FORM 10-Q/A
AMENDMENT TO FORM 10-Q PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Amendment: January 14, 2002
Date of Report Being Amended: August 13, 2001
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2001
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OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-565
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ALEXANDER & BALDWIN, INC.
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(Exact name of registrant as specified in its charter)
HAWAII 99-0032630
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P. O. BOX 3440, HONOLULU, HAWAII 96801
822 BISHOP STREET, HONOLULU, HAWAII 96813
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(Address of principal executive (Zip Code)
offices)
(808) 525-6611
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(Registrant's telephone number, including area code)
N/A
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(Former name, former address and former
fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes /X/ No / /
Number of shares of common stock outstanding as of
June 30, 2001: 40,569,696
EXPLANATORY NOTE:
This Form 10-Q/A amends the Form 10-Q filed by Alexander & Baldwin, Inc.
("Registrant") with the Securities and Exchange Commission for the quarter ended
June 30, 2001, to include the complete text of the first page (cover page) of
the Form 10-Q. The Registrant has made no further changes to its Form 10-Q
filed with the Securities and Exchange Commission on August 13, 2001 or to
the exhibits included with that Form 10-Q.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
- -----------------------------
The condensed financial statements and notes for the second quarter and first
six months of 2001 are presented below, with comparative figures from the 2000
financial statements.
ALEXANDER & BALDWIN, INC. AND SUBSIDIARIES
Condensed Statements of Income
(In thousands except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
2001 2000 2001 2000
---- ---- ---- ----
(unaudited) (unaudited)
Revenue:
Operating revenue $277,191 $284,819 $549,976 $513,384
Interest, dividends and other 16,972 4,341 20,031 8,001
-------- -------- -------- --------
Total revenue 294,163 289,160 570,007 521,385
-------- -------- -------- --------
Costs and Expenses:
Costs of goods sold, services and rentals 225,053 217,099 435,388 400,478
Selling, general and administrative 24,504 21,626 49,448 43,419
Interest 4,870 5,959 10,649 11,306
Income taxes 15,222 16,233 27,574 23,758
-------- -------- -------- --------
Total costs and expenses 269,649 260,917 523,059 478,961
-------- -------- -------- --------
Income Before Cumulative Effect of Change
in Accounting Method 24,514 28,243 46,948 42,424
Cumulative Effect of Change in Accounting
Method for Drydocking Costs (net of
income taxes of $7,668, Note d) -- -- -- 12,250
-------- -------- -------- --------
Net Income $ 24,514 $ 28,243 $ 46,948 $ 54,674
======== ======== ======== ========
Basic Earnings Per Share:
Before cumulative effect of accounting
change $ 0.61 $ 0.69 $ 1.16 $ 1.03
Accounting change (Note d) -- -- -- 0.29
-------- -------- -------- --------
Net income $ 0.61 $ 0.69 $ 1.16 $ 1.32
======== ======== ======== ========
Diluted Earnings Per Share:
Before cumulative effect of accounting
change $ 0.60 $ 0.69 $ 1.15 $ 1.03
Accounting change (Note d) -- -- -- 0.29
-------- -------- -------- --------
Net income $ 0.60 $ 0.69 $ 1.15 $ 1.32
======== ======== ======== ========
Dividends Per Share $ 0.225 $ 0.225 $ 0.450 $ 0.450
Average Number of Shares Outstanding 40,568 40,722 40,538 41,427
Outstanding
ALEXANDER & BALDWIN, INC. AND SUBSIDIARIES
Industry Segment Data, Net Income
(In thousands)
Three Months Ended Six Months Ended
June 30, June 30,
2001 2000 2001 2000
---- ---- ---- ----
(unaudited) (unaudited)
Revenue:
Ocean Transportation $ 203,212 $ 213,584 $ 399,821 $ 413,809
Property Development and Management:
Leasing 17,490 15,287 34,586 29,805
Sales 29,155 24,987 72,239 28,039
Food Products 28,118 34,504 46,316 48,170
Other 16,188 798 17,045 1,562
--------- --------- --------- ---------
Total revenue $ 294,163 $ 289,160 $ 570,007 $ 521,385
========= ========= ========= =========
Operating Profit, Net Income:
Ocean Transportation $ 18,713 $ 27,914 $ 36,168 $ 47,807
Property Development and Management:
Leasing 8,679 7,606 17,419 14,790
Sales 3,551 18,917 15,767 19,618
Food Products 747 (2,060) 5,852 8
Other 16,107 764 16,947 1,473
--------- --------- --------- ---------
Total operating profit 47,797 53,141 92,153 83,696
Interest Expense (4,870) (5,959) (10,649) (11,306)
Corporate Expenses (3,191) (2,706) (6,982) (6,208)
--------- --------- --------- ---------
Income Before Taxes and Accounting Change 39,736 44,476 74,522 66,182
Income Taxes (15,222) (16,233) (27,574) (23,758)
--------- --------- --------- ---------
Income Before Accounting Change 24,514 28,243 46,948 42,424
Cumulative Effect of Accounting Change -- -- -- 12,250
--------- --------- --------- ---------
Net Income $ 24,514 $ 28,243 $ 46,948 $ 54,674
========= ========= ========= =========
ALEXANDER & BALDWIN, INC. AND SUBSIDIARIES
Condensed Balance Sheets
(In thousands)
June 30, December 31,
2001 2000
---- ----
(unaudited) (audited)
ASSETS
Current Assets:
Cash and cash equivalents $ 308 $ 3,451
Accounts and notes receivable, net 132,531 141,553
Inventories 23,879 17,137
Real estate held for sale 11,662 19,324
Deferred income taxes 13,265 13,186
Prepaid expenses and other assets 10,821 18,736
Accrued deposits to Capital Construction Fund (2,000) (4,520)
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Total current assets 190,466 208,867
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Investments 181,055 183,141
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Real Estate Developments 59,419 62,628
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Property, at cost 1,884,927 1,808,194
Less accumulated depreciation and amortization 882,601 853,502
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Property - net 1,002,326 954,692
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Capital Construction Fund 151,322 150,405
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Other Assets 102,494 106,279
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Total $1,687,082 $1,666,012
========== ==========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current Liabilities:
Notes payable and current portion of long-term
debt $ 29,500 $ 30,500
Accounts payable 64,268 63,075
Other 63,517 59,431
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Total current liabilities 157,285 153,006
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Long-term Liabilities:
Long-term debt 311,823 330,766
Post-retirement benefit obligations 44,363 44,752
Other 57,074 56,698
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Total long-term liabilities 413,260 432,216
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Deferred Income Taxes 391,935 387,139
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Shareholders' Equity:
Capital stock 33,369 33,248
Additional capital 64,732 58,007
Unrealized holding gains on securities 68,238 61,937
Retained earnings 570,233 552,637
Cost of treasury stock (11,970) (12,178)
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Total shareholders' equity 724,602 693,651
---------- ----------
Total $1,687,082 $1,666,012
========== ==========
ALEXANDER & BALDWIN, INC. AND SUBSIDIARIES
Condensed Statements of Cash Flows
(In thousands)
Six Months Ended
June 30,
2001 2000
---- ----
(unaudited)
Cash Flows from Operating Activities $ 77,714 $ 43,318
---------- ----------
Cash Flows from Investing Activities:
Capital expenditures (63,363) (45,706)
Proceeds from sale of investments 16,217 --
Capital Construction Fund, net 358 1,807
Other 774 1,646
---------- ----------
Net cash used in investing activities (46,014) (42,253)
---------- ----------
Cash Flows from Financing Activities:
Proceeds from issuances of long-term debt 6,000 64,000
Payments of debt, net (26,000) (12,500)
Proceeds from short-term commercial paper borrowings, net -- 5,000
Proceeds from issuances of capital stock 3,409 51
Repurchases of capital stock -- (43,294)
Dividends paid (18,252) (18,625)
---------- ----------
Net cash used in financing activities (34,843) (5,368)
---------- ----------
Net Decrease in Cash and Cash Equivalents $ (3,143) $ (4,303)
========== ==========
Other Cash Flow Information:
Interest paid, net of amounts capitalized $ (12,187) $ (11,123)
Income taxes paid, net of refunds (18,091) (17,098)
Other Non-cash Information:
Accrued withdrawals from Capital Construction Fund, net (2,520) (1,204)
Depreciation expense (36,310) (34,478)
Tax-deferred property sales 30,843 23,056
Tax-deferred property purchases (42,257) (3,139)
Change in unrealized holding gains 6,301 (10,295)
Financial Notes
(Unaudited)
(a) The condensed balance sheet as of June 30, 2001, the condensed statements
of income for the three months and six months ended June 30, 2001 and
2000, and the condensed statements of cash flows for the six months ended
June 30, 2001 and 2000 are unaudited. Because of the nature of the
Company's operations, the results for interim periods are not necessarily
indicative of results to be expected for the year, but in the opinion of
management, all material adjustments necessary for the fair presentation
of interim period results have been included in the interim financial
statements.
(b) Estimated effective annual income tax rates differ from statutory rates,
primarily due to the dividends-received deduction, various tax credits and
the charitable donation of appreciated stock (See Note e).
(c) The Company's total non-owner changes in shareholders' equity consist of
net income, adjusted for unrealized holding gains (losses) on securities
(other comprehensive income). On this basis, comprehensive income for the
three months ended June 30, 2001 and 2000 was $38.4 million and $17.2
million, respectively. Comprehensive income for the six months ended June
30, 2001 and 2000 was $53.2 million and $44.4 million, respectively.
(d) The cumulative effect of an accounting change in the first quarter of 2000
related to the treatment of vessel drydocking costs. The Company changed
its method of accounting for these costs from the accrual method to the
deferral method. Drydocking costs had been accrued as a liability and an
expense on an estimated basis, in advance of the next scheduled
drydocking. Under the deferral method, actual drydocking costs are
capitalized when incurred and amortized over the period benefited. This
change was made to conform with prevailing industry accounting practices.
The cumulative effect of this accounting change, as of January 1, 2000, is
shown separately in the condensed statements of income and resulted in
income of $12,250,000 (net of income tax expense of $7,668,000), or
$0.29 per share.
The effect of this change in accounting method as of January 1, 2000, on
the Condensed Balance Sheets, was to increase Other Assets by $4,765,000,
eliminate drydocking reserves of $15,153,000, increase deferred taxes by
$7,668,000, and increase total shareholders' equity by $12,250,000. The
pro-forma effect of the change on 2000 net income is the same as the
reported amount.
(e) Investments: During the first half of 2001, the Company divested its
holdings in Pacific Century Financial Corporation ("Pacific Century")
(NYSE:BOH). This was completed through the sales, in the second quarter,
of 749,000 shares of the stock for $16,200,000 and the donations, in the
first quarter, of 360,000 shares to the Company's charitable foundation.
The fair value of the donated stock was $7.5 million and the historical
cost basis of the donated shares was approximately $500,000. The net
expense related to this contribution of $500,000 is included in the 2001
first quarter financial statements (Selling, general and administrative
Expense in the Condensed Statements of Income, and in Corporate Expenses
in the Industry Segment Data.) The after-tax gain on the sale of the
Pacific Century stock was approximately $9.4 million, or $0.23 per share.
This gain is included in the Company's 2001 second quarter financial
results in the Condensed Statements of Income under "Interest, dividends
and other" and in the Industry Segment Data under "Other."
In May 2001, BNP Paribas SA, France's largest bank, announced that,
subject to regulatory, shareholder and other approvals, it would purchase
the remaining 55 percent of BancWest Corporation ("BancWest") (NYSE:BWE)
which it did not already own. This offer was 40 percent higher than the
market price of BancWest's stock at the time of the offer. The
transaction is expected to occur during the third quarter of 2001. The
sale of the Company's holdings in BancWest, at $35 per share, would result
in an after-tax realized gain of approximately $68 million, or $1.68 per
share.
(f) Certain amounts have been reclassified to conform with the current year's
presentation.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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SECOND QUARTER AND FIRST HALF EVENTS:
Net income for the second quarter of 2001 was $24,514,000, or $0.61 per basic
share. In the second quarter of 2000, income was $28,243,000, or $0.69 per
basic share. Revenue in the second quarter of 2001 was $294,163,000, compared
with revenue of $289,160,000 in the second quarter of 2000. Second quarter
2001 net income includes a gain of $9,400,000 ($0.23 per basic share), due to
the sale of the Company's investment in Pacific Century Financial Corporation
("Pacific Century")(NYSE:BOH).
Net income for the first half of 2001 was $46,948,000, or $1.16 per basic
share, compared with $54,674,000, or $1.32 per basic share, for the first half
of 2000. The 2000 net income includes a change in accounting for vessel
drydocking costs that resulted in a one-time non-cash increase of
$12,250,000 in net income ($0.29 per basic share). This change is described
in Note (d) to the second quarter 2001 financial statements. Excluding
the change in accounting, net income rose by $4,524,000, or 11 percent,
compared with the first half of 2000.
Interest expense for the first half and second quarter of 2001 were lower
than in the comparable periods last year, due to lower rates and lower debt
balances.
Financial Condition and Liquidity
- ---------------------------------
The Company's principal liquid resources, comprising cash and cash equivalents,
receivables, sugar and coffee inventories and unused lines of credit, less
accrued deposits to the Capital Construction Fund, totaled $410,090,000 at
June 30, 2001, an increase of $165,018,000 from December 31, 2000. This net
increase was due primarily to $140,000,000 for new facilities, a $45,000,000
increase in the Company's multi-bank revolving credit facility, $7,500,000
lower drawn balances on variable rate facilities, and agricultural inventories
which were $7,000,000 higher than 2000 year end (due to seasonality of
production cycles), partially offset by the expiration and non-renewal of a
$25,000,000 uncommitted short-term facility, and lower receivables and cash
balances.
Working capital was $33,181,000 at June 30, 2001, a decrease of $22,680,000
from the amount at the end of 2000. The lower working capital was due
primarily to a lower inventory of residential units, higher income taxes
payable, lower trade receivables, and lower cash balances, partially offset by
higher agricultural products inventory. The lower inventory of residential
units was due to active sales of residential units on Maui. The remaining
factors are the result of normal seasonality.
RESULTS OF SEGMENT OPERATIONS -
SECOND-QUARTER 2001 COMPARED WITH THE SECOND-QUARTER 2000
Ocean Transportation revenue of $203,212,000 for the second quarter of 2001
decreased five percent from the $213,584,000 reported in 2000. Operating
profit of $18,713,000 decreased 33 percent from the $27,914,000 reported in
2000. The lower revenue was mainly due to the 2000 discontinuation of the
Company's Pacific Coast shuttle service and lower intermodal revenue. These
two revenue reduction factors, however, had little impact on the lower
operating profit. The decrease in operating profit resulted primarily from
modestly lower cargo volume, higher fleet costs, higher information technology
expenses, and the Company's share of lower results from a stevedoring joint
venture, partially offset by rate actions taken in 2001. Second quarter 2001
Hawaii service container volume was two-percent lower than in the second
quarter of 2000. Automobile volume was two-percent higher for the second
quarter compared with a year earlier.
Property Development and Management - Leasing revenue of $17,490,000 and
operating profit of $8,679,000 for the second quarter of 2001 were both 14
percent higher than in the second quarter of 2000. These increases were due
primarily to additions to the property portfolio in late 2000 and early 2001,
and higher Hawaii occupancy levels. Second quarter 2001 occupancy levels for
Mainland properties averaged 93 percent, versus 96 percent in the second
quarter of 2000. Occupancy levels for Hawaii properties averaged 90 percent
in the second quarter of 2001, versus 85 percent a year earlier. Mainland
occupancy declined due to lease expirations for several large industrial
tenants. The increase in Hawaii occupancy was due primarily to higher tenancy
in retail and warehouse properties.
Property Development and Management - Sales revenue of $29,155,000 and
operating profit of $3,551,000 for the second quarter of 2001 were primarily
the result of selling 46 residential properties, four business parcels and a
four-acre parcel on Maui. Sales revenue of $24,987,000 and operating profit
of $18,917,000 for the second quarter of 2000 were the result of the sale of a
ground lease under a Costco store in Kahului, Maui, six business parcels and
six residential properties. The lower operating profit and greater revenue for
the second quarter of 2001 were the result of a higher number of lower-margin
residential unit sales than in 2000.
Food Products revenue of $28,118,000 for the second quarter of 2001 was
$6,386,000 lower than the $34,504,000 of revenue reported in the second quarter
of 2000. Operating profit of $747,000 for the second quarter of 2001 compared
with a loss of $2,060,000 for the second quarter of 2000. The improvement in
operating profit was due primarily to higher domestic raw sugar prices and
reduced operating costs attributable to the closure of the Paia Mill, partially
offset by losses from A&B's residual 36 percent investment in C&H Sugar
Company, Inc. and from the startup of a panelboard manufacturing business.
For 2001, the Company has forward-priced 80 percent of its sugar production
at approximately $21/cwt. Drought conditions on Maui continue to affect
adversely sugar production and costs. Higher California energy costs were the
driving factor for the lower results at C&H.
Other operating profit for the second quarter of 2001 included a $15,100,000
gain due to the sale of the Company's investment in Pacific Century.
RESULTS OF SEGMENT OPERATIONS -
FIRST SIX MONTHS 2001 COMPARED WITH THE FIRST SIX MONTHS OF 2000
Ocean Transportation revenue of $399,821,000 for the first half of 2001 was
three-percent lower than the $413,809,000 reported in the first half of 2000.
Operating profit of $36,168,000 for the first half of 2001 declined 24 percent
from $47,807,000 in the first half of 2000. The lower revenue was due to the
same factors cited in the second quarter comparisons. The decline in operating
profit resulted primarily from higher fleet costs, higher technology costs, and
lower results from a stevedoring joint venture, partially offset by rate
actions taken in 2001. First half 2001 Hawaii service container volume was
virtually the same as in the first half of 2000. Automobile volume was
one-percent higher for the first six months of 2001, compared with the first
half of 2000.
Property Development and Management - Leasing revenue of $34,586,000 for the
first half of 2001 was 16-percent higher than the $29,805,000 reported for the
first half of 2000. Operating profit of $17,419,000 for the first half of 2001
was 18-percent higher than the $14,790,000 reported for the first half of 2000.
These increases were due primarily to additions to the property portfolio in
the latter part of 2000 and in early 2001. 2001 occupancy levels for Mainland
properties averaged 93 percent, versus 96 percent in the first half of 2000.
Average occupancy levels for Hawaii properties improved to 90 percent, versus
85 percent in the comparable period of 2000. The fluctuations in occupancy
rates were due to the same factors cited for the second quarter.
Property Development and Management - Sales revenue of $72,239,000 and
operating profit of $15,767,000 in the first half of 2001 were primarily the
result of the sale of an industrial lot to Wal-Mart, three commercial
properties in Bainbridge, Washington, a four-acre parcel on Maui,
68 residential properties and four business parcels. Sales revenue of
$28,039,000 and operating profit of $19,618,000 in the first half of 2000
included the Costco ground lease, eight business parcels and 17 residential
properties. The lower operating profit and greater revenue for 2001 compared
with 2000 were the result of a higher number of lower-margin residential unit
sales in 2001. This variability in sales and operating profit is an inherent
characteristic of property sales activity.
Food Products revenue of $46,316,000 in the first half of 2001 compared with
$48,170,000 in revenue for the comparable period of 2000. Operating profit for
the first half of 2001 was $5,852,000 compared with a nearly break-even
operating profit for the first half of 2000. The improvement in operating
profit was due primarily to a one-time cash distribution from the sugar
marketing and transportation cooperative that handles Hawaii sugar growers'
production, higher domestic raw sugar prices and reduced operating costs
attributable to the closure of the Paia Mill, partially offset by losses from
A&B's residual 36 percent investment in C&H Sugar Company, Inc. and from the
startup of a panelboard manufacturing business.
Other operating profit for the first half of 2001 included the previously noted
gain from the sale of the Company's investment in Pacific Century.
OTHER MATTERS
Property Sales and Trends: The mix of property sales in any year or quarter
can be diverse. Sales can include developed residential real estate,
commercial properties, developable subdivision lots, undeveloped land and
property sold under threat of condemnation. The sale of undeveloped land and
vacant parcels generally provides a greater contribution to earnings than does
the sale of developed and commercial property, due to the low historical-cost
basis of the Company's Hawaii land. Consequently, property sales revenue
trends, cash flows from the sales of real estate and the amount of real estate
held for sale on the balance sheets do not necessarily indicate future
profitability trends for this segment.
New Accounting Standards: Statement of Financial Accounting Standards (SFAS)
No. 133, "Accounting for Derivative Instruments and Hedging Activities," as
amended, was adopted by the Company in January 2001 with no impact on the
financial statements. SFAS No. 140, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishment of Liabilities," was adopted in 2000 with
no significant changes to the Company's accounting practices.
Accounting Change: In January 2000, the Company changed its method of
accounting for vessel drydocking costs from the accrual method to the deferral
method. The cumulative effect of this accounting change increased first
quarter 2000 net income by $12,250,000. (See Note (d) to the Company's
condensed financial statements.)
Tax-Deferred Real Estate Exchanges: During the first six months of 2001, the
Company recorded tax-deferred sales of $30,843,000 and reinvested, on a tax-
deferred basis, $42,257,000 in new real estate assets. These amounts are not
included in "cash flows from operating activities" and "capital expenditures,"
but are reported under the caption of "Other Non-cash Information" in the
Condensed Statements of Cash Flows.
Environmental Matters: As with most industrial and land-development companies
of its size, the Company's operations have certain risks, which could result in
expenditures for environmental remediation. The Company believes that it is in
compliance, in all material respects, with applicable environmental laws and
regulations, and works proactively to identify potential environmental
concerns. Management believes that appropriate liabilities have been accrued
for environmental matters.
Investments: During the first half of 2001, the Company divested its holdings
in Pacific Century. This was completed through the donation of 360,000 shares
to the Company's charitable foundation and the sale of the remaining 749,000
shares. In May 2001, BNP Paribas SA, announced that, subject to regulatory,
shareholder and other approvals, it would purchase the remaining 55 percent of
BancWest Corporation ("BancWest")(NYSE:BWE) that it did not already own. The
Company currently owns 3,385,788 shares of BancWest stock. See Note (e) for
additional information about these matters.
Economic Conditions: Although many reported measures of Hawaii's economic
performance continue to reflect momentum from the boost in 2000, some important
measures and most current forecasts anticipate that the State's economy is
decelerating. That conclusion is based on uncertainty over the prospective
performance of the U.S. mainland economy and the sustained weakness of Japan's
economy. For example, one sound current measure, Hawaii's all-cash,
broad-based general excise tax, was up a solid 6.8 percent for the fiscal year
ended June 30, 2001. In contrast, the leading economic indicator prepared by
the State of Hawaii's Department of Business, Economic Development & Tourism
has been lower in nine of the past 11 months, and for the past five consecutive
months. Similarly, measures of the important visitor industry are also
slowing. For 2001, through May, total visitor days are down 1.6%. The decline
was more pronounced at 4.4% for the month of May 2001. Reflecting the same
patterns, domestic travel, international travel and Japanese travel were down
1%, 3.3% and 0.7%, respectively, through May 2001. However, the rate of
decline during just the month of May for domestic, international and Japanese
travel was much steeper at 3.5%, 6.9 and 6.2%, respectively. Hotel occupancies
were 67.7% in May 2001, or 4.6 percentage points below May 2000.
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
The Company, from time to time, may make or may have made certain forward-
looking statements, whether orally or in writing, such as forecasts and
projections of the Company's future performance or statements of management's
plans and objectives. Such forward-looking statements may be contained in,
among other things, Securities and Exchange Commission (SEC) filings, such as
the Forms 10-Q, press releases made by the Company and oral statements made by
the officers of the Company. Except for historical information contained in
these written or oral communications, such communications contain forward-
looking statements. These forward-looking statements involve a number of risks
and uncertainties that could cause actual results to differ materially from
those projected in the statements, including, but not limited to: (1) economic
conditions in Hawaii and elsewhere; (2) market demand; (3) competitive factors
and pricing pressures in the Company's primary markets; (4) legislative and
regulatory environments at the federal, state and local levels, such as
government rate regulations, land-use regulations, government administration
of the U.S. sugar program, and modifications to or retention of cabotage laws;
(5) dependence on third-party suppliers; (6) fuel prices; (7) raw sugar prices;
(8) labor relations; (9) risks associated with current or future litigation;
and (10) other risk factors described elsewhere in such communications and from
time to time in the Company's filings with the SEC.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- -------------------------------------------------------------------
Information concerning market risk is incorporated herein by reference to Item
7A of the Company's Form 10-K for the fiscal year ended December 31, 2000.
There has been no material change in the quantitative and qualitative
disclosure about market risk since December 31, 2000.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- -------------------------------------------------------------
At the Annual Meeting of Shareholders of the Company held on April 26,
2001, the Company's shareholders voted in favor of: (i) the election of ten
directors to the Company's Board of Directors, and (ii) the election of
Deloitte & Touche LLP as the Company's independent auditors. The number of
votes for, against or withheld, as well as the number of abstentions and broker
non-votes, as to each matter voted upon at the Annual Meeting of Shareholders,
were as follows:
(i) Election of Directors For Withheld
--- --------
Michael J. Chun 37,534,512 126,771
Leo E. Denlea, Jr. 37,370,483 290,800
W. Allen Doane 35,486,419 2,174,864
Walter A. Dods, Jr. 37,247,741 413,542
Charles G. King 37,524,123 137,160
Carson R. McKissick 37,375,101 286,182
C. Bradley Mulholland 35,143,311 2,517,972
Lynn M. Sedway 37,540,420 120,863
Maryanna G. Shaw 37,521,385 139,898
Charles M. Stockholm 37,519,626 141,657
(ii) Election of Auditors For Against Abstain
--- ------- -------
37,544,808 56,474 61,145
There were no broker non-votes at the Annual Meeting.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------
(a) Exhibits
--------
4.b. Debt.
4.b.(v) Fourth Amendment to Second Amended and Restated
Revolving Credit and Term Loan Agreement, effective as of
June 14, 2001, among Alexander & Baldwin, Inc. and First
Hawaiian Bank, Bank of America, N.A., Bank of Hawaii,
The Bank of New York, Wells Fargo Bank, National Association,
and American Savings Bank, F.S.B.
10. Material contracts.
10.a.(xlvii) Private Shelf Agreement between Alexander &
Baldwin, Inc. and Prudential Insurance Company of America,
dated as of April 25, 2001.
10.a.(xlviii) Amendment, dated as of April 25, 2001, to the Note
Agreement among Alexander & Baldwin, Inc., A&B-Hawaii, Inc. and
The Prudential Insurance Company of America, dated as of June 4,
1993, and the Private Shelf Agreement between Alexander &
Baldwin, Inc., A&B-Hawaii, Inc., and Prudential Insurance
Company of America, dated as of August 2, 1996.
10.a.(xlix) Private Shelf Agreement between Matson Navigation
Company, Inc. and Prudential Insurance Company of America, dated
as of June 29, 2001.
11. Statement re Computation of Per Share Earnings.
(b) Reports on Form 8-K
-------------------
No reports on Form 8-K were filed during the quarter.
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of l934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ALEXANDER & BALDWIN, INC.
-------------------------------
(Registrant)
Date: August 10, 2001 /s/ James S. Andrasick
-------------------------------
James S. Andrasick
Sr. Vice President, Chief
Financial Officer and Treasurer
Date: August 10, 2001 /s/ Thomas A. Wellman
-------------------------
Thomas A. Wellman
Controller
EXHIBIT INDEX
-------------
4.b. Debt.
4.b.(v) Fourth Amendment to Second Amended and Restated Revolving Credit
and Term Loan Agreement, effective as of June 14, 2001, among Alexander &
Baldwin, Inc. and First Hawaiian Bank, Bank of America, N.A., Bank of
Hawaii, The Bank of New York, Wells Fargo Bank, National Association,
and American Savings Bank, F.S.B.
10. Material contracts.
10.a.(xlvii) Private Shelf Agreement between Alexander & Baldwin, Inc. and
Prudential Insurance Company of America, dated as of April 25, 2001.
10.a.(xlviii) Amendment, dated as of April 25, 2001, to the Note Agreement
among Alexander & Baldwin, Inc., A&B-Hawaii, Inc. and The Prudential
Insurance Company of America, dated as of June 4, 1993, and the Private
Shelf Agreement between Alexander & Baldwin, Inc., A&B-Hawaii, Inc., and
Prudential Insurance Company of America, dated as of August 2, 1996.
10.a.(xlix) Private Shelf Agreement between Matson Navigation Company,
Inc. and Prudential Insurance Company of America, dated as of June 29,
2001.
11. Statement re Computation of Per Share Earnings.
FOURTH AMENDMENT TO
SECOND AMENDED AND RESTATED
REVOLVING CREDIT AND TERM LOAN AGREEMENT
THIS FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED REVOLVING CREDIT AND
TERM LOAN AGREEMENT (this "Agreement") is made effective as of the 14th
day of June, 2001, by and among ALEXANDER & BALDWIN, INC., a Hawaii corporation
(the "Borrower"), FIRST HAWAIIAN BANK, BANK OF AMERICA, N.A., BANK OF HAWAII,
THE BANK OF NEW YORK, WELLS FARGO BANK, NATIONAL ASSOCIATION, and AMERICAN
SAVINGS BANK, F.S.B. (herein called, individually, a "Bank" and, collectively,
the "Banks"), FIRST HAWAIIAN BANK, a Hawaii corporation, as agent for the Banks
(the "Agent"), and BANK OF AMERICA, N.A., as co-agent for the Banks (the
"Co-Agent").
I. BACKGROUND.
----------
A. The Banks (other than The Bank of New York, Wells Fargo Bank,
National Association and American Savings Bank, F.S.B.), Credit Lyonnais Los
Angeles Branch and Union Bank of California (the "Original Banks") extended a
revolving credit facility with a term loan feature (the "Credit Facility") to
the Borrower and A&B Hawaii, Inc., a Hawaii corporation (the "Original
Borrowers") pursuant to the terms and conditions of that certain Second Amended
and Restated Revolving Credit and Term Loan Agreement dated as of December 31,
1996 (the "Credit Agreement").
B. All capitalized terms used herein shall have the meanings set forth
in the Credit Agreement except as otherwise expressly provided herein.
C. The Original Banks, The Bank of New York, and the Original
Borrowers entered into the First Amendment to the Credit Agreement dated as of
December 10, 1997 (the "First Amendment"), pursuant to which The Bank of New
York became a Bank under the Credit Agreement and pursuant to which Credit
Lyonnais Los Angeles Branch ceased to have any Commitment under the Credit
Agreement.
D. The Banks (other than Wells Fargo Bank, National Association and
American Savings Bank, F.S.B.), Union Bank of California, and the Original
Borrowers entered into the Second Amendment to the Credit Agreement dated as of
November 30 , 1998 (the "Second Amendment"), pursuant to which Union Bank of
California ceased to have any Commitment under the Credit Agreement.
E. The Banks (other than Wells Fargo Bank, National Association and
American Savings Bank, F.S.B.) and the Original Borrowers entered into a Third
Amendment to the Credit Agreement dated as of November 30, 1999 (the "Third
Amendment"), pursuant to which, among other matters, the Termination Date was
extended to November 30, 2001, and A&B-Hawaii, Inc. was deleted as a "Borrower"
under the Credit Facility.
F. The Borrower has requested the Banks to amend the Credit Agreement
to increase the Total Commitment from $140,000,000.00 to $185,000,000.00, and
to include Wells Fargo Bank, National Association and American Savings Bank,
F.S.B. as Banks under the Credit Agreement.
G. The Banks are willing to so amend the Credit Agreement in
accordance with the terms and conditions of this Agreement.
II. AGREEMENTS.
----------
In consideration of the mutual covenants set forth herein, and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:
A. Schedule I. Schedule I to the Credit Agreement is hereby deleted
----------
and replaced with Schedule I attached hereto. From and after the date hereof,
Wells Fargo Bank, National Association and American Savings Bank, F.S.B. each
shall be a "Bank" under the Credit Agreement.
B. Issuance of Revolving Credit Notes; and Issuance of Rider. On the
---------------------------------------------------------
date hereof, and as a condition to the effectiveness of this Agreement, (i)
Borrower shall issue a Revolving Credit Note, dated the date hereof, in the
form of Exhibit A hereto, in the amount of Forty Million Dollars
($40,000,000.00) to Wells Fargo Bank, National Association; (ii) Borrower shall
issue a Revolving Credit Note, dated the date hereof, in the form of Exhibit B
hereto, in the amount of Ten Million Dollars ($10,000,000.00) to American
Savings Bank, F.S.B.; and (iii) Borrower shall issue a First Rider to Revolving
Credit Note, dated the date hereof, in the form of Exhibit C hereto, to Bank of
America, N.A.
C. REALLOCATION OF EXISTING LOANS.
------------------------------
1. If on the date hereof there shall be any outstanding Term
Loans or Prime Loans, on the date hereof with respect to each such Loan, as
conditions to the effectiveness of this Agreement:
(a) Not later than 8:00 a.m., Hawaii Standard Time, the Agent
shall advise each Bank of such Bank's Proportional Share of such outstanding
Loans determined in accordance with the Commitments set forth on Schedule I
attached hereto (the "Revised Proportional Share") and the amount by which
such Bank's Revised Proportional Share exceeds or is less than such Bank's
Proportional Share determined in accordance with the Commitments set forth on
Schedule I to the Second Amendment (the "Former Proportional Share").
(b) To the extent that any Bank's Revised Proportional Share
exceeds such Bank's Former Proportional Share, such Bank shall, not later than
10:00 a.m., Hawaii Standard Time, provide to the Agent at its office specified
in Section 12.4 of the Credit Agreement, immediately available funds in Dollars
in such amount together with any accrued but unpaid interest on such amount
determined in accordance the Credit Agreement.
(c) To the extent that any Bank's Former Proportional Share
exceeds such Bank's Revised Proportional Share, the Agent shall, not later than
12:00 noon, Hawaii Standard Time, provide to such Bank immediately available
funds in Dollars in such amount together with any accrued but unpaid interest
on such amount determined in accordance the Credit Agreement.
2. If on the date hereof there shall be any outstanding CD Loans
or Eurodollar Loans, each such outstanding CD Loan and Eurodollar Loan shall
remain in effect until the expiration date(s) of the current related Eurodollar
Interest Period(s) or CD Interest Period(s), as applicable. If the Borrower
has elected, pursuant to Section 1.7 B. of the Credit Agreement, to extend such
Loan(s), such outstanding Loan(s) shall be reallocated and repaid in the manner
specified in Subsections (a) through (c) below. Any such Loan(s) converted to
a Prime Loan pursuant to said Section 1.7 B. shall be reallocated and repaid in
the manner specified in Subsections (a) through (c) of Section II. C. 1.,
above, on the last day of the relevant CD Interest Period or Eurodollar
Interest Period.
(a) Not later than 8:00 a.m., Hawaii Standard Time, on the second
Business Domestic Day or Eurodollar Business Day, as applicable, prior to the
last day of the relevant CD Interest Period or Eurodollar Interest Period, the
Agent shall advise each Bank of such Bank's Revised Proportional Share of such
outstanding Loan and the amount by which such Bank's Revised Proportional Share
exceeds or is less than such Bank's Former Proportional Share.
(b) To the extent that any Bank's Revised Proportional Share
exceeds such Bank's Former Proportional Share, such Bank shall, not later than
10:00 a.m., Hawaii Standard Time, on the last day of such CD Interest Period or
Eurodollar Interest Period, provide to the Agent at its office specified in
Section 12.4 of the Credit Agreement, immediately available funds in Dollars in
such amount together with any accrued but unpaid interest on such amount
determined in accordance the Credit Agreement.
(c) To the extent that any Bank's Former Proportional Share
exceeds such Bank's Revised Proportional Share, the Agent shall, not later than
12:00 noon, Hawaii Standard Time, on the last day of such CD Interest Period or
Eurodollar Interest Period, provide to such Bank immediately available funds in
Dollars in such amount together with any accrued but unpaid interest on such
amount determined in accordance the Credit Agreement.
D. MISCELLANEOUS.
-------------
1. Confirmation of Warranties and Covenants; No Event of
-----------------------------------------------------
Default. All of the continuing warranties of the Borrower contained in the
- -------
Credit Agreement, are hereby confirmed and reaffirmed by the Borrower as being
true, valid and correct as of the date of this Agreement. The Borrower
represents and warrants that no Event of Default exists as of the date of
this Agreement.
2. No Defenses. The Borrower acknowledges that it does not have
-----------
any offsets, counterclaims, deductions, or defenses to payment or performance
of its duties and obligations under the Credit Agreement.
3. Full Force and Effect. The provisions of the Credit
---------------------
Agreement and of the Notes, as previously amended by the First Amendment, the
Second Amendment and the Third Amendment, are hereby amended to conform with
this Agreement, and in the event of any conflict between the provisions of this
Agreement and the provisions of the Credit Agreement, the Notes, the First
Amendment, the Second Amendment or the Third Amendment, the provisions of this
Agreement shall control; but in all other respects, the provisions of the
Credit Agreement and the Notes, as previously amended by the First Amendment,
the Second Amendment and the Third Amendment, shall continue in full force and
effect.
4. Rights of the Banks. This Agreement is made on the express
-------------------
condition that nothing contained herein shall in any way be construed as
affecting, impairing, or waiving any rights of the Banks under the Credit
Agreement.
5. Bind and Inure. This Agreement shall be binding upon and
--------------
inure to the benefit of the Banks, the Borrower and their respective successors
and assigns.
6. Applicable Law; Severability. This Agreement shall be
----------------------------
governed by and interpreted in accordance with the laws of the State of
California. If any provision of this Agreement is held to be invalid or
unenforceable, the validity or enforceability of the other provisions shall
remain unaffected.
7. Paragraph Headings. The headings of paragraphs in this
------------------
Agreement are inserted only for convenience and shall in no way define,
describe, or limit the scope or intent of any provision of this Agreement.
8. Counterparts and Facsimile Signatures. The parties to this
-------------------------------------
Agreement agree that this Agreement may be executed in counterparts, each of
which shall be deemed an original, and said counterparts shall together
constitute one and the same agreement, binding all of the parties hereto,
notwithstanding all of the parties are not signatory to the original or the
same counterparts. In making proof of this Agreement, it shall not be
necessary to produce or account for more than one such counterpart. For all
purposes, including, without limitation, recordation and delivery of this
Agreement, duplicate unexecuted and unacknowledged pages of the counterparts
may be discarded and the remaining pages assembled as one document. The
submission of a signature page transmitted by facsimile telecopy (or similar
electronic transmission facility) shall be fully binding and in full effect
for all purposes under this Agreement. In such event, original signature
pages shall be delivered within a reasonable time and substituted for the
facsimile signature pages in the counterpart copies upon receipt.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
ALEXANDER & BALDWIN, INC. FIRST HAWAIIAN BANK
By /s/ Thomas A. Wellman By /s/ Lance A. Mizumoto
-------------------------------- --------------------------------
Its Controller & Asst. Treas. Its Vice President
By /s/ John B. Kelley As a "Bank" and as "Agent"
--------------------------------
Its Vice President
BANK OF AMERICA, N.A.
"Borrower"
By /s/ Nancy Nuerenberg
--------------------------------
Its Senior Vice President
As a "Bank" and as "Co-Agent"
BANK OF HAWAII
By /s/ Dana-Ann Takushi
--------------------------------
Its Vice President
As a "Bank"
THE BANK OF NEW YORK
By /s/ Jennifer Ellerman
--------------------------------
Its Vice President
As a "Bank"
WELLS FARGO BANK, NATIONAL
ASSOCIATION
420 Montgomery MAC A0101-096
San Francisco, California 94104
Attention: Mr. Stephen J. DeMarti
Telephone: (415) 396-4832
Facsimile: (415) 421-1352
By /s/ Stephen J. DeMarti
--------------------------------
Its Vice President
As a "Bank"
AMERICAN SAVINGS BANK, F.S.B.
915 Fort Street Mall, 4th Floor
Honolulu, Hawaii 96813
Attention: Mr. Carl A. Morita
Telephone: (808) 539-7631
Facsimile: (808) 536-1169
By /s/ Carl Morita
--------------------------------
Its Vice President
As a "Bank"
SCHEDULE I
Bank Commitment
- ---- ----------
First Hawaiian Bank $ 45,000,000
Bank of America, N.A. 40,000,000
Wells Fargo Bank, National Association 40,000,000
Bank of Hawaii 30,000,000
The Bank of New York 20,000,000
American Savings Bank, F.S.B. 10,000,000
------------
TOTAL: $185,000,000
ALEXANDER & BALDWIN, INC.
822 Bishop Street
Honolulu, Hawaii 96801
As of April 25, 2001
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 "Company") hereby agrees
with you as follows:
1. AUTHORIZATION OF ISSUE OF NOTES. The Company has authorized
the issue of its senior promissory notes in the aggregate principal 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
---------
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
prepayment 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 of
-----
Notes purchased and sold pursuant to this Agreement prior to such time, minus
-----
the aggregate principal amount of Accepted Notes (as hereinafter defined) 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. Notes may be issued and sold pursuant to this
Agreement until the earlier of (i) the third 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(3). REQUEST FOR PURCHASE. The Company 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 telefacsimile 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, (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 price of such Notes is 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 in writing and
- ---------
shall be deemed made when received by Prudential.
2B(4). RATE QUOTES. Not later than five Business Days after the
Company 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 Company by telephone or telefacsimile, 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 five 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"), the 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 the Company notifying
Prudential by telephone or telefacsimile within the Acceptance Window that the
Company elects 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 the 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 Company agrees 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 Company,
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 "CONFIRMATION OF ACCEPTANCE").
---------
If the Company 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 Company 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 suspension, material
limitation, or significant disruption of trading in securities 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 the 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 Company
that the provisions of this paragraph 2B(6) are applicable with respect to such
Acceptance.
2B(7). FACILITY CLOSINGS. Not later than 1:30 P.M. (New York City
local time) on the Closing Day for any Accepted Notes, the Company will deliver
to each Purchaser listed in the Confirmation of Acceptance relating thereto at
the offices of 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 Company in the Request for Purchase of such Notes. If the
Company fails 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 Company shall, prior to 2:30 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 Company reasonably believes that it will be able to comply
with the conditions set forth in paragraph 3 on such Rescheduled Closing Day
and that the Company 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 Company 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 2:30 P.M., New York City local time, on such scheduled Closing Day,
notify the Company in writing that such closing is to be canceled.
Notwithstanding anything to the contrary appearing in this Agreement, the
Company may not elect to reschedule a closing with respect to any given
Accepted Notes on 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
Company and Prudential, the Company shall pay to Prudential in immediately
available funds a fee (herein called the "Structuring Fee") in the amount of
$50,000.
2B(8)(ii). ISSUANCE FEE. The Company agrees to pay to each Purchaser in
immediately available funds a fee (herein called the "ISSUANCE FEE") on each
Closing Day (other than any Closing Day occurring on or before (a) the six
month anniversary of the date of this Agreement or (b) if the Company has
issued at least $15,000,000 of Notes hereunder on or before the three month
anniversary of the date of this Agreement, the one year anniversary of the date
of this Agreement) in an amount equal to 0.10% of the aggregate principal
amount of Notes sold to such Purchaser 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 Company agrees 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 the Company at any time notifies
Prudential in writing that the Company is canceling the closing of the purchase
and sale of any Accepted Note, or if Prudential notifies the Company 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 Company agrees 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 Bridge\Telerate (or, if such data for any reason
ceases to be available through Bridge\Telerate, 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. On or before the date on which this
Agreement is executed and delivered the Company shall (a) pay to Prudential the
Structuring Fee referenced in paragraph 2B(8)(i) and (b) deliver to Prudential
an amendment to the Private Shelf Agreement dated as of August 2, 1996, and the
Note Agreement dated as of June 4, 1993, in form and content satisfactory to
Prudential. 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 the Company 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 the Company certifying the names and true
signatures of the officers of the 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 the Company.
(v) A favorable opinion of Cades Schutte Fleming & Wright,
special counsel to the Company (or such other counsel designated by
the Company and acceptable to the Purchaser(s)) satisfactory to such
Purchaser and substantially in the form of Exhibit D attached hereto
---------
and as to such other matters as such Purchaser may reasonably request.
The Company hereby directs each such counsel to deliver such opinion,
agrees that the issuance and sale of any Notes will constitute a
reconfirmation of such direction, and understands and agrees that each
Purchaser receiving such an opinion will and is hereby authorized to
rely on such opinion.
(vi) A good standing certificate for the 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 representations
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 governmentalregulation
(including, without limitation, Section 5 of the Securities Act or
Regulation T, U 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. PAYMENT OF FEES. The Company shall have paid to Prudential or any
other Purchaser 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 prepayment 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 Company pursuant to any other provision of this paragraph 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 Company, 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. The 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. The 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
Company.
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 the Company or any of its 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 Company shall not, and shall not permit
any of its 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 Company 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 Company 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 Company covenants as
follows:
5A. FINANCIAL STATEMENTS. The Company covenants that it 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 the Company first receives such information,
consolidated statements of income and cash flows of the Company and
its Subsidiaries for the period from the beginning of the current
fiscal year to the end of such quarterly period, and a consolidated
balance sheet of the Company and its 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 the 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 the Company first receives such information,
consolidated statements of income and cash flows of the Company and
its Subsidiaries for such year and a consolidated balance sheet of the
Company and its 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 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 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 the Company's stockholders and copies of all registra-
tion 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 the Company or any of its Subsidiaries by independent
accountants in connection with any material annual, interim or special
audit made by them of the books of such Company or such Subsidiary
pursuant to a request by the 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 the Company pursuant to the terms of any indenture,
loan, credit or similar agreement or instrument and not otherwise
required to be furnished to the holders of the Notes 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 any holder of Notes may reasonably request.
Together with each delivery of financial statements required by clauses (i) and
(ii) above, the Company will deliver to each holder of Notes 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(1), 6A(2), 6A(3), 6B(1)(iv), 6B(2)(iv), 6B(3)(iv),
6B(4) and 6B(6)(ii); 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 Company proposes to
take with respect thereto.
Together with each delivery of financial statements required by clause
(ii) above, the Company will deliver to each holder of Notes 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 Company also covenants that forthwith upon a Principal Officer
obtaining actual knowledge of an Event of Default or Default, it will deliver
to each holder of Notes an Officers' Certificate specifying the nature and
period of existence thereof and what action the Company proposes to take with
respect thereto.
5B. INSPECTION OF PROPERTY. The 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 the 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 Company's independent certified public accountants, all at such times as
the Company and such Person reasonably agree and as often as such Person may
reasonably request.
5C. COVENANT TO SECURE NOTE EQUALLY. The 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. INFORMATION REQUIRED BY RULE 144A. The Company covenants
that it will, upon the request of the holder of any Note, provide such holder,
and any qualified institutional buyer designated by such holder, such financial
and other information as such holder may reasonably determine to be necessary
in order to permit compliance with the information requirements of Rule 144A
under the Securities Act in connection with the resale of Notes, except at such
times as the Company is subject to and in compliance with the reporting
requirements of section 13 or 15(d) of the Exchange Act. For the purpose of
this paragraph 5D, the term "QUALIFIED INSTITUTIONAL BUYER" shall have the
meaning specified in Rule 144A under the Securities Act.
5E. MAINTENANCE OF PROPERTIES; INSURANCE. The 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. (i) The Company covenants that it
will deliver promptly to each Significant Holder notice of (a) any material
enforcement, cleanup, removal or other material governmental or regulatory
action instituted or, to the Company's best knowledge, threatened against the
Company or any Subsidiary pursuant to any Environmental and Safety Laws,
(b) all material Environmental Liabilities and Costs against or in respect of
the Property, the Company or any Subsidiary and (c) the Company's or any
Subsidiary's discovery of any occurrence or condition on any real property
adjoining or in the vicinity of the Property that the Company or such
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) The Company covenants that it will, and will cause each of the
Subsidiaries to, keep and maintain the Property and conduct its and 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 amount due hereunder is outstanding and unpaid, the
Company covenants as follows:
6A. FINANCIAL COVENANTS. The Company will not permit:
6A(1). MINIMUM NET WORTH. Consolidated Tangible Net Worth at any
time to be less than the sum of (a) $530,000,000 plus (b) to the extent
positive, 25% of Consolidated Cumulative Net Income for each fiscal quarter
ended after December 31, 2000 (such required minimum net worth not to be
reduced by any consolidated net loss during any such fiscal quarter).
6A(2). DEBT TO EBITDA RATIO. The Debt to EBITDA Ratio at any time
to exceed 300%; or
6A(3). INTEREST COVERAGE RATIO. The Interest Coverage Ratio for any
fiscal quarter (measured at the end of such fiscal quarter) to be less than
200%.
6B. LIEN AND OTHER RESTRICTIONS. The Company will not, and will not
permit any Subsidiary 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 Debt
between Subsidiaries or owing to the 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 acquired or constructed
after December 31, 2000 and not theretofore owned by the Company or
any of its Subsidiaries, or the acquiring after December 31, 2000 of
real property or personal tangible property not theretofore owned by
the Company or any of its Subsidiaries subject to any then existing
Lien (whether or not assumed); provided, however, that notwithstanding
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the foregoing, non-Matson Subsidiaries may grant Liens on real
property owned on December 31, 2000 or thereafter acquired for
development in the ordinary course of 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) $85,000,000 and (B) $5,000,000
for each completed calendar year, commencing with the calendar year
completed December 31, 2001; and provided further, that in each such
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case (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
the Company or any of its Subsidiaries;
(v) Liens (other than as specified in clauses (i) - (iv) above)
of the Company and Subsidiaries in existence on the date of this
Agreement as set forth in Schedule 6B(1); and
(vi) subject to compliance with paragraph 6B(4), Liens securing
Debt other than as set forth in the foregoing clauses (i) - (v);
provided that there shall not exist any Lien of any kind on the shares
--------
of the Voting Stock of any Subsidiary, unless the Company and
Subsidiaries continue to own shares of Voting Stock of such Subsidiary
which are not subject to any Lien and which represent a majority of
the Voting Stock of such Subsidiary;
6B(2). LOANS AND ADVANCES. Make or permit to remain outstanding at
any time any loan or advance to any Person, except that the Company and its
Subsidiaries may:
(i) subject to paragraph 6B(4), make or permit to remain
outstanding loans and advances to the Company and Subsidiaries;
(ii) 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;
(iii) 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 $50,000,000 at any time outstanding; and
(iv) make or permit to remain outstanding 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 amount equal to 10% of 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 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 the Company, so long as the
Company is the surviving corporation;
(ii) any Subsidiary may merge with another Subsidiary, or sell,
lease, transfer or otherwise dispose of its assets to another
Subsidiary or to the Company; provided, however, that no Subsidiary
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(other than Matson and Matson Subsidiaries) may merge into or sell,
lease, transfer or otherwise dispose of any assets to any Matson
Subsidiary;
(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 Company may sell, lease,
transfer, exchange or otherwise dispose of the real property it owned
as of December 31, 2000 in the ordinary course of business;
(iv) the Company or any Subsidiary 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 (1) within the prior 12 months,
does not represent more than 15% of Consolidated Total Assets and (2)
since the date of this Agreement, does not represent more than 40% of
Consolidated Total Assets 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, did not contribute
more than 15% of Consolidated Net Income during the Company's 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) the 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). PRIORITY DEBT. Permit the aggregate amount of Priority Debt
to exceed the Priority Debt Limit.
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 (other than sales of accounts receivable the
collection of which is doubtful in accordance with GAAP);
6B(6). 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 the Company or any Subsidiary of real or personal property which has
been or is to be sold or transferred by the Company or such 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 the Company or a Subsidiary; provided, however, that such sale-
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leaseback transactions may be entered into by:
(i) Matson and Matson Subsidiaries without limitation; and
(ii) the Company and its 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 Consolidated Tangible Net Worth (measured as at the end of the
fiscal quarter immediately preceding the date of such sale-leaseback);
6B(7). 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
the Company or any executive officer (as such term is defined under the
Securities Exchange Act of 1934, as amended) of the Company (other than in such
Person's capacity as an employee); provided, however, that such acts and
-------- -------
transactions may be performed or engaged in if they are entered into upon terms
no less favorable to the Company or such Subsidiary than if no such relation-
ship described in clauses (i) or (ii) above existed and such acts or trans-
actions are otherwise permitted by this Agreement;
6B(8). 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(9). SALE OF STOCK AND DEBT OF SUBSIDIARIES. Sell or otherwise
dispose of, or part with control of, any shares of stock (or similar equity
securities) or Debt or other obligations of any Subsidiary, or permit any
Subsidiary to issue shares of its stock (or similar equity securities), to any
Person other than to a Company or another Subsidiary (except that 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 (or similar equity
securities) 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 (or similar equity
securities) and Debt or other obligations of any Subsidiary at the time owned
by or owed to the Company and any Subsidiary may be sold as an entirety to any
third party 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 obligations so sold shall constitute
- -------
assets subject to the limitations and other provisions of paragraph 6B(3); and
provided, further, that, at the time 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 the Company (unless all of the shares of stock
and Debt or other obligations of such other Subsidiary owned, directly or
indirectly, by the Company and all Subsidiaries are simultaneously being sold
as permitted by this paragraph 6B(9));
6C. RESTRICTED PAYMENTS. The Company 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
foregoing being "Restricted Payments") except that the Company may make a
Restricted Payment in any amount so long as (i) no Default or Event of Default
shall then exist or would exist after giving effect to any such Restricted
Payment and (ii) any such Restricted Payment will not violate any applicable
law or regulation.
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 Company defaults 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) the 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 the
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 the 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 Company herein
or by the 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 Company fails to perform or observe any agreement con-
tained in paragraphs 5C or 6 hereof; or
(v) the 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) the 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 the 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) the 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 the Company or any such Significant Subsidiary, or
of any substantial part of the assets of the Company or any such
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 the 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 paragraph 7A is filed, or any such proceedings are
commenced, against the Company or any Significant Subsidiary and the
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 proceedings
against the 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 proceedings
against the Company or any Significant Subsidiary decreeing a split-up
of the 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
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 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 the 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) the 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) the
Company or any ERISA Affiliate withdraws from any Multiemployer Plan,
or (f) the 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 the 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 the Company; or
(xiii) any judgment or decree in the amount of $10,000,000 or
more shall be entered against the 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 the
Company, 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 Company, (b) if such event is an Event of Default
specified in clause (vii), (viii) or (ix) of this paragraph 7A with respect to
the Company, 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 Company,
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 Company.
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 Company 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 otherwise 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 Company 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
Company 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
cumulative 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 Company
represents, covenants and warrants as follows:
8A. ORGANIZATION. The Company and each Subsidiary with a
tangible net worth in excess of $500,000 is duly organized, validly existing
and in good standing under the laws of the state of its organization. The
Company and each Significant Subsidiary has the full power and authority to
own its properties and to carry on its business as now being conducted, and
is duly qualified 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. The 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. The
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 transactions contemplated hereby and thereby. The execution,
delivery and performance of this Agreement and the Notes to be issued hereunder
by the 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 the Company, enforceable against it in accordance with their
respective terms.
8B. FINANCIAL STATEMENTS. The Company has furnished each
Purchaser of any Accepted Notes with the following financial statements,
identified by a principal financial officer of the Company: (i) consolidated
balance sheets of the 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 consolidated statements of income,
shareholders' equity and cash flows of the Company and its Subsidiaries for
each such year, certified by Deloitte & Touche (or such other accounting firm
as may be reasonably acceptable to Prudential); and (ii) consolidated balance
sheets of the 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 consolidated
statements of income, stockholders' equity and cash flows of the 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 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 the Company and its Subsidiaries required to be
shown in accordance with such principles. The balance sheets fairly present
the condition of the 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 the 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 the
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 the Company, threatened against the
Company or any Subsidiary or any properties or rights of the 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
operations of the Company and its Subsidiaries taken as a whole.
8D. OUTSTANDING DEBT. Neither the Company nor any Subsidiary
has any Debt outstanding except as permitted by paragraph 6A(2) and 6A(3).
There exists no default under the provisions of any instrument evidencing any
such Debt or of any agreement relating thereto.
8E. TITLE TO PROPERTIES. The Company and each 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 Significant 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 the Company or any such Significant Subsidiary is a lessee, lessor,
sublessee or sublessor.
8F. TAXES. The Company and each Subsidiary with a tangible net worth in
excess of $500,000 has filed all Federal, state and other income tax and
informational returns which are required to be filed by it. The 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 the Company or any Subsidiary pursuant
to, their respective articles or incorporation or bylaws (or other comparable
governing documents, as applicable), any award of any arbitrator or any
agreement, instrument, order, judgment, decree, and, after due investigation
and to the Company's best knowledge, any statute, law, rule or regulation to
which the Company or any Subsidiary is subject. Neither the 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 the Company nor any agent
acting on its behalf has, directly or indirectly, offered the Notes or any
similar security of the Company for sale to, or solicited any offers to buy the
Notes or any similar security of the Company from, or otherwise approached or
negotiated with respect thereto with, any Person or Persons other than
Prudential and the Purchasers, and neither the Company nor any agent acting on
its 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 U, ETC. The amount of all securities that the Company
and its Subsidiaries together own that constitute "margin stock" (as defined in
Regulation G (12 CFR Part 221) of the Board of Governors of the Federal Reserve
System (herein called "margin stock")) does not exceed 25% of 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 U. Neither the 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 U, 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 liability to
the PBGC has been or is expected by the Company or any ERISA Affiliate to be
incurred with respect to any Plan (other than a Multiemployer Plan) by the
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 Company and its Subsidiaries taken as a whole. Neither the Company, any
of its 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 Company and
its 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 representation by the
Company 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 the Company or any of
its Subsidiaries, nor any of their respective businesses or properties, nor any
relationship between the 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 Agreement, (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. The Company is not a public utility
within the meaning of the Federal Power Act, as amended. The 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) the Company is incorporated in Hawaii,
and substantially all of its 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, the 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. The Company is not 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 the 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. The Company and each Significant Subsidiary
has, for the real property which it owns or uses, such authorizations,
consents, approvals, licenses and permissions (collectively, "Consents")
that the Company or such 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 the Company nor any Significant
Subsidiary 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 Company and its
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 judgment of the Company in any material
respect for the ownership, maintenance and operation of their business,
properties and assets, and neither the Company nor any of its Subsidiaries is
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 the Company or its Subsidiaries thereunder.
8Q. ENVIRONMENTAL AND SAFETY MATTERS. The Company and its 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 Company and
its 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. EMPLOYEE RELATIONS. Neither the 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 Company, is any such event imminent or likely to occur.
8T. REGULATIONS AND LEGISLATION. To the best knowledge of the Company,
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 Company
and its Subsidiaries taken as a whole.
8U. DISCLOSURE. Neither this Agreement nor any other document,
certificate or statement furnished to any Purchaser by or on behalf of the
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
Company or any Subsidiary which materially adversely affects, or in the future
may (so far as the Company can now foresee) materially adversely affect, the
consolidated business, property, assets, prospects or financial condition of
the Company and the Subsidiaries 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 Company prior to the date this
representation 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
understands 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 available, and that the Company is not required to register the
Notes.
9B. SOURCE OF FUNDS. At least one of the following statements is true
regarding the source of funds being used by such Purchaser to pay the purchase
price of the Notes being purchased by such Purchaser hereunder: (i) the source
is 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 PTCE 95-60 or (ii) the source is 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 or
(iii) the source does not include assets of any employee benefit plan, other
than a plan exempt from the coverage of ERISA. 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 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 Bridge\Telerate Service (or such other
display as may replace Page 678 on the Bridge\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. The
Reinvestment Yield shall be rounded to the same number of decimal places as
appears in the coupon of the applicable Note.
"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, the Company, except a Subsidiary. A Person shall be deemed to
control another Person if such first Person possesses, directly or indirectly,
the power to direct or cause the direction of the management and policies of
such other Person, 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 Company, any
officer of the Company designated as an "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
Company's 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
Company by any individual who on or after the date of this Agreement shall have
been an Authorized Officer of the Company and whom Prudential in good faith
believes to be an Authorized Officer of the Company at the time of such action
shall be binding on the Company even though such individual shall have ceased
to be an Authorized Officer of the Company, 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 Company 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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Company 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
paragraph 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 the aggregate Consolidated
Net Income for the fiscal period(s) in question.
"CONSOLIDATED INTEREST EXPENSE" shall mean the sum of all amounts that
would, in accordance with GAAP, be deducted in computing Consolidated Net
Income 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 the consolidated gross revenues of
the Company and Subsidiaries for the period in question, less all operating and
non-operating expenses, 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 in the unremitted earnings of any other Person
(other than of 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 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, at any time of determination
thereof, the consolidated net worth of the Company and Subsidiaries, determined
in accordance with GAAP, less all Intangibles.
"CONSOLIDATED TOTAL ASSETS" shall mean, at any time of determination
thereof, the consolidated total assets of the Company and Subsidiaries
determined in accordance with GAAP.
"DEBT" shall mean, as to any Person at the time of determination thereof
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 of such Person, (iii) Guarantees, assumptions and endorsements by
such Person (other than endorsements of negotiable instruments for collection
in the ordinary course of business) of Debt of another Person, and (iv) Debt of
another Person secured by Liens on the property or other assets of such Person.
"Debt" shall not include a reimbursement obligation under either a standby
letter of credit or a performance bond to the extent such reimbursement
obligation is contingent or (ii) in the case of the Company, a Guarantee of up
to $15,000,000 of revolving debt of Hawaii Sugar & Transportation Cooperative.
"DEBT TO EBITDA RATIO" shall mean, as at any time of determination
thereof, the ratio (expressed as a percentage) of (i) all Debt of the Company
and Subsidiaries on a consolidated basis to (ii) EBITDA for the four
consecutive fiscal quarter period then most recently ended.
"DELAYED DELIVERY FEE" shall have the meaning specified in paragraph
2B(8)(iii).
"EBITDA" shall mean, for any period, Consolidated Net Income Before Taxes
for such period plus, to the extent deducted in the calculation thereof,
Consolidated Interest Expense, depreciation and amortization.
"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
subsidiaries, 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 the Company within the meaning of section
414(b) of the Code, or any trade or business which is under common control with
the 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.
"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.
"GAAP" shall have the meaning provided in paragraph 10C.
"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:
(i) to make any loan, advance or capital contribution, 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) to 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) to rent or lease (as lessee) any real or personal property
(except for leases in effect on August 2, 1996) if such obligation is
absolute and unconditional under conditions not customarily found in
commercial leases then in general use; or
(iv) of any partnership or joint venture in which such Person is
a general partner or joint venturer if such obligation is not
expressly non-recourse to such Person.
"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 INVESTOR" 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
intangible 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, at any time of determination
thereof, (a) the sum of (i) Consolidated Net Income Before Taxes for the period
of four consecutive fiscal quarters then most recently ended and
(ii) Consolidated Interest Expense for such four fiscal quarter period, divided
by (b) Consolidated Interest Expense for such four fiscal quarter period.
"ISSUANCE PERIOD" shall have the meaning specified in paragraph 2B(2).
"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 (exclusive of filings for
precautionary purposes only) 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 Company.
"MATSON SUBSIDIARY" shall mean any Subsidiary a majority of the Voting
Stock of which is owned by Matson, either directly or through Matson
Subsidiaries.
"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
Company by an Authorized Officer of the Company.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor or replacement entity thereto under ERISA.
"PERMITTED ASSETS" shall mean (i) where any Property Sub or any assets of
a Property Sub or of the Company (other than capital stock of Matson) have been
sold or otherwise transferred, assets to be used by the Company or any Property
Sub 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) any unsecured Debt of the Company or a
Subsidiary (exclusive of Debt owed to the Company or a Subsidiary) selected by
the Company, so long as the aggregate amount of all proceeds applications from
sales or other dispositions which are made after December 31, 2000 pursuant to
the proviso appearing in clause (iv) of paragraph 6B(3) do not exceed
$100,000,000 and (ii) after the $100,000,000 basket in clause (i) has been
fully utilized, all unsecured Debt of the Company and Subsidiaries (exclusive
of any Debt owed to the 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, a limited liability company, an unincorporated
organization and a government 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 the Company and any other officer of the Company whose
responsibilities include monitoring the Company's compliance with the
provisions of this Agreement.
"PRIORITY DEBT" shall mean, at any time of determination, the sum of (i)
Debt secured by Liens incurred pursuant to paragraph 6B(1)(vi), (ii) Debt of
the Company or any non-Matson Subsidiary to Matson or a Matson Subsidiary
(other than for cash management purposes in accordance with the Company's
standard cash management policies) and (iii) Debt of Subsidiaries, other than
(a) Guarantees of Debt of the Company so long as each such Subsidiary has
guaranteed the Notes and the Required Holders have confirmed in writing that
they are satisfied that such Guarantee does not subject the holders of the
Notes to potentially adverse fraudulent conveyance treatment vis-a-vis any
other recipient of a Guarantee from such Subsidiary, (b) Guarantees by Matson
and Matson Subsidiaries of Debt of Matson, Matson Subsidiaries and third
parties and (c) Debt of a non-Matson Subsidiary to Matson or a Matson
Subsidiary described in the parenthetical in clause (ii) of this definition
and (d) Debt of Matson and Matson Subsidiaries (1) of the type specified in
paragraph 6B(1)(iii) or (2) that is unsecured.
"PRIORITY DEBT LIMIT" shall mean, at any time of determination, the sum of
(i) $20,000,000 and (ii) an amount equal to 10% of Consolidated Tangible Net
Worth at such time.
"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 Company or
any of its 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 the Company, and other non-Matson Subsidiaries 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 (i) any corporation or other entity
controlling, controlled by, or under common control with, Prudential and (ii)
any managed account or investment fund which is managed by Prudential or a
Prudential Affiliate described in clause (i) of this definition. For purposes
of this definition the terms "control", "controlling" and "controlled" shall
mean the ownership, directly or through subsidiaries, of a majority of a
corporation's or other Person's Voting Stock or equivalent voting securities or
interests.
"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 2/3%
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
time to time outstanding.
"SIGNIFICANT SUBSIDIARY" shall mean any direct or indirect Subsidiary of
the Company, the net worth of which is, on the date of determination, 5% or
more of Consolidated Tangible Net Worth.
"SUBSIDIARY" shall mean, as to the Company, any company, whether operating
as a corporation, joint venture, partnership, limited liability company or
other entity, which is consolidated with the Company in accordance with GAAP.
"THIRD PARTY" shall mean any Person other than Company 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 any shares of stock (or comparable equity
securities) whose holders are entitled under ordinary circumstances to vote for
the election of directors (or comparable persons), irrespective of whether at
the time stock (or comparable equity securities) 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 Company agrees that, so long as any Purchaser
shall hold any Note, it 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 Company agrees 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 Company agrees, 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 Company 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
Company may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, if the Company 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 amendment 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 provisions 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 outstanding
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 Company 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 Company shall keep at
its principal office a register in which the Company shall provide for the
registration of Notes and of transfers of Notes. Upon surrender for
registration of transfer of any Note at the principal office of the Company,
the Company shall, at its 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 Company. Whenever
any Notes are so surrendered for exchange, the Company shall, at its 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 Company will make and deliver a new Note, of
like tenor, in lieu of the lost, stolen, destroyed or mutilated Note.
Notwithstanding anything to the contrary herein, each Purchaser agrees, and
each subsequent 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 Company, such consent not to be unreasonably withheld.
11E. PERSONS DEEMED OWNERS; PARTICIPATIONS. Prior to due presentment
for registration of transfer, the Company 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 Company 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; ENTIRE AGREEMENT. All
representations and warranties contained herein or made in writing by or on
behalf of the Company in connection herewith shall survive the execution and
delivery of this Agreement and the Notes, the transfer 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 any Purchaser or 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.
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 communications 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 Company
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 Company 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 Company, addressed to it at 822
Bishop Street, Honolulu, Hawaii 96813, Attention: Chief Financial Officer
(with a copy to General Counsel) or at such other address as the Company shall
have specified to each holder of a Note in writing, provided, however, that any
-------- -------
such communication to the Company may also, at the option of the Person sending
such communication, be delivered by any other means either to the Company at
its address specified above or to any Authorized Officer of the Company.
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 telefacsimile 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 telefacsimile terminal
the number of which is listed for the party receiving the communication in the
Information Schedule or at such other telefacsimile 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 the Company 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 Company and Prudential, it shall become a binding agreement between the
Company 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/ Thomas A. Wellman
----------------------------------
Its: Controller
By: /s/ James S. Andrasick
----------------------------------
Its: Sr. Vice President, Chief
Financial Officer & Treasurer
The foregoing Agreement is
hereby accepted as of the
date first above written.
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By /s/ Mitchell W. Reed
----------------------------------
Vice President
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
C/O PRUDENTIAL CAPITAL GROUP
Four Embarcadero Center
Suite 2700
San Francisco, California 94111
April 25, 2001
ALEXANDER & BALDWIN, INC.
822 Bishop Street
Honolulu, Hawaii 96801
Re: Amendment to 1996 Agreement and 1993 Agreement
----------------------------------------------
Gentlemen:
Reference is made to (i) the Note Agreement (as amended from time to time,
the "1993 Agreement") dated as of June 4, 1993, between ALEXANDER & BALDWIN,
INC. (the "Company") and THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
("Prudential"), (ii) the Private Shelf Agreement (as amended from time to
time, the "1996 Agreement" and, together with the 1993 Agreement,
the "Existing Agreements") dated as of August 2, 1996 by and between the
Company, on the one hand, and Prudential and each Prudential affiliate which
may have become bound by certain provisions of the 1996 Agreement, on the
other hand and (iii) the Private Shelf Agreement (the "2001 Agreement")
dated the date hereof by and between the Company, on the one hand, and
Prudential and each Prudential affiliate which may become bound by certain
provisions of the 2001 Agreement, on the other hand.
Pursuant to the request of the Company, Prudential hereby agrees with the
Company that the Company shall be deemed to be in compliance with or in default
under (as the case may be) paragraphs 5 and 6 of the Existing Agreements by
being in compliance with or in default under (as the case may be) paragraphs
5 and 6 of the 2001 Agreement as the same may be amended or otherwise modified
from time to time with the written consent of Prudential. No termination of
the 2001 Agreement in whole or in part shall affect the continued application
hereunder of paragraphs 5 and 6 thereof and, upon the written request of
either Prudential or the Company, paragraphs 5 and 6 of the Existing Agreements
shall be amended to restate such paragraphs in substantially the same form as
then existing in paragraphs 5 and 6 of the 2001 Agreement.
If you are in agreement with the foregoing, please execute the enclosed
counterpart of this letter and return it to the undersigned to the attention
of James F. Evert at the above address, whereupon it shall become a binding
agreement between the Company and Prudential, amending the Existing Agreements
as and to the extent provided above.
Sincerely,
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By: /s/ Mitchell W. Reed
----------------------------
Its: Vice President
Accepted and agreed to as of
the date first appearing above:
ALEXANDER & BALDWIN, INC.
By: /s/ J. S. Andrasick
-----------------------------
Its: Sr. VP, CFO & Treasurer
__________________________________________________________________________
__________________________________________________________________________
MATSON NAVIGATION COMPANY, INC.
$50,000,000
PRIVATE SHELF AGREEMENT
June 29, 2001
__________________________________________________________________________
__________________________________________________________________________
TABLE OF CONTENTS
SECTION PAGE NO.
- ------- --------
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..........................................2
2B(3). Request for Purchase.....................................2
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..............................5
3. CONDITIONS OF CLOSING............................................6
3A. Certain Documents................................................6
3B. Representations and Warranties; No Default.......................7
3C. Purchase Permitted by Applicable Laws............................7
3D. Payment of Fees..................................................7
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.......................................8
4E. Retirement of Notes..............................................8
5. AFFIRMATIVE COVENANTS............................................9
5A. Financial Statements.............................................9
5B. Inspection of Property..........................................10
5C. Covenant to Secure Note Equally.................................10
5D. Information Required by Rule 144A...............................10
5E. Maintenance of Properties; Insurance............................11
6. NEGATIVE COVENANTS..............................................11
6A. Financial Covenants.............................................11
6A(1). Working Capital Requirement.............................11
6A(2). Net Worth Requirement...................................11
6A(3). Fixed Charge Coverage Requirement.......................11
6B. Dividend and Investment Limitation..............................11
6C. Lien, Debt and Other Restrictions...............................11
6C(1). Liens...................................................11
6C(2). Funded Debt.............................................13
6C(3). Merger..................................................13
6C(4). Sale of Assets..........................................13
6C(5). Sale of Stock and Debt of Subsidiaries..................14
6C(6). Sale and Lease-Back.....................................14
6C(7). Transactions with Affiliates and Subsidiaries...........14
6C(8). Loans, Advances and Investments.........................14
7. EVENTS OF DEFAULT 15
7A. Acceleration....................................................15
7B. Rescission of Acceleration......................................18
7C. Notice of Acceleration or Rescission............................18
7D. Other Remedies..................................................18
8. REPRESENTATIONS, COVENANTS AND WARRANTIES.......................18
8A. Organization....................................................19
8B. Financial Statements............................................19
8C. Actions Pending.................................................19
8D. Outstanding Debt................................................20
8E. Title to Properties.............................................20
8F. Taxes...........................................................20
8G. Conflicting Agreements and Other Matters........................20
8H. Offering of the Notes...........................................20
8I. Regulation U, etc...............................................21
8J. ERISA...........................................................21
8K. Governmental Consent............................................21
8L. Holding Company and Investment Company Status...................21
8M. Possession of Franchises, Licenses, etc.........................22
8N. Environmental and Safety Matters................................22
8O. Hostile Tender Offers...........................................22
8P. Employee Relations..............................................22
8Q. Regulations and Legislation.....................................22
8R. Disclosure......................................................23
9. REPRESENTATIONS OF EACH PURCHASER...............................23
9A. Nature of Purchase..............................................23
9B. Source of Funds.................................................23
10. DEFINITIONS; ACCOUNTING MATTERS.................................23
10A. Yield Maintenance Terms.........................................23
10B. Other Terms.....................................................25
10C. Accounting Principles, Terms and Determinations.................32
11. MISCELLANEOUS...................................................33
11A. Note Payments...................................................33
11B. Expenses........................................................33
11C. Consent to Amendments...........................................33
11D. Form; Registration, Transfer and Exchange of Notes..............34
11E. Persons Deemed Owners, Participations...........................35
11F. Survival of Representations and Warranties; Entire Agreement....35
11G. Successors and Assigns..........................................35
11H. Independence of Covenants.......................................35
11I. Notices.........................................................36
11J. Descriptive Headings............................................36
11K. Satisfaction Requirement........................................36
11L. Governing Law...................................................36
11M. Payments Due on Non-Business Days...............................37
11N. Severability....................................................37
11O. Severalty of Obligations........................................37
11P. Counterparts....................................................37
11Q. Binding Agreement...............................................38
SCHEDULES AND EXHIBITS
- ----------------------
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's General Counsel
Schedule 8G -- Agreements Restricting Incurrence of Debt
MATSON NAVIGATION COMPANY, INC.
333 Market Street
San Francisco, California 94120
As of June 29, 2001
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, Matson Navigation Company, Inc. (the "Company") hereby
agrees with you as follows:
1. AUTHORIZATION OF ISSUE OF NOTES. The Company has authorized the
issue of its senior promissory notes in the aggregate principal 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 twelve years from the date of original
issuance, to have an average life, in the case of each Note so issued, of no
more than ten 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 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 prepayment 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 of
-----
Notes purchased and sold pursuant to this Agreement prior to such time, and
minus the aggregate principal amount of Accepted Notes (as hereinafter defined)
- -----
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. Notes may be issued and sold pursuant to this
Agreement until the earlier of (i) the third 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 the Company, or the 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(3). REQUEST FOR PURCHASE. The Company 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 telefacsimile 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 (monthly, quarterly or semiannual in arrears) of the
Notes covered thereby, (iii) specify the use of proceeds of such Notes,
(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 price of such Notes
is 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
in writing and shall be deemed made when received by Prudential.
2B(4). RATE QUOTES. Not later than five Business Days after the
Company 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 Company by telephone 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 five 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"), the 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 the Company notifying
Prudential by telephone or telefacsimile within the Acceptance Window that the
Company elects 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 the 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 Company agrees 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 Company,
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 "CONFIRMATION OF ACCEPTANCE").
If the Company 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 Company 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 suspension, material
limitation, or significant disruption of trading in securities 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 the 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 Company
that the provisions of this paragraph 2B(6) are applicable with respect to such
Acceptance.
2B(7). FACILITY CLOSINGS. Not later than 1:30 P.M. (New York City local
time) on the Closing Day for any Accepted Notes, the Company will deliver to
each Purchaser listed in the Confirmation of Acceptance relating thereto at the
offices of 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 Company in the Request for Purchase of such Notes. If the Company fails 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
Company shall, prior to 2:30 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 Company
reasonably believes that it will be able to comply with the conditions set
forth in paragraph 3 on such Rescheduled Closing Day and that the Company 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 Company 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 2:30
P.M., New York City local time, on such scheduled Closing Day, notify the
Company in writing that such closing is to be canceled. Notwithstanding
anything to the contrary appearing in this Agreement, the Company may not elect
to reschedule a closing with respect to any given Accepted Notes on 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
Company and Prudential, the Company shall pay to Prudential in immediately
available funds a fee (herein called the "Structuring Fee") in the amount of
$50,000.
2B(8)(ii). ISSUANCE FEE. The Company agrees to pay to each Purchaser in
immediately available funds a fee (herein called the "ISSUANCE FEE") on each
Closing Day in an amount equal to 0.10% of the aggregate principal amount of
Notes sold to such Purchaser on such Closing Day; provided that (a) no Issuance
Fee shall be due on any Closing Day occurring in 2001 and (b) if at least
$20,000,000 in principal amount of Notes have been issued on or before
September 30, 2001, no Issuance Fee will be due on any Closing Day occurring
prior to March 31, 2002.
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 Company agrees 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 the Company at any time notifies
Prudential in writing that the Company is canceling the closing of the purchase
and sale of any Accepted Note, or if Prudential notifies the Company 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 Company agrees 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 Bridge\Telerate (or, if such data for any reason
ceases to be available through Bridge\Telerate, 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. On or before the date on which this
Agreement is executed and delivered the Company shall (a) pay to Prudential the
Structuring Fee referenced in paragraph 2B(8)(i) and (b) deliver to Prudential
an amendment to the Note Agreement dated as of July 17, 1992, and the Guaranty
dated as of March 19, 1999, in each case in form and content satisfactory to
Prudential. 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 the Company 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 the Company certifying the names and true
signatures of the officers of the 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 the Company.
(v) A favorable opinion of the Company's general counsel (or such
other counsel designated by the Company and acceptable to the
Purchaser(s)) satisfactory to such Purchaser and substantially in the
form of Exhibit D attached hereto and as to such other matters as
such Purchaser may reasonably request. The Company hereby directs
each such counsel to deliver such opinion, agrees that the issuance
and sale of any Notes will constitute a reconfirmation of such
direction, and understands and agrees that each Purchaser receiving
such an opinion will and is hereby authorized to rely on such opinion.
(vi) A good standing certificate for the Company from the
secretaries of state of Hawaii and California, 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. REPRESENTATIONS AND WARRANTIES; NO DEFAULT. The representations
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 the Company shall have delivered to such Purchaser an Officer's
Certificate, dated such Closing Day, to both such effects.
3C. 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
T, U 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.
3D. PAYMENT OF FEES. The Company shall have paid to Prudential or any
other Purchaser 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 prepayment 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 Company pursuant to any other provision of this paragraph 4 shall
not reduce or otherwise affect its obligation to make any required prepayment
as specified in paragraph 4A.
4A. REQUIRED PREPAYMENTS OF NOTES. Each Series of Notes shall be
subject to the 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 Company, 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. The 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 five 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. The 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 Company.
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 the Company or any of its 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 Company shall not, and shall not permit
any of its 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 acquired, directly or
indirectly, Notes of any Series held by any holder unless the Company 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 Company 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 Company covenants as
follows:
5A. FINANCIAL STATEMENTS. The Company covenants that it will deliver
to each holder of the Notes in duplicate:
(i) as soon as practicable and in any event within 60 days after
the end of each quarterly period (other than the last quarterly
period) in each fiscal year, consolidated statements of income and
cash flows of the Company and its Subsidiaries for the period from the
beginning of the current fiscal year to the end of such quarterly
period, and a consolidated balance sheet of the Company and its
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 the Company, subject only to
changes resulting from year-end adjustments;
(ii) as soon as practicable and in any event within 120 days
after the end of each fiscal year, consolidated statements of income
and cash flows of the Company and its Subsidiaries for such year and a
consolidated balance sheet of the Company and its 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 certified by independent public accountants of
recognized national standing whose opinion shall be unqualified and
otherwise satisfactory in scope and substance to the Required
Holder(s);
(iii) promptly upon transmission thereof, copies of all such
financial, proxy and information statements, notices and other reports
as are sent to the Company's public stockholders and copies of all
registration statements (without exhibits) 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 the Company or any of its Subsidiaries by independent
accountants in connection with any material annual, interim or special
audit made by them of the books of such Company or such Subsidiary;
and
(v) with reasonable promptness, such other financial data
as any holder of Notes may reasonably request.
Together with each delivery of financial statements required by clauses (i) and
(ii) above, the Company will deliver to each holder of Notes an Officers'
Certificate (a) demonstrating (with computations in reasonable detail)
compliance with the covenants in paragraphs [6A(1), 6A(3), 6B, 6C(2), 6C(4)]
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 Company proposes to take with respect
thereto.
The Company also covenants that forthwith upon the chief executive
officer, chief financial officer, treasurer or controller obtaining actual
knowledge of an Event of Default or Default, it will deliver to each holder of
Notes an Officers' Certificate specifying the nature and period of existence
thereof and what action the Company proposes to take with respect thereto.
5B. INSPECTION OF PROPERTY. The Company covenants that it will permit
any Person designated by any Significant Holder in writing, at such Significant
Holder's expense, to visit and inspect any of the properties of the 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 Company's independent certified
public accountants, all at such reasonable times and as often as such
Significant Holder may reasonably request; provided that a principal financial
officer of the Company shall have prior notice of, and may elect to be present
during, discussions with the Company's independent public accountants.
5C. COVENANT TO SECURE NOTE EQUALLY. The 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 6C(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 obligation thereby secured so long as any such other obligation shall
be so secured.
5D. INFORMATION REQUIRED BY RULE 144A. The Company covenants that it
will, upon the request of the holder of any Note, provide such holder, and any
qualified institutional buyer designated by such holder, such financial and
other information as such holder may reasonably determine to be necessary in
order to permit compliance with the information requirements of Rule 144A under
the Securities Act in connection with the resale of Notes, except at such times
as the Company is subject to and in compliance with the reporting requirements
of section 13 or 15(d) of the Exchange Act. For the purpose of this paragraph
5D, the term "QUALIFIED INSTITUTIONAL BUYER" shall have the meaning specified
in Rule 144A under the Securities Act.
5E. MAINTENANCE OF PROPERTIES; INSURANCE. The 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.
6. NEGATIVE COVENANTS. During the Issuance Period and so long
thereafter as any Note or amount due hereunder is outstanding and unpaid, the
Company covenants as follows:
6A. FINANCIAL COVENANTS. The Company will not permit:
6A(1). WORKING CAPITAL REQUIREMENT. Consolidated Working Capital at any
time to be less than $1;
6A(2). NET WORTH REQUIREMENT. Consolidated Net Worth at any time to be
less than $250,000,000; or
6A(3). FIXED CHARGE COVERAGE REQUIREMENT. The Fixed Charge Coverage Ratio
at any time to be less than 4.50 to 1.00.
6B. DIVIDEND AND INVESTMENT LIMITATION. The Company covenants that it
will not pay or declare any dividend on any class of stock or make any other
distribution on account of any class of its stock, or redeem, purchase or
otherwise acquire, directly or indirectly, any shares of its stock or make any
Restricted Investment (all of the foregoing being herein called "Restricted
Payments") unless after giving effect to any proposed Restricted Payment (i)
consolidated Funded Debt of the Company and Subsidiaries does not exceed 50% of
Consolidated Total Capital or (ii) the total of all Restricted Payments made
during the then current fiscal year of the Company does not exceed $10,000,000
plus, if positive, 40% of Consolidated Net Earnings for the then current fiscal
year. For purposes of clause (i) of the next preceding sentence, the amount of
any Restricted Investments shall be excluded when calculating Consolidated
Total Capital.
6C. LIEN, DEBT AND OTHER RESTRICTIONS. The Company covenants that it
will not and will not permit any Subsidiary to:
6C(1). LIENS. Create, assume or suffer to exist any Lien upon 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), except
(i) Liens for taxes not yet due or which are being actively
contested in good faith by appropriate proceedings,
(ii) Liens (other than Liens pursuant to ERISA) 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 or credit, and which do not in the aggregate
materially detract from the value of its property or assets or materially
impair the use thereof in the operation of its business,
(iii) Liens on property or assets of a Subsidiary securing
obligations of such Subsidiary to the Company or another Subsidiary,
(iv) Liens on container(s) and equipment acquired subsequent to
December 31, 2000 (including Liens in connection with financing or
capitalized leases), securing Funded Debt of the Company or any Subsidiary
permitted by paragraph 6C(2); provided that any such Lien may arise at any
time after the date on which the encumbered container(s) or equipment were
acquired if such Lien relates to a cross border lease of such container(s)
or equipment where (A) the lease or financing agreement provides that in
the event of the bankruptcy or insolvency of the lessor, lessee, trustee
or other lease transaction party, a default or casualty, or any other type
of lease termination event (whether scheduled or otherwise), title to the
leased containers or equipment reverts to the Company or such Subsidiary,
(B) the aggregate amount of lease payments and consideration paid to
obtain reconveyance of title to the leased containers or equipment does
not exceed the original cost thereof, (C) no security interest, financing
statement or similar filings are made in the United States of America in
respect of the leased containers or equipment for the benefit of any
Person other than the Company or such Subsidiary and (D) prior to such
Lien becoming effective, the Company or such Subsidiary receives a legal
opinion of counsel to the lessor and trustee, if any, to the effect that
the agreements referred to in subclause (A) of this clause (iv) are valid
and legally binding agreements, enforceable against the lessor or trustee,
if any, in accordance with their respective terms,
(v) Liens on Capital Assets acquired subsequent to December 31,
2000 (excluding any asset consisting of, or acquired with, insurance
proceeds received in connection with any asset owned on December 31, 2000)
securing Funded Debt of the Company and Subsidiaries permitted by clause
(iii) of paragraph 6C(2),
(vi) Liens encumbering the Company's Capital Construction Fund to
the extent incurred in connection with Company's financing of obligations
constituting "qualified withdrawals" under regulations adopted by the
Maritime Administration under the Merchant Marine Act, 1936, as amended,
and
(vii) any Lien existing on any property of any Person at the time
it becomes a Subsidiary, or existing prior to the time of acquisition upon
any property acquired by the Company or any Subsidiary through purchase,
merger or consolidation or otherwise, whether or not assumed by the
Company or such Subsidiary; provided that (a) any such Lien shall not
encumber any other property of the Company or such Subsidiary, and (b) the
aggregate amount of Funded Debt secured by all such Liens is at all times
permitted by paragraph 6C(2);
6C(2). FUNDED DEBT. Create, incur, assume or suffer to exist any Funded
Debt, except
(i) Funded Debt of any Subsidiary to the Company or another
Subsidiary,
(ii) Funded Debt of Subsidiaries in an aggregate principal amount
at no time in excess of $25,000,000 (exclusive of Funded Debt permitted by
clause (i) or (iii) hereof),
(iii) Funded Debt of Subsidiaries described in clause (v) of
paragraph 6C(1) and Funded Debt of the Company; provided that the
aggregate principal amount thereof shall at no time exceed an amount equal
to 200% of Consolidated Net Worth at such time;
6C(3). MERGER. Enter into any transaction of merger, consolidation
or other combination with any other Person; provided that
(i) any Subsidiary may merge with the Company; provided that the
Company shall be the continuing or surviving corporation and no Default or
Event of Default will result therefrom,
(ii) any Subsidiary may merge with another Subsidiary, and
(iii) the Company may merge, consolidate or combine with any other
corporation; provided that (a) immediately after such merger, consolida-
tion or combination, no Default or Event of Default shall exist and (b) if
the Company is not the continuing or surviving corporation, the successor
corporation shall be a solvent corporation organized under the laws of any
state of the United States of America and shall expressly assume in
writing all of the obligations of the Company under this Agreement,
including all covenants herein contained, and such successor or acquiring
corporation shall be substituted for the Company with the same effect as
if it had been named herein as a party hereto;
6C(4). SALE OF ASSETS. Sell, lease or transfer or otherwise
dispose of any Capital Asset to any Person, except that during any rolling
twelve-month period, the Company may sell or otherwise dispose of Capital
Assets which constituted up to 10% of the total value of the assets of the
Company as of December 31, 2000, so long as (A) such Capital Assets sold
contributed less than 25% of the Consolidated Net Earnings in each of the three
fiscal years immediately preceding any such sale and (B) such Capital Assets,
when considered together with all other Capital Assets sold or otherwise
disposed of subsequent to December 31, 2000, do not constitute in excess of
30% of the total value of the assets of the Company as of December 31, 2000;
6C(5). SALE OF STOCK AND DEBT OF SUBSIDIARIES. Sell or
otherwise dispose of, or part with control of, any shares of stock or Debt of
any Subsidiary, except to the Company or another Subsidiary, and except that
all shares of stock and Debt of any Subsidiary at the time owned by or owed to
the Company and all Subsidiaries may be sold as an entirety for a cash
consideration which represents their fair value (as determined in good faith by
the Board of Directors of the Company), at the time of sale of the shares of
stock and Debt so sold, and provided that at the time of such sale, such
Subsidiary shall not own, directly or indirectly, any shares of stock or Debt
of any other Subsidiary (unless all of the shares of stock and Debt of such
other Subsidiary owned, directly or indirectly, by the Company and all
Subsidiaries are simultaneously being sold as permitted by this paragraph
6C(5));
6C(6). SALE AND LEASE-BACK. Enter into any arrangement with
any lender or investor or to which such lender or investor is a party providing
for the leasing by the Company or any Subsidiary of real or personal property
owned by the Company or any Subsidiary as of December 31, 2000 (including any
such property acquired with insurance proceeds received in connection with any
real or personal property owned by the Company or any Subsidiary on such date),
which has been or is to be sold or transferred by the Company or any 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 the Company or any Subsidiary;
6C(7). TRANSACTIONS WITH AFFILIATES AND STOCKHOLDERS. 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, (ii) any Person owning, beneficially
or of record, directly or indirectly, either individually or together with all
other Persons to whom such Person is related by blood, adoption or marriage,
stock of the Company or stock of any Person owning stock of the Company (of any
class having ordinary voting power for the election of directors) aggregating
5% or more of such voting power or (iii) any Person related by blood, adoption
or marriage to any Person described or coming within the provisions of clause
(i) or (ii) of this paragraph 6C(7); provided that the Company and Subsidiaries
may enter into such transactions on terms no less favorable to the Company or
Subsidiary than if no such relationship existed, including (subject in each
case to the limitations of paragraph 6B)) Restricted Payments and transactions
of the Company involving the sale or purchase of shares of the Company's stock;
or
6C(8). LOANS, ADVANCES AND INVESTMENTS. Make or permit to remain
outstanding any loan or advance to, or own, purchase or acquire any
stock, obligations or securities of, or any other interest in, or make any
capital contribution to, any Person, except that the Company or any Subsidiary
may
(i) make or permit to remain outstanding loans or advances to any
Subsidiary;
(ii) own, purchase or acquire stock, obligations or securities of
a Subsidiary or of a Person which immediately after such purchase or
acquisition will be a Subsidiary;
(iii) acquire and own stock, obligations or securities received in
settlement of debt (created in the ordinary course of business) owing to
the Company or any Subsidiary,
(iv) make investments in accordance with the resolutions of the
Board of Directors of the Company; provided that such resolutions
authorize only investments rated investment grade by Standard & Poor's
Corporation, Moody's Investors Services, or any other nationally
recognized credit rating agency,
(v) make Restricted Investments to the extent permitted by
paragraph 6B; and
(vi) make other investments, loans and advances (other than
Restricted Investments which may be made only to the extent permitted by
paragraph 6B) which in aggregate (at original cost) do not exceed
$25,000,000.
Notwithstanding the foregoing, amounts in the Capital Construction Fund may be
invested only as provided in clause (iv) above.
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 Company defaults in the payment of any principal of, or
interest or Yield-Maintenance Amount on, any Note for more than two
Business Days after the same shall become due, either by the terms
thereof or otherwise as herein provided; or
(ii) the 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 the
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 the 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
$5,000,000; or
(iii) any representation or warranty made by the Company herein
or by the 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 Company fails to perform or observe any agreement con-
tained in paragraphs 5C or 6 hereof; or
(v) the 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 officer of the Company
obtains actual knowledge thereof; or
(vi) the Company or any Material 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 the Company
or any Material Subsidiary is entered under any bankruptcy, reorgan-
ization, 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) the Company or any Material 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 the Company or any such Material Subsidiary, or of
any substantial part of the assets of the Company or any such Material
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 Material Subsidiary)
relating to the Company or any Material Subsidiary under the Bankrupt-
cy Law of any other jurisdiction; or
(ix) any petition or application of the type described in clause
(viii) of this paragraph 7A is filed, or any such proceedings are
commenced, against the Company or any Material Subsidiary and the
Company or such Material 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 proceedings
against the Company decreeing the dissolution of the Company and such
order, judgment or decree remains unstayed and in effect for more than
60 days; or
(xi) any order, judgment or decree is entered in any proceedings
against the Company or any Material Subsidiary decreeing a split-up of
the Company or such Material Subsidiary which requires the divestiture
of (A) assets representing a substantial part, or the stock of, or
other ownership interest in, a Material Subsidiary whose assets
represent a substantial part of the consolidated assets of the Company
or a Material Subsidiary or (B) assets or the stock of or other
ownership interest in a Subsidiary that has contributed a substantial
part of consolidated net income of the Company or a Material
Subsidiary 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 60 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 the 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 $5,000,000, (d) the 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) the
Company or any ERISA Affiliate withdraws from any Multiemployer Plan,
or (f) the 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 the 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 the Company; or
(xiii) any judgment or decree in the amount of $5,000,000 or
more shall be entered against the 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 (vii), (viii)
or (ix) of this paragraph 7A with respect to the Company, 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 Company, and (b) 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
Company.
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 Company 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 otherwise 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 Company 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
Company 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
cumulative 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 Company
represents, covenants and warrants as follows:
8A. ORGANIZATION. The Company and each Subsidiary is duly
organized, validly existing and in good standing under the laws of the state of
its organization. The Company and each Subsidiary has the full power and
authority to own its properties and to carry on its business as now being
conducted. The 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 transactions contemplated hereby and thereby. The
execution, delivery and performance of this Agreement and the Notes has been
duly authorized by all necessary corporate and other action, and, when duly
executed and delivered, will be the legal, valid and binding obligations of the
Company, enforceable against it in accordance with their respective terms.
8B. FINANCIAL STATEMENTS. The Company has furnished each
Purchaser of any Accepted Notes with the following financial statements,
identified by a principal financial officer of the Company: (i) consolidated
balance sheets of the 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 consolidated statements of income,
shareholders' equity and cash flows of the Company and its Subsidiaries for
each such year, certified by an internationally recognized independent public
accounting firm; and (ii) consolidated balance sheets of the 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 consolidated statements of income,
stockholders' equity and cash flows of the 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
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 the
Company and its Subsidiaries required to be shown in accordance with such
principles. The balance sheets fairly present the condition of the 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 the 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 the 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 the Company, threatened against the
Company or any Subsidiary or any properties or rights of the 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
operations of the Company and its Subsidiaries taken as a whole.
8D. OUTSTANDING DEBT. Neither the Company nor any Subsidiary
has any Funded Debt outstanding except as permitted by paragraph 6C(2). There
exists no default under the provisions of any instrument evidencing any Debt of
the Company or any Subsidiary or of any agreement relating thereto.
8E. TITLE TO PROPERTIES. The Company has and each Subsidiary has
good and indefeasible title to its respective real properties (other than
properties which it leases) and good title to all of its other properties and
assets, including the properties and assets reflected in the most recent
audited balance sheet referred to in paragraph 8B (other than properties and
assets disposed of in the ordinary course of business), subject to no Liens of
any kind except Liens permitted by paragraph 6C(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 the
Company or any Subsidiary is a lessee, lessor, sublessee or sublessor.
8F. TAXES. The Company has and each Subsidiary has filed all Federal,
state and other income tax and informational returns which are required to be
filed by it. The 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 the Company or any Subsidiary pursuant
to, their respective articles or incorporation or bylaws (or other comparable
governing documents, as applicable), any award of any arbitrator or any
agreement, instrument, order, judgment, decree, statute, law, rule or
regulation to which the Company or any Subsidiary is subject. Neither the
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 the Company nor any agent
acting on its behalf has, directly or indirectly, offered the Notes or any
similar security of the Company for sale to, or solicited any offers to buy the
Notes or any similar security of the Company from, or otherwise approached or
negotiated with respect thereto with, any Person or Persons other than
Prudential and the Purchasers, and neither the Company nor any agent acting on
its 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 U, ETC. 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" (as defined in
Regulation U (12 CFR Part 221) of the Board of Governors of the Federal Reserve
System (herein called "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 U. Neither the 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 U, 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 liability to
the PBGC has been or is expected by the Company or any ERISA Affiliate to be
incurred with respect to any Plan (other than a Multiemployer Plan) by the
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 Company and its Subsidiaries taken as a whole. Neither the Company, any of
its 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 Company and
its 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 representation by the
Company 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 the Company or any of
its Subsidiaries, nor any of their respective businesses or properties, nor any
relationship between the 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 Agreement, (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. HOLDING COMPANY AND INVESTMENT COMPANY STATUS. Except as
set forth in the next succeeding sentence, neither the Company nor any of its
Subsidiaries is a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary
company," or a "public utility," within the meaning of the Public Utility
Holding Company Act of 1935, as amended, or a "Public utility" within the
meaning of the Federal Power Act, as amended, or 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. The Company's corporate parent (the "PARENT") 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) the Parent is incorporated in Hawaii, and substantially
all of its 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, the Parent
has on file with the Securities and Exchange Commission such an exemption
statement, which is in full force and effect.
8M. POSSESSION OF FRANCHISES, LICENSES, ETC. The Company and its
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 judgment of the Company in any material
respect for the ownership, maintenance and operation of their business,
properties and assets, and neither the Company nor any of its Subsidiaries is
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 which materially
and adversely affects the rights of the Company or its Subsidiaries thereunder.
8N. ENVIRONMENTAL AND SAFETY MATTERS. The Company and its
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
Company and its Subsidiaries taken as a whole.
8O. HOSTILE TENDER OFFERS. None of the proceeds of the sale of
any Notes will be used to finance a Hostile Tender Offer.
8P. EMPLOYEE RELATIONS. Neither the 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,
investigation or other proceeding involving alleged employment discrimination,
unfair termination, employee safety or similar matters or, to the best
knowledge of the Company, is any such event imminent or likely to occur except
those which, individually or in aggregate, could not reasonably be expected to
have a material adverse effect on the business, condition (financial or
otherwise) or operations of the Company and its Subsidiaries taken as a whole.
8Q. REGULATIONS AND LEGISLATION. To the best knowledge of the Company,
no law, regulation, interpretation or legislation has been enacted or issued
that could reasonably be expected to have a material adverse effect on the
business, condition (financial or otherwise) or operations of the Company and
its Subsidiaries taken as a whole.
8R. DISCLOSURE. Neither this Agreement nor any other document,
certificate or statement furnished to Prudential or any Purchaser by or on
behalf of the 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 Company or any Subsidiary which materially adversely affects,
or in the future may (so far as the Company can now foresee) materially
adversely affect, the consolidated business, property, assets, prospects or
financial condition of the Company and the Subsidiaries 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 Company prior to
the date this representation 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.
9B. SOURCE OF FUNDS. At least one of the following statements is true
regarding the source of funds being used by such Purchaser to pay the purchase
price of the Notes being purchased by such Purchaser hereunder: (i) the source
is 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 PTCE 95-60 or (ii) the source is 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 or
(iii) the source does not include assets of any employee benefit plan, other
than a plan exempt from the coverage of ERISA. 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 or San Francisco, California 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 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 Bridge\Telerate Service (or such other
display as may replace Page 678 on the Bridge\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.
The Reinvestment Yield shall be rounded to the same number of decimal places
as appears in the coupon of the applicable Note.
"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).
"AFFILIATE" shall mean any Person directly or indirectly controlling,
controlled by, or under direct or indirect common control with, the Company,
except a Subsidiary. A Person shall be deemed to control another Person if
such first Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of such other Person,
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 Company, any
officer of the Company designated as an "Authorized Officer" in the Information
Schedule or any officer of the Company designated as an "Authorized Officer"
for the purpose of this Agreement in a certificate executed by one of the
Company's 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
Company by any individual who on or after the date of this Agreement shall have
been an Authorized Officer of the Company and whom Prudential in good faith
believes to be an Authorized Officer of the Company at the time of such action
shall be binding on the Company even though such individual shall have ceased
to be an Authorized Officer of the Company, 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 Company 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).
"CAPITAL ASSETS" shall mean all assets other than current assets, and
shall not include any amounts in the Capital Construction Fund.
"CAPITAL CONSTRUCTION FUND" shall mean the fund established and maintained
by Company in accordance with Section 607 of the Merchant Marine Act, 1936, as
amended.
"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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Company 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
paragraph 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 EBITDA" shall mean, for any period, Consolidated Net
Earnings for such period plus, to the extent deducted in the calculation
thereof, Consolidated Interest Expense, taxes, depreciation and amortization.
"CONSOLIDATED INTEREST EXPENSE" shall mean, for any period, the sum of all
amounts that would, in accordance with GAAP, be deducted in computing
Consolidated Net Earnings for such period 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 EARNINGS" shall mean, for any period, the consolidated
net income of the Company and Subsidiaries as determined in accordance with
GAAP.
"CONSOLIDATED NET WORTH" shall mean, as of the time of any determination,
the sum of (i) the par value (or value stated on the books of the Company) of
the capital stock of all classes of the Company, plus (or minus in the case of
a surplus deficit) (ii) the amount of the consolidated surplus, whether capital
or earned, of the Company and its Subsidiaries.
"CONSOLIDATED TANGIBLE NET WORTH" shall mean, as of the time of any
determination, Consolidated Net Worth minus the sum of treasury stock,
unamortized debt discount and expense, goodwill, trademarks, trade names,
patents, deferred charges and other intangible assets of the Company and
Subsidiaries on a consolidated basis and any write-up of the value of any of
their assets after December 31, 2000.
"CONSOLIDATED TOTAL CAPITAL" shall mean, as of the time of any
determination, the sum of (i) consolidated Funded Debt of the Company and
Subsidiaries, (ii) Consolidated Net Worth and (iii) Deferred Income Taxes.
"CONSOLIDATED WORKING CAPITAL" shall mean the excess of consolidated
current assets over consolidated current liabilities of the Company and
Subsidiaries.
"CURRENT DEBT" shall mean any obligation for borrowed money (and any notes
payable and drafts accepted representing extensions of credit whether or not
representing obligations for borrowed money) payable on demand or within a
period of one year from the date of the creation thereof; provided that any
obligation shall be treated as Funded Debt, regardless of its term, if such
obligation is renewable pursuant to the terms thereof or of a revolving credit
or similar agreement effective for more than one year after the date of the
creation of such obligation, or may be payable out of the proceeds of a
revolving credit or similar agreement effective for more than one year after
the date such agreement was entered into pursuant to the terms of such
agreement.
"DEBT" shall mean Funded Debt and/or Current Debt, as the case may be.
"DEFERRED INCOME TAXES" shall mean as of the time of any determination,
the liability for deferred income taxes of the Company and Subsidiaries on a
consolidated basis.
"DELAYED DELIVERY FEE" shall have the meaning specified in paragraph
2B(8)(iii).
"DESIGNATED EVENT" shall mean any event (including any issuance or
transfer of equity securities or voting rights) which results in Alexander &
Baldwin, Inc. (i) ceasing to own 100% of the capital stock of the Company or
(ii) no longer possessing the unrestricted ability to elect all members of the
Company's board of directors and in connection with which the Company or any
Subsidiary incurs or guarantees any Debt.
"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 1901 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.
"ERISA" shall mean the Employment 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 the Company within the meaning of section
414(b) of the Code, or any trade or business which is under common control with
the 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.
"FACILITY" shall have the meaning specified in paragraph 2B(1).
"FACILITY FEE " shall have the meaning specified in paragraph 2B(8)(i).
"FIXED CHARGE COVERAGE RATIO" shall mean (i) at the end of any fiscal
quarter ending prior to the occurrence of a Designated Event and at the end of
any fiscal quarter ending subsequent to the last fiscal quarter when clause
(ii), below, is operative, the ratio of Consolidated EBITDA to Consolidated
Interest Expense for the period of four consecutive fiscal quarters then most
recently ended, (ii) at the time of the occurrence of a Designated Event and
the end of each of the next three complete fiscal quarters ended subsequent
to the occurrence of a Designated Event, the ratio of Pro Forma Consolidated
EBITDA to Pro Forma Consolidated Interest Expense.
"FUNDED DEBT" shall mean and include, without duplication, (i) any
obligation payable more than one year from the date of creation thereof, which
is shown on the balance sheet as a liability in accordance with GAAP (including
Capitalized Lease Obligations but excluding reserves for deferred income taxes
and other reserves to the extent that such reserves do not constitute an
obligation), (ii) endorsements (other than endorsements of negotiable
instruments for collection in the ordinary course of business), guarantees and
other contractually incurred contingent liabilities (whether direct or
indirect) in connection with the obligations of any Person, to the extent that
such obligations are payable more than one year from the date of creation
thereof (including all guarantees of Funded Debt of another Person) and (iii)
obligations under any contract providing for the making of loans, advances or
capital contributions to any Person, or for the purchase of any property from
any Person, in each case in order to enable such Person primarily to maintain
working capital, net worth or any other balance sheet condition or to pay
debts, dividends or expenses, to the extent that such obligations are payable
more than one year from the date of creation thereof.
"GAAP" shall have the meaning provided in paragraph 10C.
"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".
"ISSUANCE PERIOD" shall have the meaning specified in paragraph 2B(2).
"LIEN" shall mean any mortgage, pledge, security interest, encumbrance,
deposit arrangement, lien (statutory or otherwise) or charge of any kind
(including any agreement to give any of the foregoing, any conditional sale or
other title retention agreement, any lease in the nature thereof, and the
filing of or agreement to give any financing statement (exclusive of financing
statements field for precautionary purposes only) under the Uniform Commercial
Code of any jurisdiction) or any other type of preferential arrangement for the
purpose, or having the effect, of protecting a creditor against loss or
securing the payment or performance of an obligation.
"MARGIN STOCK" shall have the meaning specified in paragraph 8I.
"MATERIAL SUBSIDIARY" shall mean any Subsidiary, the tangible net worth of
which is, on the date of determination, 5% or more of Consolidated Tangible Net
Worth.
"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
Company by its Chief Executive Officer, Chief Financial Officer, President, one
of its Vice Presidents or its Treasurer.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor or replacement entity thereto under ERISA.
"PERSON" shall mean and include an individual, a partnership, a joint
venture, a corporation, a trust, a limited liability company, an unincorporated
organization and a government 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.
"PRO FORMA CONSOLIDATED EBITDA" shall mean (i) at the time of the
occurrence of a Designated Event and after giving effect to any incurrence or
repayment of indebtedness in connection therewith, for the immediately
succeeding 365 day period, projected Consolidated EBITDA for such period as set
forth in the most recent projections provided to the Company's Board of
Directors as constituted prior to the Designated Event (which projected
Consolidated EBITDA shall be deemed to be 125% of Consolidated EBITDA for the
most recently completed fiscal year of the Company for which audited financial
statements have been delivered to the Note holders if the projected
Consolidated EBITDA provided to the Board of Directors exceeds 125% of the
Consolidated EBITDA derived from such audited statements), (ii) for the first
complete fiscal quarter ended subsequent to the date of a Designated Event,
Consolidated EBITDA for such fiscal quarter multiplied by four, (iii) for the
second complete fiscal quarter ended subsequent to the date of a Designated
Event, Consolidated EBITDA for such fiscal quarter and the immediately
preceding fiscal quarter multiplied by two and (iv) for the third complete
fiscal quarter ended subsequent to the date of a Designated Event, Consolidated
EBITDA for such fiscal quarter and the immediately preceding two fiscal
quarters multiplied by 1.33.
"PRO FORMA CONSOLIDATED INTEREST EXPENSE" shall mean (i) at the time of
the occurrence of a Designated Event and after giving effect to any incurrence
or repayment of indebtedness in connection therewith, for the immediately
succeeding 365 day period, Consolidated Interest Expense calculated on a pro
---
forma basis assuming the consolidated indebtedness of the Company and
- -----
Subsidiaries outstanding upon giving effect to the Designated Event was
outstanding on each day of such 365 day period, (ii) for the first complete
fiscal quarter ended subsequent to the date of a Designated Event, Consolidated
Interest Expense for such fiscal quarter multiplied by four, (iii) for the
second complete fiscal quarter ended subsequent to the date of a Designated
Event, Consolidated Interest Expense for such fiscal quarter and the
immediately preceding fiscal quarter multiplied by two and (iv) for the third
complete fiscal quarter ended subsequent to the date of a Designated Event,
Consolidated Interest Expense for such fiscal quarter and the immediately
preceding two fiscal quarters multiplied by 1.33. Pro Forma Consolidated
Interest Expense shall include interest expense with respect to indebtedness
guaranteed by the Company or any Subsidiary if the guaranty was entered into
in connection with a Designated Event.
"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.
"PRUDENTIAL" shall mean The Prudential Insurance Company of America.
"PRUDENTIAL AFFILIATE" shall mean (i) any corporation or other entity
controlling, controlled by, or under common control with, Prudential and (ii)
any managed account or investment fund which is managed by Prudential or a
Prudential Affiliate described in clause (i) of this definition. For purposes
of this definition the terms "control", "controlling" and "controlled" shall
mean the ownership, directly or through subsidiaries, of a majority of a
corporation's or other Person's voting stock or equivalent voting securities or
interests.
"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 51% 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 INVESTMENT" shall mean any loan or advance to, or purchase of
or investment in any stock, notes, obligations or securities or, or any other
interest in, or any capital contribution to, any Affiliate or any Person with
any ownership interest in any Affiliate.
"RESTRICTED PAYMENTS" shall have the meaning specified in paragraph 6B.
"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
time to time outstanding.
"SUBSIDIARY" shall mean any Person, all of the stock (or other equity
interests) of every class of which, except directors' qualifying or residency
shares (or their equivalent) shall, at the time as of which any determination
is being made, be owned by the Company either directly or through Subsidiaries.
"TRANSFEREE" shall mean any direct or indirect transferee of all or any
part of any Note purchased under this Agreement.
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 Company agrees that, so long as any Purchaser
shall hold any Note, it 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 Company agrees 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 Company agrees, 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 Company 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. Notwithstanding the foregoing, the Company shall have no reimbursement
obligation for any fees, costs or expenses incurred through the date of this
Agreement.
11C. CONSENT TO AMENDMENTS. This Agreement may be amended, and the
Company may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, if the Company 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 amendment 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 provisions 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 outstanding
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 Company 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. The Notes are
issuable as registered notes without coupons in denominations of at least
$1,000,000, except as may be necessary to reflect any principal amount not
evenly divisible by $1,000,000. The Company shall keep at its principal office
a register in which the Company shall provide for the registration of Notes and
of transfers of Notes. Upon surrender for registration of transfer of any Note
at the principal office of the Company, the Company shall, at its 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 Company. Whenever any Notes are so surrendered for exchange, the
Company shall, at its 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 Company will make
and deliver a new Note, of like tenor, in lieu of the lost, stolen, destroyed
or mutilated Note.
11E. PERSONS DEEMED OWNERS; PARTICIPATIONS. Prior to due presentment
for registration of transfer, the Company 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 Yield Maintenance Amount, if any, and
interest on such Note and for all other purposes whatsoever, whether or not
such Note shall be overdue, and the Company 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 on such
terms and conditions as may be determined by such holder in its sole and
absolute discretion.
11F. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT. All
representations and warranties contained herein or made in writing by or on
behalf of the Company in connection herewith shall survive the execution and
delivery of this Agreement and the Notes, the transfer 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 any Purchaser or 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.
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 communications 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 Company 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 Company 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 Company, addressed to it at 333 Market
Street, San Francisco, California 94120, Attention: Chief Financial Officer or
at such other address as the Company shall have specified to each holder of a
Note in writing, provided, however, that any such communication to the Company
may also, at the option of the Person sending such communication, be delivered
by any other means either to the Company at its address specified above or to
any Authorized Officer of the Company. 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
telefacsimile 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 telefacsimile terminal the number of which is listed for the
party receiving the communication in the Information Schedule or at such other
telefacsimile terminal as the party receiving the information shall have
specified in writing to the party sending such information.
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 New York.
11M. 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.
11N. 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.
11O. 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 the Company 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.
11P. 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.
[Balance of Page Intentionally Left Blank.]
11Q. BINDING AGREEMENT. When this Agreement is executed and delivered
by the Company and Prudential, it shall become a binding agreement between the
Company 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.
MATSON NAVIGATION COMPANY, INC.,
a Hawaii corporation
By: /s/ M. J. Cox
----------------------------
Its: SVP, CFO and Controller
And by: /s/ R. J. Donohue
----------------------------
Its: Senior Vice President
The foregoing Agreement is
hereby accepted as of the
date first above written.
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By /s/ Mitchell W. Reed
----------------------------
Vice President
EXHIBIT A
---------
MATSON NAVIGATION COMPANY, INC.
SERIES ___ SENIOR NOTE
No.
ORIGINAL PRINCIPAL AMOUNT:
ORIGINAL ISSUE DATE:
INTEREST RATE:
INTEREST PAYMENT DATES:
FINAL MATURITY DATE:
PRINCIPAL PREPAYMENT DATES AND AMOUNTS:
FOR VALUE RECEIVED, the undersigned, MATSON NAVIGATION COMPANY, INC.
(herein called the "Company"), a corporation organized and existing under the
laws of the State of Hawaii, hereby promises to pay to _______________, or
registered assigns, the principal sum of ______________DOLLARS payable [on the
Principal Prepayment Dates and in the amounts specified above, and] on the
Final Maturity Date specified above [in an amount equal to the unpaid balance
of the principal amount hereof,] with interest (computed on the basis of a
360-day year--30-day month) (a) on the unpaid balance thereof at the Interest
Rate per annum specified above, on each Interest Payment Date specified above
and on the Final Maturity Date specified above, commencing with the Interest
Payment Date next succeeding the date hereof, until the principal hereof shall
have become due and payable, and (b) on any overdue payment (including any
overdue prepayment) of principal, any overdue payment of Yield-Maintenance
Amount and any overdue payment of interest, payable on each Interest Payment
Date as aforesaid (or, at the option of the registered holder hereof,
on demand), at a rate per annum from time to time equal to the greater of
(i) 2% over the Interest Rate specified above or (ii) 2% over the rate of
interest publicly announced by The Bank of New York from time to time in New
York City as its Prime Rate.
Payments of principal, Yield-Maintenance Amount, if any, and interest are
to be made at the main office of Bank of New York in New York City or at such
other place as the holder hereof shall designate to the Company in writing, in
lawful money of the United States of America.
This Note is one of a series of Senior Notes (herein called the "Notes")
issued pursuant to a Private Shelf Agreement, dated as of June 29, 2001 (herein
called the "Agreement"), between the Company, on the one hand, and The
Prudential Insurance Company of America and each Prudential Affiliate (as
defined in the Agreement) which becomes party thereto, on the other hand, and
is entitled to the benefits thereof.
This Note is subject to optional prepayment, in whole or from time to time
in part, on the terms specified in the Agreement.
This Note is a registered Note and, as provided in the Agreement, upon
surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the
registered holder hereof or such holder's attorney duly authorized in writing,
a new Note for the then outstanding principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company shall not be affected by any notice to
the contrary.
In case an Event of Default shall occur and be continuing, the principal
of this Note may be declared or otherwise become due and payable in the manner
and with the effect provided in the Agreement.
Capitalized terms used and not otherwise defined herein shall have the
meanings (if any) provided in the Agreement.
This Note shall be construed and enforced in accordance with the internal
law of the State of California.
MATSON NAVIGATION COMPANY, INC.
By:
Title:
EXHIBIT B
---------
[FORM OF REQUEST FOR PURCHASE]
MATSON NAVIGATION COMPANY, INC.
Reference is made to the Private Shelf Agreement (the "Agreement"), dated
as of June 29, 2001 between Matson Navigation Company, Inc. (the "Company"), on
the one hand, and The Prudential Insurance Company of America and each
Prudential Affiliate which becomes party thereto, on the other hand.
Capitalized terms used and not otherwise defined herein shall have the
respective meanings specified in the Agreement.
Pursuant to paragraph 2B(3) of the Agreement, the Company hereby makes the
following Request for Purchase:
1. Aggregate principal amount of
the Notes covered hereby
(the "Notes")............$____________
2. Individual specifications of the Notes:
Principal
Final Prepayment Interest
Principal Maturity Dates and Payment
Amount1 Date2 Amounts2 Period
- --------- ----- -------- ------
3. Use of proceeds of the Notes:
4. Proposed day for the closing of the purchase and sale
of the Notes:
5. The purchase price of the Notes is to be transferred to:
Name, Address
and ABA Routing Number of
Number of Bank Account
-------------- -------
6. The Company certifies (a) that the representations and warranties
contained in paragraph 8 of the Agreement are true on and as of the
date of this Request for Purchase and (b) that there exists on the date
of this Request for Purchase no Event of Default or Default.
7. In connection with any rate quotes it may provide, Prudential should
assume a Designated Spread of ___%.
Dated: MATSON NAVIGATION COMPANY, INC.
By:
Authorized Officer
__________________________
1 Minimum principal amount of $5,000,000.
2 Maturity of not more than twelve years and average life of not more than
ten years.
EXHIBIT C
---------
[FORM OF CONFIRMATION OF ACCEPTANCE]
MATSON NAVIGATION COMPANY, INC.
Reference is made to the Private Shelf Agreement (the "Agreement"), dated
as of June 29, 2001 between Matson Navigation Company, Inc. (the "Company"), on
the one hand, and The Prudential Insurance Company of America ("Prudential")
and each Prudential Affiliate which becomes party thereto, on the other hand.
All terms used herein that are defined in the Agreement have the respective
meanings specified in the Agreement.
Prudential or the Prudential Affiliate which is named below as a Purchaser
of Notes hereby confirms the representations as to such Notes set forth in
paragraph 9 of the Agreement, and agrees to be bound by the provisions of
paragraphs 2B(5) and 2B(7) of the Agreement relating to the purchase and sale
of such Notes and by the provisions of the penultimate sentence of paragraph
11A of the Agreement.
Pursuant to paragraph 2B(5) of the Agreement, an Acceptance with respect
to the following Accepted Notes is hereby confirmed:
I. Accepted Notes: Aggregate principal
amount $__________________
(A) (a) Name of Purchaser:
(b) Principal amount:
(c) Final maturity date:
(d) Principal prepayment dates and amounts:
(e) Interest rate:
(f) Interest payment period:
(g) Payment and notice instructions: As set forth on attached
Purchaser Schedule
(h) Designated Spread: ____%
(B) (a) Name of Purchaser:
(b) Principal amount:
(c) Final maturity date:
(d) Principal prepayment dates and amounts:
(e) Interest rate:
(f) Interest payment period:
(g) Payment and notice instructions: As set forth on attached
Purchaser Schedule
(h) Designated Spread: ____%
[(C), (D)... same information as above.]
II. Closing Day:
Dated: MATSON NAVIGATION COMPANY, INC.
By:
Title:
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By:
Vice President
[PRUDENTIAL AFFILIATE(S)]
EXHIBIT D
---------
[FORM OF OPINION OF COMPANY'S GENERAL COUNSEL]
[Date of Closing]
[Each Purchaser]
c/o Prudential Capital Group
Four Embarcadero Center
Suite 2700
San Francisco, California 94111
Ladies and Gentlemen:
As the General Counsel of Matson Navigation Company, Inc., a Hawaii
corporation (the "Company"), I am familiar with the Private Shelf Agreement,
dated as of June 29, 2001, between the Company, on the one hand, and The
Prudential Insurance Company of America and each Prudential Affiliate which may
become bound thereby, on the other hand (the "Agreement"), pursuant to which
the Company has issued to you today its ___% Series ___ Senior Notes in the
aggregate principal amount of $________ (the "Notes"). All capitalized terms
used herein that are defined in the Agreement shall have, unless otherwise
defined herein, the respective meanings specified in the Agreement. This
letter is being delivered to you in satisfaction of the condition set forth in
clause (v) of paragraph 3A of the Agreement and with the understanding that you
are purchasing the Notes in reliance on the opinions expressed herein.
In this connection, I have examined such certificates of public
officials, certificates of officers of the Company and copies certified to my
satisfaction of documents and records of the Company, and have made such other
investigations, as I have deemed relevant and necessary as a basis for my
opinion hereinafter set forth. I have relied upon such certificates of public
officials and of officers of the Company with respect to the accuracy of
material factual matters contained therein which I have not independently
established. With respect to the opinion expressed in paragraph 6 below, I
have also relied upon the representation made by [each of] you in paragraph
9A of the Agreement.
Based on the foregoing, it is my opinion that:
1. The Company is a corporation duly organized and validly existing in
good standing under the laws of the State of Hawaii, with the corporate power,
authority and legal right to conduct its business as presently conducted.
2. The Company has the full corporate power, authority and legal right
to execute and deliver the Agreement and the Notes and to perform and observe
its obligations thereunder.
3. The Agreement and the Notes have been duly authorized by all
requisite corporate action on the part of the Company and have been duly
executed and delivered by authorized officers of the Company and constitute the
legal, valid and binding obligations of the Company, enforceable against the
Company in accordance with their respective terms.
4. The execution and delivery of the Agreement and the Notes by the
Company do not, and the performance and observance of the terms thereof will
not, breach, conflict with or contravene any provisions in the articles of
incorporation or by-laws of the Company or any provision of any material law or
regulation applicable to the Company or its properties or other assets.
5. The execution and delivery of the Agreement and the Notes do not, and
the performance and observance of the terms thereof will not, (A) conflict
with, (B) result in any breach of the terms, conditions or provisions of, (C)
constitute a default under or violation of, or (D) result in or permit the
creation or imposition of any Liens upon any of the properties or other assets
of the Company pursuant to, any material order, judgment, decree, indenture,
mortgage or any other material agreement or instrument known to me (inclusive
of all agreements listed on Schedule 8G to the Agreement) to which the Company
is a party or by which any of its properties or other assets are bound.
6. The issuance, sale and delivery of the Notes to you is an exempt
transaction under the Securities Act of 1933, as amended, and does not require
the registration of the Notes under such Act, nor is qualification of an
indenture in respect thereof required under the Trust Indenture Act of 1939, as
amended.
7. The extension, arranging and obtaining of the credit represented by
the Notes does not result in any violation of Regulation U or X of the Board of
Governors of the Federal Reserve System.
8. To the best of my knowledge after due inquiry, there is no action,
suit, investigation or proceeding pending or threatened against any Company or
any of its Subsidiaries or any of their respective properties which could
reasonably be expected to have a material adverse effect on the Company and its
Subsidiaries taken as a whole
9. The Company is a citizen of the United States within the meaning of
the Shipping Act, 1916, as amended.
10. None of the Company or any of its Subsidiaries is a "public utility"
within the meaning of the Federal Power Act, as amended, or 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.
The Company and its Subsidiaries are an "affiliate" of a "holding company"
within the meaning of the Public Utility Holding Company Act of 1935, as
amended, but are exempt from all provisions of the Public Utility Holding
Company Act of 1935, as amended, except section 9(a)(2) thereof.
The above opinions are subject to the following qualifications:
(i) That the opinions concerning the enforceability of the rights
and remedies provided in any document against any particular
party are subject to any applicable bankruptcy, reorganization,
insolvency, arrangement, moratorium, fraudulent transfer, usury
or other similar laws affecting generally the enforcement of
creditors' rights from time to time in effect;
(ii) That the opinions concerning the validity, binding effect and
enforceability of any document with respect to any party are
based on the assumption that such document constitutes or will
constitute a legal, valid and binding agreement of the other
parties thereto;
(iii) That with respect to the opinions concerning the enforceability
of any document, no opinion is expressed as to the specific
remedy any court, other governmental authority or arbitrator
may grant, impose or render;
(iv) That the opinions concerning the enforceability of certain
remedies authorized or contained in any document may be limited
by general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at
law); and
(v) That the opinions concerning enforceability are subject to the
effect of court decisions and statutes which indicate that
provisions in the Agreement which permit you to take action or
make determinations may be subject to a requirement that such
actions be taken or such determinations be made on a reasonable
basis in good faith or that it be shown that such action is
reasonably necessary for your protection.
Except as specifically provided above, this opinion speaks as of the date
hereof, and I have no responsibility to update this opinion for events of
circumstances occurring after the date hereof or as to facts relating to prior
events which are subsequently brought to my attention. I shall not have any
obligation or duty to advise you of any changes of law. I am admitted to
practice in the State of New York and, except with respect to the opinions
rendered in paragraphs 1 through 3 hereof, this opinion is limited solely to
the present law of the States of New York and the United States of America, to
present judicial interpretations thereof and to the facts as they currently
exist.
This opinion is rendered solely in connection with the transaction
described herein and, without my express permission, may not be relied upon by
any Person other than you and any Transferee.
Very truly yours,
INFORMATION SCHEDULE
Authorized Officers for Prudential
----------------------------------
ALLEN A. WEAVER STEPHEN J. DEMARTINI
Senior Managing Director Managing Director
PRUDENTIAL CAPITAL GROUP PRUDENTIAL CAPITAL GROUP
Two Prudential Plaza Four Embarcadero Center
Suite 5400 Suite 2700
Chicago, Illinois 60601 San Francisco, California 94111
Telephone: (312) 540-4211 Telephone: (415) 291-5058
Facsimile: (312) 540-4219 Facsimile: (415) 421-6233
JOSEPH Y. ALOUF MITCHELL W. REED
Senior Vice President Vice President
PRUDENTIAL CAPITAL GROUP PRUDENTIAL CAPITAL GROUP
Four Embarcadero Center Four Embarcadero Center
Suite 2700 Suite 2700
San Francisco, California 94111 San Francisco, California 94111
Telephone: (415) 291-5056 Telephone: (415) 291-5059
Facsimile: (415) 421-6233 Facsimile: (415) 421-6233
Authorized Officers for the Company
-----------------------------------
C. B. MULHOLLAND MATTHEW J. COX
President and Senior Vice President, Chief
Chief Executive Officer Financial Officer & Controller
MATSON NAVIGATION COMPANY, INC. MATSON NAVIGATION COMPANY, INC.
Post Office Box 7452 Post Office Box 7452
San Francisco, California 94120 San Francisco, California 94120
Telephone: (415) 957-4565 Telephone: (415) 957-4556
Facsimile: (415) 957-4234 Facsimile: (415) 957-4930
T.H. REID
Treasurer
MATSON NAVIGATION COMPANY, INC.
Post Office Box 7452
San Francisco, California 94120
Telephone: (415) 957-4768
Facsimile: (415) 957-4076
EXHIBIT 11
ALEXANDER & BALDWIN, INC.
COMPUTATION OF EARNINGS PER SHARE
(In thousands, except per share amounts)
- --------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
2001 2000 2001 2000
---- ---- ---- ----
Basic Earnings Per Share
- ------------------------
Net income $ 24,514 $ 28,243 $ 46,948 $ 54,674
======== ========
Average number of shares outstanding 40,568 40,722 40,538 41,427
======== ======== ======== ========
Basic earnings per share $ 0.61 $ 0.69 $ 1.16 $ 1.32
======== ======== ======== ========
Diluted Earnings Per Share
- --------------------------
Net income $ 24,514 $ 28,243 $ 46,948 $ 54,674
======== ======== ======== ========
Average number of shares outstanding 40,568 40,722 40,538 41,427
Effect of assumed exercise of
outstanding stock options 95 37 193 12
-------- -------- -------- --------
Average number of shares outstanding
after assumed exercise of
outstanding stock options 40,663 40,759 40,731 41,439
======== ======== ======== ========
Diluted earnings per share $ 0.60 $ 0.69 $ 1.15 $ 1.32
======== ======== ======== ========