ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "CONTRACT") is made and
entered into as of this 14th day of March, 2000, by and among KAU AGRIBUSINESS
CO., INC., a Hawaii corporation, KAU SUGAR, INC., a Hawaii corporation, MAUNA
KEA MACADAMIA ORCHARDS, INC., a Hawaii corporation, and MAUNA KEA AGRIBUSINESS
CO., INC., a Hawaii corporation (collectively referred to herein as "Seller" and
individually referred to herein as "Corporation") and ML MACADAMIA ORCHARDS,
L.P., a Delaware limited partnership (referred to herein as "Purchaser").
R E C I T A L S:
1. Seller and certain Affiliates (hereinafter defined) of
Seller own the Property (hereinafter defined).
2. Seller desires to sell to Purchaser and Purchaser desires
to purchase from Seller the Property and certain related assets on the terms and
subject to the conditions hereinafter set forth.
NOW, THEREFORE, for good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, Seller and Purchaser
hereby agree as follows:
ARTICLE I
DEFINITIONS
Unless the context otherwise specifies or requires, for the
purposes of this Contract the following terms shall have the meanings set forth
below:
"ACCOUNTANTS" shall mean the accounting firm of
PricewaterhouseCoopers.
"Accounts Receivable" shall have the meaning ascribed to it
in Section 7.2(a).
"AFFILIATE" of a Person shall mean a Person who, directly or
indirectly through one or more intermediaries, owns or controls, is owned or
controlled by, or is under common control or ownership with the Person in
question; provided, however, that Buyco, Inc. and the stockholders of Buyco,
Inc. shall not be considered affiliates.
"XXXX OF SALE" shall mean a xxxx of sale duly executed by
Seller conveying to Purchaser all of Seller's right, title, and interest in and
to the Tangible Personal Property on the Closing Date, in the form set forth in
EXHIBIT A hereto.
"BOOKS AND RECORDS" shall mean all financial and other books
and records maintained by or for the benefit of Seller, or its Affiliates, as
the case may be, solely in connection with the operation of the Property and all
building plans, specifications and drawings, engineering, soils and farming
reports and other documents prepared solely in connection with the construction,
maintenance, repair, management, farming or operation of any portion of the
Property which are within the possession or control of Seller, or Seller's
Affiliates, agents or representatives.
"CERCLA" means the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended (42 U.S. C. Section 9601
ET SEQ.) and any regulations promulgated thereunder.
"CLOSING" shall mean, with respect to the purchase and sale of
the Property, consummation of its purchase by Purchaser as contemplated by this
Contract.
"CLOSING DATE" shall be the date on which the Closing occurs
and shall be set by the parties after necessary documents have been prepared and
are ready for execution. It is currently contemplated by the parties that the
Closing Date shall be May 1, 2000.
"CLOSING STATEMENTS" shall mean the Preliminary Closing
Statement and the Final Closing Statement.
"CODE" shall mean the Internal Revenue Code of 1986, as
amended, and the relevant rules and regulations promulgated thereunder.
"CONFIDENTIAL INFORMATION" shall mean information, including a
formula, pattern, compilation, program, device, method, technique, or process,
that: (i) derives independent economic value, actual or potential, from not
being generally known to the public or to other persons who can obtain economic
value from its disclosure or use; and (ii) is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy.
"CONTRACT DATE" means the date specified above in the first
paragraph of this Contract.
6.
"CONTROL" has the meaning given to such term in the definition
of "Affiliate".
"CORPORATION" means each of the corporations who are the
sellers herein.
"CUT-OFF TIME" shall mean 11:59 p.m. (Hawaii Time) on the day
before the Closing Date.
"DEED" means the Warranty Deed, and any other deed from Seller
or its Affiliates to Purchaser delivered pursuant to SECTION 8.2(a) below.
"EFFECTIVE DATE" shall mean the date that this Contract has
been fully executed by Seller and Purchaser. Purchaser and Seller hereby
acknowledge and stipulate that the Effective Date is and for all purposes shall
be March 14, 2000.
"EMPLOYMENT BENEFITS" shall mean any benefit provided to any
Property Employee by the Seller or its Affiliates whether pursuant to a
collective bargaining agreement, an Employment Contract or any written policy,
procedure or practice of such company.
"EMPLOYMENT CONTRACTS" shall mean all employment contracts
(excluding collective bargaining agreements) relating to Property employees. The
Employment Contracts are listed on EXHIBIT B.
"ENVIRONMENTAL ACTIVITY" means any past, present or future
storage, holding, existence, release, threatened release, emission, discharge,
generation, processing, use, abatement, disposition, handling or transportation
of any Hazardous Substance from, under, into or on the Real Property, or
otherwise relating to the Real Property or the ownership, use, operation or
occupancy thereof, or any threat of such activity.
"ENVIRONMENTAL LAWS" means any and all laws, statutes,
ordinances, rules, regulations, judgments, orders, decrees, permits, licenses,
or other governmental restrictions or requirements relating to health, the
environment, any Hazardous Substance or any Environmental Activity in effect in
any and all jurisdictions in which Seller is or from time to time may be doing
business, or where the Real Property is located, including without limitation
CERCLA, the Hazardous Materials Transportation Act, as amended (49 U.S.C.
Sections 1801 ET SEQ.), the Clean Air Act, as amended (42 U.S.C. Sections 7401
ET SEQ.), the Clean Water Act, as amended (33 U.S.C. Sections 1251 ET SEQ.), and
the regulations adopted pursuant thereto.
7.
"EQUIPMENT LEASES" shall mean all leases, rental or other
agreements for the use of any of the FF&E, together with all amendments thereto.
Such Equipment Leases are listed on Exhibit C attached hereto.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended, and the rules and regulations promulgated thereunder.
"ERISA AFFILIATE" shall have the meaning given to such term in
SECTION 5.3(i)(8).
"EXCISE TAX EXEMPTION CERTIFICATE" means the certificate, duly
executed by Purchaser and Seller, in the form set forth on EXHIBIT D and filed
with the appropriate Governmental Authority at Closing.
"FARMING SERVICE CONTRACTS" shall mean any and all existing
farming service contracts for the provision of labor, services, materials or
supplies to or for the benefit of the owners of macadamia orchards (which
contracts are listed on EXHIBIT E), together with all amendments thereto.
"FF&E" shall mean all fixtures, furniture, furnishings,
equipment, machinery, computers, apparatus, appliances, and other articles of
depreciable personal property now owned or leased by Seller and/or its
Affiliates and used or usable in connection with their farming or accounting
services, subject to such depletions and replacements as shall occur and be made
in the normal course of business.
"FINAL CLOSING STATEMENT" shall have the meaning given to such
term in SECTION 7.1.
"GENERAL ASSIGNMENT" shall mean an assignment, duly executed
and acknowledged by Seller and Purchaser, assigning to Purchaser (to the extent
assignable) all of Seller's right, title and interest in and to the Intangible
Personal Property and certain other assets as of 12:01 a.m. (Hawaii Time) on the
Closing Date, in the form set forth in EXHIBIT F attached hereto and made a part
hereof.
GOVERNMENTAL AUTHORITIES" shall mean the federal government,
the applicable governmental authority of the County of Hawaii or State of Hawaii
and any governmental agency connected with any of them which has jurisdiction
over the construction, reconstruction, operation or use of the Property.
8.
"HAWAII TIME" shall mean Hawaii Standard Time.
"HAZARDOUS SUBSTANCE" means any substance, material or waste
which is regulated by any federal, state or local governmental or
quasi-governmental authority, and includes, without being limited to: (a) any
substance, material or waste defined, used or listed as a "hazardous waste",
"extremely hazardous waste", "restricted hazardous waste", "hazardous
substance", "hazardous material", "toxic substance" or other similar or related
terms as defined, used or listed in any Environmental Laws; (b) any petroleum
products, asbestos or polychlorinated biphenyls; (c) any additional substances
or materials which are now or hereafter hazardous or toxic substances under any
Environmental Laws relating to the Real Property; and (d) as of any date of
determination, any additional substances or materials which are hereafter
incorporated in or added to the definition of "hazardous substance" for purposes
of any Environmental Law.
"IMPROVEMENTS" shall mean all macadamia nut trees, buildings,
structures, irrigation lines, and other improvements, including the orchard
improvements and such fixtures as shall constitute real property, located on the
Land.
"Intangible Personal Property" shall mean all of the Personal
Property which is not Tangible Personal Property, and which is used in the
farming and accounting operations of the Seller. Examples of such Intangible
Personal Property are listed in Exhibit F.
"IRS" shall mean the Internal Revenue Service.
"KEY EMPLOYEES" shall have the meaning given to such term in
EXHIBIT G attached hereto.
"LAND" shall mean the land as more particularly described on
EXHIBIT H attached hereto.
"LEASES" shall mean the leases to be executed between the
Seller and the Purchaser whereby Seller leases the Land or licenses use of the
Land to Purchaser.
"NON-FOREIGN STATUS CERTIFICATE" shall mean a certificate, to
be executed by Seller, in the form set forth in EXHIBIT I attached hereto.
9.
"OPERATING EQUIPMENT" shall mean all vehicles, both
on-the-road and off-the-road, owned by Seller and/or its Affiliates, whether in
use or held in reserve storage for future use, in connection with the farming or
accounting operations of the Seller, subject to such depreciation as shall be
made in the normal course of business.
"ORCHARD IMPROVEMENTS" shall mean only those trees and other
Improvements located on the Land.
"ORCHARD LAND" shall mean the approximately 142 tree acres
within approximately 232 gross acres of land described in SECTION I of EXHIBIT
J.
"OWN" has the meaning given to such term in the definition of
"Affiliate".
"OWNERSHIP" has the meaning given to such term in the
definition of "Affiliate".
"PERMITS" shall mean all of Seller's and Seller's Affiliates
right, title, and interest in all licenses and permits used or relating to the
ownership or operation of the Property in accordance with its current use.
"PERSON" shall mean any natural person, partnership,
corporation, association, trust or trustee, or any other legal entity.
"PERSONAL PROPERTY" shall mean all of the Property, other than
the Real Property, which is used in the farming and accounting operations of the
Seller.
"Plans" shall have the meaning given to such term in Section
5.3(i)(1).
"PRELIMINARY CLOSING STATEMENT" shall have the meaning given
to such term in SECTION 7.1.
"PROPERTY" shall mean all of the assets and liabilities
comprising the business currently conducted by Seller in performing farming
services for owners of macadamia nut orchards and accounting services for said
owners and the Seller and some of its affiliates.
"PROPERTY EMPLOYEES" shall mean all persons actively employed
by either Corporation, as well as all persons on disability or worker's
compensation or other leave and all persons with recall or reinstatement rights
under any such companies' written policies, procedures and practices, including
Key Employees, but excluding those persons listed on Exhibit K.
10.
"PURCHASE PRICE" shall have the meaning given such term in
Section 2.2.
"PURCHASER'S DOCUMENTS" shall have the meaning given such term
in SECTION 8.3.
"REAL PROPERTY" shall mean the Land and the Improvements on
the Land.
"RELEASE DOCUMENTS" shall have the meaning given such term in
SECTION 8.2.
"RETAINED LITIGATION" means the litigation matters referred to
in Section 5.3(e) and described in EXHIBIT L attached hereto.
"SELLER'S DOCUMENTS" shall have the meaning given such term in
Section 8.2.
"TANGIBLE PERSONAL PROPERTY" shall mean FF&E, Operating
Equipment, Vehicles, and any other tangible personal property used in the
farming and accounting operations of the Seller and not included in the
definitions of Real Property and Intangible Personal Property. Examples of such
Tangible Personal Property are listed in Exhibit A.
"VEHICLES" shall mean the tractors, automobiles, trucks and
other on-the-road or off-the-road vehicles, described on EXHIBIT M attached
hereto and made a part hereof.
ARTICLE II
PURCHASE AND SALE OF PROPERTY
1.1 PURCHASE AND SALE. On the terms and subject to the conditions of
this Contract, Seller hereby agrees to sell, transfer, convey and deliver the
Property to Purchaser; and Purchaser hereby agrees to purchase the Property from
Seller and to assume certain obligations of Seller arising out of or relating to
the Property, as hereinafter provided.
1.2 PURCHASE PRICE. The total purchase price for all of the Property
shall be Nine Million Dollars ($9,000,000) (the "Purchase Price"), subject,
however, to the adjustments and prorations as provided in ARTICLE VII below. The
Purchase Price shall be wired on the Closing Date to an account designated by
Seller.
1.3 PURCHASE PRICE ALLOCATION. Purchaser and Seller agree to allocate
the Purchase Price among the assets comprising the Property in accordance with
the rules and principles of
11.
section 1060 of the Code, and the regulations promulgated thereunder. All tax
returns and reports filed by Purchaser and Seller with respect to the
transactions contemplated by this Contract shall be prepared in a manner
consistent with such allocation. Purchaser and Seller shall cooperate with one
another in an effort to agree upon such allocation prior to the Closing. In this
regard, within fifteen (15) days after the Contract Date, Purchaser shall
prepare and submit to Seller for its review Internal Revenue Service Form 8594.
Seller shall have fifteen (15) days to object to the allocation of the Purchase
Price on such Form 8594. If Seller does not object within such fifteen (15) day
period, Seller shall be deemed to have approved the filing of Form 8594 in the
manner proposed by Purchaser. If Seller objects to the Form 8594 proposed by
Purchaser within such fifteen (15) day period, Seller and Purchaser shall
endeavor to mutually determine the proper allocation of the Purchase Price on
such form prior to the Close of Escrow. In the event that Purchaser and Seller
cannot reach agreement as to the proper allocation of the Purchase Price on Form
8594 prior to the Close of Escrow, Accountants shall determine the proper
allocation required by section 1060 of the Code and shall prepare and submit to
Purchaser and Seller Form 8594 consistent therewith. Such Form 8594 shall be
prepared by Accountants concurrently with the preparation of the Final Closing
Statements pursuant to SECTION 7.1. Both Purchaser and Seller hereby agree to be
bound by such allocation, and to file such Form 8594 with their respective tax
returns and to report the transactions contemplated hereby in a manner
consistent with the allocation of the Purchase Price as set forth on such Form
8594.
ARTICLE III
CLOSING DATE
1.4 CLOSING PROCEDURES. The parties hereto agree that this Contract
shall constitute the agreements for the transfer of all of the Property from
Seller to Purchaser.
1.5 CLOSING DATE.
(1) The transaction shall close on the Closing Date. As used
in this Contract, the Closing Date shall mean the time the Leases are filed for
record in the Bureau of Conveyances of the State of Hawaii.
(2) Provided that neither party hereto has received written
notice of the failure of any condition precedent specified in ARTICLE IX hereof
to the obligations of such party, then,
12.
when Purchaser and Seller are each prepared to execute the documents and
instruments and transfer the funds required thereof by this Contract, they
shall:
(1) prepare closing statements for Purchaser and for
Seller based on the Preliminary Closing Statement and ARTICLE VII of this
Contract;
(2) insert the Closing Date as the date of any
document to be delivered but not theretofore dated:
(3) deliver the Leases to Purchaser by causing them
to be recorded in the Bureau of Conveyances of the State of Hawaii and with the
Assistant Registrar of the Land Court of the State of Hawaii, as the case may
be;
(4) deliver to Purchaser: the Xxxx of Sale, General
Assignment, Non-Foreign Status Certificate, and any other document required to
be delivered to Purchaser.
(5) deliver to Seller: all sums to be received by
Seller from Purchaser LESS all amounts to be paid by Seller pursuant to SECTION
3.3 for fees and expenses payable by Seller and all amounts required to be paid
in satisfaction of liens and encumbrances on the Real Property pursuant to the
terms of this Contract or otherwise pursuant to the instructions of Seller; the
General Assignment executed, in counterpart, by Purchaser; the Excise Tax
Exemption Certificate executed in counterpart by Purchaser; and any other
document required to be delivered to Seller at the Closing Date;
1.6 COSTS OF TRANSACTION. Costs of the transaction shall be allocated
as follows:
(1) Purchaser shall pay the fees for recording the Leases.
(2) Purchaser shall pay all fees and costs in connection with
Purchaser's financing, if any.
(3) Seller shall pay all conveyance taxes imposed upon the
issuance of the Leases to Purchaser.
1.7 OTHER COSTS. Except as otherwise expressly provided to the contrary
herein, each party shall pay all of its own legal, accounting and consulting
fees and all other costs and expenses incurred in connection with the
transaction contemplated by this Contract.
13.
ARTICLE IV
SUBMITTALS TO PURCHASER
Seller has heretofore furnished Purchaser with, and Purchaser
hereby acknowledges receipt of, the following:
(1) copies of the Farming Service Contracts, Equipment Leases,
and Employment Contracts, together with the Schedules of Litigation and
Vehicles, shown on EXHIBITS L AND M, respectively;
(2) Operating Statements of the Seller for the periods ending
December 31, 1997, December 31, 1998, and December 31, 1999, copies of which are
attached hereto as EXHIBIT N;
(3) copies of the property tax bills for the Land for the
1999-2000 fiscal year;
Except as expressly provided in ARTICLE V hereof, Purchaser acknowledges that
Seller has made no warranty or representation, either express or implied,
concerning the documents described in this Article IV, or the matters disclosed
therein, including (without limitation) the completeness or accuracy thereof.
If, prior to the Closing Date, Purchaser discovers that any of the items listed
above are inaccurate or any of Seller's representations contained herein are
incorrect or misleading in any materially adverse way then Purchaser shall give
Seller written notice of such fact. Seller shall then have 10 days (and the
Closing Date may be postponed until the end of such 10 day period) to either
cure such matter or elect not to cure in which latter event Purchaser, as its
sole and exclusive remedy, may terminate this Contract by delivering a written
notice to Seller within 5 days thereafter.
ARTICLE V
REPRESENTATIONS, WARRANTIES AND COVENANTS
1.8 PURCHASER'S REPRESENTATIONS AND WARRANTIES. Purchaser hereby
represents and warrants to Seller as follows:
14.
(1) POWER AND AUTHORITY. Purchaser is a limited partnership,
duly organized, validly existing and in good standing under the laws of the
State of Delaware; Purchaser has the power and authority to enter into this
Contract and the "other documents" required to be executed by Purchaser pursuant
to SECTION 8.3 below, to perform its obligations hereunder and to consummate the
transactions contemplated herein; neither the execution and delivery hereof by
Purchaser nor the performance by Purchaser of Purchaser's obligations hereunder
will violate or constitute an event of default under any material terms or
material provisions of any material agreement, document, instrument judgment,
order or decree to which Purchaser is a party or by which Purchaser is bound.
(2) AUTHORIZATION; VALID OBLIGATION. All actions required to
be taken by or on behalf of Purchaser to authorize Purchaser to make, deliver
and carry out the terms of this Contract have been or will be duly taken prior
to the Closing Date. No consent to the execution, delivery and performance of
this Contract by Purchaser is required from any partner, board of directors,
shareholder, creditor, investor, judicial or administrative body, Governmental
Authority or other Person, other than any such consent which already has been
unconditionally given. This Contract is a valid and binding obligation of
Purchaser, enforceable in accordance with its terms, except as the same may be
affected by bankruptcy, insolvency, moratorium or similar laws, or by legal or
equitable principles relating to or limiting the rights of contracting parties
generally.
(3) AS IS PURCHASE.
(1) Prior to the execution of this Contract,
Purchaser has been afforded access to books and records of Seller relating to
the operation of the Property, the documents referred to in Article IV, and to
other information available to Seller with respect thereto. Seller has made no
representations or warranties as to the accuracy or completeness of such
information except as expressly set forth in SECTION 5.3.
(2) To the extent deemed necessary or desirable by
Purchaser, Purchaser (A) has conducted its own investigation of the Property;
(B) has investigated any applicable restrictions, covenants, easements,
conditions, zoning laws, building codes, environmental matters, and other land
use regulations affecting the Property; (C) has made inquiries, inspections,
tests, audits, studies and analyses in connection with purchasing the Property;
and (D) has approved the results of its investigation (including, without
limitation, any engineering and structural tests, economic feasibility studies,
soils and geological reports, reviews of books and records, environmental and
asbestos reports, financial statements, title
15.
exceptions, projections relating to the operation of the Property, and other
documents obtained or prepared by or for Purchaser in connection with its
review). Purchaser hereby acknowledges that Seller has not made any
representations and warranties other than those set forth in SECTION 5.3 and
ARTICLE XII. Purchaser has made its own inspections, tests, audits, studies and
investigations conducted in connection with, and on Purchaser's own judgment
with respect to, its purchase of the Property.
(4) FINANCIAL RESOURCES. Purchaser has adequate financial
resources to make timely payment of all sums due from Purchaser hereunder and to
perform all of its obligations hereunder.
(5) SECURITIES LAWS. If Purchaser is raising funds to purchase
the Property, Purchaser has and will continue to comply with all applicable
federal and state securities laws and regulations. Purchaser shall indemnify,
defend, and hold Seller harmless from any and all loss, damage, claim, cost and
expense and any other liability whatsoever (including, without limitation,
reasonable attorneys' fees, charges, and costs) by reason of or arising out of
Purchaser's failure to fully comply with such securities laws and regulations.
This indemnity shall survive the Closing or other termination of this Contract.
1.9 PURCHASER'S COVENANTS. Purchaser hereby covenants with Seller as
follows:
(1) INDEMNIFICATION. Purchaser shall indemnify, defend and
hold harmless Seller from and against any and all loss, damage, claim, cost and
expense and any other liability whatsoever (including, without limitation,
reasonable attorneys' fees, charges and costs) incurred by Seller by reason of
any claim, demand or litigation relating to the Property and arising from acts,
omissions, occurrences or matters that take place after the Cut-off Time, except
to the extent arising from any act, negligence, willful misconduct or omission
of Seller, or any of their respective predecessors, successors, assigns, agents,
representatives or employees. In addition, and without limiting the generality
of the foregoing: (i) Purchaser shall assume and perform all of Seller's,
Seller's Affiliates', or the Corporations' obligations under the Farming Service
Contracts, Equipment Leases, and other property assigned to, or acquired by
Purchaser and any other agreement or with respect to any other right assigned to
Purchaser by Seller, and shall, from and after the Cut-off Time, defend,
indemnify and hold harmless Seller and Seller's Affiliates, from and against any
and all loss, damage, claim, cost and expense and any other liability
whatsoever, except to the extent arising from any act, negligence, willful
misconduct or omission of Seller, Seller's Affiliates, or any of their
respective predecessors, successors, assigns, agents, representatives or
employees: (ii) Purchaser shall from and after the Cut-off Time, defend,
16.
indemnify and hold harmless Seller and Seller's Affiliates, from and against any
and all loss, damage, claim, cost and expense and any other liability whatsoever
(including, without limitation, reasonable attorneys' fees, charges and costs)
arising from or relating to the Property or any portion thereof at or after the
Cut-off Time, except to the extent arising from any act, negligence, willful
misconduct or omission of Seller or Seller's Affiliates, or any of their
respective predecessors, successors, assigns, agents, representatives or
employees.
(2) CONFIDENTIALITY. Purchaser shall, prior to the Closing
Date, hold as confidential, all Confidential Information concerning Seller
disclosed in connection with this transaction and designated as such by Seller
in writing; and Purchaser shall not, at any time prior to the Closing Date,
release any such information relating to Seller or the Property to third parties
without Seller's prior written consent, except pursuant to a court order
requiring such release or as otherwise may be required by law. Seller hereby
gives its consent to Purchaser's disclosure of information relating to the
Property to (l) its lenders to the extent reasonably necessary in order to
obtain such lenders' participation in the contemplated transaction, (2)
Governmental Authorities, and (3) its directors, officers, employees,
accountants, counsel and other professional consultants, in each instance to the
extent reasonably necessary to verify information given to Purchaser by Seller
or otherwise to carry out the purposes of this Contract.
(3) APPRAISALS AND STUDIES. If this transaction fails to close
by reason of Purchaser's default under the terms of this Contract or by reason
of Purchaser's failure to meet a condition precedent to the Closing, Purchaser
shall, within fifteen (15) days after written request therefor from Seller,
deliver to Seller, at Purchaser's sole cost and expense, copies of all
appraisals, market studies and inspection reports which were prepared by or on
behalf of or otherwise delivered to Purchaser in connection with this
transaction, but only to the extent consented to by the consultants providing
such appraisals, studies or reports.
1.10 SELLER'S REPRESENTATIONS AND WARRANTIES. Seller represents and
warrants to Purchaser as follows:
(1) POWER AND AUTHORITY. Each of the corporations comprising
Seller are corporations, duly organized, validly existing and in good standing
under the laws of the State of Hawaii. Seller has the power and authority to
enter into this Contract, and other documents required to be executed by Seller
at Closing pursuant to SECTION 8.4 hereof, to perform its obligations under this
Contract, and to consummate the transactions contemplated herein. The execution
and delivery hereof and the performance by Seller of its obligations hereunder
will not violate or constitute an event of default under any material terms or
material provisions of any
17.
agreement, document, instrument, judgment, order or decree to which Seller is a
party or by which Seller is bound other than the provisions of any loan
documents relating to any loans secured by mortgages encumbering the Property
which loans shall be repaid at Closing entirely out of the proceeds of this
sale.
(2) AUTHORIZATION; VALID OBLIGATION. Seller has, or, prior to
the Closing Date, shall have, caused all actions required to be taken by or on
behalf of Seller to authorize Seller to make, deliver and carry out the terms of
this Contract. No consent to the execution, delivery and performance of this
Contract by Seller is required from any partner, board of directors,
shareholder, creditor, investor, judicial or administrative body, Governmental
Authority or other Person, other than any such consent which already has been
unconditionally given. This Contract is a valid and binding obligation of
Seller, enforceable in accordance with its terms, except as the same may be
affected by bankruptcy, insolvency, moratorium or similar laws, or by legal or
equitable principles relating to or limiting the rights of contracting parties
generally.
(3) FARMING SERVICE CONTRACTS, EQUIPMENT LEASES, AND
EMPLOYMENT CONTRACTS. To the best of Seller's knowledge: (1) there are no
written Farming Service Contracts, Equipment Leases or Employment Contracts
which will affect or be obligations of Purchaser or of the Property or any
portion thereof following the Close of Escrow, other than the Farming Service
Contracts, Equipment Leases, and Employment Contracts described on EXHIBITS E,
C, AND B attached hereto or otherwise agreed to in writing by Purchaser; (2)
except as shown on the copies of the Farming Service Contracts, Equipment Leases
or Employment Contracts heretofore delivered or subsequently delivered to
Purchaser prior to the Close of Escrow, there are no amendments to said Farming
Service Contracts, Equipment Leases and Employment Contracts, and (3) each
Farming Service Contract, Equipment Lease and Employment Contract is a valid and
subsisting agreement and is in full force and effect in accordance with the
terms thereof and no default by Seller or, to the best of Seller's knowledge,
any other Person exists under any Farming Service Contract, Equipment Lease, and
Employment Contract.
(4) ACCURACY OF DOCUMENTS. To the best of Seller's knowledge,
the Employment Contracts, Equipment Leases, and Farming Service Contracts
delivered to Purchaser under the terms of this Contract were complete and
correct, in all material respects, on the date of delivery and, subject to the
rights of Seller under this Contract with respect thereto, will be so upon the
Closing..
(5) LITIGATION. There is no pending or, to the best of
Seller's knowledge, threatened litigation which could become a liability of the
Property or any portion thereof
18.
following the Closing, other than as shown on EXHIBIT L hereto (the "Retained
Litigation"). Pursuant to SECTION 5.4(f) below, Seller shall indemnify Purchaser
against any claims or damages arising from the Retained Litigation.
(6) GOVERNMENT REGULATION. Seller has not received any written
notice from any Governmental Authority that the Property or any portion thereof
is in violation of any law, regulation, ordinance, order or other requirements
materially affecting the Property or any portion thereof or any Corporation,
which notice remains uncured.
(7) CONDEMNATION. Neither Seller nor any Affiliate of Seller
has received any written notice and none of such Persons is otherwise aware that
the Property or any portion thereof is or will be imminently subjected to or
affected by any condemnation, eminent domain or similar proceedings.
(8) OPERATING STATEMENTS. Except as otherwise shown on EXHIBIT
N, the operating statements attached as EXHIBIT N have been prepared in all
material respects, using general accepted accounting principles applied on a
basis consistent with the accounting practices of Seller with respect to the
Property as of December 31, 1997, December 31, 1998, and December 31, 1999. Such
operating statements fairly present the results of operations of the Property
for the indicated periods.
(9) COMPENSATION AND BENEFITS PLANS.
(1) Seller has made available to Purchaser
information with respect to all employee benefit plans (as defined in Section
3(3) of ERISA), all multiemployer plans (as defined in Section 3(37) or Section
4001(a)(3) of ERISA) and all bonus, incentive, deferred compensation,
supplemental retirement, severance, consulting, indemnification or other
contracts or agreements, (i) which are maintained for the benefit of, or
relating to, any current or former employee of any Corporation, (ii) which are
maintained by any Corporation or which any Corporation currently has in effect
or to which any Corporation contributes or (iii) with respect to which any
Corporation has incurred or may incur any liability, including such plans,
agreements and arrangements maintained by any ERISA Affiliate (the "Plans").
(2) Neither Seller, nor any Corporation nor any ERISA
Affiliate nor Purchaser has incurred or expects to incur any withdrawal
liability that has not been satisfied in full with respect to any multiemployer
plan or any liability in connection with the reorganization or termination of
any multiemployer plan.
19.
(3) Except as disclosed in writing to Purchaser, none
of the Plans provides for the payment of separation, severance, termination or
similar type benefits to any person or obligates Purchaser to pay separation,
severance, termination or similar type benefits solely as a result of the
transaction contemplated by this Agreement.
(4) Except as disclosed in writing to Purchaser, none
of the Plans provides for or promises retiree medical or life insurance benefits
to any current or former employee of any Corporation.
(5) Each Plan is now and has been operated in all
material respects in compliance with the requirements of all applicable law,
including, without limitation, ERISA and the Code, and all persons who
participate in the operation of such Plans and all Plan fiduciaries (within the
meaning of Section 3(21) of ERISA) have acted in all material respects in
accordance with the provisions of all applicable law, including ERISA and the
Code. All contributions required to be made to any Plan have been made on or
before their due dates. No legal action, suit or claim is pending or threatened
with respect to any Plan (other than claims for benefits in the ordinary course)
and no fact or event exists that could give rise to any such action, suit or
claim.
(6) Each Plan which is intended to be qualified under
Section 401(a) of the Code or Section 401(k) of the Code is so qualified and
each trust established in connection with any Plan which is intended to be so
qualified is exempt from Federal income taxation under Section 501(a) of the
Code and has been determined by the IRS to be so exempt, and no fact or event
has occurred since the date of such determination by the IRS to adversely affect
the qualified status of any such Plan or the exempt status of any such trust.
(7) There has been no prohibited transaction (within
the meaning of Section 406 of ERISA or Section 4975 of the Code) with respect to
any Plan which resulted or could result in a material liability to any
Corporation which has not been satisfied in full. Neither Seller, any
Corporation nor any ERISA Affiliate nor the Purchaser has incurred or expects to
incur any liability to the Pension Benefit Guaranty Corporation (the "PBGC") or
other liability under Title IV of ERISA with respect to any Plan subject to
Title IV of ERISA (collectively, "Title IV Plans"). All required premium
payments to the PBGC with respect to Title IV Plans have been made on or before
their due date. No event which could result in the termination of any Title IV
Plan under Section 4041 of ERISA has occurred or is expected to occur with
respect to any Title IV Plan and neither the Seller, any Corporation nor any
ERISA Affiliate nor
20.
Purchaser has incurred or reasonably expects to incur any liabilities under
Section 4062 of ERISA. Neither the Seller, any Corporation nor any ERISA
Affiliate is required to provide security to any Plan under Section 401(a)(29)
of the Code or Section 307 of ERISA. No Title IV Plan has incurred an
accumulated funding deficiency (within the meaning of Section 302 of ERISA or
Section 412 of the Code), whether or not waived, as of the most recently ended
plan year of such Title IV Plan and none of the assets of Seller, any
Corporation or any ERISA Affiliate nor Purchaser is or will be the subject of
any lien arising under Section 302(f) of ERISA or Section 412(n) of the Code.
(8) For purposes of this SECTION 5.3(i), "ERISA
AFFILIATE" means each entity that is a member of a controlled group or
affiliated service group of which Seller or any Corporation is a member or that
is under common control with Seller or any Corporation (within the meaning of
Sections 414(b), 414(c), 414(m) and 414(o) of the Code). All references to ERISA
and the Code include reference to the applicable rulings and regulations
promulgated thereunder and each reference to any specific section of ERISA or
the Code includes reference to any successor section thereto.
(10) ENVIRONMENTAL ACTIVITY. Seller is in compliance with the
provisions of all Environmental Laws relating to the Property and the ownership,
use, operations and occupancy thereof. Neither Seller nor, to the best of
Seller's knowledge, any other Person has engaged in any Environmental Activity,
nor has any Environmental Activity otherwise occurred, in violation of any
applicable Environmental Laws. Seller has no material liability, absolute or
contingent, in connection with any Environmental Activity. Seller has not
received any notice from any federal, state, county, municipal or other
governmental department, agency or authority concerning nor does Seller have any
knowledge of the existence of any Hazardous Substance discharge or seepage.
(11) BULK SALES LAW. The principal business of Seller is not
the sale of merchandise, including the manufacture of goods sold by Seller.
(12) SERVICEMARKS. There are no federally registered
servicemarks used by Seller and/or its Affiliates exclusively in connection with
the ownership or operation of the Property.
(13) TITLE TO ASSETS. The Seller has good and marketable title
to, or a valid leasehold interest in, the Property free and clear of any
security interests therein or restrictions on transfer except for: (1) lessor's
interests in the Equipment Leases, and (2) required consents to transfers of
certain contracts and leases, all of which have been obtained.
21.
1.11 SELLER'S COVENANTS. Seller hereby covenants as follows:
(1) OPERATION OF PROPERTY THROUGH THE CLOSE OF ESCROW. Seller
agrees that between the Effective Date and the earlier of the Close of Escrow or
termination of this Contract:
(1) MODIFICATIONS OF LEASES AND AGREEMENTS. The
Farming Service Contracts, Employment Contracts, and Equipment Leases and any
agreements set forth in the exhibits attached hereto will not be amended, no
other leases of or with respect to the Property will be entered into, and no
other agreements affecting the Property or any portion thereof or compensation
and benefit plans affecting the Property employees will be entered into, by
Seller, without the prior written consent of Purchaser (which consent as to
Farming Service Contracts, Employment Contracts and Equipment Leases will not be
unreasonably withheld, delayed or conditioned); excepting, however, Equipment
Leases and Farming Service Contracts, in the ordinary course of business, for
supplies to replenish the normal inventory levels of the businesses operated by
the Seller or required in connection with or necessary for customary services to
be performed prior to or within sixty (60) days after the Closing Date, at price
rates comparable to those previously paid by Seller or at rates paid by
comparable businesses for such supplies and services provided that notice
thereof at least three (3) business days prior to entering into and within one
(1) business day after entering into shall be given to Purchaser.
(2) INSURANCE POLICIES. All existing insurance
policies (or replacements thereof) affecting the Property or any portion thereof
will be kept in full force and effect; provided, however, Seller shall not be in
breach of this subsection if Seller has given Purchaser twenty (20) days written
notice that an existing insurance policy shall expire and a replacement policy
is not available at a reasonably equivalent price and Purchaser shall fail to
notify Seller in writing within said period that Purchaser elects to pay the
cost of the increase in price if the replacement policy is available;
(3) ALTERATIONS. No alterations to the physical
condition of the Land or Improvements costing in excess of an aggregate amount
of Twenty-Five Thousand Dollars ($25,000) will be commenced without the prior
written consent of Purchaser; provided that in the case of any casualty
restoration Seller shall obtain the prior written approval by Purchaser of the
plans and specifications in respect thereof (which approval shall not be
unreasonably withheld);
22.
(4) REFURBISHMENTS. No refurbishments to the FF&E
costing in excess of an aggregate amount of Ten Thousand Dollars ($10,000) will
be made without the prior written consent of Purchaser, which consent will not
be unreasonably withheld.
(5) OPERATIONS AND SERVICES. The business will be
operated in substantially the manner in which it was operated on the Effective
Date and inventories will be procured and maintained in normal operating
amounts, and all services with respect to the Property that are now required to
be provided will be provided, in order so to operate the business;
(6) RENEWAL OF PERMITS. Due diligence will be used to
keep in full force and effect (or to renew, when necessary) all Permits;
(7) REMOVAL OF FF&E. None of the FF&E will be removed
from the Property except in the ordinary course of business; and
(8) NOTICES OF CERTAIN DEFAULTS. Seller shall
promptly notify Purchaser of any notices from any Governmental Authority
regarding violation or any law relating to the Property or any business being
operated thereon and of any material default by Seller or the Corporations or by
the other party thereto existing on or after the Effective Date and prior to the
Close of Escrow under any of the Employment Contracts, Equipment Leases, or
Farming Service Contracts, and actually known to Seller.
(9) Further, notwithstanding anything in SECTION
5.3(i) above to the contrary, Seller shall use its good faith efforts in
attempting to postpone any definitive substantive renegotiation with respect to
the Employment Contracts and collective bargaining agreements until after the
Closing.
(2) EXCISE TAX. Seller shall pay any general excise tax due on
the sale to Purchaser of any of the Property. In this regard Seller and
Purchaser shall use their mutual good faith efforts to cooperate and shall
finalize, execute and file the Excise Tax Exemption Certificate at Closing so as
to eliminate any general excise tax liability in connection with the sale of the
Property.
(3) CONFIDENTIALITY. Seller shall hold as confidential all
Confidential Information of Purchaser hereby disclosed to Seller by Purchaser in
connection with said transaction; and Seller shall not, at any time, release any
such information to third parties without
23.
Purchaser's prior written consent, except pursuant to a court order requiring
such release or as otherwise may be required by law. Purchaser hereby gives its
consent to Seller's disclosure of such information to Seller's consultants and
contractors, and to Governmental Authorities, in each instance to the extent
reasonably necessary to verify information given to Seller by Purchaser or
otherwise to carry out the purposes of this Contract.
(4) INDEMNIFICATION. Seller shall indemnify, defend and hold
harmless Purchaser from and against any and all loss, damage, claim, cost or
expense and any other liability whatsoever (including, without limitation,
reasonable attorneys' fees, charges and costs) incurred by Purchaser by reason
of any claims, demands or litigation instituted by or on behalf of a third party
relating to the Property, Seller, Seller's Affiliates, the Corporations, which
arise from acts, occurrences, omissions or matters that take place prior to the
Cut-off Time.
(5) CORPORATIONS. From the Effective Date until the earlier of
the Close of Escrow or termination of this Contract, Seller shall cause the
business operations and corporate affairs of each Corporation to be conducted in
the ordinary course consistent with the respective past practice of each such
Corporation.
1.12 SURVIVAL. Purchaser and Seller each hereby covenants and agrees
with the other that the representations, warranties, covenants and indemnities
of Purchaser and Seller (as the case may be) set forth in, respectively, in
ARTICLES V, VI, VII, XI, XII AND XVI, shall survive the Closing without
limitation as to duration; provided, however the representations and warranties
made by Purchaser and Seller shall survive the Closing for a twelve (12) month
period commencing upon the Closing. Notwithstanding the foregoing, in no event
shall Purchaser have the right to bring any claim or claims against Seller after
the Close of Escrow in connection with the breach or purported breach of any
representation or warranty made by Seller in SECTION 5.3 hereof unless such
claim or claims aggregate in excess of Twenty-Five Thousand Dollars
($25,000.00).
ARTICLE VI
PROPERTY EMPLOYEES
1.13 ASSUMPTION OF COLLECTIVE BARGAINING AGREEMENT. As of the Cut-off
Time, Purchaser shall assume all collective bargaining agreements covering
Property employees and shall fully honor and maintain each such collective
bargaining agreements including all renewals thereof.
24.
1.14 TERMS OF EMPLOYMENT. At the Cut-off Time, the non-bargaining unit
Property Employees employed by Seller shall be hired by Purchaser at
substantially the same rate of pay and with substantially the same benefits as
provided by Seller.
1.15 SENIORITY. Purchaser shall determine seniority rights in its
discretion except as required by any Employment Contract or collective
bargaining agreements.
1.16 INDEMNITY. Purchaser agrees to, and shall indemnify, defend, and
hold harmless Seller and their Affiliates against all alleged labor or
employment claims, liabilities, Employment Costs, or obligations (including
reasonable attorneys' fees and experts' fees) with respect to the Property
Employees which accrue on or after the Cut-off Time.
Purchaser hereby agrees to defend, indemnify and hold Seller
and their respective Affiliates harmless from and against any and all liability,
loss, claim, demand, cost, expense (including, without limitation, reasonable
attorneys' fees, charges and costs) and any other liability whatsoever which
Seller or any of their Affiliates may incur as a result of Purchaser's complete
or partial withdrawal from a Plan or Purchaser's failure to make a contribution
or a withdrawal liability payment to each such Plan when due.
6.5 ACCRUED VACATIONS. Seller shall use its best efforts to secure from
the Union an agreement that accrued vacations need not be paid in cash at the
Closing, but may be assumed by the Purchaser and honored by Purchaser in
accordance with the collective bargaining agreement. If the Union will not agree
that accrued vacations need not be paid in cash at the Closing, the Seller will
cooperate with the Union in efforts to secure waivers of the requirement to pay
cash from the collective bargaining employees entitled to accrued vacations. If
the Union will not agree to assumption of the accrued vacation liability by the
Purchaser and if the particular employee will not sign a waiver, then Seller
will pay such accrued vacation in cash. Purchaser shall assume all accrued
vacation liability for collective bargaining employees if the Union agrees that
vacation liability need not be paid in cash. If the Union does not so agree,
Purchaser will assume accrued vacation liability for all collective bargaining
employees who sign waivers.
ARTICLE VII
CLOSING STATEMENTS, ADJUSTMENTS AND PRORATIONS
25.
1.17 PREPARATION OF PRELIMINARY AND FINAL CLOSING STATEMENTS. The
parties hereto shall cooperate with one another, both before and after the
Closing Date, for the purpose of making such inventories, examinations and
audits of the Property, and of the books and records of the Seller, as are
necessary to make the adjustments and prorations required under this ARTICLE
VII, or under any other provisions of this Contract. Based upon such preliminary
audits and inventories, three days prior to the Closing Date Seller will prepare
and deliver to Purchaser a "PRELIMINARY CLOSING STATEMENT" (herein so called),
which will show the net amount due either to Seller or to Purchaser as the
result thereof, and such net amount will be added to or subtracted from the
payment of the cash balance of the Purchase Price to be paid to Seller pursuant
to SECTION 2.2 hereof. Within 90 days following the Closing Date, Seller shall
deliver to each of the parties a "FINAL CLOSING STATEMENT" (herein so called)
setting forth the final determination of all items to be included on the Closing
Statements and an auditors report from Accountants expressing an opinion that
the adjustments and prorations in the Final Closing Statement are presented
fairly, in all material respects, in conformity with this VII Article herein.
The net amount due Seller or Purchaser, if any, by reason of adjustments in the
Preliminary Closing Statement as shown in the Final Closing Statement, shall be
paid in cash by the party obligated therefor within 10 days following that
party's receipt of the Final Closing Statement. The adjustments, prorations and
determinations of the Accountants shall be conclusive and binding on the parties
hereto.
Seller and Purchaser shall have the right to have its representatives
present, both before and after the Closing Date, for the purpose of observing
the taking of any inventories, and such representatives shall be given
reasonable access to the books and records of the Property which are relevant to
the preparation of the Closing Statements. The provisions of this ARTICLE VII
shall survive the Closing.
1.18 ADJUSTMENT AND PRORATIONS. It is the intention of Purchaser and
Seller that adjustments and prorations be made as hereinafter provided in this
SECTION 7.2 with respect to the Property and its operation. Therefore, the
following matters and item shall be apportioned on an accrual basis as of the
Cut-off Time between the parties hereto or, where applicable, credited in total
to a particular party:
(1) ACCOUNTS RECEIVABLE. For purposes of this Contract,
"Accounts RECEIVABLE" shall include all receivables pursuant to farming service
contracts and accounting services as of the Closing Date. Seller shall retain
ownership of such receivables.
(2) TAXES AND ASSESSMENTS. All ad valorem taxes, general
excise taxes, special or general assessments, water and sewer rents, rates and
charges and other municipal
26.
permit fees owed by or applicable to the Property. If the amount of any such
item is unascertainable on the Closing Date, the credit therefor shall be based
on the most recent available xxxx. If the actual amount of any such item, when
later determined, and prorated for the applicable period, differs from the
credit given therefor on the Preliminary Closing Statement, the parties shall
promptly make the appropriate adjustment, and the party owing sums by reason of
such adjustment shall promptly remit such sums to the other party.
(3) UTILITY CONTRACTS. Telephone service contracts (but
excluding Equipment Leases and service contracts for telephone equipment) and
contracts for the supply of heat, steam, electric power, gas, lighting and any
other utility service, with Seller receiving a credit for all deposits, if any,
made by Seller as security under any such public service contracts if the same
is transferable and provided such deposit remains on deposit for the benefit of
Purchaser. At Seller's option, cut-off readings will be secured for all
utilities as of the Cut-off Time. (1)
(4) FARMING SERVICE CONTRACTS, EMPLOYMENT CONTRACTS AND
EQUIPMENT LEASES. Any amounts prepaid or payable under any Farming Service
Contracts, Employment Contracts, Equipment Leases. All security deposits held by
Seller shall be transferred to Purchaser and all obligations with respect to
such security deposits shall be assumed by Purchaser.
(5) LICENSE FEES. Fees paid or payable for Permits.
(6) INSURANCE. Seller shall retain all prepaid premiums with
respect to insurance policies whether or not insurance is continued under the
Xxxxxx umbrella or is cancelled at the Closing.
(7) COMPENSATION. Compensation of the staff and other
employees of the Property not covered by the Employment Contracts. The
Compensation of the employees working as of the Cut-off Time will be prorated as
of the end of their respective shifts.
(8) ACCOUNTANTS' FEES. Seller and Purchaser shall each pay
one-half (1/2) of the fees and expenses charged by the Accountants in connection
with the preparation of the Closing Statements and, if applicable, IRS Form
8594.
(9) OTHER. Such items as are provided for in this Contract or
as are normally prorated and adjusted in a sale of this type, including without
limitation, all xxxxx cash funds.
27.
1.19 ACCOUNTS RECEIVABLE. Purchaser is not purchasing any of the
receivables of the Property, and Seller shall be solely responsible for the
collection of such accounts receivable of the Property (the "ACCOUNTS
RECEIVABLE"). Purchaser agrees to cause the Purchaser's employees to co-operate
with Seller's representative in reviewing such Accounts Receivable, and in
answering any inquiries with respect thereto. Purchaser further agrees to
promptly remit to Seller any funds received by it in payment of such Accounts
Receivable. With regard to any collection made from any person or entity who is
indebted to the Property both with respect to Accounts Receivable accruing prior
to the Closing Date and to the Accounts Receivable accruing subsequent to the
Closing Date, such collection shall be applied as designated, but if there is no
designation, then any such collections received within 90 days after the Closing
Date shall be applied first to the indebtedness accrued prior to the Closing
Date, but thereafter, any such collections shall be applied first to the payment
in full of any amounts due to Purchaser on accounts accruing subsequent to the
Closing Date.
1.20 PAYABLES. Purchaser is not assuming trade payables with respect to
the Property except to the extent that Purchaser receives a credit therefor on
the Closing Statements. Seller shall be responsible for paying all payables
which have accrued prior to the Cut-off Date.
1.21 ACCOUNTING. Unless otherwise specified herein, all accounting
terms used herein shall be interpreted, and all accounting determinations to be
made pursuant to this Contract, and all financial information required to be
delivered hereunder shall be prepared in all material respects using general
accepted accounting principles applied on a basis consistent with the accounting
practices of Seller with respect to the Property as of the Closing Date.
ARTICLE VIII
DELIVERY OF DOCUMENTS
1.22 INFORMATION TO PURCHASER. Seller and Purchaser will cooperate in
familiarizing Purchaser with the operation of the Property and in Purchaser's
preparations to assume ownership thereof on the Closing Date and, in connection
therewith, shall afford Purchaser access to the Property at reasonable times and
in a reasonable manner, provided, however, Purchaser shall provide Seller with
prior notice of Purchaser's intended entry onto the Property and, at the
election of Seller, a representative of Seller shall accompany Purchaser during
each such entry. Subject to the aforementioned notice and other requirements,
Purchaser and Seller agree that it shall be reasonable for Purchaser to have not
more than three (3) of Purchaser's employees, agents or representatives at the
Property during daylight hours prior to the Closing
28.
Date for such purposes. Purchaser shall assure that its conduct, and that of its
employees, agents and representatives, during such process is at all times
unobtrusive and does not interfere with the operation of the Property by Seller
in the ordinary course of business.
1.23 CLOSING DOCUMENTS TO BE DELIVERED BY SELLER TO PURCHASER.
(1) Seller shall deliver the following original documents to
Purchaser on the Closing Date, each of which shall be executed, and, where
appropriate, acknowledged by Seller, and dated as of the Closing Date:
(1) The Leases;
(2) Three counterparts of the General Assignment;
(3) Three counterparts of the Xxxx of Sale; (1)
(4) Three counterparts of the Excise Tax Exemption
Certificate;
(5) All documents necessary to transfer title to
Purchaser of all Vehicles owned by Seller and used in the Property business;
(6) Recordable releases of lien or reconveyance
documents with respect to any deeds of trust or mortgages encumbering the
Property (the "RELEASE DOCUMENTS");
(7) Any other documents, reasonably required by
Purchaser to consummate the purchase and sale of the Property.
(2) Seller shall also deliver the proposed Preliminary Closing
Statement to Purchaser prior to the Closing Date.
(3) Seller shall also deliver to Purchaser on the Closing Date
a favorable written opinion of J. Xxxx Xxxxx, Esq. dated as of the Closing Date
as to: (i) the power and authority of Seller to execute, deliver and perform
this Contract and the documents described in this Section 8.2 ("SELLER'S
DOCUMENTS"); (ii) the due authorization, execution and delivery by Seller of
Seller's Documents, and (iii) the legality, validity, enforceability and binding
effect as to Seller of the Seller's Documents, except as they may be limited by
(1) laws of general applicability respecting insolvency or creditors' rights,
and (2) the discretion of a court to enforce
29.
equitable remedies: and (iv) to the best knowledge of said counsel, that the
execution and delivery of Seller's Documents, and the consummation of the
transactions contemplated hereby, does not require the consent or approval of
any Governmental Authority. Such opinion may be subject to such qualifications,
limitations, and exceptions as are customary for legal opinions rendered by
lawyer" in the State of Hawaii in similar transactions.
1.24 CLOSING DOCUMENTS AND FUNDS TO BE DELIVERED BY PURCHASER TO
SELLER.
(1) Purchaser shall deliver to Seller or the Closing Date the
following funds and original documents (each of which shall be executed, and,
where appropriate, acknowledged by Seller, and dated as of the Closing Date;
(1) The Purchase Price plus the amounts described in
ARTICLE VII, in cash or other immediately available federal funds, in the form
and amount required by SECTION 2.2 and ARTICLE VII;
(2) Three counterparts of the General Assignment;
(3) Three counterparts of the Excise Tax Exemption
Certificate, duly executed by Purchaser;
(4) Any other documents, reasonably required by
Seller to consummate the purchase and sale of the Property.
(2) Purchaser shall also deliver to Seller on the Closing
Date, a favorable written opinion of counsel for Purchaser in connection with
the transaction, dated as of the Closing Date, as to: (i) the power and
authority of Purchaser to execute and deliver this Contract and the documents
described in items (2) - (4) above, ("PURCHASER'S DOCUMENTS"); (ii) the due
authorization, execution and delivery by Purchaser of Purchaser's Documents;
(iii) the legality, validity and binding effect of Purchaser's Documents",
except as they may be limited to (1) laws of general applicability respecting
insolvency or creditors' rights, and (2) the discretion of a court to enforce
equitable remedies; and (iv) to the best knowledge of said counsel, that the
execution of the transaction contemplated hereby does not require the consent or
approval of any Governmental Authority. Such opinion may be subject to such
qualifications, limitations, and exceptions as are customary for legal opinions
rendered by lawyers in the State of Hawaii in similar transactions.
30.
1.25 SELLER'S DELIVERIES TO PURCHASER AT CLOSING. Seller shall deliver
to Purchaser contemporaneously with the Closing original counterparts of the
following documents together with, to the extent obtainable by Seller through
its reasonable efforts, appropriate consents:
(1) Leases;
(2) Equipment Leases;
(3) Farming Service Contracts;
(4) Books and Records;
(5) Permits: and
(6) Keys to all entrance doors, guest rooms, offices, store
rooms and Vehicles.
The documents and keys described in this SECTION 8.4 shall be deemed to
be appropriately delivered if left in the Property in possession of an
authorized representative of Purchaser who has acknowledged in writing receipt
thereof.
ARTICLE IX
CONDITIONS PRECEDENT TO CLOSING
1.26 CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATIONS. The obligation of
Purchaser to purchase the Property is subject to the satisfaction, not later
than the Closing Date, of the following conditions:
(1) REPRESENTATIONS AND WARRANTIES OF SELLER. There has been
no material breach of any of Seller's representations, warranties and covenants
in this Contract set forth in SECTION 5.3 and SECTION 5.4 as of the Closing
Date. For purposes of this SECTION 9.1(a) only, a "material" breach shall be a
breach which in the reasonable judgment of Purchaser, exercised in good faith,
exposes Purchaser or the Property to costs, expenses or damages in excess of
Fifty Thousand Dollars ($50,000). If such representations, warranties and
covenant of Seller have been breached prior to the Closing Date and Purchaser
has notified Seller of such breach, but such breach is not "material" then
Purchaser shall have no right to terminate this Contract but, upon specific
written request therefor by Purchaser, a reasonable estimation of such amount
shall
31.
be withheld from the Purchase Price by the Purchaser pending determination of
the amount of, and Seller shall indemnify, defend and hold Purchaser harmless
from and against all losses, damages, costs and expenses (whether or not they
eventually exceed Fifty Thousand Dollars ($50,000)), including, without
limitation, reasonable attorneys' fees, charges and costs, incurred by Purchaser
by reason of such breach.
(2) NO MATERIAL CHANGES. There shall have been no casualty or
condemnation for which Purchaser has elected to terminate this Contract pursuant
to ARTICLE XIII herein.
(3) SELLER'S DELIVERIES. Seller shall have delivered the items
described in SECTION 8.2 and Purchaser's representative shall have acknowledged
that Seller is prepared to deliver the items described in SECTION 8.4.
The conditions set forth in this SECTION 9.1 are solely for the benefit
of Purchaser and may be waived only by Purchaser. Purchaser shall at all times
have the right to waive any condition. Any such waiver or waivers shall be in
writing and shall be delivered to Seller and Escrow Agent. Neither Seller nor
Purchaser shall act or fail to act for the purpose of permitting or causing any
condition to fail. If any of the conditions in this SECTION 9.1 is not satisfied
or has not been so waived by Purchaser prior to the Closing Date, Purchaser
shall give written notice to Seller describing the condition that has not been
satisfied or waived. If the condition specified in SECTION 9.1 is not satisfied
prior to the Closing Date, either Purchaser or Seller may postpone the Closing
Date, by one or more postponements, in increments of not more than one (1) week
for each postponement, for the purpose of attempting to satisfy such condition,
which postponement shall be effected by giving written notice thereof to Seller
(or Purchaser). If any of the conditions specified in this SECTION 9.1 is not
satisfied prior to the Closing Date, Seller shall be entitled to postpone the
Closing Date, by one or more postponement, to a date not later than thirty (30)
days after the originally scheduled Closing Date, for the purpose of attempting
to satisfy such conditions, which postponements shall be effected by giving
written notice thereof to Purchaser.
1.27 CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS. The Close of Escrow
and Seller's obligations with respect to the transactions contemplated by this
Contract are subject to the satisfaction, not later than the Closing Date of the
following conditions:
(1) FUNDS. Purchaser shall have delivered to Seller on the
Closing Date, all cash or other immediately available funds due from Purchaser
in accordance with SECTION 2.2 of this Contract.
32.
(2) REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER.
There shall be no material breach of any of Purchaser's representations,
warranties and covenants in this Contract including, but not limited to, those
set forth in SECTIONS 5.1 and 5.2 as of the Closing Date.
(3) PURCHASER'S DELIVERIES. Purchaser shall have delivered to
Purchaser the items described in SECTION 8.3.
The conditions set forth in this SECTION 9.2 are solely for the benefit
of Seller and may be waived only by Seller. Seller shall at all times have the
right to waive any condition. Any such waiver or waivers shall be in writing and
shall be delivered to Purchaser. Neither Purchaser nor Seller shall act or fail
to act for the purpose of permitting or causing any condition to fail.
1.28 FAILURE OF CONDITION. Except as otherwise provided in this
Contract, if the transaction fails to close on or before the Closing Date for
any reason whatsoever (other than a reason for which Purchaser or Seller has the
express right to postpone Closing), including, without limitation, a failure of
a condition precedent set forth in this ARTICLE IX, either Purchaser or Seller,
if not then in default hereunder, may terminate this Contract in accordance with
the provisions of SECTION 10.1 or 10.2, as the case may be; and, thereupon:
(1) each party shall pay its own costs and expenses; and
(2) each party shall be released from all obligations under
this Contract except for the provisions which expressly survive termination of
this Contract.
ARTICLE X
DEFAULTS AND REMEDIES
1.29 SELLER'S DEFAULTS. Seller shall be considered to be in default
hereunder if Seller fails to meet, comply with, or perform any material
covenant, agreement, representation, warranty or obligation on its part required
within the time limits and in the manner required in this Contract, and such
failure was not caused by Purchaser's default.
1.30 PURCHASER'S REMEDIES. If Seller is in default hereunder, Purchaser
may exercise either one of the following as its sole and exclusive remedies:
33.
(1) Terminate this Contract by written notice delivered to
Seller on or before the Closing Date; or
(2) Enforce specific performance of this Contract against
Seller, in which event Purchaser shall be deemed to have accepted Seller's title
to the Property and waived any breach by Seller of any of its representations
and warranties made hereunder, except for any matters or breaches that were
caused by an act or omission of Seller in violation of this Contract or which
are curable by Seller.
Purchaser hereby waives any right to any damages (whether actual,
incidental, consequential, punitive or otherwise and whether or not the remedy
of specific performance is available) or any other legal or equitable remedies
(other than those specified in (a) and (b) above) which it may otherwise have
for Seller's default.
1.31 PURCHASER'S DEFAULTS. Purchaser shall be considered to be in
default hereunder if Purchaser fails to meet, comply with, or perform any
material covenant, agreement, representation, warranty, or obligation on its
part required within the time limits and in the manner required in this
Contract, and such failure was not caused by Seller's default.
1.32 SELLER'S REMEDY.
(1) If Purchaser is in default hereunder then, as Seller's
sole remedy for such default and upon written notice of termination from Seller
to Purchaser, this contract shall terminate (except for this SECTION 10.4 and
any other provisions which expressly survive termination of this contract). The
parties acknowledge and agree that upon Purchaser's default, Seller will incur
certain costs and other damages in an amount that would be extremely difficult
or impractical to ascertain. Without limiting the generality of the foregoing:
(a) such costs and damages will include administrative costs incurred by Seller
in the processing and review of this contract and other documents relating to
this transaction, and damages suffered by reason of Seller's withdrawing the
Property from the open market; (B) Seller is entering into this contract with
Purchaser in reliance upon Purchaser's commitment to purchase the Property from
Seller on or before the Closing Date and upon the warranty, representation and
covenant which Purchaser hereby makes with respect to this SECTION 10.4, that
this SECTION 10.4 is valid and binding on Purchaser and enforceable in
accordance with its terms and that upon request Purchaser will execute and
deliver to Seller a written acknowledgment by Purchaser of the termination of
this contract, as provided in this SECTION 10.4;
34.
(2) Purchaser acknowledges and agrees that the sum of Fifty
Thousand Dollars ($50,000) bears a reasonable relationship to the damages which
the parties estimate may be suffered by Seller by reason of failure of the
closing of the Transaction to occur; and
(3) Upon delivery to Purchaser by Seller of a notice of
termination, Purchaser shall pay to Seller, as liquidated damages, the sum of
Fifty Thousand Dollars ($50,000) which damages (except as otherwise provided in
this Section 10.4) shall be Seller's sole monetary remedy hereunder in the event
of such a breach by Purchaser, and shall forthwith return to Seller all
documents and instruments theretofore provided to Purchaser by or on behalf of
Seller.
ARTICLE XI
NOTICE OF NONCOMPLIANCE WITH BULK SALES LAW
In connection with Seller's sale to Purchaser of the Property, Seller
hereby agrees to indemnify, defend and hold Purchaser harmless from any and all
liability Purchaser may incur by reason of Seller's noncompliance with the
Hawaii Bulk Sales Law (Section 490:6-101 ET SEQ. of the Hawaii Revised
Statutes).
ARTICLE XII
BROKER
Seller and Purchaser mutually represent and warrant to each other that
neither Seller nor Purchaser knows of any broker or other Person who has claimed
or may have the right to claim a commission, finder's fee, brokerage fee or
other fee or payment in connection with this transaction.
ARTICLE XIII
CASUALTY
CASUALTY. If any substantial damage to the Property shall occur prior
to the Closing Date by reason of fire, earthquake, lava flow, or other casualty,
Seller will give Purchaser immediate notice of such event. If the cost to repair
and restore the Property exceeds the sum of (i) the insurance proceeds available
for restoration plus (ii) the deductible amount on the applicable insurance
policy, then Purchaser shall have the right to terminate this Contract by
35.
giving written notice to Seller to such effect by the earlier to occur of (a)
the Closing Date, or (b) five (5) days after Seller has notified Purchaser of
the casualty. If Purchaser does not elect to terminate this Contract, then the
closing of the transaction contemplated hereby shall take place as herein
provided with abatement of the Purchase Price in an amount equal to the cost to
repair or restore the Property that exceeds the amount of proceeds from casualty
insurance paid or payable with respect to the casualty, and at the Closing,
Seller shall pay or assign to Purchaser (by written instrument in the case of
any assignment, but without recourse) any proceeds from all fire and other
casualty insurance paid or payable with respect to the casualty (less sums
theretofore expended, if any, by Seller for temporary repairs or barricades),
and the Seller shall have no liability or obligation with respect to the
condition of the Property as the result of such casualty.
ARTICLE XIV
NOTICES
1.33 NOTICES IN WRITING. Whenever any notice, demand or request is
required or permitted hereunder, such notice, demand or request shall be made in
writing and shall be personally delivered to the individuals listed below, sent
via prepaid courier or overnight courier or telecopier, or deposited in the
United States mail, registered or certified, return receipt requested, postage
prepaid, addressed to the addresses (and individuals) set forth below:
As to Seller: J. Xxxx Xxxxx, Esq.
P. O. Box 1826
Xxxxxxxx, Xxxxxx 00000
Telephone Number: (000) 000-0000
Telecopier Number: (000) 000-0000
As to Purchaser: Xxxxx X. Xxxx, Xxx.
Xxxxx 0000, Xxxxxxx Xxxxx
0000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxx 00000
Telephone Number: ( 000) 000-0000
Telecopier Number: ( 000) 000-0000
With a copy to: Xx. Xxxxxxx X. Xxxxxxxx
XX Resources, Inc.
36.
000 Xxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, Xxxxxx 00000-0000
Telephone Number: (000) 000-0000
Telecopier Number: (000) 000-0000
1.34 RECEIPT. Any notice, demand or request that shall be served upon
any party shall be deemed sufficiently given to and received by such party for
all purposes hereunder, (i) if sent via courier, at the time such notice, demand
or request is delivered, to the address specified by the party to receive such
notice, or (ii) if sent via telecopy, at the time of receipt by such party, or
(iii) if sent via registered or certified mail, three ( 3) days after it is
deposited in the United States mail.
1.35 DEEMED DELIVERY. The inability to deliver any notice, demand or
request because the individual to whom it is properly addressed in accordance
with this ARTICLE XIV refused delivery thereof or no longer can be located at
that address shall constitute delivery thereof to such individual.
1.36 CHANGE OF ADDRESS. Each party hereto shall have the right from
time to time to designate by written notice to the other parties hereto such
other person or persons and such other place or places as said party may desire
written notices to be delivered or sent in accordance herewith.
ARTICLE XV
SUCCESSORS AND ASSIGNS
1.37 TRANSFERS BY SELLER. Seller shall have the right to assign all of
its right, title, and interest in this Contract to any Affiliate of Seller
without the prior written consent of Purchaser, PROVIDED that no transfer or
assignment will be valid unless all of Seller's right, title and interest in the
Contract are held by the same Person who shall have assumed all of the
obligations and liabilities hereunder. Any other transfer or assignment shall
require the written consent of Purchaser which consent may be withheld in
Purchaser's sole and absolute discretion.
1.38 TRANSFERS BY PURCHASER. Purchaser shall have the right to assign
or partially assign all of its right, title and interest in this Contract to a
subsidiary to be formed without the prior written consent of Seller. Any other
transfer or assignment shall require the written consent of Seller which consent
may be withheld in Seller's sole and absolute discretion. No assignment or
37.
transfer made by Purchaser shall be of any force or effect whatsoever unless and
until Purchaser shall have delivered to Seller a counterpart of such assignment,
duly executed by Purchaser and the assignee, and an assumption agreement with
the respect thereto in favor of Seller, duly executed by Purchaser and the
assignee, both of which documents shall be in form and substance satisfactory to
Seller. Notwithstanding anything to the contrary contained herein, no such
assignment shall relieve the assigning party from its liability under this
Contract. Any assignment made in violation hereof or which does not comply with
the provisions hereof is and shall be null and void.
ARTICLE XVI
MISCELLANEOUS
1.39 APPROVALS. Whenever the approval or consent of either Purchaser or
Seller is called for under the terms of this Contract, such approval or consent
shall not be unreasonably withheld and shall be given or denied within three (3)
business days of receipt of a request by Purchaser or Seller, as the case may
be, for such approval or consent (unless a different period for such approval or
consent is expressly provided for in this Contract). The failure by Purchaser or
Seller to notify the other party of its denial of approval or consent prior to
5:00 p.m. (Hawaii Time) on the third business day (or such different period for
such approval or consent as is expressly provided for in this Contract) after
the day on which such request is received by the party from whom approval or
consent is sought shall be deemed to be approval or consent, as of the end of
said third business day, by the party from whom approval or consent is sought.
1.40 AMENDMENT. No provision of this Contract or of any documents or
instrument entered into, given or made pursuant to this Contract may be amended,
changed, waived, discharged or terminated except by an instrument in writing
signed by the party against whom enforcement of the amendment, change, waiver,
discharge or termination is sought.
1.41 ENTIRE CONTRACT. This Contract together with the exhibits attached
hereto embodies the entire agreement between the parties hereto with relation to
the transactions contemplated hereby, and there have been and are no covenants,
agreements, representations, warranties or restrictions between the parties
hereto with regard thereto other than those set forth herein.
1.42 TIME. Time shall be of the essence of this transaction.
38.
1.43 PARTIES. The covenants and agreements herein contained shall
extend to and be obligatory upon the heirs, executors, administrators,
successors and assigns of the respective parties hereto.
1.44 NUMBER AND GENDER OF WORDS. Words of any gender used in this
Contract hall be held and construed to include any other gender, and words of a
singular number shall be held to include the plural and vice versa, unless the
context requires otherwise.
1.45 CAPTIONS. The captions used in connection with the Articles and
Sections of this Contract are for convenience only and shall not be deemed to
construe or to limit the meaning of the language of this Contract.
1.46 THIRD PARTIES. Nothing in this Contract, express or implied, is
intended to confer upon any person, other than the parties hereto and their
respective heirs, executors, personal representatives, successors and assigns,
any rights or remedies under or by reason of this Contract.
1.47 KNOWLEDGE. The phrase "to the best of Seller's knowledge" or other
references to Seller's knowledge shall only mean to the knowledge of senior
management and operational personnel in a direct or indirect decision making
capacity employed by Seller.
1.48 FURTHER ASSURANCES. Each of Seller and Purchaser will, at any time
and from time to time after the Closing Date, upon the request of the other,
execute, acknowledge and deliver, or will cause to be done, executed,
acknowledged and delivered all such further acts, deeds, assignments, transfers,
conveyances, powers of attorney and assurances as may reasonably be required to
consummate the transactions described herein.
1.49 GOVERNING LAW. This Contract shall be construed under and be
governed by the laws of the State of Hawaii, and all obligations of the parties
hereto created under this contract shall be performable in Hawaii County,
Hawaii.
1.50 COUNTERPARTS. This Contract may be executed in any number of
counterparts, each of which shall be an original, but such counterparts together
shall constitute one and the same instrument.
39.
1.51 EXHIBITS. All exhibits described in this Contract and attached
hereto are by this reference incorporated fully herein. The term "this Contract"
shall be considered to include all such exhibits.
1.52 INVALID PROVISIONS. If any provision of this Contract is held to
be illegal, invalid or unenforceable under present or future laws, such
provisions shall be fully severable; the Contract shall be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part of the Contract: and the remaining provisions of the Contract
shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance from this Contract.
Furthermore, in lieu of such illegal, invalid or unenforceable provision, there
shall be added automatically as a part of this Contract, a provision as similar
in terms to such illegal, invalid or unenforceable provision as may be possible
and be legal, valid or enforceable.
1.53 ATTORNEYS' FEES. If any dispute between Seller and Purchaser,
relating to the transactions contemplated in this Contract, should result in
litigation, the prevailing party shall be reimbursed for all reasonable costs
incurred in connection therewith, including, without limitation, reasonable
attorneys' fees and court costs. The prevailing party shall be determined by the
court based upon an assessment of which party's major arguments or positions
taken in the proceedings could fairly be said to have prevailed over the other
party's major arguments or positions on major disputed issues.
1.54 INTERPRETATION. The parties agree that each party and its counsel
have reviewed and revised this Contract and that the normal rule of construction
to the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Contract or any amendments
or exhibits thereto.
1.55 NO WAIVER. No failure of any party to exercise any power given
such party hereunder or to insist upon strict compliance by the other party with
its obligations hereunder shall constitute a waiver of any party's right to
demand strict compliance with the terms of this Contract.
1.56 RECORDING. Seller and Purchaser represent, warrant and covenant
that it will not record this Contract (or a memorandum or other evidence of this
Contract) or cause it to be recorded in the public records for the county in
which any of the Property is located or in any other jurisdiction, except that
in the event of a default by Seller of its obligations hereunder,
40.
Purchaser may record this Contract (or a memorandum or other evidence of this
Contract) or cause the same to be recorded in any such public records.
1.57 ANNOUNCEMENTS. Seller and Purchaser shall consult with each other
with regard to all press releases and other announcements issued at or prior to
the Closing Date concerning this Contract or the transactions contemplated
hereby and, except as may be required by applicable laws or the applicable rules
and regulations of any governmental agency or stock exchange, neither Seller nor
Purchaser shall issue any such press release or other such publicity without the
prior consent of the other party.
1.58 CONSENT TO JURISDICTION. Each party hereto hereby consents to
jurisdiction in the United States District Court for Hawaii and in the Third
Circuit Court in and for the County of Hawaii, State of Hawaii, for purposes of
any litigation to construe or enforce any obligations hereunder, or any other
document or instrument entered into given or made pursuant to this Contract, or
any of them, or any obligation arising therefrom, and each party hereto
expressly covenants and agrees that service of process may be made, and personal
jurisdiction over said party obtained, by serving a copy of the Summons and
Complaint upon said party in accordance with the applicable laws of the State of
Hawaii at such address of said party as may from time to time by specified in
accordance with the notice provisions contained herein or at such other address
as may then be proper under said laws. Nothing contained herein, however, shall
prevent Seller or Purchaser from bringing any action or exercising any rights
against the other within any other competent jurisdiction. The initiation of any
such proceeding or the taking of such action in any other jurisdiction will not,
however, constitute a waiver of the agreement contained herein that the laws of
the State of Hawaii will govern the rights and obligations of the parties hereto
under this Contract.
41.
1.59 DEFENSE OF CLAIMS. Within twenty (20) days after service of
process on, or other notification to an indemnified party ("INDEMNITEE") with
respect to any matter which could reasonably be expected to result in a loss,
expense, claim, damage or liability for which indemnification or defense may be
sought under this Contract, such indemnified party shall give written notice of
such legal action to the other party hereto ("INDEMNITOR") and Indemnitor shall
have the right to assume control of such legal action and take over the defense
thereof and sole responsibility therefor. If the Indemnitee fails to give such
notice then, if and to the extent the Indemnitor is prejudiced thereby, the
obligations of the Indemnitor to indemnify, defend and hold harmless the
Indemnitee shall xxxxx. In the absence of assumption of defense by the
Indemnitor, the Indemnitee will use its best efforts to defend, and to permit
the Indemnitor to participate fully in the defense of any claim, demand or other
matter to which such party's indemnification under this Contract applies. No
such claim, demand or other matter shall be compromised or settled by the
Indemnitee in any manner which might adversely affect the interest of the
Indemnitor without the prior written consent of the Indemnitor (which consent
shall not be unreasonably withheld, delayed, or conditioned).
1.60 NEGATION OF PARTNERSHIP OR JOINT VENTURE. Nothing in this Contract
contained shall constitute, or be construed to be or create, a partnership,
joint venture or lease (except for the Leases) between Seller and Purchaser.
Seller hereby acknowledges to Purchaser and Purchaser hereby acknowledges to
Seller that neither party owes any fiduciary duty or obligation to the other.
1.61 REPRESENTATION BY COUNSEL. Each party to this Contract
acknowledges to the other that it has been represented at all times by competent
legal counsel in connection with this Contract and the transactions contemplated
hereby.
1.62 SUBMISSION OF CONTRACT. No Contract with respect to the purchase
and sale of the Property shall exist, and this writing shall have no binding
force or effect, until it is executed and delivered by Purchaser and by Seller.
If Seller executes this Contract prior to Purchaser, then this Contract shall be
void, at Seller's sole option, unless Purchaser also executes the Contract and
delivers it to Seller within two (2) business days after the date on which
Seller executed the Contract.
42.
ARTICLE XVII
POST CLOSING AGREEMENTS
1.63 NEW FARMING SERVICE CONTRACT. Seller now performs farming services
operations for certain macadamia nut orchards which are owned by Seller or its
Affiliates. Effective as of the Closing Date Purchaser will enter into new
farming service contracts with Seller providing that Purchaser will perform
farming services for Seller's orchards in accordance with the terms and
conditions contained in the farming service contract attached hereto as Exhibit
O.
1.64 NEW ACCOUNTING SERVICES CONTRACT. Seller now performs accounting
services for (1) orchards which it farms under Farming Services Contracts, (2)
orchards owned by Seller, and (3) for certain of Seller's Affiliates. Effective
as of the Closing Date, Purchaser will perform accounting services for Seller
and its affiliates of the same type as Seller performed just before the Closing
Date in accordance with the terms and conditions contained in the accounting
services contract attached hereto as Exhibit P. Seller shall have the right to
terminate this contract as of the last day of any month by giving notice of such
termination to Purchaser during the previous month.
1.65 NEW MANAGEMENT SERVICES CONTRACT. Various of Seller's affiliates
now perform executive management, legal, land management, human relations, and
insurance services to Seller. Effective as of the Closing Date, such Seller's
Affiliates will perform management services for Purchaser under the terms and
conditions contained in the management services contract attached hereto as
Exhibit Q..
1.66 EASEMENTS. Seller or Seller's Affiliates will grant Purchaser such
easements over lands owned by Seller or Seller's Affiliates as may be necessary
to allow Purchaser access for its equipment, personnel and irrigation lines to
carry out farming services for Purchaser's own orchards as well as those
orchards which Purchaser will be farming under farming services contracts.
1.67 MULTI-EMPLOYER EMPLOYMENT BENEFITS. Seller and Purchaser will
enter into a multi-employer employment benefits agreement whereby Seller and
Seller's affiliates will continue to provide employment benefits to
non-bargaining unit employees of Purchaser pursuant to an agreement attached
hereto as Exhibit R.
IN WITNESS WHEREOF, Purchaser and Seller have caused this Contract to
be executed as of the day and year first above written.
43.
PURCHASER:
ML MACADAMIA ORCHARDS, L. P.
a Delaware limited partnership
Date Executed: By ML RESOURCES, INC.
March 14, 2000 Its General Partner
By /s/ Xxxxxxx X. Xxxxxxxx
----------------------------------
Xxxxxxx X. Xxxxxxxx
Its Senior Vice President
SELLER:
KAU AGRIBUSINESS, CO., INC.
a Hawaii corporation
Date Executed:
March 14, 2000 By: /s/ J. Xxxx Xxxxx
--------------------------------------
Title: Secretary
Printed Name: J. Xxxx Xxxxx
MAUNA KEA AGRIBUSINESS CO., INC.,
a Hawaii corporation
Date Executed:
March 14, 2000
By /s/ J. Xxxx Xxxxx
--------------------------------------
Title: Secretary
Printed Name: J. Xxxx Xxxxx
MAUNA KEA MACADAMIA ORCHARDS,
INC., Hawaii corporation
By /s/ J. Xxxx Xxxxx
--------------------------------------
Date Executed: Title: Secretary
March 14, 2000 Printed Name: J. Xxxx Xxxxx
KAU SUGAR, INC., a Hawaii corporation
Date Executed: By /s/ J. Xxxx Xxxxx
--------------------------------------
March 14, 2000 Title: Secretary
Printed Name: J. Xxxx Xxxxx
44.
LIST OF EXHIBITS
Exhibit A Xxxx of Sale for Tangible Personal Assets
Exhibit B Employment Contracts
Exhibit C Equipment Leases
Exhibit D Excise Tax Exemption Certificate
Exhibit E Farming Service Contracts
Exhibit F General Assignment
Exhibit G Key Employees
Exhibit H Land
Exhibit I Non-Foreign Status Certificate
Exhibit J Orchard Land
Exhibit K Excluded Property Employees
Exhibit L Retained Litigation
Exhibit M Vehicles
Exhibit N Operating Statements
Exhibit O New Farming Services Contract
Exhibit P New Accounting Services Contract
Exhibit Q New Management Services Contract
Exhibit R Multi-Employer Employment Benefit Agreement
45
FARMING CONTRACT
This Farming Contract is entered into on the date set forth below, by and
between Ka'u Agribusiness Co., Inc., Mauna Kea Agribusiness Co., Inc., Mauna Loa
Orchards, L.P. and Mauna Kea Macadamia Orchards, Inc. ("Owner") and M.L.
Macadamia Orchards, L.P. ("Manager").
RECITALS
WHEREAS Owner is the legal owner or Lessor of 699.56 acres improved with
macadamia orchards located at Pahala and Hilo, Hawaii County, State of Hawaii,
further described on Exhibit A attached hereto and hereinafter called "Parcels";
WHEREAS MANAGER IS EXPERIENCED AND CAPABLE IN ALL ASPECTS OF THE BUSINESS OF
FARMING AND HARVESTING MACADAMIA NUTS;
WHEREAS OWNER DESIRES TO ENGAGE THE EXPERT SERVICES OF MANAGER TO FARM, HARVEST
AND HUSK MACADAMIA NUTS FROM OWNER'S TREES ON THE PARCELS AND MANAGER DESIRES TO
PERFORM SUCH SERVICES FOR OWNER AS PROVIDED HEREIN.
NOW THEREFORE, In consideration of the premises and of the mutual covenants and
agreements set forth herein, the parties agree as follows:
1. TERM:
This contract shall commence on May 1, 2000 and shall continue in full force and
effect until December 31, 2005, unless terminated earlier as provided herein.
Upon expiration of the five (5) year eight (8) months period, this Contract will
be automatically renewed each year with cancellation authorized by either Owner
or Manager with at least six (6) month's prior notice. Should either party so
request, at the end of the stated term of this Contract, the parties agree to
negotiate in good faith with a view toward extending this Contract on terms and
conditions that are agreeable to such parties at that time. This Contract may
also be terminated as provided in Section 7.
2. FARMING SERVICES:
(a) Manager will perform all farming services that shall be necessary or
desirable from time to time in order to provide for the economical growth and
yield of the Owner's Macadamia orchards in accordance with proven and sound
agricultural practices. Manager will perform such services to the best of its
skill and ability, and in a manner consistent with the practices employed by
Manager in the planting, cultivation and
46
harvesting of other macadamia trees under its management and control. Owner
acknowledges that Manager makes no guarantee as to the future yields from the
orchards and Owner recognizes and assumes the agricultural risks associated with
the cultivation and harvesting of macadamia nuts, and the natural risks in the
area, including but not limited to wind, rain, drought and volcanic risks.
(b) Without limiting the generality of the foregoing description of its
services, Manager will perform the following services: Manager will provide and
maintain all necessary or desirable cultivation, weed and pest control, ground
cover, tree bracing, transplanting, soil and plant tissue analysis,
fertilization, pruning and hedging, replanting, disposal, drainage and erosion
control, harvesting, husking, transportation of nuts to processor, agricultural
research experiments, and related services to include preparing land for
mechanical harvesting. All such services will be performed at Owner's expense as
set forth herein.
(c) Manager will keep the Orchard planted with macadamia trees (and, where
necessary or appropriate, windbreak trees) during the entire term of this
Contract, and will provide such replacement trees as may be necessary from time
to time due to tree damage, disease or mortality. Owner recognizes that, due to
unpredictable climatic conditions and agricultural and natural risks, the amount
of future tree damage, disease and mortality is uncertain and Manager gives no
warranties or guarantees whatsoever concerning future rates thereof. Replacement
trees will be grafted trees of recommended commercial varieties usually procured
from Manager's nursery, and will be ready for field planting. The cost of
replacement trees will be charged to Owner as a direct cost pursuant to Section
6(d) without xxxx-up over the respective Manager's internal cost; No charge will
be made for replacement trees if replanting is required because of Manager's
negligence.
(d) Owner agrees not to erect a fence upon the parcel without prior written
consent of Manager. Erection of a fence may incur additional operating costs,
tree removals or yield reduction.
(e) The sale of the crop is Owner's responsibility. It is contemplated that
sales will normally be to Mauna Loa Macadamia Nut Corporation. Manager, unless
directed otherwise, will transport husked crop to Mauna Loa Macadamia Nut
Corporation for sale and further processing. If sale is to Mauna Loa, Manager
will receive payment for such production from Mauna Loa, deduct outstanding
farming services fee due Manager and forward remainder to Owner's Representative
at Owner's direction. Should Owner select any other nut purchaser, Owner will be
responsible for so notifying Manager and scheduling pick-up of the crop at a
designated area. Such pick-
47
up will be scheduled at the discretion of Manager within the constraints of
Manager's normal production schedule. To facilitate such scheduling, Manager
will notify Owner of the approximate date of harvest when first scheduled and
will further inform Owner not less than 48 hours in advance of scheduled husking
in order to allow Owner time to schedule transportation to receive such husked
production as it drops from the end of the husking line. Additional costs
incurred by Manager to accommodate non-Mauna Loa deliveries will be the
responsibility of Owner.
3. PERSONNEL AND EQUIPMENT:
(a) Manager either now owns or from time to time shall procure in its own name
and at its own expense, the use of all such tools, supplies, materials,
inventory, equipment and trees as shall be necessary or desirable for the
performance of all services required to be performed hereunder by Manager. Title
to and risk of loss of trees shall pass to Owner at the time trees are planted.
(b) Manager shall employ, train and supervise all such personnel as shall be
necessary or desirable for the efficient farming and harvesting of the trees.
Manager may subcontract to others any portion of the work required hereunder.
Owner shall have no obligation to any party under any such subcontract but shall
expressly be made a third party beneficiary of such sub-contracts. Manager shall
at all times remain primarily responsible for the satisfactory performance of
all work and services described herein and may not transfer or assign such
responsibility without the prior written consent of Owner.
(c) Manager shall comply with all requirements of federal and state law with
respect to employment of personnel, including but not limited to, all insurance
coverage required under worker's compensation laws. Manager hereby indemnifies
and agrees to hold Owner harmless from and against any and all claims,
obligations, liabilities or demands with respect to and arising out of the
performance of Manager's obligations under this Contract and the employment of
Manager's personnel and agents at the Orchard.
4. ACCOUNTING AND REPORTS:
(a) Manager shall keep full and accurate records and accounts, showing all
costs, advances, payments, expenditures and liabilities, and all other
information and data which shall be necessary for the computation of the fees to
be paid by Owner hereunder. Manager will provide Owner with any and all
financial or other information relating to this Contract that Owner shall
reasonably request from time to time. To the extent that information is provided
to Owner hereunder and is not otherwise in the
48
public domain, Owner agrees to keep such information confidential and not to
disclose the same to any person except as may be required by law or in
connections with any litigation between Manager and Owner. Owner agrees to
return to Manager any copies of trade secrets, proprietary market share
information or test marketing results, within a reasonable time after such
information is provided to Owner. Owner and/or Owner's Representative will have
the right to inspect the books and records of Manager and its affiliates,
insofar as they relate to any dealings with or interest of Owner, at any time
during normal business hours, with the prior approval of Manager.
(b) In order to assist Owner in its financial planning, Manager will provide
Owner with an estimated production and price forecast, as well as an operating
cost budget for the upcoming calendar year no later than November 30 of the
preceding calendar year.
(c) As soon as practicable but in no event later than 120 days after the end of
its accounting year, Manager will provide a written report to Owner describing
in reasonable detail its conduct of operations during such year and any material
plans or developments with respect to the next year. The report shall also
include a statement of all adjustments made to reimbursement payments pursuant
to Section 5 hereof and the balance outstanding at the end of the year. If the
actual amount of the Farming Services Fee is higher than the aggregate amount
paid by Owner in the form of the Quarterly actual payments for such year, Owner
shall forthwith pay to Manager the amount of such excess. If the actual Farming
Services Fee is less than the aggregate amount paid by Owner for such year,
Manager shall, at Manager's election, either pay the difference to Owner or
apply the amount of the difference as a credit against the quarterly payments
next due on the Farming Services Fee.
(d) The statement referred to in (c) above with respect to the Farming Services
Fee for any accounting year shall be conclusive and binding unless Owner shall
object in writing thereto within 120 days after receiving Manager's annual
report containing such statement. Owner shall have the right to engage a
certified public accounting firm of its selection to review the Farming Services
Fee, and the right to assert claims based on such review, at any time during
such 120-day period. If any such review and assertion shall result in a downward
adjustment of the Manager's Costs by an amount in excess of 5% of the initial
computation thereof, Manager shall promptly reimburse Owner all of its expenses
incurred in connection with the engagement of such accounting, firm and the
assertion of such claim.
5. REIMBURSEMENT OF MANAGER'S COSTS:
49
(a)(i) Owner shall reimburse Manager on a quarterly basis consistent with
Manager's quarterly accounting periods for Manager's Costs (as defined
below). Payment with respect to each quarter will be made within 30 days
after the billing date. In the event that any payment hereunder is not
made within 30 days after it becomes due, the unpaid amount shall
thereafter bear interest at 1% over the Bank of Hawaii prime rate (but
not to exceed the highest rate permitted by the usury laws of the State
of Hawaii). Manager shall have the right to set off any reimbursement of
Manager's Costs owed by Owner against any amounts owed to Owner by Mauna
Loa or other nut purchasers for the purchase of macadamia nuts. Upon
presentation of such a request, Owner herewith authorizes such nut
purchasers to forward such amounts due directly to Manager, for
Manager's account, to be further distributed as hereinafter described.
Proceeds remaining after withdrawal of accrued costs will be forwarded
to Owner. Owner shall make quarterly disbursements to Manager for costs
incurred but not reimbursed by withholding from Owner's Mauna Loa
proceeds, upon receipt of Manager's invoice.
(ii) The term "Manager's Costs" shall not include any capital expenditures
or any other costs or expenses which are stated in this Contract to be
payable by Manager, nor shall it include any costs which Manager may
incur in order to repair any damage caused by its own negligence.
(Examples of capital expenditures include irrigation systems, road
modification, buildings, orchard floor leveling, etc.) The term
"Manager's Costs" shall include, to the extent that they are actually
incurred by Manager during the relevant year in connection with specific
services or work necessary or desirable under this Contract, direct
costs accrued by Manager for labor, equipment use, materials and
contract services. The term "Manager's Costs" shall also include
overhead costs allocated to operations at the Orchard including, but not
limited to, employee fringe benefits, Manager's administrative overhead
and general field costs such as salaries, expendable tools and supplies,
agricultural research, building and equipment depreciation and repair,
outside professional services and insurance. The term "Manager's Costs"
shall also include the cost of husking Owner's macadamia nuts, if
applicable, and a capital utilization charge of 9% of Manager's net book
value of farming, harvesting and husking equipment used in the
operations prorated to adjust for any use of such equipment otherwise
than for Owner. The Manager's net book value of farming, harvesting and
husking equipment is the historical cost of such equipment as currently
shown on Owner's books before Manager's asset purchase from Owner less
accumulated depreciation and amortization exclusive of any effect of
"step up or down" accounting resulting from changes in the ownership of
Manager, their parent company or any other affiliate. Further, the
Manager's Cost shall be based on the Manager's historical costs
exclusive of the effects of such accounting changes. Manager's
administrative overhead cost consist of all costs related to services
provided to the macadamia farming
50
operations by such Manager's corporate staff, including but not limited
to, managerial and administrative personnel, industrial relations,
accounting, industrial engineering and warehouse personnel. Manager's
overhead costs shall also include a proportionate share of service
charges allocated to Manager by X. Xxxxxx and Company, Limited ("X.
Xxxxxx"). Exhibit B sets forth a list of direct costs and overhead cost
centers which comprise the Manager's Costs and procedures for
allocating overhead costs and computing equipment capital recovery
costs.
(iii) In addition to the reimbursement of Manager Costs, Owner shall pay to
Manager, in accordance with the quarterly statements, a Management Fee
as compensation for services rendered hereunder in the amount of 15% of
total Manager's Costs.
(iv) For purposes of this Contract, all payments made by the Owner to the
Manager, including but not limited to the reimbursement of Manager's
Costs, the Management Fee and other fees, shall be increased by the
amount of any applicable Hawaii general excise tax which the Manager is
obligated to pay by reason of such payments.
(b) Unless otherwise provided to the contrary herein, in the event that any
adjustment is made in any amount paid hereunder, whether as a result of revised
estimates, audited figures or otherwise, an appropriate credit or charge shall
be included in the next succeeding reimbursement payment.
(c) Manager may be providing farming services to other parcels under Farming
Contracts. Owner agrees that Manager shall have the right to pool services and
costs and then to assign such costs on a pro rata basis to the parcel. (This
pooling concept shall include harvesting costs and revenues from nut sales as
appropriate.)
6. OWNERSHIP OF LAND:
(a) Except as specifically provided herein, Manager will not be obligated or
liable for matters that are customarily the responsibility of a landowner
including but not limited to payment of taxes and assessments, insurance against
liabilities, and compliance with laws, ordinances and government regulations
relating to the ownership of land. When requested by Owner, Manager shall
cooperate with Owner in the making of any surveys, the processing of any tax
appeals and the procurement of any permits, licenses, insurance coverage and
other items which are necessary or desirable for Owner's proper and lawful
ownership and use of the Orchards.
51
(b) Owner, with the assistance of the Manager, but at Owner's expense, will
procure and maintain insurance with respect to the trees in the Orchard, so long
as such insurance is available at commercially reasonable rates, against the
following named perils: fire, lightning, windstorm and volcanic eruption.
7. TERMINATION AND DEFAULT:
(a) The parties may terminate this Contract at any time by mutual agreement in
writing. In the event that any party shall be in default (as defined below), the
non-defaulting party may terminate this Contract at any time by delivering
written notice of such termination to the defaulting party.
(b) A party shall be in "default" under this Contract in the event that (i) a
party files any voluntary proceeding for dissolution under any federal or state
bankruptcy, insolvency, receivership or similar law; (ii) if any such proceeding
is commenced against it involuntarily and is not dismissed with 60 days; (iii)
if it make any composition or assignment for the benefit of its creditors; (iv)
if it enters into any corporate reorganization or acquisition without making
adequate provision for the performance of its obligations under this Contract;
(v) if it fails to perform any of its obligations when due under this Contract
and it fails to correct such non-performance of its obligations when due under
this Contract and it fails to correct such non-performance within thirty (30)
days after written demand for performance is made by the other party or if such
non-performance cannot be corrected within 30 days, it does not state in writing
its intent to cure such default, deliver such written notice to the other party,
and begin immediately to cure said default as soon as reasonably possible; or
(vi) if it repeatedly fails to perform its obligations under this Contract after
receipt of written demand for performance.
(c) In the event of the destruction of any part or the entire Orchard, Owner
shall restore the destroyed property to its initial condition if such
restoration can be performed economically as determined by Owner. If such
restoration is not performed, this Contract shall terminate as to the destroyed
property only. In the event that any part or the entire Orchard is condemned,
this Contract shall terminate as to the condemned property only.
8. NOTICE:
(a) For convenience of operation hereunder, Owner and Manager each shall
designate one representative to serve as the channel of communication,
delivering information to and securing necessary action by its principals. Any
party may change its
52
representative from time to time by delivering written notice of such change to
the other party hereto. Until further notice is given, each party's
representative shall be the person listed in the notice address below.
(b) Any and all notices, demands, or other communications (collectively,
"notice") required or desired to be given hereunder by either party shall be in
writing and shall be validly given or made to the other party or his authorized
representative at the addresses set forth below, if served either personally or
if deposited in the United States mail, certified or registered, postage
prepaid, or if sent by fax.
MANAGER: OWNERS REPRESENTATIVE
M.L. Macadamia Orchards, L.P. J.W.A. Buyers
P. O. Box 130 X. Xxxxxx and Company, Limited
Xxxxxx, XX 00000-0000 P. O. Xxx 0000
Telephone (000) 000-0000 Xxxxxxxx, XX 00000-0000
FAX (000) 000-0000 Telephone (000) 000-0000
FAX (000) 000-0000
(c) If such notice is delivered personally, service shall conclusively be deemed
to have been made at the time of such delivery. If such notice is given by mail,
service shall conclusively be deemed to have been made 10 days after deposit
thereof in the mail as provided for above. If such notice is given by FAX,
service shall conclusively be deemed to have been made 24 hours after the
transmission thereof and receipt of the proper response code. Any party may
change its address for the purpose of receiving notices as herein provided by a
written notice given to the other party.
9. FORCE MAJEURE:
Neither of the parties hereto shall be liable or accountable to the other party
for any delay in complying with or any failure to comply with any of the terms,
provisions or conditions of this Contract in the event that such failure shall
have been caused by an act of God, strike, lockout, public enemy, economic
failure of the industry, war, civil commotion, riot, condemnation, judicial or
governmental order or other requirements of law (such as but not limited to,
governmental regulations concerning hazards of marketing or consumption of
macadamia nuts) or the refusal or failure of any governmental office or officer
to grant any permit or order necessary for compliance herewith by either party
hereto, nor shall either of the parties hereto be liable or accountable to the
other party for any damages arising from any such delay or failure.
53
Owner is aware of the natural risks such as, but not limited to, earthquakes,
volcanic eruptions, floods, winds, etc., as well as agricultural risks, and
assumes those risks.
10. WAIVER:
The failure of either party hereto to enforce its rights upon any default or
breach of agreement on the part of the other party shall not be construed as a
waiver thereof, nor shall any custom or practice which may grow up between the
parties in the course of administering this Farming Contract be construed to
waive or to lessen the right of either party hereto to demand performance by the
other party of any term, provision or condition hereof, or to exercise any
rights in the event of default. A waiver by either party of a particular breach
or default shall not be deemed to be a waiver of the same or any subsequent
breach or default.
11. ASSIGNMENT:
Neither of the parties hereto may assign any of its rights or obligations
hereunder to any other person or legal entity without the prior written consent
of the other party hereto. Any consent or approval required under this Farming
Contract shall not be unreasonably withheld and no charge for the giving of such
consent or approval shall be made.
12. ARBITRATION:
All claims, demands, disputes, differences, controversies, disagreements and
misunderstandings (hereinafter called "disputes") arising out of, or in
connection with, or in relation to this Farming Contract shall be submitted to
and determined only by an arbitrator selected in the following manner: Either
party shall serve upon the other written notice stating that such party desires
to have the dispute reviewed by an arbitrator. Either party may then ask the
Honolulu office of the American Arbitration Association ("AAA") for a list of
five disinterested arbitrators who AAA believes are capable of deciding this
matter. Each party shall, within five days after receiving the list from AAA,
strike one person from the list, and shall continue to strike one person each
five days thereafter until there is only one remaining, and this person shall be
the arbitrator. If any party fails to strike a person from the AAA list within
the prescribed time limit, the other party may do so on behalf of the defaulting
party.
The decision and award of a majority of the arbitrators, or of such sole
arbitrator, shall be final and binding upon the parties and enforceable in
accordance with the provisions
54
of Chapter 6SB, H.R.S., as it may from time to time be amended. Each party shall
pay one-half (1/2) of the arbitrator's fees and expenses and all of its own fees
and expenses.
13. ENTIRE AGREEMENT:
This Contract represents the entire agreement and understanding of the parties
with respect to the subject matter hereof. The parties specifically acknowledge
and agree that no joint venture or lease is created hereby and that neither
party is hereby appointed as the agent of the other party.
14. GOVERNING LAW:
This Contract will primarily be performed in and shall be governed by and
construed in accordance with the laws of the State of Hawaii. Each of the
parties consents to the jurisdiction of the courts of the State of Hawaii or any
federal court sitting in Hawaii and agrees that Hawaii is an appropriate venue
for any action that may be brought under this Contract.
55
IN WITNESS WHEREOF:
Owner and Manager caused this Farming Contract to be executed on this 28TH
day of APRIL, 2000.
KA'U AGRIBUSINESS CO., INC.
M.L. MACADAMAMIA ORCHARDS, L.P.
BY /s/ J. XXXX XXXXX
--------------------------------------
ITS SECRETARY
BY /s/ XXXX X. XXXXXX
--------------------------------------
ITS PRESIDENT
MAUNA KEA AGRIBUSINESS CO., INC.
BY /s/ J. XXXX XXXXX
--------------------------------------
ITS SECRETARY
BY /s/ XXXX X. XXXXXX
--------------------------------------
ITS PRESIDENT
MAUNA LOA ORCHARDS, L.P.
BY /s/ J. XXXX XXXXX
--------------------------------------
ITS SECRETARY
BY /s/ XXXX X. XXXXXX
--------------------------------------
ITS PRESIDENT
MAUNA KEA MACADAMIA ORCHARDS, INC.
BY /s/ J. XXXX XXXXX
--------------------------------------
ITS SECRETARY
BY /s/ XXXX X. XXXXXX
--------------------------------------
ITS PRESIDENT
56
MANAGEMENT SERVICES CONTRACT
BETWEEN
ML MACADAMIA ORCHARDS, L.P. and
X. XXXXXX AND COMPANY, LIMITED
This Agreement, dated this 28th day of April, 2000 by and between ML
Macadamia Orchards, L.P. ("MLP"), a master limited partnership, and X. Xxxxxx
and Company, Limited, Inc. ("Xxxxxx"), a Hawaii corporation, each intending to
be legally bound, agree as follows:
WHEREAS, MLP has purchased all of the assets and acquired all of the
employees of Xxxxxx'x macadamia farming operation; and
WHEREAS, MLP desires Xxxxxx to provide certain Management Services to
MLP after this acquisition and Xxxxxx is willing to do so.
NOW, THEREFORE, the parties agree as follows:
1. SERVICES - Xxxxxx shall undertake to perform for MLP all of the
following standard services for the fee as set forth in Section 3:
(a) Xxxxxx will make available for consultation with MLP its
Executive Staff including specifically its senior officers who
are on the Board of Directors of ML Resources, Inc.
(b) Insurance and risk management advisory and placement services.
(c) Advice on the labor agreements with the ILWU Local 142,
including assistance in negotiating Union contracts.
(d) Assistance in handling worker's compensation cases.
(e) Human Resources administration including existing health,
welfare and retirement plans, and compensation or incentive
plans administration, consistent with past practices. Such
services to include negotiating rates and terms on behalf of MLP
for the health and welfare plans
57
Xxxxxx agrees to perform all the above services in a
professional manner and in accordance with all applicable laws
and government regulations.
2. TERM - This Agreement will be effective May 1, 2000 and will
continue for twelve months and will be automatically renewed for an additional
twelve months, subject to either party giving the other party at least sixty
(60) days prior written notice of termination or cancellation.
3. FEE - MLP shall pay to Xxxxxx a monthly fee of $8,335 payable
on the first day of each month for the services to be performed that month, and
without the necessity of Xxxxxx sending monthly invoices. This fee is solely for
Xxxxxx'x Management Services.
4. OTHER EXPENSES - Xxxxxx will provide MLP with a projected
annual budget for professional services such as actuarial or tax and audit, for
MLP's review and approval. MLP agrees to pay invoices for these professional
services directly to the vendor in accordance with the payment terms of each
vendor. If Xxxxxx is required to obligate or expend more than $3,000 of expenses
on behalf of MLP in excess of the individually projected costs in the annual
budget, or for any services not included on the annual budget at any one time,
Xxxxxx must obtain the pre-approval of MLP.
5. INDEMNIFICATION - Xxxxxx shall have no liability to MLP for
any errors or omissions in performing the management services prescribed by this
agreement unless there is willful misconduct or gross negligence in performing
such services. Furthermore, in the absence of willful misconduct or gross
negligence, MLP agrees to indemnify, defend and hold Xxxxxx harmless from any
all claims, expenses, costs (including attorneys' fees and costs), and
liabilities asserted against Xxxxxx with respect to, arising out of or by reason
of performance of said functions. Additionally, if Xxxxxx is permitted by the
State of Hawaii to add MLP to Xxxxxx'x self insured authority for workers'
compensation claims, MLP will indemnify Xxxxxx against any costs, claims,
expenses, settlements, and allocations from the Sate of Hawaii or the State's
Special Compensation Fund that Xxxxxx may be forced to pay on behalf of MLP.
6. ARBITRATION - Any controversy or disagreement arising out of
or relating to this agreement or any breach hereof shall be submitted by the
parties to arbitration in Honolulu, Hawaii under the Commercial Arbitration
Rules of the American Arbitration Association. Such arbitration will be
undertaken by a single disinterested arbitrator chosen from a list of five
supplied by each party to the other. The ruling of the arbitrator will be final
and binding upon the parties. Each party shall
58
bear its own expenses in connection with such arbitration, but will share
equally in the cost of the arbitrator's services.
7. ASSIGNMENT - Neither party can assign this agreement without
the prior written consent of the other, such consent not to be unreasonably
withheld.
8. ENTIRE AGREEMENT - This agreement embodies the entire
agreement and understanding between the parties hereto with respect to the
subject matter hereof, and shall be construed in accordance with and governed by
the laws of the State of Hawaii.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first above written.
X. XXXXXX AND COMPANY, LIMITED MAUNA LOA MACADAMIA
ORCHARDS, L.P.
By: /s/ J. Xxxx Xxxxx By: /s/ Xxxxxxx X. Xxxxxxxx
------------------ ------------------------
Its: Secretary Its: Senior Vice President
By: /s/ Xxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxxx
------------------- ---------------------
Its: President Its: Secretary
59
MEMORANDUM OF AGREEMENT
This Memorandum of Agreement between ML MACADAMIA ORCHARDS, LP (hereinafter
referred to as "Purchasing Employer"), MAUNA KEA MACADAMIA ORCHARDS, INC, KA'U
ORCHARD DIVISION OF KA'U AGRIBUSINESS CO., INC. and KEAAU ORCHARD DIVISION OF
KA'U AGRIBUSIENSS CO., INC. (Jointly referred to as "Selling Employers") and the
ILWU LOCAL 142 (hereinafter called "Union") constitute the basis of settlement
of all issues involved in this negotiations between the parties which were
concluded on April 4, 200 relative to the collective bargaining unit of the
Selling Employers and the Purchasing Employer.
This Memorandum of Agreement shall be effective from May 1, 2000 and shall
remain in effect until April 30, 2001, with the following understanding:
1. That ML Macadamia Orchards, LP shall fully honor and maintain each
collective bargaining agreement made between the ILWU Local 142 and the
Selling Employers to include all renewals thereof.
2. That ML Macadamia Orchards, LP will carry over all earned and accrued
vacation for all employees covered by each collective bargaining agreement.
3. That pension benefits for all covered employees will remain in effect and
with no loss of credits, benefits, and vesting services. Selling Employers
will be responsible for the benefit service accrued through April 30, 2000
and will report the accrued benefit to the Union and to the affected
employees by June 15, 2000. Each Unit employees' benefit at retirement or
termination will be again calculated at that time using the combined
service with Selling Employers and with Purchasing Employer. The combined
benefit will be reduced by Selling Employers' portion with the remainder of
the combined benefit due from Purchasing Employer to the extent that such
crediting of service does not result in duplication of benefits.
4. ML Macadamia Orchards, LP agrees to hire all existing union employees with
the same benefits as they currently have.
5. The parties agree that no severance is due any employees as a direct result
of this transaction as long as Selling Employers have complied with the
State's Dislocated Workers' Act.
60
6. All other sections of the collective bargaining agreement that were not
discussed in this negotiations will remain in effect.
IN WITNESS WHEREOF, the parties hereto through their duly authorized
representatives, have executed this Memorandum of agreement of the 28th day of
April, 2000.
ML MACADAMIA ORCHARDS LP ILWU LOCAL 142
By: /s/ Xxxxxxx X. Xxxxxxxx By:
------------------------------ --------------------------
By: /s/ Xxxxxx X. Xxxxxx By:
------------------------------ --------------------------
MAUNA KEA MACADAMIA ORCHARDS, INC
KA'U ORCHARD DIVISION OF KA'U AGRIBUSDINESS CO., INC.
KEAAU ORCHARD DIVISION OF KA'U AGRIBUSINESS CO., INC.
Collectively:
By: /s/ J. Xxxx Xxxxx
------------------------------
By: /s/ Xxxx X. Xxxxxx
------------------------------
61
