<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 30, 1995
MAUI LAND & PINEAPPLE COMPANY, INC.
(Exact name of registrant as specified in its charter)
HAWAII 99-0107542
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
0-4674
(Commission File Number)
P.O. Box 187, Kahului, Maui, Hawaii 96732
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (808) 877-3351
NONE
Former name, former address and former fiscal year,
if changed since last report
<PAGE>
<PAGE>
Item 2. Acquisition or Disposition of Assets
Pursuant to the terms of the Limited Partnership
Agreement of Kaahumanu Center Associates (KCA), the
Employee's Retirement System of the State of Hawaii (ERS)
converted its $30.6 million loan to an additional 49%
interest in KCA. The conversion was effective as of
April 30, 1995.
Prior to the loan conversion, Maui Land & Pineapple
Company, Inc. (the Company) owned 99% of KCA and ERS
owned 1%. After the contribution of the ERS loan to
KCA's capital, the Company and the ERS each have a 50%
interest in the partnership.
The Company's investment in KCA will be accounted for by
the equity method as of April 30, 1995.
Item 7. Financial statements, Pro Forma Financial Information and
Exhibits
(b) Pro Forma Financial Information
The following pro forma balance sheet as of December 31,
1994, and statement of operations for the year then ended
have been derived from the Company's consolidated balance
sheet as of December 31, 1994 and the related statement
of operations for the year then ended.
These pro forma financial statements are presented for
informational purposes only and do not purport to be
indicative of the financial results of the Company had
the ERS loan conversion occurred on January 1, 1994, nor
the results from future operations.
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<PAGE>
MAUI LAND & PINEAPPLE COMPANY, INC.
PRO FORMA BALANCE SHEET (UNAUDITED)
DECEMBER 31, 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
--------------------------------
Pro Forma
Actual adjustments(1) Pro Forma
------ -------------- ---------
ASSETS
------
<S> <C> <C> <C>
Current Assets
Cash $ 2,269 (1,814) $ 455
Accts. and notes receivable 13,507 8,193(2) 21,700
Inventories 20,537 -- 20,537
Other current assets 4,647 (69) 4,578
-------- ------- --------
Total current assets 40,960 6,310 47,270
Property 274,490 (86,318) 188,172
Accumulated depreciation (94,296) 6,231 (88,065)
-------- ------- --------
Property - net 180,194 (80,087) 100,107
-------- ------- --------
Other Assets 14,257 (2,574) 11,683
-------- ------- --------
TOTAL 235,411 (76,351) 159,060
======== ======= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current Liabilities
Accounts and notes payable 33,547 (183) 33,364
Other current liabilities 8,510 (1,072) 7,438
-------- ------- --------
Total current liabilities 42,057 (1,255) 40,802
-------- ------- --------
Long-Term Liabilities
Long-term debt and
capital leases 99,180 (71,388) 27,792
Other long-term liabilities 33,745 (3,708) 30,037
-------- ------- --------
Total long-term
liabilities 132,925 (75,096) 57,829
-------- ------- --------
Stockholders' Equity
Common stock 12,318 12,318
Retained earnings 48,111 -- 48,111
-------- ------- --------
Stockholders' Equity 60,429 -- 60,429
-------- ------- --------
TOTAL $235,411 (76,351) $159,060
======== ======= ========
</TABLE>
See Notes to Pro Forma Financial Statements.
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<PAGE>
MAUI LAND & PINEAPPLE COMPANY, INC.
PRO FORMA STATEMENT OF OPERATIONS (UNAUDITED)
YEAR ENDED DECEMBER 31, 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
-------------------------------
Pro Forma
Actual adjustments(1) Pro Forma
-------------------------------
<S> <C> <C> <C>
Net Sales & Gross Revenue $125,882 (6,358) 119,524
-------- ------ -------
Cost of goods sold 67,623 -- 67,623
Other operating costs and expenses 40,119 (2,749) 37,370
General and administrative 14,352 (1,500) 12,852
Equity in losses of joint ventures 4,844 (689)(3) 4,155
Interest 5,682 (744) 4,938
-------- ------ -------
Total Costs and Expenses 132,620 (5,682) 126,938
LOSS BEFORE INCOME TAX (6,738) (676) (7,414)
INCOME TAX CREDIT (2,829) (196)(4) (3,025)
-------- ------ -------
NET LOSS (3,909) (480) (4,389)
======== ====== =======
Per Common Share:
Net Loss $ (2.18) (2.44)
======== ====== =======
</TABLE>
See Notes to Pro Forma Financial Statements.
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<PAGE>
MAUI LAND & PINEAPPLE COMPANY, INC.
NOTES TO PRO FORMA FINANCIAL STATEMENTS
(1) The pro forma adjustments reflect the removal of the KCA
accounts from the consolidated financial statement and,
instead, accounting for KCA by the equity method.
(2) Represents construction advances payable to the Company by
KCA which were eliminated on the consolidated financial
statements.
(3) Represents the Company's equity in the earnings of KCA.
(4) Represents the estimated tax effect of allocating an
additional 49% of KCA's pre-tax income to the ERS.
-5-
<PAGE>
(c) Exhibits
(10) Material Contracts
A. Limited Partnership Agreement of Kaahumanu Center
Associates, dated June 18, 1993. Incorporated by
reference to Form 10-Q, filed under file number 0-
4674, for the quarter ended June 30, 1993.
B. Amendment No. 1 To Limited Partnershi Agreement of
Kaahumanu Center Associates. Attached.
C. Conversion Agreement, dated April 27, 1995.
Attached.
D. Indemnity Agreement, dated April 27, 1995.
Attached.
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<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
MAUI LAND & PINEAPPLE COMPANY, INC.
May 9, 1995 /s/PAUL J. MEYER
Date Paul J. Meyer
Executive Vice President/Finance
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<PAGE>
INDEX TO EXHIBITS
The following exhibit is incorporated by reference to Form 10-Q,
filed under file numbers 0-4674, for the quarter ended June 30,
1993:
A. Limited Partnership Agreement of Kaahumanu Center
Associates, dated June 18, 1993.
The following exhibits are filed herewith:
B. Amendment No. 1 To Limited Partnership Agreement of
Kaahumanu Center Associates.
C. Conversion Agreement, dated April 27, 1995.
D. Indemnity Agreement, dated April 27, 1995.
The following exhibits to the Conversion Agreement, dated April
27, 1995 (C above) are not filed herewith, but copies will be
furnished supplementally to the Commission upon request:
Exhibit A Assignment of Note and Security Documents
Exhibit B Release of Mortgage
Exhibit C Release
Exhibit D Form UCC-2
Exhibit E Reassignment of Rents
-8-
AMENDMENT NO. 1
TO
LIMITED PARTNERSHIP AGREEMENT
OF
KAAHUMANU CENTER ASSOCIATES
THIS AMENDMENT is made this 27th day of April, 1995,
between MAUI LAND & PINEAPPLE COMPANY, INC., a Hawaii corporation
("MLP") and the EMPLOYEES' RETIREMENT SYSTEM OF THE STATE OF
HAWAII, a quasi-governmental agency ("ERS"):
WITNESSETH THAT:
WHEREAS, MLP and ERS entered into that certain LIMITED
PARTNERSHIP AGREEMENT OF KAAHUMANU CENTER ASSOCIATES ("L. P.
Agreement") dated June 23, 1993, forming a limited partnership
("KCA") to expand, own and operate Kaahumanu Shopping Center
("Center") in Kahului, Maui, Hawaii; and
WHEREAS, ERS and MLP have agreed that (i) KCA shall
reimburse MLP for funds provided to KCA to construct the Sears
Parking Structure B (the "Structure"); (ii) that such reimbursement
shall be made from proceeds of the 1995 Financing (as defined
below) promptly after funding of such 1995 Financing and (iii) that
in connection therewith certain amendments shall be made to the
Limited Partnership Agreement affecting distribution priorities and
related matters;
NOW, THEREFORE, in consideration of the premises, the
mutual promises, obligations and agreements contained herein, and
other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, MLP and ERS, intending to be
legally bound, do hereby agree as follows:
The L. P. Agreement shall be and is hereby amended in the
following respects:
1. Definitions. Section 1.1 shall be amended by adding the
following:
(19.1) "Covered Capital Proceeds" means (i) Capital
Proceeds (computed after deduction of the amounts provided by
clauses (x) and (y) of Section 1.1(12)(i)) constituting excess
funds received from a refinancing of Partnership indebtedness
secured by one or more mortgages of its real property, if all
of the Partners have given their written consent to such
refinancing; and (ii) Capital Proceeds (computed after
deduction of the amounts provided by clauses (x) and (y) of
Section 1.1(12)(ii)) derived from a sale of all or
substantially all of the Property (excluding the granting of
a lien or security interest in the Property, and also
excluding an exchange for other real property except to the
extent cash or cash equivalents constituting Capital Proceeds
are received by the Partnership as partial consideration for
such exchange) to a third party unrelated to the Partnership
or any of its Partners, in a transaction that has been
negotiated at arm's length with such third party and as to
which all of the Partners have given their written consent.
Notwithstanding the foregoing, "Covered Capital Proceeds"
shall in all events exclude (i) Capital Proceeds derived from
the $65,000,000 term loan (the "1995 Financing") from Bank of
Hawaii for the purpose of providing permanent financing for
the Center, including repayment of indebtedness to
John Hancock Mutual Life Insurance Company secured by a first
mortgage on the Property, refinancing of the Partnership's
$35,000,000 construction loan, and reimbursement to MLP of
sums provided by it to the Partnership to finance construction
of the Structure; (ii) Capital Proceeds derived from any
borrowing pursuant to any Loan Proposal or Alternative Loan
Proposal (as defined on page B-3 of Exhibit B) unless all
Partners have given their written consent to the total amount
of such borrowing; (iii) Capital Proceeds derived from any
Deficit Loan; (iv) Capital Proceeds derived from any other
transaction if all of the Partners agree in writing that the
proceeds of such transaction shall not constitute Covered
Capital Proceeds; and (v) Capital Proceeds derived from any
sale of all or substantially all of the Property that is
accomplished without the affirmative written consent of all
Partners (including without limitation any such sale that is
accomplished without such written consent as the result of a
foreclosure, bankruptcy, receivership, partnership dissolution
or other proceeding conducted or supervised by any court),
provided, however, that notwithstanding any other provision of
this subparagraph (19.1), written consent from a Defaulter
shall not be required in order for Capital Proceeds from a
sale of all or substantially all of the Property to constitute
Covered Capital Proceeds if all of the following conditions
have been satisfied: (A) such sale occurs in the course of
the Partnership's dissolution and liquidation; (B) such
dissolution results from an Event of Default on the part of
the Defaulter described in subsection (a), (c), (d), (e), (f)
or (g) of Section 9.1.1; (C) the Non-Defaulter validly elects
pursuant to Section 9.3(a) to dissolve and terminate the
Partnership by reason of such Event of Default; and (D) the
Non-Defaulter gives written notice of such election to the
Defaulter within the period beginning on the date of
expiration of any applicable cure or other remediation period
pertaining to Sections 9.1.1(a) or 9.1.1(c) through (g), and
ending on the first anniversary of the date the Non-Defaulter
received notice of the event that (following expiration of
such time periods without cure or remediation having been
accomplished) resulted in the Event of Default, it being
agreed that any election of the Non-Defaulter to seek remedies
under Section 9.3(b) shall neither extend nor terminate the
time period provided above within which to provide the notice
of election to dissolve, and provided further that if the
Defaulter cures the Event of Default at any time prior to
delivery by the Non-Defaulter of the notice of election to
dissolve, the Non-Defaulter's right to dissolve by reason of
such Event of Default shall thereupon terminate.
(27.1) "ERS Preferred Capital Distribution" shall have
the meaning specified in Sections 4.3 and 9.4.3.
(45.1) "MLP Preferred Capital Distribution" shall have
the meaning specified in Sections 4.3 and 9.4.3.
2. Partner Advances. Section 3.3.3 is amended by revising
paragraphs (b) and (c) thereof to read in their entirety as
follows:
(b) If the Managing Partner elects in its sole
discretion either to make no advances to the Partnership
under the circumstances described in Section 3.3.3(a), or
to advance less than the total amount required to enable
the Partnership to avoid such Cash Flow Deficit, the
remaining Partner(s) may elect, in its sole discretion,
to make advances of all or any portion of the remaining
amount necessary to avoid such Cash Flow Deficit.
(c) Any advance made by the Managing Partner under
Section 3.3.3(a) or by any other Partner under Section
3.3.3(b) is herein called a "Partner Advance." Partner
Advances shall bear interest at either (i) one percent
(1%) above the rate (calculated daily) as is being
charged the Partnership under the first mortgage loan
which then encumbers the Property or any part thereof,
or, (ii) if no first mortgage loan exists, at the same
rate as the Prime Rate plus two percent (2%), or, (iii)
at an interest rate negotiated between the Partnership
and the Partner making an advance.
3. Section 3.5 Preferred Returns. Section 3.5.3(c) is hereby
amended to read as follows:
(c) Unreturned Contributions. At any given time,
(i) the then Unreturned ERS Contribution shall equal the ERS
Contribution less the distributions made to ERS (or its
successor) pursuant to priorities Fifth and Seventh of
Section 4.3, and (ii) the then Unreturned MLP Contribution
shall equal the MLP Contribution less the distributions made
to MLP (or its successor) pursuant to priorities Sixth and
Seventh of Section 4.3; provided, however, that for purposes
of calculating the then Unreturned ERS Contribution and the
then Unreturned MLP Contribution, any capital contribution
made by ERS or MLP after Conversion of the ERS Loan shall be
disregarded. Capital Proceeds derived from the 1995 Financing
that are distributed pursuant to priority Seventh of Section
4.3 shall reduce the Unreturned ERS Contribution and the
Unreturned MLP Contribution in accordance with this Section
3.5.3(c).
4. Distribution of Capital Proceeds. Section 4.3 is hereby
amended to read as follows:
Section 4.3 Distribution of Capital Proceeds.
Except as provided in Section 9.4.3 (which shall apply in
lieu of this Section 4.3 to any distribution of Capital
Proceeds or Covered Capital Proceeds received in connection
with dissolution and liquidation of the Partnership), the
Managing Partner shall apply and distribute the Capital
Proceeds or Covered Capital Proceeds received by the
Partnership within thirty (30) calendar days after receipt in
accordance with following priorities:
First: Debt Service and any other loans secured by
the Property, in order of their secured
priority
Second: Partner Advances
Third: Accrued and unpaid portions of the ERS
Preferred Return
Fourth: Accrued and unpaid portions of the MLP
Preferred Return
Fifth: ERS Preferred Capital Distribution--payment to
ERS of any then Unreturned ERS Contribution
Sixth: MLP Preferred Capital Distribution--payment to
MLP of any then Unreturned MLP Contribution
Seventh: Balance to each Partner in proportion to each
Partner's Percentage Interest, and with equal
priority
provided, however, that priorities Fifth and Sixth shall apply
only with respect to distributions of Covered Capital
Proceeds.
5. Distribution in Liquidation.
Section 9.4.3 is hereby amended to read as follows:
9.4.3 Distribution in Liquidation. The assets of the
Partnership shall be applied or distributed in liquidation in
the following manner and in the following order or priority:
(a) In payment of debts and obligations of the
Partnership owed to third parties, the secured debts of
Partners and to the expenses of liquidation in the order of
priority as provided by law, including the amount of the
accrued and unpaid portion of the Operator's Fee for the
Operator; then
(b) To the setting up of any reserves for a period
of up to twelve (12) months which the Partners or the
Non-Defaulter, as the case may be, may deem necessary for any
contingent or unforeseen liabilities or obligations to third
parties of the Partnership; then
(c) To payment of unsecured debts and obligations
of the Partnership to any Partner; then
(d) To the payment of Partner Advances made to the
Partnership by any Partner; then
(e) To the payment of the accrued and unpaid
portions of the ERS Preferred Return; then
(f) To the payment of the accrued and unpaid
portions of the MLP Preferred Return; then
(g) ERS Preferred Capital Distribution--to the
payment to ERS of any then Unreturned ERS Contribution; then
(h) MLP Preferred Capital Distribution--to the
payment to MLP of any then Unreturned MLP Contribution; then
(i) To the Partners pro rata in proportion to the
positive balances then remaining in any Partners' Capital
Accounts until said Capital Accounts have been reduced to
zero; and then
(j) The balance, if any, to the Partners pro rata
in proportion to and in accordance with their respective
Percentage Interests and with equal priority;
provided, however, that (x) if liquidation occurs by
reason of any Event of Default as to which ERS or its
successor is the Defaulter, whether or not liquidating
distributions include Covered Capital Proceeds paragraph
(g) of this Section 9.4.3 shall be inapplicable and
payments shall be made to MLP pursuant to paragraph (h)
hereof to such extent (and only to such extent) as is
necessary to cause the amount of the Unreturned MLP
Contribution remaining after such payment to equal the
amount of the then Unreturned ERS Contribution; and
provided further that (y) if clause (x) is inapplicable,
paragraphs (g) and (h) of this Section 9.4.3 shall apply
only with respect to distributions of Covered Capital
Proceeds.
If the General Partner has a deficit balance in its Capital
Account following the liquidation of its interest in the
Partnership, as determined after taking into account all
capital account adjustments for the Fiscal Year during which
such liquidation occurs, the General Partner shall restore the
amount of such deficit balance to the Partnership by the end
of such Fiscal Year (or if later, within 90 days after the
date of such liquidation), which amount shall upon liquidation
of the Partnership be paid to creditors of the Partnership or
distributed to other Partners in accordance with their
positive Capital Account balances.
6. Exhibit B. Exhibit B is amended by revising paragraph (b) of
Section A, paragraph (b) of Section B, and paragraph (b) of Section
C so that each such paragraph reads in its entirety as follows:
(b) except as set forth in clause (ii) of this
paragraph (b): (i) notwithstanding any provision of the
Agreement, including this Exhibit B, a Partner, with
respect to which any Event of Default exists, shall not
have the right of approval while the default remains
uncured; but (ii) nevertheless, in the case of a
refinancing of Partnership indebtedness, or of any sale
of all or substantially all of the Property, the proceeds
of such transactions shall not constitute "Covered
Capital Proceeds" unless (x) all Partners have given
their affirmative written consent thereto (or, in the
case of any refinancing accomplished as the result of a
Loan Proposal or Alternative Loan Proposal, such written
consent has been furnished as to the aggregate amount of
such refinancing), which consent may be given or withheld
in the sole discretion of each Partner, or (y) in the
case of a sale of all or substantially all of the
Property in the course of Partnership dissolution and
liquidation, such written consent is given by all
Partners other than any Defaulter from which written
consent is not required by reason of conditions (A)
through (D) of clause (v) of the last sentence of the
definition of "Covered Capital Proceeds."
7. Incorporation of Conversion Agreement. The Partners and KCA
have entered into a Conversion Agreement dated April 27, 1995.
Section 4 of the Conversion Agreement provides that MLP may elect
to treat as Partner Advances certain payments made by MLP pursuant
to the Limited Payment Guaranty referred to therein, and Section 5
of the Conversion Agreement establishes the effective date of the
conversion of the ERS Loan into an additional 49% Percentage
Interest in the Partnership. The Conversion Agreement (including
without limitation Sections 4 and 5 thereof) is hereby incorporated
by reference into this Amendment, and into the Limited Partnership
Agreement.
8. Continuation of Other Provisions. Except as amended or
modified by this Amendment (including the Conversion Agreement
incorporated herein by reference) all other terms and conditions of
the L. P. Agreement shall remain in full force and effect.
9. Counterparts. This Amendment may be executed in counterparts,
all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their duly authorized officers and
representatives, each on the day and year first above written.
MAUI LAND & PINEAPPLE
COMPANY, INC.
By /s/ PAUL J. MEYER
Its E. V. P.
By /s/ ADELE H. SUMIDA
Its SECRETARY
"MLP"
EMPLOYEES' RETIREMENT SYSTEM
OF THE STATE OF HAWAII
By /s/ STANLEY SUI
Its SECRETARY
By /s/ KEN MATSUURA
Its CHAIRMAN
"ERS"
CONVERSION AGREEMENT
This Conversion Agreement (the "Agreement") is made this
27th day of April, 1995 by and among KAAHUMANU CENTER ASSOCIATES
("KCA"), a Hawaii limited partnership, EMPLOYEES' RETIREMENT SYSTEM
OF THE STATE OF HAWAII, a governmental agency of the State of
Hawaii ("ERS") and MAUI LAND & PINEAPPLE COMPANY INC., a Hawaii
corporation ("ML&P").
WHEREAS, ERS is the sole limited partner and ML&P is the
sole general partner of KCA;
WHEREAS, ERS presently holds a one percent (1%)
Percentage Interest and ML&P holds a ninety-nine percent (99%)
Percentage Interest in KCA (as "Percentage Interest" is defined in
the Partnership Agreement identified below);
WHEREAS, pursuant to a Loan Agreement dated June 28, 1993
(the "ERS Loan Agreement"), ERS loaned KCA $30,587,879 for the
purposes set forth in Section 2.01 of the ERS Loan Agreement (the
terms "ERS Note" and "ERS Loan" being used herein to mean the
"Note" and the "Loan" as defined in the ERS Loan Agreement);
WHEREAS, pursuant to the ERS Loan Agreement, KCA and ML&P
provided various security to, and entered into various agreements
with, ERS;
WHEREAS, Article IX of the ERS Loan Agreement, and
Section 3.2.2 of KCA's Limited Partnership Agreement (the
"Partnership Agreement") provide that upon satisfaction of various
conditions ERS shall contribute the ERS Loan to the capital of KCA
in exchange for an additional forty-nine percent (49%) equity
interest in KCA;
WHEREAS, an Amended and Restated Loan Agreement of even
date herewith (the "Restated Loan Agreement") between Bank of
Hawaii (the "Bank") and KCA provides for $65 million in permanent
financing for Kaahumanu Center (the "1995 Financing");
WHEREAS, the Restated Loan Agreement requires that the
ERS Note (together with various instruments securing payment
thereof) be assigned to the Bank, and provides that the ERS Note so
assigned will be restated and amended so as (among other things) to
reflect a reduction in the principal amount of such note to
$30,000,000;
WHEREAS, the reduction in the principal amount of the ERS
Note to $30,000,000 will be effected by ERS' contribution to KCA's
capital of $587,879 in principal amount of the ERS Note, in
exchange for an interest in KCA, pursuant to IRC {721;
WHEREAS, the parties have agreed that the conversion of
the ERS Loan to equity in KCA shall be accomplished as set forth
herein by the assignment to the bank of the ERS Note (as well as
related security documents, and the interests of ERS in a title
insurance policy, certain subordination agreements and other
instruments) and the reduction of the principal balance of the ERS
Note to $30,000,000 pursuant to the Restated Loan Agreement;
WHEREAS, as the result of the foregoing, upon conversion
of the ERS loan, the total ERS contribution to the capital of KCA
will equal $30,900,000;
WHEREAS, the Parties have also agreed that ML&P shall
have certain rights in respect of payments made under a Limited
Payment Guaranty to be provided to the Bank pursuant to the
Restated Loan Agreement;
NOW, THEREFORE, the parties covenant and agree as
follows:
1. Assignments and Conversion. ERS shall execute and deliver to
the Bank an Assignment of Note and Security Documents substantially
in the form of Exhibit A (the "Assignment"), and take such further
action as may reasonably be requested by the Bank or KCA to
accomplish or further evidence the assignments contemplated by the
Restated Loan Agreement, and KCA hereby consents to such actions.
The parties agree (i) that such actions, together with the
reduction by $587,879 of the principal balance of the ERS Note
assigned to the Bank and the restatement of such note pursuant to
the Restated Loan Agreement, satisfy the conversion obligations of
ERS under the ERS Loan Agreement and the Partnership Agreement;
(ii) that by reason thereof, the entire $30,587,879 principal
amount of the ERS Loan shall be deemed to have been contributed to
the capital of KCA in exchange for an interest in KCA pursuant to
IRC {721 and converted into an additional 49% Percentage Interest
in KCA prior to closing of the 1995 Financing; and (iii) that ERS
shall therefore be entitled to all rights as a limited partner in
KCA with a 50% Percentage Interest therein, including, but not
limited to, the right to participate in partnership distributions
resulting from the 1995 Financing.
2. Disposition of Certain Agreements.
By reason of and in connection with the conversion of the
ERS Loan and the delivery to the Bank of the Assignment, and
effective as of the time of such conversion, the following shall
occur with respect to certain agreements and instruments related to
(and identified herein by the definitions set forth in) the ERS
Loan Agreement:
a. The Environmental Indemnity Agreement, the ML&P
Environmental Indemnity Agreement, and the ML&P Indemnity Agreement
shall remain in effect to the extent provided by their respective
terms, but shall not be assigned to the Bank.
b. The Direct Liability Agreement shall not be assigned to the
Bank, shall terminate without further action of the parties, and
ERS shall have no further rights thereunder.
c. The mortgages and security interests represented by
the First Mortgage Documents shall be deemed released, and ERS
shall execute and deliver to ML&P the Release of Mortgage, Release
of Security Agreement, Form UCC-2 Termination Statement and
Reassignments of Rents in the forms attached as Exhibits B through
E.
d. ML&P shall become subject to the terms and conditions of the
Indemnity Agreement attached as Exhibit F, the fully executed
original of which shall be delivered to ERS.
e. The Cost Overrun Guaranty Agreement shall not be
assigned to the Bank, and as between ERS and ML&P shall remain in
full force and effect. As of April 7, 1995, the total "Cost
Overrun", i.e., the extent to which Project Costs (as defined in
the ERS Loan Agreement) exceed $65,900,000 is approximately
$7,000,000, all of which has been funded by ML&P and the exact
amount of which shall be set forth on a supplemental schedule
hereto upon approval of such schedule by ML&P and ERS). The Cost
Overrun shall be subject to adjustment solely by reason of expenses
incurred by KCA with respect to (i) those items identified in the
"Budget to Complete" referred to in that certain letter from
Jeffrey S. Cavanaugh to ML&P dated March 20, 1995, as such Budget
to Complete has been modified by ML&P's letter to the Bank dated
April 7, 1995, (ii) expenses identified after April 7, 1995 that
have been inadvertently omitted from the Budget to Complete, but
that pertain to items set forth in the Project Budget or revisions
thereto, and (iii) legal fees to be reimbursed to ERS pursuant to
Section 7 below.
3. Effect on Loan Agreement. By virtue of this Agreement, the
conversion of the ERS Loan, and the assignment to the Bank of the
ERS Loan Agreement and the restatement thereof, from and after the
effective date of such conversion as determined pursuant to Section
5 below (but subject to the continuing obligations referred to in
Section 2 above) the ERS Loan Agreement shall have no further force
or effect between or among ERS, KCA and ML&P.
4. Limited Payment Guaranty. In order to induce the Bank to
provide the 1995 Financing, ML&P has agreed to provide the Limited
Payment Guaranty referred to in the Restated Loan Agreement. KCA
shall indemnify, defend and hold harmless ML&P with respect to any
amounts ML&P may be required to pay pursuant to the Limited Payment
Guaranty. In addition, ML&P shall have the right to elect, by
written notice delivered to KCA and ERS in accordance with Article
10 of the Partnership Agreement, to designate as "Partner Advances"
under the Partnership Agreement all or any portion of any amounts
paid by ML&P pursuant to the Limited Payment Guaranty. In the
event of such election, the resulting Partner Advance shall be
deemed to have been made as of the date of the relevant payment
made by ML&P pursuant to the Limited Payment Guaranty. However
(i) ML&P shall have recourse only to KCA and its assets and shall
have no recourse to or against any KCA general or limited partner,
and none of which Partners shall have personal liability, with
respect to any obligation arising from the indemnification hereby
provided or with respect to any Partner Advances that result from
payments made under the Limited Payment Guaranty; and (ii) as
between ML&P and the Bank, all rights of ML&P to receive payment
from KCA pursuant to this paragraph shall be subject to the
provisions of the Limited Payment Guaranty and the Restated Loan
Agreement.
5. Effective Date. The parties acknowledge that the conditions
to conversion set forth in the ERS Loan Agreement and the
Partnership Agreement were satisfied in all material respects no
later than March 31, 1995; that documentation of the conversion
contemplated thereby has occurred subsequent to satisfaction of
such conditions solely by reason of the need to conform such
documentation to the requirements of the Restated Loan Agreement;
and that (unless otherwise required by the Internal Revenue Code of
1986, as amended), the conversion of the ERS Loan to equity shall
be deemed effective for tax and accounting purposes as of April 30,
1995.
6. Distribution to Partners of Certain 1995 Financing Proceeds.
The Restated Loan Agreement provides that the proceeds of the 1995
Financing (after application of such amounts as are necessary to
repay KCA's indebtedness under its construction loan from the Bank,
to repay KCA's first mortgage indebtedness to John Hancock Mutual
Life Insurance Company, and to fund certain payments to be made by
KCA on the Closing Date) will be deposited in a KCA bank account.
The parties agree that KCA shall promptly pay $5,191,372.31 of the
amount so deposited to ML&P to reimburse ML&P for funds lent to KCA
on an unsecured basis to fund construction of the Sears Parking
Structure B (the "Parking Structure"); that $1,642,726 of such
amount shall be retained by KCA to fund project cost reimbursements
to be made to Liberty House; that $1,798,408.57 of such amounts
shall be retained by KCA to fund the Budget to Complete, as
modified, referred to in Section 2.e above (except that ML&P shall
be paid $40,000 of the Budget to Complete Contingency related to
the Parking Structure); that ML&P shall be reimbursed $284,950.73
in interest costs incurred by ML&P in respect of amounts advanced
to fund construction of the Parking Structure; that the principal
and interest payments made to ML&P in respect of the Parking
Structure shall not be deemed a Project Cost for purposes of the
Cost Overrun Guaranty; that the remaining proceeds of the 1995
Financing shall not be disbursed except pursuant to a disbursement
schedule that has been approved by ML&P and by ERS; that for
purposes of the Partnership Agreement, as amended pursuant to
Amendment No. 1 to Limited Partnership Agreement of Kaahumanu
Center Associates, dated April 27, 1995, Capital Proceeds derived
from the 1995 Financing shall not be deemed "Covered Capital
Proceeds" and that priorities Fifth and Sixth of Section 4.3
thereof shall be inapplicable; and that distributions of such
Capital Proceeds to ERS and ML&P pursuant to priority Seventh of
such amended Section 4.3 shall reduce the Unreturned ERS
Contribution and the Unreturned ML&P Contribution.
7. Other Reimbursements. KCA shall pay to ERS $209,902.56 to
reimburse ERS for attorneys' fees incurred through March 31, 1995
in connection with the ERS Loan Agreement and related partnership
matters (which shall be considered a Project Cost for purposes of
the Cost Overrun Guaranty Agreement), together with additional
legal fees incurred by ERS from such date through the date of this
Agreement (which shall not be considered such a Project Cost). KCA
shall also reimburse ERS for certain accounting and tax
consultation fees incurred by ERS totalling $85,714, which shall
not be considered such a Project Cost.
8. Provision of Notices to ERS. KCA shall provide to ERS
promptly upon receipt by KCA all notices delivered by the Bank to
KCA pursuant to the Restated Loan Agreement and the
Loan Documents as defined therein.
9. Counterparts. This Agreement may be executed in counterparts,
all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date first indicated above.
KAAHUMANU CENTER ASSOCIATES, a
Hawaii limited partnership
By: MAUI LAND & PINEAPPLE CO.,
INC.
Its General Partner
By:/s/ PAUL J. MEYER
Its E.V.P.
By:/s/ ADELE H. SUMIDA
Its SECRETARY
EMPLOYEES' RETIREMENT SYSTEM OF
THE STATE OF HAWAII
By:/s/ STANLEY SUI
Its SECRETARY
By:/s/ KEN MATSUURA
Its CHAIRMAN
MAUI LAND & PINEAPPLE CO., INC.
By:/s/ PAUL J. MEYER
Its E.V.P.
By:/s/ ADELE H. SUMIDA
Its SECRETARY
In its Individual Capacity
INDEMNITY AGREEMENT
This Indemnity Agreement is made as of the 27th day of
April, 1995, by MAUI LAND & PINEAPPLE COMPANY, INC. ("MLP") in
favor of the EMPLOYEES' RETIREMENT SYSTEM OF THE STATE OF HAWAII
("ERS").
RECITALS:
1. ERS has made a loan in the amount of $30,587,479.00 to
Kaahumanu Center Associates ("KCA"), a Hawaii limited partnership,
of which MLP is the sole managing general partner, under the terms
of that certain Loan Agreement dated June 28, 1993 (the "Loan
Agreement").
2. Under the terms of the Loan Agreement, ERS has agreed to
contribute its loan to the capital of KCA, becoming a 50% limited
partner in KCA, pursuant to the terms and conditions as set forth
in the Loan Agreement.
3. MLP wishes to assure ERS that when ERS contributes its loan
to the capital of KCA, ERS will not be liable for any actions or
inactions of MLP or KCA prior to the time ERS contributes its loan
to the capital of KCA to become a 50% limited partner in KCA.
NOW, THEREFORE, MLP individually and as the sole general
partner of KCA, hereby agrees with ERS as follows:
a. The indemnity shall cover any and all of (i) demands,
claims, litigation, actions or causes of action, of whatsoever kind
or nature, assessments, judgments, losses, liabilities, damages,
taxes, penalties, interest, costs or expenses, including reasonable
attorneys' fees, asserted against, resulting to, imposed upon or
incurred by ERS by reason of, arising from or related to the
activities of KCA or MLP prior to the time ERS contributes its loan
to the capital of KCA to become a 50% limited partner in KCA; and
(ii) loss, damage (including all foreseeable and unforeseeable
consequential damages), cost (including the costs of any required
or necessary repair, clean up or detoxification of the Property,
and the preparation and implementation of any closure, remedial or
other required plans), expense or liability directly or indirectly
arising out of or attributable to the use, generation, manufacture,
treatment, handling, refining, production, processing, storage,
release, threatened release, discharge, disposal, or presence of
Hazardous Substances (defined below) on, under or about the
properties mortgaged to ERS under the Loan Agreement prior to the
time ERS contributes its loan to the capital of KCA to become a 50%
limited partner in KCA (hereinafter collectively referred to as the
"Covered Claims").
b. MLP shall indemnify, defend and hold harmless ERS, its
trustees, officers, employees, agents, successors and assigns from
and against any and all demands, claims, litigation, actions or
causes of action, of whatsoever kind or nature, assessments,
judgments, losses, liabilities, damages, taxes, penalties and
interest asserted against, resulting to, imposed upon or incurred
by ERS by reason of, arising from or related to the Covered Claims,
including, without limitation, all foreseeable and unforeseeable
consequential damages, and all reasonable costs and expenses
incurred by ERS, including reasonable attorneys' fees.
c. MLP's obligations under this Agreement are unconditional and
shall not be limited in any way.
d. As used in this Agreement, "Hazardous Substances" shall
mean: flammable explosives, radioactive materials, asbestos,
organic compounds known as polychlorinated biphenyl, chemicals
known to cause cancer or reproductive toxicity, pollutants,
contaminants, hazardous wastes, toxic substances or related
materials, including, without limitation, any substances defined as
or included in the definition of "hazardous substances", "hazardous
wastes", "hazardous materials", or "toxic substances", under any
federal, state or local laws, ordinances or regulations, now or
hereafter in effect, relating to environmental conditions,
industrial hygiene or hazardous substances on, under or about the
Property, including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended, 42 U.S.C. Section 9601 et seq., the Hazardous Materials
Transportation Act, 49 U.S.C. Section 7401 et seq., the Toxic
Substances Control Act, 15 U.S.C. Sections 2601 through 2629, the
Safe Drinking Water Act, 42 U.S.C. Sections 300f through 300j, the
Clean Air Act, 42 U.S.C. Sections 7401 through 7626, and any
similar state and local laws and ordinances and the regulations now
or hereafter adopted, published and/or promulgated pursuant
thereto.
e. This Agreement shall be binding upon and inure to the
benefit of ERS and MLP and their respective successors and assigns.
IN WITNESS WHEREOF, MLP has executed this Agreement as of
the 27th day of April, 1995.
MAUI LAND & PINEAPPLE
COMPANY, INC.
By /s/ PAUL J. MEYER
Its E. V. P.
By /s/ ADELE H. SUMIDA
Its SECRETARY
