incurred or
come to exist, any Lien in respect of Indebtedness on any vessel or other
of its properties or assets of any kind, real or personal, tangible or
intangible, included in the Borrower's consolidated balance sheet excluding
Specified Subsidiaries in accordance with GAAP, nor shall the Borrower
permit any of its Subsidiaries excluding Specified Subsidiaries to do any
of the foregoing. Solely for purposes of the preceding sentence the term
"Lien" shall not include (i) Liens with respect to Indebtedness under the
Swaps Documents and (ii) other Liens in respect of Indebtedness up to an
amount not greater than
40% (during its fiscal year 1994) and
35% (after its fiscal year 1994)
of the amount of total assets of the Borrower as shown on its consolidated
balance sheet excluding Specified Subsidiaries (but excluding the value of any
intangible assets) for the relevant period.
(k) [Reserved.]
(l) Organizational Documents. Amend its articles of incorporation
(or similar charter documents) or by-laws (except for such amendments as
shall not adversely affect the rights and remedies of the Agent or any
Lender).
ARTICLE VI
DEFAULT
SECTION 6.01. Events of Default. If any of the following events
("Events of Default") shall occur and be continuing:
(a) The Borrower shall fail to pay any Facility Fee, or any
installment of principal of a Note, when due, or shall fail to pay any
interest on any such Note or fee within two (2) days after such interest
shall become due; or
(b) Any representation or warranty made by or on behalf of the
Borrower under or in connection with this Agreement or any of the other
Loan Documents shall prove to have been incorrect in any material respect
when made; or
(c) The Borrower shall fail to perform or observe any other term,
covenant or agreement contained in this Agreement or any of the other Loan
Documents on its part to be performed or observed and, in each case, any
such failure shall remain unremedied for ten (10) days after written notice
thereof shall have been given to the Borrower by the Agent or any Lender;
or
(d) The Borrower or any of its Subsidiaries excluding Specified
Subsidiaries shall fail to pay any amount or amounts due in respect of
Indebtedness in the aggregate amount in excess of Twenty Million Dollars
($20,000,000) (but excluding Indebtedness resulting from the Notes) of the
Borrower or such Subsidiary when due (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise), and such failure
shall continue after the applicable grace period, if any, specified in the
agreement or instrument relating to such Indebtedness; or any other default
under one or more agreements or instruments relating to Indebtedness in the
aggregate amount in excess of Twenty Million Dollars ($20,000,000) (but
excluding Indebtedness resulting from the Notes) of the Borrower or such
Subsidiary, or any other event, shall occur and shall continue after the
applicable grace period, if any, specified in such agreement or instrument,
if the effect of such default or event is to accelerate, or to permit the
acceleration of, the maturity of such Indebtedness; or any such
Indebtedness shall be declared to be due and payable, or required to be
prepaid (other than by a regularly scheduled required prepayment), prior
to the stated maturity thereof; or
(e)(1) The Borrower or any of its Subsidiaries excluding Specified
Subsidiaries shall (A) generally not pay its debts as such debts become
due, (B) threaten to stop making payments generally, (C) admit in writing
its inability to pay its debts generally, (D) make a general assignment for
the benefit of creditors, (E) not be Solvent or (F) be unable to pay its
debts;
(2) Any proceeding shall be instituted in any jurisdiction by or
against the Borrower or any of its Subsidiaries excluding Specified
Subsidiaries (A) seeking to adjudicate it a bankrupt or insolvent, (B)
seeking liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or (C)
seeking the entry of an administration order, an order for relief, or the
appointment of a receiver, trustee, or other similar official, for it or
for any substantial part of its property, provided, that, in the case of
any such proceeding instituted against but not by the Borrower or any of
its Subsidiaries excluding Specified Subsidiaries, such proceeding shall
remain undismissed or unstayed for a period of forty-five (45) days or any
of the relief sought in such proceeding (including, without limitation, the
entry of an order for relief against it or the appointment of a receiver,
trustee, custodian or other similar official for it or any substantial part
of its property) shall be granted; or
(3) (A) The Borrower or any of its Subsidiaries excluding Specified
Subsidiaries shall take any corporate action to authorize any of the
actions set forth above in subparagraph (e)(2) of this Section 6.01, or (B)
any director, or if one or more directors are elected and acting, any two
directors of the Borrower or any of its Subsidiaries excluding Specified
Subsidiaries, or any Person owning directly, or indirectly, shares of
capital stock of the Borrower or any of its Subsidiaries excluding
Specified Subsidiaries in a number sufficient to elect a majority of
directors of the Borrower or any of its Subsidiaries, shall take any
preparatory or other steps to convene a meeting of any kind of the Borrower
or any of its Subsidiaries excluding Specified Subsidiaries, or any meeting
is convened or any other preparatory steps are taken, for the purposes of
considering or passing any resolution or taking any corporate action to
authorize any of the actions set forth above in subparagraph (e)(2) of this
Section 6.01; or
(f) One or more judgments or orders for the payment of money, singly
or in the aggregate, in excess of an amount equal to Ten Million Dollars
($10,000,000) shall be rendered against the Borrower or any of its
Subsidiaries excluding Specified Subsidiaries and either (i) enforcement
proceedings shall have been commenced by any creditor upon such judgment
or order or (ii) there shall have elapsed any period of ten (10)
consecutive days during which a stay of enforcement of such judgment or
order, by reason of a pending appeal or otherwise, shall not have been in
effect; or
(g) An extraordinary event shall occur, or a material adverse change
affecting the business or operations of the Borrower shall occur, which
situation or change gives reasonable grounds to conclude that the Borrower
will not, or will be unable to, perform or observe in the normal course its
obligations under this Agreement or the Loan Documents; or
(h) Micky Arison or Ted Arison (or, in the event of his death, a
member of his immediate family or another Person acceptable to the Lenders)
shall cease to own, directly or indirectly, shares of capital stock of the
Borrower entitled to elect directors, in a number of shares at least
sufficient to elect a majority of directors of the Borrower; or
(i) Any material provision of any of the Loan Documents after
delivery thereof shall for any reason cease to be valid and binding on the
parties thereto (other than the Lenders and the Agent), or any party
thereto (other than a Lender or the Agent) shall so state in writing;
then, and in any such event, the Agent on direction of the Majority Lenders
(i) shall, by notice to the Borrower, declare the Commitment to be terminated,
whereupon the same shall forthwith terminate, and (ii) shall, by notice to the
Borrower, declare each Advance and the Notes, and all interest thereon and all
other amounts payable under this Agreement, to be forthwith due and payable
(except that no notice shall be required upon the occurrence of an Event of
Default described in paragraph (e) of this Section 6.01) whereupon each Advance,
each Note, all such interest and all such amounts shall become and be forthwith
due and payable without presentment, demand, protest or further notice of any
kind, all of which are hereby expressly waived by the Borrower.
ARTICLE VII
RELATION OF LENDERS; ASSIGNMENTS, DESIGNATIONS
AND PARTICIPATIONS
SECTION 7.01. Lenders and Agent. The general administration of this
Agreement and the Loan Documents shall be by the Agent, and each Lender hereby
authorizes and directs the Agent to take such action (including without
limitation retaining lawyers, accountants, surveyors or other experts) or
forbear from taking such action as in the Agent's reasonable opinion may be
necessary or desirable for the administration hereof (subject to any direction
of the Majority Lenders and to the other requirements of Section 7.04 hereof).
The Agent shall inform each Lender, and each Lender shall inform the Agent, of
the occurrence of any Event of Default promptly after obtaining knowledge
thereof; however, unless it has actual knowledge of an Event of Default, each
of the Agent and the Lenders may assume that no Event of Default has occurred.
SECTION 7.02. Pro Rata Sharing. If any Lender shall obtain any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) on account of the A Advances and Term Loan made by it
(other than pursuant to Section 2.06(c), 2.07 or 2.09) in excess of its ratable
share of payments on account of the A Advances obtained by all the Lenders, such
Lender shall forthwith purchase from the other Lenders such participations in
the A Advances and Term Loans made by them as shall be necessary to cause such
purchasing Lender to share the excess payment ratably with each of them,
provided, however, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Lender, such purchase from each Lender
shall be rescinded and such Lender shall repay to the purchasing Lender the
purchase price to the extent of such recovery together with an amount equal to
such Lender's ratable share (according to the proportion of (i) the amount of
such Lender's required repayment to (ii) the total amount so recovered from the
purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect of the total amount so recovered. Any Lender so
purchasing a participation from another Lender pursuant to this Section 7.02
may, to the fullest extent permitted by law, exercise all its rights of payment
with respect to such participation as fully as if such Lender were the direct
creditor of the Borrower in the amount of such participation.
SECTION 7.03. Setoff. Upon (i) the occurrence and during the
continuance of any Event of Default and (ii) the making of the request or the
granting of the consent specified by Section 6.01 to authorize the Agent to
declare the Notes due and payable pursuant to the provisions of Section 6.01,
each Lender is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Lender to or for the credit or the
account of the Borrower against any and all of the obligations of the Borrower
now or hereafter existing under this Agreement and any Note held by such Lender,
whether or not such Lender shall have made any demand under this Agreement or
such Note and although such obligations may be unmatured. Each Lender agrees
promptly to notify the Borrower after any such set-off and application made by
such Lender, provided that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of each Lender under this
Section are in addition to other rights and remedies (including, without
limitation, other rights of set-off) which such Lender may have.
SECTION 7.04. Approvals. Upon any occasion requiring or permitting
an approval of any amendment or modification or any consent, waiver, declaring
an Event of Default or taking any action thereafter, or any other action on the
part of the Agent or the Lenders under any of the Loan Documents, (1) action may
(but shall not be required to) be taken by the Agent for and on the behalf or
for the benefit of all Lenders, provided (A) that no other direction of the
Majority Lenders shall have been previously received by the Agent, and (B) that
the Agent shall have received consent of the Majority Lenders to enter into any
written amendment or modification of the provisions of any of the Loan
Documents, or to consent in writing to any material departure from the terms of
any Loan Documents by the Borrower or any other party thereto or (2) action
shall be taken by the Agent upon the direction of the Majority Lenders, and any
such action shall be binding on all Lenders; provided further, however, that
unless all of the Lenders (other than the Designated Bidders) agree in writing
thereto, no amendment, modification, waiver, consent or other action with
respect to this Agreement or any of the Series A Notes shall be effective which
(a) increases the Commitment or increases the Percentage Interest of any of the
Lenders, (b) reduces any commission, fee, the principal or interest owing to any
Lender in respect of the Series A Notes hereunder or the method of calculation
of any thereof, (c) extends the Termination Date or the date on which any sum
in respect of the Series A Notes is due hereunder, (d) releases any collateral,
guaranty or other security, (e) amends the provisions of this Section 7.04 or
the definition of Majority Lenders, or (f) waives any condition for Borrowing
set forth in Article III. It is understood and agreed that from and after the
conversion of Advances to Term Loans on the Termination Date, such Lenders as
have no outstanding claims under any Note shall have no rights under this
Section 7.04.
SECTION 7.05. Exculpation. The Agent shall not be liable or
answerable for anything whatsoever in connection with any of the Loan Documents
or other instrument or agreement required hereunder or thereunder, including
responsibility in respect of the execution, delivery, construction or
enforcement of any of the Loan Documents or any such other instrument or
agreement, or for any action taken or not taken by the Agent in any case
involving exercise of any power or authority conferred upon the Agent under any
thereof, except for its wilful misconduct or gross negligence, and the Agent
shall have no duties or obligations other than as provided herein and therein.
The Agent shall be entitled to rely on any opinion of counsel (including counsel
for the Borrower or any of its Subsidiaries) in relation to any of the Loan
Documents or any other instrument or agreement required hereunder or thereunder
and upon writings, statements and communications received from the Borrower or
any of its Subsidiaries (including any representation made in or in connection
with any Loan Document), or from any other party to any of the Loan Documents
or any documents referred to therein or any other Person, firm or corporation
reasonably believed by it to be authentic, and the Agent shall not be required
to investigate the truth or accuracy of any writing or representation, nor shall
the Agent be liable for any action it has taken or omitted in good faith on such
reliance.
SECTION 7.06. Indemnification. Each Lender (other than any
Designated Bidder) agrees to indemnify the Agent, except to the extent
reimbursed by the Borrower and except in the case of any suit by any Lender
against the Agent resulting in a final judgment against the Agent, ratably
according to the aggregate principal amount of the Series A Notes or Term Notes
then held by it (or if no Series A Notes or Term Notes are outstanding or if any
such Series A Notes or Term Notes are held by Persons which are not Lenders,
ratably according to the amount of its Commitment) against all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever (except to the extent
the foregoing results from the Agent's gross negligence or wilful misconduct)
which may be imposed on, incurred by or asserted against the Agent in any way
relating to or arising out of (y) any of the Loan Documents or any other
instrument or agreement contemplated hereunder or thereunder or (z) any action
taken or omitted by the Agent under any of the Loan Documents or such other
instrument or agreement.
SECTION 7.07. Agent as Lender. The Agent shall, in its individual
capacity, have the same rights and powers hereunder as any other Lender and may
exercise the same as though it were not an agent; the term "Lenders" shall
include the Agent in its individual capacity to the extent of its Percentage
Interest. The Agent and its Subsidiaries and Affiliates may accept deposits
from, lend money to, and generally engage in any kind of banking, trust or other
business with the Borrower and its Subsidiaries and Affiliates, as if it were
not the Agent.
SECTION 7.08. Notice of Transfer; Resignation; Successor Agent. (a)
The Agent may deem and treat a Lender party to this Agreement as the owner of
such Lender's interest in any Loan and any other instrument or agreement
contemplated hereunder or thereunder for all purposes hereof unless and until
a written notice of the assignment or transfer thereof, executed by such Lender
and otherwise in compliance with the requirements of Section 7.10 hereof, shall
have been received and accepted by the Agent. The Agent shall resign if
directed by the Majority Lenders for any reason. The Agent may not resign at
any time, except that, upon written notice to the Lenders and the Borrower, the
Agent may resign if in its judgement there exist or may occur reasons related
to conflict of interest, a change in, or violation of, law or regulation or
interpretation thereof, or such other occurrence that may prevent or impede the
Agent in discharging its duties hereunder faithfully and effectively in
accordance with their terms.
(b) Any successor Agent shall be appointed by the Majority Lenders
and shall be a bank or trust company reasonably satisfactory to the Borrower (so
long as no Event of Default shall have occurred and be continuing) and the
Majority Lenders. If no successor Agent shall have been so appointed by the
Majority Lenders, and shall have accepted such appointment, within 30 days after
the retiring Agent's giving of notice of resignation or the Majority Lender's
removal of the Agent, then such retiring Agent may, on behalf of the Lenders,
appoint a successor Agent, which shall be a commercial bank organized under the
laws of the United States of America or of any State thereof and having a
combined capital and surplus of at least $50,000,000. Upon the acceptance of
any appointment as Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations under this Agreement. After any
retiring Agent's resignation or removal hereunder as Agent, the provisions of
this Article VII shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Agent under this Agreement.
SECTION 7.09. Credit Decision; Not Trustee. Each Lender represents
that it has made, and agrees that it shall continue to make, its own independent
investigation of the financial condition and affairs of the Borrower and its
Subsidiaries, and its own appraisal of the creditworthiness of the Borrower and
its Affiliates and Subsidiaries in connection with the making and performance
of this Agreement. The Agent has and shall have no duty or responsibility
whatsoever on the date hereof or, except as otherwise expressly provided in this
Agreement at any time hereafter, to provide any Lender with any credit or other
information. Nothing herein shall (nor shall it be construed so as to)
constitute the Agent a trustee for the Borrower or its Subsidiaries or impose
on it any duties or obligations other than those for which express provision is
made in this Agreement or under the other Loan Documents.
SECTION 7.10. Assignments, Designations and Participation. (a) Each
Lender (other than the Designated Bidders) may assign to one or more banks or
other entities all or a portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of its Commitment,
the Advances owing to it and the Note or Notes held by it); provided, however,
that (i) each such assignment shall be of constant, and not a varying,
percentage of all rights and obligations under this Agreement (other than any
right to make B Advances, B Advances owing to it or Series B Notes), (ii) unless
the Borrower shall otherwise agree with the assigning Lender, the amount of the
Commitment of the assigning Lender being assigned pursuant to each such
assignment (determined as of the date of the Assignment and Acceptance with
respect to such assignment) that is not to a then existing Lender hereunder, or
to a Designated Bidder designated by a then existing Bank hereunder shall in no
event be less than Ten Million Dollars ($10,000,000) or such lesser amount as
shall constitute all of such assigning Bank's Commitment and the outstanding
principal of Notes payable to it, (iii) each such assignment shall be to an
Eligible Assignee, and (iv) the parties to each such assignment shall execute
and deliver to the Agent, for its acceptance and recording in the Register, an
Assignment and Acceptance, together with any Note or Notes subject to such
assignment and a processing and recordation fee of $3,000; provided further,
however, that each such assignment that is not to a then existing Lender
hereunder, or to a Designated Bidder designated by a then existing Bank
hereunder (x) shall be subject to the consent of the Borrower, which consent
shall not unreasonably be denied and which consent shall be deemed given unless
the Borrower gives the assigning Lender and the Agent written notice of and a
reasonable basis for its denial not later than five (5) Business Days following
(i) telex, telecopy or cable notice given to the Borrower by the assigning
Lender or the Agent of the name of the proposed transferee, the amount of
Commitment to be assigned and such information as the Borrower may reasonably
request for purposes of making an informed judgment, and, if the proposed
transferee is organized under the laws of a jurisdiction outside the United
States, (ii) transmission to the Borrower by telecopy of any one of the
following documents, properly completed and executed by the proposed
transferee:Internal Revenue Service Form 1001 (or any successor form),
certifying that the proposed transferee is entitled to benefits under an income
tax treaty whichwill exempt from United States Federal income tax the income
receivable by the
proposed transferee pursuant to this Agreement, or Internal Revenue Service Form
4224 (or any successor form), certifying that the income receivable by the
proposed transferee pursuant to this Agreement will be effectively connected
with the conduct of a trade or business in the United States, or Internal
Revenue Service Form W-8 (or any successor form) certifying that it is a foreign
person together with a tax certificate, substantially in the form of Attachment
III to the Assignment and Acceptance, as appropriate. Any consent to assignment
untimely or unreasonably denied by the Borrower shall be void and of no effect,
and shall not preclude or bar any assignment otherwise permitted by this Section
7.10(a). Any assignment or purported assignment not in compliance with this
Section shall be void and of no effect. Without regard to any of the other
terms of this Agreement or of any other agreement, any Lender may assign, as
collateral or otherwise, any of its rights (including, without limitation,
rights to payments of principal and/or interest on the Notes) under this
Agreement to any Federal Reserve Bank of the United States without notice to or
consent of the Borrower, the Agent or any other Person. In case of any
assignment pursuant to this Section 7.10(a), the assignee shall not be entitled
to receive the portion (if any) of any amount otherwise payable under Section
2.07 or 2.09 hereof which exceeds the amount which would have been payable under
Section 2.07 or 2.09 (as the case may be) to the assignor with respect to the
rights and obligation so assigned. In the case of a transfer of any Note from
the accounting records of the office of a Lender where such Note was originally
recorded to the accounting records of any other office of such Lender, or a
change in the location of the Lending Office from that designated as of the
Closing Date, such Lender or the Agent, as the case may be, shall not be
entitled to receive the portion (if any) of any amount otherwise payable under
Section 2.07 or 2.09 hereof which exceeds the amount which would have been
payable under Section 2.07 or 2.09 (as the case may be) to such Lender or the
Agent, as the case may be, if such transfer or change had not been made. In the
case of a change in location, from the Closing Date, of the Lending Office,
unless the Borrower shall consent to such change, the Borrower shall not be
required to remit to the Agent pursuant to Section 2.07 or 2.09 hereof any
amount that exceeds the amount which would have been payable under Section 2.07
or 2.09 (as the case may be) if such change in location had not occurred. Upon
such execution, delivery, acceptance and recording, from and after the effective
date specified in each Assignment and Acceptance, and delivery of the tax forms
and other documents referred to in Section 2.09 hereof, (x) the assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance and subject to the foregoing, have the rights and obligations of a
Lender hereunder and (y) the Lender assignor thereunder shall, to the extent
that rights and obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights and be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be party
hereto).
(b) By executing and delivering an Assignment and Acceptance, the
Lender assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than as provided
in such Assignment and Acceptance, such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in connection with this Agreement or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement or any other instrument or document furnished pursuant hereto;
(ii) such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of any of the Borrower
or its Subsidiaries or the performance or observance by any of the Borrower or
its Subsidiaries of any of its obligations under this Agreement or any other
instrument or document furnished pursuant hereto; (iii) such assignee confirms
that it has received a copy of this Agreement, together with copies of the
financial statements referred to herein Sections 4.01(e) and 5.01(c), and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and Acceptance;
(iv) such assignee will, independently and without reliance upon the Agent, such
assigning Lender or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement; (v) such
assignee confirms that it is an Eligible Assignee; (vi) such assignee appoints
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement as are delegated to the Agent by the
terms hereof, together with such powers as are reasonably incidental thereto;
and (vii) such assignee agrees that it will perform in accordance with their
terms all of the obligations which by the terms of this Agreement are required
to be performed by it as a Lender.
(c) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an assignee representing that it is an Eligible Assignee,
the Agent shall, if such Assignment and Acceptance has been completed and is in
substantially the form of Exhibit C hereto and has attached thereto the forms
referred to in paragraph 3(vii) thereof, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register
(including the transfer of Notes to such Eligible Assignee by the assigning
Lender) and (iii) give prompt notice and an execution counterpart thereof to the
Borrower. Within five (5) Business Days after its receipt of such notice, the
Borrower, at its own expense, shall execute and deliver to the Agent in exchange
for the surrendered Note or Notes a new Note or new Notes, as the case may be,
of the same Series or type to the order of such Eligible Assignee in an amount,
if on or before the Termination Date, equal to the Commitment assumed by it
pursuant to such Assignment and Acceptance, and a new Series B Note in
substantially the form of Exhibit A-2 hereto, as the case may be, and if the
assigning Lender has retained a Commitment hereunder, a new Series A Note to the
order of the assigning Lender in an amount equal to the Commitment retained by
it hereunder. Such new Series A Note or Series A Notes shall be in an aggregate
principal amount equal to the aggregate principal amount of such surrendered
Series A Note or Series A Notes, shall be dated the effective date of such
Assignment and Acceptance and shall otherwise be in substantially the form of
Exhibit A-1 hereto. After the Termination Date, a new Term Note or Term Notes,
substantially in the form of Exhibit A-3 hereto, shall be delivered as aforesaid
in connection with the Assignment and Acceptance in lieu of Series A or Series
B Notes.
(d) In addition each Lender (other than the Designated Bidders) may
designate one or more banks or other entities to have a right to make B Advances
as a Lender pursuant to Section 2.03; provided, however, that (i) no such Lender
shall be entitled to make more than two such designations with respect to any
particular B Borrowing, (ii) each such Lender making one or more of such
designations shall retain the right to make B Advances as a Lender pursuant to
Section 2.03, (iii) each such designation shall be to a Designated Bidder and
(iv) the parties to each such designation shall execute and deliver to the
Agent, for its acceptance and recording in the Register, a Designation
Agreement. Upon such execution, delivery, acceptance and recording, from and
after the effective date specified in each Designation Agreement, the designee
thereunder shall be a party hereto with a right to make B Advances as a Lender
pursuant to Section 2.03 and the obligations related thereto.
(e) By executing and delivering a Designation Agreement, the Lender
making the designation thereunder and its designee thereunder confirm and agree
with each other and the other parties hereto as follows: (i) such Lender makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other instrument or document
furnished pursuant hereto; (ii) such Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of any of
the Borrower or its Subsidiaries or the performance or observance by any of the
Borrower or its Subsidiaries of any of its obligations under this Agreement or
any other instrument or document furnished pursuant hereto; (iii) such designee
confirms that it has received a copy of this Agreement, together with copies of
the financial statements referred to in Section 4.01(e) and 5.01(c) and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into the Designation Agreement; (iv) such
designee will, independently and without reliance upon the Agent, such
designating Lender or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement; (v) such
designee confirms that it is a Designated Bidder; (vi) such designee appoints
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement as are delegated to the Agent by the
terms hereof, together with such powers as are reasonably incidental thereto;
and (vii) such designee agrees that it will perform in accordance with their
terms all of the obligations which by the terms of this Agreement are required
to be performed by it as a Lender.
(f) Upon its receipt of a Designation Agreement executed by a
designating Lender and a designee representing that it is a Designated Bidder,
the Agent shall, if such Designation Agreement has been completed and is
substantially in the form of Exhibit D hereto, (i) accept such Designation
Agreement, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the Borrower. Within five (5) Business Days
after its receipt of such notice, the Borrower, at its own expense, shall
execute and deliver to the Agent a new Series B Note to the order of such
Designated Bidder in substantially the form of Exhibit A-2 hereto.
(g) The Agent shall maintain at its address referred to in
Section 8.02 of this Agreement a register for the recordation of the names and
addresses of the Lenders and, with respect to Lenders other than Designated
Bidders, the Commitment of, and principal amount of the Advance owing and each
Note payable to, each Lender from time to time and a copy of each Assignment and
Acceptance and Designation Agreement delivered to and accepted by it (the
"Register"). The entries in the Register shall be conclusive and binding for
all purposes, absent manifest error, and the Borrower, the Agent and the Lenders
may treat each Person whose name is recorded in the Register as a Lender
hereunder for all purposes of this Agreement. The Register shall be available
for inspection by the Borrower or any Lender at any reasonable time and from
time to time upon reasonable prior notice and each shall be entitled to make
copies thereof at its expense.
(h) Each Lender and the Agent may grant participations to one or more
banks or other entities in or to all or any part of its rights and obligations
under this Agreement (including, without limitation, all or a portion of its
Commitment and the Advance owing to it); provided, however, that,
notwithstanding the grant of any such participation by any Lender, such
participation, and the right to grant such a participation, shall be expressly
subject to the following conditions and limitations: (i) such Lender's
obligations under this Agreement (including without limitation, its Commitment
to the Borrower hereunder) shall remain unchanged, (ii) such Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations, (iii) such Lender shall remain the holder of any such Note and
Advance for all purposes of this Agreement, (iv) the Borrower, the Agent and the
other Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement,
(v) such Lender shall continue to be able to agree to any modification or
amendment of this Agreement or any waiver hereunder without the consent,
approval or vote of any such participant or group of participants, other than
modifications, amendments, and waivers which (a) postpone the Termination Date,
the Term Loan Maturity Date or any date fixed for any payment of, or reduce any
payment of, principal of or interest on such Lender's Advance or any fees or
other amounts payable under this Agreement, or (b) increase the amount of such
Lender's Commitment, or (c) change the interest rate payable under this
Agreement, or (d) release all or substantially all of any collateral or
guaranty, provided that if a Lender agrees to any modification or waiver
relating to items (a) through (d), the Borrower, the Agent and each other Lender
may conclusively assume that such Lender duly received any necessary consent of
each of its participants and (vi) except as contemplated by the immediately
preceding clause (v), no participant shall be deemed to be or to have any of the
rights or obligations of a "Lender" hereunder.
(i) Any Lender may, in connection with any assignment, designation
or participation or proposed assignment, designation or participation pursuant
to this Section 7.10, disclose to the assignee, Designated Bidder or
participant, or proposed assignee, designated bidder or participant, any
information relating to the Borrower or its Subsidiaries furnished to such
Lender by or on behalf of the Borrower, provided that the Person receiving such
information undertakes not to disclose it to a third party except pursuant to,
and subject to the conditions provided in, this Section 7.10.
SECTION 7.11. Managing Agent; Co-Agent. Each of the Managing Agent
and Co-Agent shall have no duties, responsibilities, rights or liabilities as
Managing Agent or Co-Agent, as the case may be, under this Agreement or any of
the other Loan Documents and, other than as a Lender, shall not be liable or
answerable for anything whatsoever in connection with any of the Loan Documents
or other instrument or agreement required hereunder or thereunder, including
responsibility in respect of the execution, delivery, construction or
enforcement of any of the Loan Documents or any such other instrument or
agreement, or for any action taken or not taken by any Person with respect
thereto. Each of the Managing Agent and Co-Agent has and shall have no duty or
responsibility whatsoever on the date hereof or at any time hereafter, to
provide any Bank with any credit or other information. Nothing herein shall
(nor shall it be construed so as to) constitute the Managing Agent or Co-Agent
a trustee for the Borrower or its Subsidiaries or impose on it any duties or
obligations whatsoever under this Agreement, the other Loan Documents, or
otherwise.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Amendments. No amendment, supplement or modification
to this Agreement shall be enforceable against the Borrower unless the same
shall be in writing and signed by the Borrower. No amendment or waiver of any
provision of this Agreement or any instrument delivered hereunder, nor consent
to any departure by the Borrower therefrom, shall in any event be effective
unless the same shall be in writing and signed by the Agent and, to the extent
required by Section 7.04 hereof, the Majority Lenders or each Lender, as the
case may be, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
SECTION 8.02. Notices. All notices, demands and other communications
provided for hereunder shall be in writing (including telegraphic communication)
and mailed, telexed, telecopied or telegraphed or delivered, if to the Borrower
at its address set forth below its signature herein written; and if to a Lender
other than the Agent, at its address set forth below its signature herein
written; or, as to each party, at such other address as shall be designated by
such party in a notice to the other parties hereto. All such notices and
communications shall, when mailed, telexed, telecopied, or telegraphed, be
effective upon the earliest of (i) actual receipt, (ii) seven days from the date
when deposited in the mails, or (iii) when (on a Business Day and during normal
business hours at the addressee's address) transmitted by telecopy or telex or
delivered to the telegraph company, respectively, except that notices and
communications to the Agent or any Lender pursuant to Article II hereof shall
not be effective until received by the Agent or such Lender.
SECTION 8.03. No Waiver; Remedies. Regardless of any fact known or
investigation undertaken by the Agent or any Lender, no failure on the part of
the Agent or any Lender to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder preclude any other or further exercise thereof
or the exercise of any other right. The remedies herein provided are cumulative
and not exclusive of any remedies provided by law.
SECTION 8.04. Costs, Expenses, Fees and Indemnities. (a) The
Borrower agrees to pay on demand (i) in connection with the preparation,
execution, and delivery of this Agreement and the instruments and other
documents to be delivered hereunder, (y) the reasonable fees and out-of-pocket
expenses of Messrs. Haight, Gardner, Poor & Havens, as special counsel for the
Agent and the Lenders (and any local counsel retained by such firm) with respect
to the closing of the Transaction and (z) all other costs and expenses of the
Lenders and the Agent (other than any other legal fees and related expenses
incurred by them) and (ii) after the Closing Date, all costs and expenses in
connection with the administration of this Agreement and the other instruments
and documents to be delivered hereunder, including, without limitation, the
reasonable fees and out-of-pocket expenses of any counsel for the Agent or the
Lenders in connection with advice given the Agent or the Lenders, from time to
time, as to their rights and responsibilities under this Agreement and such
instruments and documents. The Borrower shall not be liable to any Lender in
respect of any costs or expenses incurred in connection with any assignment or
grant of participation under Section 7.10 hereof. The Borrower further agrees
to pay on demand all losses, costs and expenses, if any (including, without
limitation, reasonable counsel fees and expenses), in connection with the
enforcement of this Agreement and the instruments and other documents delivered
hereunder, including, without limitation, losses, costs and expenses sustained
as a result of a Default by the Borrower in the performance of its obligations
contained in this Agreement or any instrument or document delivered hereunder.
(b) If, for any reason, including maturity or demand of the Loan
under Article VI, or prepayment of the Loan, in whole or in part, the Agent or
any of the Lenders receives payment of principal of or interest on the Loan, or
any part thereof, on any day other than the last day of the Interest Period for
the Loan, or any part thereof, permitted under this Loan Agreement the Borrower
shall pay to the Agent on behalf of the Lenders on demand any amounts required
to compensate the Lenders for any breakage costs (including cost or expense
incurred by reason of the liquidation or reemployment of deposits or other funds
in respect of such payment) and any additional losses, costs or expenses which
any Lender may incur as a result of such payment, provided that the Lender shall
have delivered to the Agent and the Borrower, as the case may be, a certificate
as to the amount of such breakage costs, additional losses, costs or expenses,
which certificate shall be binding, absent manifest error, except that the
failure of the Lender to provide such certificate shall in no way relieve the
Borrower of its obligations under this Section 8.04(b).
(c) The Borrower agrees to indemnify and hold harmless each of the
Lenders and the Agent, and its and their respective Affiliates, directors,
officers, employees, agents, representatives, counsel and advisors (each an
"Indemnified Party") from and against any and all claims, damages, losses,
liabilities and expenses (including, without limitation, reasonable fees and
disbursements of counsel and the costs of investigation and defense thereof)
which may be incurred by or asserted or awarded against any Indemnified Party,
in each case based upon, arising out of or in connection with or by reason of,
the Transaction, including, without limitation, any act or failure to act by the
Agent where such act or failure to act was taken pursuant to the Borrower's
request or any transaction contemplated by this Agreement or any Loan Document,
whether or not any Advance hereunder is made, except to the extent that such
claim, damage, loss, liability or expense results from the gross negligence or
willful misconduct of such Indemnified Party. The indemnities of this Agreement
shall survive the termination of this Agreement and the other Loan Documents.
SECTION 8.05. [Reserved.]
SECTION 8.06. Judgment. (a) If for the purposes of obtaining
judgment in any court it is necessary to convert a sum due hereunder or under
any instrument delivered hereunder in United States Dollars into another
currency, the parties hereto agree, to the fullest extent permitted by law, that
the rate of exchange used shall be that at which in accordance with normal
banking procedures the Agent or the Lender, as the case may be, could purchase
United States Dollars with such other currency on the Business Day preceding
that on which final judgment is given.
(b) The obligation of the Borrower in respect of any sum due from it
to the Agent or any Lender hereunder or under such instrument shall,
notwithstanding any judgment in a currency other than United States Dollars, be
discharged only to the extent that on the Business Day following receipt by the
Agent or such Lender of any sum adjudged to be so due in such other currency the
Agent or such Lender, as the case may be, may in accordance with normal banking
procedures purchase United States Dollars with such other currency; if the
United States Dollars so purchased are less than the sum originally due to the
Agent or such Lender, as the case may be, in United States Dollars, the Borrower
agrees, as a separate obligation and notwithstanding any such judgment, to
indemnify the Agent or such Lender, as the case may be, against such loss, and
if the United States Dollars so purchased exceed the sum originally due to the
Agent or such Lender in United States Dollars, the Agent or such Lender shall
remit such excess to the Borrower.
SECTION 8.07. Consent to Jurisdiction; Waiver of Immunities. (a)
The Borrower hereby irrevocably submits to the jurisdiction of any New York
State court sitting in New York County and to the jurisdiction of the United
States District Court for the Southern District of New York in any action or
proceeding arising out of or relating to this Agreement or the Notes, and the
Borrower hereby irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined in such New York State or Federal court.
The Borrower hereby irrevocably waives, to the fullest extent it may effectively
do so, the defense of an inconvenient forum to the maintenance of such action
or proceeding. The Borrower hereby irrevocably appoints C T Corporation System
(the "Process Agent"), with an office on the date hereof at 1633 Broadway, New
York, New York 10019, United States, as its agent to receive on behalf of itself
and its property service of copies of the summons and complaint and any other
process which may be served in any such action or proceeding. Such service may
be made by mailing or delivering a copy of such process to the Borrower in care
of the Process Agent (or any successor thereto, as the case may be) at such
Process Agent's above address (or the address of any successor thereto, as the
case may be), and the Borrower hereby irrevocably authorizes and directs the
Process Agent (and any successor thereto) to accept such service on its behalf.
The Borrower shall appoint a successor agent for service of process should the
agency of C T Corporation System terminate for any reason, and further shall at
all times maintain an agent for service of process in New York, New York, so
long as there shall be outstanding any Obligations under the Loan Documents.
The Borrower shall give notice to the Agent of any appointment of successor
agents for service of process, and shall obtain from each successor agent a
letter of acceptance of appointment and promptly deliver the same to the Agent.
As an alternative method of service, the Borrower also irrevocably consents to
the service of any and all process in any such action or proceeding by the
mailing of copies of such process to it at its address specified in Section 8.02
hereof. Without waiver of its rights of appeal permitted by relevant law, the
Borrower agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law.
(b) Nothing in this Section 8.07 shall affect the right of the Agent
or any Lender to serve legal process in any other manner permitted by law, or
affect the right of the Agent or any Lender to bring any action or proceeding
against the Borrower or their respective properties in the courts of any other
jurisdiction.
(c) To the extent that the Borrower has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property, the
Borrower hereby irrevocably waives such immunity in respect of its obligations
under this Agreement and the Notes.
SECTION 8.08. Binding Effect; Merger; Severability; GOVERNING LAW.
(a) This Agreement shall become effective when it shall have been executed by
the Borrower and the Agent and when the Agent shall have been notified by each
Bank that such Bank has executed it and thereafter this Agreement shall be
binding upon, and shall inure to the benefit of the Borrower, the Agent and each
Lender, and their respective successors and assigns, except that the Borrower
shall not have the right to assign its rights hereunder or any interest herein.
Each Lender may, to the extent permitted under this Agreement, assign to any
other financial institution all or any part of, or any interest in, the Lender's
rights and benefits hereunder and under any instrument delivered hereunder, and
to the extent of such assignment such assignee shall have the same rights and
benefits against the Borrower as it would have had if it were the Lender
hereunder.
(b) The Loan Documents, together with all attachments and exhibits
to each of them and all other documents referenced herein and therein, and
delivered hereunder and thereunder and pursuant hereto and thereto, constitute
the entire agreement among the parties with respect to the subject matter hereof
and thereof, and supersede all prior and contemporaneous written and oral
understandings and agreements related thereto among the parties.
(c) If any word, phrase, sentence, paragraph, provision or section
of the Loan Documents shall be held, declared, pronounced or rendered invalid,
void, unenforceable or inoperative for any reason by any court of competent
jurisdiction, governmental authority, statute, or otherwise, such holding,
declaration, pronouncement or rendering shall not adversely affect any other
word, phrase, sentence, paragraph, provision or section of the Loan Documents,
which shall otherwise remain in full force and effect and be enforced in
accordance with their respective terms.
(d) This Agreement has been delivered in New York, New York. THIS
AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND BE CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK.
SECTION 8.09. Counterparts. This Agreement may be executed in as
many counterparts as may be deemed necessary or convenient and by each party
hereto on separate counterparts, each of which, when so executed, shall be
deemed as original, but all such counterparts shall constitute but one and the
same agreement.
SECTION 8.10. WAIVER OF JURY TRIAL. BY ITS SIGNATURE BELOW WRITTEN
EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT,
THE LOAN DOCUMENTS HEREIN DESCRIBED OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY.
[THE REMAINDER OF THIS PAGE WAS INTENTIONALLY LEFT BLANK.]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
CITIBANK, N.A., CARNIVAL CORPORATION,
as Agent as Borrower
By:______________________________ By:___________________________
Title: Title:
Address: 399 Park Avenue Address: 3655 N.W. 87th Avenue
Shipping Department Miami, Florida 33178-2428
8th Floor Attention: Chairman and Chief Executive
Officer
New York, NY 10043 Telephone: (305) 599-2600
Telephone: (212) 559-3842 Telex: 519206
Telex: 425 727 Answerback:CARNOP
Answerback: NY AAB Telecopy: (305) 471-4700
Telecopy: (212) 793-3588
_______________________________ ___________________________
as Managing Agent as Co-Agent
By:____________________________ By:________________________
Title: Title:
Address: Address:
Telephone: Telephone:
Telex: Telex:
Answerback: Answerback:
Telecopy: Telecopy:
EXHIBIT 4.7
January 24, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, DC 20549
RE: Carnival Corporation
Commission File No. 1-9610
Gentlemen:
Pursuant to Item 601 (b) (4) (iii) of Regulation S-K promulgated under the
Securities Exchange Act of 1934, as amended, Carnival Corporation (the
"Company") hereby agrees to furnish copies of certain long-term debt instruments
to the Securities and Exchange Commission upon the request of the Commission,
and, in accordance with such regulation, such instruments are not being filed
as part of the Annual Report on Form 10-K of the Company for its fiscal year
ended November 30, 1995.
Very truly yours,
CARNIVAL CORPORATION
Arnaldo Perez
General Counsel
KEY MANAGEMENT INCENTIVE PLAN TERMS
HAL ANTILLEN N.V. AND SUBSIDIARIES
1994 -1996
OBJECTIVE
The Holland America Line - Westours, Inc. ("HALW") Key Management Incentive Plan
(the "Plan") is designed to focus managerial attention on the objective of
maximizing the profitability of the Holland America Line group of companies.
The Plan provides a framework within which the participants share in the Net
Income (as defined below) achieved from applicable business operations on a
fiscal year basis.
PLAN ADMINISTRATION
The Plan Administrator is the President and Chief Executive Officer of HALW (the
"Plan Administrator"). The Plan Administrator may, in his or her discretion,
delegate administrative functions regarding the Plan to the HALW Vice
President-Human Resources and/or the HALW Chief Financial Officer. The Plan
Administrator shall have sole discretion in resolving any questions regarding
the administration or terms of the Plan not addressed in this document as well
as in resolving any ambiguities that may exist in this document.
PLAN YEAR
The "Plan Year" is the fiscal year for HAL Antillen N.V., being specifically the
12-month period ending November 30 of each year.
PARTICIPATION
Key Management positions participate in the Plan based on their level of
responsibility and to the degree the position can impact the Plan's objectives.
Each participant is awarded a specific number of shares (the "Shares") except
that no participant shall be awarded in excess of 100 Shares. Decisions
regarding whether or not an individual will participate in the Plan, the number
of Shares awarded to individual participants, and the aggregate number of Shares
awarded to individual participants, and the aggregate number of Shares in a Plan
Year are determined by the Plan Administrator. The Shares of each participant
will be communicated to the participant during the first ninety (90) days of
each Plan Year. Such decisions may be revised during a Plan Year by the Plan
Administrator due to major changes in position responsibilities occurring during
the Plan Year.
Only persons who are employed by HAL Antillen N.V. or one of its direct or
indirect subsidiaries on the first day of a Plan Year are eligible to
participate in the Plan, except that persons who commence employment following
the beginning of the Plan Year may, with the approval of the Plan Administrator,
be allowed to participate in the Plan. Such late-entry participants will be
awarded Shares pro-rated to the time of their entry into the Plan, subject to
the approval of the Plan Administrator.
In order to actually receive an Incentive Award (as defined below) under the
Plan, a participant must be employed by HAL Antillen N.V. or one of its direct
or indirect subsidiaries on the last day of the Plan Year. The only exception
to this requirement is for participants whose employment is terminated prior to
the last day of the Plan Year as the result of death, disability or retirement
("Early Termination Employees").
NET INCOME
The basis for determining the total amount payable under the Plan is the
consolidated net income generated within each Plan Year by HAL Antillen N.V. and
its direct and indirect subsidiaries including Holland America Line-Westours
Inc., Westmark Hotels, Inc., Gray Line of Seattle, Gray Line of Alaska, the
Windstar Companies and other corporations or entities as to which HAL Antillen
N.V. has a direct or indirect ownership interest, either existing or established
during the Plan Year, as such net income is specified in the annual audited
consolidated financial statements for HAL Antillen N.V., prepared in accordance
with generally accepted accounting principles consistently applied (the "Net
Income").
METHOD OF CALCULATING INCENTIVE AWARDS
Each participant will be awarded a specific number of Shares within the Plan for
each Plan Year. Each participant will receive the aggregate dollar value of his
or her Shares (the "Incentive Award"). The dollar value of a single Share will
either be fixed or variable depending on the participant's position, as
determined by the Plan Administrator. Participants with a fixed Share value
will receive $50.00/Share for each $1,000,000 of Net Income during the Plan Year
(pro rated for increments of less than $1,000,000). The fixed Share value is
subject to adjustment by the Plan Administrator at any time prior to the
commencement of the Plan Year to which such adjustment relates.
Participants with a variable Share value will have their Incentive Awards
determined by dividing the actual number of variable Shares outstanding at the
end of the Plan Year into the balance of the Incentive Pool (as defined below)
after subtracting the aggregate value of the outstanding Shares as to
participants with a fixed Share value.
The total Plan incentive award pool for each Plan Year shall equal three and two
tenths percent (3.2%) of Net Income for the Plan Year (the "Incentive Pool")
provided, however, that percentage may, as to either the 1995 and 1996 Plan
Years, be changed by the Plan Administrator at any time prior to the
commencement of the applicable Plan Year.
The Plan Administrator has authority to reduce Incentive Awards to Early
Termination Employees based upon the actual number of days during the Plan Year
in which the person was employed by HAL Antillen N. V. or one of its direct
or indirect subsidiaries.
PAYMENT OF INCENTIVE AWARDS
Incentive Awards are paid on a date determined by the Plan Administrator which
is within seventy-five (75) days following the conclusion of each Plan Year.
At the discretion of the Plan Administrator, advance partial payment of
Incentive Awards may be made based on anticipated Net Income. At the discretion
of the Plan Administrator, special arrangements may be made for earlier payments
to Early Termination Employees.
Cash awards are subject to partial payment in CCL Stock (as defined below) on
the terms described below under Senior Management Common Stock Award.
SENIOR MANAGEMENT COMMON STOCK AWARD
A predetermined portion of the Incentive Award shall be made to specified
participants in the form of CCL Class A shares of common stock ("CCL Stock")
based on the following table:
Share Level Fixed/Variable Amount of Incentive
Award in CCL Stock
All Levels Fixed 30%
20 or more Variable 25%
10-19.99 Variable 20%
Less than 10 Variable -0-
Notwithstanding the foregoing, no portion of the Incentive Award payable to the
Plan Administrator, in his/her capacity as a participant, shall be made in CCL
Stock. The actual number of shares of CCL Stock to be received by each
participant referred to in the foregoing table shall be determined by dividing
the amount of the participant's Incentive Award to be received in CCL Stock (as
above provided) by the average closing price for CCL Stock for the last ten (10)
trading days of the Plan Year, as quoted on the national stock exchange on which
the CCL Stock is traded. Fractional shares of CCL Stock will not be issued.
The value of CCL Stock received by Plan participants will be reported to
governmental taxing authorities, and taxes shall be withheld in respect of such
CCL Stock, in accordance with the requirements of applicable law. CCL Stock
issued will be subject to a restriction on sale commencing from date of issuance
and continuing until, but not including, the first trading day in the second
January following the end of the Plan Year in respect of which the CCL Stock was
issued (e.g., CCL stock issued in respect of the Plan Year ending November 30,
1994 would be subject to a restriction on sale that would not end until the
first trading day in January, 1996). Holders will be eligible to receive
dividends during the restriction period.
DURATION OF PLAN
The Plan will be effective for the fiscal years 1994, 1995 and 1996. It is the
intent of HALW to make a decision on whether or not to renew the Plan for an
additional year in August of each year in order to effect a 2-year planning
horizon (e.g., decision by August 1995 as to whether or not to extend the Plan
to 1997).
PURCHASE FOR INVESTMENT
Whether or not the shares of CCL Stock covered by the Plan have been registered
under the Securities Act of 1933, as amended, each person acquiring shares of
CCL Stock under the Plan may be required by CCL to give a representation in
writing that such person is acquiring such shares for investment and not with
a view to, or for sale in connection with, the distribution of any part thereof.
CCL will endorse any necessary legend referring to the foregoing restriction
upon the certificate or certificates representing any shares of CCL Stock issued
or transferred to the Plan participants upon the grant of any shares CCL Stock
under the Plan.
AMENDMENT OF PLAN
Any amendment to the Plan shall comply with all applicable laws and applicable
stock exchange listing requirements.
GOVERNMENTAL AND OTHER REGULATIONS
The Plan and the CCL Stock awards under the Plan shall be subject to all
applicable federal and state laws, rules and regulations and such approvals by
any governmental or regulatory agency or national securities exchange, as may
be required. CCL shall not be required to issue or deliver any certificates or
shares of CCL stock prior to the completion of any registration or qualification
of such shares under any federal or state law, or any ruling or regulations of
any governmental body or national securities exchange which CCL shall, in its
sole discretion, determine to be necessary or advisable.
ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT, dated as of __________, among Ted Arison ("Arison"),
Cititrust (Jersey) Limited, as Trustee for the Ted Arison 1994 Cash Trust (the
"Cash Trust"), Royal Bank of Scotland Trust Company (Jersey) Limited as Trustee
for each of The Ted Arison 1992 Irrevocable Trust for Micky, The Ted Arison 1992
Irrevocable Trust for Shari and The Ted Arison 1992 Irrevocable Trust for Lin
No. 2 (collectively the "Irrevocable Trusts" and, together with the Cash Trust,
the "Transferees"), and Carnival Corporation, a Panamanian corporation (the
"Company").
WHEREAS, on June 14, 1991, the Company and Arison entered into the
Consulting Agreement/Registration Rights Agreement, dated as of such date (the
"Registration Agreement"), as amended by the First Amendment to Consulting
Agreement/Registration Rights Agreement, dated as of July 31, 1992, in order to,
among other things, provide Arison with certain registration rights with respect
to 64,797,737 shares (the "Shares") of the Company's Class A Common Stock, par
value $.01 per share, owned by Arison as of such date;
WHEREAS, subsequent to June 14, 1991, Arison transferred certain of
the Shares to other members of the Arison Family, certain Trusts for the benefit
of members of the Arison Family, including the Transferees, and certain other
related parties;
WHEREAS, Arison wishes to assign to the Transferees the rights granted
to him pursuant to the Registration Agreement with respect to the Shares
currently held by the Transferees (the "Transferee Shares") and the Transferees
desire to acquire such rights and are willing to perform the duties of Arison
under the Agreement with respect to the Transferee Shares; and
WHEREAS, the Company wishes to consent to such assignment and
assumption.
NOW, THEREFORE, in consideration of the covenants and agreements
contained herein and such other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
i. Assignment. Arison hereby irrevocably assigns to each
Transferee all of Arison's rights under the Registration
Agreement with respect to the Transferee Shares owned by such
Transferee on the date hereof.
ii. Assumption. Each Transferee hereby accepts such assignment
and assumes and covenants to perform all of the obligations of
Arison under the Registration Agreement with respect to the
Transferee Shares owned by such Transferee on the date hereof.
iii. Consent. The Company hereby consents to the assignment and
assumption set forth herein.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
______________________________
Ted Arison
THE TED ARISON 1992 IRREVOCABLE TRUST FOR MICKY
By: Royal Bank of Scotland Trust Company
(Jersey) Limited, as Trustee
By: _____________________
Name:
Title:
THE TED ARISON 1992 IRREVOCABLE TRUST FOR SHARI
By: Royal Bank of Scotland Trust Company
(Jersey) Limited, as Trustee
By: _____________________
Name:
Title:
THE TED ARISON 1992 IRREVOCABLE TRUST FOR LIN
NO.2
By: Royal Bank of Scotland Trust Company
(Jersey) Limited, as Trustee
By: _____________________
Name:
Title:
<PAGE>
THE TED ARISON 1994 CASH TRUST
By: Cititrust (Jersey) Limited, as Trustee
By: _____________________
Name:
Title:
<PAGE>
CARNIVAL CORPORATION
By:
Name: Howard S. Frank
EXHIBIT 11
CARNIVAL CORPORATION
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
(In thousands, except per share data)
<TABLE>
<CAPTION>
For the Years Ended
November 30,
1995 1994
<S> <C> <C>
Net income $451,091 $381,765
Adjustments to net income for the
purpose of computing fully diluted
earnings per share:
Interest reduction from assumed
conversion of
4.5% Convertible Debentures 5,538 5,538
Adjusted net income $456,629 $387,303
Weighted average shares outstanding 284,220 282,744
Adjustments to weighted average shares
outstanding for the purpose of computing
fully diluted earnings per share:
Additional shares issuable upon
conversion of 4.5% Convertible Debentures 6,618 6,618
Adjusted weighted average shares outstanding 290,838 289,362
Earnings per share:
Primary $1.59 $1.35
Fully Diluted* $1.57 $1.34
</TABLE>
* This exhibit is provided to comply with SEC regulations. In accordance with
Accounting Principles Board Opinion No. 15, the Company does not present fully
diluted EPS in its financial statements because the convertible debentures are
anti-dilutive or result in a less than 3% dilution for the periods presented.
EXHIBIT 12
CARNIVAL CORPORATION
RATIO OF EARNINGS TO FIXED CHARGES
(In thousands, except ratios)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED NOVEMBER 30,
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Income from continuing operations $451,091 $381,765 $318,170 $281,773 $253,824
Income tax expense 9,374 10,053 5,497 9,008 8,995
Income from continuing operations
before income taxes $460,465 $391,818 $323,667 $290,781 $262,819
Fixed Charges:
Interest expense $ 63,080 $ 51,378 $ 34,325 $ 53,792 $65,428
Interest portion of rental expense(1)1,645 2,575 2,894 3,567 3,300
Fixed charges associated with
discontinued operations 0 928 1,451 1,265 7,349
Capitalized interest 18,762 21,888 24,609 21,682 28,215
Total fixed charges $ 83,487 $ 76,769 $ 63,279 $ 80,306 $104,292
Earnings before fixed charges $525,190 $446,699 $362,337 $349,405 $338,896
Ratio of earnings to fixed charges 6.3 x 5.8 x 5.7 x 4.4 x 3.2 x
</TABLE>
___________________
(1) Represents one-third of rental expense, which Company management believes
to be representative of the interest portion of rental expense.
EXHIBIT 13
CARNIVAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
ASSETS NOVEMBER 30,
1995 1994
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 53,365 $ 54,105
Short-term investments 50,395 70,115
Accounts receivable, net 33,080 20,789
Consumable inventories, at average cost 48,820 45,122
Prepaid expenses and other 70,718 50,318
Total current assets 256,378 240,449
PROPERTY AND EQUIPMENT, net 3,414,823 3,071,431
OTHER ASSETS
Goodwill, less accumulated amortization of
$48,292 and $41,310 226,571 233,553
Long-term notes receivable 78,907 76,876
Investments in affiliates and other assets 128,808 47,514
$4,105,487 $3,669,823
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt $ 72,752 $ 84,644
Accounts payable 90,237 86,750
Accrued liabilities 113,483 114,868
Customer deposits 292,606 257,505
Dividends payable 25,632 21,190
Total current liabilities 594,710 564,957
LONG-TERM DEBT 1,035,031 1,046,904
CONVERTIBLE NOTES 115,000 115,000
OTHER LONG-TERM LIABILITIES 15,873 14,028
COMMITMENTS AND CONTINGENCIES (Note 9)
SHAREHOLDERS' EQUITY
Class A Common Stock; $.01 par value; one
vote per share; 399,500 shares authorized;
229,839 and 227,575 shares issued and
outstanding 2,298 2,276
Class B Common Stock; $.01 par value; five
votes per share; 100,500 shares authorized;
54,957 shares issued and outstanding 550 550
Paid-in-capital 594,811 544,947
Retained earnings 1,752,140 1,390,589
Less - other (4,926) (9,428)
Total shareholders' equity 2,344,873 1,928,934
$4,105,487 $3,669,823
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
CARNIVAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
1995 1994 1993
<S> <C> <C> <C>
REVENUES $1,998,150 $1,806,016 $1,556,919
COSTS AND EXPENSES:
Operating expenses 1,131,113 1,028,475 907,925
Selling and administrative 248,566 223,272 207,995
Depreciation and amortization 128,433 110,595 93,333
1,508,112 1,362,342 1,209,253
OPERATING INCOME 490,038 443,674 347,666
OTHER INCOME (EXPENSE):
Interest income 14,403 8,668 11,527
Interest expense, net of
capitalized interest (63,080) (51,378) (34,325)
Other income (expense) 19,104 (9,146) (1,201)
Income tax expense (9,374) (10,053) (5,497)
(38,947) (61,909) (29,496)
NET INCOME $ 451,091 $ 381,765 $ 318,170
EARNINGS PER SHARE $1.59 $1.35 $1.13
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
CARNIVAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
1995 1994 1993
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income $ 451,091 $ 381,765 $318,170
Adjustments to reconcile net
income to net cash provided
from operations:
Depreciation and amortization 128,433 110,595 93,333
Other 7,681 2,754 7,608
Changes in operating assets and liabilities:
Increase in receivables (12,655) (2,872) (1,548)
Increase in inventory (3,698) (7,877) (5,627)
Increase in prepaid and other (20,849) (1,995) (16,203)
Increase in accounts payable 3,487 5,376 9,901
(Decrease) increase in accrued
liabilities (1,385) 20,038 24,911
Increase in customer deposits 35,101 29,352 49,208
Net cash provided from operation 587,206 537,136 479,753
INVESTING ACTIVITIES:
Decrease in short-term investments 19,720 15,249 22,371
Additions to property and equipment, net (483,901) (594,789) (712,826)
Proceeds from Metra Oy settlement applied
to basis of ship 19,426
Increase in other non-current assets (83,325) (5,649) (14,713)
Proceeds from sale of discontinued operation 20,000
Net cash used for investing activities (528,080) (565,189) (705,168)
FINANCING ACTIVITIES:
Proceeds from issuance of common stock 49,032 2,297 1,360
Principal payments of long-term debt (406,600) (414,381) (483,174)
Repayment of debt of discontinued operation (25,000)
Dividends paid (85,098) (79,072) (79,027)
Proceeds from long-term debt 382,800 538,071 731,485
Net cash (used for) provided from
financing activities (59,866) 21,915 170,644
Net decrease in cash and cash equivalents (740) (6,138) (54,771)
Cash and cash equivalents at beginning
of year 54,105 60,243 115,014
Cash and cash equivalents at end of year $ 53,365 $ 54,105 $ 60,243
Supplemental disclosures:
Cash paid during the year for:
Interest (net of amount capitalized) $ 62,868 $ 48,501 $33,419
Income taxes $ 8,671 $ 6,871 $4,889
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
CARNIVAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - DESCRIPTION OF BUSINESS
Carnival Corporation and subsidiaries (the "Company") operate three
separate cruise lines under the names Carnival Cruise Lines, Holland America
Line and Windstar Cruises and a tour business, Holland America Westours.
Additionally, the Company has an investment in another cruise operation
discussed below.
Under the Carnival Cruise Lines name, the Company operates ten cruise ships
primarily serving the Caribbean and the Mexican Riviera. Holland America Line
operates seven cruise ships serving primarily the Caribbean and Alaska and
Windstar Cruises operates three luxury, sail-powered vessels which call on more
exotic locations inaccessible to larger ships. The Company has a 50% interest
in K/S Seabourn Cruise Line ("Seabourn") after the Company's investment in a $10
million convertible note receivable was converted into additional shares of
capital stock of Seabourn on December 1, 1995. Prior to that date, the Company
owned 25% of Seabourn. Seabourn operates two luxury vessels. Holland America
Westours markets sight-seeing tours both separately and as a part of Holland
America Line cruise/tour packages. Holland America Westours also operates
sixteen hotels in Alaska and the Canadian Yukon, three luxury day boats offering
tours to the glaciers of Alaska and the Yukon River, over 290 motor coaches used
for sight-seeing and charters in the states of Washington and Alaska and in the
Canadian Rockies and ten private domed rail cars which are run on the Alaska
Railroad between Anchorage and Fairbanks. The Company markets its services
primarily in North America.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Preparation of Financial Statements
The accompanying financial statements present the consolidated balance
sheets, statements of operations and cash flows of the Company. Preparation of
financial statements in accordance with generally accepted accounting principles
requires the use of management estimates. All material intercompany
transactions and accounts have been eliminated in consolidation. Certain
amounts in prior periods have been reclassified to conform with current years
presentation.
Cash and Cash Equivalents and Short-term Investments
Cash and cash equivalents includes investments with original maturities of
three months or less and are stated at cost which approximates market.
The Company adopted Statement of Financial Accounting Standards No. 115
("SFAS 115"), "Accounting for Certain Investments in Debt and Equity
Securities", effective November 30, 1994.
At November 30, 1995, short-term investments are primarily comprised of
marketable debt securities, including U.S. Government and corporate debt
securities. These investments are categorized as available for sale and, in
accordance with SFAS 115, are stated at their fair value. Unrealized holding
gains and losses are included as a component of shareholders' equity until
realized.
Property and Equipment
Property and equipment is stated at cost. Depreciation and amortization is
computed using the straight-line method over the following estimated useful
lives:
<TABLE>
<CAPTION>
YEARS
<S> <C>
Vessels 25-30
Buildings 10-40
Equipment 2-20
Leasehold improvements shorter of the term
of lease or related
asset life
</TABLE>
Assets and related obligations for equipment under capital leases are
initially recorded at an amount equal to the present value of the future minimum
lease payments using interest rates implicit within the leases. Equipment under
capital leases is amortized over the life of the lease or the estimated useful
life of the asset, whichever is shorter.
The Company reviews long-lived assets, identifiable intangibles and
goodwill and reserves for impairment whenever events or changes in circumstances
indicate the carrying amount of the assets may not be fully recoverable.
The Company capitalizes interest on vessels and other capital projects
during the construction period. Interest is capitalized using rates equivalent
to the average borrowing rate of the Company's long-term debt.
Costs associated with drydocking are capitalized and charged to expense
over the lesser of 12 months or the period to the next scheduled drydocking.
Goodwill
Goodwill of $275 million resulting from the acquisition of HAL Antillen,
N.V. ("HAL"), the parent company of Holland America Line, Windstar Cruises and
Holland America Westours, is being amortized using the straight-line method over
40 years.
Investment in Affiliates
The Company accounts for investments based on its ability to exercise
significant influence over financial and operating policies of the investee
and/or its relative ownership interest. The Company consolidates affiliates in
which it has control or an ownership interest of greater than 50%. For
affiliates where significant influence exists and/or where the level of
ownership is between 20% and 50%, the investment is accounted for using the
equity method. When the Company does not have significant influence, the level
of ownership interest is less than 20% or for investments where the ability to
exercise control or significant influence is temporary, the cost method of
accounting is followed.
Revenue Recognition
Customer cruise deposits, which represent unearned revenue, are included
in the balance sheet when received and are recognized as cruise revenue upon
completion of voyages with durations of 10 days or less and on a pro rata
basis, computed using the number of days completed during the reporting period,
for voyages in excess of 10 days. Revenues from tour and related services are
recognized at the time the service is performed.
Advertising Expense
Effective December 1, 1994, the Company adopted Statement of Position 93-7,
"Reporting on Advertising Costs", the effect of which was immaterial. This
statement was issued by the American Institute of Certified Public Accountants
and requires the Company to prospectively capitalize and amortize
direct-response advertising to better match revenues with expenses. The
Company
continues to expense other advertising costs as incurred. Advertising expense
totalled $98 million in 1995, $85 million in 1994 and $79 million in 1993.
Financial Instruments
The Company's financial instruments include forward foreign currency
contracts and interest rate swap transactions held for purposes other than
trading. These contracts are entered into to hedge the impact of foreign
currency and interest rate fluctuations. Changes in the market value and any
discounts or premiums on forward foreign currency contracts which hedge
exposures of firm commitments related to the construction of cruise ships are
recorded when the related foreign currency payments are made with any resulting
gain or loss included in the cost of the vessel. Changes in market value of
forward agreements entered into to hedge estimated foreign currency transactions
are recognized into income currently. Discounts and premiums related to forward
agreements entered into to hedge estimated foreign currency transactions are
amortized to income over the life of the agreement. Gains and losses on
interest rate swap transactions designated as hedges are recorded as reductions
or increases in interest expense over the life of the swap agreement.
Income Taxes
Companies are exempt from U.S. corporate income tax on U.S. source income
from international passenger cruise operations if (i) their countries of
incorporation exempt shipping operations of U.S. persons from income tax (the
"Incorporation Test"), and (ii) they meet the "CFC Test". The Company and its
subsidiaries involved in the cruise ship operations meet the Incorporation Test
because they are incorporated in countries which provide the required exemption
to U.S. persons involved in shipping operations. A company meets the CFC Test
if it is a controlled foreign corporation ("CFC"). A CFC is defined by the
Internal Revenue Code as a foreign corporation more than 50% of whose stock by
voting power or value is owned or considered as owned by U.S. persons, each of
whom owns or is considered to own 10% or more of the corporation's voting power
("10% U.S. Shareholders"). During 1994, all of the outstanding shares of Class
B Common Stock of the Company were transferred to The Micky Arison 1994 "B"
Trust (the "B Trust"), a U.S. trust whose primary beneficiary is Micky Arison,
the Company's Chairman of the Board. Stock of the Company representing more
than 50% of the total combined voting power of all classes of stock is owned by
the B Trust, which is a "United States Person", and thus, the Company meets the
definition of a CFC. Accordingly, the Company believes that virtually all of
its income (with the exception of its United States source income from the
operation of transportation, hotel and tour businesses of HAL) is exempt from
United States Federal Income taxes. The B Trust has entered into an agreement
with the Company that is designed to ensure, except under certain limited
circumstances, that stock possessing more than 50% of the Company's voting power
will be held by ten percent shareholders until at least July 1, 1997. If the
Company or the subsidiaries involved in the cruise ship operations were to cease
to meet the CFC Test, and no other basis for exemption were available, much of
their income would become subject to taxation by the United States at higher
than normal corporate tax rates. Because the Company is a CFC, a pro rata share
of the passenger cruise operation earnings of the Company is includable in the
taxable income of any "10% U.S. Shareholder", as defined above.
Earnings Per Share and Stock Split
Earnings per share computations are based on the weighted average number
of shares of Class A and B Common Stock and common equivalent shares (related
to stock options), outstanding during each of the years. Total shares used in
the computation were 284.2 million, 282.7 million and 282.5 million for fiscal
1995, 1994 and 1993, respectively.
On December 14, 1994, a two-for-one stock split was effected whereby one
additional share of Class A Common Stock, par value $.01, was issued for each
share outstanding to shareholders of record on November 30, 1994. All share and
per share data appearing in the consolidated financial statements and notes
thereto have been retroactively adjusted for this stock split.
NOTE 3 - PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
<TABLE>
<CAPTION>
November 30,
1995 1994
(in thousands)
<S> <C> <C>
Vessels $3,467,731 $3,147,026
Vessels under construction 289,661 207,128
3,757,392 3,354,154
Land, buildings and improvements 132,183 95,294
Transportation and other equipment 174,903 152,649
Total property and equipment 4,064,478 3,602,097
Less-accumulated depreciation and amortization (649,655) (530,666)
$3,414,823 $3,071,431
</TABLE>
Interest costs associated with the construction of vessels and buildings
are capitalized during the construction period and amounted to $18.8 million in
1995, $21.9 million in 1994 and $24.6 million in 1993.
NOTE 4 - INVESTMENT IN AFFILIATES AND OTHER ASSETS
During 1994, the Company acquired a 50% interest in CHC International, Inc.
("CHC"), a newly created hotel and casino management company. Principals of The
Continental Companies (the "TCC Principals") own the remainder of CHC and are
responsible for day-to-day operations. One of the TCC Principals is a member
of the Company's board of directors. CHC began operating a casino riverboat in
U.S. waters in December 1994 which required the Company to divest itself of
slightly more than half of its 50% interest in order to comply with The Jones
Act. The Jones Act prohibits the operation of vessels exclusively in U.S.
waters by any company that is 25% or more owned by non-U.S. entities.
Accordingly, the Company sold a 25.1% interest in CHC to the TCC Principals in
exchange for $16 million of 6% notes receivable (the "TCC Notes"). The TCC
Notes contain a put option which the TCC Principals can exercise, requiring the
Company to repurchase 25.1% of CHC in exchange for the full principal and
interest due under the TCC Notes. If not exercised, the option expires in
November 1996 unless extended by the Company to November 1998. As of November
30, 1995, the carrying value of the Company's CHC investment, including the TCC
Notes, is approximately $26 million, which the Company carries at cost since it
is anticipated to be a temporary investment. Since inception, the Company's
intention has been to spin-off 90% of its CHC investment to shareholders. At
November 30, 1995, there were no significant amounts owed to or from CHC.
Further, CHC pays a license fee amounting to 1% of CHC's gross revenues, as
adjusted, not to be less than $100,000 per year, for the use of the "Carnival"
name. Such fees amounted to approximately $.3 and $.1 million in fiscal years
ended November 30, 1995 and 1994, respectively.
As of November 30, 1995, the Company had a 25% interest in the operation
of Seabourn. On December 1, 1995, a $10 million convertible note receivable was
converted into an additional 25% interest. The Company's investment in the $10
million note is classified as a long-term note receivable in the accompanying
financial statements.
In October 1995, the Company purchased $101 million face amount of 13%
Senior Secured Notes Due 2003 of a competitor, Kloster Cruise Limited
("Kloster"), for approximately $81 million (See Note 7).
NOTE 5 - LONG-TERM DEBT AND CONVERTIBLE NOTES
<TABLE>
<CAPTION>
Long-term debt consists of the following:
November 30,
1995 1994
(in thousands)
<S> <C> <C>
Mortgages and other loans payable bearing interest
at rates ranging from 8% to 9.9%, secured by vessels,
maturing through 1999 $ 208,078 $ 287,642
Unsecured Revolving Credit Facility Due 2000 185,000 238,000
Unsecured 5.75% Notes Due March 15, 1998 200,000 200,000
Unsecured 6.15% Notes Due October 1, 2003 124,946 124,939
Unsecured 7.20% Debentures Due October 1, 2023 124,867 124,862
Unsecured 7.7% Notes Due July 15, 2004 99,902 99,890
Unsecured 7.05% Notes Due May 15, 2005 99,811
Other loans payable 65,179 56,215
1,107,783 1,131,548
Less portion due within one year (72,752) (84,644)
$1,035,031 $1,046,904
</TABLE>
Property and equipment with a net book value of $881 million at November
30, 1995 is pledged as collateral against the mortgage indebtedness.
In December 1995, the Company amended the terms of its $750 million
unsecured revolving credit facility (the "$750 Million Revolver") primarily to
extend the termination date to December 5, 2000, and to eliminate the commitment
fee. The borrowing rate on the $750 Million Revolver is a maximum of LIBOR plus
.20% and the facility fee is .08%. Concurrently with the amendment of the $750
Million Revolver, the Company entered into a new $250 million unsecured
revolving credit facility with the same syndicate of banks (the "$250 Million
Revolver"). Unless extended by the lenders, the $250 Million Revolver will
terminate on December 3, 1996. At the option of the Company, any borrowings
under the $250 Million Revolver outstanding on the termination date may be
converted by the Company into a one year term loan. Borrowings under the $250
Million Revolver will accrue interest at a maximum of LIBOR plus .22% and the
facility fee is .06%. As of November 30, 1995, the Company had $565 million
available for borrowing under the $750 Million Revolver.
The Company has an interest rate swap agreement which converts the fixed
rate unsecured 5.75% Notes due March 15, 1998 (the "$200 Million Notes") to a
LIBOR based floating rate loan (see Note 7).
A subsidiary of the Company has a $25 million revolving line of credit for
short-term working capital purposes. The loan bears interest at the lessor of
LIBOR plus 50 basis points or prime. As of November 30, 1995, there was no
balance outstanding under this line of credit.
As of November 30, 1995, the scheduled annual maturities of the Company's
long-term debt are summarized as follows (in thousands):
<TABLE>
<S> <C>
1996 $ 72,752
1997 64,788
1998 257,897
1999 47,396
2000 185,117
Thereafter 479,833
$1,107,783
</TABLE>
In July 1992, the Company issued $115 million of 4-1/2% Convertible
Subordinated Notes Due July 1, 1997 (the "Convertible Notes"). The Convertible
Notes are convertible into 57.55 shares of the Company's Class A Common Stock
per $1,000 of notes. As of November 30, 1995 the Convertible Notes are
convertible into a total of approximately 6.6 million shares of Class A Common
Stock. The Convertible Notes are redeemable in whole or in part at the
Company's option on or after July 3, 1996.
NOTE 6 - SHAREHOLDERS' EQUITY
The following represents an analysis of the changes in shareholders' equity
for the three years ended November 30, 1995:
<TABLE>
<CAPTION>
COMMON STOCK
$.01 PAR VALUE PAID-IN RETAINED
CLASS A CLASS B CAPITAL EARNINGS OTHER TOTAL
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Balance, November 30, 1992 $2,272 $ 550 $538,211 $850,193 $(6,381)$1,384,845
Net income for the year 318,170 318,170
Cash dividends (79,040) (79,040)
Issuance of stock to
employees under
stock plans 2 2,983 (1,625) 1,360
Vested portion of common
stock under restricted
stock plan 1,871 1,871
Balance, November 30, 1993 2,274 550 541,194 1,089,323 (6,135) 1,627,206
Net income for the year 381,765 381,765
Cash dividends (80,499) (80,499)
Changes in securities
valuation allowance (3,313) (3,313)
Issuance of stock to
employees under
stock plans 2 3,753 (1,458) 2,297
Vested portion of common
stock under restricted
stock plan 1,478 1,478
Balance, November 30, 1994 2,276 550 544,947 1,390,589 (9,428) 1,928,934
Net income for the year 451,091 451,091
Cash dividends (89,540) (89,540)
Issuance of common stock 21 46,488 46,509
Changes in securities
valuation allowance 2,424 2,424
Issuance of stock to
employees under
stock plans 1 3,376 3,377
Vested portion of common
stock under restricted
stock plan 2,078 2,078
Balance, November 30, 1995$2,298 $550 $594,811 $1,752,140 $(4,926)$2,344,873
</TABLE>
Each share of Class A Common Stock is entitled to one vote and each share
of Class B Common Stock is entitled to five votes, except (i) for the election
of directors, and (ii) as otherwise provided by law. Annually, the holders of
Class A Common Stock, voting as a separate class, are entitled to elect 25% of
the directors to be elected. The holders of Class B Common Stock, voting as a
separate class, are entitled to elect 75% of the directors to be elected, so
long as the number of shares of Class B Common Stock is at least 12-1/2% of the
number of outstanding shares of both classes of Common Stock. If the number of
outstanding shares of Class B Common Stock falls below 12-1/2%, directors that
would have been elected by a separate vote of that class will instead be elected
by the holders of both classes of Common Stock, with holders of Class A Common
Stock having one vote per share and holders of Class B Common Stock having five
votes per share. At the option of the holder of record, each share of Class B
Common Stock is convertible at any time into one share of Class A Common Stock.
At November 30, 1995 there were approximately 14.4 million shares of Class
A Common Stock reserved for conversion of convertible debt, exercise of stock
options, and for issuance of shares under the employee stock purchase plan and
restricted stock plans.
During 1995, the Company declared quarterly cash dividends aggregating
$.315 per share. In October 1995, the Board of Directors increased the
quarterly dividends from $.075 per share to $.09 per share.
NOTE 7 - FINANCIAL INSTRUMENTS
The Company estimates the fair market value of financial instruments
through the use of public market prices, quotes from financial institutions, and
other available information. Considerable judgement is required in interpreting
data to develop estimates of market value and, accordingly, amounts are not
necessarily indicative of the amounts that the Company could realize in a
current market exchange.
Short-term Investments
Short-term investments, classified as available for sale at November 30,
1995 and 1994, consisted of the following debt securities (in thousands):
<TABLE>
<CAPTION>
Gross Unrealized
Cost Losses Gains Fair
Value
<S> <C> <C> <C> <C>
November 30, 1995:
U. S. Government securities $38,991 $(1,244) $ 114 $37,861
Mortgage backed securities 10,676 (464) 0 10,212
Corporate securities 2,322 0 0 2,322
$51,989 $(1,708) $ 114 $50,395
November 30, 1994:
U. S. Government securities $45,308 $(2,236) $ 0 $43,072
Mortgage backed securities 23,883 (1,108) 31 22,806
Corporate securities 4,237 0 0 4,237
$73,428 $(3,344) $ 31 $70,115
</TABLE>
The contractual maturities of short-term investments at November 30, 1995
and 1994 were as follows (in thousands):
<TABLE>
<CAPTION>
1995 1994
Cost Fair Value Cost Fair
Value
<S> <C> <C> <C> <C>
Due within one year $27,581 $27,497 $ 8,553 $8,461
Due after one year through five years 11,732 11,154 36,992 35,702
Due after five years through 10 years 2,000 1,532 4,000 3,144
Mortgage backed securities 10,676 10,212 23,883 22,808
$51,989 $50,395 $73,428 $70,115
</TABLE>
Gross realized losses from the sale of short-term investments were $0 and
$1.1 million during fiscal years ended November 30, 1995 and 1994, respectively,
and were charged against earnings. Proceeds from the sale of short-term
investments for the years ended November 30, 1995 and 1994 were approximately
$20 million and $124 million, respectively. For the purpose of determining
gross realized gains and losses, the cost of short-term investments sold is
based upon specific identification.
Long-term Notes Receivable
The Company's long-term notes receivable are comprised primarily of $47.5
million of notes receivable from the sale in August 1994 of Carnival's Crystal
Palace, a resort and casino located in the Bahamas, $15 million of 9% notes due
from Seabourn and a $10 million 7.5% convertible note due from Seabourn which
was converted into common stock in December 1995. The Company has received an
offer from the issuer of the Crystal Palace notes to repurchase the notes from
the Company at a substantial discount. Management is continuing discussions
with issuer regarding the possible sale of the notes. The Company believes the
fair value of the $15 million 9% notes due from Seabourn approximates cost based
on current market interest rates. The Company believes it is not practicable
to estimate the fair value of the $10 million convertible notes due to the lack
of information related to the value of Seabourn's common stock.
Investments in Affiliates and Other Assets
The 13% Kloster bonds are classified as available for sale and,
accordingly, are carried at fair value. The fair value was determined based on
recent market prices, however, there is limited trading activity in these bonds.
Gross unrealized holding gains at November 30, 1995 amounted to approximately
$.8 million (See Note 4). Interest on the bonds due November 1, 1995 was not
paid when due, however, on December 1, 1995 all amounts due were paid in full.
Long-term Debt and Convertible Notes
The fair value of the Company's long-term debt was approximately $1.123
billion and $1.074 billion at November 30, 1995 and 1994, respectively, which
is approximately $15 million more and $58 million less than the carrying value
at November 30, 1995 and 1994, respectively. The fair value of the long-term
debt is slightly more than the carrying amount due to the Company's issuance of
fixed rate debt obligations at interest rates above market rates at November 30,
1995. The fair value of the Company's long-term debt is estimated based on the
quoted market price for the same or similar issues or on the applicable year end
rates offered to the Company for debt of similar terms and maturity. At
November 30, 1995 and 1994, the carrying amount of the Convertible Notes was
approximately $53 million and $33 million, respectively less than the fair
value primarily due to increases in the price of the Company's Class A Common
Stock.
Foreign Currency and Interest Rate Swap Agreements
The Company enters into forward foreign currency contracts to reduce its
exposures relating to changes in foreign currency rates. These instruments are
subject to gain or loss from changes in foreign currency rates; however, any
realized gain or loss would generally be offset by gains or losses on the actual
foreign currency transaction. The Company also enters into interest rate swap
agreements to adjust the relationship between the amount of the Company's fixed
and floating rate debt. Certain exposures to credit losses related to
counterparty nonperformance exist; however, the Company does not anticipate
nonperformance by the counterparties as they are primarily large, well
established financial institutions. The fair values of the Company's forward
and swap hedging instruments discussed below are based on prices quoted by
financial institutions for these or similar instruments, adjusted for maturity
differences.
Several of the Company's contracts for the construction of cruise vessels
are stated in foreign currencies. The Company entered into forward foreign
currency contracts to fix the price of the vessels into U.S. dollars (see Note
9). As of November 30, 1995 and 1994, these forward contracts were in a gain
position of approximately $42 million and $32 million, respectively. At the
expiration of the forwards, which coincides with the payments related to vessels
under construction, any gains or losses will be included in the cost of the
vessel. In addition, the Company prices some products in Canadian dollars and
entered into foreign currency contracts totaling approximately U.S. $104 million
to reduce the impact of changes in exchange rates. The Company also has some
expenses in foreign currencies and entered into foreign currency contracts
totaling approximately $15 million to reduce the impact of changes in exchange
rates. As of November 30, 1995, there were no significant gains or losses
related to the Canadian currency transactions or other currency transactions
entered into to hedge estimated expenses.
The Company has hedged the interest rate on the $200 Million Notes through
the utilization of interest rate swap agreements (See Note 5). As of November
30, 1995, the interest rate swaps were in an unrealized loss position of
approximately $.7 million. These swap agreements effectively convert the $200
Million Notes into a floating rate facility.
NOTE 8 - RELATED PARTY TRANSACTIONS
The Company utilizes Carnival Air Lines, an airline owned by a trust, the
primary beneficiary of which is the Company's Chairman of the Board, to
transport a limited number of the Company's cruise passengers. During the
fiscal years ended November 30, 1995, 1994 and 1993 approximately $3 million,
$4 million, and $8 million , respectively, has been paid to the airline for
transportation services. The Company also receives a license fee for the use
of the "Carnival" name. Approximately $.4 million has been received by the
Company for license fees during each of fiscal years ended November 30, 1995,
1994. The Company also receives license fees from CHC (See Note 4).
A director of the Company is employed by an investment banking firm. The
investment banking firm assisted the Company in connection with issuances of
notes and Class A Common Stock to the public during the fiscal years ended
November 30, 1995, 1994 and 1993. In addition, the investment banking firm has
provided other services for the Company during those years. The Company paid
the investment banking firm approximately $300,000 in each of fiscal years ended
November 30, 1995, 1994 and 1993.
A director of the Company is a partner in a legal firm. The legal firm
acted as the Company's primary outside counsel and provided services to the
Company in connection with various litigation, corporate and other matters
during fiscal years ended November 30, 1995, 1994 and 1993. The Company paid
the legal firm $6.2 million, $1.3 million and $.7 million in fiscal years ended
November 30, 1995, 1994 and 1993, respectively.
The Company has a six-year consulting agreement with a corporation
affiliated with the Company's founder to provide services related to the
construction of cruise ships. The consulting agreement expires in November
1996. Under the consulting agreement, the Company paid a fee of $500,000 per
year plus travel expenses. The Company's founder also has certain demand and
piggy back registration rights with respect to shares of Class A Common Stock
beneficially owned by him.
The owner of a travel agency located in Seattle, Washington is the wife of
the Chief Executive Officer of HAL and a director of the Company. The travel
agency sells cruises and other similar products, including the Company's
products, and receives as commission based on the amount of sales generated.
During the years ended November 30, 1995, 1994 and 1993, the travel agency
generated revenues for the Company of approximately $5 million, $6 million, and
$4 million, respectively and received commissions from the Company related to
such revenues of approximately $.8 million, $1 million and $.6 million,
respectively.
Pursuant to an agreement between the Company and certain irrevocable
trusts, the beneficiaries of which are the children of the Company's founder and
certain others, the Company has granted to the trusts certain registration
rights with respect to 14,277,028 shares of Class A Common Stock held for
investment by the trusts. The Company has agreed to prepare and file with the
SEC a registration statement and pay all expenses relating to such registration,
except for fees and disbursements of counsel for the trusts, selling costs,
underwriting discounts and applicable filing fees.
NOTE 9 - COMMITMENTS AND CONTINGENCIES
Capital Expenditures
The following table provides a description of ships currently under
contract for construction (in millions, except berth data):
<TABLE>
<CAPTION>
Expected Number Estimated
Delivery Contract of Lower Total
Ship Name Operating Unit Date Denomination Berths Cost
<S> <C> <C> <C> <C> <C>
Inspiration Carnival Cruise Lines 2/96 U. S. Dollar 2,040 $ 270
Veendam Holland America Lines 4/96 Lire 1,266 225
Carnival Destiny Carnival Cruise Lines 9/96 Lire 2,640 400
To Be Named Holland America Line 9/97 Lire 1,320 235
To Be Named Carnival Cruise Lines 2/98 U. S. Dollar 2,040 300
To Be Named Carnival Cruise Lines 11/98 U. S. Dollar 2,040 300
To Be Named Carnival Cruise Lines 12/98 Lire 2,640 415
13,986 $2,145
</TABLE>
Contracts denominated in foreign currencies have been fixed into U.S.
Dollars through the utilization of forward currency contracts (see Note 7). In
connection with the vessels under contract for construction described above, the
Company has paid $290 million through November 30, 1995, anticipates paying $674
million in fiscal 1996 and approximately $1.2 billion beyond fiscal 1996.
Litigation
A purported class action suit was filed against the Company on September
19, 1995 and was subsequently dismissed by the court on jurisdictional grounds
on December 15, 1995. The suit alleged that the Company had violated the
Florida Deceptive and Unfair Trade Practices Act by overcharging passengers for
port charges. The plaintiffs refiled their suit un the same court on December
27, 1995 and modified the complaint to add various federal law claims and a
state fraud claim. The suit seeks declaratory relief to enjoin the Company from
further alleged overcharges and seeks compensatory damages in an unspecified
amount. The action is presently in its early stages and it is not possible at
this time to determine the outcome of the litigation. Management of the Company
intends to vigorously defend the lawsuit.
During 1995, the Company received $40 million in cash and other
consideration from the settlement of litigation with Metra Oy, the former parent
company of Wartsila Marine Industries Incorporated ("Wartsila"), related to
losses suffered in connection with the construction of three of the Company's
cruise ships. These losses were the result of higher construction costs and
lost profits due to late delivery of the cruise ships. Of the $40 million, $6.2
million was used to pay related legal fees, $14.4 million was recorded as other
income and $19.4 million was used to reduce the Company's cost basis of certain
ships. The Company is continuing to pursue claims in bankruptcy proceedings in
Finland to recover damages suffered in connection with the construction of the
three ships.
In the normal course of business, various other claims and lawsuits have
been filed or are pending against the Company. The majority of these claims and
lawsuits are covered by insurance. Management believes the outcome of any such
suits which are not covered by insurance would not have a material adverse
effect on the Company's financial condition or results of operations.
Operating Leases
In 1989, the Company entered into a lease for 230,000 square feet of office
space located in Miami, Florida to serve as Carnival Cruise Lines headquarters
and operations center. In December 1994, the Company purchased the building and
an adjacent parcel of land under a purchase option for approximately $23
million. The Company has commenced construction of a second building on the
parcel of land at an estimated cost of $35 million. The Company leases other
facilities, transportation and other equipment under operating leases. Rental
expense for all operating leases for the years ended November 30, 1995, 1994 and
1993 was approximately $4.9 million, $7.7 million and $8.7 million,
respectively. As of November 30, 1995, minimum annual rentals for all operating
leases, with initial or remaining terms in excess of one year, were as follows
(in thousands):
<TABLE>
<S> <C>
1996 $ 6,296
1997 5,487
1998 4,364
1999 2,451
2000 2,437
Thereafter 6,041
$27,076
</TABLE>
NOTE 10 - SEGMENT INFORMATION
The Company's cruise segment currently operates seventeen passenger cruise
ships and three luxury sailing vessels. Cruise revenues are comprised of sales
of tickets and other revenues from on-board activities. A tour business
operated by HAL, consisting of sixteen hotels, three luxury day-boats, over 290
motor coaches and ten private domed rail cars comprise the assets that generate
revenue for the tour segment. Intersegment revenues represent tour revenues
generated when tour services are rendered in conjunction with a cruise. Segment
information for the three years ended November 30, 1995 is as follows:
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
1995 1994 1993
(in thousands)
<S> <C> <C> <C>
REVENUES
Cruise $1,800,775 $1,623,069 $1,381,473
Tour 241,909 227,613 214,382
Intersegment revenues (44,534) (44,666) (38,936)
$1,998,150 $1,806,016 $1,556,919
GROSS OPERATING PROFIT
Cruise $ 810,736 $ 726,808 $ 598,642
Tour 56,301 50,733 50,352
$ 867,037 $ 777,541 $ 648,994
DEPRECIATION AND AMORTIZATION
Cruise $ 120,304 $ 101,146 $ 84,228
Tour 8,129 9,449 9,105
$ 128,433 $ 110,595 $ 93,333
OPERATING INCOME
Cruise $ 465,870 $ 425,590 $ 333,392
Tour 24,168 18,084 14,274
$ 490,038 $ 443,674 $ 347,666
IDENTIFIABLE ASSETS
Cruise $3,967,174 $3,531,727 $2,995,221
Tour 138,313 138,096 134,146
Discontinued resort and casino 89,553
$4,105,487 $3,669,823 $3,218,920
CAPITAL EXPENDITURES
Cruise $ 456,920 $ 587,249 $ 705,196
Tour 8,747 9,963 10,281
$ 465,667 $ 597,212 $ 715,477
</TABLE>
NOTE 11 - EMPLOYEE BENEFIT PLANS
Stock Option Plans
The Company has stock option plans, applicable to Class A Common Stock, for
certain key employees. The plans are administered by a committee of three
directors of the Company (the "Committee") who determine the employees and
directors eligible to participate, the number of shares for which options are
to be granted and the amounts that any employee or director may exercise within
a specified year or years. The maximum number of shares available to be granted
as of November 30, 1995 and 1994 was 1,774,000 and 723,600, respectively. Under
the terms of the plans, the option price per share is established by the
Committee as an amount between 50% and 100% of the fair market value of the
shares of Class A Common Stock on the date the option is granted. Since 1991,
all options granted have been for 100% of the fair market value of the shares
on the date of grant. Options may extend for such periods as may be determined
by the Committee but only for so long as the optionee remains an employee of the
Company. The status of options in the plans was as follows:
<TABLE>
<CAPTION>
Price Years Ended November 30,
Per Share Number of Shares
1995 1994 1993
<S> <C> <C> <C> <C>
Unexercised Options-
Beginning of Year $3.88 - $23.88 2,433,236 730,526 730,598
Options Granted $19.78 - $23.44 1,564,000 1,764,000 72,000
Options Exercised $3.88 - $22.16 (90,100) (61,290) (56,472)
Options Canceled $22.16 - $22.50 (1,432,400) (15,600)
Unexercised Options-
End of Year $3.88 - $23.88 2,474,736 2,433,236 730,526
</TABLE>
Upon the adoption of Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation", the Company intends to retain the
intrinsic value method of accounting for stock based compensation which it
currently uses.
Restricted Stock Plans
The Company has restricted stock plans under which certain key employees
are granted restricted shares of the Company's Class A Common Stock. Shares are
awarded in the name of each of the participants, who have all the rights of
other Class A stockholders, subject to certain restriction and forfeiture
provisions. Unearned compensation is recorded at the date of award based on the
market value of the shares on the date of grant. Unearned compensation is
amortized to expense over the vesting period. As of November 30, 1995 there
have been 1,896,032 shares issued under the plans of which 340,322 remain to be
vested.
Defined Contribution Plans
HAL has two defined contribution plans available to substantially all U.S.
and Canadian employees. HAL contributes to these plans based on employee
contributions and salary levels. Total expense relating to these plans in
fiscal year ended November 30, 1995, 1994 and 1993 was approximately $2.4
million, $2.1 million and $2.2 million, respectively.
Defined Benefit Pension Plans
The Company adopted two pension plans (qualified and non-qualified)
effective January 1, 1989 which together cover all full-time employees of
Carnival Corporation working in the United States, excluding HAL employees.
Employees will vest in the pension plans 100% after five years of service, will
be eligible to receive benefits at age 65 and, upon completion of 15 years of
service, become eligible to receive benefits at age 55. The benefits are based
on years of service and the employee's highest average compensation over five
consecutive years during the last ten years of employment. Carnival
Corporation's funding policy for the qualified plan is to annually contribute
at least the minimum amount required under the applicable labor regulations.
The weighted average discount rate, 7.5% in 1995, 8.5% in 1994 and 7.5% in
1993, and a 5.0% rate of increase in future compensation levels were used in
determining the projected benefit obligation. The expected long-term rate of
return on assets was 8.5%.
Pension costs for the qualified and non-qualified defined benefit plans
were approximately $1.6 million, $2.0 million and $1.5 million for the years
ended November 30, 1995, 1994 and 1993, respectively.
The funded status of the plans at November 30, 1995 and 1994 is:
<TABLE>
<CAPTION>
Qualified Non-Qualified
(in thousands) (in thousands)
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Accumulated benefit obligation:
Vested $4,082 $2,796 $4,832 $3,089
Non-vested 346 285 153 102
$4,428 $3,081 $4,985 $3,191
Projected benefit obligation $6,933 $4,606 $6,886 $4,801
Plan assets (4,821) (3,745)
Unfunded accumulated benefits 2,112 861 6,886 4,801
Unrecognized prior service cost (406) (491) (317) (460)
Unrecognized gains and (losses) (1,885) (493) (1,048) 309
Accrued (prepaid) pension obligation $ (179) $ (123) $5,521 $4,650
</TABLE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders of
Carnival Corporation
In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations and of cash flows present fairly,
in all material respects, the financial position of Carnival Corporation and its
subsidiaries at November 30, 1995 and 1994, and the results of their operations
and their cash flows for each of the three years in the period ended November
30, 1995, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which 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,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
PRICE WATERHOUSE LLP
Miami, Florida
January 18, 1996
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Carnival Corporation and its subsidiaries (the "Company") earn revenues
primarily from (i) the sale of passenger tickets, which include accommodations,
meals, most shipboard activities and in many cases airfare, and (ii) the sale
of goods and services on board its cruise ships, such as casino gaming, liquor
sales, gift shop sales and other related services. The Company also derives
revenues from the tour operations of HAL Antillen N.V ("HAL").
For selected segment information related to the Company's revenues, gross
operating profit, operating income and other financial information, see Note 10
in the accompanying financial statements. The following table presents
operations data expressed as a percentage of total revenues and selected
statistical information for the periods indicated:
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
1995 1994 1993
<S> <C> <C> <C>
REVENUES 100% 100% 100%
COSTS AND EXPENSES:
Operating expenses 57 57 58
Selling and administrative 12 12 14
Depreciation and amortization 6 6 6
OPERATING INCOME 25 25 22
OTHER INCOME (EXPENSE) (2) (4) (2)
.
INCOME FROM CONTINUING OPERATIONS 23% 21% 20%
SELECTED STATISTICAL INFORMATION:
Passengers carried 1,543,000 1,354,000 1,154,000
Passenger cruise days 9,201,000 8,102,000 7,003,000
Occupancy percentage 105.0% 104.0% 105.3%
</TABLE>
GENERAL
The growth in the Company's revenues during the last three fiscal years has
primarily been a function of the expansion of its fleet capacity.
Fixed costs, including depreciation, fuel, insurance and crew costs
represent more than one-third of the Company's operating expenses and do not
significantly change in relation to changes in passenger loads and aggregate
passenger ticket revenue.
The Company's different businesses experience varying degrees of
seasonality. The Company's revenue from the sale of passenger tickets for
Carnival Cruise Lines ("Carnival") ships is moderately seasonal. Historically,
demand for Carnival cruises has been greater during the periods from late
December through April and late June through August. HAL cruise revenues are
more seasonal than Carnival's cruise revenues. Demand for HAL cruises is
strongest during the summer months when HAL ships operate in Alaska and Europe
and HAL obtains higher pricing for these summer products. Demand for HAL
cruises is lower during the winter months when HAL ships sail in more
competitive markets. The Company's tour revenues are extremely seasonal with
a large majority of tour revenues generated during the late spring and summer
months in conjunction with the Alaska cruise season.
Fiscal Year Ended November 30, 1995 Compared
To Fiscal Year Ended November 30, 1994
Revenues
The increase in total revenues of $192.1 million from 1994 to 1995 was
comprised primarily of a $177.7 million, or 10.9%, increase in cruise revenues
for the period. The increase in cruise revenues was primarily the result of a
12.5% increase in capacity for the period resulting from the addition of
Carnival's cruise ship Fascination in July 1994, HAL's Ryndam in October 1994,
and Carnival's Imagination in July 1995, partially offset by the discontinuation
of the FiestaMarina division in September 1994. Also affecting cruise revenues
were lower gross passenger per diems. The gross passenger per diems decreased
primarily due to a reduction in the percentage of passengers electing the
Company's air program. When a passenger elects to purchase his/her own air
transportation, rather than use the Company's air program, both the Company's
cruise revenues and operating expenses decrease by approximately the same
amount. Occupancy rates increased by approximately 1%. Also affecting cruise
revenues in 1995 and 1994 were lost revenues caused by the incidents described
under "Nonoperating Income (Expense)" below.
Average capacity is expected to increase approximately 12.6% during fiscal
1996 as a result of the delivery of the Imagination in June 1995, the
Inspiration in February 1996, the Veendam in April 1996 and the Carnival Destiny
in September 1996, net of a reduction in capacity due to the charter of
Carnival's Festivale in April 1996.
Revenues from the Company's tour operations increased $14.3 million, or
6.3%, to $241.9 million in 1995 from $227.6 million in 1994. The increase was
primarily the result of an increase in the tour and transportation revenues
generated by the company's tour business and Gray Line of Alaska tour and
motorcoach operations.
Costs and Expenses
Operating expenses increased $102.6 million, or 10.0%, from 1994 to 1995.
Cruise operating costs increased by $93.8 million, or 10.5%, to $990.0 million
in 1995 from $896.3 million in 1994, primarily due to additional costs
associated with the increased capacity in 1995. Tour operating expenses
increased $8.7 million, or 4.9%, from 1994 to 1995 primarily due to an increase
in tour passengers.
Selling and administrative costs increased $25.3 million, or 11.3%,
primarily due to a 14.6% increase in advertising expenses and an increase in
payroll and related costs during 1995 as compared with the same period of 1994.
Depreciation and amortization increased by $17.8 million, or 16.1%, to
$128.4 million in the 1995 from $110.6 million in 1994 primarily due to the
addition of the Ryndam, the Fascination and the Imagination.
Nonoperating Income (Expense)
Total nonoperating expense (net of nonoperating income) decreased to $38.9
million for 1995 from $61.9 million in 1994. Interest income increased $5.7
million primarily due to the recognition of interest income on notes received
from the sale of Carnival's Crystal Palace Hotel and Casino and higher
investment balances. Interest expense increased to $81.9 million in 1995 from
$73.2 million in 1994 primarily as a result of increased average debt levels and
higher interest rates on variable rate debt. The increased debt levels were the
result of expenditures made in connection with the ongoing construction and
delivery of new cruise ships. Capitalized interest decreased to $18.8 million
in 1995 from $21.9 million in 1994 due to lower levels of investments in vessels
under construction.
Other income increased to $19.1 million in 1995 primarily as a result of
a $14.4 million gain from the settlement of litigation with Metra Oy and a gain
from the sale of the Company's entire interest in Epirotiki Cruise Line. These
gains were partially offset by the loss from the Celebration incident discussed
below and certain other non-related, non-recurring items.
In June 1995, a fire, which was quickly extinguished, broke out in the
engine control room on Carnival's Celebration. There were no injuries to
passengers or crew, however, there was damage to one of the vessel's electrical
control panels. The time necessary to complete repairs to the Celebration as
a result of this incident caused the cancellation of four one week cruises.
Costs associated with repairs to the ship, passenger handling and various other
expenses, net of estimated insurance recoveries, amounted to $3.0 million and
were included in other expenses. In addition, the Company estimates the loss
of revenue, net of related variable expenses, from the Celebration being out of
service reduced operating income and net income by an additional $7.3 million
in 1995.
Other expenses of $9.1 million in 1994 were primarily the result of two
events. In September 1994, the Company discontinued its FiestaMarina division
because of lower than expected passenger occupancy levels which resulted in a
charge of $3.2 million to other expenses. In August 1994, HAL's Nieuw Amsterdam
ran aground in Alaska resulting in the cancellation of three one-week cruises.
Costs associated with repairs to the ship, passenger handling and various
other expenses, net of estimated insurance recoveries, amounted to $6.4 million
and were included in other expenses. In addition, the Company estimates the
loss of revenue, net of related variable expenses, from the Nieuw Amsterdam
being out of service during that three-week period, reduced operating income and
net income by an additional $4.5 million in 1994.
Fiscal Year Ended November 30, 1994 Compared
To Fiscal Year Ended November 30, 1993
Revenues
The increase in total revenues of $249.1 million from 1993 to 1994 was
comprised of a $241.6 million, or 17.5%, increase in cruise revenues and an
increase of $7.5 million, or 4.3%, in tour revenues for the period. The
increase in cruise revenues was primarily the result of a 17.2% increase in
capacity for the period. This capacity increase resulted from additional
capacity provided by Carnival's SuperLiner Sensation and Fascination which
entered service in November 1993 and July 1994, respectively, and Holland
America Line's Maasdam and Ryndam which entered service in December 1993 and
October 1994, respectively. Also affecting cruise revenues were slightly higher
yields, slightly lower occupancies and lost revenues related to the grounding
of the Nieuw Amsterdam which resulted in the cancellation of three one-week
cruises in August 1994. See Nonoperating Income (Expense) below.
Revenues from the Company's tour operations increased to $227.6 million in
1994 from $214.4 million in 1993 primarily due to an increase in the number of
tour passengers.
Costs and Expenses
Operating expenses increased $120.6 million, or 13.3%, from 1993 to 1994.
Cruise operating costs increased by $113.4 million, or 14.5%, to $896.3 million
in 1994 from $782.8 million in 1993. Cruise operating costs increased primarily
due to costs associated with the increased capacity in 1994.
Selling and administrative expenses increased $15.3 million, or 7.3%, from
1993 to 1994. These increases were attributable to additional advertising and
other costs associated primarily with the increase in capacity.
Depreciation and amortization increased by $17.3 million, or 18.5%, to
$110.6 million in 1994 from $93.3 million in 1993. Depreciation and
amortization increased primarily due to the additional capacity discussed
above. Also, the depreciable lives of four of the Carnival ships built in the
1980's were extended from 20 or 25 years to 30 years to conform to industry
standards. This resulted in a reduction of depreciation of approximately $4
million during 1994.
Nonoperating Income (Expense)
Total nonoperating expense (net of nonoperating income) increased to $61.9
million in 1994 from $29.5 million in 1993. Interest income decreased to $8.7
million in 1994 from $11.5 million in 1993 due to a lower level of investments
in 1994. Interest expense increased to $73.3 million in 1994 from $58.9 million
in 1993 as a result of increased debt levels. Both the lower investment levels
and higher debt levels were the result of expenditures made in connection with
the ongoing construction and delivery of cruise ships. Capitalized interest
decreased to $21.9 million in 1994 from $24.6 million in 1993.
Other expenses increased to $9.1 million in 1994 because of two events
which occurred during 1994 which are discussed in the nonoperating income
(expense) section for the fiscal year ended November 30,1995 compared to fiscal
year ended November 30, 1994 above.
Income tax expense increased to $10.1 million in 1994 primarily as a result
of taxes, approximately $3 million, on a dividend paid by the tour company, a
U.S. Company, to its parent company, a foreign shipping company.
LIQUIDITY AND CAPITAL RESOURCES
Sources and Uses of Cash
The Company's business provided $587.2 million of net cash from operations
during the year ended November 30, 1995, an increase of 9.3% compared to the
corresponding period in 1994. The increase between periods was primarily the
result of an increase in net income.
During fiscal 1995 the Company made cash expenditures of approximately $484
million on capital projects, of which $432 million was spent in connection with
its ongoing shipbuilding program and $34 million was spent on the purchase and
expansion of the Company's existing corporate headquarters and operations
facility located in Miami, Florida. The remainder was spent on vessel
refurbishments, tour assets and other equipment. Amounts expended on the
shipbuilding program included a final payment upon delivery of the Imagination
in June 1995.
In October 1995, the Company purchased $101 million face amount of 13%
Senior Secured Notes Due 2003 of Kloster Cruise Limited for $81 million
(then"Kloster Bonds"). The investment presented an opportunity to acquire a
company that appeared to be on the verge of failing and which, upon
restructuring, could develop into a viable operation. Subsequently, the Company
was not able to reach an agreement to acquire Kloster's common stock. Although
Kloster is currently not in default with respect to its interest and principal
payment obligations under the Kloster Bonds, there is no assurance that Kloster
will continue to satisfy such obligations. The Company continues to hold these
bonds. See Note 7 in the accompanying financial statements for additional
information regarding the Kloster Bonds.
In April 1995, the Company received $47 million of net proceeds from the
sale of 2.1 million shares of Class A Common Stock by the Company pursuant to
the underwriters exercise of an overallotment option in a secondary offering by
certain shareholders of the Company. Also during fiscal 1995, the Company
issued $100 million of 7.05% Notes Due May 15, 2005 and received approximately
$99.2 million in cash proceeds net of underwriting fees and other costs and
borrowed $269 million under its $750 million revolving credit facility due
2000(the "$750 Million Revolver").
The Company made scheduled principal payments totaling approximately $79.6
million under various individual vessel mortgage loans and repaid $322 million
of the outstanding balance on the $750 Million Revolver during fiscal 1995.
Future Commitments
The Company has contracts for the delivery of seven new vessels over the
next three and one half years. The Company will pay approximately $674 million
during fiscal 1996 relating to the construction and delivery of the new cruise
ships and approximately $1.2 billion beyond fiscal 1996. See Note 9 in the
accompanying financial statements for more information related to commitments
for the construction of cruise ships. In addition, the Company has $1.2
billion of long-term debt and convertible notes of which $73 million is due
during fiscal 1996. See Note 5 in the accompanying financial statements for
more information regarding the Company's debt.
Funding Sources
Cash from operations is expected to be the Company's principal source of
capital to fund its debt service requirements and ship construction costs. In
addition, the Company may fund a portion of the construction cost of new ships
from borrowings under the $750 Million Revolver, $250 Million Revolver discussed
below and/or through the issuance of long-term debt in the public or private
markets. One of the Company's subsidiaries also has a $25 million line of
credit. The Company had $565 million available for borrowing under the $750
Million Revolver as of November 30, 1995.
In December 1995, the Company entered into a short-term $250 million
revolving credit facility to be used for general corporate purposes (then "$250
Million Revolver"). As of January 23, 1996, the Company had not made any
borrowings under the $250 Million Revolver. See Note 5 in the accompanying
financial statements for additional information regarding the $250 Million
Revolver.
To the extent that the Company should require or choose to fund future
capital commitments from sources other than operating cash or from borrowings
under the $750 Million Revolver or the $250 Million Revolver, the Company
believes that it will be able to secure such financing from banks or through the
offering of debt and/or equity securities in the public or private markets. In
this regard, the Company has filed two Registration Statements on Form S-3 (the
"Shelf Registration") relating to a shelf offering of up to $500 million
aggregate principal amount of debt or equity securities. Through November 1995,
the Company had issued $230 million of debt securities under the Shelf
Registration. A balance of $270 million aggregate principal amount of debt or
equity securities remains available for issuance under the Shelf Registration.
SELECTED FINANCIAL DATA
The selected financial data presented below for the fiscal years ended
November 30, 1991 through 1995 and as of the end of each such fiscal year are
derived from the financial statements of the Company and should be read in
conjunction with such financial statements and the related notes.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED NOVEMBER 30,
1995 1994 1993 1992 1991
(in thousands, except per share)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Total revenues $1,998,150 $1,806,016 $1,556,919 $1,473,614 $1,404,704
Operating income $ 490,038 $ 443,674 $ 347,666 $ 324,896 $ 315,905
Income from continuing
operations $ 451,091 $ 381,765 $ 318,170 $ 281,773 $ 253,824
Net income $ 451,091 $ 381,765 $ 318,170 $ 276,584 $ 84,988
Earnings per share (1):
Income from continuing
operations $1.59 $1.35 $1.13 $1.00 $ .93
Net income $1.59 $1.35 $1.13 $ .98 $ .31
Dividends declared
per share $.315 $.285 $.280 $.280 $.245
Passenger cruise days 9,201 8,102 7,003 6,766 6,365
Percent of total
capacity(2) 105.0% 104.0% 105.3% 105.3% 105.7%
AS OF NOVEMBER 30,
1995 1994 1993 1992 1991
(in thousands)
BALANCE SHEET DATA:
Total assets $4,105,487 $3,669,823 $3,218,920 $2,645,607 $2,650,252
Long-term debt and
convertible notes $1,150,031 $1,161,904 $1,031,221 $ 776,600 $ 921,689
Total shareholders'
equity $2,344,873 $1,928,934 $1,627,206 $1,384,845 $1,171,129
</TABLE>
- ----------------------------------
(1) All earnings per share amounts have been adjusted to reflect a two-for-one
stock split effective November 30, 1994.
(2) In accordance with cruise industry practice, total capacity is calculated
based upon two passengers per cabin even though some cabins can accommodate
three or four passengers. The percentages in excess of 100% indicate that more
than two passengers occupied some cabins.
MARKET PRICE FOR CAPITAL STOCK
The following table sets forth for the periods indicated the high and low
market prices for the Class A Common Stock on the New York Stock Exchange
restated to reflect the two-for-one stock split effective November 30, 1994:
<TABLE>
<CAPTION>
SALES PRICE
HIGH LOW
<S> <C> <C>
Fiscal Year ended November 30, 1994:
First Quarter $26.125 $23.000
Second Quarter $25.438 $21.000
Third Quarter $24.063 $21.750
Fourth Quarter $23.125 $20.563
Fiscal Year ended November 30, 1995:
First Quarter $23.750 $19.125
Second Quarter $26.625 $22.125
Third Quarter $24.250 $20.375
Fourth Quarter $27.125 $20.625
</TABLE>
As of January 17, 1996, there were approximately 3,445 holders of record
of the Company's Class A Common Stock. All of the issued and outstanding shares
of Class B Common Stock are held by The Micky Arison 1994 "B" Trust, a United
States Trust, whose primary beneficiary is Micky Arison. While no tax treaty
currently exists between the Republic of Panama and the United States, under
current law, the Company believes that distributions to its shareholders are not
subject to taxation under the laws of the Republic of Panama.
SELECTED QUARTERLY FINANCIAL DATA (unaudited)
Quarterly financial results for the year ended November 30, 1995 are as
follows:
<TABLE>
<CAPTION>
FOR THE QUARTER
FIRST SECOND THIRD FOURTH
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Total revenue $419,820 $452,826 $672,598 $452,906
Operating income $ 76,912 $ 96,268 $224,120 $ 92,738
Net income $ 67,552 $ 89,769 $209,542 $ 84,228
Earnings per share $.24 $.32 $.74 $.30
Quarterly financial results for the year ended November 30, 1994 are as
follows:
FOR THE QUARTER
FIRST SECOND THIRD FOURTH
(in thousands, except per share data)
Total revenue $385,256 $409,400 $600,796 $410,564
Operating income $ 72,013 $ 85,780 $204,927 $ 80,954
Net income $ 65,051 $ 77,886 $168,776 $ 70,052
Earnings per share $.23 $.28 $.60 $.25
</TABLE>
<PAGE>
EXHIBIT 23
Consent of Independent Certified Public Accountants
We hereby consent to the incorporation by reference in the Prospectuses
constituting part of the Registration Statements on Forms S-3 (No. 33-50947, No.
33-53136 and No.33-48756) and the Registrations Statements on Forms S-8
(No. 33-53099, 33-51195, 33-45288, 33-45287 and 33-26898) of Carnival
Corporation of our report dated January 18, 1996 appearing in the Annual Report
to Shareholders for the year ended November 30, 1995 which is incorporated in
this Annual Report on Form 10-K.
PRICE WATERHOUSE LLP
January 18, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-END> NOV-30-1995
<CASH> 53,365
<SECURITIES> 50,395
<RECEIVABLES> 33,080
<ALLOWANCES> 0
<INVENTORY> 48,820
<CURRENT-ASSETS> 256,378
<PP&E> 4,064,478
<DEPRECIATION> 649,655
<TOTAL-ASSETS> 4,105,487
<CURRENT-LIABILITIES> 594,710
<BONDS> 1,150,031
<COMMON> 2,848
0
0
<OTHER-SE> 2,342,025
<TOTAL-LIABILITY-AND-EQUITY> 4,105,487
<SALES> 0
<TOTAL-REVENUES> 1,998,150
<CGS> 0
<TOTAL-COSTS> 1,131,113
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 81,842
<INCOME-PRETAX> 460,465
<INCOME-TAX> 9,374
<INCOME-CONTINUING> 451,091
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 451,091
<EPS-PRIMARY> 1.59
<EPS-DILUTED> 1.57
<PAGE>
</TABLE>
