SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
___ OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2002
___ TRANSITION REPORT PURSUANT TO SECTIONS 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___ to ___
Commission file number 0-5556
CONSOLIDATED-TOMOKA LAND CO.
(Exact name of registrant as specified in its charter)
Florida 59-0483700
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
149 South Ridgewood Avenue
Daytona Beach, Florida 32114
(Address of principal executive offices) (Zip Code)
(386) 255-7558
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months and
(2) has been subject to such filing requirements for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class of Common Stock Outstanding
August 12, 2002
$1.00 par value 5,615,579
1
CONSOLIDATED-TOMOKA LAND CO.
INDEX
Page No.
--------
PART I - FINANCIAL INFORMATION
Consolidated Condensed Balance Sheets -
June 30, 2002 and December 31, 2001 3
Consolidated Condensed Statements of Income -
Three Months Ended and Six Months Ended
June 30, 2002 and 2001 4
Consolidated Statement of Shareholders' Equity -
Six Months Ended June 30, 2002 5
Consolidated Condensed Statements of Cash Flows -
Six Months Ended June 30, 2002 and 2001 6
Notes to Consolidated Condensed Financial Statements 7-10
Management's Discussion and Analysis of Financial
Condition and Results of Operations 11-15
PART II -- OTHER INFORMATION 16
SIGNATURES 17
2
PART I -- FINANCIAL INFORMATION
CONSOLIDATED-TOMOKA LAND CO.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
June 30, December 31,
2002 2001
---------- ------------
ASSETS
Cash $ 4,556,633 $ 2,797,868
Investment Securities 5,432,084 5,487,052
Notes Receivable 8,818,725 9,245,576
Real Estate Held for Development and Sale 8,857,712 9,189,609
Refundable Income Taxes 2,375,219 1,411,557
Other Assets 2,821,619 2,314,140
---------- ----------
$32,861,992 $30,445,802
---------- ----------
Property, Plant, and Equipment:
Land, Timber and Subsurface Interests 1,917,136 1,877,240
Golf Buildings, Improvements & Equipment 11,245,765 11,209,610
Income Properties Land, Buildings & Improvements 19,808,770 19,808,770
Other Furnishings and Equipment 790,348 790,520
---------- ----------
Total Property, Plant & Equipment 33,762,019 33,686,140
Less Accumulated Depreciation and Amortization ( 2,312,865) ( 1,915,241)
---------- ----------
Net - Property, Plant & Equipment 31,449,154 31,770,899
---------- ----------
TOTAL ASSETS $64,311,146 $62,216,701
========== ==========
LIABILITIES
Accounts Payable $ 160,064 $ 181,712
Accrued Liabilities 2,873,035 4,321,739
Deferred Income Taxes 5,065,078 2,872,779
Notes Payable 9,273,323 9,457,698
---------- ----------
TOTAL LIABILITIES 17,371,500 16,833,928
---------- ----------
SHAREHOLDERS' EQUITY
Common Stock 5,615,579 5,615,579
Additional Paid In Capital 758,470 758,470
Retained Earnings 40,913,310 39,008,724
Accumulated Other Comprehensive Loss ( 347,713) -
---------- ----------
TOTAL SHAREHOLDERS' EQUITY 46,939,646 45,382,773
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $64,311,146 $62,216,701
========== ==========
See accompanying Notes to Consolidated Condensed Financial Statements.
3
CONSOLIDATED-TOMOKA LAND CO.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited) (Unaudited)
Three Months Ended Six Months Ended
----------------------- ------------------------
June 30, June 30, June 30, June 30,
2002 2001 2002 2001
---------- ---------- ---------- ----------
Income
Real Estate Operations:
Sales and Other Income $6,887,264 $2,708,032 $9,369,292 $4,942,423
Costs and Expenses (2,380,995) (2,112,317) (4,281,300) (3,884,848)
--------- --------- --------- ---------
4,506,269 595,715 5,087,992 1,057,575
--------- --------- --------- ---------
Profit on Sales of Undeveloped
Real Estate Interests 149,866 50,939 149,866 52,279
--------- --------- --------- ---------
Interest and Other Income 236,995 407,109 465,968 797,513
--------- --------- --------- ---------
4,893,130 1,053,763 5,703,826 1,907,367
General and Administrative Expenses ( 791,927) ( 893,280) (1,790,681) (1,902,612)
--------- --------- --------- ---------
Income Before Income Taxes 4,101,203 160,483 3,913,145 4,755
Income Taxes (1,515,830) ( 58,623) (1,447,001) ( 1,782)
--------- --------- --------- ---------
Net Income 2,585,373 101,860 2,466,144 2,973
========= ========= ========= =========
PER SHARE INFORMATION:
Basic and Diluted
Net Income $ 0.46 $ 0.02 $ 0.44 $ 0.00
========= ========= ========= =========
Dividends $ 0.05 $ 0.05 $ 0.10 $ 0.10
========= ========= ========= =========
See accompanying Notes to Consolidated Condensed Financial Statements.
4
CONSOLIDATED-TOMOKA LAND CO.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
Accumulated
Additional Other Total
Common Paid-In Retained Comprehensive Shareholders' Comprehensive
Stock Capital Earnings Loss Equity Income
--------- -------- ----------- ----------- ------------ -----------
Balance,
December 31, 2001 $5,615,579 $758,470 $39,008,724 $ -- $45,382,773 $ --
Net Income -- -- 2,466,144 -- 2,466,144 2,466,144
Other Comprehensive
Loss:
Cash Flow Hedging
Derivatives,
Net of Tax - - - ( 347,713) ( 347,713) ( 347,713)
---------
Comprehensive Income -- -- -- -- -- $2,118,431
=========
Cash Dividends
($.05 per share) -- -- ( 561,558) -- ( 561,558)
--------- ------- ---------- ---------- ----------
Balance,
June 30, 2002 $5,615,579 $758,470 $40,913,310 $( 347,713)$46,939,646
========= ======= ========== ========== ==========
5
CONSOLIDATED-TOMOKA LAND CO.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
----------------------------
June 30, June 30,
2002 2001
----------- ----------
CASH FLOW FROM OPERATING ACTIVITIES:
Net Income $ 2,466,144 $ 2,973
Adjustments to Reconcile Net Income to Net Cash
Provided By (Used In) Operating Activities:
Depreciation and Amortization 398,057 351,814
Loss on Sale of Property, Plant and Equipment 12,596 --
Decrease (Increase) in Assets:
Notes Receivable 426,851 3,178,962
Real Estate Held for Development 331,897 151,920
Refundable Income Taxes ( 963,662) ( 72,500)
Other Assets ( 507,479) ( 267,620)
(Decrease) Increase in Liabilities:
Accounts Payable ( 21,648) ( 138,147)
Accrued Liabilities (2,014,781) 471,836
Deferred Income Taxes 2,410,663 74,281
--------- ---------
Net Cash Provided By Operating Activities 2,538,638 3,753,519
--------- ---------
CASH FLOW FROM INVESTING ACTIVITIES:
Acquisition of Property, Plant, and Equipment ( 88,908) (13,771,602)
Net Decrease in Investment Securities 54,968 440,169
--------- ----------
Net Cash Used In Investing Activities 33,940 (13,331,433)
--------- ----------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from Notes Payable 1,295,000 688,000
Payments on Notes Payable (1,479,375) ( 910,323)
Funds Used to Repurchase Common Stock - ( 226,521)
Dividends Paid ( 561,558) ( 556,578)
--------- ----------
Net Cash Used in Financing Activities ( 745,933) ( 1,005,422)
--------- ----------
Net Increase (Decrease) In Cash 1,758,765 (10,583,336)
Cash, Beginning of Year 2,797,868 12,909,722
--------- ----------
Cash, End of Period $ 4,556,633 $ 2,326,386
========= ==========
See accompanying Notes to Consolidated Condensed Financial Statements.
6
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. Principles of Interim Statements. The following unaudited
consolidated condensed financial statements have been prepared
pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and note disclosures,
which are normally included in annual financial statements
prepared in accordance with generally accepted accounting
principles, have been condensed or omitted pursuant to those
rules and regulations. The consolidated condensed financial
statements reflect all adjustments which are, in the opinion
of the management, necessary to present fairly the Company's
financial position and the results of operations for the
interim periods. The consolidated condensed format is
designed to be read in conjunction with the last annual
report. For further information refer to the consolidated
financial statements and the notes thereto included in the
Company's Annual Report on Form 10-K for the year ended
December 31, 2001.
The consolidated condensed financial statements include the
accounts of the Company and its wholly owned subsidiaries.
Inter-company balances and transactions have been eliminated
in consolidation.
Certain reclassifications were made to the 2001 accompanying
consolidated financial statements to conform to the 2002
presentation.
2. Common Stock and Earnings Per Common Share. Basic earnings per
common share are computed by dividing net income by the
weighted average number of shares of common stock outstanding
during the period. Diluted earnings per common share are
determined based on the assumption of the conversion of stock
options at the beginning of each period using the treasury
stock method at average cost for the periods.
7
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - CONTINUED
Three Months Ended Six Months Ended
--------------------- ---------------------
June 30, June 30, June 30, June 30,
2002 2001 2002 2001
--------- --------- --------- ---------
Income Available to Common Shareholders:
Net Income $2,585,373 $ 101,860 $2,466,144 $ 2,973
========= ========= ========= =========
Weighted Average Shares Outstanding 5,615,579 5,565,784 5,615,579 5,565,965
Common Shares Applicable to Stock
Options Using the Treasury Stock Method 15,624 5,349 14,579 3,995
--------- --------- --------- ---------
Total Shares Applicable to Diluted
Earnings Per Share 5,631,203 5,571,133 5,630,158 5,569,960
========= ========= ========= =========
Basic and Diluted Earnings Per Share:
Net Income (Loss) $ 0.46 $ 0.02 $ 0.44 $ --
========= ========= ========= =========
3. Notes Payable. Notes payable consist of the following:
June 30, 2002
---------------------
Total Due Within
One Year
---------------------
$7,000,000 Line of Credit $ -- $ --
Mortgage Notes Payable 9,089,885 7,889,885
Industrial Revenue Bond 183,438 109,502
--------- ---------
$9,273,323 $7,999,387
========= =========
Payments applicable to reduction of principal amounts will be
required as follows:
Year Ending June 30,
--------------------
2003 $7,999,387
2004 73,936
2005 --
2006 1,200,000
2007 & Thereafter --
---------
$9,273,323
=========
In the first six months of 2002 and 2001 interest totaled $408,639
and $423,830 respectively. No interest was capitalized during
either period.
8
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - CONTINUED
On July 1, 2002 the Company entered into an $8,000,000 long-term
financing arrangement. The new debt is for a ten-year term at a
rate of 7.35% and secured by 3,000 acres of the Company's most
western lands. The funds were used to pay off the $7,860,000, 8.8%
term note, which became due July 1, 2002. In addition, the Company
has placed its unsecured $7,000,000 revolving line of credit with
the same financing source. There is no outstanding balance on the
line of credit at this time.
4. Business Segment Data. The Company primarily operates in three
business segments: real estate, income properties and golf. Real
estate operations include commercial real estate, real estate
development, residential, leasing properties for oil and mineral
exploration, and forestry operations.
Information about the Company's operations in different segments
is as follows:
Three Months Ended Six Months Ended
----------------------- ------------------------
June 30, June 30, June 30, June 30,
2002 2001 2002 2001
----------------------- ------------------------
Revenues:
Real Estate $ 5,280,343 $ 1,217,044 $ 6,007,175 $ 1,894,279
Income Properties 464,434 406,744 929,418 775,901
Golf 1,142,487 1,084,244 2,432,699 2,272,243
General, Corporate and Other 386,861 458,048 615,834 849,792
--------- --------- --------- ---------
$ 7,274,125 3,166,080 $ 9,985,126 $ 5,792,215
========= ========= ========= =========
Income Before Income Taxes:
Real Estate $ 4,390,145 $ 680,444 $ 4,642,017 $ 954,778
Income Properties 367,077 309,283 729,310 580,931
Golf ( 250,953) ( 394,012) ( 283,335) ( 478,134)
General, Corporate and Other ( 405,066) ( 435,232) (1,174,847) (1,052,820)
--------- --------- --------- ---------
$ 4,101,203 $ 160,483 $ 3,913,145 $ 4,755
========= ========= ========= =========
5. Derivative Instruments and Hedging Activities. On January 1, 2001,
the Company adopted Statement of Financial Accounting Standards
(SFAS) No. 133, "Accounting for Derivative Instruments and Hedging
Activities," as amended, but had no derivative instruments or
hedging activities. SFAS No. 133 establishes accounting and
reporting standards for derivative instruments. Specifically, SFAS
133 requires that all derivative instruments be recognized as
assets or liabilities on the balance sheet at fair value.
Additionally, changes in fair value of the derivative shall be
reported as adjustments to accumulated other comprehensive income,
provided the derivative is designated as a qualifying cash flow
hedge.
9
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - CONTINUED
On April 8, 2002, the Company entered into an interest rate swap
agreement to mitigate the interest rate risk on the variable rate
debt of the Company. The Company expects the cash flows related to
the swap to be highly effective in offsetting the changes in the
cash flows of the variable rate debt, and under the guidance of
SFAS 133, has assumed no ineffectiveness.
The change in the fair value of the interest rate swap has resulted
in the recording of a liability in the amount of $566,077 at June
30, 2002. The change in fair value, net of applicable taxes, in
the amount of $347,713, has been recorded as accumulated other
comprehensive loss, a component of stockholders' equity. This
activity represents a non-cash transaction.
10
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Management's Discussion and Analysis is designed to be read
in conjunction with the financial statements and Management's
Discussion and Analysis in the last annual report.
Certain statements contained in this report (other than the financial
statements and statements of historical fact), are forward-looking
statements. The words "believe," "estimate," "expect," "intend,"
"anticipate," "will," "could," "may," "should," "plan," "potential,"
"predict," "forecast," and similar expressions and variations thereof
identify certain of such forward-looking statements, which speak only
as of the dates on which they were made. Forward-looking statements
are made based upon management's expectations and beliefs
concerning future developments and their potential effect upon the
Company. There can be no assurance that future developments will be
in accordance with management's expectations or that the effect of
future developments on the Company will be those anticipated by
management.
The Company wishes to caution readers that the assumptions which form
the basis for forward-looking statements with respect to or that
may impact earnings for the year ended December 31, 2002, and
thereafter include many factors that are beyond the Company's ability
to control or estimate precisely. These risks and uncertainties
include, but are not limited to, the market demand of the Company's
real estate parcels; the impact of competitive real estate; changes
in pricing by the Company or its competitors; the costs and other
effects of complying with environmental and other regulatory
requirements; losses due to natural disasters; and changes in
national, regional or local economic and political conditions, such as
inflation, deflation, or fluctuation in interest rates.
While the Company periodically reassesses material trends and
uncertainties affecting its results of operations and financial
condition, the Company does not intend to review or revise any
particular forward-looking statement referenced herein in light of
future events.
RESULTS OF OPERATIONS
Real Estate Operations
- ----------------------
Real Estate Sales
-----------------
Profits from real estate sales of $4,390,000 for the second
quarter of 2002 represented a dramatic increase over the profit
of $680,000 earned in 2001's second period. The sale of 119
acres of land in 2002's second period compared to the sale of 20
acres in the prior year accounted for this major increase. Gross
profits of $4,760,000 were generated on the 2002 sales with gross
profits of $871,000 produced on the 2001 second quarter sales.
For the six months ended June 30, 2002, gross profits of
$5,285,000 were generated on the sale of 139 acres of property.
During the six month period of 2001, the sale of 31 acres
produced gross profits of $1,428,000. The sales increase in 2002
11
Real Estate Sales (Continued)
----------------------------
increased the net profits from real estate sales more than three-
fold to $4,642,000 from $955,000 one year earlier.
Golf Operations
---------------
During the second quarter of 2002, losses from golf operations
were reduced 36% to $251,000 when compared to the prior year's
same period loss amounting to $394,000. The improved results
were achieved on a 5% increase in revenues coupled with a 6%
decrease in costs and expenses. The rise in revenue was
accomplished on a 32% increase in food and beverage revenues at
the clubhouse facility, offset by a 4% decline in revenues
derived from golf course activities. Golf course revenues were
down due to a 20% decrease in rounds played offset by a 19% rise
in average rate per round. The decline in golf operating expenses
was realized on cost savings attained in golf course maintenance.
Losses from golf operations totaling $283,000 for the first six
months of 2002 decreased 41% when compared to 2001 first six
months losses of $478,000. This improvement in profitability can
primarily be attributed to a 7% rise in revenues. The gain in
revenues was attained on a 35% increase in activity at the food
and beverage operations. Revenues from golf course activities
decreased 1% during the period on a 14% decline in rounds played
offset by an 11% rise in average rate paid per round. Golf
operations costs and expenses decreased 1% during the period. A
7% reduction in expenses associated with the golf course,
primarily course maintenance, was substantially offset by higher
costs from the food and beverage operations on the higher volume.
Income Properties
-----------------
Revenues from income properties rose 14% during the second
quarter of 2002 due to the acquisition of a triple-net lease
property in June 2001 and an additional property in November
2001. These gains were somewhat offset by the year-end 2001
disposition of a portion of the auto dealership site which was
acquired in 2000. Income properties costs and expenses were in
line with prior year's expenses, thus income properties net
income gained 19% during the period to $367,000, from $309,000 in
2001's second quarter.
For the first half of 2002 profits from income properties rose
26% to $729,000. Profits of $581,000 were posted in 2001's same
period. This gain was generated on a 20% increase in revenues
from the income properties acquired in the previous year, offset
by the disposition of a portion of the auto dealership site.
Expenses from income properties increased 3% for the period,
primarily due to additional depreciation associated with the
acquisitions.
General Corporate and Other
- ---------------------------
Interest and other income of $237,000 and $466,000 for the second
quarter and first six months of 2002, respectively, represented a 42%
12
General Corporate and Other
- ---------------------------
reduction for both periods. This decline, from the $407,000 and
$798,000 earned in 2001's equivalent periods, was the result of lower
investment income earned on reduced funds available for investment.
Lower compensation expenses were the primary cause of an 11% decrease
in general and administrative expenses for the three month period,
and for the 6% reduction in costs for the first half of 2002 when
compared to prior year.
Net Income and Earnings Before Depreciation and Deferred Taxes
- ---------------------------------------------------------------
Net income totaling $2,466,144, equivalent to $.46 per share, for the
first six months of 2002 represented a substantial improvement over
the breakeven results posted in 2001's same period. These favorable
results were attributable to the increase in commercial land sales
volume, improved performance from golf operations and higher income
earned from income properties.
The Company also uses Earnings Before Depreciation and Deferred Taxes
("EBDDT") as a performance measure. The Company's strategy of
investing in income properties through the deferred tax like-kind
exchange process produces significant amounts of depreciation and
deferred taxes. This measure tracks results in this area.
Following is the calculation of EBDDT for the periods covered by this
report:
Quarter Ended
----------------------
June 30, June 30,
2002 2001
----------------------
Net Income $2,585,373 $101,860
Add Back:
Depreciation 199,446 181,134
Deferred Taxes 2,277,274 249,802
--------- -------
Earnings Before Depreciation and Deferred Taxes $5,062,093 $532,796
--------- -------
EBDDT Per Share $ 0.90 $ 0.10
--------- -------
Six Months Ended
----------------------
June 30, June 30,
2002 2001
----------------------
Net Income $2,466,144 $ 2,973
Add Back:
Depreciation 398,068 351,814
Deferred Taxes 2,192,299 74,281
--------- -------
Earnings Before Depreciation and Deferred Taxes $5,056,511 $429,068
--------- -------
EBDDT Per Share $0.90 $0.08
--------- -------
13
EBDDT is not a measure of operating results or cash flows from
operating activities as defined by generally accepted accounting
principles. Further, EBDDT is not necessarily indicative of cash
availability to fund cash needs and should not be considered as an
alternative to cash flow as a measure of liquidity. The Company
believes, however, that EBDDT provides relevant information about
operations and is useful, along with net income, for an understanding
of the Company's operating results.
EBDDT is calculated by adding depreciation, amortization and deferred
income taxes to net income, as they represent non-cash charges.
EBDDT improved dramatically for the first half of 2002, not only due
to the improved operating results but also due to a significant change
in deferred taxes. The change in deferred taxes was predominantly the
result of deferring gains on land sales closed during the period for
income tax purposes through the like-kind exchange process along with
the deduction (due to payment) of previously deferred compensation
expenses during the period.
Spurred by continued development activities on Company owned and
surrounding lands, contract activity during the first six months of
2002 was strong with a number of new contracts signed for closing in
2002 and future years. Management believe a significant contract
backlog is in place for closing. Management continues to work
diligently to satisfy contract contingencies and convert the contract
backlog into closings. As qualified closings occur, management
intends to continue to add to its inventory of geographically
dispersed Florida income properties through the deferred tax like-kind
exchange process.
Liquidity and Capital Resources
- -------------------------------
For the six months ended June 30, 2002, cash increased $1,759,000.
Cash from operating activities produced $2,539,000, with cash from
financing activities using $746,000, including the payment of
dividends totaling $562,000 equivalent to $.10 per share. Notes
payable declined $184,000 for the six month period. Total cash and
investment securities on hand at June 30, 2002 was $9,989,000 while
notes payable amounted to $9,273,000 on that date. Capital
requirements for the remainder of the year approximate $4,500,000.
These funds will primarily be expended on roads, entrance features and
site development on lands adjacent to Interstate 95 in Daytona Beach,
in addition to approximately $3,100,000 to be used to purchase an
income property. In addition, as funds become available through
qualified sales, the Company intends to acquire income properties
through the tax deferred like-kind exchange process. The Company
intends to finance these capital requirements from cash and investment
securities on hand, operating activities and existing financing
sources.
On July 1, 2002 the Company entered into an $8,000,000 long-term
financing arrangement. The new debt is for a ten-year term at a rate
of 7.35% and secured by 3,000 acres of the Company's most western
lands. The funds were used to pay off the $7,860,000, 8.8% term note,
which became due July 1, 2002. In addition, the Company has placed
its unsecured $7,000,000 revolving line of credit with the same
financing source. There is no outstanding balance on the line of
14
credit at this time. The interest rate on the line of credit will
continue to be the lower of 150 basis points above the 30-day LIBOR
or one percent below the prime rate. Currently, the income properties
owned by the Company are free of debt. The Company has the ability to
borrow against these properties on a non-recourse basis.
Critical Accounting Policies
- ----------------------------
The profit on sales of real estate is accounted for in accordance with
the provisions of SFAS No. 66 "Accounting for Sales of Real Estate."
The Company recognizes revenue from the sale of real estate at the
time the sale is consummated unless the property is sold on a deferred
payment plan and the initial payment does not meet criteria
established under SFAS 66 or meet other requirements of SFAS 66. No
income has been deferred for the six months ended June 30, 2002 as
sales have met the established criteria.
The Company has reviewed the recoverability of long-lived assets,
including real estate held for development and sale, property, plant
and equipment and certain identifiable intangibles, for impairment
whenever events or changes in circumstances indicate that the carrying
amount of an asset may or may not be recoverable. There has been no
material impairment of long-lived assets reflected in the consolidated
financial statements.
The Company's debt was refinanced through an interest rate swap
agreement. This swap arrangement changes the variable-rate cash flow
exposure on the debt obligations to fixed cash flows so that the
Company can manage fluctuations in cash flows resulting from interest
rate risk. This swap arrangement essentially creates the equivalent
of fixed-rate debt. The above referenced transaction is accounted for
under SFAS No. 133 "Accounting for Derivative Instruments and Certain
Hedging Activities" and SFAS No. 138 "Accounting for Certain
Derivative Instruments and Certain Hedging Activity, an Amendment of
SFAS 133." The derivative meets the criteria established to be
accounted for as a perfectly effective hedge. This accounting
requires the derivative to be recognized on the balance sheet at its
fair value and the changes in fair value to be accounted for as other
comprehensive loss, net of tax. During the second quarter a liability
of $566,077 was established on the Company's balance sheet and
Accumulated Other Comprehensive Loss of $347,713 ($566,077 net of
income taxes of $218,364) was also recorded.
15
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings
There are no material pending legal proceedings to which the
Company or its subsidiaries is a party.
Items 2 through 5.
Not Applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 10 - Material Contracts.
Exhibit 10.8 - Master Loan and Security Agreement
Between Consolidated-Tomoka Land Co.
and SunTrust Bank Dated July 1, 2002.
Exhibit 10.9 - Master Loan and Security Agreement
Between Consolidated-Tomoka Land Co.
and SunTrust Bank Dated May 31, 2002.
Exhibit 10.10 - International Swap Dealers Association,
Inc. Master Agreement Dated April 8,
2002, Between Consolidated-Tomoka Land
Co. And SunTrust Bank.
Exhibit 10.11 - Confirmation of Interest Rate
Transaction Dated April 9, 2002 Between
Consolidated-Tomoka Land Co. and
SunTrust Bank.
Exhibit 11 - Incorporated by Reference on Page 7 of
this 10-Q report.
Exhibit 99.1 - Certification Pursuant to 18 U.S.C
Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-oxley Act
Of 2002.
Exhibit 99.2 - Certification Pursuant to 18 U.S.C
Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-oxley Act
Of 2002.
(b) Reports on Form 8-K
On July 24, 2002 a Form 8-K was filed reporting under
Item 4 "Changes in Registrant's Certifying Accountant."
16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
CONSOLIDATED-TOMOKA LAND CO.
(Registrant)
Date: August 12, 2002 By:/s/ William H. McMunn
----------------------------
William H. McMunn, President
and Chief Executive Officer
Date: August 12, 2002 By:/s/ Bruce W. Teeters
----------------------------
Bruce W. Teeters, Senior
Vice President - Finance
and Treasurer
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EXHIBIT 10.8
MASTER LOAN AND SECURITY AGREEMENT
THIS AGREEMENT, made this 1ST day of JULY, 2002, by and among
SUNTRUST BANK with its principal banking address at 120 South
Ridgewood Avenue, Daytona Beach, FL 32114 hereinafter called "the
Bank"), and CONSOLIDATED-TOMOKA LAND CO., a Florida corporation
(hereinafter called "the Borrower")
WITNESSETH:
SECTION 1. DEFINITIONS
1.1 DEFINED TERMS. As used in this Agreement, the following
terms shall have the following meanings, unless the context
otherwise requires:
a.) AGREEMENT shall mean this Master Loan Agreement as
it may from time to time be amended, supplemented or otherwise
modified in accordance with its terms.
b.) BUSINESS DAY shall mean a day other than a Saturday,
Sunday, or other day on which commercial banks are authorized or
required to close under the laws of the State of Florida.
c.) COLLATERAL shall have the meaning set forth in
Section 2.2 of this Agreement.
d.) COLLATERAL AGREEMENTS shall mean all agreements
creating or intending to create a security interest in or lien upon
the Collateral or any other security for repayment of the obligations,
if the loan is secured.
e.) DEFAULT RATE shall mean the maximum annual rate of
interest permitted by then applicable law.
f.) EQUIPMENT If the loan is secured, shall mean all
equipment (as such term is defined in the Uniform Commercial Code as
from time to time in effect in the State of Florida), now owned or
hereafter acquired by the Borrower located on the real property
encumbered by the mortgage defined herein.
g.) EVENTS OF DEFAULT shall have the meaning assigned to
it as set forth in Section 7 of this Agreement.
h.) GENERALLY ACCEPTED ACCOUNTING PRINCIPLES shall mean
generally accepted accounting principles in effect from time to time,
consistently applied.
i.) LIEN. The Loan is secured by a Mortgage, Assignment
of Rents and such other collateral defined in the Assignment of
Mortgage, Assignment of Loan Documents, Mortgage Modification
Agreement and other documents executed simultaneously herewith.
j.) LOAN DOCUMENTS shall mean this Agreement, the Note,
the Assignment of Mortgage, Assignment of Loan Documents, Mortgage
Modification Agreement as well as any other documents, instruments or
agreements executed in connection with the transactions contemplated
herein. Copies of the Assignment of Mortgage and Assignment of Loan
Documents are attached hereto and incorporated herein.
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k.) MORTGAGED PROPERTY shall mean the property described
in the Mortgage Modification Agreement, Assignment of Mortgage and
Assignment of Loan Documents. The legal description of the mortgaged
property is attached hereto.
l.) NOTE shall mean the note referred to herein.
m.) OBLIGATIONS shall mean, collectively, (i) the unpaid
principal amount of and accrued interest on the Note, and (ii) all
other obligations and liabilities (primary, secondary, direct,
contingent, sole, joint or several, whether similar or dissimilar or
related or unrelated) of the Borrower, due or to become due, now
existing or hereafter incurred, contracted or acquired, whether
arising under, out of or in connection with the Loan Documents or
otherwise.
n.)REAL ESTATE MORTGAGE shall mean the mortgage and any
amendments thereto assigned in the Assignment of Mortgage and modified
in the Mortgage Modification Agreement executed simultaneously
herewith.
o.) CURRENT ASSETS shall mean, at any date, the aggregate
amount of all assets which would be properly classified as current
assets at such date, but excluding deferred assets, all computed in
accordance with Generally Accepted Accounting Principles applied on a
consistent basis.
p.) CURRENT LIABILITIES shall mean, at any date, all
liabilities (including tax and other proper accruals), which would be
properly classified as current liabilities at such date, but excluding
deferred liabilities, all computed in accordance with Generally
Accepted Accounting Principles applied on a consistent basis.
q.) DEBT TO TANGIBLE NET WORTH RATIO shall mean, on any
date of determination thereof, the ratio of the Borrower's total
liabilities less subordinated debt to tangible net worth.
r.) EMPLOYEE PLAN shall mean any employee plan which is
subject to the provisions of Title IV of the Employee Retirement
Income Security Act of 1974, as, from time to time, amended and which
is maintained (in whole or in part) for employees of the Borrower or
any subsidiary.
s.) EQUIPMENT shall mean all equipment (as such term is
defined in the Uniform Commercial Code as from time to time in effect
in the State of Florida), now owned or hereafter acquired by the
Borrower, wherever located, if the loan is secured.
t.) GUARANTEE. There are no guarantors.
u.) PLEDGED PROPERTY shall mean all property described in
the Assignment of Mortgage, Assignment of Loan Documents, Mortgage
Modification Agreement, as well as all other property described
herein.
v.) CROSS COLLATERALIZATION AGREEMENT. Not applicable.
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w.) LIBOR As used herein "LIBOR Rate" means the thirty
(30) day LIBOR interest rate as quoted in the Wall Street Journal.
x.) UCC-1 shall mean that certain UCC-1 to be executed and
recorded simultaneous with the execution of the note described herein
and this Agreement to be recorded in the Public Records of the State
of Florida and such County Public Records as required by Bank.
y.) REPORTABLE EVENT shall mean a Reportable Event as
defined in Title IV of ERISA.
z.) TANGIBLE NET WORTH shall mean, at any date, (a)(i) the
aggregate amount of all assets that may properly be classified on a
balance sheet as such and excluding from such assets the amount of any
write-up or revaluation of any assets occurring after the date hereof
and receivables due from any officer, director, employee or Affiliate,
less (ii) the aggregate amount of all assets included as capitalized
research and development costs, capitalized interest or financing
costs, net leasehold improvements (except as to Borrower's LPGA Golf
Facilities), debt discount, good-will, patents, trademarks,
copyrights, franchises, prepaid expenses and such other assets
classified as "intangible assets", LESS (b) the aggregate amount of
all unsubordinated debt and reserves, LESS (c) amounts due from
officers and related parties, all computed and consolidated in
accordance with Generally Accepted Accounting Principles.
aa.) UNSUBORDINATED DEBT shall mean, at any date, all
liabilities which would be included on a balance sheet as such other
than indebtedness which is subject to a Subordination Agreement.
bb.) WORKING CAPITAL shall mean, as of any date, the
excess of current assets over current liabilities.
cc.) NET WORTH shall mean, at any date, (a) the
aggregate amount of all assets that may properly be classified on a
balance sheet as such and excluding from such assets the amount of any
write-up or revaluation of any assets occurring after the date hereof
less (b) the aggregate amount of all liabilities, all computed and
consolidated in accordance with Generally Accepted Accounting
Principles.
dd.) CURRENT RATIO means Current Assets divided by
Current Liabilities.
ee.) DEBT TO WORTH RATIO means the ratio of Debt to
Worth; with "Debt" defined as Total Liabilities less subordinated
debt, and "Worth" defined as total stockholder's equity LESS
intangible assets, less amounts due from officers and affiliates, LESS
distributions (as defined below), PLUS subordinated debt, all per
generally accepted accounting principles. For interim covenant
calculation purposes, distributions will be estimated at 40% of net
income before taxes or the Bank will utilize the actual amount of
distributions, whichever is greater.
ff.) DEBT SERVICE COVERAGE means (a) net income before
taxes minus withdrawals (not to exceed 60% of net income before taxes)
plus (i) interest expense, (ii) depreciation and (iii) amortization
divided by (b) current portion of long term debt (of all loans) plus
interest expenses, all per generally accepted accounting principles.
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gg.) INTANGIBLE ASSETS means any personal property
(including chosen in action) other than goods, accounts, chattel
paper, documents, instruments and money and including, but not limited
to all of the Borrower's now owned or hereafter acquired (i) deferred
assets, other than prepaid insurance and prepaid taxes, (ii) goodwill,
manufacturing and processing rights, rights and patents, technology,
patent rights, licenses, franchises, permits, copyrights, trademarks,
service marks, trade names, trade styles, trademark and trade name
registrations, and applications, trade secrets, customer lists, tax
refund claims, incentive payments, insurance proceeds, experimental
expenses and other similar assets which would be classified as
"intangible assets" under GAAP, (iii) treasury stock and any write-up
of the value of any assets after the date hereof unless in accordance
with GAAP, (iv) contract rights, and (v) all proceeds of any and all
of the foregoing.
hh.) ADVANCE means any monies advanced to the Borrower
by the Bank pursuant to this Agreement.
ii.) PRIME RATE means that the rate of interest published
by Bank from time to time and designated as its Prime Rate. The
Bank's Prime Rate is internally determined by the Bank's Management
and is based upon prevailing business conditions and other conditions
in the credit markets. The Prime Rate is not necessarily the lowest
or best rate offered to any particular customer of Bank.
All terms defined in or incorporated into this Agreement shall
have defined meanings when used in any certificate or other instrument
made or delivered pursuant hereto unless the context otherwise
requires. Each accounting term used but not defined herein, shall
have the meaning given to it under Generally Accepted Accounting
Principles.
SECTION 2. THE FACILITIES
2.1 Loan/Notes
Subject to the terms and conditions of this Agreement, the
Bank agrees to loan to Borrower the maximum sum of Eight Million and
00/100 ($8,000,000.00) Dollars as a term loan under the following
terms:
1. BORROWER: The advance shall be made to Borrower who shall
be responsible for repayment of the advance and all interest and other
charges.
2. AMOUNT OF LOAN: The original maximum loan amount shall be
Eight Million ($8,000,000.00) and 00/100 Dollars.
The advance under the loan shall be subject to the following
additional requirements:
(a) Borrower shall not be in default with any obligations
due Bank.
(b) Operating account must be opened by Borrower with
Bank.
3. PURPOSE: Advances under the line will be used primarily to
refinance an existing first mortgage.
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4. TERM OF LOAN: The loan shall be represented by a
promissory note, payable as described therein.
5. INTEREST RATE: Advances under the line shall bear and
accrue interest at a rate per annum which shall be 125 basis points
above the thirty (30) day Libor Rate as quoted in the Wall Street
Journal computed monthly. Interest shall be due and payable monthly.
Interest shall be calculated using a year base of 360 days and charged
for the actual number of days elapsed in an interest period.
Interest paid is also subject to the terms of a "Rate Swap Agreement"
executed by Borrower.
6. SERVICE FEE: The Loan Commitment fee is 1/4 of 1% of the
loan amount.
7. ADVANCES: The sums contemplated to be advanced will be
advanced in full at closing.
8. RIGHT OF PREPAYMENT; FIRST REFUSAL; PREPAYMENT FEE: The
note may be prepaid in whole or in part at any time without penalty
subject to the terms contained herein. In the event prepayment is
contemplated from a refinance by any other lender, Borrower agrees
that Bank shall have a first right of refusal to match exactly the
terms and conditions of the contemplated refinance. Bank shall have
twenty (20) days from receipt of any bonafide written loan commitment
from another lender to provide Borrower with an identical loan
commitment consistent in all respects with the commitment from the
other lender. If Borrower elects not to accept the commitment from
Bank and accepts the commitment from the other lender and refinances
with said lender resulting in a prepayment to Bank; there shall be a
prepayment fee due Bank in the sum of five (5%) of the amount prepaid
collected by Bank in addition to the repayment of principle and
payment of all accrued interest. Borrower acknowledges that a
prepayment fee may also be due pursuant to the terms of a "Rate Swap
Agreement" signed by Borrower.
9. LOAN GUARANTY. None
10. PENALTY INTEREST CHARGE: In the event the Borrower fails to
perform certain administrative tasks as provided herein, to-wit: the
failure to provide financial information, the failure to maintain
insurance, the failure to provide evidence of payment of debts, taxes,
or lawful claims, the Bank shall increase the applicable interest rate
on the loan by imposing an additional penalty interest surcharge as
hereinafter provided. For a period beginning three (3) days after
written noticed default, the Bank shall increase the interest charge
by one quarter of one percent (.25%) for the first thirty (30) days of
the default and increase the interest rate an additional one quarter
of one percent (.25%) during each thirty (30) day period thereafter
during which the noticed default continues. Such interest penalty
surcharge shall apply to the outstanding principal balance of the
loan. Upon the curing of the noticed default, the interest rate of
the loan shall revert to the initial agreed-upon interest rate
effective on the date on which the default is cured.
11. HAZARD INSURANCE: As required elsewhere in this Agreement.
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12. ANNUAL REPORTS: The Borrower shall furnish to the Bank
within Ninety (90) days after the end of each fiscal year, a profit
and loss statement, reconciliation of surplus statement of the
Borrower for each year, and a balance sheet as of the end of such year
compiled by independent certified public accountants of recognized
standing selected by Borrower and satisfactory to Bank. Tax returns
shall be furnished within thirty (30) days of date of filing with the
United States Treasury Department. Borrower shall provide annual
reports as required herein beginning with calendar year 2002. All
reports shall be prepared in accordance with generally accepted
accounting principles and certified by the Chief Financial Officer of
Borrower as being true and accurate.
13. LOAN SECURITY: All real and personal property; and all
rights and privileges incident thereto reflected in the Assignment of
Mortgage, Assignment of Loan Documents, Mortgage Modification
Agreement and other loan documents executed simultaneously herewith.
The Assignment of Mortgage and Assignment of Loan Documents are
attached hereto and incorporated herein. Each and every document
stated therein and all real property and improvements encumbered
thereby shall be deemed security for the Note.
14. LATE CHARGE: Lender may, at its option, assess a late
charge not to exceed 5% of the amount of any installment payment not
paid when due.
15. CLOSING INDEMNITY: Borrower agrees to pay all documentary
stamps, intangible taxes, and all other closing taxes and expenses
that may be required either at closing or subsequent thereto. If
additional closing charges, expenses or taxes are deemed to be due
after closing, Borrower agrees to pay said charges immediately upon
notification by Bank. Borrower agrees to indemnify Bank and hold Bank
harmless from all claims, demands or charges regarding any closing
fees, costs, expenses or taxes arising from this transaction
whatsoever, and further agrees to defend Bank if necessary at trial
and on appeal.
2.2 SECURITY: As security for the payment of the note described
in paragraph 2.1 and all substitutions, renewals or extensions
thereof, the Borrower assigns, pledges and grants to Bank a security
interest in the following:
a.) The mortgage and all amendments or modifications thereto,
including the Mortgage Modification Agreement executed simultaneously
herewith, assigned to Bank by Assignment of Mortgage (copy attached);
and all real property and improvements referenced therein;
b.) All collateral security documents assigned to Bank
referenced in the attached Assignment of Mortgage and/or Assignment
of Loan Documents;
c.) The Rate Swap Agreement executed by Borrower;
d.) Borrower's agreement regarding Cross Default. This
Agreement and Note is made and issued in conjunction with other credit
commitments and loans to the Borrower from Bank. A default under this
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Agreement and/or Note shall constitute a default under all commitments
and loans issued to Borrower by Bank. A default under any other
commitment or loan documents (i.e., Notes, Mortgages, UCC-1's
Assignments of Rent, Loan Agreements, etc.) by Borrower regarding a
loan transaction between Borrower and Bank shall be deemed a default
in this Note and Agreement. A default in the terms and conditions
that certain Promissory Note dated May 31, 2002, Master Loan and
Security Agreement and other loan documents all dated May 31, 2002,
shall be deemed a default in the terms of this Agreement.
e.) The Loan Commitment issued to Borrower by Bank for this
transaction. The loan commitment shall survive the closing and all
terms and conditions of said Loan Commitment as amended and modified
shall remain fully binding obligations of all parties after closing.
All of the foregoing shall be collectively referred to
as "Collateral".
A default in the note described in paragraph 2.1 above and/or a
default in the terms and conditions of any collateral documents
referenced above and/or a default in any of the terms or conditions of
the commitment letter referenced in subparagraph (e) above, and/or a
default in any of the terms or conditions of this Agreement and/or a
default in the terms and conditions of that certain Promissory Note in
the sum of $7,000,000.00 between Bank and Borrower dated May 31, 2002
together with the Master Loan and Security Agreement and other loan
documents all dated May 31, 2002 and/or a default in any other terms
and conditions of any other loan between Borrower and Bank shall be
deemed a default in each and all of the referenced foregoing loan
documents, this Agreement, and all loan documents executed
simultaneously with this Agreement. A default in any one is a default
in all and Bank shall have any and all remedies as provided in any and
all of the foregoing referenced documents and/or agreements.
SECTION 3. REPRESENTATIONS AND WARRANTIES
3.1 ORGANIZATION, STANDING, CORPORATE POWERS, ETC.
a.) The Borrower (i) is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
organization, (ii) has all requisite power and authority, corporate or
otherwise, to conduct its business as now being conducted and to own
its properties and assets, and (iii) is duly qualified to do business
in every jurisdiction wherein the failure to so qualify would have a
material adverse effect.
b.) The Borrower has all requisite power and authority to
execute and deliver, and to perform all of its obligations under the
loan documents to which it is a party.
c.) The loan documents are legal, valid and binding
obligations of the Borrower enforceable in accordance with their
respective terms, subject to bankruptcy, insolvency, reorganization or
other laws affecting creditors' rights generally, moratorium laws from
time to time in effect and subject to the application of equitable
principles.
7
3.2 AUTHORIZATION OF BORROWING, ETC.
a.) The execution, delivery and performance of this Agreement
(i) will not violate any provision of applicable law, any governmental
rule or regulation, any order of any court or other agency of
government to which Borrower is subject and (ii) does not violate any
provision of any indenture, agreement or other instrument to which the
Borrower is a party or by which the Borrower is bound and which is
material to the conduct or operation of the Borrower's respective
businesses and financial affairs, or be in conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a
default under any provision of such indenture, agreement or other
instruments, or result in the creation or imposition of any lien,
charge or encumbrance of any nature whatsoever upon any of the
properties or assets of the Borrower other than as provided in the
Loan Documents.
b.) To the knowledge of the Borrower, no registration with,
consent or approval of, or other action by any Federal, State or other
governmental authority, regulatory body or court of law is required in
connection with the execution, delivery and performance of this
Agreement by it or with the execution and delivery of and performance
under the Loan Documents, the borrowing thereunder by it or, if so
required, such registration has been made, such consent or approval
has been obtained and is final and not appealable or such other action
has been taken heretofore and proof thereof furnished to the Bank.
c.) Bank acknowledges that Borrower has three (3) outstanding
Letters of Credit with First Union National Bank / Wachovia which will
expire no later than November 30, 2002. Borrower agrees not to renew
or otherwise obtain any additional Letters of Credit unless obtained
through Bank, without Bank's express written consent. Bank further
acknowledges that Borrower has an existing Line of Credit with First
Union National Bank / Wachovia which line of credit will remain open
in the approximate sum of $600,000.00 until the Letters of Credit
referenced above have expired. Borrower agrees not to draw on the
Line of Credit with First Union National Bank / Wachovia and agrees to
terminate said Line of Credit upon expiration of the above referenced
Letters of Credit. Borrower agrees not to renew said Line of Credit
and agrees not to obtain any additional lines of credit unless
obtained through Bank, without Bank's express written consent.
3.3 FINANCIAL STATEMENTS. The Borrower has heretofore furnished
to the Bank financial statements.
Such financial statements fairly present the financial condition
and the results of operations of the Borrower as of the dates and for
the periods indicated to the best of Borrowers' knowledge; and
further, to the best of the Borrowers' knowledge such balance sheets
show all known material liabilities, direct or contingent, as of the
respective dates thereof, and such financial statements were prepared
in accordance with generally accepted accounting principles.
3.4 ADVERSE CHANGE. There has been no material adverse change
n the business, properties or condition (financial or otherwise) of
the Borrower since the date of the most recent of the financial
statements listed above.
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3.5 TITLE TO PROPERTIES. The Borrower owns all of their
properties and assets reflected on the financial statements referred
to in Section 3.3 hereof, except for such properties and assets as
have been disposed of since that date as no longer used or useful in
the conduct of its business; or as may be sold or otherwise disposed
of in the ordinary course of business. All such properties and
assets are free and clear of all mortgages, pledges, liens, charges
and other encumbrances of any nature whatsoever, except those
specifically referenced in this Agreement; and except as provided in
the financial statements.
3.6 LITIGATION. Except as provided herein there are no actions,
suits or proceedings pending or, to the knowledge of the Borrower,
overtly threatened against or affecting the Borrower at law or in
equity, or before or by any Federal, state, municipal or other
governmental court, tribunal, department, commission, board, bureau,
agency or instrumentality, domestic or foreign, which involve any of
the transactions herein contemplated or the possibility of any
judgement or liability which would, in the case of the Borrower,
result in any material adverse change in the business, operations,
properties or assets or in the financial condition of the Borrower or
materially and adversely affect Borrower's ability to perform under
the loan documents. The Borrower is not in default with respect to
(a) any judgement, order, writ, injunction or decree or (b) any rule
or regulation of any court or Federal, state, municipal or other
governmental court, tribunal, department, commission, board, bureau,
agency or instrumentality, domestic or foreign which would have a
material adverse effect on its business, properties or condition
(financial or otherwise).
3.7 PAYMENTS OF TAXES. The Borrower has filed or caused to be
filed all Federal, state and local tax returns that are required to
be filed and has paid or caused to be paid all taxes shown on such
returns or on any assessment received by it, to the extent that such
taxes have become due, except taxes the validity of which is being
contested in good faith by appropriate proceedings and for which, in
the case of the Borrower, in the exercise of reasonable business
judgement, there have been set aside adequate reserves with respect
to any such tax or assessment so contested and, in the case of the
Guarantors, the tax or assessment so contested.
3.8 PRIORITY OF SECURITY INTEREST. Subject (a) to filing and
recordation of the appropriate instruments in the appropriate offices
of the proper jurisdictions, (b) to the enforcement of remedies, to
bankruptcy, insolvency, and other laws affecting creditors' rights
generally and to moratorium laws, from time to time in effect, and (c)
to general equitable principles which may limit the right to obtain
the remedy of specific performance; each of the security interests
granted to the Bank in the collateral under Section 2.2 of this
Agreement constitutes a valid security interest.
SECTION 4. CONDITIONS OF LENDING
The obligation of the Bank to make available funds under this
Master Loan Agreement is subject to the following conditions
precedent:
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4.1 REPRESENTATION AND WARRANTIES. At the date of the Loan
advance, or any future advance hereunder, the representations and
warranties set forth in Section 3 hereof shall be true and correct on
and as of such date, with the same effect as though such
representations and warranties had been made on and as of such date,
except to the extent that such representations and warranties relate
solely to an earlier date.
4.2 NO DEFAULT. At the date of the Loan advance, or any future
advance hereunder, no event of default, or event which with the giving
of notice or of the passage of time, or both, would constitute an
event of default, shall have occurred and be continuing and the
representations and warranties of the Borrower contained herein shall
remain true and correct as of such date except to the extent that such
representations and warranties relate to an earlier date.
SECTION 5. AFFIRMATIVE COVENANTS
From the date of this Agreement and so long as any of the Loan
Documents remain in effect and any of the obligations shall be unpaid,
the Borrower, will:
5.1 EXISTENCE, PROPERTIES, ETC.
To the extent that the same are necessary for the proper and
advantageous conduct of its business:
a.) Do or cause to be done all things necessary to preserve,
renew and keep in full force and effect all rights, licenses, permits
and franchises and comply with all laws and regulations applicable to
it and conduct and operate its business in substantially the manner in
which it is presently conducted and operated;
b.) At all times preserve all property (except for such
property as is disposed of in the ordinary course of business) used
r useful in the conduct of its business and keep the same in good
repair, working order and condition (subject to normal wear and tear),
and from time to time make, or cause to be made, all needful and
proper repairs, renewals, replacements, betterments and improvements
thereto.
5.2 INSURANCE. Maintain in effect adequate insurance for all
assets reflected on Borrower's financial statements, by financially
sound and reputable insurers, and maintain or cause to be maintained
such other insurance to such extent and against such risks, including
fire and other risks insured against by extended coverage, as is
customary with companies in the same or similar business, and maintain
in full force and effect public liability insurance against claims for
personal injury, death or property damage occurring upon, in, about or
in connection with the use of any properties owned, occupied or
controlled by it and maintain such other insurance as may be required
by law, or as may be reasonably required in writing by the Bank.
5.3 OBLIGATIONS, TAXES AND LAWS. Pay all indebtedness and
obligations promptly and in accordance with their respective terms if
the failure to make such payments would adversely affect either the
Borrower's ability to perform or the rights of the Bank under the loan
documents, and pay and discharge promptly all taxes, assessments and
governmental charges or levies imposed upon it or in respect of its
property, before the same shall become in default, as well as all
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lawful material claims for labor, materials, and supplies or otherwise
which, if unpaid, might become a lien or charge upon such property or
any part thereof, and timely comply with all applicable laws and
governmental rules and regulations; provided, however, that the
Borrower shall not be required to pay or discharge or cause to be paid
or discharged any such tax, assessment, charge, lien or claim, or
timely comply with laws and governmental rules so long as the validity
thereof shall be contested by appropriate legal proceedings timely
initiated and conducted in good faith, and (a) in the case of an
unpaid tax, assessment, governmental charge or levy, lien,
encumbrance, charge or claim, such proceedings shall be effective to
suspend the collection thereof from the Borrower, and its properties;
(b) neither such properties nor any part thereof, nor any interest
therein would be in any danger of being sold, forfeited or lost; (c)
in the case of a law and governmental rule or regulation, neither the
Borrower nor the Bank would be in any danger or criminal liability for
failure to comply therewith; and (d) there shall have been established
such reserve or other appropriate provision, if any, with respect
thereto on the books of the entity involved, as shall be required by
Generally Accepted Accounting Principles with respect to any such tax,
assessment, charge, lien, claim, encumbrance, law, rule or regulation,
so contested.
5.4 FINANCIAL STATEMENTS, REPORTS, INVOICES, REQUIREMENTS, AND
CONDITIONS, SPECIFIC LOAN REQUIREMENTS.
1. For purposes of these financial covenants, the following
definitions shall apply:
(a) Debt Service Coverage Ratio - means net profit plus
depreciation, amortization, and interest expense, less dividends,
payments for stock repurchase (modified as provided below), and non-
recurring income, divided by the sum of interest expense and the
current portion of long term debt. An example of non-recurring income
is gains on the sale of assets and income derived from discontinued
operations. Payments under previously announced stock repurchase
programs will be excluded from the calculation of debt service
coverage. Any future stock repurchase program not yet announced must
receive prior Bank approval before it can be excluded from the debt
service coverage calculation.
(b) Liquidity means the sum of cash and marketable
securities.
2. Borrower agrees that the minimum debt service ratio shall
be maintained at 1.2. The debt service coverage ratio will be
calculated on a rolling twenty-four (24) month basis to account for
delayed closings effecting income in any given year.
3. Minimum liquidity to be maintained at all times is
$1,000,000.00. The minimum liquidity requirement establishes a debt
service reserve to offset the effects of delayed closings or any other
matters. The minimum liquidity requirement shall be tested annually.
4. Borrower agrees that it shall not seek or otherwise
undertake any additional debt, of any kind, nature or description, in
excess of $1,000,000.00 in the aggregate, without Bank's express
written consent which consent may be withheld for any reason by Bank.
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5. All shareholder debt is subordinated to the Note and this
Agreement; however, shareholder debt created under any deferred
compensation plans for key employees is specifically excluded from
this requirement of subordination. Borrower agrees that the payment
of any present or future indebtedness to any shareholder shall be
subordinated to any and all payments due Bank pursuant to the terms of
the Note or this Agreement. If necessary to insure payments to Bank,
Borrower agrees to suspend all payments to shareholders.
SECTION 6. FINANCIAL COVENANTS
For so long as any of the loan documents remain in effect and
the obligation remains unpaid, Borrower agrees as follows:
6.1 ANNUAL REPORTS: The Borrower shall furnish to the Bank within
Ninety (90) days after the end of each fiscal year, a profit and loss
statement, reconciliation of surplus statement of the Borrower and a
balance sheet compiled by independent certified public accountants of
recognized standing selected by Borrower and satisfactory to Bank.
Tax returns shall be furnished within thirty (30) days of date of
filing with the United States Treasury Department. Borrower shall
provide annual reports as required herein beginning with calendar year
2002. All reports shall be prepared in accordance with generally
accepted accounting principles and certified by the Chief Financial
Officer of Borrower as being true and accurate.
6.2 ADDITIONAL FINANCIAL COVENANTS: Borrower agrees to maintain
operating accounts at Bank.
SECTION 7. EVENTS OF DEFAULT
7.1 EVENTS OF DEFAULT. In the case of the happening of any of
the following events (herein called "Events of Default"):
a.) Any representation or warranty made by any party hereto
in any loan document or in any report, certificate, financial
statement or other instrument furnished at any time in connection with
the loan documents shall prove to be false or misleading in any
material respect as of the time when made;
b.) Default shall be made in the payment of (i) any principal
of or interest on the note when due, or (ii) the payment of any other
monetary obligation within five (5) business days of written notice
thereof, if no default period is stated in the loan document or
instrument or (iii) the payment of any other monetary obligation as
prescribed by the loan documents.
c.) Default shall be made in the due observance or
performance of any other covenant, condition or agreement to be
observed or performed pursuant to the terms of this Agreement and such
default shall continue unremedied for a period of thirty (30) days
after written notice thereof by the Bank;
d.) The Borrower shall (i) make an assignment for the benefit
of creditors, file a petition in bankruptcy, petition or apply to any
tribunal for the appointment of a custodian, receiver or any trustee
for any of the Borrowers or a substantial part of any of its
properties or assets, or shall commence any proceeding under any
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bankruptcy, reorganization, arrangement, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction, whether
now or hereafter in effect; or if there shall have been filed any such
petition or application, or any such proceeding shall have been
commenced against the Borrower in which an order for relief is entered
or which remains undismissed for a period of thirty (30) days or more;
or the Borrower by any act or omission shall indicate its consent to,
approval of or fail to timely object to any such petition, application
or proceeding or order for relief of the appointment of a custodian,
receiver or any trustee for the Borrower, or any substantial part of
any of its properties or assets, or shall suffer any such
custodianship, receivership or trusteeship to continue undischarged
for a period of thirty (30) days or more; (ii) generally not pay its
debts as such debts become due or admit in writing its inability to
pay its debts as they mature; or (iii) have concealed, removed, or
permitted to be concealed or removed, any part of its properties or
assets, with intent to hinder, delay or defraud its creditors or any
of them, or made or suffered a transfer of any of its property which
may be fraudulent under any bankruptcy, fraudulent conveyance or
similar law; or shall have made any transfer of its property to or for
the benefit of a creditor at a time when other creditors similarly
situated have not been paid; or shall have suffered or permitted,
while solvent, any creditor to obtain a lien upon any of the
collateral through legal proceedings or distraint which is not vacated
or "bonded-off" within thirty (30) days from the date thereof; or (iv)
be "insolvent", as such term is defined in the Bankruptcy Code, 11
U.S.C. Section 101(29), as computed in accordance with Generally
Accepted Accounting Principles;
e) Default be made in the financial covenants found in
Section 6 hereof; herein;
f) Default be made in the Mortgage Modification Agreement or
any other loan document executed simultaneously, including by not
limited to a default in any document assigned to Bank by the
Assignment of Mortgage and Assignment of Loan Documents.
Then, and in each event, and at any time thereafter the
Bank may, at its option and without written notice, take any or all of
the following actions, at the same or different times: (i) terminate
its obligation, if any, to make any additional disbursements under
this Agreement, the Note or any other Agreements, (ii) declare the
obligations, or any of them, to be forthwith due and payable without
presentment, demand, protest or other notice of any kind, all of
which, to the extent permitted by applicable law, are hereby expressly
waived, anything contained herein or in any loan document to the
contrary notwithstanding, (iii) notify account debtors or the obligors
under any collateral hereunder to make payments to the Bank and take
control of any proceeds of collateral, and (iv) take any and all
action and pursue any and all remedies as may be permitted by the loan
documents or by applicable law (including, without limitation,
remedies in respect of the collateral and all rights of banker's lien,
counterclaim or set-off against any deposit account maintained by the
Borrower at any office of the Bank (the Bank shall be deemed to have
exercised any such right of set-off and to have made a charge against
any such deposit account immediately upon the occurrence of an event
of default even though a charge therefor is made on the books of the
Bank subsequent thereto)).
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7.2 ADDITIONAL REMEDIES. At any time after default, the Bank
may at any time in its discretion transfer property constituting
collateral into its own name or that of its nominee and receive the
income thereon and hold the same as security for the obligations or
apply it on principal or interest due on the obligations.
SECTION 8. NEGATIVE COVENANTS
From the date of this Agreement and so long as any of the loan
documents remain in effect and any of the obligations shall be unpaid,
the Borrower will not, without the prior written consent of the Bank:
8.1 NEGATIVE PLEDGE. Either, directly or indirectly, incur,
create, assume or permit to exist any liens with respect to any
collateral now owned or hereafter acquired, or be bound by or subject
to any agreement or option to do so, except:
a.) Liens incurred or pledges or deposits made in connection
with workers' compensation, unemployment insurance, pension and social
security laws, or to secure the performance of bids, tenders,
contracts (other than for the repayment of borrowed money) or leases
or to obtain, accommodate or secure statutory obligations or surety or
appeal bonds, or to obtain, accommodate or secure indemnity,
performance or other similar bonds in the ordinary course of business;
b.) Liens for taxes or assessments and other similar
governmental charges or claims, either (i) not delinquent or (ii)
being contested in good faith by appropriate proceedings and as to
which there shall have been set aside adequate reserves as determined
by the exercise of reasonable business judgement;
c.) Mortgages, pledges, liens, charges, or encumbrances
incurred or created in favor of the Bank in connection with the loan
documents.
8.2 INDEBTEDNESS. Incur, create, assume or permit to exist any
indebtedness or liability other than the outstandings under the note
described in paragraph 2.1 above wherein the collateral described in
Section 2.2 hereof is pledged as security.
8.3 GUARANTEES. Guarantee, endorse, become surety for, indemnify
or otherwise in any way become or be responsible for the obligations
of another, whether by agreement to purchase the indebtedness of
another, or agreement for the furnishing of funds to another, directly
or indirectly, through the purchase of goods, supplies or services (or
by way of stock purchase, capital contribution, advance or loan) for
the purpose of paying or discharging the indebtedness of another, or
otherwise, or enter into or be a party to any contract for the
purchase of merchandise, materials, supplies or other property if such
contract provides that payment for such merchandise, materials,
supplies or other property shall be made regardless of whether
delivery of such merchandise, materials, supplies or other property is
ever made or tendered, except:
a.) Endorsements of negotiable instruments for collection or
deposit in the ordinary course of business;
b.) Indemnities of officers and directors pursuant to
applicable certificate of incorporation and by-laws;
14
c.) Indemnities and guarantees given to the Bank under the
loan documents.
8.4 NO SHARE REPURCHASES. Redeem, retire, purchase or otherwise
acquire directly or indirectly, for value or set apart any sum for the
redemption, retirement, purchase or other acquisition of, any of the
capital stock (or any options or warrants in respect thereof) of the
Borrower or any subsidiary now or hereafter outstanding, except for
purchases pursuant to previously announced stock repurchase programs,
without the prior written consent of the Bank.
8.5 MERGER, ETC. Either directly or indirectly, (a) merge or
consolidate the Borrower or any subsidiary with or into any other
corporation unless the Borrower or such subsidiary, as the case may
be, is the surviving or resulting corporation; or (b) sell, lease or
otherwise dispose of all or substantially all of the assets of the
Borrower and its subsidiaries, unless the transferee or the lessee
shall be acceptable to the Bank, which acceptance must be in writing
and issued by the Bank prior to any sale, lease or other disposition,
and such transferee shall have assumed the obligations of the
transferor or lessor (including in the case of the Borrower its
obligations under the loan documents).
8.6 NATURE OF BUSINESS, ETC.
a.) Directly or indirectly engage in any business activity
which would represent a material change from the kind of business
activity to be engaged in by it as of the date hereof.
b.) Amend the Articles of Incorporation of the Borrower or
any subsidiary to increase the authorized common stock or issue
additional stock of any class or type or issue any capital stock of
any class or type of Borrower or any subsidiary, unless in the
ordinary course of business.
c.) Dispose of, transfer, hypothecate, pledge as collateral
or sell any shares of stock in Borrower, unless in the ordinary course
of business including the issuance of shares upon the exercise of
stock options pursuant to the existing stock option plan.
SECTION 9. GUARANTEE
There is no Guarantor.
SECTION 10. MISCELLANEOUS
10.1 PREPAYMENT. Provided no event of default shall have
occurred, Bank grants to Borrower the right to prepay without penalty
in whole or in part from time to time, the indebtedness evidenced by
any of the notes.
10.2 APPLICABLE LAW. Each of the loan documents shall be
construed in accordance with and governed by the internal laws of the
State of Florida without giving effect to principles of conflict of
laws.
15
10.3 MODIFICATION OF AGREEMENT. No modification or waiver of any
provision of the loan documents nor consent to any departure by the
Borrower shall in any event be effective against the Bank unless the
same shall be in writing and signed by all parties hereto, and then
such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No notice to or demand
on the Borrower or any Guarantor in any case shall entitle such
parties to any other or further notice or demand in the same, similar
or other circumstances.
10.4 WAIVER OF RIGHTS BY THE BANK. No failure or delay on the
part of the Bank in exercising any right, power or privilege under the
loan documents shall operate as a waiver thereof, nor shall a single
or partial exercise thereof preclude any other or further exercise or
the exercise of any other right, power or privilege.
10.5 SEVERABILITY; CONFLICTS.
a.) In case any one or more of the provisions contained in
the loan documents should be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining
provisions contained herein and therein shall not in any way be
affected or impaired thereby.
b.) In the event of any conflict, inconsistency or ambiguity
between the provisions of this Agreement and the provisions of any
other loan document, the provisions of this Agreement shall prevail.
10.6 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original, but all of
which, when taken together, shall constitute but one instrument.
10.7 HEADINGS. The name of this Agreement, as well as Section
headings used herein, are for convenience of reference only and are
not to affect the construction of, or be taken into consideration in
interpreting this Agreement.
10.8 TERMS. Any term used herein shall be equally applicable to
both the singular and plural forms.
10.9 EXPENSES OF THE BANK. Borrower will pay all out-of-pocket
expenses incurred by the Bank in connection with the preparation of
the loan documents (whether or not the transaction contemplated hereby
shall be consummated), the enforcement and protection in any legal or
equitable proceeding of the rights of the Bank in connection with any
action or claim under the loan documents, including the note, or in
any way related thereto, including, without limitation, the reasonable
fees and disbursements of counsel for the Bank.
10.10 WAIVER OF JURY TRIAL, ETC.
a.) THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT, THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
HEREIN. FURTHER, THE BORROWERS HEREBY CERTIFY THAT NO REPRESENTATIVE
OR AGENT OF THE BANK NOR THE BANK'S COUNSEL HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT THE BANK WOULD NOT, IN THE EVENT OF SUCH
16
LITIGATION, SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL
PROVISION. FINALLY, EACH OF THE BORROWER AND THE GUARANTORS
ACKNOWLEDGES THAT THE BANK HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, INTER ALIA, THE PROVISIONS OF THIS SECTION 10.10.
b.) The Borrower hereby waives any plea of jurisdiction or
venue as not being a resident of Volusia County, Florida, and hereby
specifically authorizes any action brought upon the enforcement of the
loan documents by the Bank to be instituted and prosecuted in either
the Circuit Court of Volusia County, Florida or the United States
District Court for the Middle District
IN WITNESS WHEREOF, the parties hereto have caused this Master
Loan and Security Agreement to be duly executed, sealed and delivered
the day and year first above written.
"BANK"
Kathy Poal SUNTRUST BANK
- ----------
Susan M. Hill By:/S/ John R. Browning
- ------------- --------------------
"BORROWER"
CONSOLIDATED-TOMOKA LAND
CO., a Florida corporation
Jeff Blass By:/S/ Bruce W. Teeters
- ---------- --------------------
Bruce W. Teeters,
Sr. Vice President
and Treasurer
Jeff Blass By:/S/ Robert F. Apgar
- ---------- -------------------
Robert F. Apgar,
Vice President and
General Counsel
17
STATE OF FLORIDA
COUNTY OF VOLUSIA
The foregoing instrument was acknowledged before me this 1ST day of
JULY, 2002, by JEFFREY D. BLASS of SunTrust Bank, who is personally
known to me or who has produced a driver's license as identification
and who did not take an oath.
/S/Susan M. Hill
----------------
Notary Public
STATE OF FLORIDA
COUNTY OF VOLUSIA
The foregoing instrument was acknowledged before me this 1ST day of
JULY, 2002, by Bruce W. Teeters as Sr. Vice President and Treasurer of
CONSOLIDATED-TOMOKA LAND CO., a Florida corporation, who is personally
known to me or who has produced a driver's license as identification
and who did not take an oath.
/S/Susan M. Hill
----------------
Notary Public
STATE OF FLORIDA
COUNTY OF VOLUSIA
The foregoing instrument was acknowledged before me this 1ST day of
JULY, 2002, by Robert F. Apgar as Vice President and General Counsel
for CONSOLIDATED-TOMOKA LAND CO., a Florida corporation, who is
personally known to me or who has produced a driver's license as
identification and who did not take an oath.
/S/Susan M. Hill
----------------
Notary Public
18
EXHIBIT 10.9
MASTER LOAN AND SECURITY AGREEMENT
THIS AGREEMENT, made this 31st day of MAY, 2002, by and
among SUNTRUST BANK with its principal banking address at 120 South
Ridgewood Avenue, Daytona Beach, FL 32114 hereinafter called "the
Bank"), and CONSOLIDATED-TOMOKA LAND CO., a Florida corporation
(hereinafter called "the Borrower")
WITNESSETH:
SECTION 1. DEFINITIONS
1.1 DEFINED TERMS. As used in this Agreement, the following terms
shall have the 3333following meanings, unless the context otherwise
requires:
a.) AGREEMENT shall mean this Master Loan Agreement as it may
from time to time be amended, supplemented or otherwise modified in
accordance with its terms.
b.) BUSINESS DAY shall mean a day other than a Saturday,
Sunday, or other day on which commercial banks are authorized or
required to close under the laws of the State of Florida.
c.) COLLATERAL shall have the meaning set forth in Section 2.2
of this Agreement.
d.) COLLATERAL AGREEMENTS shall mean all agreements creating
or intending to create a security interest in or lien upon the
Collateral or any other security for repayment of the obligations, if
the loan is secured.
e.) DEFAULT RATE shall mean the maximum annual rate of
interest permitted by then applicable law.
f.) EQUIPMENT If the loan is secured, shall mean all
equipment (as such term is defined in the Uniform Commercial Code as
from time to time in effect in the State of Florida), now owned or
hereafter acquired by the Borrower located on the real property
encumbered by the mortgage defined herein.
g.) EVENTS OF DEFAULT shall have the meaning assigned to it as
set forth in Section 7 of this Agreement.
h.) GENERALLY ACCEPTED ACCOUNTING PRINCIPLES shall mean
generally accepted accounting principles in effect from time to time,
consistently applied.
i.) LIEN. The Loan is unsecured.
j.) LOAN DOCUMENTS shall mean this Agreement, the Note, as
well as any other documents, instruments or agreements executed in
connection with the transactions contemplated herein.
k.) MORTGAGED PROPERTY. This loan is unsecured.
l.) NOTE shall mean the note referred to herein.
m.) OBLIGATIONS shall mean, collectively, (i) the unpaid
principal amount of and accrued interest on the Note, and (ii) all
other obligations and liabilities (primary, secondary, direct,
contingent, sole, joint or several, whether similar or dissimilar or
related or unrelated) of the Borrower, due or to become due, now
existing or hereafter incurred, contracted or acquired, whether
arising under, out of or in connection with the Loan Documents or
otherwise.
n.) REAL ESTATE MORTGAGE. This loan is unsecured.
o.) CURRENT ASSETS shall mean, at any date, the aggregate
amount of all assets which would be properly classified as current
assets at such date, but excluding deferred assets, all computed in
accordance with Generally Accepted Accounting Principles applied on a
consistent basis.
1
p.) CURRENT LIABILITIES shall mean, at any date, all
liabilities (including tax and other proper accruals), which would be
properly classified as current liabilities at such date, but excluding
deferred liabilities, all computed in accordance with Generally
Accepted Accounting Principles applied on a consistent basis.
q.) DEBT TO TANGIBLE NET WORTH RATIO shall mean, on any date
of determination thereof, the ratio of the Borrower's total
liabilities less subordinated debt to tangible net worth.
r.) EMPLOYEE PLAN shall mean any employee plan which is
subject to the provisions of Title IV of the Employee Retirement
Income Security Act of 1974, as, from time to time, amended and which
is maintained (in whole or in part) for employees of the Borrower or
any subsidiary.
s.) EQUIPMENT shall mean all equipment (as such term is
defined in the Uniform Commercial Code as from time to time in effect
in the State of Florida), now owned or hereafter acquired by the
Borrower, wherever located, if the loan is secured.
t.) GUARANTEE. There are no guarantors.
u.) PLEDGED PROPERTY. This loan is unsecured.
v.) CROSS COLLATERALIZATION AGREEMENT. Not applicable.
w.) LIBOR As used herein "LIBOR Rate" means the thirty (30)
day LIBOR interest rate as quoted in the Wall Street Journal.
x.) UCC-1 shall mean that certain UCC-1 to be executed and
recorded simultaneous with the execution of the note described herein
and this Agreement to be recorded in the Public Records of the State
of Florida and such County Public Records as required by Bank, if the
loan is unsecured.
y.) REPORTABLE EVENT shall mean a Reportable Event as defined
in Title IV of ERISA.
z.) TANGIBLE NET WORTH shall mean, at any date, (a)(i) the
aggregate amount of all assets that may properly be classified on a
balance sheet as such and excluding from such assets the amount of any
write-up or revaluation of any assets occurring after the date hereof
and receivables due from any officer, director, employee or Affiliate,
LESS (ii) the aggregate amount of all assets included as capitalized
research and development costs, capitalized interest or financing
costs, net leasehold improvements (except as to Borrower's LPGA Golf
Facilities), debt discount, good-will, patents, trademarks,
copyrights, franchises, prepaid expenses and such other assets
classified as "intangible assets", LESS (b) the aggregate amount of
all unsubordinated debt and reserves, LESS (c) amounts due from
officers and related parties, all computed and consolidated in
accordance with Generally Accepted Accounting Principles.
aa.) UNSUBORDINATED DEBT shall mean, at any date, all
liabilities which would be included on a balance sheet as such other
than indebtedness which is subject to a Subordination Agreement.
bb.) WORKING CAPITAL shall mean, as of any date, the excess
of current assets over current liabilities.
cc.) NET WORTH shall mean, at any date, (a) the aggregate
amount of all assets that may properly be classified on a balance
sheet as such and excluding from such assets the amount of any write-
p or revaluation of any assets occurring after the date hereof less
(b) the aggregate amount of all liabilities, all computed and
consolidated in accordance with Generally Accepted Accounting
Principles.
dd.) CURRENT RATIO means Current Assets divided by Current
Liabilities.
2
ee.) DEBT TO WORTH RATIO means the ratio of Debt to Worth;
with "Debt" defined as Total Liabilities less subordinated debt, and
"Worth" defined as total stockholder's equity LESS intangible assets,
LESS amounts due from officers and affiliates, LESS distributions (as
defined below), PLUS subordinated debt, all per generally accepted
accounting principles. For interim covenant calculation purposes,
distributions will be estimated at 40% of net income before taxes or
the Bank will utilize the actual amount of distributions, whichever is
greater.
ff.) DEBT SERVICE COVERAGE means (a) net income before taxes
minus withdrawals (not to exceed 60% of net income before taxes) plus
(i) interest expense, (ii) depreciation and (iii) amortization divided
by (b) current portion of long term debt (of all loans) plus interest
expenses, all per generally accepted accounting principles.
gg.) INTANGIBLE ASSETS means any personal property (including
choses in action) other than goods, accounts, chattel paper,
documents, instruments and money and including, but not limited to all
of the Borrower's now owned or hereafter acquired (i) deferred assets,
other than prepaid insurance and prepaid taxes, (ii) goodwill,
manufacturing and processing rights, rights and patents, technology,
patent rights, licenses, franchises, permits, copyrights, trademarks,
service marks, trade names, trade styles, trademark and trade name
registrations, and applications, trade secrets, customer lists, tax
refund claims, incentive payments, insurance proceeds, experimental
expenses and other similar assets which would be classified as
"intangible assets" under GAAP, (iii) treasury stock and any write-up
of the value of any assets after the date hereof unless in accordance
with GAAP, (iv) contract rights, and (v) all proceeds of any and all
of the foregoing.
hh.) ADVANCE means any monies advanced to the Borrower by the
Bank pursuant to this Agreement.
ii.) PRIME RATE means that the rate of interest published by
Bank from time to time and designated as its Prime Rate. The Bank's
Prime Rate is internally determined by the Bank's Management and is
based upon prevailing business conditions and other conditions in the
credit markets. The Prime Rate is not necessarily the lowest or best
rate offered to any particular customer of Bank.
All terms defined in or incorporated into this Agreement shall
have defined meanings when used in any certificate or other instrument
made or delivered pursuant hereto unless the context otherwise
requires. Each accounting term used but not defined herein, shall
have the meaning given to it under Generally Accepted Accounting
Principles.
SECTION 2. THE FACILITIES
2.1 Loan/Notes
Subject to the terms and conditions of this Agreement, the Bank
agrees to loan to Borrower the maximum sum of Seven Million and 00/100
($7,000,000.00) Dollars as a line of credit under the following
terms:
1. BORROWER: Advances under the line shall be made to
Borrower who shall be responsible for the repayment of the advances
and all interest and other charges.
3
2. AMOUNT OF LINE: The maximum amount of outstandings under
the line shall be up to Seven Million ($7,000,000.00) and 00/100
Dollars. Advances under this line will be used primarily for short
term working capital needs of Borrower.
Advances under the line shall be subject to the following
additional requirements:
(a) Borrower shall not be in default with any obligations
due Bank.
(b) Operating account must be opened by Borrower with Bank.
3. PURPOSE: Advances under the line will be used primarily
for the short term working capital needs of Borrower.
4. TERM OF LINE: The line shall be represented by a
promissory note or notes, payable ON DEMAND. The bank's obligation to
advance under this Line of Credit may be terminated at any time if:
(i) in the sole opinion of the Bank, the Borrower is no
longer creditworthy, (ii) it is learned that the Borrower made
material misrepresentation to obtain the credit, (iii) the Borrower
refuses to cooperate with Bank by the submission of requested
information in order to evaluate or update the Borrower's overall
financial condition, (iv) the Borrower no longer maintains a
satisfactory relationship with the Bank. In any event, the Note and
Agreement shall be reviewed annually by May 31 (commencing May 31,
2003) for reaffirmation. The continuation of the Note and
Agreement shall depend upon the Borrower's overall banking
relationship with the Bank, the continued satisfactory financial
condition of the Borrower, and the Borrower's willingness to cooperate
in submitting requested reports, information and data with which the
Bank may evaluate the Borrower's overall creditworthiness.
5. INTEREST RATE: Advances under the line shall bear and
accrue interest at a rate per annum which shall be the lower of the
variable rate of 150 basis points above the thirty (30) day Libor Rate
as quoted in the Wall Street Journal or one percent (1%) below Bank's
Prime Rate computed monthly. Interest shall be due and payable
monthly. Interest shall be calculated using a year base of 360 days
and charged for the actual number of days elapsed in an interest
period.
6. SERVICE FEE: Zero (0).
7. ADVANCES: The sums contemplated to be advanced may be
repaid and re-advanced pursuant to the terms hereof, so long as this
Agreement and Note remains in effect. The advance may be prepaid in
whole or in part at any time without prepayment premium, penalty, or
fee whatsoever.
8. LINE OF CREDIT PAY DOWN. Prior to May 31, 2003, and prior
to May 31 of every year thereafter; Borrower agrees that for one (1)
consecutive thirty (30) day period, the outstanding obligations on the
Note shall not exceed $1,000.00.
9. LOAN GUARANTY. None
4
10. REVIEW: The Bank will review the relationship with
Borrower and the pricing structure of this line as of May 31, 2003,
and every twelve (12) months thereafter, for reaffirmation of the
relationship and the credit line.
11. PENALTY INTEREST CHARGE: In the event the Borrower fails
to perform certain administrative tasks as provided herein, to-wit:
the failure to provide financial information, the failure to maintain
insurance, the failure to provide evidence of payment of debts, taxes,
or lawful claims, the Bank shall increase the applicable interest rate
on the loan by imposing an additional penalty interest surcharge as
hereinafter provided. For a period beginning three (3) days after
written noticed default, the Bank shall increase the interest charge
by one quarter of one percent (.25%) for the first thirty (30) days of
the default and increase the interest rate an additional one quarter
of one percent (.25%) during each thirty (30) day period thereafter
during which the noticed default continues. Such interest penalty
surcharge shall apply to the outstanding principal balance of the
loan. Upon the curing of the noticed default, the interest rate of
the loan shall revert to the initial agreed-upon interest rate
effective on the date on which the default is cured.
12. HAZARD INSURANCE: None.
13. ANNUAL REPORTS: The Borrower shall furnish to the Bank
within Ninety (90) days after the end of each fiscal year, a profit
and loss statement, reconciliation of surplus statement of the
Borrower for each year, and a balance sheet as of the end of such year
compiled by independent certified public accountants of recognized
standing selected by Borrower and satisfactory to Bank. Tax returns
shall be furnished within thirty (30) days of date of filing with the
United States Treasury Department. Borrower shall provide annual
reports as required herein beginning with calendar year 2002. All
reports shall be prepared in accordance with generally accepted
accounting principles and certified by the Chief Financial Officer of
Borrower as being true and accurate.
14. LOAN SECURITY: Unsecured.
15. FURTHER REVIEW TO DISBURSEMENT REQUEST: Notwithstanding
any provision contained herein, Bank reserves the right to limit
disbursements, in Bank's sole discretion, if Bank deems itself
insecure.
16. LATE CHARGE: Lender may, at its option, assess a late
charge not to exceed 5% of the amount of any installment payment not
paid when due.
17. CLOSING INDEMNITY: Borrower agrees to pay all documentary
stamps, intangible taxes, and all other closing taxes and expenses
that may be required either at closing or subsequent thereto. If
additional closing charges, expenses or taxes are deemed to be due
after closing, Borrower agrees to pay said charges immediately upon
notification by Bank. Borrower agrees to indemnify Bank and hold Bank
harmless from all claims, demands or charges regarding any closing
fees, costs, expenses or taxes arising from this transaction
whatsoever, and further agrees to defend Bank if necessary at trial
and on appeal.
5
2.2 SECURITY: As security for the payment of the note described
in paragraph 2.1 and all substitutions, renewals or extensions
thereof, the Borrower assigns, pledges and grants to Bank a security
interest in the following:
a.) Borrower's agreement regarding Cross Default. This
Agreement and Note is made and issued in conjunction with other credit
commitments and loans to the Borrower from Bank. A default under this
Agreement and/or Note shall constitute a default under all commitments
and loans issued to Borrower by Bank. A default under any other
commitment or loan documents (i.e., Notes, Mortgages, UCC-1's
Assignments of Rent, Loan Agreements, etc.) by Borrower regarding a
loan transaction between Borrower and Bank shall be deemed a default
in this Note and Agreement.
b.) The Loan Commitment issued to Borrower by Bank for this
transaction. The loan commitment shall survive the closing and all
terms and conditions of said Loan Commitment as amended and modified
shall remain fully binding obligations of all parties after closing.
A default in the note described in paragraph 2.1 above and/or a
default in the terms and conditions of any collateral documents
referenced above and/or a default in any of the terms or conditions of
the commitment letter referenced in subparagraph (b) above, and/or a
default in any of the terms or conditions of this Agreement and/or a
default in any other terms and conditions of any other loan between
Borrower and Bank shall be deemed a default in each and all of the
referenced foregoing loan documents. A default in any one is a
default in all and Bank shall have any and all remedies as provided in
any and all of the foregoing referenced documents and/or agreements.
SECTION 3. REPRESENTATIONS AND WARRANTIES
3.1 Organization, Standing, Corporate Powers, Etc.
a.) The Borrower (i) is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
organization, (ii) has all requisite power and authority, corporate or
otherwise, to conduct its business as now being conducted and to own
its properties and assets, and (iii) is duly qualified to do business
in every jurisdiction wherein the failure to so qualify would have a
material adverse effect.
b.) The Borrower has all requisite power and authority to
execute and deliver, and to perform all of its obligations under the
loan documents to which it is a party.
c.) The loan documents are legal, valid and binding
obligations of the Borrower enforceable in accordance with their
respective terms, subject to bankruptcy, insolvency, reorganization or
other laws affecting creditors' rights generally, moratorium laws from
time to time in effect and subject to the application of equitable
principles.
3.2 AUTHORIZATION OF BORROWING, ETC.
a.) The execution, delivery and performance of this
Agreement (i) will not violate any provision of applicable law, any
governmental rule or regulation, any order of any court or other
agency of government to which Borrower is subject and (ii) does not
violate any provision of any indenture, agreement or other instrument
to which the Borrower is a party or by which the Borrower is bound
6
and which is material to the conduct or operation of the Borrower's
respective businesses and financial affairs, or be in conflict with,
result in a breach of or constitute (with due notice or lapse of time
or both) a default under any provision of such indenture, agreement or
other instruments, or result in the creation or imposition of any
lien, charge or encumbrance of any nature whatsoever upon any of the
properties or assets of the Borrower other than as provided in the
Loan Documents.
b.) To the knowledge of the Borrower, no registration
with, consent or approval of, or other action by any Federal, State or
other governmental authority, regulatory body or court of law is
required in connection with the execution, delivery and performance of
this Agreement by it or with the execution and delivery of and
performance under the Loan Documents, the borrowing thereunder by it
or, if so required, such registration has been made, such consent or
approval has been obtained and is final and not appealable or such
other action has been taken heretofore and proof thereof furnished to
the Bank.
c.) Bank acknowledges that Borrower has three (3)
outstanding Letters of Credit with First Union National Bank /
Wachovia which will expire no later than November 30, 2002. Borrower
agrees not to renew or otherwise obtain any additional Letters of
Credit unless obtained through Bank, without Bank's express written
consent. Bank further acknowledges that Borrower has an existing Line
of Credit with First Union National Bank / Wachovia which line of
credit will remain open in the approximate sum of $600,000.00 until
the Letters of Credit referenced above have expired. Borrower agrees
not to draw on the Line of Credit with First Union National Bank /
Wachovia and agrees to terminate said Line of Credit upon expiration
of the above referenced Letters of Credit. Borrower agrees not to
renew said Line of Credit and agrees not to obtain any additional
lines of credit unless obtained through Bank, without Bank's express
written consent.
3.3 FINANCIAL STATEMENTS. The Borrower has heretofore
furnished to the Bank financial statements.
Such financial statements fairly present the financial condition
and the results of operations of the Borrower as of the dates and for
the periods indicated to the best of Borrowers' knowledge; and
further, to the best of the Borrowers' knowledge such balance sheets
show all known material liabilities, direct or contingent, as of the
respective dates thereof, and such financial statements were prepared
in accordance with generally accepted accounting principles.
3.4 ADVERSE CHANGE. There has been no material adverse change in
the business, properties or condition (financial or otherwise) of the
Borrower since the date of the most recent of the financial statements
listed above.
3.5 TITLE TO PROPERTIES. The Borrower owns all of their
properties and assets reflected on the financial statements referred
to in Section 3.3 hereof, except for such properties and assets as
have been disposed of since that date as no longer used or useful in
the conduct of its business; or as may be sold or otherwise disposed
of in the ordinary course of business. All such properties and
7
assets are free and clear of all mortgages, pledges, liens, charges
and other encumbrances of any nature whatsoever, except those
specifically referenced in this Agreement; and except as provided in
the financial statements.
3.6 LITIGATION. Except as provided herein there are no actions,
suits or proceedings pending or, to the knowledge of the Borrower,
overtly threatened against or affecting the Borrower at law or in
equity, or before or by any Federal, state, municipal or other
governmental court, tribunal, department, commission, board, bureau,
agency or instrumentality, domestic or foreign, which involve any of
the transactions herein contemplated or the possibility of any
judgement or liability which would, in the case of the Borrower,
result in any material adverse change in the business, operations,
properties or assets or in the financial condition of the Borrower or
materially and adversely affect Borrower's ability to perform under
the loan documents. The Borrower is not in default with respect to
(a) any judgement, order, writ, injunction or decree or (b) any rule
or regulation of any court or Federal, state, municipal or other
governmental court, tribunal, department, commission, board, bureau,
agency or instrumentality, domestic or foreign which would have a
material adverse effect on its business, properties or condition
(financial or otherwise).
3.7 PAYMENTS OF TAXES. The Borrower has filed or caused to be
filed all Federal, state and local tax returns that are required to be
filed and has paid or caused to be paid all taxes shown on such
returns or on any assessment received by it, to the extent that such
taxes have become due, except taxes the validity of which is being
contested in good faith by appropriate proceedings and for which, in
the case of the Borrower, in the exercise of reasonable business
judgement, there have been set aside adequate reserves with respect to
any such tax or assessment so contested and, in the case of the
Guarantors, the tax or assessment so contested.
3.8 PRIORITY OF SECURITY INTEREST. Subject (a) to filing and
recordation of the appropriate instruments in the appropriate offices
of the proper jurisdictions, (b) to the enforcement of remedies, to
bankruptcy, insolvency, and other laws affecting creditors' rights
generally and to moratorium laws, from time to time in effect, and (c)
to general equitable principles which may limit the right to obtain
the remedy of specific performance; each of the security interests
granted to the Bank in the collateral under Section 2.2 of this
Agreement constitutes a valid security interest.
SECTION 4. CONDITIONS OF LENDING
The obligation of the Bank to make available funds under this
Master Loan Agreement is subject to the following conditions
precedent:
4.1 REPRESENTATION AND WARRANTIES. At the date of each Loan or
advance the representations and warranties set forth in Section 3
hereof shall be true and correct on and as of such date, with the same
effect as though such representations and warranties had been made on
and as of such date, except to the extent that such representations
and warranties relate solely to an earlier date.
8
4.2 NO DEFAULT. At the date of each advance hereunder, no event
of default, or event which with the giving of notice or of the passage
of time, or both, would constitute an event of default, shall have
occurred and be continuing and the representations and warranties of
the Borrower contained herein shall remain true and correct as of such
date except to the extent that such representations and warranties
relate to an earlier date.
SECTION 5. AFFIRMATIVE COVENANTS
From the date of this Agreement and so long as any of the Loan
Documents remain in effect and any of the obligations shall be unpaid,
the Borrower and, as specified hereinbelow, each of the Guarantors
(jointly and severally), as the case may be, will:
5.1 EXISTENCE, PROPERTIES, ETC.
To the extent that the same are necessary for the proper and
advantageous conduct of its business:
a.) Do or cause to be done all things necessary to preserve,
renew and keep in full force and effect all rights, licenses, permits
and franchises and comply with all laws and regulations applicable to
it and conduct and operate its business in substantially the manner in
which it is presently conducted and operated;
b.) At all times preserve all property (except for such property
as is disposed of in the ordinary course of business) used or useful
in the conduct of its business and keep the same in good repair,
working order and condition (subject to normal wear and tear), and
from time to time make, or cause to be made, all needful and proper
repairs, renewals, replacements, betterments and improvements thereto.
5.2 INSURANCE. Maintain in effect adequate insurance for all
assets reflected on Borrower's financial statements, by financially
sound and reputable insurers, and maintain or cause to be maintained
such other insurance to such extent and against such risks, including
fire and other risks insured against by extended coverage, as is
customary with companies in the same or similar business, and maintain
in full force and effect public liability insurance against claims for
personal injury, death or property damage occurring upon, in, about or
in connection with the use of any properties owned, occupied or
controlled by it and maintain such other insurance as may be required
by law, or as may be reasonably required in writing by the Bank.
5.3 OBLIGATIONS, TAXES AND LAWS. Pay all indebtedness and
obligations promptly and in accordance with their respective terms if
the failure to make such payments would adversely affect either the
Borrower's ability to perform or the rights of the Bank under the loan
documents, and pay and discharge promptly all taxes, assessments and
governmental charges or levies imposed upon it or in respect of its
property, before the same shall become in default, as well as all
lawful material claims for labor, materials, and supplies or otherwise
which, if unpaid, might become a lien or charge upon such property or
any part thereof, and timely comply with all applicable laws and
governmental rules and regulations; provided, however, that the
Borrower shall not be required to pay or discharge or cause to be paid
or discharged any such tax, assessment, charge, lien or claim, or
timely comply with laws and governmental rules so long as the validity
thereof shall be contested by appropriate legal proceedings timely
9
initiated and conducted in good faith, and (a) in the case of an
unpaid tax, assessment, governmental charge or levy, lien,
encumbrance, charge or claim, such proceedings shall be effective to
suspend the collection thereof from the Borrower, and its properties;
(b) neither such properties nor any part thereof, nor any interest
therein would be in any danger of being sold, forfeited or lost; (c)
in the case of a law and governmental rule or regulation, neither the
Borrower nor the Bank would be in any danger or criminal liability for
failure to comply therewith; and (d) there shall have been established
such reserve or other appropriate provision, if any, with respect
thereto on the books of the entity involved, as shall be required by
Generally Accepted Accounting Principles with respect to any such tax,
assessment, charge, lien, claim, encumbrance, law, rule or regulation,
so contested.
5.4 FINANCIAL STATEMENTS, REPORTS, INVOICES, REQUIREMENTS, AND
CONDITIONS, SPECIFIC LOAN REQUIREMENTS.
1. For purposes of these financial covenants, the following
definitions shall apply:
(a) Debt Service Coverage Ratio - means net profit plus
depreciation, amortization, and interest expense, less dividends,
payments for stock repurchase (modified as provided below), and non-
ecurring income, divided by the sum of interest expense and the
current portion of long term debt. An example of non-recurring income
is gains on the sale of assets and income derived from discontinued
operations. Payments under previously announced stock repurchase
programs will be excluded from the calculation of debt service
coverage. Any future stock repurchase program not yet announced must
receive prior Bank approval before it can be excluded from the debt
service coverage calculation.
(b) Liquidity means the sum of cash and marketable
securities.
2. Borrower agrees that the minimum debt service ratio shall be
maintained at 1.2. The debt service coverage ratio will be calculated
on a rolling twenty-four (24) month basis to account for delayed
closings effecting income in any given year.
3. Minimum liquidity to be maintained at all times is
$1,000,000.00. The minimum liquidity requirement establishes a debt
service reserve to offset the effects of delayed closings or any other
matters. The minimum liquidity requirement shall be tested annually.
4. Borrower agrees that it shall not seek or otherwise undertake
any additional debt, of any kind, nature or description, in excess of
$1,000,000.00 in the aggregate, without Bank's express written consent
which consent may be withheld for any reason by Bank.
5. Prior to May 31, 2003, and prior to May 31 of every year
thereafter; Borrower agrees that for one (1) consecutive thirty (30)
day period, the outstanding obligations on the Note shall not exceed
$1,000.00.
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6. All shareholder debt is subordinated to the Note and this
Agreement; however, shareholder debt created under any deferred
compensation plans for key employees is specifically excluded from
this requirement of subordination. Borrower agrees that the payment
of any present or future indebtedness to any shareholder shall be
subordinated to any and all payments due Bank pursuant to the terms of
the Note or this Agreement. If necessary to insure payments to Bank,
Borrower agrees to suspend all payments to shareholders.
SECTION 6. FINANCIAL COVENANTS
For so long as any of the loan documents remain in effect and the
obligation remains unpaid, Borrower agrees as follows:
6.1 ANNUAL REPORTS: The Borrower shall furnish to the Bank within
Ninety (90) days after the end of each fiscal year, a profit and loss
statement, reconciliation of surplus statement of the Borrower and a
balance sheet compiled by independent certified public accountants of
recognized standing selected by Borrower and satisfactory to Bank.
Tax returns shall be furnished within thirty (30) days of date of
filing with the United States Treasury Department. Borrower shall
provide annual reports as required herein beginning with calendar year
2002. All reports shall be prepared in accordance with generally
accepted accounting principles and certified by the Chief Financial
Officer of Borrower as being true and accurate.
6.2 ADDITIONAL FINANCIAL COVENANTS: Borrower agrees to maintain
operating accounts at Bank.
SECTION 7. EVENTS OF DEFAULT
7.1 EVENTS OF DEFAULT. In the case of the happening of any of
the following events (herein called "Events of Default"):
a.) Any representation or warranty made by any party hereto
in any loan document or in any report, certificate, financial
statement or other instrument furnished at any time in connection with
the loan documents shall prove to be false or misleading in any
material respect as of the time when made;
b.) Default shall be made in the payment of (i) any principal
of or interest on the note when due, or (ii) the payment of any other
monetary obligation within five (5) business days of written notice
thereof, if no default period is stated in the loan document or
instrument or (iii) the payment of any other monetary obligation as
prescribed by the loan documents.
c.) Default shall be made in the due observance or
performance of any other covenant, condition or agreement to be
observed or performed pursuant to the terms of this Agreement and such
default shall continue unremedied for a period of thirty (30) days
after written notice thereof by the Bank;
d.) The Borrower shall (i) make an assignment for the benefit
of creditors, file a petition in bankruptcy, petition or apply to any
tribunal for the appointment of a custodian, receiver or any trustee
for any of the Borrowers or a substantial part of any of its
properties or assets, or shall commence any proceeding under any
11
bankruptcy, reorganization, arrangement, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction, whether
now or hereafter in effect; or if there shall have been filed any such
petition or application, or any such proceeding shall have been
commenced against the Borrower in which an order for relief is entered
or which remains undismissed for a period of thirty (30) days or more;
or the Borrower by any act or omission shall indicate its consent to,
approval of or fail to timely object to any such petition, application
or proceeding or order for relief of the appointment of a custodian,
receiver or any trustee for the Borrower, or any substantial part of
any of its properties or assets, or shall suffer any such
custodianship, receivership or trusteeship to continue undischarged
for a period of thirty (30) days or more; (ii) generally not pay its
debts as such debts become due or admit in writing its inability to
pay its debts as they mature; or (iii) have concealed, removed, or
permitted to be concealed or removed, any part of its properties or
assets, with intent to hinder, delay or defraud its creditors or any
of them, or made or suffered a transfer of any of its property which
may be fraudulent under any bankruptcy, fraudulent conveyance or
similar law; or shall have made any transfer of its property to or for
the benefit of a creditor at a time when other creditors similarly
situated have not been paid; or shall have suffered or permitted,
while solvent, any creditor to obtain a lien upon any of the
collateral through legal proceedings or distraint which is not vacated
or "bonded-off" within thirty (30) days from the date thereof; or (iv)
be "insolvent", as such term is defined in the Bankruptcy Code, 11
U.S.C. Section 101(29), as computed in accordance with Generally
Accepted Accounting Principles;
e) Default be made in the financial covenants found in
Section 6 hereof; herein;
then, and in each event, and at any time thereafter the Bank may,
at its option and without written notice, take any or all of the
following actions, at the same or different times: (i) terminate its
obligation, if any, to make any additional disbursements under this
Agreement, the Note or any other Agreements, (ii) declare the
obligations, or any of them, to be forthwith due and payable without
presentment, demand, protest or other notice of any kind, all of
which, to the extent permitted by applicable law, are hereby expressly
waived, anything contained herein or in any loan document to the
contrary notwithstanding, (iii) notify account debtors or the obligors
under any collateral hereunder to make payments to the Bank and take
control of any proceeds of collateral, and (iv) take any and all
action and pursue any and all remedies as may be permitted by the loan
documents or by applicable law (including, without limitation,
remedies in respect of the collateral and all rights of banker's lien,
counterclaim or set-off against any deposit account maintained by the
Borrower at any office of the Bank (the Bank shall be deemed to have
exercised any such right of set-off and to have made a charge against
any such deposit account immediately upon the occurrence of an event
of default even though a charge therefor is made on the books of the
Bank subsequent thereto)).
7.2 ADDITIONAL REMEDIES. At any time after default, the Bank may
at any time in its discretion transfer property constituting
collateral into its own name or that of its nominee and receive the
income thereon and hold the same as security for the obligations or
apply it on principal or interest due on the obligations.
12
SECTION 8. NEGATIVE COVENANTS
From the date of this Agreement and so long as any of the loan
documents remain in effect and any of the obligations shall be unpaid,
the Borrower will not, without the prior written consent of the Bank:
8.1 NEGATIVE PLEDGE. Either, directly or indirectly,
incur, create, assume or permit to exist any liens with respect to any
collateral now owned or hereafter acquired, or be bound by or subject
to any agreement or option to do so, except:
a.) Liens incurred or pledges or deposits made in
connection with workers' compensation, unemployment insurance, pension
and social security laws, or to secure the performance of bids,
tenders, contracts (other than for the repayment of borrowed money) or
leases or to obtain, accommodate or secure statutory obligations or
surety or appeal bonds, or to obtain, accommodate or secure indemnity,
performance or other similar bonds in the ordinary course of business;
b.) Liens for taxes or assessments and other similar
governmental charges or claims, either (i) not delinquent or (ii)
being contested in good faith by appropriate proceedings and as to
which there shall have been set aside adequate reserves as determined
by the exercise of reasonable business judgement;
c.) Mortgages, pledges, liens, charges, or encumbrances
incurred or created in favor of the Bank in connection with the loan
documents.
8.2 INDEBTEDNESS. Incur, create, assume or permit to
exist any indebtedness or liability other than the outstandings under
the note described in paragraph 2.1 above.
8.3 GUARANTEES. Guarantee, endorse, become surety for,
indemnify or otherwise in any way become or be responsible for the
obligations of another, whether by agreement to purchase the
indebtedness of another, or agreement for the furnishing of funds to
another, directly or indirectly, through the purchase of goods,
supplies or services (or by way of stock purchase, capital
contribution, advance or loan) for the purpose of paying or
discharging the indebtedness of another, or otherwise, or enter into
or be a party to any contract for the purchase of merchandise,
materials, supplies or other property if such contract provides that
payment for such merchandise, materials, supplies or other property
shall be made regardless of whether delivery of such merchandise,
materials, supplies or other property is ever made or tendered,
except:
a.) Endorsements of negotiable instruments for collection
or deposit in the ordinary course of business;
b.) Indemnities of officers and directors pursuant to
applicable certificate of incorporation and by-laws;
c.) Indemnities and guarantees given to the Bank under the
loan documents.
13
8.4 NO SHARE REPURCHASES. Redeem, retire, purchase or
otherwise acquire directly or indirectly, for value or set apart any
sum for the redemption, retirement, purchase or other acquisition of,
any of the capital stock (or any options or warrants in respect
thereof) of the Borrower or any subsidiary now or hereafter
outstanding, except for purchases pursuant to previously announced
stock repurchase programs, without the prior written consent of the
Bank.
8.5 MERGER, ETC. Either directly or indirectly, (a)
merge or consolidate the Borrower or any subsidiary with or into any
other corporation unless the Borrower or such subsidiary, as the case
may be, is the surviving or resulting corporation; or (b) sell,
lease or otherwise dispose of all or substantially all of the assets
of the Borrower and its subsidiaries, unless the transferee or the
lessee shall be acceptable to the Bank, which acceptance must be in
writing and issued by the Bank prior to any sale, lease or other
disposition, and such transferee shall have assumed the obligations of
the transferor or lessor (including in the case of the Borrower its
obligations under the loan documents).
8.6 NATURE OF BUSINESS, ETC.
a.) Directly or indirectly engage in any business activity
which would represent a material change from the kind of business
activity to be engaged in by it as of the date hereof.
b.) Amend the Articles of Incorporation of the Borrower
or any subsidiary to increase the authorized common stock or issue
additional stock of any class or type or issue any capital stock of
any class or type of Borrower or any subsidiary, unless in the
ordinary course of business.
c.) dispose of, transfer, hypothecate, pledge as collateral
or sell any shares of stock in Borrower, unless in the ordinary course
of business including the issuance of shares upon the exercise of
stock options pursuant to the existing stock option plan.
SECTION 9. GUARANTEE
There is no Guarantor.
SECTION 10. MISCELLANEOUS
10.1 PREPAYMENT. Provided no event of default shall have
occurred, Bank grants to Borrower the right to prepay without penalty
in whole or in part from time to time, the indebtedness evidenced by
any of the notes.
10.2 APPLICABLE LAW. Each of the loan documents shall be
construed in accordance with and governed by the internal laws of the
State of Florida without giving effect to principles of conflict of
laws.
10.3 MODIFICATION OF AGREEMENT. No modification or
waiver of any provision of the loan documents nor consent to any
departure by the Borrower shall in any event be effective against the
Bank unless the same shall be in writing and signed by all parties
hereto, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. No notice to
or demand on the Borrower or any Guarantor in any case shall entitle
such parties to any other or further notice or demand in the same,
similar or other circumstances.
14
10.4 WAIVER OF RIGHTS BY THE BANK. No failure or delay
on the part of the Bank in exercising any right, power or privilege
under the loan documents shall operate as a waiver thereof, nor shall
a single or partial exercise thereof preclude any other or further
exercise or the exercise of any other right, power or privilege.
10.5 SEVERABILITY; CONFLICTS.
a.) In case any one or more of the provisions contained
in the loan documents should be invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in any way
be affected or impaired thereby.
b.) In the event of any conflict, inconsistency or
ambiguity between the provisions of this Agreement and the provisions
of any other loan document, the provisions of this Agreement shall
prevail.
10.6 COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which shall constitute an original, but
all of which, when taken together, shall constitute but one
instrument.
10.7 HEADINGS. The name of this Agreement, as well as
Section headings used herein, are for convenience of reference only
and are not to affect the construction of, or be taken into
consideration in interpreting this Agreement.
10.8 TERMS. Any term used herein shall be equally
applicable to both the singular and plural forms.
10.9 EXPENSES OF THE BANK. Borrower will pay all
out-of-pocket expenses incurred by the Bank in connection with the
preparation of the loan documents (whether or not the transaction
contemplated hereby shall be consummated), the enforcement and
protection in any legal or equitable proceeding of the rights of the
Bank in connection with any action or claim under the loan documents,
including the note, or in any way related thereto, including, without
limitation, the reasonable fees and disbursements of counsel for the
Bank.
10.10 WAIVER OF JURY TRIAL, ETC.
a.) THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT, THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
HEREIN. FURTHER, THE BORROWERS HEREBY CERTIFY THAT NO REPRESENTATIVE
OR AGENT OF THE BANK NOR THE BANK'S COUNSEL HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT THE BANK WOULD NOT, IN THE EVENT OF SUCH
LITIGATION, SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL
PROVISION. FINALLY, EACH OF THE BORROWER AND THE GUARANTORS
ACKNOWLEDGES THAT THE BANK HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, INTER ALIA, THE PROVISIONS OF THIS SECTION 10.10.
15
b.) The Borrower hereby waives any plea of jurisdiction
or venue as not being a resident of Volusia County, Florida, and
hereby specifically authorizes any action brought upon the enforcement
of the loan documents by the Bank to be instituted and prosecuted in
either the Circuit Court of Volusia County, Florida or the United
States District Court for the Middle District
IN WITNESS WHEREOF, the parties hereto have caused this Master
Loan and Security Agreement to be duly executed, sealed and delivered
the day and year first above written.
"BANK"
Kathy Poal SUNTRUST BANK
- ----------
Susan M. Hill By:/S/ John R. Browning
- ------------- --------------------
"BORROWER"
CONSOLIDATED-TOMOKA LAND
CO., a Florida corporation
Jeff Blass By:/S/ Bruce W. Teeters
- ---------- --------------------
Bruce W. Teeters,
Sr. Vice President
and Treasurer
Jeff Blass By:/S/ Robert F. Apgar
- ---------- -------------------
Robert F. Apgar,
Vice President and
General Counsel
16
STATE OF FLORIDA
COUNTY OF VOLUSIA
The foregoing instrument was acknowledged before me this 31ST day of
MAY, 2002, by JEFFREY D. BLASS of SunTrust Bank, who is personally
known to me or who has produced a driver's license as identification
and who did not take an oath.
/S/Susan M. Hill
----------------
Notary Public
STATE OF FLORIDA
COUNTY OF VOLUSIA
The foregoing instrument was acknowledged before me this 31ST day of
MAY, 2002, by Bruce W. Teeters as Sr. Vice President and Treasurer of
CONSOLIDATED-TOMOKA LAND CO., a Florida corporation, who is personally
known to me or who has produced a driver's license as identification
and who did not take an oath.
/S/Susan M. Hill
----------------
Notary Public
STATE OF FLORIDA
COUNTY OF VOLUSIA
The foregoing instrument was acknowledged before me this 31ST day of
MAY, 2002, by Robert F. Apgar as Vice President and General Counsel
for CONSOLIDATED-TOMOKA LAND CO., a Florida corporation, who is
personally known to me or who has produced a driver's license as
identification and who did not take an oath.
/S/Susan M. Hill
----------------
Notary Public
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EXHIBIT 10.10
(Multicurrency Cross Border)
ISDA
International Swap Dealers Association, Inc.
MASTER AGREEMENT
dated as of April 8, 2002
SUNTRUST BANK AND CONSOLIDATED-TOMOKA LAND CO.
Party A Party B
have entered and/or anticipate entering into one or more
transactions (each a "Transaction") that are or will be governed by
this Master Agreement, which includes the schedule (the "Schedule"),
and the documents and other confirming evidence (each a "Confirmation")
exchanged between the parties confirming those Transactions.
Accordingly, the parties agree as follows:
1. INTERPRETATION
(a) DEFINITIONS. The terms defined in Section 14 and in the
Schedule will have the meanings therein specified for the purpose of
this Master Agreement.
(b) INCONSISTENCY. In the event of any inconsistency between the
provisions of the Schedule and the other provisions of this Master
Agreement, the Schedule will prevail. In the event of any
inconsistency between the provisions of any Confirmation and this
Master Agreement (including the Schedule), such Confirmation will
prevail for the purpose of the relevant Transaction.
(c) SINGLE AGREEMENT. All Transactions are entered into in
reliance on the fact that this Master Agreement and all Confirmations
form a single agreement between the parties (collectively referred to
as this "Agreement"), and the parties would not otherwise enter into
any Transactions.
2. OBLIGATIONS
(a) General Conditions.
(i) Each party will make each payment or delivery specified in
each Confirmation to be made by it, subject to the other
provisions of this Agreement.
(ii) Payments under this Agreement will be made on the due
date for value on that date in the place of the account
specified in the relevant Confirmation or otherwise pursuant to
this Agreement, in freely transferable funds and in the manner
customary for payments in the required currency. Where
settlement is by delivery (that is, other than by payment),
such delivery will be made for receipt on the due date in the
manner customary for the relevant obligation unless otherwise
specified in the relevant Confirmation or elsewhere in this
Agreement.
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(iii) Each obligation of each party under Section 2(a)(i) is
subject to (1) the condition precedent that no Event of Default
or Potential Event of Default with respect to the other party
has occurred and is continuing, (2) the condition precedent that
no Early Termination Date in respect of the relevant Transaction
has occurred or been effectively designated and (3) each other
applicable condition precedent specified in this Agreement.
(b) Change of Account. Either party may change its account for
receiving a payment or delivery by giving notice to the other party
at least five Local Business Days prior to the scheduled date for the
payment or delivery to which such change applies unless such other
party gives timely notice of a reasonable objection to such change.
(c) Netting. If on any date amounts would otherwise be payable:
(i) in the same currency; and
(ii) in respect of the same Transaction,
by each party to the other, then, on such date, each party's
obligation to make payment of any such amount will be automatically
satisfied and discharged and, if the aggregate amount that would
otherwise have been payable by one party exceeds the aggregate amount
that would otherwise have been payable by the other party, replaced
by an obligation upon the party by whom the larger aggregate amount
would have been payable to pay to the other party the excess of the
larger aggregate amount over the smaller aggregate amount.
The parties may elect in respect of two or more Transactions that a
net amount will be determined in respect of all amounts payable on the
same date in the same currency in respect of such Transactions,
regardless of whether such amounts are payable in respect of the same
Transaction. The election may be made in the Schedule or a
Confirmation by specifying that subparagraph (ii) above will not apply
to the Transactions identified as being subject to the election,
together with the starting date (in which case subparagraph (ii) above
will not, or will cease to, apply to such Transactions from such
date). This election may be made separately for different groups of
Transactions and will apply separately to each pairing of Offices
through which the parties make and receive payments or deliveries.
(d) Deduction or Withholding for Tax.
(i)Gross-Up. All payments under this Agreement will be made
without any deduction or withholding for or on account of any Tax
unless such deduction or withholding is required by any applicable
law, as modified by the practice of any relevant governmental revenue
authority, then in effect. If a party is so required to deduct or
withhold, then that party ("X") will:
(1) promptly notify the other party ("Y") of such
requirement;
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(2) pay to the relevant authorities the full amount
required to be deducted or withheld (including the full
amount required to be deducted or withheld from any
additional amount paid by X to Y under this Section 2(d))
promptly upon the earlier of determining that such
deduction or withholding is required or receiving notice
that such amount has been assessed against Y;
(3) promptly forward to Y an official receipt (or a
certified copy), or other documentation reasonably
acceptable to Y, evidencing such payment to such
authorities; and
(4) if such Tax is an Indemnifiable Tax, pay to Y, in
addition to the payment to which Y is otherwise entitled
under this Agreement, such additional amount as is
necessary to ensure that the net amount actually received
by Y (free and clear of Indemnifiable Taxes, whether
assessed against X or Y) will equal the full amount Y
would have received had no such deduction or withholding
been required. However, X will not be required to pay any
additional amount to Y to the extent that it would not be
required to be paid but for:
(A) the failure by Y to comply with or perform any
agreement contained in Section 4(a)(i), 4(a)(iii) or
4(d); or
(B) the failure of a representation made by Y pursuant
to Section 3(f) to be accurate and true unless such
failure would not have occurred but for (I) any action
taken by a taxing authority, or brought in a court of
competent jurisdiction, on or after the date on which a
Transaction is entered into (regardless of whether such
action is taken or brought with respect to a party to
this Agreement) or (II) a Change in Tax Law.
(ii) LIABILITY. If:
(1) X is required by any applicable law, as modified by
the practice of any relevant governmental revenue
authority, to make any deduction or withholding in
respect of which X would not be required to pay an
additional amount to Y under Section 2(d)(i)(4);
(2) X does not so deduct or withhold; and
(3) a liability resulting from such Tax is assessed
directly against X,
then, except to the extent Y has satisfied or then satisfies the
liability resulting from such Tax, Y will promptly pay to X the amount
of such liability (including any related liability for interest, but
including any related liability for penalties only if Y has failed to
comply with or perform any agreement contained in Section 4(a)(i),
4(a)(iii) or 4(d)).
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(e) DEFAULT INTEREST; OTHER AMOUNTS. Prior to the occurrence or
effective designation of an Early Termination Date in respect of the
relevant Transaction, a party that defaults in the performance of any
payment obligation will, to the extent permitted by law and subject to
Section 6(c), be required to pay interest (before as well as after
judgment) on the overdue amount to the other party on demand in the
same currency as such overdue amount, for the period from (and
including) the original due date for payment to (but excluding) the
date of actual payment, at the Default Rate. Such interest will be
calculated on the basis of daily compounding and the actual number of
days elapsed. If, prior to the occurrence or effective designation
of an Early Termination Date in respect of the relevant Transaction,
a party defaults in the performance of any obligation required to be
settled by delivery, it will compensate the other party on demand if
and to the extent provided for in the relevant Confirmation or
elsewhere in this Agreement.
3. Representations
Each party represents to the other party (which representations will
be deemed to be repeated by each party on each date on which a
Transaction is entered into and, in the case of the representations in
Section 3(f), at all times until the termination of this Agreement)
that:
(a) Basic Representations.
(i) Status. It is duly organized and validly existing under
the laws of the jurisdiction of its organisation or
incorporation and, if relevant under such laws, in good
standing;
(ii) Powers. It has the power to execute this Agreement and
any other documentation relating to this Agreement to which it
is a party, to deliver this Agreement and any other
documentation relating to this Agreement that it is required by
this Agreement to deliver and to perform its obligations under
this Agreement and any obligations it has under any Credit
Support Document to which it is a party and has taken all
necessary action to authorize such execution, delivery and
performance;
(iii) No Violation or Conflict. Such execution, delivery and
performance do not violate or conflict with any law applicable
to it, any provision of its constitutional documents, any order
or judgment of any court or other agency of government
applicable to it or any of its assets or any contractual
restriction binding on or affecting it or any of its assets;
(iv) Consents. All governmental and other consents that are
required to have been obtained by it with respect to this
Agreement or any Credit Support Document to which it is a party
have been obtained and are in full force and effect and all
conditions of any such consents have been complied with; and
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(v) Obligations Binding. Its obligations under this Agreement
and any Credit Support Document to which it is a party
constitute its legal, valid and binding obligations,
enforceable in accordance with their respective terms (subject
to applicable bankruptcy, reorganisation, insolvency, moratorium
or similar laws affecting creditors' rights generally and
subject, as to enforceability, to equitable principles of
general application (regardless of whether enforcement is sought
in a proceeding in equity or at law)).
(b) Absence of Certain Events. No Event of Default or
Potential Event of Default or, to its knowledge, Termination
Event with respect to it has occurred and is continuing and no
such event or circumstance would occur as a result of its
entering into or performing its obligations under this Agreement
or any Credit Support Document to which it is a party.
(c) Absence of Litigation. There is not pending or, to its
knowledge, threatened against it or any of its Affiliates any
action, suit or proceeding at law or in equity or before any
court, tribunal, governmental body, agency or official or any
arbitrator that is likely to affect the legality, validity or
enforceability against it of this Agreement or any Credit
Support Document to which it is a party or its ability to
perform its obligations under this Agreement or such Credit
Support Document.
(d) Accuracy of Specified Information. All applicable
information that is furnished in writing by or on behalf of it
to the other party and is identified for the purpose of this
Section 3(d) in the Schedule is, as of the date of the
information, true, accurate and complete in every material
respect.
(e) Payer Tax Representation. Each representation specified
in the Schedule as being made by it for the purpose of this
Section 3(e) is accurate and true.
(f) Payee Tax Representations. Each representation specified
in the Schedule as being made by it for the purpose of this
Section 3(f) is accurate and true.
4. AGREEMENTS
Each party agrees with the other that, so long as either party has or
may have any obligation under this Agreement or under any Credit
Support Document to which it is a party:
(a) FURNISH SPECIFIED INFORMATION. It will deliver to the other
party or, in certain cases under subparagraph (iii) below, to such
government or taxing authority as the other party reasonably directs:
(i) any forms, documents or certificates relating to taxation
specified in the Schedule or any Confirmation;
(ii) any other documents specified in the Schedule or any
Confirmation; and
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(iii) upon reasonable demand by such other party, any form or
document that may be required or reasonably requested in writing
in order to allow such other party or its Credit Support Provider
to make a payment under this Agreement or any applicable Credit
Support Document without any deduction or withholding for or on
account of any Tax or with such deduction or withholding at a
reduced rate (so long as the completion, execution or submission
of such form or document would not materially prejudice the legal
or commercial position of the party in receipt of such demand),
with any such form or document to be accurate and completed in a
manner reasonably satisfactory to such other party and to be
executed and to be delivered with any reasonably required
certification,
in each case by the date specified in the Schedule or such
confirmation or, if none is specified, as soon as reasonably
practicable.
(b) MAINTAIN AUTHORIZATIONS. It will use all reasonable efforts to
maintain in full force and effect all consents of any governmental or
other authority that are required to be obtained by it with respect to
this Agreement or any Credit Support Document to which it is a party
and will use all reasonable efforts to obtain any that may become
necessary in the future.
(c) COMPLY WITH LAWS. It will comply in all material respects with
all applicable laws and orders to which it may be subject if failure
so to comply would materially impair its ability to perform its
obligations under this Agreement or any Credit Support Document to
which it is a party.
(d) TAX AGREEMENT. It will give notice of any failure of a
representation made by it under Section 3(f) to be accurate and true
promptly upon learning of such failure.
(e) PAYMENT OF STAMP TAX. Subject to Section 11, it will pay any
Stamp Tax levied or imposed upon it or in respect of its execution or
performance of this Agreement by a jurisdiction in which it is
incorporated, organized, managed and controlled, or considered to have
its seat, or in which a branch or office through which it is acting
for the purpose of this Agreement is located ("Stamp Tax
Jurisdiction") and will indemnify the other party against any Stamp
Tax levied or imposed upon the other party or in respect of the other
party's execution or performance of this Agreement by any such Stamp
Tax Jurisdiction which is not also a Stamp Tax Jurisdiction with
respect to the other party.
5. EVENTS OF DEFAULT AND TERMINATION EVENTS
(a) EVENTS OF DEFAULT. The occurrence at any time with respect to a
party or, if applicable, any Credit Support Provider of such party or
any Specified Entity of such party of any of the following events
constitutes an event of default (an "Event of Default") with respect
to such party:
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(i) FAILURE TO PAY OR DELIVER. Failure by the party to make,
when due, any payment under this Agreement or delivery under
Section 2(a)(i) or 2(e) required to be made by it if such failure
is not remedied on or before the third Local Business Day after
notice of such failure is given to the party;
(ii) BREACH OF AGREEMENT. Failure by the party to comply with
or perform any agreement or obligation (other than an obligation
to make any payment under this Agreement or delivery under
Section 2(a)(i) or 2(e) or to give notice of a Termination Event
or any agreement or obligation under Section 4(a)(i), 4(a)(iii)
or 4(d)) to be complied with or performed by the party in
accordance with this Agreement if such failure is not remedied on
or before the thirtieth day after notice of such failure is given
to the party;
(iii) CREDIT SUPPORT DEFAULT.
(1) Failure by the party or any Credit Support Provider
of such party to comply with or perform any agreement or
obligation to be complied with or performed by it in
accordance with any Credit Support Document if such failure
is continuing after any applicable grace period has
elapsed;
(2) the expiration or termination of such Credit Support
Document or the failing or ceasing of such Credit Support
Document to be in full force and effect for the purpose of
this Agreement (in either case other than in accordance
with its terms) prior to the satisfaction of all
obligations of such party under each Transaction to which
such Credit Support Document relates without the written
consent of the other party; or
(3) the party or such Credit Support Provider disaffirms,
disclaims, repudiates or rejects, in whole or in part, or
challenges the validity of, such Credit Support Document;
(iv) MISREPRESENTATION. A representation (other than a
representation under Section 3(e) or (f)) made or repeated or
deemed to have been made or repeated by the party or any Credit
Support Provider of such party in this Agreement or any Credit
Support Document proves to have been incorrect or misleading in
any material respect when made or repeated or deemed to have been
made or repeated;
(v) DEFAULT UNDER SPECIFIED TRANSACTION. The party, any Credit
Support Provider of such party or any applicable Specified Entity
of such party (1) defaults under a Specified Transaction and,
after giving effect to any applicable notice requirement or grace
period, there occurs a liquidation of, an acceleration of
obligations under, or an early termination of, that Specified
Transaction, (2) defaults, after giving effect to any applicable
notice requirement or grace period, in making any payment or
delivery due on the last payment, delivery or exchange date of,
or any payment on early termination of, a Specified Transaction
(or such default continues for at least three Local Business Days
if
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there is no applicable notice requirement or grace period) or (3)
disaffirms, disclaims, repudiates or rejects in whole or in part,
a Specified Transaction (or such action is taken by any person or
entity appointed or empowered to operate it or act on its
behalf);
(vi) CROSS DEFAULT. If "Cross Default" is specified in the
Schedule as applying to the party, the occurrence or existence
of (1) a default, event of default or other similar condition or
event (however described) in respect of such party, any Credit
Support Provider of such party or any applicable Specified
Entity of such party under one or more agreements or instruments
relating to Specified Indebtedness of any of them (individually
or collectively) in an aggregate amount of not less than the
applicable Threshold Amount (as specified in the Schedule) which
has resulted in such Specified Indebtedness becoming, or becoming
capable at such time of being declared, due and payable under
such agreements or instruments, before it would otherwise have
been due and payable or (2) a default by such party, such Credit
Support Provider or such Specified Entity (individually or
collectively) in making one or more payments on the due date
thereof in an aggregate amount of not less than the applicable
Threshold Amount under such agreements or instruments (after
giving effect to any applicable notice requirement or grace
period);
(vii) BANKRUPTCY. The party, any Credit Support Provider of
such party or any applicable Specified Entity of such party:
(1) is dissolved (other than pursuant to a consolidation,
amalgamation or merger); (2) becomes insolvent or is
unable to pay its debts or fails or admits in writing its
inability generally to pay its debts as they become due;
(3) makes a general assignment, arrangement or composition
with or for the benefit of its creditors; (4) institutes or
has instituted against it a proceeding seeking a judgment
of insolvency or bankruptcy or any other relief under any
bankruptcy or insolvency law or other similar law affecting
creditors' rights, or a petition is presented for its
winding-up or liquidation, and, in the case of any such
proceeding or petition instituted or presented against it,
such proceeding or petition (A) results in a judgment of
insolvency or bankruptcy or the entry of an order for
relief or the making of an order for its winding-up or
liquidation or (B) is not dismissed, discharged, stayed or
restrained in each case within 30 days of the institution
or presentation thereof; (5) has a resolution passed for
its winding-up, official management or liquidation (other
than pursuant to a consolidation, amalgamation or merger);
(6) seeks or becomes subject to the appointment of an
administrator, provisional liquidator, conservator,
receiver, trustee, custodian or other similar official for
it or for all or substantially all its assets; (7) has a
secured party take possession of all or substantially
all its assets or has a distress, execution, attachment,
sequestration or other legal process levied, enforced or
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sued on or against all or substantially all its assets and
such secured party maintains possession, or any such
process is not dismissed, discharged, stayed or restrained,
in each case within 30 days thereafter: (8) causes or is
subject to any event with respect to it which, under the
applicable laws of any jurisdiction, has an analogous
effect to any of the events specified in clauses (1) to (7)
(inclusive); or (9) takes any action in furtherance of, or
indicating its consent to, approval of, or acquiescence
in, any of the foregoing acts; or
(viii) MERGER WITHOUT ASSUMPTION. The party or any Credit Support
Provider of such party consolidates or amalgamates with, or merges
with or into, or transfers all or substantially all its assets to,
another entity and, at the time of such consolidation,
amalgamation, merger or transfer:
(1) the resulting, surviving or transferee entity fails
to assume all the obligations of such party or such Credit
Support Provider under this Agreement or any Credit Support
Document to which it or its predecessor was a party by
operation of law or pursuant to an agreement reasonably
satisfactory to the other party to this Agreement; or
(2) the benefits of any Credit Support Document fail to
extend (without the consent of the other party) to the
performance by such resulting, surviving or transferee
entity of its obligations under this Agreement.
(b) TERMINATION EVENTS. The occurrence at any time with respect to
a party or, if applicable, any Credit Support Provider of such party
or any Specified Entity of such party of any event specified below
constitutes an Illegality if the event is specified in (i) below, a
Tax Event if the event is specified in (ii) below or a Tax Event Upon
Merger if the event is specified in (iii) below, and, if specified to
be applicable, a Credit Event Upon Merger if the event is specified
pursuant to (iv) below or an Additional Termination Event if the event
is specified pursuant to (v) below:
(i) ILLEGALITY. Due to the adoption of, or any change in, any
applicable law after the date on which a Transaction is entered
into, or due to the promulgation of, or any change in, the
interpretation by any court, tribunal or regulatory authority
with competent jurisdiction of any applicable law after such
date, it becomes unlawful (other than as a result of a breach by
the party of Section 4(b)) for such party (which will be the
Affected Party):
(1) to perform any absolute or contingent obligation to make
a payment or delivery or to receive a payment or delivery in
respect of such Transaction or to comply with any other
material provision of this Agreement relating to such
Transaction; or
(2) to perform, or for any Credit Support Provider of such
party to perform, any contingent or other obligation which
the party (or such Credit Support Provider) has under any
Credit Support Document relating to such Transaction;
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(ii) TAX EVENT. Due to (x) any action taken by a taxing
authority, or brought in a court of competent jurisdiction, on
or after the date on which a Transaction is entered into
(regardless of whether such action is taken or brought with
respect to a party to this Agreement) or (y) a Change in Tax Law,
the party (which will be the Affected Party) will, or there is a
substantial likelihood that it will, on the next succeeding
Scheduled Payment Date (1) be required to pay to the other party
an additional amount in respect of an Indemnifiable Tax under
Section 2(d)(i)(4) (except in respect of interest under Section
2(e), 6(d)(ii) or 6(e)) or (2) receive a payment from which an
amount is required to be deducted or withheld for or on account
of a Tax (except in respect of interest under Section 2(e),
6(d)(ii) or 6(e)) and no additional amount is required to be paid
in respect of such Tax under Section 2(d)(i)(4) (other than by
reason of Section 2(d)(i)(4)(A) or (B));
(iii) TAX EVENT UPON MERGER. The party (the "Burdened Party")
on the next succeeding Scheduled Payment Date will either (1) be
required to pay an additional amount in respect of an
Indemnifiable Tax under Section 2(d)(i)(4) (except in respect of
interest under Section 2(e), 6(d)(ii) or 6(e)) or (2) receive a
payment from which an amount has been deducted or withheld for or
on account of any Indemnifiable Tax in respect of which the other
party is not required to pay an additional amount (other than by
reason of Section 2(d)(i)(4)(A) or (B)), in either case as a
result of a party consolidating or amalgamating with, or merging
with or into, or transferring all or substantially all its assets
to, another entity (which will be the Affected Party) where such
action does not constitute an event described in Section
5(a)(viii);
(iv) CREDIT EVENT UPON MERGER. If "Credit Event Upon Merger" is
specified in the Schedule as applying to the party, such party
("X"), any Credit Support Provider of X or any applicable
Specified Entity of X consolidates or amalgamates with, or merges
with or into, or transfers all or substantially all its assets
to, another entity and such action does not constitute an event
described in Section 5(a)(viii) but the creditworthiness of the
resulting, surviving or transferee entity is materially weaker
than that of X, such Credit Support Provider or such Specified
Entity, as the case may be, immediately prior to such action
(and, in such event, X or its successor or transferee, as
appropriate, will be the Affected Party); or
(v) ADDITIONAL TERMINATION EVENT. If any "Additional Termination
Event" is specified in the Schedule or any Confirmation as
applying, the occurrence of such event (and, in such event, the
Affected Party or Affected Parties shall be as specified for such
Additional Termination Event in the Schedule or such
Confirmation).
(c) EVENT OF DEFAULT AND ILLEGALITY. If an event or circumstance
which would otherwise constitute or give rise to an Event of Default
also constitutes an Illegality, it will be treated as an Illegality
and will not constitute an Event of Default.
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6. Early Termination
(a) RIGHT TO TERMINATE FOLLOWING EVENT OF DEFAULT. If at any time an
Event of Default with respect to a party (the "Defaulting Party") has
occurred and is then continuing, the other party (the "Non-defaulting
Party") may, by not more than 20 days notice to the Defaulting Party
specifying the relevant Event of Default, designate a day not earlier
than the day such notice is effective as an Early Termination Date in
respect of all outstanding Transactions. If, however, "Automatic
Early Termination" is specified in the Schedule as applying to a
party, then an Early Termination Date in respect of all outstanding
Transactions will occur immediately upon the occurrence with respect
to such party of an Event of Default specified in Section
5(a)(vii)(l), (3), (5), (6) or, to the extent analogous thereto, (8),
and as of the time immediately preceding the institution of the
relevant proceeding or the presentation of the relevant petition upon
the occurrence with respect to such party of an Event of Default
specified in Section 5(a)(vii)(4) or, to the extent analogous thereto,
(8).
(b) Right to Terminate Following Termination Event.
(i) NOTICE. If a Termination Event occurs, an Affected Party
will, promptly upon becoming aware of it, notify the other party,
specifying the nature of that Termination Event and each Affected
Transaction and will also give such other information about that
Termination Event as the other party may reasonably require.
(ii) TRANSFER TO AVOID TERMINATION EVENT. If either an Illegality
under Section 5(b)(i)(1) or a Tax Event occurs and there is only
one Affected Party, or if a Tax Event Upon Merger occurs and the
Burdened Party is the Affected Party, the Affected Party will, as
a condition to its right to designate an Early Termination Date
under Section 6(b)(iv), use all reasonable efforts (which will not
require such party to incur a loss, excluding immaterial,
incidental expenses) to transfer within 20 days after it gives
notice under Section 6(b)(i) all its rights and obligations under
this Agreement in respect of the Affected Transactions to another
of its Offices or Affiliates so that such Termination Event ceases
to exist.
If the Affected Party is not able to make such a transfer it will
give notice to the other party to that effect within such 20 day
period, whereupon the other party may effect such a transfer
within 30 days after the notice is given under Section 6(b)(i).
Any such transfer by a party under this Section 6(b)(ii) will be
subject to and conditional upon the prior written consent of the
other party, which consent will not be withheld if such other
party's policies in effect at such time would permit it to enter
into transactions with the transferee on the terms proposed.
(iii) TWO AFFECTED PARTIES. If an Illegality under Section
5(b)(i)(1) or a Tax Event occurs and there are two Affected
Parties, each party will use all reasonable efforts to reach
agreement within 30 days after notice thereof is given under
Section 6(b)(i) on action to avoid that Termination Event.
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(iv) RIGHT TO TERMINATE. If:
(1) a transfer under Section 6(b)(ii) or an agreement under
Section 6(b)(iii), as the case may be, has not been effected
with respect to all Affected Transactions within 30 days
after an Affected Party gives notice under Section 6(b)(i);
or
(2) an Illegality under Section 5(b)(i)(2), a Credit Event
Upon Merger or an Additional Termination Event occurs, or a
Tax Event Upon Merger occurs and the Burdened Party is not
the Affected Party,
either party in the case of an Illegality, the Burdened Party in
the case of a Tax Event Upon Merger, any Affected Party in the
case of a Tax Event or an Additional Termination Event if there is
more than one Affected Party, or the party which is not the
Affected Party in the case of a Credit Event Upon Merger or an
Additional Termination Event if there is only one Affected Party
may, by not more than 20 days notice to the other party and
provided that the relevant Termination Event is then continuing,
designate a day not earlier than the day such notice is effective
as an Early Termination Date in respect of all Affected
Transactions.
(c) EFFECT OF DESIGNATION.
(i) If notice designating an Early Termination Date is given
under Section 6(a) or (b), the Early Termination Date will occur
on the date so designated, whether or not the relevant Event of
Default or Termination Event is then continuing.
(ii) Upon the occurrence or effective designation of an Early
Termination Date, no further payments or deliveries under Section
2(a)(i) or 2(e) in respect of the Terminated Transactions will be
required to be made, but without prejudice to the other provisions
of this Agreement. The amount, if any, payable in respect of an
Early Termination Date shall be determined pursuant to Section
6(e).
(d) CALCULATIONS.
(i) STATEMENT. On or as soon as reasonably practicable following
the occurrence of an Early Termination Date, each party will make
the calculations on its part, if any, contemplated by Section 6(e)
and will provide to the other party a statement (1) showing, in
reasonable detail, such calculations (including all relevant
quotations and specifying any amount payable under Section 6(e))
and (2) giving details of the relevant account to which any amount
payable to it is to be paid. In the absence of written
confirmation from the source of a quotation obtained in
determining a Market Quotation, the records of the party obtaining
such quotation will be conclusive evidence of the existence and
accuracy of such quotation.
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(ii) PAYMENT DATE. An amount calculated as being due in respect
of any Early Termination Date under Section 6(e) will be payable
on the day that notice of the amount payable is effective (in the
case of an Early Termination Date which is designated or occurs as
a result of an Event of Default) and on the day which is two Local
Business Days after the day on which notice of the amount payable
is effective (in the case of an Early Termination Date which is
designated as a result of a Termination Event). Such amount will
be paid together with (to the extent permitted under applicable
law) interest thereon (before as well as after judgment) in the
Termination Currency, from (and including) the relevant Early
Termination Date to (but excluding) the date such amount is paid,
at the Applicable Rate. Such interest will be calculated on the
basis of daily compounding and the actual number of days elapsed.
(e) PAYMENTS ON EARLY TERMINATION. If an Early Termination Date
occurs, the following provisions shall apply based on the parties'
election in the Schedule of a payment measure, either "Market
Quotation" or "Loss", and a payment method, either the "First Method"
or the "Second Method". If the parties fail to designate a payment
measure or payment method in the Schedule, it will be deemed that
"Market Quotation" or the "Second Method", as the case may be, shall
apply. The amount, if any, payable in respect of an Early Termination
Date and determined pursuant to this Section will be subject to any
Set-off.
(i) EVENTS OF DEFAULT. If the Early Termination Date results
from an Event of Default:
(1) FIRST METHOD AND MARKET QUOTATION. If the First Method
and Market Quotation apply, the Defaulting Party will pay to
the Non-defaulting Party the excess, if a positive number, of
(A) the sum of the Settlement Amount (determined by the Non-
defaulting Party) in respect of the Terminated Transactions
and the Termination Currency Equivalent of the Unpaid Amounts
owing to the Non-defaulting Party over (B) the Termination
Currency Equivalent of the Unpaid Amounts owing to the
Defaulting Party.
(2) FIRST METHOD AND LOSS. If the First Method and Loss
apply, the Defaulting Party will pay to the Non-defaulting
Party, if a positive number, the Non-defaulting Party's Loss
in respect of this Agreement.
(3) SECOND METHOD AND MARKET QUOTATION. If the Second Method
and Market Quotation apply, an amount will be payable equal
to (A) the sum of the Settlement Amount (determined by the
Non-defaulting Party) in respect of the Terminated
Transactions and the Termination Currency Equivalent of the
Unpaid Amounts owing to the Non-defaulting Party less (B) the
Termination Currency Equivalent of the Unpaid Amounts owing
to the Defaulting Party. If that amount is a positive
number, the Defaulting Party will pay it to the Non-
defaulting Party; if it is a negative number, the Non-
defaulting Party will pay the absolute value of that amount
to the Defaulting Party.
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(4) SECOND METHOD AND LOSS. If the Second Method and Loss
apply, an amount will be payable equal to the Non-defaulting
Party's Loss in respect of this Agreement. If that amount
is a positive number, the Defaulting Party will pay it to the
Non-defaulting Party; if it is a negative number, the Non-
defaulting Party will pay the absolute value of that amount
to the Defaulting Party.
(ii) TERMINATION EVENTS. If the Early Termination Date results
from a Termination Event:
(1) ONE AFFECTED PARTY. If there is one Affected Party, the
amount payable will be determined in accordance with Section
6(e)(i)(3), if Market Quotation applies, or Section
6(e)(i)(4), if Loss applies, except that, in either case,
references to the Defaulting Party and to the Non-defaulting
Party will be deemed to be references to the Affected Party
and the party which is not the Affected Party, respectively,
and, if Loss applies and fewer than all the Transactions are
being terminated, Loss shall be calculated in respect of all
Terminated Transactions.
(2) TWO AFFECTED PARTIES. If there are two Affected
Parties:
(A) if Market Quotation applies, each party will
determine a Settlement Amount in respect of the
Terminated Transactions, and an amount will be payable
equal to (I) the sum of (a) one-half of the difference
between the Settlement Amount of the party with the
higher Settlement Amount ("X") and the Settlement Amount
of the party with the lower Settlement Amount ("Y") and
(b) the Termination Currency Equivalent of the Unpaid
Amounts owing to X less (II) the Termination Currency
Equivalent of the Unpaid Amounts owing to Y; and
(B) if Loss applies, each party will determine its Loss
in respect of this Agreement (or, if fewer than all the
Transactions are being terminated, in respect of all
Terminated Transactions) and an amount will be payable
equal to one-half of the difference between the Loss of
the party with the higher Loss ("X") and the Loss of the
party with the lower Loss ("Y").
If the amount payable is a positive number, Y will pay it to
X; if it is a negative number, X will pay the absolute value
of that amount to Y.
(iii) ADJUSTMENT FOR BANKRUPTCY. In circumstances where an Early
Termination Date occurs because "Automatic Early Termination"
applies in respect of a party, the amount determined under this
Section 6(e) will be subject to such adjustments as are
appropriate and permitted by law to reflect any payments or
deliveries made by one party to the other under this Agreement
(and retained by such other party) during the period from the
relevant Early Termination Date to the date for payment determined
under Section 6(d)(ii).
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(iv) PRE-ESTIMATE. The parties agree that if Market Quotation
applies an amount recoverable under this Section 6(e) is a
reasonable pre-estimate of loss and not a penalty. Such amount is
payable for the loss of bargain and the loss of protection against
future risks and except as otherwise provided in this Agreement
neither party will be entitled to recover any additional damages
as a consequence of such losses.
7. TRANSFER
Subject to Section 6(b)(ii), neither this Agreement nor any interest
or obligation in or under this Agreement may be transferred (whether
by way of security or otherwise) by either party without the prior
written consent of the other party, except that:
(a) a party may make such a transfer of this Agreement pursuant to a
consolidation or amalgamation with, or merger with or into, or
transfer of all or substantially all its assets to, another entity
(but without prejudice to any other right or remedy under this
Agreement); and
(b) a party may make such a transfer of all or any part of its
interest in any amount payable to it from a Defaulting Party under
Section 6(e).
Any purported transfer that is not in compliance with this Section
will be void.
8. CONTRACTUAL CURRENCY
(a) PAYMENT IN THE CONTRACTUAL CURRENCY. Each payment under this
Agreement will be made in the relevant currency specified in this
Agreement for that payment (the "Contractual Currency"). To the
extent permitted by applicable law, any obligation to make payments
under this Agreement in the Contractual Currency will not be
discharged or satisfied by any tender in any currency other than the
Contractual Currency, except to the extent such tender results in the
actual receipt by the party to which payment is owed, acting in a
reasonable manner and in good faith in converting the currency so
tendered into the Contractual Currency, of the full amount in the
Contractual Currency of all amounts payable in respect of this
Agreement. If for any reason the amount in the Contractual Currency
so received falls short of the amount in the Contractual Currency
payable in respect of this Agreement, the party required to make the
payment will, to the extent permitted by applicable law, immediately
pay such additional amount in the Contractual Currency as may be
necessary to compensate for the shortfall. If for any reason the
amount in the Contractual Currency so received exceeds the amount in
the Contractual Currency payable in respect of this Agreement, the
party receiving the payment will refund promptly the amount of such
excess.
(b) JUDGMENTS. To the extent permitted by applicable law, if any
judgment or order expressed in a currency other than the Contractual
Currency is rendered (i) for the payment of any amount owing in
respect of this Agreement, (ii) for the payment of any amount relating
to any early termination in respect of this Agreement or (iii) in
15
respect of a judgment or order of another court for the payment of
any amount described in (i) or (ii) above, the party seeking recovery,
after recovery in full of the aggregate amount to which such party is
entitled pursuant to the judgment or order, will be entitled to
receive immediately from the other party the amount of any shortfall
of the Contractual Currency received by such party as a consequence of
sums paid in such other currency and will refund promptly to the other
party any excess of the Contractual Currency received by such party as
a consequence of sums paid in such other currency if such shortfall or
such excess arises or results from any variation between the rate of
exchange at which the Contractual Currency is converted into the
currency of the judgment or order for the purposes of such judgment or
order and the rate of exchange at which such party is able, acting in
a reasonable manner and in good faith in converting the currency
received into the Contractual Currency, to purchase the Contractual
Currency with the amount of the currency of the judgment or order
actually received by such party. The term "rate of exchange" includes,
without limitation, any premiums and costs of exchange payable in
connection with the purchase of or conversion into the Contractual
Currency.
(c) SEPARATE INDEMNITIES. To the extent permitted by applicable law,
these indemnities constitute separate and independent obligations from
the other obligations in this Agreement, will be enforceable as
separate and independent causes of action, will apply notwithstanding
any indulgence granted by the party to which any payment is owed and
will not be affected by judgment being obtained or claim or proof
being made for any other sums payable in respect of this Agreement.
(d) EVIDENCE OF LOSS. For the purpose of this Section 8, it will be
sufficient for a party to demonstrate that it would have suffered a
loss had an actual exchange or purchase been made.
9. MISCELLANEOUS
(a) ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
and understanding of the parties with respect to its subject matter
and supersedes all oral communication and prior writings with respect
thereto.
(b) AMENDMENTS. No amendment, modification or waiver in respect of
this Agreement will be effective unless in writing (including a
writing evidenced by a facsimile transmission) and executed by each of
the parties or confirmed by an exchange of telexes or electronic
messages on an electronic messaging system.
(c) SURVIVAL OF OBLIGATIONS. Without prejudice to Sections 2(a)(iii)
and 6(c)(ii), the obligations of the parties under this Agreement will
survive the termination of any Transaction.
(d) REMEDIES CUMULATIVE. Except as provided in this Agreement, the
rights, powers, remedies and privileges provided in this Agreement are
cumulative and not exclusive of any rights, powers, remedies and
privileges provided by law.
16
(e) COUNTERPARTS AND CONFIRMATIONS.
(i) This Agreement (and each amendment, modification and waiver
in respect of it) may be executed and delivered in counterparts
(including by facsimile transmission), each of which will be
deemed an original.
(ii) The parties intend that they are legally bound by the terms
of each Transaction from the moment they agree to those terms
(whether orally or otherwise). A Confirmation shall be entered
into as soon as practicable and may be executed and delivered in
counterparts (including by facsimile transmission) or be created
by an exchange of telexes or by an exchange of electronic messages
on an electronic messaging system, which in each case will be
sufficient for all purposes to evidence a binding supplement to
this Agreement. The parties will specify therein or through
another effective means that any such counterpart, telex or
electronic message constitutes a Confirmation.
(f) NO WAIVER OF RIGHTS. A failure or delay in exercising any right,
power or privilege in respect of this Agreement will not be presumed
to operate as a waiver, and a single or partial exercise of any right,
power or privilege will not be presumed to preclude any subsequent or
further exercise, of that right, power or privilege or the exercise of
any other right, power or privilege.
(g) HEADINGS. The headings used in this Agreement are for convenience
of reference only and are not to affect the construction of or to be
taken into consideration in interpreting this Agreement.
10. OFFICES; MULTIBRANCH PARTIES
(a) If Section 10(a) is specified in the Schedule as applying, each
party that enters into a Transaction through an Office other than its
head or home office represents to the other party that,
notwithstanding the place of booking office or jurisdiction of
incorporation or organisation of such party, the obligations of such
party are the same as if it had entered into the Transaction through
its head or home office. This representation will be deemed to be
repeated by such party on each date on which a Transaction is entered
into.
(b) Neither party may change the Office through which it makes and
receives payments or deliveries for the purpose of a Transaction
without the prior written consent of the other party.
(c) If a party is specified as a Multibranch Party in the Schedule,
such Multibranch Party may make and receive payments or deliveries
under any Transaction through any Office listed in the Schedule, and
the Office through which it makes and receives payments or deliveries
with respect to a Transaction will be specified in the relevant
Confirmation.
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11. EXPENSES
A Defaulting Party will, on demand, indemnify and hold harmless the
other party for and against all reasonable out-of-pocket expenses,
including legal fees and Stamp Tax, incurred by such other party by
reason of the enforcement and protection of its rights under this
Agreement or any Credit Support Document to which the Defaulting Party
is a party or by reason of the early termination of any Transaction,
including, but not limited to, costs of collection.
12. NOTICES
(a) EFFECTIVENESS. Any notice or other communication in respect of
this Agreement may be given in any manner set forth below (except that
a notice or other communication under Section 5 or 6 may not be given
by facsimile transmission or electronic messaging system) to the
address or number or in accordance with the electronic messaging
system details provided (see the Schedule) and will be deemed
effective as indicated:
(i) if in writing and delivered in person or by courier, on the
date it is delivered;
(ii) if sent by telex, on the date the recipient's answerback is
received;
(iii) if sent by facsimile transmission, on the date that
transmission is received by a responsible employee of the
recipient in legible form (it being agreed that the burden of
proving receipt will be on the sender and will not be met by a
transmission report generated by the sender's facsimile machine);
(iv) if sent by certified or registered mail (airmail, if
overseas) or the equivalent (return receipt requested), on the
date that mail is delivered or its delivery is attempted; or
(v) if sent by electronic messaging system, on the date that
electronic message is received,
unless the date of that delivery (or attempted delivery) or that
receipt, as applicable, is not a Local Business Day or that
communication is delivered (or attempted) or received, as applicable,
after the close of business on a Local Business Day, in which case
that communication shall be deemed given and effective on the first
following day that is a Local Business Day.
(b) CHANGE OF ADDRESSES. Either party may by notice to the other
change the address, telex or facsimile number or electronic messaging
system details at which notices or other communications are to be
given to it.
13. GOVERNING LAW AND JURISDICTION
(a) GOVERNING LAW. This Agreement will be governed by and construed
in accordance with the law specified in the Schedule.
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(b) JURISDICTION. With respect to any suit, action or proceedings
relating to this Agreement ("Proceedings"), each party irrevocably:
(i) submits to the jurisdiction of the English courts, if this
Agreement is expressed to be governed by English law, or to the
nonexclusive jurisdiction of the courts of the State of New York
and the United States District Court located in the Borough of
Manhattan in New York City, if this Agreement is expressed to be
governed by the laws of the State of New York; and
(ii) waives any objection which it may have at any time to the
laying of venue of any Proceedings brought in any such court,
waives any claim that such Proceedings have been brought in an
inconvenient forum and further waives the right to object, with
respect to such Proceedings, that such court does not have any
jurisdiction over such party.
Nothing in this Agreement precludes either party from bringing
Proceedings in any other jurisdiction (outside, if this Agreement is
expressed to be governed by English law, the Contracting States, as
defined in Section 1(3) of the Civil Jurisdiction and Judgments Act
1982 or any modification, extension or re-enactment thereof for the
time being in force) nor will the bringing of Proceedings in any one
or more jurisdictions preclude the bringing of Proceedings in any
other jurisdiction.
(c) SERVICE OF PROCESS. Each party irrevocably appoints the Process
Agent (if any) specified opposite its name in the Schedule to receive,
for it and on its behalf, service of process in any Proceedings. If
for any reason any party's Process Agent is unable to act as such,
such party will promptly notify the other party and within 30 days
appoint a substitute process agent acceptable to the other party. The
parties irrevocably consent to service of process given in the manner
provided for notices in Section 12. Nothing in this Agreement will
affect the right of either party to serve process in any other manner
permitted by law.
(d) WAIVER OF IMMUNITIES. Each party irrevocably waives, to the
fullest extent permitted by applicable law, with respect to itself and
its revenues and assets (irrespective of their use or intended use),
all immunity on the grounds of sovereignty or other similar grounds
from (i) suit, (ii) jurisdiction of any court, (iii) relief by way of
injunction, order for specific performance or for recovery of
property, (iv) attachment of its assets (whether before or after
judgment) and (v) execution or enforcement of any judgment to which it
or its revenues or assets might otherwise be entitled in any
Proceedings in the courts of any jurisdiction and irrevocably agrees,
to the extent permitted by applicable law, that it will not claim any
such immunity in any Proceedings.
14. DEFINITIONS
As used in this Agreement:
"ADDITIONAL TERMINATION EVENT" has the meaning specified in Section
5(b).
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"AFFECTED PARTY" has the meaning specified in Section 5(b).
"AFFECTED TRANSACTIONS" means (a) with respect to any Termination
Event consisting of an Illegality, Tax Event or Tax Event Upon Merger,
all Transactions affected by the occurrence of such Termination Event
and (b) with respect to any other Termination Event, all Transactions.
"AFFILIATE" means, subject to the Schedule, in relation to any person,
any entity controlled, directly or indirectly, by the person, any
entity that controls, directly or indirectly, the person or any entity
directly or indirectly under common control with the person. For this
purpose, "control" of any entity or person means ownership of a
majority of the voting power of the entity or person.
"APPLICABLE RATE" means:
(a) in respect of obligations payable or deliverable (or which would
have been but for Section 2(a)(iii)) by a Defaulting Party, the
Default Rate;
(b) in respect of an obligation to pay an amount under Section 6(e)
of either party from and after the date (determined in accordance with
Section 6(d)(ii)) on which that amount is payable, the Default Rate;
(c) in respect of all other obligations payable or deliverable (or
which would have been but for Section 2(a)(iii)) by a Non-defaulting
Party, the Non-default Rate; and
(d) in all other cases, the Termination Rate.
"BURDENED PARTY" has the meaning specified in Section 5(b).
"CHANGE IN TAX LAW" means the enactment, promulgation, execution or
ratification of, or any change in or amendment to, any law (or in the
application or official interpretation of any law) that occurs on or
after the date on which the relevant Transaction is entered into.
"CONSENT" includes a consent, approval, action, authorization,
exemption, notice, filing, registration or exchange control consent.
"CREDIT EVENT UPON MERGER" has the meaning specified in Section 5(b).
"CREDIT SUPPORT DOCUMENT" means any agreement or instrument that is
specified as such in this Agreement.
"CREDIT SUPPORT PROVIDER" has the meaning specified in the Schedule.
"DEFAULT RATE" means a rate per annum equal to the cost (without proof
or evidence of any actual cost) to the relevant payee (as certified by
it) if it were to fund or of funding the relevant amount plus 1% per
annum.
"DEFAULTING PARTY" has the meaning specified in Section 6(a).
"EARLY TERMINATION DATE" means the date determined in accordance with
Section 6(a) or 6(b)(iv).
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"EVENT OF DEFAULT" has the meaning specified in Section 5(a) and, if
applicable, in the Schedule.
"ILLEGALITY" has the meaning specified in Section 5(b).
"INDEMNIFIABLE TAX" means any Tax other than a Tax that would not be
imposed in respect of a payment under this Agreement but for a present
or former connection between the jurisdiction of the government or
taxation authority imposing such Tax and the recipient of such payment
or a person related to such recipient (including, without limitation,
a connection arising from such recipient or related person being or
having been a citizen or resident of such jurisdiction, or being or
having been organized, present or engaged in a trade or business in
such jurisdiction, or having or having had a permanent establishment
or fixed place of business in such jurisdiction, but excluding a
connection arising solely from such recipient or related person having
executed, delivered, performed its obligations or received a payment
under, or enforced, this Agreement or a Credit Support Document).
"LAW" includes any treaty, law, rule or regulation (as modified, in
the case of tax matters, by the practice of any relevant governmental
revenue authority) and "LAWFUL" and "UNLAWFUL" will be construed
accordingly.
"LOCAL BUSINESS DAY" means, subject to the Schedule, a day on which
commercial banks are open for business (including dealings in foreign
exchange and foreign currency deposits) (a) in relation to any
obligation under Section 2(a)(i), in the place(s) specified in the
relevant Confirmation or, if not so specified, as otherwise agreed by
the parties in writing or determined pursuant to provisions contained,
or incorporated by reference, in this Agreement, (b) in relation to
any other payment, in the place where the relevant account is located
and, if different, in the principal financial centre, if any, of the
currency of such payment, (c) in relation to any notice or other
communication, including notice contemplated under Section 5(a)(i), in
the city specified in the address for notice provided by the recipient
and, in the case of a notice contemplated by Section 2(b), in the
place where the relevant new account is to be located and (d) in
relation to Section 5(a)(v)(2), in the relevant locations for
performance with respect to such Specified Transaction.
"LOSS" means, with respect to this Agreement or one or more Terminated
Transactions, as the case may be, and a party, the Termination
Currency Equivalent of an amount that party reasonably determines in
good faith to be its total losses and costs (or gain, in which case
expressed as a negative number) in connection with this Agreement or
that Terminated Transaction or group of Terminated Transactions, as
the case may be, including any loss of bargain, cost of funding or, at
the election of such party but without duplication, loss or cost
incurred as a result of its terminating, liquidating, obtaining or
reestablishing any hedge or related trading position (or any gain
resulting from any of them). Loss includes losses and costs (or
gains) in respect of any payment or delivery required to have been
made (assuming satisfaction of each applicable condition precedent) on
or before the relevant Early Termination Date and not made, except, so
as to avoid duplication, if Section 6(e)(i)(1) or (3) or
21
6(e)(ii)(2)(A) applies. Loss does not include a party's legal fees
and out-of-pocket expenses referred to under Section 11. A party will
determine its Loss as of the relevant Early Termination Date, or, if
that is not reasonably practicable, as of the earliest date thereafter
as is reasonably practicable. A party may (but need not) determine
its Loss by reference to quotations of relevant rates or prices from
one or more leading dealers in the relevant markets.
"MARKET QUOTATION" means, with respect to one or more Terminated
Transactions and a party making the determination, an amount
determined on the basis of quotations from Reference Market-makers.
Each quotation will be for an amount, if any, that would be paid to
such party (expressed as a negative number) or by such party
(expressed as a positive number) in consideration of an agreement
between such party (taking into account any existing Credit Support
Document with respect to the obligations of such party) and the
quoting Reference Market-maker to enter into a transaction (the
"Replacement Transaction") that would have the effect of preserving
for such party the economic equivalent of any payment or delivery
(whether the underlying obligation was absolute or contingent and
assuming the satisfaction of each applicable condition precedent) by
the parties under Section 2(a)(i) in respect of such Terminated
Transaction or group of Terminated Transactions that would, but for
the occurrence of the relevant Early Termination Date, have been
required after that date. For this purpose, Unpaid Amounts in respect
of the Terminated Transaction or group of Terminated Transactions are
to be excluded but, without limitation, any payment or delivery that
would, but for the relevant Early Termination Date, have been required
(assuming satisfaction of each applicable condition precedent) after
that Early Termination Date is to be included. The Replacement
Transaction would be subject to such documentation as such party and
the Reference Market-maker may, in good faith, agree. The party
making the determination (or its agent) will request each Reference
Market-maker to provide its quotation to the extent reasonably
practicable as of the same day and time (without regard to different
time zones) on or as soon as reasonably practicable after the relevant
Early Termination Date. The day and time as of which those quotations
are to be obtained will be selected in good faith by the party obliged
to make a determination under Section 6(e), and, if each party is so
obliged, after consultation with the other. If more than three
quotations are provided, the Market Quotation will be the arithmetic
mean of the quotations, without regard to the quotations having the
highest and lowest values. If exactly three such quotations are
provided, the Market Quotation will be the quotation remaining after
disregarding the highest and lowest quotations. For this purpose, if
more than one quotation has the same highest value or lowest value,
then one of such quotations shall be disregarded. If fewer than three
quotations are provided, it will be deemed that the Market Quotation
in respect of such Terminated Transaction or group of Terminated
Transactions cannot be determined.
"NON-DEFAULT RATE" means a rate per annum equal to the cost (without
proof or evidence of any actual cost) to the Non-defaulting Party (as
certified by it) if it were to fund the relevant amount.
"NON-DEFAULTING PARTY" has the meaning specified in Section 6(a).
22
"OFFICE" means a branch or office of a party, which may be such
party's head or home office.
"POTENTIAL EVENT OF DEFAULT" means any event which, with the giving
of notice or the lapse of time or both, would constitute an Event of
Default.
"REFERENCE MARKET-MAKERS" means four leading dealers in the relevant
market selected by the party determining a Market Quotation in good
faith (a) from among dealers of the highest credit standing which
satisfy all the criteria that such party applies generally at the time
in deciding whether to offer or to make an extension of credit and (b)
to the extent practicable, from among such dealers having an office in
the same city.
"RELEVANT JURISDICTION" means, with respect to a party, the
jurisdictions (a) in which the party is incorporated, organized,
managed and controlled or considered to have its seat, (b) where an
Office through which the party is acting for purposes of this
Agreement is located, (c) in which the party executes this Agreement
and (d) in relation to any payment, from or through which such payment
is made.
"SCHEDULED PAYMENT DATE" means a date on which a payment or delivery
is to be made under Section 2(a)(i) with respect to a Transaction.
"SET-OFF" means set-off, offset, combination of accounts, right of
retention or withholding or similar right or requirement to which the
payer of an amount under Section 6 is entitled or subject (whether
arising under this Agreement, another contract, applicable law or
otherwise) that is exercised by, or imposed on, such payer.
"SETTLEMENT AMOUNT" means, with respect to a party and any Early
Termination Date, the sum of:
(a) the Termination Currency Equivalent of the Market Quotations
(whether positive or negative) for each Terminated Transaction or
group of Terminated Transactions for which a Market Quotation is
determined; and
(b) such party's Loss (whether positive or negative and without
reference to any Unpaid Amounts) for each Terminated Transaction or
group of Terminated Transactions for which a Market Quotation cannot
be determined or would not (in the reasonable belief of the party
making the determination) produce a commercially reasonable result.
"SPECIFIED ENTITY" has the meaning specified in the Schedule.
"SPECIFIED INDEBTEDNESS" means, subject to the Schedule, any
obligation (whether present or future, contingent or otherwise, as
principal or surety or otherwise) in respect of borrowed money.
"SPECIFIED TRANSACTION" means, subject to the Schedule, (a) any
transaction (including an agreement with respect thereto) now existing
or hereafter entered into between one party to this Agreement (or any
Credit Support Provider of such party or any applicable Specified
Entity of such party) and the other party to this Agreement (or any
23
Credit Support Provider of such other party or any applicable
Specified Entity of such other party) which is a rate swap
transaction, basis swap, forward rate transaction, commodity swap,
commodity option, equity or equity index swap, equity or equity index
option, bond option, interest rate option, foreign exchange
transaction, cap transaction, floor transaction, collar transaction,
currency swap transaction, cross-currency rate swap transaction,
currency option or any other similar transaction (including any option
with respect to any of these transactions), (b) any combination of
these transactions and (c) any other transaction identified as a
Specified Transaction in this Agreement or the relevant confirmation.
"STAMP TAX" means any stamp, registration, documentation or similar
tax.
"TAX" means any present or future tax, levy, impost, duty, charge,
assessment or fee of any nature (including interest, penalties and
additions thereto) that is imposed by any government or other taxing
authority in respect of any payment under this Agreement other than a
stamp, registration, documentation or similar tax.
"TAX EVENT" has the meaning specified in Section 5(b).
"TAX EVENT UPON MERGER" has the meaning specified in Section 5(b).
"TERMINATED TRANSACTIONS" means with respect to any Early Termination
Date (a) if resulting from a Termination Event, all Affected
Transactions and (b) if resulting from an Event of Default, all
Transactions (in either case) in effect immediately before the
effectiveness of the notice designating that Early Termination Date
(or, if "Automatic Early Termination" applies, immediately before that
Early Termination Date).
"TERMINATION CURRENCY" has the meaning specified in the Schedule.
"TERMINATION CURRENCY EQUIVALENT" means, in respect of any amount
denominated in the Termination Currency, such Termination Currency
amount and, in respect of any amount denominated in a currency other
than the Termination Currency (the "Other Currency"), the amount in
the Termination Currency determined by the party making the relevant
determination as being required to purchase such amount of such Other
Currency as at the relevant Early Termination Date, or, if the
relevant Market Quotation or Loss (as the case may be), is determined
as of a later date, that later date, with the Termination Currency at
the rate equal to the spot exchange rate of the foreign exchange agent
(selected as provided below) for the purchase of such Other Currency
with the Terminated Currency at or about 11:00 a.m. (in the city in
which such foreign exchange agent is located) on such date as would be
customary for the determination of such a rate for the purchase of
such Other Currency for value on the relevant Early Termination Date
or that later date. The foreign exchange agent will, if only one
party is obliged to make a determination under Section 6(e), be
selected in good faith by that party and otherwise will be agreed by
the parties.
"TERMINATION EVENT" means an Illegality, a Tax Event or a Tax Event
Upon Merger or, if specified to be applicable, a Credit Event Upon
Merger or an Additional Termination Event.
24
"TERMINATION RATE" means a rate per annum equal to the arithmetic mean
of the cost (without proof or evidence of any actual cost) to each
party (as certified by such party) if it were to fund or of funding
such amounts.
"UNPAID AMOUNTS" owing to any party means, with respect to an Early
Termination Date, the aggregate of (a) in respect of all Terminated
Transactions, the amounts that became payable (or that would have
become payable but for Section 2(a)(iii)) to such party under Section
2(a)(i) on or prior to such Early Termination Date and which remain
unpaid as at such Early Termination Date and (b) in respect of each
Terminated Transaction, for each obligation under Section 2(a)(i)
which was (or would have been but for Section 2(a)(iii)) required to
be settled by delivery to such party on or prior to such Early
Termination Date and which has not been so settled as at such Early
Termination Date, an amount equal to the fair market value of that
which was (or would have been) required to be delivered as of the
originally scheduled date for delivery, in each case together with (to
the extent permitted under applicable law) interest, in the currency
of such amounts, from (and including) the date such amounts or
obligations were or would have been required to have been paid or
performed to (but excluding) such Early Termination Date, at the
Applicable Rate. Such amounts of interest will be calculated on the
basis of daily compounding and the actual number of days elapsed. The
fair market value of any obligation referred to in clause (b) above
shall be reasonably determined by the party obliged to make the
determination under Section 6(e) or, if each party is so obliged, it
shall be the average of the Termination Currency Equivalents of the
fair market values reasonably determined by both parties.
IN WITNESS WHEREOF the parties have executed this document on the
respective dates specified below with effect from the date specified
on the first page of this document.
SUNTRUST BANK CONSOLIDATED-TOMOKA LAND CO.
By:/S/ Fred D. Woolf By:/S/ Bruce W. Teeters
_________________ _________________________
Fred D. Woolf Bruce W. Teeters
Vice President Sr. Vice President
Date:05/16/02 Date:04/29/02
25
SCHEDULE TO THE
ISDA MASTER AGREEMENT
DATED AS OF APRIL 8, 2002, BETWEEN
SUNTRUST BANK
("PARTY A")
AND
CONSOLIDATED TOMOKA LAND CO.
("PARTY B")
PART 1
DEFINITIONS
1. "AFFILIATE" shall have the meaning assigned to such term in Section
14 of this Agreement.
2. "CALCULATION AGENT" shall mean Party A.
3. "SHAREHOLDERS' EQUITY" means with respect to any entity, at any
time, the sum (as shown in the most recent annual audited financial
statements of such entity) of (i) its capital stock (including
preferred stock) outstanding, taken at par value, (ii) its capital
surplus and (iii) its retained earnings, minus (iv) treasury stock,
each to be determined in accordance with generally accepted accounting
principles.
4. "SPECIFIED ENTITY" shall mean for the purposes of Sections 5(a)(v),
(vi), and (vii), and Section 5(b)(iv) of this Agreement, in the case
of Party A, not applicable, and in the case of Party B, any Affiliate
of Party B.
5. "SPECIFIED INDEBTEDNESS" shall have the meaning assigned to such
term in Section 14 of this Agreement, but shall not include
indebtedness in respect of deposits received.
6. "SPECIFIED TRANSACTION" shall have the meaning assigned to such
term in Section 14 of this Agreement.
7. "TERMINATION CURRENCY" shall mean United States Dollars.
8. "THRESHOLD AMOUNT" shall mean, for purposes of Section 5(a)(vi) of
this Agreement, (a) with respect to Party A, an amount equal to three
percent (3%) of its Shareholders' Equity, determined in accordance
with generally accepted accounting principles in such party's
jurisdiction of incorporation or organization, consistently applied,
as at the end of such party's most recently completed fiscal year, and
(b) with respect to Party B, an amount equal to $1,000,000 (or the
equivalent thereof in any other currencies), except that with respect
to indebtedness under the Loan Agreement, the Threshold Amount shall
be $0.00.
1
Part 2
REPRESENTATIONS
1. TAX REPRESENTATIONS. None.
2. The following paragraph is added as Section 3(g) of this Agreement:
"(g) ELIGIBLE CONTRACT PARTICIPANT. It is an Eligible Contract
Participant as defined in Section 101(12) of the Commodity Futures
Modernization Act of 2000."
PART 3
AGREEMENTS
1. DOCUMENTS TO BE DELIVERED. For purposes of Section 4(a) of this
Agreement, each party agrees to deliver the following documents as
applicable:
(a) Certified copies of all documents evidencing necessary
corporate authorizations, as well as other authorizations and
approvals with respect to the execution, delivery and performance
by the party of this Agreement and any Credit Support Document.
Party required to deliver: Party B
Date by which to be delivered: Upon execution of this Agreement
Covered by Section 3(d) Representation: Yes
(b) An incumbency certificate of an authorized officer of the party
certifying the names, true signatures and authority of the officers
of the party signing this Agreement and any Credit Support
Document.
Party required to deliver: Party B
Date by which to be delivered: Upon execution of this Agreement
Covered by Section 3(d) Representation: Yes
(c) Such other document as the other party may reasonably request
in connection with each Transaction.
Party required to deliver: Party B
Date by which to be delivered: Promptly upon request
Covered by Section 3(d) Representation: Yes
(d) Such other written information respecting the condition or
operations, financial or otherwise, of Party B as Party A may
reasonably request from time to time
Party required to deliver: Party B
Date by which to be delivered: Promptly upon request
Covered by Section 3(d) Representation: Yes
2
PART 4
TERMINATION PROVISIONS
1. CROSS DEFAULT. The "Cross Default" provisions of Section 5(a)(vi)
of this Agreement shall apply to each of Party A and Party B.
2. CREDIT EVENT UPON MERGER. The "Credit Event Upon Merger"
provisions of Section 5(b)(iv) of this Agreement shall apply to each
of Party A and Party B.
3. AUTOMATIC EARLY TERMINATION. The "Automatic Early Termination"
provision of Section 6(a) of this Agreement shall not apply to either
Party A or Party B.
4. PAYMENTS ON EARLY TERMINATION. For purposes of Section 6(e) of
this Agreement, Second Method and Loss shall apply.
5. ADDITIONAL TERMINATION EVENT WILL NOT APPLY. Notwithstanding the
foregoing, Party A will have the right (but not the obligation) to
terminate all or a pro rata portion of any Transaction related to the
Loan Agreement and will be entitled to receive from, or will be
required to pay to, Party B the fair market value for such
termination, as determined by Party A in good faith and in accordance
with market practice and its own customary procedures, upon the
occurrence of one or more of the following events:
(a) If the indebtedness under the Loan Agreement is (for whatever
reason, in whatever manner) partially or fully paid or discharged
(except with respect to any scheduled amortization);
(b) If Party A ceases to be a party to the Loan Agreement;
If the lenders party to the Loan Agreement become secured or, if
already secured, the lenders obtain additional security thereunder
and Party A, in its capacity as a party to this Agreement and any
Transaction hereunder, is not entitled to the same rights,
privileges, and interest in the collateral and/or guaranty
agreements as the lenders are entitled to under the Loan Agreement;
(c) If there is a default, an event of default, or other similar
condition or event (however described) in relation to Party B under
the Loan Agreement (without regard to the existence of any waiver
or forbearance agreement with respect thereto); and
(d) If the Loan Agreement is amended, restated, supplemented, or
otherwise modified and Party A does not consent, in its sole
discretion, to such amendment, restatement, supplement, or other
modification.
Party A may exercise such right to terminate, at any time in its
sole discretion, following the occurrence of any one of such events
through the Termination Date. A failure or delay in exercising the
foregoing right to terminate will not be presumed to operate as a
waiver, and a single or partial exercise of such right will not be
presumed to preclude any subsequent or further exercise of that
right.
3
PART 5
MISCELLANEOUS
1. NOTICES. For purposes of Section 12 of this Agreement:
(a) The address for notice or communication to Party A is:
SunTrust Capital Markets, Inc.
Financial Risk Management, Operations
303 Peachtree Street, N.E.
23rd Floor, Center Code 3913
Atlanta, GA 30308
404-575-2696 (phone)
404-532-0514 (fax)
(b) The address for notice or communication to Party B is:
Mr. Bruce Teeters
Chief Financial Officer
Consolidated Tomoka Land Co.
149 S. Ridgewood Ave.
Daytona Beach, FL 32114
386-255-7558 (phone)
386-239-0555 (fax)
2. GOVERNING LAW. Section 13(a) of this Agreement is hereby
restated as follows:
"(a) GOVERNING LAW. This Agreement will be governed by and
construed in accordance with the laws of the State of New York
without reference to choice of law doctrine."
3. JURISDICTION. Section 13(b)(i) of this Agreement is hereby
restated as follows:
"(i) submits to the nonexclusive jurisdiction of the courts of the
State of Georgia and the United States District Court located in
Atlanta, Georgia; and"
4. PROCESS AGENT. Process Agent shall not apply to this Agreement.
5. OFFICES. The provisions of Section 10(a) of this Agreement shall
not apply to either party.
6. MULTIBRANCH PARTY. For purposes of Section 10(c) of this
Agreement, neither Party A nor Party B is a Multibranch Party.
7. CREDIT SUPPORT PROVIDER.
Credit Support Provider means in relation to Party A: Not
applicable.
Credit Support Provider means in relation to Party B: Not
applicable.
4
8. CREDIT SUPPORT DOCUMENT.
Credit Support Document means in relation to Party A: Not
applicable.
Credit Support Document means in relation to Party B: Any letter
of credit, credit agreement, security agreement, mortgage, deed of
trust, pledge agreement, assignment agreement, investment
agreement, surety bond, or other credit enhancement device, or any
combination thereof issued as security for the timely performance
of Party B's obligations under this Agreement, as may be
acceptable to Party A, including, without limitation, any
amendments, supplements, restatements, or other modifications, or
any substitutions or replacements thereto in form and substance
satisfactory to Party A.
PART 6
ADDITIONAL AGREEMENTS
1. RECORDING OF CONVERSATIONS. Each party (i) consents to the
monitoring or recording, at any time and from time to time, by the
other party of any and all communications between officers or
employees of the parties, (ii) waives any further notice of such
monitoring or recording, and (iii) agrees to notify (and, if required
by law, obtain the consent of) its officers and employees with respect
to such monitoring or recording.
2. MEDIATION AND ARBITRATION. Notwithstanding anything to the
contrary contained herein, the parties agree to submit to mediation
and, should settlement through mediation not occur, to arbitration any
and all claims, disputes, and controversies between them (and their
respective employees, officers, directors, affiliates, attorneys, and
other agents) resulting from or arising out of this Agreement. Such
mediation and arbitration shall proceed in the jurisdiction where
Party A is located, shall be governed by the law specified in this
Agreement, and shall be conducted (a) in accordance with such rules as
may be agreed upon by the parties or (b) in the event the parties do
not reach an agreement as to such rules within thirty (30) days after
a notice of dispute, in accordance with the Commercial Mediation Rules
and Commercial Arbitration Rules of the American Arbitration
Association. If, within thirty (30) days after service of a written
demand for mediation, the mediation does not result in settlement of
the dispute, then any party may demand arbitration, and the decision
of the arbitrator(s) shall be binding on the parties. Judgment upon
the award rendered by the arbitrator(s) may be entered in any court
having jurisdiction. It is agreed that the arbitrators shall have no
authority to award treble, exemplary, or punitive damages of any type
under any circumstances, whether or not such damages may be available
under state or federal law, or under the Federal Arbitration Act, or
under the Commercial Arbitration Rules of the American Arbitration
Association, the parties hereby waiving their right, if any, to
recover any such damages.
5
3. SET OFF. Section 6 of the Agreement is amended by adding the
following new subsection 6(f):
"(f) RIGHT OF SET-OFF." Upon the occurrence of an Event of
Default with respect to Party B, or an Illegality or Credit Event
Upon Merger where Party B is the Affected Party, Party A will
have the right (but not the obligation), without prior notice to
Party B or any other person, to set-off any obligation of Party A
or any of Party A's present or future Affiliates, branches, or
offices owing to Party B, against any obligation of Party B owing
to Party A or any of Party A's present or future Affiliates,
branches, or offices (whether or not such obligations arise under
this Agreement, whether or not matured, whether or not contingent,
and regardless of the place of payment or booking office of the
obligations). In order to enable Party A to exercise its rights
of set-off, if an obligation is unascertained, Party A may in good
faith estimate that obligation and set-off in respect of the
estimate, subject to Party A accounting to Party B when the
obligation is ascertained.
Nothing in this Section 6(f) shall be effective to create a charge
or other security interest. This Section 6(f) shall be without
prejudice and in addition to any right of set-off, combination of
accounts, lien, or other right to which any party is at any time
otherwise entitled (whether by operation of law, contract, or
otherwise)."
4. By signing this Schedule, Party B acknowledges that it has
received and understands the SunTrust Bank "Terms of Dealing for OTC
Risk Management Transactions" and the "Risk Disclosure Statement for
OTC Risk Management Transactions" (each attached hereto and
incorporated by reference into this Agreement).
Please confirm your agreement to the terms of the foregoing Schedule
by signing below.
SUNTRUST BANK CONSOLIDATED TOMOKA LAND CO.
By:/S/ Fred D. Woolf By:/S/ Bruce W. Teeters
_________________ ____________________
Fred D. Woolf Bruce W. Teeters
Vice President Sr. Vice President
6
SunTrust Bank ("SunTrust")
Terms of Dealing for OTC Risk Management Transactions
In connection with the negotiation, entry into, and performance from
time to time of over-the-counter ("OTC") risk management transactions,
please be advised that:
SunTrust acts as principal only and does not act as advisor, agent,
broker, or fiduciary for or with respect to any counterparty (unless
otherwise expressly agreed in a written engagement letter).
SunTrust expects that its counterparties have the authority and
capacity to enter into and perform their obligations under their OTC
risk management transactions with SunTrust, and SunTrust relies on the
express and implied representations of its counterparties with respect
thereto.
SunTrust expects that its counterparties possess adequate knowledge
and experience to assess independently, or with the assistance of
their own advisors, the merits and risks of each OTC risk management
transaction that the counterparty may from time to time enter into,
amend, or terminate.
SunTrust endeavors to maintain the confidentiality of all confidential
counterparty information and expects its counterparties to do the
same. Unless a counterparty gives SunTrust written notice to the
contrary, each counterparty authorizes SunTrust and all SunTrust
affiliates, including SunTrust Capital Markets, Inc. (STCM), to share
with each other confidential information concerning a counterparty
and/or its accounts for marketing or other purposes from time to time.
Any trade ideas, term sheets, and other similar documents sent to
counterparties by SunTrust are not to be shared with others.
SunTrust may pay fees, commissions, and other amounts to agents,
brokers, and/or other third parties in connection with OTC risk
management transactions entered into with counterparties. SunTrust
considers the amount of such fees, commissions, and other amounts to
be confidential and does not disclose the same to its counterparties.
SunTrust may from time to time receive orders for similar or identical
transactions, and SunTrust makes no representation with respect to
execution priorities.
STCM's Authorized Officers have the authority to bind SunTrust in
connection with OTC risk management transactions. A current list of
Authorized Officers may be obtained from STCM upon request.
OTC risk management obligations of SunTrust are not FDIC insured.
7
SunTrust Bank ("SunTrust")
Risk Disclosure Statement for OTC Risk management Transactions
Over-the-counter ("OTC") risk management transactions, like other
financial transactions, involve a variety of significant potential
risks. OTC risk management transactions generally include options,
forwards, swaps, swaptions, caps, floors, collars, combination and
variations of such instruments, and other executory contractual
arrangements, and may involve interest rates, currencies, securities,
commodities, equities, credit, indices, and other underlying
interests.
Before entering into any OTC risk management transaction, you should
carefully consider whether the transaction is appropriate for you in
light of your experience, objectives, financial and operational
resources, and other relevant circumstances. You should also ensure
that you fully understand the nature of the transaction and
contractual relationship into which you are entering and the nature
and extent of your exposure to risk of loss, which may significantly
exceed the amount of any initial payment or investment by you.
The specific risks presented by a particular OTC risk management
transaction necessarily depend upon the character of the specific
transaction and your circumstances. In general, however, all OTC risk
management transactions involve the risk of adverse or unanticipated
market developments, risk of illiquidity and credit risk, and may
involve other material risks. Equity risk management transactions may
increase or decrease in value with a change in, among other things,
stock prices and interest rates which could result in unlimited loss.
In addition, you may be subject to internal operational risks in the
event that appropriate internal systems and controls are not in place
to monitor the various risks and funding requirements to which you are
subject by virtue of your activities in the OTC risk management and
related markets. OTC risk management transactions frequently are
tailored to permit parties to customize transactions to accomplish
complex financial and risk management objectives. Such customization
can also introduce significant risk factors of a complex character.
As in any financial transaction, you must understand the requirements
(including investment restrictions), if any, applicable to you that
are established by your regulators or by your Board of Directors or
other governing body. You should also consider the tax and accounting
implications of entering into any risk management or other
transaction. To the extent appropriate in light of the specific
transaction and your circumstances, you should consider consulting
such advisers as may be appropriate to assist you in understanding the
risks involved. If you are acting in the capacity of financial
adviser or agent, you must evaluate the foregoing matters in light of
the circumstances applicable to your principal.
In entering into any OTC risk management transaction, you should also
take into consideration that, unless you and SunTrust have established
in writing an express financial advisory or other fiduciary
relationship or you and SunTrust have expressly agreed in writing that
you will be relying on SunTrust's recommendations as the primary basis
8
for making your trading or investment decisions, SunTrust is acting
solely in the capacity of an arm's-length contractual counterparty and
not in the capacity of your financial advisor or fiduciary. In
addition, SunTrust or its affiliates may from time to time have
substantial long or short positions in and may make a market in or
otherwise buy or sell instruments identical or economically related to
the OTC risk management transaction entered into with you or may have
an investment banking or other commercial relationship with the issuer
of any security or financial instrument underlying an OTC risk
management transaction entered into with you.
THIS BRIEF STATEMENT DOES NOT DISCLOSE ALL OF THE RISKS AND OTHER
SIGNIFICANT ASPECTS OF ENTERING INTO OTC RISK MANAGEMENT TRANSACTIONS.
YOU SHOULD REFRAIN FROM ENTERING INTO ANY SUCH TRANSACTION UNLESS YOU
FULLY UNDERSTAND ALL SUCH RISK AND HAVE INDEPENDENTLY DETERMINED THAT
THE TRANSACTION IS APPROPRIATE FOR YOU.
9
EXHIBIT 10.11
SUNTRUST ROBINSON HUMPHRY
Capital Markets
A Division of SunTrust Capital Markets
303 Peachtree Street, N.E.
23rd Floor, Center Code 3913
Atlanta, Georgia 30308
Member NASD and SIPC
April 9, 2002
Confirmation of Interest Rate Transaction
THIS LETTER AGREEMENT SHOULD BE REVIEWED, EXECUTED BY AN
AUTHORIZED PERSON(S), AND RETURNED IMMEDIATELY VIA FAX TO
404-532-0514.
(Please direct any questions to
Ken Kuykendall at 678-624-7750.)
Bruce Teeters
Chief Financial Officer
Consolidated Tomoka Land Co.
149 S. Ridgewood Ave.
Daytona Beach, Florida 32114
Ph#: 386-255-7558
Fax#: 386-239-0555
REF: 16252
Dear Mr. Teeters:
The purpose of this letter agreement is to set forth the terms
and conditions of the Rate Transaction entered into between
Consolidated Tomoka Land Co. ("Counterparty" or "you") and SunTrust
Bank ("SunTrust" or "us") on the Trade Date specified below (the
"Transaction"). SunTrust Capital Markets, Inc. acts as agent on
behalf of SunTrust with respect to this Transaction. This letter
agreement constitutes a "Confirmation" as referred to in the ISDA
Master Agreement to be entered into by the parties hereto
(see Section 2(a) below).
The definitions and provisions contained in the 2000 ISDA
Definitions published by the International Swap and Derivatives
Association, Inc. ("ISDA"), as amended and supplemented from time to
time (the "Definitions"), are incorporated by reference into this
Confirmation. In the event of any inconsistency between the
Definitions and this Confirmation, this Confirmation will govern.
This Confirmation supplements, forms a part of, and is subject
to the ISDA Master Agreement, as amended and supplemented from time
to time (the "Swap Agreement"), between you and us. All provisions
contained or incorporated by reference in the Swap Agreement shall
govern this Confirmation except as expressly modified below. Prior
to the execution and delivery of such Swap Agreement, this
Confirmation alone shall constitute a complete and binding agreement
with respect to the Transaction.
1
Each party is hereby advised, and each such party acknowledges,
that the other party has engaged in (or refrained from engaging in)
substantial financial transactions and has taken other material
actions in reliance upon the parties' entry in the Transaction to
which this Confirmation relates on the terms and conditions set forth
below.
This Confirmation shall be governed by and construed in
accordance with the laws of the State of New York without reference
to choice of law doctrine.
1. The terms of the particular Transaction to which this
Confirmation relates are as follows:
Type of Transaction: Swap Transaction
Notional Amount: $8,000,000.00 amortizing (see
attached Schedule A)
Trade Date: April 8, 2002
Effective Date: July 1, 2002
Termination Date: July 1, 2012
Fixed Amounts:
Fixed Rate Payer: Counterparty
Fixed Rate Payer Payment Dates: The 1st day of each month,
beginning August 1, 2002,
through and including the
Termination Date, subject
to adjustment in
accordance with the
Modified Following
Business Day
Convention
Fixed Rate: 7.35% per annum
Fixed Rate Day Count Fraction: Actual/360
Adjustment to Period End Dates: Inapplicable
Floating Amounts:
Floating Rate Payer: SunTrust
2
Floating Rate Payer Payment Dates: The 1st day of each month,
beginning August 1, 2002,
through and including the
Termination Date, subject
to adjustment in
accordance with the
Modified Following
Business Day Convention
Floating Rate for initial
Calculation Period: To be determined
Floating Rate Day Count Fraction: Actual/360
Designated Maturity: 1 month
Floating Rate Option: USD-LIBOR-BBA
Spread: 1.25% per annum
Adjustment to Period End Dates: Inapplicable
Reset Dates: The first day of each
Floating Rate Payer
Calculation Period
Calculation Agent: SunTrust
Business Days: New York
2. Other Provisions
(a) Subject to the terms, conditions and limitations of any
other agreement between the parties, SunTrust shall have the
right, but not the obligation, to terminate this Transaction if
seventy-five (75) days have elapsed since the Trade Date and the
Swap Agreement has not been executed by you and received by
SunTrust. If this right to terminate is exercised, SunTrust
will be entitled to receive from you or will be required to pay
to you the fair market value for such termination as determined
by SunTrust in good faith and in accordance with market practice
and its own customary procedures.
(b) You agree to provide us (i) corporate resolutions, and (ii)
a certificate of incumbency with respect to the individual(s)
executing this Confirmation, both documents evidencing your
authority to enter into this Transaction. This provision shall
constitute an additional Agreement for the purpose of Section 4
of the Swap Agreement.
(c) By signing this Confirmation, you acknowledge that you have
received and understand the SunTrust Bank "Terms of Dealing for
OTC Risk Management Transactions" and the "Risk Disclosure
Statement for OTC Risk Management Transactions" (each attached
hereto and incorporated by reference into this Confirmation).
3
(d) "Loan Agreement" shall mean each agreement, related by its
terms to this Transaction, to which you (as borrower) and
SunTrust (or one of its Affiliates) are or hereafter become
parties (and to which other lenders may be parties) involving
the making of loans, extensions of credit or financial
accommodations thereunder or commitments therefor, as the same
exists on the Trade Date and without regard to (i) any
termination or cancellation thereof, whether by reason of
payment of all indebtedness incurred thereunder or otherwise, or
(ii) unless consented to in writing by SunTrust, any amendment,
modification, addition, waiver or consent thereto or thereof.
3. Account Details
Payments to Counterparty:
Depository: [PLEASE ADVISE]
ABA #
Favor of:
Account #
Payments to SunTrust:
SunTrust Bank
ABA # 061000104
FBO: Bond Wire Clearing
Account # 9088-0000-95
Attn: Financial Risk Management, Operations
4. Offices
(a) The Office of Counterparty for the Transaction is its Daytona
Beach office; and
(b) The Office of SunTrust for the Transaction is its Atlanta
office.
By signing below, you also acknowledge and agree that we have
explained to you the risks involved in this Transaction, which risks
include but are not limited to the following:
Market Risk: The risk that the Transaction may increase or
decrease in value with a change in, among other things, interest
rates or the yield curve; and
Liquidity Risk: The risk that the Transaction cannot be closed
out or disposed of quickly at or near its value.
You further acknowledge and agree that you understand these
risks and the Transaction as a whole, that you are capable of
managing the risks associated with this Transaction, that the risks
involved in this Transaction are consistent with your financial
goals, policies and procedures, and risk tolerance, and that you have
determined that this Transaction is appropriate for you.
4
Please confirm that the foregoing correctly sets forth the terms
of our agreement by signing this copy of this Confirmation and
immediately returning it to SunTrust Capital Markets, Inc. via fax at
the number indicated on Page 1.
Very truly yours, Accepted and Confirmed as of the date
first written:
SUNTRUST BANK CONSOLIDATED TOMOKA LAND CO.
By:/S/ Fred D. Woolf By:/S/ Bruce W. Teeters
_________________ ____________________
Fred D. Woolf Bruce W. Teeters
Vice President Sr. Vice President
5
AMORTIZATION SCHEDULE A
PERIOD BEGIN PERIOD END NOTIONAL AMOUNT
- ------------ ---------- ---------------
1-Jul-02 1-Aug-02 8,000,000.00
1-Aug-02 1-Sep-02 7,985,284.31
1-Sep-02 1-Oct-02 7,970,478.48
1-Oct-02 1-Nov-02 7,955,581.97
1-Nov-02 1-Dec-02 7,940,594.22
1-Dec-02 1-Jan-03 7,925,514.66
1-Jan-03 1-Feb-03 7,910,342.75
1-Feb-03 1-Mar-03 7,895,077.90
1-Mar-03 1-Apr-03 7,879,719.56
1-Apr-03 1-May-03 7,864,267.15
1-May-03 1-Jun-03 7,848,720.10
1-Jun-03 1-Jul-03 7,833,077.81
1-Jul-03 1-Aug-03 7,817,339.72
1-Aug-03 1-Sep-03 7,801,505.23
1-Sep-03 1-Oct-03 7,785,573.76
1-Oct-03 1-Nov-03 7,769,544.71
1-Nov-03 1-Dec-03 7,753,417.48
1-Dec-03 1-Jan-04 7,737,191.47
1-Jan-04 1-Feb-04 7,720,866.07
1-Feb-04 1-Mar-04 7,704,440.68
1-Mar-04 1-Apr-04 7,687,914.69
1-Apr-04 1-May-04 7,671,287.47
1-May-04 1-Jun-04 7,654,558.42
1-Jun-04 1-Jul-04 7,637,726.89
1-Jul-04 1-Aug-04 7,620,792.28
1-Aug-04 1-Sep-04 7,603,753.94
1-Sep-04 1-Oct-04 7,586,611.24
1-Oct-04 1-Nov-04 7,569,363.54
1-Nov-04 1-Dec-04 7,552,010.20
1-Dec-04 1-Jan-05 7,534,550.57
1-Jan-05 1-Feb-05 7,516,984.00
1-Feb-05 1-Mar-05 7,499,309.83
1-Mar-05 1-Apr-05 7,481,527.41
1-Apr-05 1-May-05 7,463,636.07
1-May-05 1-Jun-05 7,445,635.15
1-Jun-05 1-Jul-05 7,427,523.97
1-Jul-05 1-Aug-05 7,409,301.87
1-Aug-05 1-Sep-05 7,390,968.15
1-Sep-05 1-Oct-05 7,372,522.13
1-Oct-05 1-Nov-05 7,353,963.14
1-Nov-05 1-Dec-05 7,335,290.47
1-Dec-05 1-Jan-06 7,316,503.43
1-Jan-06 1-Feb-06 7,297,601.32
1-Feb-06 1-Mar-06 7,278,583.44
1-Mar-06 1-Apr-06 7,259,449.07
1-Apr-06 1-May-06 7,240,197.50
1-May-06 1-Jun-06 7,220,828.02
1-Jun-06 1-Jul-06 7,201,339.90
1-Jul-06 1-Aug-06 7,181,732.41
1-Aug-06 1-Sep-06 7,162,004.83
1-Sep-06 1-Oct-06 7,142,156.42
1-Oct-06 1-Nov-06 7,122,786.43
1-Nov-06 1-Dec-06 7,102,094.13
6
PERIOD BEGIN PERIOD END NOTIONAL AMOUNT
- ------------ ---------- ---------------
1-Dec-06 1-Jan-07 7,081,878.76
1-Jan-07 1-Feb-07 7,061,539.58
1-Feb-07 1-Mar-07 7,041,075.82
1-Mar-07 1-Apr-07 7,020,486.71
1-Apr-07 1-May-07 6,999,771.50
1-May-07 1-Jun-07 6,978,929.41
1-Jun-07 1-Jul-07 6,957,959.66
1-Jul-07 1-Aug-07 6,936,861.47
1-Aug-07 1-Sep-07 6,915,634.05
1-Sep-07 1-Oct-07 6,894,276.62
1-Oct-07 1-Nov-07 6,872,788.37
1-Nov-07 1-Dec-07 6,851,168.50
1-Dec-07 1-Jan-08 6,829,416.22
1-Jan-08 1-Feb-08 6,807,530.70
1-Feb-08 1-Mar-08 6,785,511.13
1-Mar-08 1-Apr-08 6,763,356.70
1-Apr-08 1-May-08 6,741,066.56
1-May-08 1-Jun-08 6,718,639.90
1-Jun-08 1-Jul-08 6,696,075.88
1-Jul-08 1-Aug-08 6,673,373.65
1-Aug-08 1-Sep-08 6,650,532.37
1-Sep-08 1-Oct-08 6,627,551.19
1-Oct-08 1-Nov-08 6,604,429.25
1-Nov-08 1-Dec-08 6,581,165.68
1-Dec-08 1-Jan-09 6,557,759.63
1-Jan-09 1-Feb-09 6,534,210.22
1-Feb-09 1-Mar-09 6,510,516.56
1-Mar-09 1-Apr-09 6,486,677.78
1-Apr-09 1-May-09 6,462,692.99
1-May-09 1-Jun-09 6,438,561.29
1-Jun-09 1-Jul-09 6,414,281.79
1-Jul-09 1-Aug-09 6,389,853.57
1-Aug-09 1-Sep-09 6,365,275.73
1-Sep-09 1-Oct-09 6,340,547.35
1-Oct-09 1-Nov-09 6,315,667.51
1-Nov-09 1-Dec-09 6,290,635.28
1-Dec-09 1-Jan-10 6,265,449.73
1-Jan-10 1-Feb-10 6,240,109.92
1-Feb-10 1-Mar-10 6,214,614.90
1-Mar-10 1-Apr-10 6,188,963.72
1-Apr-10 1-May-10 6,163,155.43
1-May-10 1-Jun-10 6,137,189.07
1-Jun-10 1-Jul-10 6,111,063.66
1-Jul-10 1-Aug-10 6,084,778.23
1-Aug-10 1-Sep-10 6,058,331.80
1-Sep-10 1-Oct-10 6,031,723.39
1-Oct-10 1-Nov-10 6,004,952.00
1-Nov-10 1-Dec-10 5,978,016.64
1-Dec-10 1-Jan-11 5,950,916.30
1-Jan-11 1-Feb-11 5,923,649.97
1-Feb-11 1-Mar-11 5,896,216.63
1-Mar-11 1-Apr-11 5,868,615.27
1-Apr-11 1-May-11 5,840,844.84
1-May-11 1-Jun-11 5,812,904.33
1-Jun-11 1-Jul-11 5,784,792.67
7
PERIOD BEGIN PERIOD END NOTIONAL AMOUNT
- ------------ ---------- ---------------
1-Jul-11 1-Aug-11 5,756,508.83
1-Aug-11 1-Sep-11 5,728,051.76
1-Sep-11 1-Oct-11 5,699,420.38
1-Oct-11 1-Nov-11 5,670,613.64
1-Nov-11 1-Dec-11 5,641,630.45
1-Dec-11 1-Jan-12 5,612,469.75
1-Jan-12 1-Feb-12 5,583,130.43
1-Feb-12 1-Mar-12 5,553,611.41
1-Mar-12 1-Apr-12 5,523,911.59
1-Apr-12 1-May-12 5,494,029.86
1-May-12 1-Jun-12 5,463,965.10
1-Jun-12 1-Jul-12 5,433,716.19
8
SunTrust Bank ("SunTrust")
Terms of Dealing for OTC Risk Management Transactions
In connection with the negotiation, entry into, and performance from
time to time of over-the-counter ("OTC") risk management
transactions, please be advised that:
SunTrust acts as principal only and does not act as advisor, agent,
broker, or fiduciary for or with respect to any counterparty (unless
otherwise expressly agreed in a written engagement letter).
SunTrust expects that its counterparties have the authority and
capacity to enter into and perform their obligations under their OTC
risk management transactions with SunTrust, and SunTrust relies on
the express and implied representations of its counterparties with
respect thereto.
SunTrust expects that its counterparties possess adequate knowledge
and experience to assess independently, or with the assistance of
their own advisors, the merits and risks of each OTC risk management
transaction that the counterparty may from time to time enter into,
amend, or terminate.
SunTrust endeavors to maintain the confidentiality of all
confidential counterparty information and expects its counterparties
to do the same. Unless a counterparty gives SunTrust written notice
to the contrary, each counterparty authorizes SunTrust and all
SunTrust affiliates, including SunTrust Capital Markets, Inc. (STCM),
to share with each other confidential information concerning a
counterparty and/or its accounts for marketing or other purposes from
time to time. Any trade ideas, term sheets, and other similar
documents sent to counterparties by SunTrust are not to be shared
with others.
SunTrust may pay fees, commissions, and other amounts to agents,
brokers, and/or other third parties in connection with OTC risk
management transactions entered into with counterparties. SunTrust
considers the amount of such fees, commissions, and other amounts to
be confidential and does not disclose the same to its counterparties.
SunTrust may from time to time receive orders for similar or
identical transactions, and SunTrust makes no representation with
respect to execution priorities.
STCM's Authorized Officers have the authority to bind SunTrust in
connection with OTC risk management transactions. A current list of
Authorized Officers may be obtained from STCM upon request.
OTC risk management obligations of SunTrust are not FDIC insured.
9
SunTrust Bank ("SunTrust")
Risk Disclosure Statement for
OTC Risk management Transactions
Over-the-counter ("OTC") risk management transactions, like other
financial transactions, involve a variety of significant potential
risks. OTC risk management transactions generally include options,
forwards, swaps, swaptions, caps, floors, collars, combination and
variations of such instruments, and other executory contractual
arrangements, and may involve interest rates, currencies, securities,
commodities, equities, credit, indices, and other underlying
interests.
Before entering into any OTC risk management transaction, you should
carefully consider whether the transaction is appropriate for you in
light of your experience, objectives, financial and operational
resources, and other relevant circumstances. You should also ensure
that you fully understand the nature of the transaction and
contractual relationship into which you are entering and the nature
and extent of your exposure to risk of loss, which may significantly
exceed the amount of any initial payment or investment by you.
The specific risks presented by a particular OTC risk management
transaction necessarily depend upon the character of the specific
transaction and your circumstances. In general, however, all OTC
risk management transactions involve the risk of adverse or
unanticipated market developments, risk of illiquidity and credit
risk, and may involve other material risks. Equity risk management
transactions may increase or decrease in value with a change in,
among other things, stock prices and interest rates which could
result in unlimited loss. In addition, you may be subject to
internal operational risks in the event that appropriate internal
systems and controls are not in place to monitor the various risks
and funding requirements to which you are subject by virtue of
your activities in the OTC risk management and related markets. OTC
risk management transactions frequently are tailored to permit
parties to customize transactions to accomplish complex financial and
risk management objectives. Such customization can also introduce
significant risk factors of a complex character.
As in any financial transaction, you must understand the requirements
(including investment restrictions), if any, applicable to you that
are established by your regulators or by your Board of Directors or
other governing body. You should also consider the tax and
accounting implications of entering into any risk management or other
transaction. To the extent appropriate in light of the specific
transaction and your circumstances, you should consider consulting
such advisers as may be appropriate to assist you in understanding the
risks involved. If you are acting in the capacity of financial
adviser or agent, you must evaluate the foregoing matters in light of
the circumstances applicable to your principal.
In entering into any OTC risk management transaction, you should also
take into consideration that, unless you and SunTrust have
established in writing an express financial advisory or other
fiduciary relationship or you and SunTrust have expressly agreed in
10
writing that you will be relying on SunTrust's recommendations as the
primary basis for making your trading or investment decisions,
SunTrust is acting solely in the capacity of an arm's-length
contractual counterparty and not in the capacity of your financial
advisor or fiduciary. In addition, SunTrust or its affiliates may
from time to time have substantial long or short positions in and may
make a market in or otherwise buy or sell instruments identical or
economically related to the OTC risk management transaction entered
into with you or may have an investment banking or other commercial
relationship with the issuer of any security or financial instrument
underlying an OTC risk management transaction entered into with you.
THIS BRIEF STATEMENT DOES NOT DISCLOSE ALL OF THE RISKS
AND OTHER SIGNIFICANT ASPECTS OF ENTERING INTO OTC RISK MANAGEMENT
TRANSACTIONS. YOU SHOULD REFRAIN FROM ENTERING INTO ANY SUCH
TRANSACTION UNLESS YOU FULLY UNDERSTAND ALL SUCH RISK AND HAVE
INDEPENDENTLY DETERMINED THAT THE TRANSACTION IS APPROPRIATE FOR YOU.
11
EXHIBIT 99.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Consolidated-Tomoka Land
Co. (The "Company") on Form 10-Q for the period ending June 30, 2002
as filed with the Securities and Exchange Commission on the date
hereof (the "Report"), I, William H. McMunn, President and Chief
Executive Officer of the Company, certify, pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that:
(1) The Report fully complies with the requirement of Section
13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents,
in all material respects, the financial condition and results of
operations of the Company.
/S/ William H. McMunn
- ---------------------
William H. McMunn
President and
Chief Executive Officer
August 12, 2002
1
Exhibit 99.2
CERTIFICATION PURSUANT TO
18 U.S.C SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Consolidated-Tomoka Land
Co. (The "Company") on Form 10-Q for the period ending June 30, 2002
as filed with the Securities and Exchange Commission on the date
hereof (the "Report"), I, Bruce W. Teeters, Senior Vice President -
Finance and Treasurer of the Company, certify, pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that:
(1) The Report fully complies with the requirement of Section
13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents,
in all material respects, the financial condition and results of
operations of the Company.
/S/ Bruce W. Teeters
- --------------------
Bruce W. Teeters
Senior Vice President-Finance and Treasurer
August 12, 2002
1