Loan No. 0000000000
BRIDGE LOAN AGREEMENT
This BRIDGE LOAN AGREEMENT ("Agreement") is entered
into as of December 30, 1998 between PACIFIC COAST FARM CREDIT
SERVICES, ACA, ("PCFC") and MAUI LAND & PINEAPPLE COMPANY, INC.,
a Hawaii corporation ("Borrower").
1. Definitions. The following terms used in this
Agreement shall have the following meanings:
"Adjusted Gains on Asset Sales" shall mean the
capital gains recognized by Borrower upon the sale of a real
property asset, or upon the sale of a real property asset by a
Person in which Borrower has an investment or upon the sale by
Borrower of its interest in a Person holding a real property
asset, attributable to the increase in value of the real property
that occurred as a result of appreciation in value of the
underlying land prior to the commencement of development of such
real property, as opposed to profit attributable to the increase
in value that occurred after commencement of development.
"Affiliate" shall mean, with respect to any
Person, (i) each Person that, directly or indirectly, owns or
controls, whether beneficially, or as a trustee, guardian or
other fiduciary, ten percent (10%) or more of the Stock having
ordinary voting power in the election of directors of such
Person, (ii) each Person that controls, is controlled by or is
under common control with such Person or any Affiliate of such
Person or (iii) each of such Person's officers, directors, joint
venturers and partners. For the purpose of this definition,
"control" of a Person shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of its
management or policies, whether through the ownership of voting
securities, by contract or otherwise.
"Business Day" shall mean any day that is not a
Saturday, a Sunday, or a day on which banks are required or
permitted to be closed in the State of California.
"Calendar Quarter" shall mean a three-month period
beginning on January 1, April 1, July 1, or October 1 of any
particular year and ending on March 31, June 30, September 30, or
December 31, respectively, of that same year.
"Capital Expenditures" shall mean, for any period,
the aggregate of all expenditures (whether paid in cash or other
consideration or accrued as a liability and including that
portion of Capital Leases that is capitalized on the balance
sheet of Borrower including in connection with a sale-leaseback
transaction) by Borrower and its Subsidiaries for the acquisition
or leasing of fixed or capital assets or additions to equipment
(including replacements, capitalized repairs and improvements
during such period) which are required to be capitalized under
GAAP on a consolidated balance sheet of Borrower and its
Subsidiaries. Capital Expenditures shall not include (i) the
actual value received for existing equipment either traded-in at
time of purchase of new equipment or sold in the ordinary course
of business (but only to the extent such equipment is replaced),
and (ii) expenditures made from insurance proceeds.
"Capital Lease" shall mean any lease of any
property (whether real, personal or mixed) by Borrower or a
Subsidiary as lessee that, in accordance with GAAP, either would
be required to be classified and accounted for as a capital lease
on a balance sheet of Borrower or such Subsidiary or otherwise be
disclosed as such in a note to such balance sheet.
"Consolidated Cash Flow" shall mean, for any
period, for Borrower and its Subsidiaries on a consolidated
basis, the sum (without duplication) of: (a) Consolidated Net
Income; plus (b) the sum of (i) Equity in Losses of Joint
Ventures, (ii) extraordinary non-cash losses, (iii) interest
expense (including the interest portion of any capitalized lease
obligations), (iv) depletion, depreciation and amortization, and
(v) losses on asset sales; minus (c) the sum of (i) Equity in
Earnings of Joint Ventures, (ii) extraordinary gains, (iii) non-
cash amounts resulting from Adjusted Gains on Asset Sales,
(iv) Maintenance Capital Expenditures, and (v) Restricted
Payments made during such period, other than Restricted Payments
referred to in clause (iii) of the definition of Restricted
Payments.
"Consolidated Current Assets" shall mean, as at
any date of determination, the current assets of Borrower and its
Subsidiaries, determined on a consolidated basis in conformity
with GAAP.
"Consolidated Current Liabilities" shall mean, as
at any date of determination, the current liabilities of Borrower
and its Subsidiaries, determined on a consolidated basis in
conformity with GAAP, adjusted to include the Bridge Loan.
"Consolidated Debt Coverage Ratio" shall mean, as
at any date of determination, the ratio of Consolidated Cash Flow
for any period to Consolidated Debt Service for such period.
"Consolidated Debt Service" shall mean, for any
period, for Borrower and its Subsidiaries on a consolidated
basis, the sum (without duplication) of the following:
(i) interest expense (including the interest portion of any
capitalized lease obligations), and (ii) scheduled principal
payments (including the principal portion of capitalized lease
obligations).
"Consolidated EBITDA" shall mean, for any period,
for Borrower and its Subsidiaries on a consolidated basis, the
sum (without duplication) of: (a) Consolidated Net Income; plus
(b) the sum of (i) Federal, state, local, and foreign income
taxes, (ii) Equity in Losses of Joint Ventures, (iii) interest
expense (including the interest portion of any capitalized lease
obligations), (iv) depletion, depreciation and amortization,
(v) losses on asset sales, and (vi) all other non-cash expenses;
minus (c) the sum of (i) Equity in Earnings of Joint Ventures,
(ii) Adjusted Gains on Asset Sales, and (iii) extraordinary
gains.
"Consolidated Indebtedness" shall mean, as at any
date of determination, for Borrower and its Subsidiaries on a
consolidated basis, the sum (without duplication) of: (i) all
obligations for borrowed money or for the deferred purchase price
of property or services (including the present value of
capitalized lease obligations) which, in accordance with GAAP,
would be included in determining total liabilities as shown on
the liability side of a balance sheet as of the date at which
such indebtedness is to be determined, (ii) guarantees (other
than Borrower's $9,000,000 limited payment guaranty of
indebtedness of Kaahumanu Center Associates relating to the
Kaahumanu Shopping Center), and (iii) letters of credit (other
than letters of credit to support trade payables) and
endorsements (other than of notes, bills, and checks presented to
banks for collection or deposit in the ordinary course of
business), in each case to support obligations for borrowed money
of others.
"Consolidated Indebtedness to Consolidated EBITDA
Ratio" shall mean, as at any date of determination, the ratio of
Consolidated Indebtedness, as of such date of determination, to
Consolidated EBITDA for the rolling four-quarter period ending
upon such date of determination.
"Consolidated Net Income" shall mean, for any
period, on a consolidated basis, the net income, if any, of
Borrower and its Subsidiaries, determined in accordance with
GAAP.
"Consolidated Net Loss" shall mean, for any
period, on a consolidated basis, the net loss, if any, of
Borrower and its Subsidiaries, determined in accordance with
GAAP.
"Consolidated Tangible Net Worth" shall mean, as
at any date of determination, the gross book value of the assets
of Borrower, (exclusive of goodwill, patents, trademarks, trade
names, organization expense, unamortized debt discount and
expense, deferred charges (other than deferred development costs
related to the Kapalua Resort, provided the aggregate of said
costs shall not exceed $5,000,000), and other like intangibles,
minus (i) reserves applicable thereto, and (ii) all liabilities
(including subordinated liabilities), in each case determined in
accordance with GAAP and taking into effect such other
adjustments as may be reasonably determined by PCFC in accordance
with GAAP.
"Default" shall mean the occurrence of any event
or circumstance which, with the passage of time or the giving of
notice or both, would become an Event of Default.
"Default Rate" shall mean a rate of interest that
is two percent (2.00%) higher than the rate otherwise applicable;
provided, that with respect to fees, costs, or expenses, or any
amount other than principal, the Default Rate applicable to such
obligations shall be the Variable Rate plus three percent
(3.00%).
"Environmental Laws" shall mean all applicable
federal, state, local and foreign laws, statutes, ordinances,
codes, rules, standards and regulations, now or hereafter in
effect, and any applicable judicial or administrative
interpretation thereof, including any applicable judicial or
administrative order, consent decree, order or judgment, imposing
liability or standards of conduct for or relating to the
regulation and protection of human health, safety, the
environment and natural resources (including ambient air, surface
water, groundwater, wetlands, land surface or subsurface strata,
wildlife, aquatic species and vegetation). Environmental Laws
include the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980 (42 U.S.C. 9601 et seq.) ("CERCLA");
the Hazardous Materials Transportation Authorization Act of 1994
(49 U.S.C. 5101 et seq.); the Federal Insecticide, Fungicide,
and Rodenticide Act (7 U.S.C. 136 et seq.); the Solid Waste
Disposal Act (42 U.S.C. 6901 et seq.); the Toxic Substance
Control Act (15 U.S.C. 2601 et seq.); the Clean Air Act (42
U.S.C. 7401 et seq.); the Federal Water Pollution Control Act
(33 U.S.C. 1251 et seq.); the Occupational Safety and Health
Act (29 U.S.C. 651 et seq.); and the Safe Drinking Water Act
(42 U.S.C. 300(f) et seq.), and any and all regulations
promulgated thereunder, and all analogous state, local and
foreign counterparts or equivalents and any transfer of ownership
notification or approval statutes.
"Environmental Liabilities" shall mean, with
respect to any Person, all liabilities, obligations,
responsibilities, response, remedial and removal costs,
investigation and feasibility study costs, capital costs,
operation and maintenance costs, losses, damages, punitive
damages, property damages, natural resource damages,
consequential damages, treble damages, costs and expenses
(including all fees, disbursements and expenses of counsel,
experts and consultants), fines, penalties, sanctions and
interest incurred as a result of or related to any claim, suit,
action, investigation, proceeding or demand by any Person,
whether based in contract, tort, implied or express warranty,
strict liability, criminal or civil statute or common law,
including any arising under or related to any Environmental Laws,
environmental permits, or in connection with any release or
threatened release or presence of a Hazardous Material whether
on, at, in, under, from or about or in the vicinity of any real
or personal property.
"Equity in Earnings of Joint Ventures" shall mean
that portion of the earnings from joint ventures which are not
distributed in cash to Borrower, determined on a consolidated
basis in conformity with GAAP.
"Equity in Losses of Joint Venture" shall mean the
non-cash portion of any losses realized from joint ventures,
determined on a consolidated basis in conformity with GAAP.
"Event of Default" shall have the meaning assigned
thereto in Section 13.
"Fiscal Month" shall mean any of the monthly
accounting periods of Borrower.
"Fiscal Year" shall mean the 12-month period of
Borrower ending December 31 of each year. Subsequent changes of
the fiscal year of Borrower shall not change the term "Fiscal
Year," unless PCFC shall consent in writing to such change.
"GAAP" shall mean generally accepted accounting
principles.
"Guarantor" shall mean any Person that has
guaranteed to PCFC all or any part of the Loan.
"Guaranty Agreement" shall mean any Continuing
Guaranty or other agreement by which a Guarantor has guaranteed
all or any portion of the Loan.
"Hazardous Material" shall mean any substance,
material or waste that is regulated by or forms the basis of
liability now or hereafter under, any Environmental Laws,
including any material or substance that is (a) defined as a
"solid waste," "hazardous waste," "hazardous material,"
"hazardous substance," "extremely hazardous waste," "restricted
hazardous waste," "pollutant," "contaminant," "hazardous
constituent," "special waste," "toxic substance" or other similar
term or phrase under any Environmental Laws, (b) petroleum or any
fraction or by-product thereof, asbestos, polychlorinated
biphenyls (PCB's), or any radioactive substance.
"Investments" shall mean all expenditures by
Borrower and its Subsidiaries, other than Capital Expenditures,
made for the purpose of acquiring, increasing, or supplementing
equity interests of any nature in partnerships, joint ventures,
corporations, trusts, associations, or other business entities,
or in real property of any kind and as reflected as investments
in Borrower's financial statements.
"Lien" shall mean any mortgage or deed of trust,
pledge, hypothecation, assignment, deposit arrangement, lien,
charge, claim, security interest or encumbrance, or preference,
priority or other security agreement or preferential arrangement
of any kind or nature whatsoever (including any lease or title
retention agreement, any financing lease having substantially the
same economic effect as any of the foregoing).
"Maintenance Capital Expenditures" shall mean
Capital Expenditures for the replacement of capital assets used
in the ordinary course of business.
"Material Adverse Effect" shall mean a Material
Adverse Effect on (i) the business, assets, operations,
prospects, or financial or other condition of Borrower or any
Guarantor, (ii) Borrower's ability to pay its obligations to PCFC
under this Agreement, or (iii) PCFC's rights and remedies under
this Agreement or any Guaranty Agreement.
"Obligations" shall mean all loans, advances,
debts, liabilities, and obligations, for the performance of
covenants, tasks or duties or for payment of monetary amounts
(whether or not such performance is then required or contingent,
or amounts are liquidated or determinable and whether or not
allowed as a claim in any proceeding referred to in
Section 13(f)) owing by Borrower to PCFC, and all covenants and
duties regarding such amounts, of any kind or nature, present or
future, whether or not evidenced by any note, agreement or other
instrument, arising under any of the Other Documents. This term
includes the Bridge Loan, all principal, interest, Fees, charges,
expenses, attorneys' fees and any other sum chargeable to
Borrower under this Agreement or any of the Other Documents.
"Permitted Encumbrances" shall mean the following
encumbrances: (i) Liens for taxes or assessments or other
governmental charges or levies, either not yet due and payable or
to the extent that nonpayment thereof is permitted by the terms
of this Agreement; (ii) pledges or deposits securing obligations
under workmen's compensation, unemployment insurance, social
security or public liability laws or similar legislation;
(iii) pledges or deposits securing bids, tenders, contracts
(other than contracts for the payment of money) or leases to
which Borrower or any Guarantor is a party as lessee made in the
ordinary course of business; (iv) workers', mechanics',
suppliers' or similar Liens arising in the ordinary course of
business that are either not yet due and payable or that are
being contested in good faith by appropriate proceedings and for
which Borrower or any Guarantor has established adequate
reserves; (v) carriers', warehousemen's, or other similar
possessory Liens arising in the ordinary course of business;
(vi) an attachment or judgment Lien, but only for a period of
thirty (30) days following attachment of such Lien and such
attachment or judgment lien shall cease to be a Permitted
Encumbrance if the obligation that it secures has not been
satisfied or bonded during such thirty (30) day period;
(vii) zoning restrictions, easements, licenses, or other
restrictions on the use of real property or other minor
irregularities in title (including leasehold title) thereto, so
long as the same do not materially impair the use, value, or
marketability of such real property, leases or leasehold estates;
(viii) Liens securing indebtedness owed by a Subsidiary to
Borrower; (ix) security interests securing purchase money
indebtedness in capital assets, the acquisition of which is
permitted by this Agreement, and so long as the security interest
does not encumber any asset other than the asset acquired;
(x) any Lien listed as a Permitted Encumbrance on the Disclosure
Schedule referred to in Exhibit A; (xi) the refinancing of the
real property mortgages referred to in the Disclosure Schedule
referred to in Exhibit A, provided that such refinancing covers
the same property covered by the original mortgages, secures a
principal amount not in excess of that secured by such mortgages
on the date of refinancing, and the terms of such refinancing
have all been negotiated at arms length and are on fair market
terms; and (xii) other Liens securing Consolidated Indebtedness
not exceeding Fifteen Million Dollars ($15,000,000) in the
aggregate outstanding at any time, so long as such other Liens do
not attach to any of the Collateral.
"Person" shall mean any individual, sole
proprietorship, partnership, joint venture, trust, unincorporated
organization, association, corporation, limited liability
company, institution, public benefit corporation, entity or
government (whether federal, state, county, city, municipal or
otherwise, including, without limitation, any instrumentality,
division, agency, body or department thereof).
"Restricted Payments" shall mean (i) dividends or
other distributions or payments on account of or with respect to
any capital stock of Borrower or of any Guarantor, except
distributions consisting of such stock or, in the case of a
Guarantor, distributions or payments made to Borrower, (ii) the
redemption or acquisition of such stock or of warrants, rights,
or other options to purchase such stock, except, in the case of a
Guarantor, redemption or acquisition of stock held by Borrower,
and (iii) any payment, repayment, redemption, retirement,
repurchase or other acquisition, direct or indirect, by Borrower,
any Guarantor or any Subsidiary of Borrower or any Guarantor of
any principal portion of any obligation or indebtedness that has
been subordinated to the indebtedness owed by Borrower to PCFC.
"Stock" shall mean all shares, options, warrants,
general or limited partnership interests, participations or other
equivalents (regardless of how designated) of or in a
corporation, partnership or equivalent entity whether voting or
nonvoting, including, without limitation, common stock, preferred
stock, or any other "equity security" (as such term is defined in
Rule 3a11-1 of the General Rules and Regulations promulgated by
the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended).
"Subsidiary" shall mean, with respect to any
Person, (i) any corporation of which an aggregate of more than
50% of the outstanding Stock having ordinary voting power to
elect a majority of the board of directors of such corporation
(irrespective of whether, at the time, Stock of any other class
or classes of such corporation shall have or might have voting
power by reason of the happening of any contingency) is at the
time, directly or indirectly, owned legally or beneficially by
such Person and/or one or more Subsidiaries of such Person, or
with respect to which any such Person has the right to vote or
designate the vote of 50% or more of such Stock whether by proxy,
agreement, operation of law or otherwise and (ii) any
partnership, trust, limited liability company, or other entity in
which such Person and/or one or more Subsidiaries of such Person
shall have an interest (whether in the form of voting or
participation in profits or capital contribution) of more than
50% or of which any such Person is a general partner or may
exercise the powers of a general partner.
2. The Loan. On the terms and conditions set forth
in this agreement, PCFC agrees to make a bridge loan to Borrower
in a principal amount of Fifteen Million Dollars ($15,000,000)
(the "Bridge Loan"). The Bridge Loan will be available to
Borrower on the terms and conditions set forth in this Agreement
when all conditions precedent set forth in Section 3 have been
satisfied. The Bridge Loan shall be due and payable on April 30,
1999 (the "Bridge Loan Maturity Date"); provided, that if the
Obligations shall become due and payable in accordance with
Section 14 or any other provision of this Agreement, then the
Bridge Loan Maturity Date shall be the date on which the
Obligations become due and payable.
3. Conditions Precedent. PCFC's obligation to make
an advance hereunder is subject to the following conditions
precedent:
(a) Required Documents. PCFC shall have received
from Borrower either an executed original, or a facsimile of the
signature page of an executed original, of this Agreement as well
as all of the other documents (the "Other Documents") listed in
Exhibit A, each of which must be satisfactory to PCFC in its sole
discretion.
(b) Payment of Portion of Senior Notes. PCFC
shall have received confirmation that Borrower has paid to Xxxx
Xxxxxxx Mutual Life Insurance Company and Xxxxxxx & Co. a minimum
aggregate amount of Six Million Six Hundred Forty-Seven Thousand
Nine Hundred Twenty-Two Dollars and Twenty-Two Cents
($6,647,922.22), in partial prepayment of the 8.86% Senior Notes
held by such entities.
(c) Recordation of Mortgage and Issuance of Title
Commitment. The Mortgage, Assignment of Rents, Security
Agreement, Financing Statement and Fixture Filing executed by
Borrower in favor of PCFC shall have been duly recorded, and
Title Guaranty of Hawaii, Incorporated shall have issued its 1992
ALTA lender's policy or title insurance or commitment therefor in
favor of PCFC, each in form and substance satisfactory to PCFC.
(d) Approvals. PCFC shall have received evidence
satisfactory to it that all consents and approvals which are
necessary for or required as a condition of the validity and
enforceability of this Agreement and all documents and
instruments contemplated hereby, have been obtained and are in
full force and effect.
(e) Event of Default. No Default or Event of
Default shall have occurred and be continuing.
(f) Loan Fee. Borrower shall have paid to PCFC
the Bridge Loan Fee required by Section 5.
(g) Continuing Guaranty Agreements. Borrower
shall have delivered to PCFC continuing guaranty agreements, in
form and substance satisfactory to PCFC, from the persons
identified on Exhibit A pursuant to which such Persons guarantee
to PCFC all of Borrower's obligations to PCFC under this
Agreement.
4. Terms of Bridge Loan.
(a) Repayment of Principal. Principal of the
Bridge Loan and all accrued interest, and reimbursable expenses
shall be due and payable in full on the Bridge Loan Maturity
Date.
(b) Interest.
(1) Definitions. For the purposes of this
section the following terms shall have the meanings as follows:
"Fixed Rate" means, with respect to any portion of the
Bridge Loan that Borrower elects at any time pursuant to
Section 4(b)(2) to convert to a fixed rate of interest, the
applicable LIBO Rate as of the date of such election plus a
margin of two and one-quarter percent (2.25%).
"Interest Determination Date" means the date, as
designated by Borrower, on which a portion of the Bridge Loan
shall begin to bear interest at the Fixed Rate.
"Interest Period" means (a) with respect to any portion
of the Bridge Loan that Borrower elects to have bear interest at
the Fixed Rate, a period beginning on the Interest Determination
Date and ending thirty (30) days thereafter.
"LIBO Rate" means, for any Interest Determination Date,
the rate offered from time to time for U.S. Dollar deposits for
the Interest Period selected, as quoted by Telerate News Service
as of 11:00 A.M. London setting time (or, at PCFC's option, a
comparable reference on the Reuters Screen LIBOR Page or such
other quotation service as may be chosen by PCFC) on the
Eurodollar Business Day immediately preceding the beginning of
the Interest Period; provided, that if two or more of such
offered rates appear on Telerate (or on the Reuters Screen LIBOR
Page or alternative service, as the case may be), the "LIBO Rate"
shall be highest of the two rates quoted.
"Prepayment" means a payment of principal made in
advance of the date scheduled for such payment, whether such
payment is made voluntarily or by operation of law, acceleration
of maturity or otherwise.
"Prime Rate" means, on any given day, the "Prime" rate
as published from time to time in the Eastern Edition of The Wall
Street Journal, or the highest such rate if more than one is
shown, regardless of whether such rate is actually charged by any
bank, or, in the event that The Wall Street Journal ceases
publication of such rate, in such other nationally recognized
financial publication of general circulation as PCFC may, from
time to time, designate in writing based on PCFC's reasonable
determination that the rate so published is comparable to the
"Prime" rate published in the Eastern Edition of The Wall Street
Journal.
"Variable Rate" means, on any given day, the applicable
Prime Rate as of such day, plus a margin of one-quarter percent
(0.25%).
(2) Interest on Bridge Loan.
(A) Variable Rate. The Bridge Loan
shall bear interest at the Variable Rate, unless Borrower elects
to convert the interest rate to the Fixed Rate in accordance with
the provisions of Section 4(b)(2)(B).
(B) Fixed Rate. Borrower may, from
time to time, elect to convert all or a portion of the Bridge
Loan to the Fixed Rate; provided, that (i) at least three (3)
Business Days prior to the proposed Interest Determination Date,
Borrower has provided PCFC with written notice of such election,
the requested Interest Determination Date, and the amount of the
Revolving Advances to be converted, (ii) at the time of delivery
of such written notice and upon the date of conversion, no
Default or Event of Default exists under this Agreement, (iii) at
no time shall there be more than three (3) outstanding tranches
of the Bridge Loan bearing interest at the Fixed Rate, (iv) the
last day of the Interest Period chosen by Borrower shall not
extend beyond the Bridge Loan Maturity Date, and (v) the amount
converted to the Fixed Rate at any one time shall be not less
than Five Million Dollars ($5,000,000) and any amounts in excess
thereof shall be in integral multiples of One Million Dollars
($1,000,000). Any election by Borrower pursuant to this
Section 4(b)(2)(B) shall be irrevocable during the Interest
Period selected by Borrower, and that portion of the Bridge Loan
so converted shall bear interest at the applicable Fixed Rate
until the expiration of the applicable Interest Period at which
time, unless another Fixed Rate has been duly elected by Borrower
pursuant to this Section 4(b)(2)(B), the interest rate for such
portion of the Bridge Loan will automatically convert to the
Variable Rate.
(3) No Designation Upon Occurrence of a
Default or Event of Default. If a Default or Event of Default
shall have occurred, then, during the continuance of such Default
or Event of Default, (i) Borrower shall have no right to
designate the Fixed Rate for any portion of the Bridge Loan, and
(ii) any portion of the Bridge Loan bearing interest at the Fixed
Rate shall, at the end of the relevant Interest Period, convert
to the Variable Rate. If such Default or Event of Default shall
subsequently be cured, Borrower may thereafter designate Interest
Periods in accordance with this Agreement.
(4) Interest Payment Dates. Interest shall
be due and payable, in arrears, commencing on February 1, 1999
and continuing on the first day of each calendar month
thereafter; provided, that if any Interest Period shall mature
prior to the first day of a month, then interest accrued at the
Fixed Rate during such Interest Period shall be due and payable
upon expiration of the Interest Period. Interest accrued on the
Bridge Loan but not otherwise due and payable on the Bridge Loan
Maturity Date shall become due and payable on the Bridge Loan
Maturity Date.
(5) Payments Due on Business Days. If any
installment of interest or any other amount payable under any
Other Document becomes due and payable on a day other than a
Business Day, the payment date for such payment shall be extended
to the next succeeding Business Day and, with respect to payments
of principal or other payments that bear interest (other than
interest first due on such date), interest thereon shall be
payable at the then applicable rate during such extension;
provided, however, if any installment of interest at the Fixed
Rate shall become due and payable on a Saturday, the payment date
for such payment shall be the preceding Business Day.
(6) Computation of Interest. All
computations of interest at the Fixed Rate shall be made by PCFC
on the basis of a three hundred sixty (360) day year for the
actual number of days occurring in the period for which such
interest is payable. All computations of interest on at the
Variable Rate shall be made by PCFC on the basis of a three
hundred sixty five (365) day year, in each case for the actual
number of days occurring in the period for which such interest is
payable. Interest determined by reference to the Variable Rate
shall be determined on a daily basis for use in calculating the
interest that is payable for such day, and any change in the
Variable Rate shall become effective on the day such change
occurs. Each determination by PCFC of an interest rate hereunder
shall be conclusive and binding for all purposes, absent manifest
error or bad faith.
(7) Default Rate. Any overdue principal of
or interest with respect to any portion of the Bridge Loan, and
the amount of any fees, costs, or expenses that Borrower is
obligated to pay to PCFC under this Agreement not paid when due,
shall bear interest, payable on demand, for each day until paid
at a rate per annum equal to the Default Rate. In addition, upon
and after the occurrence of an Event of Default and continuing
until such Event of Default has been cured or waived in writing
by PCFC in accordance with the terms of this Agreement, interest
shall accrue on all obligations owed by Borrower to PCFC
hereunder at the Default Rate. The interest rate increase to the
Default Rate shall take effect immediately upon the occurrence of
an Event of Default, without prior notice to Borrower.
(8) Interest Not to Exceed Maximum Lawful
Rate. Notwithstanding anything to the contrary set forth in this
Agreement, if at any time until payment in full of all of
obligations under this Agreement, the rate of interest payable
hereunder exceeds the highest rate of interest permissible under
any law which a court of competent jurisdiction shall, in a final
determination, deem applicable hereto (the "Maximum Lawful
Rate"), then in such event and so long as the Maximum Lawful Rate
would be so exceeded, the rate of interest payable hereunder
shall be equal to the Maximum Lawful Rate; provided, that if at
any time thereafter the rate of interest payable hereunder is
less than the Maximum Lawful Rate, Borrower shall continue to pay
interest hereunder at the Maximum Lawful Rate until such time as
the total interest received by PCFC is equal to the total
interest which PCFC would have received had the interest rate
payable hereunder been (but for the operation of this
Section 4(b)(8)) the interest rate payable since the date of this
Agreement. Thereafter, the interest rate payable hereunder shall
be the rate of interest set forth herein, unless and until the
rate of interest again exceeds the Maximum Lawful Rate, in which
event this paragraph shall again apply. In no event shall the
total interest received by PCFC pursuant to the terms hereof
exceed the amount which PCFC could lawfully have received had the
interest due hereunder been calculated for the full term hereof
at the Maximum Lawful Rate. In the event the Maximum Lawful Rate
is calculated pursuant to this Section 4(b)(8), such interest
shall be calculated at a daily rate equal to the Maximum Lawful
Rate divided by the number of days in the year in which such
calculation is made. In the event that a court of competent
jurisdiction, notwithstanding the provisions of this
Section 4(b)(8), shall make a final determination that PCFC has
received interest hereunder in excess of the Maximum Lawful Rate,
PCFC shall, to the extent permitted by applicable law, promptly
apply such excess first to any interest due and not yet paid,
then to the outstanding principal of the Bridge Loan (without
premium or penalty), and then to any other unpaid obligations
owed by Borrower under this Agreement and thereafter shall refund
any excess to Borrower or as a court of competent jurisdiction
may otherwise order.
(9) Additional Fixed Rate Provisions. If at
any time PCFC reasonably determines that for any reason adequate
and reasonable means do not exist for ascertaining the LIBO Rate
or any other index hereunder or the LIBO Rate or any such index
generally becomes unavailable to PCFC, PCFC shall promptly give
notice thereof to Borrower and shall designate an alternative
index that is reasonably comparable to the LIBO Rate or such
other index; provided, that PCFC's determination under this
Section 4(b)(9) as to Borrower shall be in accordance with its
treatment of other borrowers under commercial loans generally.
In the event that any law, treaty, rule, regulation, or
determination of a court or governmental authority or any change
therein or in the interpretation or application thereof or
compliance by PCFC with any request or directive (whether or not
having the force of law) from any central bank or governmental
authority:
(A) shall subject PCFC to any tax of
any kind whatsoever with respect to any LIBO Rate, or change the
basis of taxation of payments to PCFC of principal, interest or
any other amount payable under this Agreement (except for changes
in the rate of tax on the overall net income of PCFC); or
(B) shall impose, modify, or hold
applicable any reserve, special deposit, compulsory loan, or
similar requirement against assets held by, or deposits or other
liabilities in or for the account of, advances or loans by, or
other credit extended by, or any other acquisition of funds by,
any office of PCFC; or
(C) shall impose on PCFC any other
condition; and the result of any of the foregoing is to increase
the cost to PCFC of making, renewing, or maintaining any portion
of the Bridge Loan with interest rates tied to the LIBO Rate
and/or to reduce any amount receivable by PCFC in connection
therewith;
then in any such case, Borrower shall pay to PCFC, immediately
upon demand, such amount or amounts as may be necessary to
compensate PCFC for any additional costs incurred by PCFC and/or
reductions in amounts received by PCFC which are attributable to
LIBO Rates made available to Borrower hereunder. In determining
which costs incurred by PCFC or reductions in amounts received by
PCFC are attributable to such LIBO Rates, any reasonable
allocation made by PCFC among its operations shall be conclusive
and binding upon Borrower; provided, that PCFC's determination
under this Section 4(b)(9) as to Borrower is in accordance with
its treatment of other borrowers under commercial loans
generally.
5. Loan Fee. In consideration of PCFC's entering
into this Agreement, Borrower shall pay to PCFC a Bridge Loan Fee
(the "Bridge Loan Fee") of Seventy-Five Thousand Dollars
($75,000). The Bridge Loan Fee shall be due and payable upon the
effectiveness of this Agreement. The full amount of the Bridge
Loan Fee shall be considered earned upon receipt and no portion
of the Bridge Loan Fee shall be refundable to Borrower under any
circumstances.
6. Prepayments.
(a) Prepayment in Full. Borrower shall have the
right at any time to voluntarily prepay the entire amount of the
Bridge Loan and to terminate this Agreement upon at least three
(3) Business Days notice to PCFC, without premium or penalty,
except that Borrower shall pay to PCFC a prepayment surcharge, if
any, calculated in accordance with Section 6(c). Prepayment in
full shall be accompanied by the payment of all accrued and
unpaid interest and all fees, costs, expenses, and other
obligations owed by Borrower to PCFC under this Agreement.
(b) Partial Prepayment of Fixed Rate Obligations.
Borrower shall have the right at any time to voluntarily prepay
any portion of the Bridge Loan upon at least three (3) Business
Days notice to PCFC, without premium or penalty, except that
Borrower shall pay to PCFC a prepayment surcharge, if any,
calculated in accordance with Section 6(c). All voluntary
partial prepayments shall be applied by PCFC as directed by
Borrower.
(c) Prepayment Surcharge. At the time that
Borrower makes a Prepayment, whether or not such Prepayment is
voluntary on behalf of Borrower and specifically including a
prepayment occurring as the result of an acceleration of the
Bridge Loan, Borrower shall simultaneously pay to PCFC a
prepayment surcharge for each Fixed Rate portion of the Bridge
Loan so prepaid equal any loss of earnings expense attributable
to Fixed Rate funding incurred or projected by PCFC as a result
of such prepayment.
7. Manner and Time of Payment. Borrower shall make
all payments by wire transfer of immediately available funds as
follows:
To: Bank of America
00 Xxxxx Xxxx Xxxxxx
Xxxxx Xxxx, XX 00000
ABA Routing No.: 000000000
Account Number: 14984-00266
Account Name: Pacific Coast Farm Credit Services, ACA
Reference: Loan # 0000000000
Attention: Xxxx Xxxxx, Accounting
X.X. Xxx 0000, Xxxxx Xxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Tax ID No.: 00-0000000
(or to such other account as PCFC may designate by notice).
Borrower shall give PCFC telephonic notice no later than 12:00
noon Pacific Time of its intent to make a wire transfer. Wire
transfers received after 2:00 p.m. Pacific Time shall be credited
on the next business day.
8. Capitalization. Borrower agrees to make such
investments in PCFC as PCFC may from time to time require in
accordance with its bylaws and capital plan. In connection with
the foregoing, the Borrower hereby acknowledges receipt, prior to
the execution of this document, of copies of the following:
Notice Regarding Your Required Investment in this Association,
1997 Annual Report, and the Association's Capitalization Plan and
Bylaws. All such investments and all other equities which the
Borrower may now own or hereafter acquire or be allocated in PCFC
shall be subject to a statutory first lien in favor of PCFC to
secure any indebtedness of Borrower to PCFC.
At the option of PCFC, any amounts borrowed to purchase
capital stock or participation certificates, and any amounts
repaid from redemption of such stock or certificates, may be
recorded as part of the loan accounting in the transaction
summary, or in a separate stock or loan account.
A certificate will not be issued for capital stock or
participation certificates, but ownership will be evidenced by
the records of PCFC. THE OWNERSHIP OF THE CAPITAL STOCK OR
PARTICIPATION CERTIFICATES WILL BE REGISTERED ON THE RECORDS OF
PCFC AS FOLLOWS: Maui Land & Pineapple Company, Inc., a Hawaii
Corporation.
Borrower hereby grants to PCFC a security interest in
and lien upon all capital stock and participation certificates as
collateral for the Bridge Loan. Upon an Event of Default, PCFC
may but is not required to apply all or part of the proceeds from
such capital stock or participation certificates against the
Line.
UNTIL WRITTEN NOTICE OF REVOCATION IS RECEIVED BY PCFC,
XXXX X. XXXXX IS AUTHORIZED TO VOTE FOR THE ABOVE-NAMED BORROWER
AND IS AUTHORIZED TO REQUEST THE CONVERSION FROM ONE CLASS TO
ANOTHER OF ALL SHARES OF CAPITAL STOCK WHICH MAY BE REGISTERED IN
THE NAME OF BORROWER.
As required by PCFC's bylaws and the federal income tax
law, Borrower agrees that the amount of any distribution of
patronage made by written notice of allocation to Borrower after
the date of this Agreement will be included in the Borrower's
gross income for the purpose of federal income tax for the year
in which the notice is received.
Lender hereby confirms that, as of the date of this
Agreement, Borrower has made all investments in PCFC currently
required under its bylaws and capital plan.
9. Collateral; No Subordination. The obligations of
Borrower to PCFC hereunder shall be unsecured, except as follows:
(i) PCFC shall have first priority liens on Borrower's fee
interests in the real property located on the Island and County
of Maui, State of Hawaii and identified as Tax Map Key parcel
numbers (2) 2-4-001-003, (2) 2-3-002-004, (2) 2-3-002-008, (2) 2-
0-000-000, (2) 0-0-000-000, and (2) 4-3-001-031; (ii) PCFC shall
have the lien referred to in Section 8 and any other liens
provided by the Farm Credit Act; and (ii) PCFC shall have and
Borrower hereby grants PCFC a security interest in, all cash,
accounts, securities, investment property, instruments,
documents, or other property of Borrower that is in PCFC's
possession or under its control (the items described in clauses
(i), (ii), and (iii) collectively, the "Collateral"). The
obligations of Borrower to PCFC under this Agreement shall
constitute senior indebtedness and are not subordinate in payment
or priority to any other obligations of Borrower.
10. Representations and Warranties. Borrower
represents and warrants to PCFC that, except as may be set forth
in the disclosure schedule referred to in Exhibit A (the
"Disclosure Schedule") or in a subsequent written disclosure to
PCFC, each of the following statements is true and correct on the
date hereof and shall also be true and correct on the date that
Borrower requests an advance under Bridge Loan or a conversion to
the Fixed Rate of any portion of the Bridge Loan:
(a) Corporate Existence; Compliance with Law and
Agreements. Borrower and each Guarantor: (i) are corporations
duly organized, validly existing and in good standing under the
laws of the State of Hawaii; (ii) are duly qualified as foreign
corporations and in good standing under the laws of each
jurisdiction where their ownership or lease of property or the
conduct of their businesses require such qualification (except
for jurisdictions in which such failure to so qualify or to be in
good standing would not have a Material Adverse Effect);
(iii) have the requisite corporate power and authority and the
legal right to own, pledge, mortgage, or otherwise encumber and
operate all real property that they own, to lease the real
property they operate under lease, and to conduct their
businesses as now, heretofore, and proposed to be conducted;
(iv) have all material licenses, permits, consents, or approvals
from or by, and have made all material filings with, and have
given all material notices to, all governmental authorities
having jurisdiction, to the extent required for such ownership,
operation, and conduct; (v) are in compliance with their articles
or certificates of incorporation and by-laws; (vi) are in
compliance with all applicable provisions of law where the
failure to comply would have a Material Adverse Effect, and
(vii) are not in default, and, to Borrower's knowledge, no third
party is in default, under or with respect to any contract,
agreement, lease or other instrument to which Borrower or any
Guarantor is a party which default in each case or in the
aggregate would have a Material Adverse Effect.
(b) Corporate Power; Authorization; Enforceable
Obligations. The execution, delivery, and performance by
Borrower of the Agreement, and any Other Documents to which
Borrower is a party, and by each Guarantor of such Guarantor's
Guaranty Agreement: (i) are within Borrower's or such Guarantor's
corporate power; (ii) have been duly authorized by all necessary
or proper corporate action; (iii) are not in contravention of any
provision of Borrower's or such Guarantor's articles of or
certificate of incorporation or by-laws; (iv) will not violate
any law or regulation, or any order or decree of any court or
governmental instrumentality; (v) will not conflict with or
result in the breach or termination of, constitute a default
under or accelerate any performance required by, any material
indenture, mortgage, deed of trust, lease, agreement or other
instrument to which Borrower or any Guarantor is a party or by
which Borrower or any Guarantor or any of Borrower's or any
Guarantor's property is bound; (vi) will not result in the
creation or imposition of any lien upon any of the property of
Borrower or any Guarantor; and (vii) do not require the consent
or approval of any governmental authority or any other Person,
except for consents or approvals which have been duly obtained,
made, or complied with. This Agreement constitutes a legal,
valid, and binding obligation of Borrower enforceable against it
in accordance with its terms except for general principles of
equity and the effect of bankruptcy, insolvency, and other laws
affecting the rights of creditors generally.
(c) Financial Statements and Condition;
Disclosure. The current audited and unaudited financial
statements previously delivered by Borrower to Lender, and all
financial statements to be delivered by Borrower to PCFC pursuant
to Section 11(g) (i) fairly present in all material respects the
financial position of Borrower as of the dates specified in such
financial statements, (ii) have been prepared in accordance with
GAAP, consistently applied throughout the periods involved except
as set forth in the notes thereto (subject, in the case of any
interim financial statements, to normal year-end adjustments),
and (iii) do not contain any untrue statement of a material fact
or omit to state any material fact necessary to make the
statements therein not misleading in light of the circumstances
under which they were made. There has been no material adverse
change in the financial condition, operations, business,
properties or prospects of Borrower since the date of such
financial statements except changes that individually or in the
aggregate could not reasonably be expected to have a Material
Adverse Effect. There is no fact or circumstance known to
Borrower that could reasonably be expected to have a Material
Adverse Effect. Borrower is solvent and will continue to be
solvent after giving effect to the transactions contemplated by
this Agreement. There is no action, claim or proceeding now
pending or, to Borrower's knowledge, threatened against Borrower
before any court, board, commission, agency, or instrumentality
of any federal, state, or local government or of any agency or
subdivision thereof, or before any arbitrator or panel of
arbitrators, which, if determined adversely, could have a
Material Adverse Effect.
(d) Taxes. Borrower and each Guarantor have
filed all tax returns that are required to have been filed in any
jurisdiction and has paid all taxes shown to be due and payable
on such returns and all other taxes and assessments levied upon
it or its properties, assets, income or franchises, to the extent
such taxes and assessments have become due and payable and before
they have become delinquent, except for any taxes and assessments
(i) the amount of which is not individually or in the aggregate
material or (ii) the amount, applicability or validity of which
is currently being contested in good faith by appropriate
proceedings and with respect to which Borrower or such Guarantor
has established adequate reserves in accordance with GAAP.
Borrower knows of no basis for any other tax or assessment that
could reasonably be expected to have a Material Adverse Effect.
(e) Licenses; Permits; Intellectual Property
Rights. Borrower and each Guarantor own or possess all licenses,
permits, franchises, authorizations, patents, copyrights, service
marks, trademarks and trade names, or rights thereto, that
individually or in the aggregate are necessary to the conduct of
Borrower's or such Guarantor's business, without known conflict
with the rights of others. To the best knowledge of Borrower, no
product of Borrower or any Guarantor infringes in any material
respect any license, permit, franchise, authorization, patent,
copyright, service xxxx, trademark and trade name or other right
owned by any other Person. To the best knowledge of Borrower,
there is no Material violation by any Person of any right of
Borrower or Guarantor with respect to any patent, copyright,
service xxxx, trademark and trade name or other right owned by
Borrower or any Guarantor.
(f) Labor Matters. There are no strikes or other
labor disputes against Borrower or any Guarantor that are pending
or, to Borrower's knowledge, threatened which would have a
Material Adverse Effect. All payments due from Borrower or any
Guarantor on account of employee health and welfare insurance
which would have a Material Adverse Effect if not paid have been
paid or accrued as a liability on the books of Borrower or such
Guarantor.
(g) Investment Company Act. Neither Borrower nor
any Guarantor is an "investment company" or an "affiliated
Person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment
Company Act of 1940, as amended.
(h) Margin Regulations. Neither Borrower nor any
Guarantor owns any "margin security", as that term is defined in
Regulations G and U of the Board of Governors of the Federal
Reserve System (the "Federal Reserve Board").
(i) ERISA. Each "Plan" (as defined below) is in
compliance in all material respects with the applicable
provisions of ERISA and the Internal Revenue Code ("IRC") and
with respect to each Plan, other than a Qualified Plan, all
required contributions and benefits have been paid in accordance
with the provisions of each such Plan to the extent that the
failure to pay any such contribution or benefit would have a
Material Adverse Effect. There are no pending or, to Borrower's
knowledge, threatened claims, actions or lawsuits (other than
claims for benefits in the normal course), asserted or instituted
against Borrower or any Guarantor or any Plan or its assets.
Neither Borrower, any Guarantor, nor any ERISA Affiliate of
either has incurred or reasonably expects to incur any Withdrawal
Liability under Section 4201 of ERISA as a result of a complete
or partial withdrawal from a Multiemployer Plan. Neither
Borrower nor any Guarantor has engaged in a prohibited
transaction, as defined in Section 4975 of the IRC or Section 406
of ERISA, in connection with any Plan, which would subject
Borrower or such Guarantor (after giving effect to any exemption)
to a material tax on prohibited transactions imposed by Section
4975 of the IRC or any other material liability. As used above,
the term "Plan" shall mean, with respect to Borrower or any
Guarantor or any ERISA Affiliate of either, at any time, an
employee benefit plan, as defined in Section 3(3) of ERISA, which
Borrower maintains, contributes to or has an obligation to
contribute to on behalf of participants who are or were employed
by any of them. The terms "Qualified Plan" and "Multiemployer
Plan" shall have the meaning given them in ERISA.
(j) Brokers. No broker or finder acting on
behalf of Borrower or any Guarantor brought about the obtaining,
making, or closing of the Bridge Loan and neither Borrower nor
any Guarantor nor PCFC have any obligation to any Person in
respect of any finder's or brokerage fees in connection with the
Bridge Loan.
(k) Environmental Matters. Except as set forth
in the Disclosure Schedule, and except for matters that do not
relate to any of the Collateral and do not, individually or in
the aggregate, constitute a Material Adverse Effect, as of the
date of this Agreement: (i) all of Borrower's real property is
free of contamination from any Hazardous Material except for such
contamination that would not adversely impact the value or
marketability of such real property and that would not result in
Environmental Liabilities that could reasonably be expected to
exceed $100,000; (ii) Borrower has not caused or suffered to
occur any release of Hazardous Materials on, at, in, under,
above, to, from or about any of its real property; (iii) Borrower
is and has been in compliance with all Environmental Laws, except
for such noncompliance which would not result in Environmental
Liabilities which could reasonably be expected to exceed
$100,000; (iv) Borrower has obtained, and is in compliance with,
all environmental permits required by Environmental Laws for the
operations of their respective businesses as presently conducted
or as proposed to be conducted, except where the failure to so
obtain or comply with such environmental permits would not result
in Environmental Liabilities that could reasonably be expected to
exceed $100,000, and all such Environmental Permits are valid,
uncontested and in good standing; (iii) Borrower is not involved
in operations and does not know of any facts, circumstances or
conditions, including any releases of Hazardous Materials, that
are likely to result in any Environmental Liabilities of Borrower
that could reasonably be expected to exceed $100,000, and
Borrower has not permitted any current or former tenant or
occupant of any of its real property to engage in any such
operations; (iv) there is no litigation arising under or related
to any Environmental Laws, environmental permits or Hazardous
Material that seeks damages, penalties, fines, costs or expenses
in excess of $50,000 or injunctive relief against, or that
alleges criminal misconduct by, Borrower; (v) no notice has been
received by Borrower identifying it as a "potentially responsible
party" or requesting information under CERCLA or analogous state
statutes, and to the knowledge of Borrower, there are no facts,
circumstances or conditions that may result in Borrower being
identified as a "potentially responsible party" under CERCLA or
analogous state statutes; and (vi) Borrower has provided to PCFC
copies of all existing, material environmental reports, reviews
and audits and all written information pertaining to actual or
potential Environmental Liabilities, in each case relating to
Borrower.
(l) Year 2000. Borrower has completed a year
2000 Assessment and Corrective Plan that will eliminate all
limitations on the ability of Borrower and the Subsidiaries, and
any software, hardware, microchips, peripheral interfaces, and
systems used by Borrower or any Subsidiary, to accurately accept,
create, manipulate, sort, sequence, calculate, compare, or
provide calendar date information with respect to calendar year
2000 and any year thereafter, including exchanges of information
among data systems. Such Assessment and Corrective Plan provides
for the elimination of all such limitations on or before June 30,
1999.
11. Affirmative Covenants. Unless otherwise agreed to
in writing by PCFC, while this agreement is in effect whether or
not any indebtedness is outstanding hereunder, Borrower agrees
to, and, except with respect to the covenant contained in
Section 11(a), to cause each Guarantor to:
(a) Eligibility. Maintain its status as an
entity eligible to borrow from PCFC.
(b) Corporate Existence. Preserve and keep in
full force its corporate status, existence and good standing in
the jurisdiction of its organization, its qualifications to
transact business in all places required by law, and all
licenses, certificates, permits, authorizations, approvals and
the like which are material to the conduct of its business or
required by law.
(c) Compliance with Laws. Comply in all material
respects with all applicable federal, state, and local laws,
rules, regulations, ordinances, codes, and orders (collectively
"Laws"). Without limiting the foregoing, Borrower agrees to
comply in all material respects, and to cause all Guarantors and
all Persons occupying or present on any properties of Borrower or
any Guarantor to so comply, with all Laws relating to
environmental protection.
(d) Property Maintenance. Maintain all of its
property that is necessary to or useful in the proper conduct of
its business in good working condition, ordinary wear and tear
excepted.
(e) Books and Records. Keep adequate records and
books of account in which complete entries will be made in
accordance with past practices.
(f) Inspection. Permit PCFC or its agents,
during normal business hours or at such other times as the
parties may agree, to examine Borrower's or any Guarantor's
properties, books, and records, and to discuss Borrower's or any
Guarantor's affairs, finances, and accounts with its respective
officers, directors, employees, and independent certified public
accountants.
(g) Reports and Notices. Furnish to PCFC:
(1) Annual Financial Statement. As soon as
possible, but in no event later than 90 days after the end of any
Fiscal Year of Borrower occurring during the term hereof, annual
financial statements of Borrower prepared in accordance with GAAP
consistently applied. Such financial statements shall: (i) be
audited by independent certified public accountants selected by
Borrower and acceptable to PCFC, (ii) be accompanied by a report
of such accountants containing an opinion acceptable to PCFC;
(iii) be prepared in reasonable detail and in comparative form;
and (iv) include a balance sheet, a statement of income, a
statement of retained earnings, a statement of all cash flows and
all notes and schedules relating thereto;
(2) Monthly Financial Statements. No later
than 30 days after the end of each Fiscal Month, internally
prepared monthly financial statements containing the same
information regularly generated by Borrower on its internal
monthly financial statements, accompanied by a compliance
certificate from Borrower's chief financial officer, in the form
attached hereto as Exhibit B, certifying that as of the date of
such financial statement there did not exist a Default or Event
of Default under this Agreement.
(3) Modifications to Annual Budget and Cash
Flow Forecast. No later than five (5) days after issuance, all
modifications to Borrower's current capital expenditures budget
for the forthcoming Fiscal Year, and to Borrower's current
rolling five-year plan for the forthcoming five-year period, to
the extent any such modification or group of related
modifications increase such expenditures by more than Two Hundred
Thousand Dollars ($200,000).
(4) Notice of Default. Promptly after
becoming aware thereof, notice of the occurrence of a Default or
Event of Default.
(5) Tax Returns. Within 14 days after
filing of such tax returns, a copy of such portions of every
federal income tax return filed by Borrower as are necessary to
enable PCFC to verify Borrower's calculations of Adjusted Gains
on Asset Sales and, if requested by PCFC, a copy of the entire
tax return.
(6) Notice of Non-Environmental Litigation.
Promptly after the commencement thereof, notice of the
commencement of all actions, suits, or proceedings before any
court, arbitrator, or governmental department, commission, board,
bureau, agency, or instrumentality affecting Borrower or any
Guarantor which, if determined adversely to Borrower or such
Guarantor, could have a Material Adverse Effect.
(7) Notice of Environmental Litigation, Etc.
Promptly after receipt thereof, notice of the receipt of all
pleadings, orders, complaints, indictments, or any other
communication alleging a condition that may require Borrower or
Guarantor to undertake or to contribute to a cleanup or other
response under environmental laws, or which seeks penalties,
damages, injunctive relief, or criminal sanctions related to
alleged violations of such Laws, or which claims personal injury
or property damage to any Person as a result of environmental
factors or conditions, in each case to the extent such
communication relates to any of the Collateral or to matters that
could reasonably be deemed to constitute a Material Adverse
Effect.
(8) Other Information. Such other
information regarding the condition or operations, financial or
otherwise, of Borrower or any Guarantor as PCFC may, from time to
time, reasonably request.
(h) Insurance. At Borrower's sole cost and
expense, maintain insurance providing for the following types of
coverages in at least the following amounts: (i) "All Risk"
physical damage insurance on all of Borrower's tangible real and
personal property and assets, including volcanic activity (but
not eruption) coverage, (ii) comprehensive general liability
insurance on an "occurrence basis" against claims for personal
injury, bodily injury and property damage with a minimum limit of
One Million Dollars ($1,000,000) per occurrence and Two Million
Dollars ($2,000,000) in the aggregate, which coverage shall
include premises/operations, broad form contractual liability,
underground, explosion and collapse hazard, independent
contractors, broad form property coverage, products and completed
operations liability, (iv) with respect to worker's compensation
insurance, either self-insurance through reserves in excess of
the minimum required amounts, or commercial insurance within the
applicable statutory limits, in either case which includes
coverage for employee's occupational disease and employer's
liability within such legal amounts or limits, (v) automobile
liability insurance for all owned, non-owned or hired automobiles
against claims for personal injury, bodily injury, and property
damage with a minimum combined single limit of One Million
Dollars ($1,000,000) per occurrence; and (vi) umbrella insurance
of Fifty Million Dollars ($50,000,000) per occurrence and Fifty
Million Dollars ($50,000,000) in the aggregate.
All of such policies shall at all times remain in full
force and effect and in form and with insurers recognized as
adequate by PCFC, and provide coverage of such risks and for such
amounts as are customarily maintained for businesses of the scope
and size of Borrower's and Guarantor's and as otherwise
acceptable to PCFC. PCFC reserves the right at any time, upon a
review of Borrower's and the Guarantors' risk profile, to require
additional forms and limits of insurance. Borrower shall, if
requested by PCFC, provide PCFC with a report of Borrower's
insurance broker concerning Borrower's and the Guarantors'
insurance policies.
12. Negative Covenants. Unless otherwise agreed to in
writing by PCFC, while this agreement is in effect, Borrower will
not, and will not permit any Guarantor to:
(a) Mergers, Acquisitions, Etc.
(1) Merge or consolidate with any other
entity, or commence operations under any other name.
(2) Without the prior, written consent of
PCFC, acquire all or substantially all of the assets of any
Person or entity, form or create any new Subsidiary or Affiliate,
or enter into any business venture, including any joint venture,
partnership, or limited liability company; provided, that PCFC's
consent to any of the foregoing shall not be unreasonably
withheld.
(b) Transfer of Assets. Sell, transfer, lease,
or otherwise dispose of any of its assets, except (i) in the
ordinary course of Borrower's or such Guarantor's business,
(ii) transactions outside the ordinary course transactions, but
only to the extent that the aggregate amount of all assets
involved in such transactions from and after the date of this
Agreement have a fair market value of less than Five Million
Dollars ($5,000,000), (iii) disposal of worn out or obsolete
assets, (iv) disposal of equipment that is being replaced by
equipment having a similar value or serving a similar function,
(v) transfers between Borrower and any Guarantor or between any
Guarantors of assets other than the Collateral, but only to the
extent that the aggregate amount of all assets involved in such
transfers from and after the date of this Agreement have a fair
marked value of less than One Million Dollars ($1,000,000), and
(vi) transfers to Subsidiaries of Borrower that are specifically
identified on the Disclosure Schedule; provided, that each such
transaction referred to in clauses (i) through (iv) above shall
be at arm's length and for fair market value.
(c) Change in Business. Engage in any business
activities or operations substantially different from or
unrelated to Borrower's or such Guarantor's present business
activities or operations.
(d) Liens. Create or permit any Lien on any of
its properties or assets except for Permitted Encumbrances.
(e) Indebtedness. Incur any indebtedness, or
allow any of its Subsidiaries to incur any indebtedness, if after
such indebtedness is incurred the aggregate amount of all
Consolidated Indebtedness shall exceed Forty-Five Million Dollars
($45,000,000).
(f) Capital Expenditures. Make Capital
Expenditures or Investments, other than Capital Expenditures for
or Investments in Borrower's "Kaahumanu Center Associates"
Subsidiary, in excess of Twenty-Five Million Dollars
($25,000,000) during Fiscal Year 1999.
(g) Loans. Make or accrue any loan or advance of
money to any Person or entity, through the direct or indirect
holding of securities or otherwise, if doing so would cause the
aggregate of all such loans or advances, other than loans set
forth in the Disclosure Schedule referred to in Exhibit A, to
exceed One Million Dollars ($1,000,000); provided, that, in
addition to the foregoing, Borrower and each Guarantor shall be
permitted to extend purchase money financing to persons
purchasing real property from Borrower or such Guarantor so long
as (i) Borrower or such Guarantor has received at least twenty
percent (20%) of the purchase price in cash, (ii) the financing
does not exceed One Million Dollars ($1,000,000) in any
particular transaction, and (iii) all such financing extended
after December 31, 1997 does not exceed Five Million Dollars
($5,000,000) in the aggregate.
(h) Restricted Payments. Make any Restricted
Payments unless each and every one of the following conditions
has been fulfilled: (i) no Default or Event of Default then
exists or has occurred within the twelve (12) month period
preceding the making of such Restricted Payment nor shall a
Default or Event of Default occur from the making of such
Restricted Payment, (ii) the amount of the Restricted Payment,
together with the aggregate amount of all other Restricted
Payments made during such Fiscal Year, shall not exceed the "Debt
Coverage Ratio Cushion" (as defined below) for such year,
(iii) the amount of the Restricted Payment, together with the
aggregate amount of all other Restricted Payments made during
such Fiscal Quarter, would not, if such amounts were to
subtracted from Borrower's Tangible Net Worth for the preceding
Fiscal Quarter, have caused Borrower's Tangible Net Worth for
such Fiscal Quarter to have been less than the minimum required
by Section 12(j)(1), (iv) the amount of the Restricted Payment,
together with the aggregate amount of all other Restricted
Payments made during such Fiscal Year, shall not exceed the
"Annual Distribution Amount" (as defined below) for such year;
provided that if in any Fiscal Year, Borrower makes Restricted
Payments that are less than the Annual Distribution Amount for
such Fiscal Year, such unused portion may be carried forward and
distributed during a subsequent year (provided that all of the
conditions set forth in this Section 12(h) have been fulfilled).
As used in this Section 12(h), the following terms
shall have the following meanings:
"Annual Distribution Amount" shall mean, for any
particular Fiscal Year, thirty percent (30%) of the lesser
of (A) Borrower's Consolidated Net Income for the preceding
Fiscal Year, and (B) the amount, if any, by which Borrower's
Consolidated Cash Flow for the preceding Fiscal Year
exceeded Borrower's Consolidated Debt Service for such
preceding Fiscal Year.
"Debt Coverage Ratio Cushion" shall mean, for any
particular year, the amount (if any) by which Borrower's
Consolidated Cash Flow for the preceding Fiscal Year
exceeded one hundred fifteen percent (115%) of Borrower's
Consolidated Debt Service for such preceding Fiscal Year.
(i) Transactions with Affiliates. Enter into any
transaction or arrangement with any Affiliate, or permit any
Subsidiary to enter into any transaction or arrangement with any
Affiliate of it, (including the purchase from, sale to, or
exchange of property with, or the rendering of any service by or
for any Affiliate) except in the ordinary course of business and
upon fair and reasonable terms and that are no less favorable to
Borrower than would be obtained in a comparable arms-length
transaction with a Person not an Affiliate.
(j) Financial Covenants.
(1) Minimum Tangible Net Worth. Borrower
shall not permit its Consolidated Tangible Net Worth, as of the
last day of each Fiscal Month ending after the date hereof
through and including the Fiscal Month ending March 31, 1999 to
be less than Fifty-Seven Million Dollars ($57,000,000).
(2) Current Ratio. Borrower shall not
permit the ratio of (i) Consolidated Current Assets to
(ii) Consolidated Current Liabilities, as of the last day of each
Fiscal Month ending after the date hereof and continuing through
the Bridge Loan Maturity Date to be less than 1.90 to 1.00.
(3) Debt Coverage Ratio. Commencing with
the Fiscal Year ending December 31, 1998 and continuing for each
Fiscal Quarter through the Bridge Loan Maturity Date, Borrower
shall not permit the Consolidated Debt Coverage Ratio for such
period to be less than 1.25 to 1.00.
13. Events of Default. Each of the following shall
constitute an "Event of Default" hereunder:
(a) Payment Default. Failure by Borrower to make
any payment of principal or interest required to be made under
this Agreement on the date when due or failure to pay any other
amount owed to PCFC hereunder on the date when due.
(b) Representations and Warranties. Any
representation or warranty made by Borrower herein or in any
agreement, certificate, or document related hereto or furnished
in connection herewith, or by any Guarantor in any Guaranty
Agreement or in any agreement, certificate, or document related
to such Guaranty Agreement, shall prove to have been false or
misleading in any material respect on or as of the date made.
(c) Other Covenants and Agreements. Borrower
fails to perform or comply with any covenant or agreement
contained in this Agreement (other than those referred to in
Section 13(a)) or any Guarantor fails to perform or comply with
any covenant or agreement contained in any Guaranty Agreement;
provided, that if such failure is by its nature capable of being
cured, then such failure shall not become an Event of Default
unless such failure remains uncured for fifteen (15) days.
(d) Other Indebtedness. Borrower or any
Guarantor shall fail to pay when due any Consolidated
Indebtedness for borrowed money or any other event occurs which,
under any agreement or instrument relating to such Consolidated
Indebtedness, has the effect of accelerating or permitting the
acceleration of such Consolidated Indebtedness, whether or not
such Consolidated Indebtedness is actually accelerated.
(e) Judgments. A judgment, decree, or order for
the payment of money in excess of One Million Dollars
($1,000,000) shall be rendered against Borrower or any Guarantor
and either: (i) enforcement proceedings shall have been
commenced; or (ii) such judgment, decree, or order shall continue
unsatisfied and in effect for a period of twenty (20) consecutive
days without being vacated, discharged, satisfied, or stayed
pending appeal.
(f) Insolvency, Etc. Borrower or any Guarantor:
(i) shall become insolvent or shall generally not, or shall be
unable to, or shall admit in writing its inability to, pay its
debts as they come due; or (ii) shall suspend its business
operations or a material part thereof or make an assignment for
the benefit of creditors; or (iii) shall apply for, consent to,
or acquiesce in the appointment of a trustee, receiver, or
custodian for it or any of its property; or (iv) shall commence
or have commenced against it any proceeding under any bankruptcy,
reorganization, arrangement, readjustment of debt, dissolution,
or liquidation law or statute of any jurisdiction.
(g) Material Adverse Change. Any material
adverse change occurs, as reasonably determined by PCFC, in
Borrower's ability to perform its obligations under this
Agreement.
14. Remedies Upon Events of Default. Upon the
occurrence of and during the continuance of each and every Event
of Default:
(a) Termination of Rights; Acceleration. PCFC
may, without notice to Borrower, declare the entire unpaid
principal balance under this Agreement, all accrued interest
thereon and all other amounts payable under this Agreement, to be
immediately due and payable. Upon such a declaration, the unpaid
principal balance under this Agreement and all such other amounts
shall become immediately due and payable, without protest,
presentment, demand, or further notice of any kind, all of which
are hereby expressly waived by Borrower.
(b) Enforcement. PCFC may proceed to protect
exercise, and enforce such rights and remedies against Borrower
and against the Collateral as may be provided by this Agreement,
by any Guaranty Agreement, by any Other Document, or under law,
each and every one of such rights and remedies shall be
cumulative and may be exercised from time to time, and no failure
on the part of PCFC to exercise, and no delay in exercising, any
right or remedy shall operate as a waiver thereof, or the
exercise of any other right. Without limiting the foregoing,
PCFC may, as provided in the Farm Credit Act of 1971, as amended,
retire and cancel all or any portion of Borrower's stock or other
equities in PCFC and apply the proceeds thereof against
Borrower's indebtedness to PCFC. In addition, PCFC may hold, set
off, sell, and/or apply against Borrower's indebtedness any and
all cash, accounts, securities, instruments, documents, or other
property in PCFC's possession or under its control.
(c) Application of Funds. All amounts received
by PCFC shall be applied to amounts owing under this Agreement in
such order and manner as PCFC may in its sole discretion elect.
15. Indemnity. Borrower shall indemnify and hold
harmless each of PCFC and its Affiliates, and each such Person's
respective officers, directors, employees, attorneys, agents and
representatives (each, an "Indemnified Person"), from and against
any and all suits, actions, proceedings, claims, damages, losses,
liabilities and expenses (including reasonable attorneys' fees
and disbursements and other costs of investigation or defense,
including those incurred upon any appeal) that may be instituted
or asserted against or incurred by any such Indemnified Person as
the result of credit having been extended, suspended or
terminated under this Agreement and the other Loan Documents and
the administration of such credit, and in connection with or
arising out of the transactions contemplated hereunder and
thereunder and any actions or failures to act in connection
therewith, including any and all Environmental Liabilities and
legal costs and expenses arising out of or incurred in connection
with disputes between or among any parties to any of the Loan
Documents (collectively, "Indemnified Liabilities"); provided,
that Borrower shall not be liable for any indemnification to an
Indemnified Person to the extent that any such suit, action,
proceeding, claim, damage, loss, liability or expense results
solely from that Indemnified Person's gross negligence or willful
misconduct, as finally determined by a court of competent
jurisdiction.
16. Discussions Regarding Long-Term Financing.
Borrower and PCFC hereby confirm that they have discussed the
possible provision by PCFC to Borrower of long-term financing
that would replace the Bridge Loan on or before the Bridge Loan
Maturity Date, but that as of the date of this Agreement no
agreement has been reached, and no commitment or obligation of
either Borrower or PCFC exists, with respect to such long-term
financing (including identification of the nature or extent of
the collateral that might secure such long-term financing).
17. Complete Agreement; Amendments. This Agreement
and all documents and instruments contemplated hereby are
intended by the parties to be a complete and final expression of
their agreement. No amendment, modification, or waiver of any
provision hereof or thereof, nor any consent to any departure of
Borrower herefrom or therefrom, shall be effective unless
approved by PCFC and contained in a writing signed by or on
behalf of PCFC and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for
which given.
18. Counterparts; Effectiveness. This Agreement may
be executed in any number of separate counterparts, each or which
shall collectively and separately constitute one agreement. This
Agreement shall become effective upon execution by each party and
delivery to the other parties of either an executed original of
the signature pages hereof or of a facsimile of such executed
original of the signature pages hereof.
19. Applicable Law. Except to the extent governed by
applicable federal law, this Agreement shall be governed and
construed in accordance with the laws of the State of California,
without reference to choice of law doctrine.
20. Notices. All notices hereunder shall be in
writing and shall be deemed to be duly given upon delivery, if
personally delivered or sent by telegram or facsimile
transmission, or three (3) days after mailing if sent by express,
certified or registered mail, to the parties at the following
addresses (or such other address for a party as shall be
specified by like notice):
If to PCFC as follows:
Pacific Coast Farm Credit Services, ACA
0000 Xxxxx Xxxxxxxx
Xxxxxx, XX 00000
Attn: Account Officer -- Maui Land & Pineapple
Fax No.: (000) 000-0000
and to
Pacific Coast Farm Credit Services, ACA
0000 Xxxxxx Xxxx
X.X. Xxx 000
Xxxxxxx, XX 00000
Attn: Account Officer -- Maui Land & Pineapple
Fax No.: (000) 000-0000
If to Borrower, as follows;
Maui Land & Pineapple Company, Inc.
XX Xxx 000, Xxxxxxx, Xxxxxx 00000-0000
Attn: Executive Vice President-Finance
Fax No.: (000) 000-0000
21. Costs and Expenses. Borrower shall pay all costs
incurred by PCFC, including reasonable attorneys fees, in
connection with the preparation for, negotiation of, and
documentation of this Agreement, the Other Documents, and any
Guaranty Agreement. If in the future PCFC shall employ the
services of legal counsel or any other professional or any third
party in connection with (i) any request made by Borrower to PCFC
for a modification, amendment, waiver, or consent in connection
with this Agreement, any Other Document, or any Guaranty
Agreement, (ii) rendering advice or other services to PCFC
regarding PCFC's rights or obligations under this Agreement or
any Other Document or any Guaranty Agreement, whether or not an
Event of Default has occurred, (iii) representing the interests
of PCFC in any judicial or nonjudicial action, suit or proceeding
instituted by PCFC or any other Person connected with or related
to or with reference to the Bridge Loan or to reclaim, seek
relief from a judicial or statutory stay, sequester, protect,
preserve or enforce PCFC's interests, then in such event Borrower
promises to pay reasonable attorney's fees and reasonable costs
and expenses incurred by PCFC and/or its attorney in connection
with the above-mentioned events. Such amounts shall be payable
upon demand.
22. Effectiveness; Severability. This Agreement shall
continue in effect until all indebtedness and obligations of
Borrower hereunder shall have been repaid and all commitments of
PCFC hereunder have terminated. Any provision of this Agreement
or of any instrument or document contemplated hereby which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof or thereof.
23. Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of Borrower and PCFC and
their respective successors and assigns except that Borrower may
not assign or transfer its rights or obligations hereunder
without the prior written consent of PCFC. PCFC may assign all
or any portion of its obligations under this Agreement without
prior notice to Borrower and such assignment shall relieve PCFC
of any future obligations hereunder. PCFC may grant or sell
participation interests in its interests under this Agreement
without notice to Borrower.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be executed by their duly authorized officers as of the date
shown above.
BORROWER:
MAUI LAND & PINEAPPLE COMPANY, INC., a Hawaii Corporation
By: /S/ XXXX X. XXXXX
XXXX X. XXXXX
Title: EXECUTIVE VICE PRESIDENT/FINANCE
By: /S/ XXXXXX Y. H. XXXX
XXXXXX X. X. XXXX
Title:_ TREASURER
PCFC:
PACIFIC COAST FARM CREDIT SERVICES, ACA
By: /S/ XXXX X. O'DAY
Xxxx X. O'Day, Regional Vice-President
EXHIBIT A
List of Required Documents
1. Promissory Note.
2. Loan Application
3. Interest Rate Disclosure Statement.
4. Continuing Guaranty Agreements from the
following entities:
a. Maui Pineapple Company, Ltd.
b. Kapalua Land Company, Ltd.
5. Environmental Disclosure Documents
acceptable to PCFC, certified by chief financial
officer of Borrower
6. Appraisal information with respect to
the real property collateral, certified as
accurate and complete by Borrower's CFO
7. Preliminary Title Reports
8. Mortgage
9. Instruction letter to title company and
related correspondence
10. Title Policy and Endorsements
11. Payment instructions from Borrower to PCFC
12. Corporate authority documents:
a. Certificate of corporate
secretary of Borrower.
b. Certificate of corporate
secretary of Maui Pineapple Company, Ltd.
c. Certificate of corporate
secretary of Kapalua Land Company, Ltd.
13. Opinion of counsel to Borrower and each
Guarantor.
14. Disclosure Schedule setting forth:
a. Any exceptions to
representations and warranties.
b. Existing loans made by
Borrower to third parties.
c. Permitted Encumbrances.
d. All subsidiaries owned by Borrower and all
partnerships and joint ventures in which Borrower
is engaged.
EXHIBIT B
[FORM OF COMPLIANCE CERTIFICATE
UNDER SECTION 11(g)(2)]
[Letterhead of Maui Land & Pineapple Company, Inc.]
________________, 199__
Pacific Coast Farm Credit Services, ACA
Capital Markets Group
0000 X. Xxxxxxxx
Xxxxxx, XX 00000
Attention: Xxxx X. O'Day, Regional Vice President
Ladies and Gentlemen:
The undersigned, as the Executive Vice
President/Finance of Maui Land & Pineapple Company, Inc., a
Hawaii corporation ("Borrower"), gives this Compliance
Certificate to Pacific Coast Farm Credit Services, ACA ("Lender")
in accordance with the requirements of Section 11(g)(2) of that
certain Bridge Loan Agreement dated as of December 30, 1998,
between Borrower and Lender (the "Bridge Loan Agreement").
Capitalized terms used in this Compliance Certificate, unless
otherwise defined herein, shall have the meanings ascribed to
them in the Bridge Loan Agreement. All references to Sections
shall, unless otherwise indicated, refer to Sections of the
Bridge Loan Agreement.
Based upon my review of the financial statements of
Borrower, on a consolidated basis, for the Fiscal Month ending
__________________, 199__, copies of which are attached hereto as
Appendix 1, I hereby certify as follows:
1. Attached hereto as Appendix 2 is a statement,
prepared by or for me, as Executive Vice President/Finance of
Borrower, showing, as of the date set forth above, the
calculations used in determining [compliance] [noncompliance]
with each financial covenant set forth in Section 13(j), as
indicated thereon.
2. The financial statements attached as Appendix 1
were prepared in accordance with the customary of Borrower in
preparing internal, monthly financial statements, and, subject to
the limitations inherent in such customary practices, present
fairly the financial position and results of operation of
Borrower and its Subsidiaries, and are true and correct in all
material respects.
3. No Default or Event of Default has occurred and is
continuing as of the date hereof [, other than:
[Describe Specifically] ].
4. Borrower has taken the following steps to cure
such Default or Event or Default: [Describe
Specifically] ].
Very truly yours,
_______________________________
Name: Xxxx X. Xxxxx
Title: Executive Vice President/Finance,
Maui Land & Pineapple Company,Inc.
APPENDIX 1
FINANCIAL STATEMENTS
APPENDIX 2
CALCULATION OF
FINANCIAL COVENANT COMPLIANCE
