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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
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The condensed financial statements and notes for the third quarter and first
nine months of 1996 are presented below with comparative 1995 financial
statements.
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ALEXANDER & BALDWIN, INC.
A&B-HAWAII, INC.
PRIVATE SHELF AGREEMENT
$50,000,000
Private Shelf Facility
Dated as of August 2, 1996
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TABLE OF CONTENTS
(not part of agreement)
[Page number references do not correspond with electronic version]
Page
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1. AUTHORIZATION OF ISSUE OF NOTES ...................................... 1
2A. Intentionally Omitted ................................................ 2
2B. PURCHASE AND SALE OF NOTES ........................................... 2
2B(1). Facility ................................................. 2
2B(2). Issuance Period and Spread Information ................... 2
2B(2)(i). Issuance Period .......................................... 2
2B(2)(ii). Periodic Spread Information .............................. 2
2B(3). Request for Purchase ..................................... 3
2B(4). Rate Quotes .............................................. 3
2B(5). Acceptance ............................................... 3
2B(6). Market Disruption ........................................ 4
2B(7). Facility Closings ........................................ 4
2B(8). Fees ..................................................... 5
2B(8)(i). Structuring Fee .......................................... 5
2B(8)(ii). Issuance Fee ............................................. 5
2B(8)(iii). Delayed Delivery Fee ..................................... 5
2B(8)(iv). Cancellation Fee ......................................... 6
3. CONDITIONS OF CLOSING ................................................ 6
3A. Certain Documents ........................................ 6
3B. Opinion of Purchaser's Special Counsel ................... 7
3C. Representations and Warranties; No Default ............... 7
3D. Purchase Permitted By Applicable Laws .................... 7
3E. Solvency of A&B-Hawaii ................................... 8
3F. Payment of Fees .......................................... 8
4. PREPAYMENTS .......................................................... 8
4A. Required Prepayments of Notes ............................ 8
4B. Optional Prepayment With Yield-Maintenance Amount ........ 8
4C. Notice of Optional Prepayment ............................ 8
4D. Application of Prepayments ............................... 9
4E. Retirement of Notes ...................................... 9
5. AFFIRMATIVE COVENANTS ................................................ 9
5A. Financial Statements ..................................... 9
5B. Inspection of Property ................................... 11
5C. Covenant to Secure Note Equally .......................... 11
5D. Intentionally Omitted .................................... 11
5E. Maintenance of Properties; Insurance ..................... 11
5F. Environmental and Safety Laws ............................ 11
6. NEGATIVE COVENANTS ................................................... 12
6A. Minimum Net Worth ........................................ 12
6B. Lien and Other Restrictions .............................. 12
6B(1). Liens .................................................... 12
6B(2). Loans and Advances ....................................... 14
6B(3). Merger and Sale of Assets ................................ 14
6B(4). Interest Coverage ........................................ 15
6B(5). Sale or Discount of Receivables .......................... 15
6B(6). Debt Restrictions ........................................ 15
6B(7). Sale-Leasebacks .......................................... 16
6B(8). Transactions with Holders of
Partnership or Other Equity Interests .................... 16
6B(9). Guarantees and Related Obligations ....................... 16
6B(10). Transfer of Assets to Subsidiaries ....................... 17
6B(11). Excluded Liabilities ..................................... 17
6C. Sale of Stock and Debt of Subsidiaries ................... 17
6D. Restricted Payments ...................................... 18
7. EVENTS OF DEFAULT .................................................... 18
7A. Acceleration ............................................. 18
7B. Rescission of Acceleration ............................... 21
7C. Notice of Acceleration or Rescission ..................... 21
7D. Other Remedies ........................................... 21
8. REPRESENTATIONS, COVENANTS AND WARRANTIES ............................ 22
8A. Organization ............................................. 22
8B. Financial Statements ..................................... 22
8C. Actions Pending .......................................... 23
8D. Outstanding Debt ......................................... 23
8E. Title to Properties ...................................... 23
8F. Taxes .................................................... 23
8G. Conflicting Agreements and Other Matters ................. 24
8H. Offering of the Notes .................................... 24
8I. Regulation G, etc. ....................................... 24
8J. ERISA .................................................... 24
8K. Governmental Consent ..................................... 25
8L. Utility Company Status ................................... 25
8M. Investment Company Status ................................ 25
8N. Bank Holding Company Status .............................. 25
8O. Real Property Matters .................................... 25
8P. Possession of Francises, Licenses, etc. .................. 26
8Q. Environmental and Safety Matters ......................... 26
8R. Hostile Tender Offers .................................... 26
8S. Solvency ................................................. 26
8T. Employee Relations ....................................... 26
8U. Regulations and Legislation .............................. 27
8V. Disclosure ............................................... 27
9. REPRESENTATIONS OF THE PURCHASERS .................................... 27
9A. Nature of Purchase ....................................... 27
9B. Source of Funds .......................................... 27
10. DEFINITIONS; ACCOUNTING MATTERS ...................................... 27
10A. Yield-Maintenance Terms .................................. 28
10B. Other Terms .............................................. 29
10C. Accounting Principles, Terms
and Determinations ....................................... 38
11. MISCELLANEOUS ........................................................ 38
11A. Note Payments ............................................ 38
11B. Expenses ................................................. 39
11C. Consent to Amendments .................................... 39
11D. Form, Registration, Transfer and
Exchange of Notes; Transfer Restriction .................. 40
11E. Persons Deemed Owners; Participations .................... 41
11F. Survival of Representations and
Warranties; Joint and Several Obligations;
Entire Agreement ......................................... 41
11G. Successors and Assigns ................................... 41
11H. Independence of Covenants ................................ 41
11I. Notices .................................................. 42
11J. Descriptive Headings ..................................... 42
11K. Satisfaction Requirement ................................. 42
11L. Governing Law ............................................ 42
11M. Change in Accounting Principles .......................... 43
11N. Payments Due on Non-Business Days ........................ 43
11O. Severability ............................................. 43
11P. Severalty of Obligations ................................. 43
11Q. Counterparts ............................................. 43
11R. Binding Agreement ........................................ 44
EXHIBITS AND SCHEDULES
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Information Schedule
Exhibit A -- Form of Note
Exhibit B -- Form of Request for Purchase
Exhibit C -- Form of Confirmation of Acceptance
Exhibit D -- Form of Opinion of Company Counsel
Schedule 5A -- Form of Auditor's Certificate
Schedule 6B(1) -- List of Existing Liens
Schedule 8G -- List of Agreements Restricting Debt
ALEXANDER & BALDWIN, INC.
A&B-HAWAII, INC.
822 Bishop Street
Honolulu, Hawaii 96801
As of August 2, 1996
The Prudential Insurance Company
of America ("PRUDENTIAL")
Each Prudential Affiliate (as hereinafter
defined) which becomes bound by certain
provisions of this Agreement as hereinafter
provided (together with Prudential,
the "PURCHASERS")
c/o Prudential Capital Group
Four Embarcadero Center
Suite 2700
San Francisco, CA 94111
Ladies and Gentlemen:
The undersigned, Alexander & Baldwin, Inc. (the "Parent" or a "Company")
and A&B-Hawaii, Inc. ("A&B-Hawaii" or a "Company" and, together with the
Parent, the "Companies"), hereby agree with you as follows:
1. AUTHORIZATION OF ISSUE OF NOTES. The Companies have
authorized the issue of their senior promissory notes in the aggregate princi-
pal amount of $50,000,000, to be dated the date of issue thereof, to mature,
in the case of each Note so issued, no more than twenty years from the date
of original issuance, to have an average life, in the case of each Note so
issued, of no more than fifteen years, to bear interest on the unpaid balance
thereof from the date thereof at the rate per annum, and to have such other
particular terms, as shall be set forth, in the case of each Note so issued,
in the Confirmation of Acceptance with respect to such Note delivered pursuant
to paragraph 2B(5), and to be substantially in the form of Exhibit A attached
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hereto. The terms "NOTE" and "NOTES" as used herein shall include each Note
delivered pursuant to any provision of this Agreement and each Note delivered
in substitution or exchange for any such Note pursuant to any such provision.
Notes which have (i) the same final maturity, (ii) the same principal pre-
payment dates, (iii) the same principal prepayment amounts (as a percentage of
the original principal amount of each Note), (iv) the same interest rate,
(v) the same interest payment periods and (vi) the same date of issuance
(which, in the case of a Note issued in exchange for another Note, shall be
deemed for these purposes the date on which such Note's ultimate predecessor
Note was issued), are herein called a "SERIES" of Notes.
2A. INTENTIONALLY OMITTED.
2B. PURCHASE AND SALE OF NOTES.
2B(1). FACILITY. Prudential is willing to consider, in its sole
discretion and within limits which may be authorized for purchase by Prudential
and Prudential Affiliates from time to time, the purchase of Notes pursuant to
this Agreement. The willingness of Prudential to consider such purchase of
Notes is herein called the "FACILITY". At any time, the aggregate principal
amount of Notes stated in paragraph 1, minus the aggregate principal amount
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of Notes purchased and sold pursuant to this Agreement prior to such time,
minus the aggregate principal amount of Accepted Notes (as hereinafter defined)
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which have not yet been purchased and sold hereunder prior to such time, is
herein called the "AVAILABLE FACILITY AMOUNT" at such time. NOTWITHSTANDING
THE WILLINGNESS OF PRUDENTIAL TO CONSIDER PURCHASES OF NOTES, THIS AGREEMENT IS
ENTERED INTO ON THE EXPRESS UNDERSTANDING THAT NEITHER PRUDENTIAL NOR ANY
PRUDENTIAL AFFILIATE SHALL BE OBLIGATED TO MAKE OR ACCEPT OFFERS TO PURCHASE
NOTES, OR TO QUOTE RATES, SPREADS OR OTHER TERMS WITH RESPECT TO SPECIFIC
PURCHASES OF NOTES, AND THE FACILITY SHALL IN NO WAY BE CONSTRUED AS A
COMMITMENT BY PRUDENTIAL OR ANY PRUDENTIAL AFFILIATE.
2B(2). ISSUANCE PERIOD AND SPREAD INFORMATION.
2B(2)(i). ISSUANCE PERIOD. Notes may be issued and sold pursuant to
this Agreement until the earlier of (i) the second anniversary of the date of
this Agreement (or if such anniversary is not a Business Day, the Business Day
next preceding such anniversary) and (ii) the thirtieth day after Prudential
shall have given to a Company, or a Company shall have given to Prudential, a
written notice stating that it elects to terminate the issuance and sale of
Notes pursuant to this Agreement (or if such thirtieth day is not a Business
Day, the Business Day next preceding such thirtieth day). The period during
which Notes may be issued and sold pursuant to this Agreement is herein called
the "ISSUANCE PERIOD".
2B(2)(ii). PERIODIC SPREAD INFORMATION. Upon the request of the
Companies Prudential shall, on the fourth Business Day of every other week
during the Issuance Period (if there is an Available Facility Amount),
commencing one week following the week in which the request is received, and to
the extent reasonably practicable, provide to the Companies information (by
telecopier or telephone) with respect to various spreads at which Prudential or
Prudential Affiliates might be interested in purchasing Notes of different
maturities and average lives. The amount and content of information so pro-
vided shall be in the sole discretion of Prudential but it is the intent of
Prudential to provide information which will be of use to the Companies in
determining whether to initiate procedures for use of the Facility.
Information so provided shall not constitute an offer to purchase Notes, and
neither Prudential nor any Prudential Affiliate shall be obligated to purchase
Notes at the spreads specified. Prudential may suspend or terminate providing
information pursuant to this paragraph 2B(2)(ii) for any reason, including its
determination that the credit quality of the Company has declined since the
date of this Agreement.
2B(3). REQUEST FOR PURCHASE. The Companies may from time to time
during the Issuance Period make requests for purchases of Notes (each such
request being herein called a "REQUEST FOR PURCHASE"). Each Request for
Purchase shall be made to Prudential by telecopier or overnight delivery
service, and shall (i) specify the aggregate principal amount of Notes covered
thereby, which shall not be less than $5,000,000 and not be greater than the
Available Facility Amount at the time such Request for Purchase is made, (ii)
specify the principal amounts, final maturities, principal prepayment dates and
amounts and interest payment periods (quarterly or semiannual in arrears) of
the Notes covered thereby, (iii) specify the use of proceeds of such Notes by
Company, (iv) specify the proposed day for the closing of the purchase and sale
of such Notes, which shall be a Business Day during the Issuance Period not
less than 5 Business Days and not more than 30 Business Days after the making
of such Request for Purchase, (v) specify the number of the account and the
name and address of the depository institution to which the purchase prices of
such Notes are to be transferred on the Closing Day for such purchase and sale,
(vi) certify that the representations and warranties contained in paragraph 8
are true on and as of the date of such Request for Purchase and that there
exists on the date of such Request for Purchase no Event of Default or Default,
(vii) specify the Designated Spread for such Notes and (viii) be substantially
in the form of Exhibit B attached hereto. Each Request for Purchase shall be
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in writing and shall be deemed made when received by Prudential.
2B(4). RATE QUOTES. Not later than five Business Days after the
Companies shall have given Prudential a Request for Purchase pursuant to
paragraph 2B(3), Prudential may, but shall be under no obligation to, provide
to the Companies by telephone or telecopier, in each case between 9:30 A.M. and
2:00 P.M. New York City local time (or such later time as Prudential may elect)
interest rate quotes for the several principal amounts, maturities, principal
prepayment schedules, and interest payment periods of Notes specified in such
Request for Purchase. Each quote shall represent the interest rate per annum
payable on the outstanding principal balance of such Notes at which Prudential
or a Prudential Affiliate would be willing to purchase such Notes at 100% of
the principal amount thereof.
2B(5). ACCEPTANCE. Within 30 minutes after Prudential shall have
provided any interest rate quotes pursuant to paragraph 2B(4) or such shorter
period as Prudential may specify to the Company (such period herein called the
"ACCEPTANCE WINDOW"), a Company may, subject to paragraph 2B(6), elect to
accept such interest rate quotes as to not less than $5,000,000 aggregate
principal amount of the Notes specified in the related Request for Purchase.
Such election shall be made by an Authorized Officer of a Company notifying
Prudential by telephone or telecopier within the Acceptance Window that the
Companies elect to accept such interest rate quotes, specifying the Notes (each
such Note being herein called an "ACCEPTED NOTE") as to which such acceptance
(herein called an "ACCEPTANCE") relates. The day a Company notifies an
Acceptance with respect to any Accepted Notes is herein called the "ACCEPTANCE
DAY" for such Accepted Notes. Any interest rate quotes as to which Prudential
does not receive an Acceptance within the Acceptance Window shall expire, and
no purchase or sale of Notes hereunder shall be made based on such expired
interest rate quotes. Subject to paragraph 2B(6) and the other terms and
conditions hereof, the Companies agree to sell to Prudential or a Prudential
Affiliate, and Prudential agrees to purchase, or to cause the purchase by a
Prudential Affiliate of, the Accepted Notes at 100% of the principal amount of
such Notes. As soon as practicable following the Acceptance Day, the
Companies, Prudential and each Prudential Affiliate which is to purchase any
such Accepted Notes will execute a confirmation of such Acceptance
substantially in the form of Exhibit C attached hereto (herein called a
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"CONFIRMATION OF ACCEPTANCE"). If the Companies should fail to execute and
return to Prudential within three Business Days following receipt thereof a
Confirmation of Acceptance with respect to any Accepted Notes, Prudential may
at its election at any time prior to its receipt thereof cancel the closing
with respect to such Accepted Notes by so notifying the Companies in writing.
2B(6). MARKET DISRUPTION. Notwithstanding the provisions of
paragraph 2B(5), if Prudential shall have provided interest rate quotes
pursuant to paragraph 2B(4) and thereafter prior to the time an Acceptance with
respect to such quotes shall have been notified to Prudential in accordance
with paragraph 2B(5) the domestic market for U.S. Treasury securities or
derivatives shall have closed or there shall have occurred a general sus-
pension, material limitation, or significant disruption of trading in secu-
rities generally on the New York Stock Exchange or in the domestic market for
U.S. Treasury securities or derivatives, then such interest rate quotes shall
expire, and no purchase or sale of Notes hereunder shall be made based on such
expired interest rate quotes. If a Company thereafter notifies Prudential of
the Acceptance of any such interest rate quotes, such Acceptance shall be
ineffective for all purposes of this Agreement, and Prudential shall promptly
notify the Companies that the provisions of this paragraph 2B(6) are applicable
with respect to such Acceptance.
2B(7). FACILITY CLOSINGS. Not later than 11:30 A.M. (New York City
local time) on the Closing Day for any Accepted Notes, the Companies will
deliver to each Purchaser listed in the Confirmation of Acceptance relating
thereto at the offices of the Prudential Capital Group the Accepted Notes to be
purchased by such Purchaser in the form of one or more Notes in authorized
denominations as such Purchaser may request for each Series of Accepted Notes
to be purchased on the Closing Day, dated the Closing Day and registered in
such Purchaser's name (or in the name of its nominee), against payment of the
purchase price thereof by transfer of immediately available funds for credit to
the account specified by the Companies in the Request for Purchase of such
Notes. If the Companies fail to tender to any Purchaser the Accepted Notes to
be purchased by such Purchaser on the scheduled Closing Day for such Accepted
Notes as provided above in this paragraph 2B(7), or any of the conditions
specified in paragraph 3 shall not have been fulfilled by the time required on
such scheduled Closing Day, the Companies shall, prior to 1:00 P.M., New York
City local time, on such scheduled Closing Day notify Prudential (which
notification shall be deemed received by each Purchaser) in writing whether (i)
such closing is to be rescheduled (such rescheduled date to be a Business Day
during the Issuance Period not less than one Business Day and not more than 10
Business Days after such scheduled Closing Day (the "RESCHEDULED CLOSING DAY")
and certify to Prudential (which certification shall be for the benefit of each
Purchaser) that the Companies reasonably believe that they will be able to
comply with the conditions set forth in paragraph 3 on such Rescheduled Closing
Day and that the Companies jointly and severally will pay the Delayed Delivery
Fee in accordance with paragraph 2B(8)(iii) or (ii) such closing is to be
canceled. In the event that the Companies shall fail to give such notice
referred to in the preceding sentence, Prudential (on behalf of each Purchaser)
may at its election, at any time after 1:00 P.M., New York City local time, on
such scheduled Closing Day, notify the Companies in writing that such closing
is to be canceled. Notwithstanding anything to the contrary appearing in this
Agreement, the Companies may elect to reschedule a closing with respect to any
given Accepted Notes on not more than one occasion, unless Prudential shall
have otherwise consented in writing.
2B(8). FEES.
2B(8)(i). STRUCTURING FEE. In consideration for the time, effort and
expense involved in the preparation, negotiation and execution of this
Agreement, at the time of the execution and delivery of this Agreement by the
Companies and Prudential, the Companies shall pay to Prudential in immediately
available funds a fee (herein called the "Structuring Fee") in the amount of
$20,000.
2B(8)(ii). ISSUANCE FEE. The Companies jointly and severally agree to
pay to Prudential in immediately available funds a fee (herein called the
"ISSUANCE FEE") on each Closing Day (other than any Closing Day occurring prior
to January 1, 1997) in an amount equal to 0.10% of the aggregate principal
amount of Notes sold on such Closing Day.
2B(8)(iii). DELAYED DELIVERY FEE. If the closing of the purchase and sale
of any Accepted Note is delayed for any reason beyond the original Closing Day
for such Accepted Note, the Companies jointly and severally agree to pay to
Prudential (a) on the Cancellation Date or actual closing date of such purchase
and sale and (b) if earlier, the next Business Day following 90 days after the
Acceptance Day for such Accepted Note and on each Business Day following 90
days after the prior payment hereunder, a fee (herein called the "DELAYED
DELIVERY FEE") calculated as follows:
(BEY - MMY) X DTS/360 X PA
where "BEY" means Bond Equivalent Yield, i.e., the bond equivalent yield per
annum of such Accepted Note, "MMY" means Money Market Yield, i.e., the yield
per annum on a commercial paper investment of the highest quality selected by
Prudential on the date Prudential receives notice of the delay in the closing
for such Accepted Note having a maturity date or dates the same as, or closest
to, the Rescheduled Closing Day or Rescheduled Closing Days (a new alternative
investment being selected by Prudential each time such closing is delayed);
"DTS" means Days to Settlement, i.e., the number of actual days elapsed from
and including the original Closing Day with respect to such Accepted Note (in
the case of the first such payment with respect to such Accepted Note) or from
and including the date of the next preceding payment (in the case of any
subsequent delayed delivery fee payment with respect to such Accepted Note)
to but excluding the date of such payment; and "PA" means Principal Amount,
i.e., the principal amount of the Accepted Note for which such calculation is
being made. In no case shall the Delayed Delivery Fee be less than zero.
Nothing contained herein shall obligate any Purchaser to purchase any Accepted
Note on any day other than the Closing Day for such Accepted Note, as the same
may be rescheduled from time to time in compliance with paragraph 2B(7).
2B(8)(iv). CANCELLATION FEE. If a Company at any time notifies
Prudential in writing that the Companies are canceling the closing of the
purchase and sale of any Accepted Note, or if Prudential notifies the Companies
in writing under the circumstances set forth in the last sentence of paragraph
2B(5) or the penultimate sentence of paragraph 2B(7) that the closing of the
purchase and sale of such Accepted Note is to be canceled, or if the closing of
the purchase and sale of such Accepted Note is not consummated on or prior to
the last day of the Issuance Period (the date of any such notification, or the
last day of the Issuance Period, as the case may be, being herein called the
"CANCELLATION DATE"), the Companies jointly and severally agree to pay to
Prudential in immediately available funds an amount (the "CANCELLATION FEE")
calculated as follows:
PI X PA
where "PI" means Price Increase, i.e., the quotient (expressed in decimals)
obtained by dividing (a) the excess of the ask price (as determined by
Prudential) of the Hedge Treasury Note(s) on the Cancellation Date over the bid
price (as determined by Prudential) of the Hedge Treasury Notes(s) on the
Acceptance Day for such Accepted Note by (b) such bid price; and "PA" has the
meaning ascribed to it in paragraph 2B(8)(iii). The foregoing bid and ask
prices shall be as reported by Telerate Systems, Inc. (or, if such data for any
reason ceases to be available through Telerate Systems, Inc., any publicly
available source of similar market data). Each price shall be based on a U.S.
Treasury security having a par value of $100.00 and shall be rounded to the
second decimal place. In no case shall the Cancellation Fee be less than zero.
3. CONDITIONS OF CLOSING. The obligation of any Purchaser to
purchase and pay for any Notes is subject to the satisfaction, on or before the
Closing Day for such Notes, of the following conditions:
3A. CERTAIN DOCUMENTS. Such Purchaser shall have received the
following, each dated the date of the applicable Closing Day:
(i) The Note(s) to be purchased by such Purchaser.
(ii) Certified copies of the resolutions of the Board of
Directors of each of the Companies authorizing the execution and
delivery of this Agreement and the issuance of the Notes, and of all
documents evidencing other necessary corporate action and governmental
approvals, if any, with respect to this Agreement and the Notes.
(iii) A certificate of the Secretary or an Assistant Secretary
and one other officer of each of the Companies certifying the names
and true signatures of the officers of such Company authorized to sign
this Agreement and the Notes and the other documents to be delivered
hereunder.
(iv) Certified copies of the Certificate of Incorporation and
By-laws of each of the Companies.
(v) A favorable opinion of Cades Schutte Fleming & Wright,
special counsel to the Companies (or such other counsel designated by
the Companies and acceptable to the Purchaser(s)) satisfactory to such
Purchaser and substantially in the form of Exhibit D attached hereto
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and as to such other matters as such Purchaser may reasonably request.
The Companies hereby direct each such counsel to deliver such opinion,
agree that the issuance and sale of any Notes will constitute a
reconfirmation of such direction, and understand and agree that each
Purchaser receiving such an opinion will and is hereby authorized to
rely on such opinion.
(vi) A good standing certificate for each Company from the
secretary of state of Hawaii and, if different, from its jurisdiction
of incorporation, in each case dated as of a recent date and such
other evidence of the status of each Company as such Purchaser may
reasonably request.
(vii) Additional documents or certificates with respect to
legal matters or corporate or other proceedings related to the
transactions contemplated hereby as may be reasonably requested by
such Purchaser.
3B. OPINION OF PURCHASER'S SPECIAL COUNSEL. Such Purchaser shall
have received from James F. Evert, Assistant General Counsel of Prudential or
such other counsel who is acting as special counsel for it in connection with
this transaction, a favorable opinion satisfactory to such Purchaser as to such
matters incident to the matters herein contemplated as it may reasonably
request.
3C. REPRESENTATIONS AND WARRANTIES; NO DEFAULT. The representa-
tions and warranties contained in paragraph 8 shall be true on and as of such
Closing Day, except to the extent of changes caused by the transactions herein
contemplated; there shall exist on such Closing Day no Event of Default or
Default; and each Company shall have delivered to such Purchaser an Officer's
Certificate, dated such Closing Day, to both such effects.
3D. PURCHASE PERMITTED BY APPLICABLE LAWS. The purchase of and
payment for the Notes to be purchased by such Purchaser on the terms and
conditions herein provided (including the use of the proceeds of such Notes by
each Company) shall not violate any applicable law or governmental regulation
(including, without limitation, Section 5 of the Securities Act or Regulation
G, T or X of the Board of Governors of the Federal Reserve System) and shall
not subject such Purchaser to any tax, penalty, liability or other onerous
condition under or pursuant to any applicable law or governmental regulation,
and such Purchaser shall have received such certificates or other evidence as
it may request to establish compliance with this condition. This paragraph 3D
is a closing condition and shall not be construed as a tax indemnity.
3E. SOLVENCY OF A&B-HAWAII. If A&B Hawaii is not receiving all of
the proceeds of the Notes, such Purchaser shall have received evidence
satisfactory to it regarding the solvency for fraudulent conveyance law
purposes of A&B-Hawaii.
3F. PAYMENT OF FEES. The Companies shall have paid to Prudential
any fees due it pursuant to or in connection with this Agreement, including the
Structuring Fee due pursuant to paragraph 2B(8)(i), any Issuance Fee due
pursuant to paragraph 2B(8)(ii) and any Delayed Delivery Fee due pursuant to
paragraph 2B(8)(iii).
4. PREPAYMENTS. The Notes shall be subject to required pre-
payment as and to the extent provided in paragraph 4A. The Notes shall also be
subject to prepayment under the circumstances set forth in paragraph 4B. Any
prepayment made by the Companies pursuant to any other provision of this para-
graph 4 shall not reduce or otherwise affect their obligation to make any
required prepayment as specified in paragraph 4A.
4A. REQUIRED PREPAYMENTS OF NOTES. Each Series of Notes shall be
subject to required prepayments, if any, set forth in the Notes of such Series.
4B. OPTIONAL PREPAYMENT WITH YIELD-MAINTENANCE AMOUNT. The Notes
of each Series shall be subject to prepayment, in whole at any time or from
time to time in part (in integral multiples of $100,000 and in a minimum
amount of $1,000,000), at the option of the Companies, at 100% of the principal
amount so prepaid plus interest thereon to the prepayment date and the Yield-
Maintenance Amount, if any, with respect to each such Note. Any partial
prepayment of a Series of the Notes pursuant to this paragraph 4B shall be
applied in satisfaction of required payments of principal in inverse order of
their scheduled due dates.
4C. NOTICE OF OPTIONAL PREPAYMENT. A Company shall give the
holder of each Note of a Series to be prepaid pursuant to paragraph 4B
irrevocable written notice of such prepayment not less than 10 Business Days
prior to the prepayment date, specifying such prepayment date, the aggregate
principal amount of the Notes of such Series to be prepaid on such date, the
principal amount of the Notes of such Series held by such holder to be prepaid
on that date and that such prepayment is to be made pursuant to paragraph 4B.
Notice of prepayment having been given as aforesaid, the principal amount of
the Notes specified in such notice, together with interest thereon to the
prepayment date and together with the Yield-Maintenance Amount, if any, herein
provided, shall become due and payable on such prepayment date. A Company
shall, on or before the day on which it gives written notice of any prepayment
pursuant to paragraph 4B, give telephonic notice of the principal amount of the
Notes to be prepaid and the prepayment date to each Significant Holder which
shall have designated a recipient for such notices in the purchaser schedule
attached to the applicable Confirmation of Acceptance or by notice in writing
to the Companies.
4D. APPLICATION OF PREPAYMENTS. In the case of each prepayment of
less than the entire unpaid principal amount of all outstanding Notes of any
Series pursuant to paragraph 4A or 4B, the amount to be prepaid shall be
applied pro rata to all outstanding Notes of such Series (including, for the
purpose of this paragraph 4D only, all Notes prepaid or otherwise retired or
purchased or otherwise acquired by either Company or any of their Subsidiaries
or Affiliates other than by prepayment pursuant to paragraph 4A or 4B)
according to the respective unpaid principal amounts thereof.
4E. RETIREMENT OF NOTES. The Companies shall not, and shall not
permit any of their Subsidiaries or Affiliates to, prepay or otherwise retire
in whole or in part prior to their stated final maturity (other than by
prepayment pursuant to paragraphs 4A or 4B, or upon acceleration of such final
maturity pursuant to paragraph 7A), or purchase or otherwise acquire, directly
or indirectly, Notes of any Series held by any holder unless the Companies or
such Subsidiary or Affiliate shall have offered to prepay or otherwise retire
or purchase or otherwise acquire, as the case may be, the same proportion of
the aggregate principal amount of Notes of such Series held by each other
holder of Notes of such Series at the time outstanding upon the same terms and
conditions. Any Notes so prepaid or otherwise retired or purchased or
otherwise acquired by the Companies or any of its Subsidiaries or Affiliates
shall not be deemed to be outstanding for any purpose under this Agreement,
except as provided in paragraph 4D.
5. AFFIRMATIVE COVENANTS. During the Issuance Period and so long
thereafter as any Note is outstanding and unpaid, the Companies jointly and
severally covenant as follows:
5A. FINANCIAL STATEMENTS. The Companies covenant that they will
deliver to each holder of the Notes in duplicate:
(i) as soon as practicable and in any event within the
earlier to occur of 60 days after the end of each quarterly period
(other than the last quarterly period) in each fiscal year or the date
on which another creditor of either Company first receives such
information, consolidated and consolidating statements of income and
cash flows of each Company and their respective Subsidiaries for the
period from the beginning of the current fiscal year to the end of
such quarterly period, and consolidated and consolidating balance
sheets of each Company and their respective Subsidiaries as at the end
of such quarterly period, setting forth in each case in comparative
form figures for the corresponding period in the preceding fiscal
year, all in reasonable detail and certified by an authorized
financial officer of each Company, subject only to changes resulting
from year-end adjustments;
(ii) as soon as practicable and in any event within the
earlier to occur of 120 days after the end of each fiscal year or the
date on which another creditor of either Company first receives such
information, consolidated and consolidating statements of income and
cash flows of each Company and their respective Subsidiaries for such
year and balance sheets of each Company and their respective
Subsidiaries as at the end of such year, setting forth in each case in
comparative form corresponding figures from the preceding annual
audit, all in reasonable detail and reasonably satisfactory in scope
to the Required Holder(s) and, with respect to each Company's
consolidated financial statements, certified by independent public
accountants of recognized standing whose opinion shall be unqualified
and otherwise satisfactory in scope and substance to the Required
Holder(s), provided that such opinion shall be deemed otherwise
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satisfactory if prepared and rendered in accordance with GAAP and
generally accepted auditing standards;
(iii) promptly upon transmission thereof, copies of all such
financial, proxy and information statements, notices and other reports
as are sent to Parent's stockholders and copies of all registration
statements (with such exhibits as any holder reasonably requests) and
all reports which are filed with the Securities and Exchange
Commission (or any governmental body or agency succeeding to the
functions of the Securities and Exchange Commission);
(iv) promptly upon receipt thereof, a copy of each other
report submitted to either Company or any of their Subsidiaries by
independent accountants in connection with any material annual,
interim or special audit made by them of the books of such Company or
Subsidiary pursuant to a request by such Company's Board of Directors;
(v) promptly after the furnishing thereof, copies of any
certificate, statement or report furnished to any other holder of the
securities of either Company pursuant to the terms of any indenture,
loan, credit or similar agreement or instrument and not otherwise
required to be furnished to you pursuant to any other clause of this
paragraph 5; and
(vi) with reasonable promptness, such other financial data
(including without limitation the information specified in paragraph
5E(ii)) as you may reasonably request.
Together with each delivery of financial statements required by clauses (i) and
(ii) above, the Companies will deliver to you an Officers' Certificate (a)
setting forth the aggregate amount of Restricted Payments made during such
fiscal period and computations showing (non)compliance with the covenants in
paragraphs 6A, 6B(4) and 6B(6)(iii) and (iv); and (b) stating that there exists
no Default or Event of Default, or if any such Default or Event of Default
exists, specifying the nature and period of existence thereof and what action
the Companies propose to take with respect thereto.
Together with each delivery of financial statements required by clause
(ii) above, the Companies will deliver to you a certificate of such accountants
substantially in the form of Schedule 5A stating whether they have obtained
knowledge of any Event of Default or Default and, if so, specifying the nature
and period of existence thereof.
The Companies also covenant that forthwith upon a Principal Officer
obtaining actual knowledge of an Event of Default or Default, they will deliver
to you an Officers' Certificate specifying the nature and period of existence
thereof and what action the Companies propose to take with respect thereto.
5B. INSPECTION OF PROPERTY. Each Company covenants that it will
permit any employees or designated representatives of Prudential, any
Prudential Affiliate or any other holder of Notes in an original principal
amount in excess of $5,000,000, at such Person's expense, to visit and inspect
any of the properties of such Company and its Subsidiaries, to examine their
books and financial records and to make copies thereof or extracts therefrom
and to discuss their affairs, finances and accounts with the Principal Officers
and the Companies' independent certified public accountants, all at such times
as the Companies and such Person reasonably agree and as often as such Person
may reasonably request.
5C. COVENANT TO SECURE NOTE EQUALLY. Each Company covenants that,
if it or any of its Subsidiaries shall create, assume or otherwise incur any
Lien upon any of its property or assets, whether now owned or hereafter
acquired, other than Liens permitted by the provisions of paragraph 6B(1)
(unless prior written consent to the creation or assumption thereof shall have
been obtained pursuant to paragraph 11C), it will make or cause to be made
effective provision whereby the Notes will be secured by such Lien equally and
ratably with any and all other Debt thereby secured so long as any such other
Debt shall be so secured.
5D. [INTENTIONALLY OMITTED.]
5E. MAINTENANCE OF PROPERTIES; INSURANCE. Each Company covenants
that it and each Subsidiary will (i) maintain or cause to be maintained in good
repair, working order and condition all properties used or useful at that time
in its business and from time to time will make or cause to be made all
appropriate repairs, renewals and replacements thereof; and (ii) maintain
insurance with reputable and financially sound insurers in such amounts and
against such liabilities and hazards as is customarily maintained by other
companies operating similar businesses and together with each delivery of
financial statements under clause (ii) of paragraph 5A, upon the request of any
Significant Holder of Notes, deliver certificates of insurance to the foregoing
effect to such Significant Holder.
5F. ENVIRONMENTAL AND SAFETY LAWS. Each Company covenants that it
will:
(i) deliver promptly to each Significant Holder any notice of
(a) any material enforcement, cleanup, removal or other material
governmental or regulatory actions instituted, completed or, to such
Company's best knowledge, threatened pursuant to any Environmental and
Safety Laws; (b) all material Environmental Liabilities and Costs
against or in respect of the Property, such Company or any Subsidiary;
and (c) such Company's or Subsidiary's discovery of any occurrence or
condition on any real property adjoining or in the vicinity of the
Property that such Company or Subsidiary has reason to believe could
cause the Property or any material part thereof to be subject to any
material restrictions on its ownership, occupancy, transferability or
use under any Environmental and Safety Laws.
(ii) keep and maintain the Property and conduct their
operations in compliance in all material respects with all applicable
Environmental and Safety Laws.
6. NEGATIVE COVENANTS. During the Issuance Period and so long
thereafter as any Note or other amount due hereunder is outstanding and unpaid,
the Companies jointly and severally covenant as follows:
6A. MINIMUM NET WORTH. The Companies covenant that they will not,
without the prior written consent of the Required Holders of each Series, at
any time permit Parent's Consolidated Tangible Net Worth to be less than the
sum of (a) $450,000,000 plus (b) to the extent positive, 25% of Parent's
Consolidated Cumulative Net Income for each fiscal quarter ended after
December 31, 1995 (such required minimum net worth not to be reduced by any
consolidated net loss during any such fiscal quarter).
6B. LIEN AND OTHER RESTRICTIONS. Each Company covenants that it
will not, and will not permit its Subsidiaries to:
6B(1). LIENS. Create, assume or suffer to exist at any time any Lien
on or with respect to any of its property or assets, whether now owned or
hereafter acquired (whether or not provision is made for the equal and ratable
securing of the Notes in accordance with the provisions of paragraph 5C
hereof), except:
(i) Liens for taxes not yet due or which are being actively
contested in good faith by appropriate proceedings and for which
adequate reserves have been established;
(ii) Liens incidental to the conduct of its business or the
ownership of its property and assets which were not incurred in
connection with the borrowing of money or the obtaining of advances of
credit, or the guarantee, maintenance, extension or renewal of the
same, and which do not in the aggregate materially detract from the
value of its property or assets, taken as a whole, or materially
impair the use thereof in the operation of its business;
(iii)(A) Liens on the vessels owned or to be owned or chartered,
or any shoreside facilities or equipment owned, leased or to be owned
or leased by Matson or its Subsidiaries and (B) Liens securing Funded
Debt between Subsidiaries or owing to either Company by a Subsidiary;
(iv) the giving, simultaneously with or within ninety (90)
days after the acquisition or construction of real property or
tangible personal property, of any purchase money lien (including
vendor's rights under purchase contracts under an agreement whereby
title is retained for the purpose of securing the purchase price
thereof) on real property or tangible personal property hereafter
acquired or constructed and not heretofore owned by either Company or
any of their Subsidiaries, or the acquiring hereafter of real property
or personal tangible property not heretofore owned by either Company
or any of their Subsidiaries subject to any then existing Lien
(whether or not assumed); provided, however, that notwithstanding the
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foregoing, A&B-Hawaii or any of its Subsidiaries may grant Liens on
real property now owned or hereafter acquired for development in the
ordinary course of its Property Development Activities so long as the
aggregate amount of Debt secured by all such Liens does not, at any
time, exceed the sum of (A) $65,000,000 and (B) $5,000,000 for each
completed calendar year, commencing with the calendar year completed
December 31, 1997; and provided further, that in each such case
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(including Liens granted pursuant to the foregoing proviso) (x) such
Lien is limited to such real or tangible personal property, and (y)
the principal amounts of the Debt secured by each such Lien, together
(without duplication) with the principal amount of all other Debt
secured by Liens on such property, shall not exceed 100% of the cost
(which shall be deemed to include the amount of Debt secured by Liens,
including existing Liens, on such property) of such property to such
Company or any of its Subsidiaries;
(v) Liens (other than as specified in clauses (i) - (iv)
above) of the Companies and their respective Subsidiaries in existence
on the date of this Agreement as set forth in Schedule 6B(1); and
(vi) Liens securing Debt other than as set forth in the
foregoing clauses (i)-(v); provided, however, that at no time shall
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(A) the aggregate principal amount of all Debt outstanding that is
secured by such Liens, together with the aggregate principal amount of
Funded Debt described in clause (B)(2) of the proviso appearing in
paragraph 6B(6) and the aggregate principal amount of all Debt
Guaranteed as described in paragraph 6B(9)(ii), exceed the sum of
$20,000,000 and 10% of the Parent's Consolidated Tangible Net Worth at
such time and (B) there exist any Lien of any kind on a majority or
more of the shares of the Voting Stock of any Subsidiary (including
A&B-Hawaii);
6B(2). LOANS AND ADVANCES. Make or permit to remain outstanding at
any time any loan or advance to any Person, except that the Parent and its
Subsidiaries may:
(i) make or permit to remain outstanding travel and other
like advances and customary employee benefits in reasonable amounts to
employees in the ordinary course of business;
(ii) make or permit to remain outstanding third party loans
and advances on standard arm's-length terms, all such loans and
advances not to exceed an aggregate of $25,000,000 at any time
outstanding; and
(iii) make purchase money loans to Persons to whom it sells
real property in the ordinary course of its Property Development
Activities, provided that the aggregate amount of all such purchase
-------- ----
money loans may not exceed at any one time an aggregate amount in
excess of 10% of the Parent's Consolidated Total Assets at the end of
the fiscal quarter most recently-ended as of any date of
determination;
6B(3). MERGER AND SALE OF ASSETS. Merge with or into or consolidate
with any other corporation, partnership, company or other Person or sell,
lease, transfer or otherwise dispose of assets (other than in the ordinary
course of business), except that:
(i) any Subsidiary may merge with a Company, so long as such
Company is the surviving corporation;
(ii) any Subsidiary may merge or sell, lease, transfer or
otherwise dispose of its assets to another Subsidiary or to either
Company; provided, however, that neither Company nor any of their
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Subsidiaries (other than Matson and its Subsidiaries) may merge into
or sell, lease, transfer or otherwise dispose of any assets to Matson
or its Subsidiaries;
(iii)(A) Property Subs may sell, lease, transfer, exchange or
otherwise dispose of their real property to the extent that such sales
or other dispositions are made in the ordinary course of their
Property Development Activities, and (B) the Parent may sell, lease,
transfer, exchange or otherwise dispose of the real property it owned
as of the date of this Agreement in the ordinary course of business;
(iv) the Companies or any Subsidiary thereof may sell, lease,
transfer or otherwise dispose of assets to third parties so long as
(A) the fair market value thereof on the date sold or otherwise
disposed of, together with the fair market value of all other assets
sold or otherwise disposed of to third parties within the prior 12
months or since the date hereof, does not represent more than 15% or
40%, respectively, of the value of the Parent's Consolidated Total
Assets on June 30, 1996 (or in the case of a Subsidiary acquired by
Parent or any Subsidiary after June 30, 1996, on the date such
Subsidiary was acquired) and (B) such assets, together with all other
assets sold or otherwise disposed of to third parties since the
beginning of the most recently ended fiscal year, have not contributed
a substantial portion of the Parent's Consolidated Net Income during
the most recently ended fiscal year; provided that, notwithstanding
--------
the 15% limitation appearing clause (A), above, sales or dispositions
in excess thereof in a twelve month period may be made if the proceeds
of such sale or disposition are fully utilized in the acquisition of
Permitted Assets and/or applied to the repayment of Permitted Debt, in
each case within 365 days from the date of sale or disposition; and
(v) a Company may merge or consolidate with another
corporation or other Person if (A) it will be the continuing or
surviving entity and (B) no Default or Event of Default would exist
immediately after giving effect to such merger or consolidation;
6B(4). INTEREST COVERAGE. Permit the Parent's Interest Coverage
Ratio for any fiscal quarter (measured at the end of such fiscal quarter) to be
less than 200%;
6B(5). SALE OR DISCOUNT OF RECEIVABLES. Sell with recourse, or
discount or otherwise sell for less than the face value thereof, any of its
notes or accounts receivable;
6B(6). DEBT RESTRICTIONS. Create, incur, assume or suffer to exist
at any time any Debt except:
(i) Funded Debt of a Subsidiary to either Company or another
Subsidiary;
(ii) Funded Debt of Matson and its Subsidiaries (A) of the
type specified in paragraph 6B(1)(iii) above or (B) that is unsecured
and the proceeds of which are used for general working capital
purposes in the ordinary course of business;
(iii) Funded Debt of C&H (in addition to Funded Debt thereof
permitted by clause (i), above) which in aggregate amount at no time
exceeds $125,000,000; and
(iv) Funded Debt of either Company;
provided that (A) the aggregate amount of all Funded Debt described in clauses
- --------
(ii), (iii) and (iv) shall not at any time exceed 150% of the Parent's
Consolidated Tangible Net Worth, and (B) in no event shall either Company or
any non-Matson Subsidiary incur or permit to exist any Funded Debt to Matson or
its Subsidiaries other than (1) for cash management purposes in accordance with
the Parent's standard cash management policies or (2) for other purposes, but
only to the extent that the aggregate principal amount of such Funded Debt
described in this clause (B)(2), together with the aggregate principal amount
of Debt outstanding that is secured by Liens described in paragraph 6B(1)(vi)
and the aggregate principal amount of Debt Guaranteed as described in paragraph
6B(9)(ii), does not at any time exceed the sum of $20,000,000 and 10% of the
Parent's Consolidated Tangible Net Worth;
6B(7). SALE-LEASEBACKS. Enter into any arrangement with any lender
or investor or to which such lender or investor is a party providing for the
leasing by either Company or any of their Subsidiaries of real or personal
property which has been or is to be sold or transferred by such Company or
Subsidiary to such lender or investor or to any Person to whom funds have been
or are to be advanced by such lender or investor on the security of such
property or rental obligations of either Company or Subsidiary; provided,
--------
however, that such sale-leaseback transactions may be entered into by:
- -------
(i) Matson and its Subsidiaries without limitation; and
(ii) either Company and their respective non-Matson
Subsidiaries so long as the aggregate sales price of all assets sold
or otherwise transferred after December 20, 1990 pursuant to such
transactions does not exceed 5% of the Parent's Consolidated Tangible
Net Worth (measured as at the end of the fiscal quarter immediately
preceding the date of such sale-leaseback);
6B(8). TRANSACTIONS WITH HOLDERS OF PARTNERSHIP OR OTHER EQUITY
INTERESTS. Directly or indirectly, purchase, acquire or lease any property
from, or sell, transfer or lease any property to, or otherwise deal with, in
the ordinary course of business or otherwise (i) any Affiliate (other than in
the capacity of an employee), or (ii) any Person owning, beneficially or of
record, directly or indirectly, 5% or more of the outstanding voting stock of
Parent or any executive officer (as such term is defined under the Securities
Exchange Act of 1934, as amended) of a Company (other than in such Person's
capacity as an employee); provided, however, that such acts and transactions
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may be performed or engaged in if they are entered into upon terms no less
favorable to such Company or any Subsidiary than if no such relationship
described in clauses (i) or (ii) above existed and such acts or transactions
are otherwise permitted by this Agreement;
6B(9). GUARANTEES AND RELATED OBLIGATIONS. Directly or indirectly
Guarantee or otherwise become or remain contingently obligated or liable for
another Person's Debt or other obligations, except
(i) the Companies may Guarantee up to $125,000,000 of Funded
Debt of C&H,
(ii) either Company or any of their non-Matson Subsidiaries
may Guarantee Debt of any third party; provided, however, that such
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Guarantees shall be permitted only to the extent that the principal
amount of the Debt so Guaranteed, when added to the aggregate
principal amount of Debt then outstanding that is secured by Liens
described in paragraph 6B(1)(vi) and the aggregate principal amount of
Funded Debt described in clause (B)(2) of the proviso appearing in
paragraph 6B(6), does not at any time exceed $20,000,000 plus 10% of
Parent's Consolidated Tangible Net Worth,
(iii) Subsidiaries (including A&B-Hawaii and Matson) may
Guarantee Debt of either Company; provided, however, that if the Debt
--------
so Guaranteed is Debt other than the Notes (a) the Notes shall be
equally and ratably Guaranteed with all other Debt thereby Guaranteed
so long as such other Debt shall be so Guaranteed and (b) the Required
Holders of the Notes shall have confirmed to the Companies in writing
that they are satisfied that the Guarantee in question shall not
subject the holders of the Notes to potentially adverse fraudulent
conveyance treatment vis-a-vis any other recipient of such Guarantee, and
---------
(iv) Matson and its Subsidiaries may Guarantee Debt of Matson,
its Subsidiaries and third parties (but in no event may Guarantee Debt
of either Company or any of their non-Matson Subsidiaries other than
as contemplated in clause (iii), above);
6B(10). TRANSFER OF ASSETS TO SUBSIDIARIES. Transfer (other than in
the ordinary course of business) any assets to a Subsidiary for the principal
purpose of improving the credit position of such Subsidiary in order to enable
it to borrow money;
6B(11). EXCLUDED LIABILITIES. Incur, create, assume or permit to
exist at any time Excluded Liabilities in an aggregate amount greater than 30%
of the Parent's Consolidated Tangible Net Worth.
6C. SALE OF STOCK AND DEBT OF SUBSIDIARIES. Each Company
covenants that it will not, nor will it permit any Subsidiary to, sell or
otherwise dispose of, or part with control of, any shares of stock or Debt or
other obligations of any Subsidiary, or permit any Subsidiary to issue shares
of its capital stock, to any Person other than to a Company or another
Subsidiary (except that A&B-Hawaii and non-Matson Subsidiaries may not issue
shares of capital stock to Matson or a Matson Subsidiary), and except that (i)
the Property Subs may sell or otherwise dispose or part with control of all
shares of stock of special purpose Subsidiaries (i.e., Subsidiaries established
to hold and develop real property only for specific development projects) if
such sale or disposition is made in the ordinary course of their Property
Development Activities and (ii) all shares of stock and Debt or other
obligations of any Subsidiary at the time owned by or owed to a Company and any
Subsidiary may be sold as an entirety to any Person for a consideration which
represents fair value (as determined in good faith by its Board of Directors)
at the time of such sale; provided, however, that the securities or other
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obligations so sold shall constitute assets subject to the limitations and
other provisions of paragraph 6B(3); and provided, further, that, at the time
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of such sale, such Subsidiary shall not own, directly or indirectly, any shares
of stock or Debt or other obligations of any other Subsidiary or of a Company
(unless all of the shares of stock and Debt or other obligations of such other
Subsidiary owned, directly or indirectly, by a Company and all Subsidiaries are
simultaneously being sold as permitted by this paragraph 6C);
6D. RESTRICTED PAYMENTS. The Parent covenants that it will not
declare or pay any dividend or other distribution on any class of its capital
stock or other equity interests, redeem or repurchase any such interests or
make any other distribution on account of any such interests (all of the fore-
going being "Restricted Payments") except that Parent may make Restricted
Payments in any amount so long as (i) no Default or Event of Default shall then
be existing or be existing after giving effect to any such Restricted Payment
and (ii) any such Restricted Payment will not violate any applicable law or
regulation, including Regulation U of the Board of Governors of the Federal
Reserve System.
7. EVENTS OF DEFAULT.
7A. ACCELERATION. If any of the following events shall occur and
be continuing for any reason whatsoever (and whether such occurrence shall be
voluntary or involuntary or come about or be effected by operation of law or
otherwise):
(i) the Companies default in the payment of any principal of,
or interest or Yield-Maintenance Amount on, any Note, for more than
five Business Days after the same shall become due, either by the
terms thereof or otherwise as herein provided; or
(ii) either Company or any Subsidiary defaults in any payment
of principal of, or premium or interest on, any obligation for money
borrowed (or of any obligation under conditional sale or other title
retention agreement or of any obligation issued or assumed as full or
partial payment for property whether or not secured by a purchase
money mortgage or of any obligation under notes payable or drafts
accepted representing extensions of credit) other than the Notes
beyond any period of grace provided with respect thereto, or either
Company or any Subsidiary fails to perform or observe any other
agreement, term or condition contained in any agreement (or any other
event thereunder or under any such agreement occurs and is continuing)
and the effect of such default, failure or other event is to cause, or
permit the holder or holders of such obligation (or a trustee on
behalf of such holder or holders) to cause, such obligation to become
due (or to be repurchased by either Company or any Subsidiary) prior
to any stated maturity; provided that the aggregate amount of all
obligations as to which such a payment default shall occur or such a
failure or other event causing or permitting acceleration (or resale
to a Company or any Subsidiary) shall occur and be continuing exceeds
$10,000,000; or
(iii) any representation or warranty made by the Companies
herein or by a Company or any of its officers in any writing furnished
in connection with or pursuant to this Agreement shall be false or
misleading in any material respect on the date as of which made; or
(iv) the Companies fail to perform or observe any agreement
contained in paragraphs 5C or 6 hereof; or
(v) either Company or any Subsidiary fails to perform or
observe any other agreement, term or condition contained herein and
such failure shall not be remedied within 30 days after any Principal
Officer obtains actual knowledge thereof; or
(vi) either Company or any Significant Subsidiary makes an
assignment for the benefit of creditors or is generally not paying its
debts as such debts become due; or
(vii) any decree or order for relief in respect of either
Company or any Significant Subsidiary is entered under any bankruptcy,
reorganization, compromise, arrangement, insolvency, readjustment of
debt, dissolution, liquidation or similar law, whether now or
hereafter in effect (herein called the "Bankruptcy Law"), of any
jurisdiction; or
(viii) either Company or any Significant Subsidiary petitions or
applies to any tribunal for, or consents to, the appointment of, or
taking possession by, a trustee, receiver, custodian, liquidator or
similar official of such Company or any Significant Subsidiary, or of
any substantial part of the assets of such Company or any Significant
Subsidiary, or commences a voluntary case under the Bankruptcy Law of
the United States or any proceedings (other than proceedings for the
voluntary liquidation and dissolution of a Significant Subsidiary)
relating to such Company or any Significant Subsidiary under the
Bankruptcy Law of any other jurisdiction; or
(ix) any petition or application of the type described in
clause (viii) of this Section 7A is filed, or any such proceedings are
commenced, against either Company or any Significant Subsidiary and
such Company or such Significant Subsidiary by any act indicates its
approval thereof, consent thereto or acquiescence therein, or an
order, judgment or decree is entered appointing any such trustee,
receiver, custodian, liquidator or similar official, or approving the
petition in any such proceedings, and such order, judgment or decree
remains unstayed and in effect for more than 30 days; or
(x) any order, judgment or decree is entered in any pro-
ceedings against either Company or any Significant Subsidiary
decreeing the dissolution of such Company or such Significant
Subsidiary and such order, judgment or decree remains unstayed and in
effect for more than 30 days; or
(xi) any order, judgment or decree is entered in any pro-
ceedings against either Company or any Significant Subsidiary
decreeing a split-up of such Company or such Significant Subsidiary
which requires the divestiture of (A) assets representing a
substantial part, or the stock of, or other ownership interest in, a
Significant Subsidiary whose assets represent a substantial part, of
Consolidated Total Assets of the Parent or (B) assets or the stock of
or other ownership interest in a Significant Subsidiary that has
contributed a substantial part of Consolidated Cumulative Net Income
of the Parent for any of the three fiscal years then most recently
ended, and such order, judgment or decree remains unstayed and in
effect for more than 30 days; or
(xii)(a) any Plan shall fail to satisfy the minimum funding
standards of ERISA or the Code for any plan year or part thereof or a
waiver of such standards or extension of any amortization period is
sought or granted under section 412 of the Code, (b) a notice of
intent to terminate any Plan shall have been or is reasonably expected
to be filed with the PBCG or the PBGC shall have instituted
proceedings under ERISA section 4042 to terminate or appoint a trustee
to administer any Plan or the PBGC shall have notified either Company
or any ERISA Affiliate that a Plan may become a subject of such
proceedings, (c) the aggregate "amount of unfunded benefit
liabilities" (within the meaning of section 4001(a)(18) of ERISA)
under all Plans, determined in accordance with Title IV of ERISA,
shall exceed $15,000,000, (d) either Company or any ERISA Affiliate
shall have incurred or is reasonably expected to incur any liability
pursuant to Title I or IV or ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit plans, (e) either
Company or any ERISA Affiliate withdraws from any Multiemployer Plan,
or (f) either Company or any Subsidiary establishes or amends any
employee welfare benefit plan that provides post-employment welfare
benefits in a manner that would increase the liability of either
Company or any Subsidiary thereunder; and any such event or events
described in clauses (a) through (f) above, either individually or
together with any other such event or events, could reasonably be
expected to have a material adverse effect on the business or
condition (financial or otherwise) of either Company; or
(xiii) any judgment or decree in the amount of $10,000,000 or
more shall be entered against either Company or any of its
Subsidiaries that is not paid or fully covered (beyond any applicable
deductibles) by insurance and such judgment or decree shall not have
been vacated, discharged or stayed or bonded pending appeal within 60
days from the entry thereof;
then (a) if such event is an Event of Default specified in clause (i) of this
paragraph 7A, the holder of any Note (other than a Company or any of its
Subsidiaries or Affiliates) may at its option, by notice in writing to either
or both Companies, declare such Note to be, and such Note shall thereupon be
and become, immediately due and payable at par together with interest accrued
thereon without presentment, demand, protest or other notice of any kind, all
of which are hereby waived by the Companies, (b) if such event is an Event of
Default specified in clause (vii), (viii) or (ix) of this paragraph 7A with
respect to either or both Companies, all of the Notes at the time outstanding
shall automatically become immediately due and payable together with interest
accrued thereon and the Yield-Maintenance Amount with respect thereto, without
presentment, demand, protest or notice of any kind, all of which are hereby
waived by the Companies, and (c) with respect to any event constituting an
Event of Default, the Required Holder(s) of any Series of Notes may at its or
their option, by notice in writing to the Company, declare all of the Notes of
such Series to be, and all of the Notes of such Series shall thereupon be and
become, immediately due and payable together with interest accrued thereon and
together with the Yield-Maintenance Amount, if any, with respect to each Note
of such Series, without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Companies.
7B. RESCISSION OF ACCELERATION. At any time after any or all of
the Notes of a Series shall have been declared immediately due and payable
pursuant to paragraph 7A, the Required Holder(s) of such Series may, by notice
in writing to the Company, rescind and annul such declaration and its
consequences if (i) the Companies shall have paid all overdue interest on the
Notes of such Series, the principal of and Yield-Maintenance Amount, if any,
payable with respect to any Notes of such Series which have become due other-
wise than by reason of such declaration, and interest on such overdue interest
and overdue principal and Yield-Maintenance Amount at the rate specified in the
Notes of such Series, (ii) the Companies shall not have paid any amounts which
have become due solely by reason of such declaration, (iii) all Events of
Default and Defaults, other than non-payment of amounts which have become due
solely by reason of such declaration, shall have been cured or waived pursuant
to paragraph 11C, and (iv) no judgment or decree shall have been entered for
the payment of any amounts due pursuant to the Notes of such Series or this
Agreement (as this Agreement pertains to the Notes of such Series). No such
rescission or annulment shall extend to or affect any subsequent Event of
Default or Default or impair any right arising therefrom.
7C. NOTICE OF ACCELERATION OR RESCISSION. Whenever any Note shall
be declared immediately due and payable pursuant to paragraph 7A or any such
declaration shall be rescinded and annulled pursuant to paragraph 7B, the
Companies shall forthwith give written notice thereof to the holder of each
Note at the time outstanding.
7D. OTHER REMEDIES. If any Event of Default or Default shall
occur and be continuing, the holder of any Note may proceed to protect and
enforce its rights under this Agreement and such Note by exercising such
remedies as are available to such holder in respect thereof under applicable
law, either by suit in equity or by action at law, or both, whether for
specific performance of any covenant or other agreement contained in this
Agreement or in aid of the exercise of any power granted in this Agreement. No
remedy conferred in this Agreement upon the holder of any Note is intended to
be exclusive of any other remedy, and each and every such remedy shall be cumu-
lative and shall be in addition to every other remedy conferred herein or now
or hereafter existing at law or in equity or by statute or otherwise.
8. REPRESENTATIONS, COVENANTS AND WARRANTIES. The Companies
jointly and severally represent, covenant and warrant as follows:
8A. ORGANIZATION. Each Company and each Subsidiary with a
Consolidated Tangible Net Worth in excess of $500,000 is a corporation duly
organized, validly existing and in good standing under the laws of the state of
its incorporation. Each Company and each Significant Subsidiary has the full
corporate power and authority to own its properties and to carry on its
business as now being conducted, and is duly qualified as a foreign corporation
in every state where the nature of its business requires that it do so, and is
in good standing under the laws of every jurisdiction outside the state of its
incorporation in which it owns or leases property or conducts business and in
which the failure to so qualify would have a material adverse effect upon its
business or property taken as a whole. Each Company and each Significant
Subsidiary has complied in all material respects with (or is exempt from the
application of) all material federal, state and local laws, regulations and
orders that are, or in the absence of any exemption could be, applicable to the
operations of its business, including public utility, bank holding company,
state agricultural and Environmental and Safety Laws. Each Company has full
power, authority and right to execute and deliver, and to perform and observe,
the provisions of this Agreement and the Notes and to carry out the trans-
actions contemplated hereby and thereby. The execution, delivery and
performance of this Agreement and the Notes to be issued hereunder by each
Company has been authorized by all necessary corporate and other action, and,
when duly executed and delivered, will be the legal, valid and binding
obligations of each Company, enforceable against each of them in accordance
with their respective terms.
8B. FINANCIAL STATEMENTS. The Companies have furnished each
Purchaser of any Accepted Notes with the following financial statements,
identified by a principal financial officer of each Company: (i) consolidating
and consolidated balance sheets of each Company and its Subsidiaries as of the
last day in each of the five fiscal years of the Company most recently
completed prior to the date as of which this representation is made or repeated
(other than fiscal years completed within 120 days prior to such date for which
audited financial statements have not been released) and consolidating and
consolidated statements of income, shareholders' equity and cash flows of each
Company and its Subsidiaries for each such year, all certified by Deloitte &
Touche (or such other accounting firm as may be reasonably acceptable to
Prudential); and (ii) consolidating and consolidated balance sheets of each
Company and its Subsidiaries as at the end of the quarterly period (if any)
most recently completed prior to such date and after the end of such fiscal
year (other than quarterly periods completed within 60 days prior to such date
for which financial statements have not been released) and the comparable
quarterly period in the preceding fiscal year and consolidating and consoli-
dated statements of income, stockholders' equity and cash flows of each Company
and its Subsidiaries for the periods from the beginning of the fiscal years in
which such quarterly periods are included to the end of such quarterly periods,
in each case prepared by the applicable Company. Such financial statements
(including any related schedules and/or notes) are true and correct in all
material respects (subject, as to interim statements, to changes resulting from
audits and year-end adjustments), have been prepared in accordance with GAAP
consistently followed throughout the periods involved and show all liabilities,
direct and contingent, of each Company and its Subsidiaries required to be
shown in accordance with such principles. The balance sheets fairly present
the condition of each Company and its Subsidiaries as at the dates thereof, and
the statements of income, shareholders' equity and cash flows fairly present
the results of the operations and cash flows of each Company and its
Subsidiaries for the periods indicated. There has been no material adverse
change in the business, condition (financial or otherwise) or operations of
either Company and its Subsidiaries taken as a whole since the end of the most
recent fiscal year for which such audited financial statements have been
furnished.
8C. ACTIONS PENDING. There is no action, suit, investigation or
proceeding pending or, to the knowledge of either Company, threatened against
either Company or any Subsidiary or any properties or rights of either Company
or any Subsidiary, by or before any court, arbitrator or administrative or
governmental body which could reasonably be expected to result in any material
adverse change in the business, condition (financial or otherwise) or opera-
tions of the Companies and their Subsidiaries taken as a whole.
8D. OUTSTANDING DEBT. Neither Company nor any Subsidiary has any
Debt or Guarantee outstanding except as permitted by paragraph 6B(6) and 6B(9).
There exists no default under the provisions of any instrument evidencing any
such Debt or Guarantee or of any agreement relating thereto.
8E. TITLE TO PROPERTIES. Each Company and Significant Subsidiary
has such title to its properties and assets as is appropriate and sufficient
for the conduct of the business which such Company or Significant Subsidiary
presently undertakes or contemplates undertaking. There are no Liens on such
properties and assets that (i) materially restrict such Company's or Signi-
ficant Subsidiary's intended use and enjoyment thereof in the ordinary course
of business or (ii) are not permitted by paragraph 6B(1). There is no material
default, nor any event that, with notice or lapse of time or both, would
constitute such a material default under any material lease to which either
Company or any Significant Subsidiary is a lessee, lessor, sublessee or
sublessor.
8F. TAXES. Each Company and each Subsidiary with a Consolidated
Tangible Net Worth in excess of $500,000 have filed all Federal, state and
other income tax and informational returns which are required to be filed by
it. Each Company and each such Subsidiary has paid all taxes as shown on its
returns and on all assessments received to the extent that such taxes have
become due, except such assessments as are being contested in good faith by
appropriate proceedings for which adequate reserves have been established in
accordance with GAAP.
8G. CONFLICTING AGREEMENTS AND OTHER MATTERS. Neither the
execution nor delivery of this Agreement or the Notes, nor the offering,
issuance and sale of the Notes, nor fulfillment of nor compliance with the
terms and provisions of this Agreement or the Notes will conflict with, or
result in a breach of the terms, conditions or provisions of, or constitute a
default under, or result in any violation of, or result in the creation of any
Lien upon any of the properties or assets of either Company or any Subsidiary
pursuant to, their respective articles or incorporation or bylaws, any award of
any arbitrator or any agreement, instrument, order, judgment, decree, and,
after due investigation and to the Companies' best knowledge, any statute, law,
rule or regulation to which either Company or any Subsidiary is subject.
Neither Company nor any Subsidiary is a party to, or otherwise subject to any
provision contained in, any instrument evidencing any of their respective Debt,
any agreement relating thereto or any other contract or agreement which
restricts or otherwise limits the incurring of Debt pursuant hereto, except as
set forth on Schedule 8G hereto.
8H. OFFERING OF THE NOTES. Neither Company, nor any agent acting
on either of their behalf has, directly or indirectly, offered the Notes or any
similar security of either Company for sale to, or solicited any offers to buy
the Notes or any similar security of the Companies from, or otherwise
approached or negotiated with respect thereto with, any Person or Persons other
than the Purchasers, and neither Company, nor any agent acting on either of
their behalf has taken or will take any action which would subject the issuance
or sale of the Notes to the provisions of Section 5 of the Securities Act or
to the provisions of any securities or blue sky law of any applicable
jurisdiction.
8I. REGULATION G, ETC. The amount of all securities that the
Companies and their Subsidiaries together own that constitute "margin stock"
(as defined in Regulation G (12 CFR Part 207) of the Board of Governors of the
Federal Reserve System (herein called "margin stock")) does not exceed 25% of
the Parent's Consolidated Total Assets. None of the proceeds of the Notes will
be used, directly or indirectly, for the purpose, whether immediate, incidental
or ultimate, of purchasing or carrying any margin stock or for the purpose of
maintaining, reducing or retiring any indebtedness which was originally
incurred to purchase or carry any stock that is currently a margin stock or for
any other purpose which might constitute this transaction a "purpose credit"
within the meaning of such Regulation G. Neither Company nor any agent acting
on its behalf has taken or will take any action which might cause this
Agreement or the Notes to violate Regulation G, Regulation T or any other
regulation of the Board of Governors of the Federal Reserve System or to
violate the Exchange Act, in each case as in effect now or as the same may
hereafter be in effect.
8J. ERISA. No accumulated funding deficiency (as defined in
section 302 of ERISA and section 412 of the Code), whether or not waived,
exists with respect to any Plan (other than a Multiemployer Plan). No lia-
bility to the PBGC has been or is expected by either Company or any ERISA
Affiliate to be incurred with respect to any Plan (other than a Multiemployer
Plan) by either Company, any Subsidiary or any ERISA Affiliate which is or
would be materially adverse to the business, condition (financial or otherwise)
or operations of the Companies and their Subsidiaries taken as a whole.
Neither Company, any of their Subsidiaries or any ERISA Affiliate has incurred
or presently expects to incur any withdrawal liability under Title IV of ERISA
with respect to any Multiemployer Plan which is or would be materially adverse
to the Companies and their Subsidiaries taken as a whole. The execution and
delivery of this Agreement and the issuance and sale of the Notes will be
exempt from, or will not involve any transaction which is subject to the
prohibitions of, section 406 of ERISA and will not involve any transaction in
connection with which a penalty could be imposed under section 502(i) of ERISA
or a tax could be imposed pursuant to section 4975 of the Code. The represen-
tation by the Companies in the next preceding sentence is made in reliance upon
and subject to the accuracy of each Purchaser's representation in paragraph 9B.
8K. GOVERNMENTAL CONSENT. Neither the nature of either Company or
any of their Subsidiaries, nor any of their respective businesses or proper-
ties, nor any relationship between either Company or a Subsidiary and any other
Person, nor any circumstance in connection with the offering, issuance, sale or
delivery of the Notes is such as to require any authorization, consent,
approval, exemption or other action by, notice to or filing with any court,
administrative or governmental body (other than routine filings after the date
of closing with the Securities and Exchange Commission and/or state blue sky
authorities) in connection with (i) the execution and delivery of this Agree-
ment, (ii) the offering, issuance, sale or delivery of the Notes or (iii)
fulfillment of or compliance with the terms and provisions of this Agreement
and the Notes.
8L. UTILITY COMPANY STATUS. Neither Company is a public utility
within the meaning of the Federal Power Act, as amended. Each Company is a
"holding company" as such term is defined in the Public Utility Holding Company
Act of 1935, as amended, but is exempt from all provisions of such Act, except
section 9(a)(2) thereof (relating to the acquisition of securities of a
"public-utility company"), because (i) each Company is incorporated in Hawaii,
and substantially all of their respective utility operations are conducted in
Hawaii and (ii) of the filing annually with the Securities and Exchange
Commission of an exemption statement. On each date as of which this
representation is made or confirmed, each Company has on file with the
Securities and Exchange Commission such an exemption statement, which is in
full force and effect.
8M. INVESTMENT COMPANY STATUS. Neither Company is an "investment
company" or a company "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended, or an "investment
adviser" within the meaning of the Investment Advisers Act of 1940, as amended.
8N. BANK HOLDING COMPANY STATUS. Neither Company nor any
Subsidiary is a "bank holding company" within the meaning of the Federal
Deposit Insurance Act (12 U.S.C. Section 1811, et. seq.), as amended.
8O. REAL PROPERTY MATTERS. Each Company and Significant
Subsidiary has for the real property which it owns or uses such authorizations,
consents, approvals, licenses and permissions (collectively, "Consents") that
such Company or Significant Subsidiary believes or has been advised by counsel
to be now necessary for it to own, hold, develop, use or operate such real
property in its current or intended manner, all in material compliance with
applicable laws and regulations. Neither Company has received any notice that
any such Consent is necessary which has not been obtained, other than
applications for the same that have been timely filed and are being diligently
pursued with the appropriate governmental authorities and agencies.
8P. POSSESSION OF FRANCHISES, LICENSES, ETC. The Companies and
their Subsidiaries possess all material franchises, certificates, licenses,
development and other permits and other authorizations from governmental
political subdivisions or regulatory authorities and all patents, trademarks,
service marks, trade names, copyrights, licenses, easements, rights of way and
other rights (collectively, "Material Rights"), free from burdensome
restriction, that are necessary in the judgement of the Companies in any
material respect for the ownership, maintenance and operation of their
business, properties and assets, and neither Company nor any of their
Subsidiaries are in violation of any Material Rights in any material respect.
No event has occurred which permits, or after notice or lapse of time or both
would permit, the revocation or termination of any such Material Rights, or
materially and adversely affect the rights of either Company or their
Subsidiaries thereunder.
8Q. ENVIRONMENTAL AND SAFETY MATTERS. The Companies and their
Subsidiaries and all of their respective properties and facilities have
complied at all times and in all respects with all Environmental and Safety
Laws except where failure to comply would not result in a material adverse
effect on the business, condition (financial or otherwise) or operations of the
Companies and their Subsidiaries taken as a whole.
8R. HOSTILE TENDER OFFERS. None of the proceeds of the sale of
any Notes will be used to finance a Hostile Tender Offer.
8S. SOLVENCY. After giving effect to any issuance of any Notes
and the use of the proceeds thereof on any date on which this representation is
made or confirmed by the Companies: (i) the fair value of the property and
other assets of each Company is greater than the total amount of its liabi-
lities, including without limitation, contingent liabilities and 100% of the
liabilities with respect to the Notes and any other obligations with respect to
which the other Company or any other Person is jointly liable with such
Company; (ii) the present fair saleable value of the property and other assets
of each Company is not less than the amount that will be required to pay the
probable amount of its liabilities as such liabilities become due and payable;
(iii) each Company does not intend to, nor does it believe that it will, incur
debts or liabilities beyond its ability to repay as such debts and liabilities
mature; and (iv) each Company's property and other assets do not constitute an
unreasonably small amount of capital for the line of business it is engaged in.
8T. EMPLOYEE RELATIONS. Neither Company nor any Subsidiary is the
subject of (i) any material strike, work slowdown or stoppage, union organizing
drive or other similar activity or (ii) any material action, suit, investiga-
tion or other proceeding involving alleged employment discrimination, unfair
termination, employee safety or similar matters or, to the best knowledge of
the Companies, is any such event imminent or likely to occur.
8U. REGULATIONS AND LEGISLATION. To the best knowledge of the
Companies, no law, regulation, interpretation or legislation has been enacted
or issued or is likely to be enacted or issued, that would reasonably be
expected to have a material adverse effect on the operations or financial
condition of the Companies and their Subsidiaries taken as a whole.
8V. DISCLOSURE. Neither this Agreement nor any other document,
certificate or statement furnished to any Purchaser by or on behalf of either
Company in connection herewith contains any untrue statement of a material fact
or omits to state a material fact necessary in order to make the statements
contained herein and therein not misleading. There is no fact peculiar to the
Companies or any Subsidiary which materially adversely affects, or in the
future may (so far as the Companies can now foresee) materially adversely
affect, the consolidated business, property, assets, prospects or financial
condition of the Companies and which has not been set forth in this Agreement
or in the other documents, certificates and statements furnished to each
Purchaser by or on behalf of the Companies prior to the date this representa-
tion is made or confirmed in connection with the transactions contemplated
hereby.
9. REPRESENTATIONS OF THE PURCHASERS.
Each Purchaser represents as follows:
9A. NATURE OF PURCHASE. Such Purchaser is acquiring the Notes
purchased by it hereunder for the purpose of investment and not with a view to
or for sale in connection with any distribution thereof within the meaning of
the Securities Act, provided that the disposition of such Purchaser's property
shall at all times be and remain within its control. Such Purchaser under-
stands that the Notes have not been registered under the Securities Act and may
be exchanged, offered, transferred or resold only if registered pursuant to the
provisions of the Securities Act or if an exemption from registration is avai-
lable, and that the Company is not required to register the Notes.
9B. SOURCE OF FUNDS. The source of funds being used by such
Purchaser to pay the purchase price of the Notes being purchased by such
Purchaser hereunder constitutes assets allocated to: (i) the "insurance company
general account" of such Purchaser (as such term is defined under Section V of
the United States Department of Labor's Prohibited Transaction Class Exemption
("PTCE") 95-60), and as of the date of the purchase of the Notes such
Purchaser satisfies all of the applicable requirements for relief under
Sections I and IV of PTCEE 95-60 or (ii) a separate account maintained by such
Purchaser in which no employee benefit plan, other than employee benefit plans
identified on a list which has been furnished by such Purchaser to the Company,
participates to the extent of 10% or more. For the purpose of this paragraph
9B, the terms "SEPARATE ACCOUNT" and "EMPLOYEE BENEFIT PLAN" shall have the
respective meanings specified in section 3 of ERISA.
10. DEFINITIONS; ACCOUNTING MATTERS. For the purpose of this
Agreement, the terms defined in paragraphs 10A and 10B (or within the text of
any other paragraph) shall have the respective meanings specified therein and
all accounting matters shall be subject to determination as provided in
paragraph 10C.
10A. YIELD-MAINTENANCE TERMS.
"BUSINESS DAY" shall mean any day other than a Saturday, a Sunday or a
day on which commercial banks in New York City, San Francisco, California or
Honolulu, Hawaii are required or authorized to be closed.
"CALLED PRINCIPAL" shall mean, with respect to any Note, the principal of
such Note that (i) is to be prepaid pursuant to paragraph 4B or (ii) is
declared to be immediately due and payable pursuant to paragraph 7A, as the
context requires.
"DESIGNATED SPREAD" shall mean 0.00% in the case of each Note of any
Series unless the Confirmation of Acceptance with respect to the Notes of such
Series specifies a different Designated Spread in which case it shall mean,
with respect to each Note of such Series, the Designated Spread so specified.
"DISCOUNTED VALUE" shall mean, with respect to the Called Principal of
any Note, the amount obtained by discounting all Remaining Scheduled Payments
with respect to such Called Principal from their respective scheduled due dates
to the Settlement Date with respect to such Called Principal, in accordance
with accepted financial practice and at a discount factor (converted to reflect
the periodic basis on which interest on such Note is payable, if payable other
than on a semiannual basis) equal to the Reinvestment Yield with respect to
such Called Principal.
"REINVESTMENT YIELD" shall mean, with respect to the Called Principal of
any Note, the Designated Spread over the yield to maturity implied by (i) the
yields reported, as of 10:00 a.m. (New York City time) on the Business Day next
preceding the Settlement Date with respect to such Called Principal, on the
display designated as "Page 678" on the Telerate Service (or such other display
as may replace Page 678 on the Telerate Service) for actively traded U.S.
Treasury securities having a maturity equal to the Remaining Average Life of
such Called Principal as of such Settlement Date, or if such yields shall not
be reported as of such time or the yields reported as of such time shall not be
ascertainable, (ii) the Treasury Constant Maturity Series yields reported, for
the latest day for which such yields shall have been so reported as of the
Business Day next preceding the Settlement Date with respect to such Called
Principal, in Federal Reserve Statistical Release H.15 (519) (or any comparable
successor publication) for actively traded U.S. Treasury securities having a
constant maturity equal to the Remaining Average Life of such Called Principal
as of such Settlement Date. Such implied yield shall be determined, if
necessary, by (a) converting U.S. Treasury bill quotations to bond-equivalent
yields in accordance with accepted financial practice and (b) interpolating
linearly between yields reported for various maturities.
"REMAINING AVERAGE LIFE" shall mean, with respect to the Called Principal
of any Note, the number of years (calculated to the nearest one-twelfth year)
obtained by dividing (i) such Called Principal into (ii) the sum of the
products obtained by multiplying (a) each Remaining Scheduled Payment of such
Called Principal (but not of interest thereon) by (b) the number of years
(calculated to the nearest one-twelfth year) which will elapse between the
Settlement Date with respect to such Called Principal and the scheduled due
date of such Remaining Scheduled Payment.
"REMAINING SCHEDULED PAYMENTS" shall mean, with respect to the Called
Principal of any Note, all payments of such Called Principal and interest
thereon that would be due on or after the Settlement Date with respect to such
Called Principal if no payment of such Called Principal were made prior to its
scheduled due date.
"SETTLEMENT DATE" shall mean, with respect to the Called Principal of any
Note, the date on which such Called Principal (i) is to be prepaid pursuant to
paragraph 4B or (ii) is declared to be immediately due and payable pursuant to
paragraph 7A, as the context requires.
"YIELD-MAINTENANCE AMOUNT" shall mean, with respect to any Note, an amount
equal to the excess, if any, of the Discounted Value of the Called Principal of
such Note over the sum of (i) such Called Principal plus (ii) interest accrued
thereon as of (including interest due on) the Settlement Date with respect to
such Called Principal. The Yield-Maintenance Amount shall in no event be less
than zero.
10B. OTHER TERMS.
"ACCEPTANCE" shall have the meaning specified in paragraph 2B(5).
"ACCEPTANCE DAY" shall have the meaning specified in paragraph 2B(5).
"ACCEPTANCE WINDOW" shall have the meaning specified in paragraph 2B(5).
"ACCEPTED NOTE" shall have the meaning specified in paragraph 2B(5).
"ACCUMULATED FUNDING DEFICIENCY" shall mean a funding deficiency
described in section 302 of ERISA and section 412 of the Code.
"AFFILIATE" shall mean, without duplication, any Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with, either Company, except a Subsidiary. A Person shall be deemed to
control a corporation if such Person possesses, directly or indirectly, the
power to direct or cause the direction of the management and policies of such
corporation, whether through the ownership of voting securities, by contract or
otherwise.
"AGREEMENT" shall have the meaning specified in paragraph 11C.
"AUTHORIZED OFFICER" shall mean (i) in the case of the Companies, any
officer of either Company designated as their "Authorized Officer" in the
Information Schedule or any officer of either Company designated as an
"Authorized Officer" for the purpose of this Agreement in a certificate
executed by one of the Companies' Authorized Officers and (ii) in the case of
Prudential, any officer of Prudential designated as its "Authorized Officer" in
the Information Schedule or any officer of Prudential designated as its
"Authorized Officer" for the purpose of this Agreement in a certificate
executed by one of its Authorized Officers. Any action taken under this
Agreement on behalf of the Companies by any individual who on or after the date
of this Agreement shall have been an Authorized Officer of the Companies and
whom Prudential in good faith believes to be an Authorized Officer of the
Companies at the time of such action shall be binding on the Companies even
though such individual shall have ceased to be an Authorized Officer of the
Companies, and any action taken under this Agreement on behalf of Prudential by
any individual who on or after the date of this Agreement shall have been an
Authorized Officer of Prudential, and whom the Companies in good faith believe
to be an Authorized Officer of Prudential at the time of such action shall be
binding on Prudential even though such individual shall have ceased to be an
Authorized Officer of Prudential.
"AVAILABLE FACILITY AMOUNT" shall have the meaning specified in paragraph
2B(1).
"BANKRUPTCY LAW" shall have the meaning specified in clause (vii) of
paragraph 7A.
"BUSINESS DAY" shall have the meaning specified in paragraph 10A.
"CANCELLATION DATE" shall have the meaning specified in paragraph
2B(8)(iv).
"CANCELLATION FEE" shall have the meaning specified in paragraph
2B(8)(iv).
"CAPITALIZED LEASE OBLIGATION" shall mean, with respect to any Person,
any rental obligation of such Person which, under GAAP, is or will be required
to be capitalized on the books of such Person, taken at the amount thereof
accounted for as indebtedness (net of interest expense) in accordance with such
principles.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. Section 9601 et. seq.), as amended,
and the regulations promulgated thereunder.
"CLOSING DAY" shall mean, with respect to any Accepted Note, the Business
Day specified for the closing of the purchase and sale of such Accepted Note in
the Request for Purchase of such Accepted Note, provided that (i) if the
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Companies and the Purchaser which is obligated to purchase such Accepted Note
agree on an earlier Business Day for such closing, the "CLOSING DAY" for such
Accepted Note shall be such earlier Business Day, and (ii) if the closing of
the purchase and sale of such Accepted Note is rescheduled pursuant to para-
graph 2B(7), the Closing Day for such Accepted Note, for all purposes of this
Agreement except references to "original Closing Day" in paragraph 2B(8)(iii),
shall mean the Rescheduled Closing Day with respect to such Accepted Note.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"CONFIRMATION OF ACCEPTANCE" shall have the meaning specified in paragraph
2B(5).
"CONSOLIDATED CUMULATIVE NET INCOME" shall mean, as to any Person, the
aggregate Consolidated Net Income of that Person for the fiscal period(s) in
question.
"CONSOLIDATED INTEREST EXPENSE" shall mean, as to any Person, the sum of
all amounts that would, in accordance with GAAP, be deducted in computing
Consolidated Net Income of such Person for the fiscal periods in question on
account of interest, including without limitation, imputed interest in respect
of Capitalized Lease Obligations, fees in respect of letters of credit and
bankers' acceptance financing and amortization of debt discount and expense.
"CONSOLIDATED NET INCOME" shall mean, as to any Person, such Person's and
its Subsidiaries' consolidated gross revenues for the period in question, less
all operating and non-operating expenses of such Person and its Subsidiaries,
including all charges of a proper character (including current and deferred
taxes on income, provision for taxes on unremitted foreign earnings which are
included in gross revenues, and current additions to reserves), but not
including in gross revenues any (i) gains (net of expenses and taxes applicable
thereto) in excess of losses resulting from the sale, conversion, exchange or
other disposition of capital assets (i.e., assets other than current assets)
other than real property sold for cash, cash equivalents or other property or
tangible assets by the Property Subs in the ordinary course of their Property
Development Activities, (ii) gains resulting from the write-up of assets, (iii)
equity of such Person or its Subsidiaries in the unremitted earnings of any
other Person (other than of such Person or its Subsidiaries) or (iv) net
income, gain or loss during such period from any change in accounting, from any
discontinued operations or the disposition thereof, from any extraordinary
events or from any prior period adjustments, all determined in accordance with
GAAP.
"CONSOLIDATED NET INCOME BEFORE TAXES" shall mean, as to any Person, such
Person's Consolidated Net Income for the period in question plus the sum of all
deferred and current Federal, state, local and foreign taxes that are deducted
in accordance with GAAP in computing Consolidated Net Income for such period.
"CONSOLIDATED TANGIBLE NET WORTH" shall mean, as to any Person as at any
time of determination thereof, the consolidated net worth of such Person and
its Subsidiaries, determined in accordance with GAAP, less all Intangibles.
"CONSOLIDATED TOTAL ASSETS" shall mean, as to any Person as at any time
of determination thereof, that Person's and its Subsidiaries' consolidated
total assets, determined in accordance with GAAP.
"DEBT" shall mean (i) Funded Debt and all other items of indebtedness,
obligations or liabilities which, in accordance with GAAP, would be included in
determining liabilities as shown on the liabilities side of a Person's
consolidated balance sheet and (ii) all Guarantees of Debt, both as of the date
as of determination thereof.
"DELAYED DELIVERY FEE" shall have the meaning specified in paragraph
2B(8)(iii).
"ENVIRONMENTAL AND SAFETY LAWS" shall mean all Federal, state and local
laws, regulations and ordinances, relating to the discharge, handling,
disposition or treatment of Hazardous Materials and other substances or the
protection of the environment or of employee health and safety, including,
without limitation, CERCLA, the Hazardous Materials Transportation Act (49
U.S.C. Section 1801 et. seq.), the Resource Conservation and Recovery Act (42
U.S.C. Section 6901 et. seq.), the Federal Water Pollution Control Act (33
U.S.C. Section 1251 et. seq.), the Clean Air Act (42 U.S.C. Section 7401 et.
seq.), the Toxic Substances Control Act (15 U.S.C. Section 2601 et. seq.), the
Occupational Safety and Health Act (29 U.S.C. Section 651 et. seq.) and the
Emergency Planning and Community Right-To-Know Act (42 U.S.C. Section 11001 et.
seq.), each as the same may be amended and supplemented.
"ENVIRONMENTAL LIABILITIES AND COSTS" shall mean, as to any Person, all
liabilities, obligations, responsibilities, remedial actions, losses, damages,
punitive damages, consequential damages, treble damages, contribution, cost
recovery, costs and expenses (including all fees, disbursements and expenses of
counsel, expert and consulting fees, and costs of investigation and feasibility
studies), fines, penalties, sanctions and interest incurred as a result of any
claim or demand, by any Person, whether based in contract, tort, implied or
express warranty, strict liability, criminal or civil statute, permit, order or
agreement with any Federal, state or local governmental authority or other
Person, arising from environmental, health or safety conditions, or the release
or threatened release of a contaminant, pollutant or Hazardous Material into
the environment, resulting from the operations of such Person or its sub-
sidiaries, or breach of any Environmental and Safety Law or for which such
Person or its subsidiaries is otherwise liable or responsible.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA AFFILIATE" shall mean any corporation which is a member of the same
controlled group of corporations as either Company within the meaning of
section 414(b) of the Code, or any trade or business which is under common
control with either Company within the meaning of section 414(c) of the Code.
"EVENT OF DEFAULT" shall mean any of the events specified in paragraph
7A, provided that there has been satisfied any requirement in connection with
such event for the giving of notice, or the lapse of time, or the happening of
any further condition, event or act, and `DEFAULT'' shall mean any of such
events, whether or not any such requirement has been satisfied.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended.
"EXCLUDED LIABILITIES" shall mean Debt of any partnership, joint venture
or similar entity in which either Company or any of their respective
Subsidiaries is a partner, joint venturer or other participant.
"FACILITY" shall have the meaning specified in paragraph 2B(1).
"FACILITY FEE" shall have the meaning specified in paragraph 2B(8)(i).
"FASB" shall mean the Financial Accounting Standards Board of the
American Institute of Certified Public Accountants, or any successor body.
"FUNDED DEBT", as to any Person, shall mean and include without
duplication, (i) any indebtedness of such Person (A) for borrowed money,
including commercial paper and revolving credit lines, (B) evidenced by bonds,
debentures or notes or otherwise representing extensions of credit, whether or
not representing obligations for borrowed money or (C) for the payment of the
deferred purchase price of property or services, except trade accounts payable
arising in the ordinary course of business, regardless of when such liability
or other obligation is due and payable, (ii) Capitalized Lease Obligations,
(iii) Guarantees, assumptions and endorsements by such Person (other than
endorsements of negotiable instruments for collection in the ordinary course
of business) of Funded Debt of a third party, (iv) Funded Debt of a third party
secured by Liens on the property or other assets of such Person and
(v) maintenance, modifications, refinancings, renewals and extensions of the
foregoing.
"GUARANTEE" shall mean, without duplication, any obligation, contingent
or otherwise, of any Person guaranteeing or having the economic effect of
guaranteeing any Debt or other obligation of any other Person (the primary
obligor) in any manner, directly or indirectly, and including any obligation of
such guarantor to:
(i) make any loans, advances or capital contributions to such
Person, or for the purchase of any property from any Person, in each
case for the purpose of enabling such Person to maintain working
capital, net worth or any other balance sheet condition or to pay
debts, dividends or expenses except for advances, deposits and initial
payments made in the usual and ordinary course of business for the
purchase or acquisition of property or services; or
(ii) purchase materials, supplies or other property or
services if such obligation requires that payment for such materials,
supplies or other property or services be made regardless of whether
or not delivery of such materials, supplies or other property or
services is ever made or tendered; or
(iii) rent or lease (as lessee) any real or personal property
(except for leases in effect on the Closing Date) if such obligation
is absolute and unconditional under conditions not customarily found
in commercial leases then in general use.
"HAZARDOUS MATERIALS" shall mean (a) any material or substance defined as
or included in the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "toxic substances" or any other formulations intended
to define, list or classify substances by reason of their deleterious
properties, (b) any oil, petroleum or petroleum derived substance, (c) any
flammable substances or explosives, (d) any radioactive materials, (e) asbestos
in any form, (f) electrical equipment that contains any oil or dielectric fluid
containing levels of polychlorinated biphenyls in excess of fifty parts per
million, (g) pesticides or (h) any other chemical, material or substance,
exposure to which is prohibited, limited or regulated by any governmental
agency or authority or which may or could pose a hazard to the health and
safety of persons in the vicinity thereof.
"HEDGE TREASURY NOTE(S)" shall mean, with respect to any Accepted Note,
the United States Treasury Note or Notes whose duration (as determined by
Prudential) most closely matches the duration of such Accepted Note.
"HOSTILE TENDER OFFER" shall mean, with respect to the use of proceeds of
any Note, any offer to purchase, or any purchase of, shares of capital stock of
any corporation or equity interests in any other entity, or securities
convertible into or representing the beneficial ownership of, or rights to
acquire, any such shares or equity interests, if such shares, equity interests,
securities or rights are of a class which is publicly traded on any securities
exchange or in any over-the-counter market, other than purchases for portfolio
investment purposes of such shares, equity interests, securities or rights
which, together with any shares, equity interests, securities or rights then
owned, represent less than 5% of the equity interests or beneficial ownership
of such corporation or other entity, and such offer or purchase has not been
duly approved by the board of directors of such corporation or the equivalent
governing body of such other entity prior to the date on which the Company
makes the Request for Purchase of such Note.
"INCLUDING" shall mean, unless the context clearly requires otherwise,
"including without limitation".
"INSTITUTIONAL INVESTORS" shall mean an insurance company, bank, pension
fund, investment company, "qualified institutional buyer" (as such term is
defined under Rule 144A promulgated under the Securities Act, or any successor
law, rule or regulation), "accredited investor" (as such term is defined under
Regulation D promulgated under the Securities Act, or any successor law, rule
or regulation) or other Person with assets in excess of $50,000,000 that
invests in securities for its own account or as a dealer.
"INTANGIBLES" shall mean any Intellectual Properties, goodwill (including
any amounts, however designated, representing the cost of acquisition of
business and investments in excess of underlying tangible assets), unamortized
debt discount and expense, deferred research and development costs, any write-
up of asset value after December 31, 1989 and other assets treated as intan-
gible assets under GAAP.
"INTELLECTUAL PROPERTIES" shall mean inventions, patents, copyrights,
trade secrets, trade names and trademarks, technologies, methods, design
drawings, software (including documentation and source code listings)
processes, applications for the same and other proprietary properties or
information.
"INTEREST COVERAGE RATIO" shall mean, as to any Person as at any time of
determination thereof, (a) the sum of (i) such Person's Consolidated Net Income
Before Taxes for the period of four consecutive fiscal quarters then most
recently ended and (ii) such Person's Consolidated Interest Expense for such
four fiscal quarter period, divided by (b) such Person's Consolidated Interest
Expense for such four fiscal quarter period.
"ISSUANCE PERIOD" shall have the meaning specified in paragraph 2B(2)(i).
"LIEN" shall mean any mortgage, deed of trust, pledge, security interest,
encumbrance, lien or charge of any kind (including any agreement to give any of
the foregoing, any purchase money mortgage, conditional sale or other title
retention agreement, any lease in the nature thereof, and the filing of or
agreement to give any financing statement under the Uniform Commercial Code of
any jurisdiction).
"MARGIN STOCK" shall have the meaning specified in paragraph 8I.
"MATERIAL RIGHTS" shall have the meaning specified in paragraph 8P.
"MATSON" shall mean Matson Navigation Company, Inc., a wholly owned
subsidiary of the Parent.
"MULTIEMPLOYER PLAN" shall mean any Plan which is a "multiemployer plan"
(as such term is defined in section 4001(a)(3) of ERISA).
"NOTES" shall have the meaning specified in paragraph 1.
"OFFICER'S CERTIFICATE" shall mean a certificate signed in the name of the
Companies by an Authorized Officer of the Companies.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor or replacement entity thereto under ERISA.
"PERMITTED ASSETS" shall mean (i) where A&B-Hawaii, any Subsidiary
thereof, any of their assets or any of the assets of Parent (other than capital
stock of Matson) have been sold or otherwise transferred, assets to be used by
the Parent, A&B-Hawaii or a Subsidiary of A&B-Hawaii in conducting Property
Development Activities, the Property Management Business or the food products
business and (ii) in all other instances, assets to be used in conducting
Property Development Activities, the Property Management Business, the food
products business or the ocean transportation business.
"PERMITTED DEBT" shall mean (i) where A&B-Hawaii, any Subsidiary thereof,
any of their assets or any of the assets of Parent (other than capital stock of
Matson) have been sold or otherwise disposed of, (a) any unsecured Funded Debt
of such entities (exclusive of Funded Debt owed to a Company or a Subsidiary
thereof) selected by the Companies, so long as the aggregate amount of all
proceeds applications from such sales or other dispositions which are made
after the date hereof do not exceed $100,000,000 and (b) in all other
instances, all unsecured Funded Debt of such entities (exclusive of any Funded
Debt owed to a Company or a Subsidiary thereof) on a pro rata basis and (ii)
--- ----
in all instances involving a sale or other disposition by the Parent (except to
the extent described in clause (i), above), Matson or any Subsidiary of Matson,
(a) any unsecured Funded Debt of such entities (exclusive of Funded Debt owed
to a Company or a Subsidiary thereof) selected by the Parent, so long as the
aggregate amount of all proceeds applications from such sales or other
dispositions which are made after the date hereof do not exceed $100,000,000
and (b) in all other instances, all unsecured Funded Debt of the Companies and
all Subsidiaries thereof (exclusive of Funded Debt owed to a Company or a
Subsidiary thereof) on a pro rata basis.
"PERSON" shall mean and include an individual, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization and a govern-
ment or any department or agency thereof.
"PLAN" shall mean any "employee pension benefit plan" (as such term is
defined in section 3 of ERISA) which is or has been established or maintained,
or to which contributions are or have been made, by either Company or any ERISA
Affiliate.
"PRINCIPAL OFFICER" shall mean the Treasurer, Chief Financial Officer and
General Counsel of each Company and any other officer of a Company whose
responsibilities include monitoring such Company's compliance with the
provisions of this Agreement.
"PROHIBITED TRANSACTION" shall mean any transaction described in section
406 of ERISA which is not exempt by reason of section 408 of ERISA or the
transitional rules set forth in section 414(c) of ERISA and any transaction
described in section 4975(c) of the Code which is not exempt by reason of
section 4975(c) (2) or section 4975(d) of the Code, or the transitional rules
of section 2003(c) of ERISA.
"PROPERTY" shall mean all real property owned or leased by the Companies
or any of their respective Subsidiaries, and all personal property including
without limitation ocean transportation vessels and hauling trucks, located
thereon or used or consumed in the operation of the business conducted thereat.
"PROPERTY DEVELOPMENT ACTIVITIES" shall mean land acquisition and
development activities of the Property Subs, the principal objective of which
is to acquire and develop real property for sale or other disposition.
"PROPERTY MANAGEMENT BUSINESS" shall mean the managing, leasing, selling
and purchasing of real property.
"PROPERTY SUBS" shall mean A&B Properties, Inc., Kukui'ula Development
Company, Inc., South Shore Resources, Inc., South Shore Community Services,
Inc., and East Maui Irrigation Company Limited, all Hawaii corporations, and
A&B Development Company, a California corporation, all of which are wholly
owned Subsidiaries of A&B-Hawaii, and other Subsidiaries of A&B-Hawaii that
are formed or acquired principally to engage in real property development
activities.
"PRUDENTIAL" shall mean The Prudential Insurance Company of America.
"PRUDENTIAL AFFILIATE" shall mean any corporation or other entity all of
the Voting Stock (or equivalent voting securities or interests) of which is
owned by Prudential either directly or through Prudential Affiliates.
"PURCHASERS" shall mean, with respect to any Accepted Notes, Prudential
and/or the Prudential Affiliate(s) which are purchasing such Accepted Notes.
"REQUEST FOR PURCHASE" shall have the meaning specified in paragraph
2B(3).
"REQUIRED HOLDER(S)" shall mean the holder or holders of at least 66 % of
the aggregate principal amount of the Notes or of a Series of Notes, as the
context may require, from time to time outstanding and, if no Notes are
outstanding, shall mean Prudential.
"RESCHEDULED CLOSING DAY" shall have the meaning specified in paragraph
2B(7).
"RESTRICTED PAYMENTS" shall have the meaning specified in paragraph 6D.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SERIES" shall have the meaning specified in paragraph 1.
"SIGNIFICANT HOLDER" shall mean (i) Prudential or any Prudential
Affiliate, so long as Prudential or any Prudential Affiliate shall hold any
Note or the Issuance Period has not terminated or (ii) any other holder of at
least 10% of the aggregate principal amount of the Notes of any Series from to
time outstanding.
"SIGNIFICANT SUBSIDIARY" shall mean any direct or indirect Subsidiary of
either Company, the net worth of which is, on the date of determination, 5% or
more of Parent's Consolidated Tangible Net Worth.
"SUBSIDIARY" shall mean, as to a Company, any company, whether operating
as a corporation, joint venture, partnership or other entity, in which in
excess of 50% of the ordinary voting power ownership, except director's quali-
fying shares in the case of a corporation, is, at the time as of which any
determination is being made, owned by such Company, either directly or through
Subsidiaries.
"THIRD PARTY" shall mean any Person other than Parent and its
Subsidiaries.
"TRANSFEREE" shall mean any Institutional Investor that is the direct or
indirect transferee of all or any part of any Note purchased under this
Agreement.
"VOTING STOCK" shall mean, with respect to any corporation, any shares of
stock of such corporation whose holders are entitled under ordinary
circumstances to vote for the election of directors of such corporation
(irrespective of whether at the time stock of any other class or classes shall
have or might have voting power by reason of the happening of any contingency).
10C. ACCOUNTING PRINCIPLES, TERMS AND DETERMINATIONS. All
references in this Agreement to "generally accepted accounting principles" and
"GAAP" shall be deemed to refer to generally accepted accounting principles in
effect in the United States at the time of application thereof. Unless
otherwise specified herein, all accounting terms used herein shall be
interpreted, all determinations with respect to accounting matters hereunder
shall be made, and all unaudited financial statements and certificates and
reports as to financial matters required to be furnished hereunder shall be
prepared, in accordance with generally accepted accounting principles, applied
on a basis consistent with the most recent audited consolidated financial
statements of the Company and its Subsidiaries delivered pursuant to clause
(ii) of paragraph 5A or, if no such statements have been so delivered, the most
recent audited financial statements referred to in clause (i) of paragraph 8B.
11. MISCELLANEOUS.
11A. NOTE PAYMENTS. The Companies jointly and severally agree
that, so long as any Purchaser shall hold any Note, they will make payments of
principal of, interest on, and any Yield-Maintenance Amount payable with
respect to, such Note, which comply with the terms of this Agreement, by wire
transfer of immediately available funds for credit on the date due to the
account or accounts of such Purchaser specified in the purchaser schedule
attached to the applicable Confirmation of Acceptance with respect to such Note
or such other account or accounts in the United States as such Purchaser may
from time to time designate in writing, notwithstanding any contrary provision
herein or in any Note with respect to the place of payment. Each Purchaser
agrees that, before disposing of any Note, it will make a notation thereon (or
on a schedule attached thereto) of all principal payments previously made
thereon and of the date to which interest thereon has been paid. The Companies
agree to afford the benefits of this paragraph 11A to any Transferee which
shall have made the same agreement as the Purchasers have made in this
paragraph 11A.
11B. EXPENSES. The Companies jointly and severally agree, whether
or not the transactions contemplated hereby shall be consummated, to pay, and
save Prudential, each Purchaser and any Transferee harmless against liability
for the payment of, all out-of-pocket expenses arising in connection with such
transactions, including (i) all document production and duplication charges and
the fees and expenses of any special counsel engaged by the Purchasers or any
Transferee in connection with this Agreement, the transactions contemplated
hereby and any subsequent proposed modification of, or proposed consent under,
this Agreement, whether or not such proposed modification shall be effected or
proposed consent granted, and (ii) the reasonable costs and expenses, including
attorneys' fees, incurred by any Purchaser or any Transferee in enforcing any
rights under this Agreement or the Notes or in responding to any subpoena or
other legal process or informal investigative demand issued in connection with
this Agreement or the transactions contemplated hereby or by reason of any
Purchaser's or any Transferee's having acquired any Note, including without
limitation costs and expenses incurred in any bankruptcy case. The obligations
of the Companies under this paragraph 11B shall survive the transfer of any
Note or portion thereof or interest therein by any Purchaser or any Transferee
and the payment of any Note.
11C. CONSENT TO AMENDMENTS. This Agreement may be amended, and the
Companies may take any action herein prohibited, or omit to perform any act
herein required to be performed by them, if the Companies shall obtain the
written consent to such amendment, action or omission to act, of the Required
Holder(s) of the Notes of each Series except that, (i) with the written consent
of the holders of all Notes of a particular Series, and if an Event of Default
shall have occurred and be continuing, of the holders of all Notes of all
Series, at the time outstanding (and not without such written consents), the
Notes of such Series may be amended or the provisions thereof waived to change
the maturity thereof, to change or affect the principal thereof, or to change
or affect the rate or time of payment of interest on or any Yield-Maintenance
Amount payable with respect to the Notes of such Series, (ii) without the
written consent of the holder or holders of all Notes at the time outstanding,
no amendment to or waiver of the provisions of this Agreement shall change or
affect the provisions of paragraph 7A or this paragraph 11C insofar as such
provisions relate to proportions of the principal amount of the Notes of any
Series, or the rights of any individual holder of Notes, required with respect
to any declaration of Notes to be due and payable or with respect to any
consent, amendment, waiver or declaration, (iii) with the written consent of
Prudential (and not without the written consent of Prudential) the provisions
of paragraph 2B may be amended or waived (except insofar as any such amendment
or waiver would affect any rights or obligations with respect to the purchase
and sale of Notes which shall have become Accepted Notes prior to such amend-
ment or waiver), and (iv) with the written consent of all of the Purchasers
which shall have become obligated to purchase Accepted Notes of any Series
(and not without the written consent of all such Purchasers), any of the provi-
sions of paragraphs 2B and 3 may be amended or waived insofar as such amendment
or waiver would affect only rights or obligations with respect to the purchase
and sale of the Accepted Notes of such Series or the terms and provisions of
such Accepted Notes. Each holder of any Note at the time or thereafter out-
standing shall be bound by any consent authorized by this paragraph 11C,
whether or not such Note shall have been marked to indicate such consent, but
any Notes issued thereafter may bear a notation referring to any such consent.
No course of dealing between the Companies and the holder of any Note nor any
delay in exercising any rights hereunder or under any Note shall operate as a
waiver of any rights of any holder of such Note. As used herein and in the
Notes, the term "THIS AGREEMENT" and references thereto shall mean this
Agreement as it may from time to time be amended or supplemented.
11D. FORM, REGISTRATION, TRANSFER AND EXCHANGE OF NOTES; TRANSFER
RESTRICTION. The Notes are issuable as registered notes without coupons in
denominations of at least $2,500,000, except as may be necessary to reflect
any principal amount not evenly divisible by $2,500,000. The Parent shall keep
at its principal office a register in which the Parent shall provide for the
registration of Notes and of transfers of Notes. Upon surrender for regis-
tration of transfer of any Note at the principal office of the Parent, the
Companies shall, at their expense, execute and deliver one or more new Notes of
like tenor and of a like aggregate principal amount, registered in the name of
such transferee or transferees. At the option of the holder of any Note, such
Note may be exchanged for other Notes of like tenor and of any authorized
denominations, of a like aggregate principal amount, upon surrender of the Note
to be exchanged at the principal office of the Parent. Whenever any Notes are
so surrendered for exchange, the Companies shall, at their expense, execute and
deliver the Notes which the holder making the exchange is entitled to receive.
Each prepayment of principal payable on each prepayment date upon each new Note
issued upon any such transfer or exchange shall be in the same proportion to
the unpaid principal amount of such new Note as the prepayment of principal
payable on such date on the Note surrendered for registration of transfer or
exchange bore to the unpaid principal amount of such Note. No reference need
be made in any such new Note to any prepayment or prepayments of principal
previously due and paid upon the Note surrendered for registration of transfer
or exchange. Every Note surrendered for registration of transfer or exchange
shall be duly endorsed, or be accompanied by a written instrument of transfer
duly executed, by the holder of such Note or such holder's attorney duly
authorized in writing. Any Note or Notes issued in exchange for any Note or
upon transfer thereof shall carry the rights to unpaid interest and interest
to accrue which were carried by the Note so exchanged or transferred, so that
neither gain nor loss of interest shall result from any such transfer or
exchange. Upon receipt of written notice from the holder of any Note of the
loss, theft, destruction or mutilation of such Note and, in the case of any
such loss, theft or destruction, upon receipt of such holder's unsecured
indemnity agreement, or in the case of any such mutilation upon surrender and
cancellation of such Note, the Companies will make and deliver a new Note, of
like tenor, in lieu of the lost, stolen, destroyed or mutilated Note. Notwith-
standing anything to the contrary herein, each Purchaser agrees, and each sub-
sequent holder of a Note or purchaser of a participation in a Note by its
acceptance of an interest in a Note agrees, that no Note shall be transferred
to any Person which is not an Institutional Investor without the prior consent
of the Companies, such consent not to be unreasonably withheld.
11E. PERSONS DEEMED OWNERS; PARTICIPATIONS. Prior to due
presentment for registration of transfer, the Companies may treat the Person in
whose name any Note is registered as the owner and holder of such Note for the
purpose of receiving payment of principal of and premium, if any, and interest
on such Note and for all other purposes whatsoever, whether or not such Note
shall be overdue, and the Companies shall not be affected by notice to the
contrary. Subject to the preceding sentence, the holder of any Note may from
time to time grant participations in all or any part of such Note to any
Institutional Investor on such terms and conditions as may be determined by
such holder in its sole and absolute discretion.
11F. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; JOINT AND SEVERAL
OBLIGATIONS; ENTIRE AGREEMENT. All representations and warranties contained
herein or made in writing by or on behalf of the Companies in connection
herewith shall survive the execution and delivery of this Agreement and the
Notes, the transfer by you of any Note or portion thereof or interest therein
and the payment of any Note, and may be relied upon by any Transferee,
regardless of any investigation made at any time by or on behalf of you or any
Transferee. Subject to the preceding sentence, this Agreement and the Notes
embody the entire agreement and understanding between the parties hereto with
respect to the subject matter hereof and supersede all prior agreements and
understandings relating to the subject matter hereof.
All representations and warranties contained herein or made in writing by
or on behalf of either Company in connection herewith, and all covenants and
other agreements hereunder or under the Notes, are the joint and several
obligations of the Parent and A&B-Hawaii, whether or not otherwise expressed as
such.
11G. SUCCESSORS AND ASSIGNS. All covenants and other agreements in
this Agreement contained by or on behalf of either of the parties hereto shall
bind and inure to the benefit of the respective successors and assigns of the
parties hereto (including, without limitation, any Transferee) whether so
expressed or not.
11H. INDEPENDENCE OF COVENANTS. All covenants hereunder shall be
given independent effect so that if a particular action or condition is
prohibited by any one of such covenants, the fact that it would be permitted by
an exception to, or otherwise be in compliance within the limitations of,
another covenant shall not (i) avoid the occurrence of a Default or Event of
Default if such action is taken or such condition exists or (ii) in any way
prejudice an attempt by the holder of any Note to prohibit, through equitable
action or otherwise the taking of any action by the Company or any Subsidiary
which would result in a Default or Event of Default.
11I. NOTICES. All written communications provided for hereunder
(other than communications provided for under paragraph 2B) shall be sent by
first class mail or nationwide overnight delivery service (with charges
prepaid) and (i) if to any Purchaser, addressed as specified for such communi-
cations in the purchaser schedule attached to the applicable Confirmation of
Acceptance or at such other address as any such Purchaser shall have specified
to the Companies in writing, (ii) if to any other holder of any Note,
addressed to it at such address as it shall have specified in writing to the
Companies or, if any such holder shall not have so specified an address, then
addressed to such holder in care of the last holder of such Note which shall
have so specified an address to the Company and (iii) if to the Companies,
addressed to the Parent at 822 Bishop Street, Honolulu, Hawaii 96813,
Attention: Chief Financial Officer (with a copy to General Counsel) or at such
other address as the Companies shall have specified to each holder of a Note in
writing, provided, however, that any such communication to the Companies may
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also, at the option of the Person sending such communication, be delivered by
any other means either to the Parent at its address specified above or to any
Authorized Officer of the Companies. Any communication pursuant to paragraph
2B shall be made by the method specified for such communication in paragraph
2B, and shall be effective to create any rights or obligations under this
Agreement only if, in the case of a telephone communication, an Authorized
Officer of the party conveying the information and of the party receiving the
information are parties to the telephone call, and in the case of a telecopier
communication, the communication is signed by an Authorized Officer of the
party conveying the information, addressed to the attention of an Authorized
Officer of the party receiving the information, and in fact received at the
telecopier terminal the number of which is listed for the party receiving the
communication in the Information Schedule or at such other telecopier terminal
as the party receiving the information shall have specified in writing to the
party sending such information.
Notices sent as aforesaid shall be deemed to have been given as of the
receipt date appearing on the receipt signed upon delivery of such notice.
11J. DESCRIPTIVE HEADINGS. The descriptive headings of the several
paragraphs of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
11K. SATISFACTION REQUIREMENT. If any agreement, certificate or
other writing, or any action taken or to be taken, is, by the terms of this
Agreement, required to be satisfactory to Prudential, any Purchaser or the
Required Holder(s), the determination of such satisfaction shall be made by
Prudential, such Purchaser or the Required Holder(s), as the case may be, in
the sole and exclusive judgment (exercised in good faith) of the Person(s)
making such determination.
11L. GOVERNING LAW. This Agreement shall be construed and enforced
in accordance with, and the rights of the parties shall be governed by, the law
of the State of California.
11M. CHANGE IN ACCOUNTING PRINCIPLES. Notwithstanding any changes
in accounting principles from those used in the preparation of the financial
statements referred to in paragraph 5B(i) and (ii) hereafter occasioned by the
promulgation of rules, regulations, pronouncements and opinions by or required
by FASB, the method of calculating or determining financial covenants,
standards or terms found in paragraphs 6 and 10 hereof shall, at the request of
the Required Holders of the Notes, remain the same as if such changes had not
been promulgated.
11N. PAYMENTS DUE ON NON-BUSINESS DAYS. Anything in this Agreement
or the Notes to the contrary notwithstanding, any payment of principal of or
interest, or Yield-Maintenance Amount payable with respect to, any Note that is
due on a date other than a Business Day shall be made on the next succeeding
Business Day.
11O. SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
11P. SEVERALTY OF OBLIGATIONS. The sales of Notes to the
Purchasers are to be several sales, and the obligations of Prudential and the
Purchasers under this Agreement are several obligations. No failure by
Prudential or any Purchaser to perform its obligations under this Agreement
shall relieve any other Purchaser or either of the Companies of any of its
obligations hereunder, and neither Prudential nor any Purchaser shall be
responsible for the obligations of, or any action taken or omitted by, any
other such Person hereunder.
11Q. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
11R. BINDING AGREEMENT.
When this Agreement is executed and delivered by the Companies and Prudential,
it shall become a binding agreement between the Companies and Prudential. This
Agreement shall also inure to the benefit of each Purchaser which shall have
executed and delivered a Confirmation of Acceptance, and each such Purchaser
shall be bound by this Agreement to the extent provided in such Confirmation of
Acceptance.
ALEXANDER & BALDWIN, INC.,
a Hawaii corporation
By: /s/ G. R. Rogers
Its: Vice President and
Chief Financial Officer
By: /s/ J. C. Couch
Its: Chairman, President and
Chief Executive Officer
A&B-HAWAII, INC.
a Hawaii corporation
By: /s/ G. R. Rogers
Its: Senior Vice President and
Chief Financial Officer
By: /s/ J. C. Couch
Its: Chairman and Chief
Executive Officer
The foregoing Agreement is
hereby accepted as of the
date first above written.
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By /s/ Jeffrey L. Dickson
Vice President