UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 30, 2005
ALEXANDER & BALDWIN, INC.
(Exact name of registrant as specified in its charter)
Hawaii 0-565 99-0032630
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(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
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incorporation) Identification No.)
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822 Bishop Street, P. O. Box 3440
Honolulu, Hawaii 96801
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(Address of principal executive office and zip code)
(808) 525-6611
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(Registrant's telephone number, including area code)
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2.):
_
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
_
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
_
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
_
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01. Entry into a Material Definitive Agreement.
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On September 30, 2005, Matson Navigation Company, Inc. ("Matson"), a
wholly owned subsidiary of Alexander & Baldwin, Inc. ("A&B") executed a
revolving credit agreement ("Agreement") with Wells Fargo Bank, National
Association ("Bank").
The agreement provides that Matson may borrow up to $30 million under a
revolving credit note for a three year period ending September 30, 2008 and may
convert the then outstanding balance into a one-year term agreement with
quarterly payments through September 30, 2009.
The purpose of the agreement is to provide general working capital
and mid-term financing support to the business. No immediate material draws on
the credit line are expected.
Amounts drawn on the three-year revolving loan period may be for up to
90 days at an interest rate of the London Inter-Bank Offer Rate ("LIBOR") plus
47.5 basis points.
Matson's principal financial covenants include:
1. Quarterly and annual compliance reporting. 2. Annual audited
financial statements. 3. Maintenance of adequate insurance. 4. Positive
net income after taxes for each fiscal quarter.
5. Maintain a consolidated tangible net worth of not less than $250
million or 65 percent of the consolidated tangible net worth at the
beginning of the most recent fiscal year end. 6. Maintain a
ratio of funded debt to tangible net worth of no more than 2:1. Funded
debt includes all indebtedness, including capital lease obligations,
as determined under generally accepted accounting principles.
7. Restrictions on dividends to A&B while any event of default exists
and is uncured. 8. Limitations on the ability to liquidate, merge or
consolidate with another entity. 9. With certain exceptions as
specified in the Agreement, may not enter into lien agreements of
greater than $20 million in aggregate.
10. May not dispose of more than ten percent of Matson's assets as
measured against Matson's consolidated assets at the end of its most
recent fiscal year.
The agreement provides that the primary events of default include:
1. Failure to pay amounts due under the Agreement when due.
2. Failure to pay amounts due under any agreement that extends to
Matson credit of more than $10 million.
3. Bankruptcy or insolvency.
4. A judgment or award against Matson in the amount of $10 million or
more that is not covered by insurance and that is not discharged or
satisfied within 60 days of award.
Item 1.02. Termination of a Material Definitive Agreement.
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The Agreement described in Item 1.01 replaced a revolving credit
agreement dated September 30, 2003 that expired on September 30, 2005. No
amounts were outstanding under the 2003 agreement at the time of its expiration.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an
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Off-Balance Sheet Arrangement of a Registrant
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The information set forth under Item 1.01 is incorporated herein by
reference.
Item 9.01. Financial Statements and Exhibits
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(c) Exhibits
10.1 Revolving Line of Credit Note and Loan Agreement
between Matson Navigation Company, Inc. and
Wells Fargo Bank, National Association, dated
September 30, 2005.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: October 6, 2005
ALEXANDER & BALDWIN, INC.
/s/ Thomas A. Wellman
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Thomas A. Wellman
Vice President, Controller & Treasurer
REVOLVING LINE OF CREDIT NOTE
$30,000,000.00 San Francisco, California
September 30, 2005
FOR VALUE RECEIVED, the undersigned MATSON NAVIGATION COMPANY, INC.
("Borrower") promises to pay to the order of WELLS FARGO BANK, NATIONAL
ASSOCIATION ("Bank") at its San Francisco U.S. Corporate Banking Office at 550
California Street, MAC A0112-101, San Francisco, CA 94104, or at such other
place as the holder hereof may designate, in lawful money of the United States
of America and in immediately available funds, the principal sum of Thirty
Million Dollars ($30,000,000.00), or so much thereof as may be advanced and be
outstanding, with interest thereon, to be computed on each advance from the date
of its disbursement as set forth herein.
DEFINITIONS:
Capitalized terms defined in the Loan Agreement and used in this Note
shall have herein the meanings ascribed to them in the Loan Agreement. As used
herein, the following terms shall have the meanings set forth after each, and
any other term defined in this Note shall have the meaning set forth at the
place defined:
(a) "Advance Period" means the period commencing on the date of this
Note and ending on the Initial Maturity Date.
(b) "Business Day" means any day except a Saturday, Sunday or any other
day on which commercial banks in California are authorized or required by law to
close.
(c) "Fixed Rate Term" means a period commencing on a Business Day and
continuing for 1, 2, 3, 6 or 12 months as designated by Borrower, during which
all or a portion of the outstanding principal balance of this Note bears
interest determined in relation to LIBOR; provided however, that (i) no Fixed
Rate Term during the Advance Period may be selected for a principal amount less
than One Hundred Thousand Dollars ($100,000.00); (ii) each Fixed Rate Advance
during the Term Period shall apply to the then entire outstanding principal
balance of this Note and (iii) no Fixed Rate Term which commences in the Advance
Period shall extend beyond the Initial Maturity Date and no Fixed Rate Term
which commences during the Term Period shall extend beyond the final scheduled
maturity date hereof. If any Fixed Rate Term would end on a day which is not a
Business Day, then such Fixed Rate Term shall be extended to the next succeeding
Business Day.
(d) "LIBOR" means the rate per annum determined pursuant to the
following formula:
LIBOR = Base LIBOR
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100% - LIBOR Reserve Percentage
(i) "Base LIBOR" means the rate per annum for United States dollar
deposits quoted by Bank as the Inter-Bank Market Offered Rate, with the
understanding that such rate is quoted by Bank for the purpose of calculating
effective rates of interest for loans making reference thereto, on the first day
of a Fixed Rate Term for delivery of funds on said date for a period of time
approximately equal to the number of days in such Fixed Rate Term and in an
amount approximately equal to the principal amount to which such Fixed Rate Term
applies. Borrower understands and agrees that Bank may base its quotation of the
Inter-Bank Market Offered Rate upon such offers or other market indicators of
the Inter-Bank Market as Bank in its discretion deems appropriate including, but
not limited to, the rate offered for U.S. dollar deposits on the London
Inter-Bank Market.
(ii) "LIBOR Reserve Percentage" means the reserve percentage prescribed
by the Board of Governors of the Federal Reserve System (or any successor) for
"Eurocurrency Liabilities" (as defined in Regulation D of the Federal Reserve
Board, as amended), adjusted by Bank for expected changes in such reserve
percentage during the applicable Fixed Rate Term.
(e) "Loan Agreement" means that certain Loan Agreement between Borrower
and Bank dated as of September 30, 2005, as amended from time to time.
(f) "Prime Rate" means at any time the rate of interest most recently
announced within Bank at its principal office as its Prime Rate, with the
understanding that the Prime Rate is one of Bank's base rates and serves as the
basis upon which effective rates of interest are calculated for those loans
making reference thereto, and is evidenced by the recording thereof after its
announcement in such internal publication or publications as Bank may designate.
(g) "Term Period" means the period commencing on October 1, 2008
and ending on September 30, 2009.
INTEREST:
(a) Interest. The outstanding principal balance of this Note shall bear
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interest (computed on the basis of a 360-day year, actual days elapsed , during
the Advance Period, (i) either (y) at a fluctuating rate per annum equal to two
percent and five-hundredths (2.05%) below the Prime Rate in effect from time to
time, or (z) at a fixed rate per annum determined by Bank to be four hundred
seventy-five thousandths percent (0.475%) above LIBOR in effect on the first day
of the applicable Fixed Rate Term, and (ii) after the Advance Period, at a fixed
rate per annum determined by Bank to be four hundred seventy-five thousandths
percent (0.475%) above LIBOR in effect on the first day of the applicable Fixed
Rate Term. When interest is determined in relation to the Prime Rate, each
change in the rate of interest hereunder shall become effective on the date each
Prime Rate change is announced within Bank. With respect to each LIBOR selection
hereunder, Bank is hereby authorized to note the date, principal amount,
interest rate and Fixed Rate Term applicable thereto and any payments made
thereon on Bank's books and records (either manually or by electronic entry)
and/or on any schedule attached to this Note, which notations shall be prima
facie evidence of the accuracy of the information noted.
(b) Selection of Interest Rate Options. At any time any portion of this
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Note bears interest determined in relation to LIBOR, it may be continued by
Borrower at the end of the Fixed Rate Term applicable thereto so that all or a
portion thereof bears interest determined in relation to the Prime Rate or to
LIBOR for a new Fixed Rate Term designated by Borrower. At any time any portion
of this Note bears interest determined in relation to the Prime Rate, Borrower
may convert all or a portion thereof so that it bears interest determined in
relation to LIBOR for a Fixed Rate Term designated by Borrower. At such time as
Borrower requests an advance hereunder or wishes to select a LIBOR option for
all or a portion of the outstanding principal balance hereof, and at the end of
each Fixed Rate Term, Borrower shall give Bank notice specifying: (i) the
interest rate option selected by Borrower; (ii) the principal amount subject
thereto; and (iii) for each LIBOR selection, the length of the applicable Fixed
Rate Term. Any such notice may be given by telephone (or such other electronic
method as Bank may permit) so long as, with respect to each LIBOR selection, (A)
if requested by Bank, Borrower provides to Bank written confirmation thereof not
later than three (3) Business Days after such notice is given, and (B) such
notice is given to Bank prior to 10:00 a.m. on the first day of the Fixed Rate
Term, or at a later time during any Business Day if Bank, at its sole option but
without obligation to do so, accepts Borrower's notice and quotes a fixed rate
to Borrower. If Borrower does not immediately accept a fixed rate when quoted by
Bank, the quoted rate shall expire and any subsequent LIBOR request from
Borrower shall be subject to a redetermination by Bank of the applicable fixed
rate. If no specific designation of interest is made at the time any advance is
requested hereunder or at the end of any Fixed Rate Term, Borrower shall be
deemed to have made a Prime Rate interest selection for such advance or the
principal amount to which such Fixed Rate Term applied. Notwithstanding the
foregoing, no Prime Rate-based interest option shall be available during the
Term Period, and Borrower shall be deemed to have selected a Fixed Rate Term of
one month duration if Borrower does not specify otherwise with respect to any
Fixed Rate Term during the Term Period.
(c) Taxes and Regulatory Costs. Borrower shall pay to Bank immediately
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upon demand, in addition to any other amounts due or to become due hereunder,
any and all (i) withholdings, interest equalization taxes, stamp taxes or other
taxes (except income and franchise taxes) imposed by any domestic or foreign
governmental authority and related in any manner to LIBOR, and (ii) future,
supplemental, emergency or other changes in the LIBOR Reserve Percentage,
assessment rates imposed by the Federal Deposit Insurance Corporation, or
similar requirements or costs imposed by any domestic or foreign governmental
authority or resulting from compliance by Bank with any request or directive
(whether or not having the force of law) from any central bank or other
governmental authority and related in any manner to LIBOR to the extent they are
not included in the calculation of LIBOR. In determining which of the foregoing
are attributable to any LIBOR option available to Borrower hereunder, any
reasonable allocation made by Bank among its operations shall be conclusive and
binding upon Borrower.
(d) Payment of Interest. Interest accrued on this Note shall be payable
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on the last day of each calendar quarter, commencing December 31, 2005.
(e) Default Interest. From and after the maturity date of this Note, or
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such earlier date as all principal owing hereunder becomes due and payable by
acceleration or otherwise, the outstanding principal balance of this Note shall
bear interest until paid in full at an increased rate per annum (computed on the
basis of a 360-day year, actual days elapsed, equal to four percent (4%) above
the rate of interest from time to time applicable to this Note.
BORROWING AND REPAYMENT:
(a) Borrowing and Repayment. Borrower may from time to time during the
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term of this Note borrow, partially or wholly repay its outstanding borrowings,
and reborrow, subject to all of the limitations, terms and conditions of this
Note and of any document executed in connection with or governing this Note;
provided however, that the total outstanding borrowings under this Note shall
not at any time exceed the principal amount stated above. The unpaid principal
balance of this obligation at any time shall be the total amounts advanced
hereunder by the holder hereof less the amount of principal payments made hereon
by or for any Borrower, which balance may be endorsed hereon from time to time
by the holder. The outstanding principal balance of this Note shall be due and
payable in full on the Initial Maturity Date, or, if Borrower so elects in
accordance with the terms of the Loan Agreement, in installments, each equal to
one quarter of the outstanding principal balance of this Note on the Initial
Maturity Date, which installments shall be due and payable on December 31, 2008,
March 31, 2009, June 30, 2009 and September 30, 2009.
(b) Advances. Advances hereunder, to the total amount of the principal
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sum stated above, may be made by the holder at the oral or written request of
(i) Matthew J. Cox, Susan Chen, or Timothy H. Reid, any one acting alone, who
are authorized to request advances and direct the disposition of any advances
until written notice of the revocation of such authority is received by the
holder at the office designated above, or (ii) any person, with respect to
advances deposited to the credit of any deposit account of Borrower, which
advances, when so deposited, shall be conclusively presumed to have been made to
or for the benefit of Borrower regardless of the fact that persons other than
those authorized to request advances may have authority to draw against such
account. The holder shall have no obligation to determine whether any person
requesting an advance is or has been authorized by Borrower.
(c) Application of Payments. Each payment made on this Note shall be
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credited first, to any interest then due and second, to the outstanding
principal balance hereof. All payments credited to principal shall be applied
first, to the outstanding principal balance of this Note which bears interest
determined in relation to the Prime Rate, if any, and second, to the outstanding
principal balance of this Note which bears interest determined in relation to
LIBOR, with such payments applied to the oldest Fixed Rate Term first.
PREPAYMENT:
(a) Prime Rate. Borrower may prepay principal on any portion of this
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Note which bears interest determined in relation to the Prime Rate at any time,
in any amount and without penalty.
(b) LIBOR. Borrower may prepay principal on any portion of this Note
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which bears interest determined in relation to LIBOR at any time and in the
minimum amount of One Hundred Thousand Dollars ($100,000.00); provided however,
that if the outstanding principal balance of such portion of this Note is less
than said amount, the minimum prepayment amount shall be the entire outstanding
principal balance thereof. In consideration of Bank providing this prepayment
option to Borrower, or if any such portion of this Note shall become due and
payable at any time prior to the last day of the Fixed Rate Term applicable
thereto by acceleration or otherwise, Borrower shall pay to Bank immediately
upon demand a fee which is the sum of the discounted monthly differences for
each month from the month of prepayment through the month in which such Fixed
Rate Term matures, calculated as follows for each such month:
(i) Determine the amount of interest which would have accrued each
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month on the amount prepaid at the interest rate applicable to
such amount had it remained outstanding until the last day of
the Fixed Rate Term applicable thereto.
(ii) Subtract from the amount determined in (i) above the amount of
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interest which would have accrued for the same month on the
amount prepaid for the remaining term of such Fixed Rate Term
at LIBOR in effect on the date of prepayment for new loans
made for such term and in a principal amount equal to the
amount prepaid.
(iii) If the result obtained in (ii) for any month is greater than
zero, discount that difference by LIBOR used in (ii) above.
Borrower acknowledges that prepayment of such amount may result in Bank
incurring additional costs, expenses and/or liabilities, and that it is
difficult to ascertain the full extent of such costs, expenses and/or
liabilities. Borrower, therefore, agrees to pay the above-described prepayment
fee and agrees that said amount represents a reasonable estimate of the
prepayment costs, expenses and/or liabilities of Bank. If Borrower fails to pay
any prepayment fee when due, the amount of such prepayment fee shall thereafter
bear interest until paid at a rate per annum two percent (2.00%) above the Prime
Rate in effect from time to time (computed on the basis of a 365/366-day year,
actual days elapsed). Each change in the rate of interest on any such past due
prepayment fee shall become effective on the date each Prime Rate change is
announced within Bank. Prepayments made during the Term Period shall be applied
to installments of principal then unpaid, in inverse order of maturity.
EVENTS OF DEFAULT:
This Note is made pursuant to and is subject to the terms and
conditions of the Loan Agreement. Any default in the payment or performance of
any obligation under this Note, or any defined event of default under the Loan
Agreement, shall constitute an "Event of Default" under this Note.
MISCELLANEOUS:
(a) Remedies. Upon the occurrence of any Event of Default, the holder
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of this Note, at the holder's option, may declare all sums of principal and
interest outstanding hereunder to be immediately due and payable without
presentment, demand, notice of nonperformance, notice of protest, protest or
notice of dishonor, all of which are expressly waived by each Borrower, and the
obligation, if any, of the holder to extend any further credit hereunder shall
immediately cease and terminate. Borrower shall pay to the holder immediately
upon demand the full amount of all payments, advances, charges, costs and
expenses, including reasonable attorneys' fees (to include outside counsel fees
and all allocated costs of the holder's in-house counsel), expended or incurred
by the holder in connection with the enforcement of the holder's rights and/or
the collection of any amounts which become due to the holder under this Note,
and the prosecution or defense of any action in any way related to this Note,
including without limitation, any action for declaratory relief, whether
incurred at the trial or appellate level, in an arbitration proceeding or
otherwise, and including any of the foregoing incurred in connection with any
bankruptcy proceeding (including without limitation, any adversary proceeding,
contested matter or motion brought by Bank or any other person) relating to any
Borrower or any other person or entity.
(b) Governing Law. This Note shall be governed by and construed in
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accordance with the laws of the State of California.
IN WITNESS WHEREOF, the undersigned has executed this Note as of the
date first written above.
MATSON NAVIGATION COMPANY, INC.
By: /s/ James S. Andrasick
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James S. Andrasick
Title: President & CEO
By: /s/ Timothy H. Reid
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Timothy H. Reid
Title: Treasurer
September 30, 2005
MATSON NAVIGATION COMPANY, INC.
333 Market Street Tower Building, 3rd Floor
San Francisco, CA 94105
Attention: Tim Reid, Treasurer
Re: Loan Agreement
Wells Fargo Bank, National Association (the "Bank") hereby agrees to
make available the credit accommodation described below to Matson Navigation
Company, Inc, (the "Borrower") subject to the terms and conditions set forth in
this letter agreement (this "Loan Agreement"):
1. THE CREDIT
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1.1 Type: Three year revolving line of credit ("Line of Credit"), with
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advances thereunder available until September 30, 2008 ("Initial Maturity
Date"). As a subfeature under the Line of Credit, Bank agrees from time to time
during the term thereof to issue or cause an affiliate to issue standby letters
of credit for the account of Borrower to finance working capital and other
corporate purposes (each, a "Letter of Credit"); provided however, that the
aggregate undrawn amount of all outstanding Letters of Credit shall not at any
time exceed $20,000,000.00. The form and substance of each Letter of Credit
shall be subject to approval by Bank, in its sole discretion. No Letter of
Credit shall have an expiration date subsequent to the Initial Maturity Date.
The undrawn amount of all Letters of Credit shall be reserved under the Line of
Credit and shall not be available for borrowings thereunder. Each Letter of
Credit shall be subject to the additional terms and conditions of the Letter of
Credit agreements, applications and any related documents required by Bank in
connection with the issuance thereof. Each drawing paid under a Letter of Credit
shall be deemed an advance under the Line of Credit and shall be repaid by
Borrower in accordance with the terms and conditions of this Agreement
applicable to such advances; provided however, that if advances under the Line
of Credit are not available, for any reason, at the time any drawing is paid,
then Borrower shall immediately pay to Bank the full amount drawn, together with
interest thereon from the date such drawing is paid to the date such amount is
fully repaid by Borrower, at the rate of interest applicable to advances under
the Line of Credit. In such event Borrower agrees that Bank, in its sole
discretion, may debit any account maintained by Borrower with Bank for the
amount of any such drawing.
1.2 Amount: Aggregate outstanding principal amount not to exceed
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$30,000,000.00 at any time.
1.3 Purpose: For working capital and other general corporate
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purposes, including as support for the issuance of commercial paper.
1.4 Maturity Date/Term Loan: All advances under the Line of Credit
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shall be due and payable on the Initial Maturity Date, provided however, that
Borrower may elect, by written notice to Bank (delivered not more than 90 days
and not less than 30 prior to the Initial Maturity Date, to repay the
outstanding principal balance of the Line of Credit on the Initial Maturity Date
in four (4) quarterly installments, each equal to one quarter of such
outstanding principal balance, as set forth more fully in the Note. No new
advances or Letters of Credit shall be available following the Initial Maturity
Date.
1.5 Note. All advances shall be made pursuant to a Line of Credit Note
executed by the Borrower in the form attached to this letter (the "Note").
1.6 Interest Rates: The outstanding principal balance of advances under
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the Line of Credit shall bear interest at the rate(s) set forth in the Note.
1.7 Commitment Fees. Borrower shall pay to Bank (i) an initial fee in
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the amount of 0.10% of the amount of Bank's commitment under the Line of Credit,
and (ii) a fee at the rate of 0.125% per annum (computed on the basis of a
360-day year, actual days elapsed) on the average daily unused amount of the
Line of Credit, computed and payable quarterly in arrears, as of each March 31,
June 30, September 30 and December 31. All such fees are non-refundable.
1.8 Letter of Credit Fees. Borrower shall pay to Bank (i) fees upon the
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issuance of each Letter of Credit equal to four hundred seventy-five thousandths
percent (0.475%) per annum (computed on the basis of a 360-day year, actual days
elapsed) of the face amount thereof, and (ii) fees upon the payment or
negotiation of each drawing under any Letter of Credit and fees upon the
occurrence of any other activity with respect to any Letter of Credit (including
without limitation, the transfer, amendment or cancellation of any Letter of
Credit) determined in accordance with Bank's standard fees and charges then in
effect for such activity.
2. CONDITIONS PRECEDENT
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Before Bank is obligated to extend any credit, Bank must
receive the Note, executed on behalf of the Borrower, and evidence that the
execution, delivery and performance by Borrower of this Loan Agreement and Note
and the execution, delivery, and performance by Borrower of any other instrument
or agreement required under this Agreement, as appropriate, have been duly
authorized (collectively, "Loan Documents"), as well as evidence of existing
insurance coverage. In addition, Borrower shall have paid the fee required under
Section 1.7(i).
3. COVENANTS
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Borrower agrees, so long as the line of credit is available and until
full and final payment of all of Borrower's obligations under this Loan
Agreement and under the Note, Borrower will:
3.1 Promptly give written notice to Bank of:
(a) any Event of Default under this Agreement or any event
which, upon notice or a lapse of time or both, would become an Event of
Default;
(b) any other matter which has or might materially impair the
Borrower's ability to perform its obligations under this Agreement;
3.2 Provide Bank with (i) annual audited and quarterly unaudited
consolidated financial statements, together with compliance certificates, within
120 days after each annual and 45 days after each quarterly accounting period,
(ii) an annual operating plan approved by Borrower's Board of Directors, as soon
as available but no later than each April 30, and (iii) such other financial
information concerning Borrower's business activities and financial condition as
Bank may reasonably request from time to time;
3.3 Maintain and keep in force in adequate amounts of insurance as is
usual in the business carried on by Borrower and provide to Bank evidence of
such insurance as Bank may from time to time request;
3.4 Maintain Borrower's financial condition as follows using generally
accepted accounting principles consistently applied and used consistently with
prior practices (except to the extent modified by the following definitions):
(a) On a consolidated basis, net income after taxes not less
than $1.00 on an annual basis, determined as of the end of each fiscal
year, and net profit after taxes not less than $1.00 in each fiscal
quarter immediately following a fiscal quarter in which Borrower
incurred a net loss after taxes; and
(b) On a consolidated basis, Tangible Net Worth not at any
time less than the greater of (i) $250,000,000 or (ii) an amount equal
to 65% of Borrower's consolidated Tangible Net Worth as of the then
most recent fiscal year end; for purposes of this Agreement, "Tangible
Net Worth" means total assets (exclusive of goodwill, patents,
trademarks, trade names, organization expense, treasury shares,
unamortized debt discount and premium, deferred charges and other like
intangibles) less all liabilities (including accrued and deferred
income taxes and subordinated liabilities);
3.5 Not permit at any time, on a consolidated basis, the ratio of
Funded Debt to Tangible Net Worth to exceed 2.0 to 1.0; for purposes of this
Loan Agreement, "Funded Debt" means all indebtedness (including capitalized
lease obligations) determined in accordance with generally accepted accounting
principles, consistently applied;
3.6 Not declare or pay cash dividends or redeem any stock in Borrower
if, prior thereto there exists, or, after giving effect thereto there would
exist, any Event of Default;
3.7 Not liquidate or dissolve;
3.8 Not merge or consolidate with or into any other entity, unless
Borrower is the surviving entity and prior thereto there does not exist, or,
after giving effect thereto there would not exist, any Event of Default;
3.9 Not, and not cause or permit any Subsidiary (as defined below) to,
sell, convey, or dispose of, or grant or permit the creation of any mortgage,
pledge, lien, charge, encumbrance, lease, security interest, claim, exercise of
rights or other interest affecting title ("Liens" and individually a "Lien") in,
on or against any of Borrower's or such Subsidiary's property or assets, whether
now owned or hereafter acquired, except:
(a) mechanics, suppliers, tax and any other like Lien arising
in the ordinary course of business securing obligations which are not
overdue or are being contested in good faith by appropriate legal
proceedings diligently conducted, provided that Borrower or such
Subsidiary's sets aside on its books such reserves or other appropriate
provision, if any, as shall be required by generally accepted
accounting principles;
(b) any Lien on any asset securing liabilities incurred or
assumed for the purpose of financing all or any part of the cost of
acquiring such asset, including any interest in title of a lessor under
any operating lease or any financing lease, provided that such Lien
attaches to such asset currently with or within one hundred twenty
(120) days after the acquisition thereof;
(c) any Lien existing on the date of this Agreement and
disclosed in Schedule 3.9 hereto or arising out of refinancing (so long
as there is no increase in principal amount or in the amount of
security provided), extension, renewal or rollover of liabilities;
(d) any Lien existing on any asset of any corporation at the
time such corporation is acquired by or merged into Borrower or such
Subsidiary;
(e) any Lien arising pursuant to any order of attachment,
distraint or similar legal process arising in connection with court
proceedings so long as the execution or other enforcement thereof is
effectively stayed and the claims secured thereby are being contested
in good faith by appropriate proceedings;
(f) easements, rights of way, restrictions and other similar
encumbrances incurred in the ordinary course of business that in the
aggregate do not exceed $5,000,000;
(g) additional Liens not otherwise permitted hereunder which
secure indebtedness not to exceed an aggregate principal amount of
$20,000,000.00 outstanding at any time; and
(h) (i) the disposition of property or assets in the ordinary
course of business, and (ii) additional dispositions in each fiscal
year not to exceed an aggregate of 10% of the book value of
consolidated assets as of the then most recent fiscal year end,
provided that all such dispositions shall be for fair consideration.
The term "Subsidiary" means each entity, whether now existing or
hereafter acquired, in which Borrower owns, directly or indirectly, more than
50% of the voting equity interests.
Unless otherwise specified in this Agreement, all accounting terms used in this
Agreement shall be interpreted, all financial information required under this
Agreement shall be prepared and all financial computations required under this
Agreement shall be made in accordance with generally accepted accounting
principles, consistently applied.
4. EVENTS OF DEFAULT
-----------------
Upon the occurrence of any events specified below ("Event of Default
"), any obligation on the part of Bank to make advances under or continue the
Line of Credit shall terminate, and, at the option of Bank, all interest and
principal with respect to the advances and all other obligations and sums
outstanding under or in respect of this Loan Agreement and the Note shall be
immediately due and payable, without notice of default, presentment or demand
for payment, protest or notice of nonpayment or dishonor, or other notices or
demands of any kind or character:
4.1 (a) Borrower fails to pay, within 3 days after the date when due,
any principal sum due under this Loan Agreement or the Note in
accordance with the terms hereof or thereof,
(b) Borrower fails to pay, within three days after the date
when due, any installment of interest or any other sum under this Loan
Agreement or the Note in accordance with the terms hereof or thereof;
4.2 Borrower fails to pay any indebtedness or to perform any
other obligation when due (including any applicable grace period) under any
agreement providing for the extension of credit to Borrower in an amount
exceeding $10,000,000, and such credit is then due and payable in full or has
been accelerated by reason of such failure;
4.3 (a) Borrower breaches, or defaults under, any of
Paragraphs 3.4, 3.5, 3.6, 3.7, or 3.8;
(b) Borrower breaches, or defaults under, any other
term, condition, provision or covenant contained in this Agreement, and
such breach or default is not remedied within 30 days after a
responsible officer of Borrower is first aware of its occurrence.
4.4 Borrower is generally not paying or admits in writing its
inability to pay its debts as such debts become due, or files any petition or
action for relief under any bankruptcy, reorganization, arrangement, insolvency,
or moratorium law or any other law for the relief of, or relating to, debtors,
or requests the appointment of a custodian, receiver or trustee (or similar
official) to take possession, custody or control of any of its property, or
enters into any composition with creditors, or makes any assignment for the
benefit of creditors, or takes any corporate action in furtherance of any of the
foregoing;
4.5 An involuntary petition is filed against Borrower under
any bankruptcy, reorganization, arrangement, insolvency, or moratorium law or
any other law for the relief of, or relating to, debtors, or a custodian,
receiver or trustee (or similar official) is appointed to take possession,
custody or control of any property of Borrower;
4.6 A judgment or judgments or arbitration award or awards is
entered against Borrower in the aggregate amount of $10,000,000 or more on a
claim or claims not covered by insurance, except that no judgment or arbitration
award shall be included in this Paragraph if it is discharged or satisfied
within 60 days of the date of being entered.
5. MISCELLANEOUS
-------------
5.1 Borrower will pay Bank, on demand, all out-of-pocket
expenses and all legal fees (including allocated costs for in-house legal
services) incurred by it in connection with the enforcement of this Loan
Agreement, the Note, and any agreements or instruments required or delivered
hereunder.
5.2 This Agreement and the Note amend, replace and supersede
the loan agreement dated October 3, 2003, as amended, by and between Bank and
Borrower, and the promissory note issued by Borrower thereunder.
6. ARBITRATION.
-----------
(a) Arbitration. The parties hereto agree, upon demand by any party, to
-----------
submit to binding arbitration all claims, disputes and controversies between or
among them (and their respective employees, officers, directors, attorneys, and
other agents), whether in tort, contract or otherwise arising out of or relating
to in any way (i) the loan and related Loan Documents which are the subject of
this Agreement and its negotiation, execution, collateralization,
administration, repayment, modification, extension, substitution, formation,
inducement, enforcement, default or termination; or (ii) requests for additional
credit.
(b) Governing Rules. Any arbitration proceeding will (i) proceed in a
---------------
location in California selected by the American Arbitration Association ("AAA");
(ii) be governed by the Federal Arbitration Act (Title 9 of the United States
Code), notwithstanding any conflicting choice of law provision in any of the
documents between the parties; and (iii) be conducted by the AAA, or such other
administrator as the parties shall mutually agree upon, in accordance with the
AAA's commercial dispute resolution procedures, unless the claim or counterclaim
is at least $1,000,000.00 exclusive of claimed interest, arbitration fees and
costs in which case the arbitration shall be conducted in accordance with the
AAA's optional procedures for large, complex commercial disputes (the commercial
dispute resolution procedures or the optional procedures for large, complex
commercial disputes to be referred to, as applicable, as the "Rules"). If there
is any inconsistency between the terms hereof and the Rules, the terms and
procedures set forth herein shall control. Any party who fails or refuses to
submit to arbitration following a demand by any other party shall bear all costs
and expenses incurred by such other party in compelling arbitration of any
dispute. Nothing contained herein shall be deemed to be a waiver by any party
that is a bank of the protections afforded to it under 12 U.S.C. ss.91 or any
similar applicable state law.
(c) No Waiver of Provisional Remedies, Self-Help and Foreclosure. The
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arbitration requirement does not limit the right of any party to (i) foreclose
against real or personal property collateral; (ii) exercise self-help remedies
relating to collateral or proceeds of collateral such as setoff or repossession;
or (iii) obtain provisional or ancillary remedies such as replevin, injunctive
relief, attachment or the appointment of a receiver, before, during or after the
pendency of any arbitration proceeding. This exclusion does not constitute a
waiver of the right or obligation of any party to submit any dispute to
arbitration or reference hereunder, including those arising from the exercise of
the actions detailed in sections (i), (ii) and (iii) of this paragraph.
(d) Arbitrator Qualifications and Powers. Any arbitration proceeding in
------------------------------------
which the amount in controversy is $5,000,000.00 or less will be decided by a
single arbitrator selected according to the Rules, and who shall not render an
award of greater than $5,000,000.00. Any dispute in which the amount in
controversy exceeds $5,000,000.00 shall be decided by majority vote of a panel
of three arbitrators; provided however, that all three arbitrators must actively
participate in all hearings and deliberations. The arbitrator will be a neutral
attorney licensed in the State of California or a neutral retired judge of the
state or federal judiciary of California, in either case with a minimum of ten
years experience in the substantive law applicable to the subject matter of the
dispute to be arbitrated. The arbitrator will determine whether or not an issue
is arbitratable and will give effect to the statutes of limitation in
determining any claim. In any arbitration proceeding the arbitrator will decide
(by documents only or with a hearing at the arbitrator's discretion) any
pre-hearing motions which are similar to motions to dismiss for failure to state
a claim or motions for summary adjudication. The arbitrator shall resolve all
disputes in accordance with the substantive law of California and may grant any
remedy or relief that a court of such state could order or grant within the
scope hereof and such ancillary relief as is necessary to make effective any
award. The arbitrator shall also have the power to award recovery of all costs
and fees, to impose sanctions and to take such other action as the arbitrator
deems necessary to the same extent a judge could pursuant to the Federal Rules
of Civil Procedure, the California Rules of Civil Procedure or other applicable
law. Judgment upon the award rendered by the arbitrator may be entered in any
court having jurisdiction. The institution and maintenance of an action for
judicial relief or pursuit of a provisional or ancillary remedy shall not
constitute a waiver of the right of any party, including the plaintiff, to
submit the controversy or claim to arbitration if any other party contests such
action for judicial relief.
(e) Discovery. In any arbitration proceeding discovery will be
---------
permitted in accordance with the Rules. All discovery shall be expressly limited
to matters directly relevant to the dispute being arbitrated and must be
completed no later than 20 days before the hearing date and within 180 days of
the filing of the dispute with the AAA. Any requests for an extension of the
discovery periods, or any discovery disputes, will be subject to final
determination by the arbitrator upon a showing that the request for discovery is
essential for the party's presentation and that no alternative means for
obtaining information is reasonably available.
(f) Class Proceedings and Consolidations. The resolution of any dispute
------------------------------------
arising pursuant to the terms of this Agreement shall be determined by a
separate arbitration proceeding and such dispute shall not be consolidated with
other disputes or included in any class proceeding.
(g) Payment Of Arbitration Costs And Fees. The arbitrator shall award
-------------------------------------
all costs and expenses of the arbitration proceeding to the prevailing party.
(h) Real Property Collateral; Judicial Reference. Notwithstanding
--------------------------------------------
anything herein to the contrary, no dispute shall be submitted to arbitration if
the dispute concerns indebtedness secured directly or indirectly, in whole or in
part, by any real property unless (i) the holder of the mortgage, lien or
security interest specifically elects in writing to proceed with the
arbitration, or (ii) all parties to the arbitration waive any rights or benefits
that might accrue to them by virtue of the single action rule statute of
California, thereby agreeing that all indebtedness and obligations of the
parties, and all mortgages, liens and security interests securing such
indebtedness and obligations, shall remain fully valid and enforceable. If any
such dispute is not submitted to arbitration, the dispute shall be referred to a
referee in accordance with California Code of Civil Procedure Section 638 et
seq., and this general reference agreement is intended to be specifically
enforceable in accordance with said Section 638. A referee with the
qualifications required herein for arbitrators shall be selected pursuant to the
AAA's selection procedures. Judgment upon the decision rendered by a referee
shall be entered in the court in which such proceeding was commenced in
accordance with California Code of Civil Procedure Sections 644 and 645.
(i) Miscellaneous. To the maximum extent practicable, the AAA, the
-------------
arbitrators and the parties shall take all action required to conclude any
arbitration proceeding within 180 days of the filing of the dispute with the
AAA. No arbitrator or other party to an arbitration proceeding may disclose the
existence, content or results thereof, except for disclosures of information by
a party required in the ordinary course of its business or by applicable law or
regulation. If more than one agreement for arbitration by or between the parties
potentially applies to a dispute, the arbitration provision most directly
related to the Loan Documents or the subject matter of the dispute shall
control. This arbitration provision shall survive termination, amendment or
expiration of any of the Loan Documents or any relationship between the parties.
continued on next page
This commitment shall expire unless accepted in writing by Borrower on
or before October 31, 2005. Please indicate your acceptance by signing and
renaming the enclosed copy of this Agreement on or before such date.
Sincerely,
WELLS FARGO BANK,
NATIONAL ASSOCIATION
By: /s/ Jeff A. Bailard
Jeff A. Bailard
Vice President
ACCEPTED AND AGREED TO
THIS 30th DAY OF SEPTEMBER, 2005
MATSON NAVIGATION COMPANY, INC.
By: /s/ James S. Andrasick
--------------------------
James S. Andrasick
Title: President & CEO
By: /s/ Timothy H. Reid
--------------------------
Timothy H. Reid
Title: Treasurer