October 3, 2003
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: Two
year revolving line of credit ("Line of Credit"),
----
with advances thereunder available until
September 30, 2005 ("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 maturity date of the Line
of Credit. 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
------
$40,000,000.00 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: All advances under the Line of Credit shall be
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due and payable on the Maturity Date. 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").
1.5 Interest
Rates: The outstanding
principal balance of advances
--------------
under the Line of Credit shall bear
interest at the rate(s) set forth in the
Note.
1.6 Commitment
Fees. Borrower shall pay to Bank (i) an initial fee
---------------
in the amount of 0.05% 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.
1.7 Letter of
Credit Fees. Borrower shall pay to Bank (i) fees
---------------------
upon the issuance of each Letter of Credit
equal to one-half percent (0.50%) 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
--------------------
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"). In addition, Borrower shall have
paid the fee required under Section
1.6(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, as soon as
available but no later than 90 days
after the end of each year, 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;
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 of at least
$250,000,000; 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 Should
Borrower's ratio, on a consolidated basis, of Funded
Debt to Consolidated Total Capital at any
time without the prior written consent
of Bank equal or exceed 0.50 to 1.0, not
thereafter at any time declare or pay
cash dividends which, in the aggregate,
would exceed in any fiscal year the sum
of $10,000,000 plus 40% of the net
after-tax income earned by Borrower in such
fiscal year; for purposes of this Loan
Agreement, "Consolidated Total Capital"
means the sum of Funded Debt, Tangible Net
Worth and deferred income taxes, each
as calculated on a consolidated basis;
3.7 Not
liquidate or dissolve;
3.8 Not merge,
consolidate with or into, convey, transfer, lease,
or otherwise dispose of (whether in one
transaction or in a series of
transactions) all or substantially all of
its assets (whether now owned or
hereafter acquired);
3.9 Not,
without the prior written consent of Bank (which consent
shall not be unreasonably withheld), 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 property
or assets, whether now owned or hereafter
acquired, if as a result thereof
Borrower would no longer be in compliance
with any of Paragraphs 3.4, 3.5, or
3.6, 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 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 ass
