EXHIBIT 10.47
RESTATED KAIWIKI ORCHARDS FARMING LEASE
THIS LEASE is made this 26th day of February, 1996, but effective as
of July 1, 1989, by and between:
MAUNA KEA AGRIBUSINESS CO., INC., A HAWAII CORPORATION, with its
principal place of business at 000 Xxxx Xxxxxx, Xxxxxxxx, Xxxxxx 00000, and post
office address at X.X. Xxx 0000, Xxxxxxxx, Xxxxxx 00000, hereinafter called the
"Landlord", and
MAUNA LOA MACADAMIA PARTNERS, L.P., A DELAWARE LIMITED PARTNERSHIP,
with its principal place of business at 000 Xxxx Xxxxxx, Xxxxxxxx, Xxxxxx, and
post office address at X.X. Xxx 0000, Xxxxxxxx, Xxxxxx 00000, hereinafter called
the "Tenant".
WITNESSETH
For the term, at the rents, and on the covenants, conditions and
provisions hereinafter set forth, Landlord hereby demises and leases, and Tenant
hereby accepts and rents, that certain parcel of land situated at South Hilo,
Island and County of Hawaii, State of Hawaii, more particularly described in
Exhibit "A" attached hereto and made a part hereof, subject, however, to the
encumbrances described in said Exhibit "A".
TO HAVE AND TO HOLD the same, together with all improvements, rights,
easements, privileges and appurtenances thereunto belonging or appertaining,
unto Tenant for a term commencing July 1, 1989, and ending June 30, 2034, unless
sooner terminated or unless extended as provided below.
Tenant hereby covenants and agrees to pay to Landlord, net over and
above all taxes, assessments and other charges hereunder payable by Tenant, rent
as set out in the Rent Schedule attached hereto and made a part hereof.
AND LANDLORD hereby covenants with Tenant that upon payment by Tenant
of the rent as aforesaid and upon observance and performance of the covenants by
Tenant hereinafter contained, Tenant shall peaceably hold and enjoy said
premises for the term hereby demised without hindrance or interruption by
Landlord or any other person or persons lawfully claiming by, through or under
Landlord, except as herein expressly provided.
AND TENANT hereby covenants with Landlord as follows:
1. PAYMENT OF RENT. Tenant will pay said rent in lawful money of
the United States of America at the times and in the manner aforesaid, without
any deduction and without notice or demand, at the office of Landlord in
Honolulu.
2. TAXES AND OTHER CHARGES. Tenant will also pay to Landlord at
least ten (10) days before the same become delinquent all taxes, assessments,
rates, charges and other outgoings of every description (but not including
interest and penalties if Landlord makes late payment after receiving timely
remittance from Tenant) to which said premises or any part thereof or any
improvement thereon, or Landlord or Tenant in respect thereof, are now or may
during said term be assessed or become liable, whether made by governmental
authority, by any utility company or by any public or community service company;
provided, however, that with respect to any assessment made under any betterment
or improvement law which may be payable in installments, Tenant shall be
required to pay only such installments together with interest as shall become
due and payable during said term, and real property taxes shall be prorated
between Landlord and Tenant as of the dates of commencement and expiration
respectively of said term.
Tenant will also pay to Landlord with each installment of rent, real
property taxes and assessments and other charges hereunder payable by Tenant the
amount of all Hawaii general excise or similar taxes payable by Landlord with
respect thereto, whether actually or constructively received. If at any time
during said term there shall be assessed against the demised land or any part
thereof or any improvement thereon or any rents payable to Landlord therefor or
against Landlord in respect thereof, any new taxes (other than federal or state
net income, franchise, corporation, capital stock or excess profits taxes or any
other taxes existing at the commencement of said term) which are in substitution
for real property taxes or are in lieu of increases thereof, Tenant will also
pay to Landlord as additional rent, at least ten (10) days before the same
become delinquent, all such new taxes; Tenant will pay all Hawaii conveyance
taxes, if any, payable with respect to this Lease and any subleases hereunder.
3. IMPROVEMENTS REQUIRED BY LAW. Tenant will at Tenant's own
expense during the whole of said term make, build, maintain and repair all
fences, sewers, drains and roads which may be required by law to be made, built,
maintained and repaired upon or adjoining or in connection with or for the use
of the premises used or occupied by Tenant or any part thereof and will bear the
pro rata cost of all such features or facilities used by both Tenant and
Landlord, corresponding to the proportionate usage of the same by Tenant or
persons acting under Tenant.
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4. REPAIR. Tenant will at Tenant's own expense from time to time
and at all times during said term repair, maintain and keep all of Tenant's
buildings and other improvements now or hereafter built on the demised land with
all necessary reparations and amendments whatsoever in good and safe repair,
order and condition, except for reasonable wear and use thereof and damage by
unavoidable casualty other than fire and extended coverage risks. If Tenant or
any person claiming by, through or under Tenant shall damage any private roadway
giving access to said premises, Tenant shall immediately upon written notice by
Landlord repair such roadway to the condition that existed prior to such damage,
and if Tenant shall fail to do so Landlord may accomplish such repair at
Tenant's expense. Tenant will also, at all times during said term at Tenant's
own expense, maintain in good order and condition all boundary monuments (if
any) now or hereafter constructed on the demised land. Landlord represents that
no major repairs that would be required pursuant to the terms of this paragraph
are necessary as of the date of this Lease.
5. OBSERVANCE OF LAWS. Tenant will at all times during said term
keep said premises in a safe condition and observe and perform all laws,
ordinances, rules and regulations now or hereafter made by any governmental
authority for the time being applicable to said premises or any improvement
thereon or use thereof.
6. INSPECTION. Tenant will permit Landlord and Landlord's agents at
all reasonable times during said term to enter said premises and examine the
state of repair and condition thereof, and will repair and make good all defects
required by the terms of this Lease to be repaired by Tenant of which notice
shall be given by Landlord or Landlord's agents within thirty (30) days after
the giving of such notice or such further time as may be required to complete
such repair with due diligence.
7. USE. Tenant will use said premises solely for the cultivation
and harvesting of macadamia nuts and for accessory buildings and other
improvements useful for or incidental to said purpose. Tenant will not make or
suffer any strip or waste or unlawful, improper or offensive use of said
premises or any part thereof.
8. GOOD HUSBANDRY. Tenant will in the use of the portions of said
premises used or occupied by Tenant follow approved methods of husbandry
practiced on lands similarly situated or subject to similar conditions. Tenant
will keep said premises in a good cultivated condition reasonably free from
weeds and other noxious growth. Tenant will seek the guidance of appropriate
governmental agencies on the matter of erosion control and will by proper
construction and use of drainage ditches and otherwise, take all reasonable
precautions to prevent or arrest loss of soil by erosion. Any buffer strip
required by Tenant for the protection of Tenant's agricultural crops on said
premises shall be provided by Tenant at Tenant's own expense within the land
hereby demised,
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and Tenant will not demand any contribution whatsoever for the cost of providing
or maintaining any such strip from Landlord or Landlord's tenants of any land
adjoining areas used by Tenant. Tenant understands and agrees that neither
Landlord nor Landlord's tenants shall be required to perform any crop or weed
control on any land adjoining said premises.
9. REPORTS. Tenant will furnish to Landlord on or before the
expiration of sixty (60) days after the end of each calendar year during said
term a complete written statement stating in reasonable detail (a) the quantity
of macadamia nuts produced on or derived from the demised land which were sold
during such year, (b) a list of every sublease, tenancy and cropping agreement
effective at any time during such year with respect to any part of said premises
specifying the area, location and term thereof and the rent reserved thereunder,
(c) the extent of construction and maintenance of buildings and other
improvements on and general character and condition of the demised land, and (d)
the number of acres of the demised land cleared and planted with macadamia nut
trees and the location thereof.
10. FIRE INSURANCE. Tenant will at Tenant's own expense at all times
during said term keep all buildings now or hereafter erected on the demised land
used by Tenant exceeding $1,000 in actual value insured against loss or damage
by fire with extended coverage in an insurance company authorized to do business
in Hawaii in a sum not less than 80% of the value thereof, in the joint names of
Landlord, Tenant and any mortgagee as their interests may appear, and will pay
all premiums thereon when due, and will, whenever requested by Landlord, deposit
promptly with Landlord the current policies of such insurance or certificates
thereof. In every case of loss or damage to said buildings all proceeds of such
insurance shall be used with all reasonable speed by Tenant for rebuilding,
repairing or otherwise reinstating the same buildings in a good and substantial
manner according to the plan and elevation of the buildings so destroyed or
damaged or such modified plan as shall first be approved in writing by Landlord;
provided, however, that in lieu of such restoration Tenant may at Tenant's
option remove all debris and remains of such damaged buildings and restore the
site thereof to good condition and even grade, and all insurance proceeds then
remaining after the costs of restoration and debris removal shall be payable to
Tenant and any mortgagee as their interests may appear, except that such
remaining proceeds shall be payable to Landlord if there shall be fewer than
three (3) years remaining on the term of this Lease (not including any extension
options).
11. LIENS AND BONDS. Tenant will not commit or suffer any act or
neglect whereby said premises or any improvement thereon or the estate of Tenant
therein shall at any time during said term become subject to any attachment,
judgment, lien, charge or encumbrance whatsoever, and will indemnify and hold
Landlord harmless from and against all loss, cost and expense, including
reasonable attorneys' fees, with respect thereto. Tenant will, before
commencing
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construction of any improvements on said premises, deposit with Landlord a
fully-executed copy of the contract therefor and a copy of the contractor's
performance bond and labor and material payment bond naming Landlord as an
obligee, in an amount equal to the cost of such construction in form and with
surety satisfactory to Landlord, guaranteeing the completion of such work free
and clear of all mechanics' and materialmen's lien.
12. INDEMNITY AND LIABILITY INSURANCE. Except as to death or
property damage resulting solely from the negligence of Landlord, Tenant will
indemnify and hold Landlord harmless from and against all claims and demands for
loss or damage, including property damage, personal injury and wrongful death,
arising out of or in connection with the use or occupancy of said premises by
Tenant or any person claiming by, through or under Tenant, or any accident or
fire on said premises, or any nuisance made or suffered thereon, or any failure
by Tenant to keep said premises or any adjoining land as set forth in paragraph
14 hereof in a safe condition, or to perform any of the covenants herein
contained, and will reimburse Landlord for all costs and expenses, including
reasonable attorneys' fees, incurred by Landlord in connection with the defense
of any such claims, and will hold all goods, materials, furniture, fixtures,
equipment, machinery, livestock and other property whatsoever on said premises
at the sole risk of Tenant and hold Landlord harmless from any loss or damage
thereto by any cause whatsoever. Tenant will at Tenant's own expense effect and
maintain during the whole of said term comprehensive general liability insurance
with respect to said premises in an insurance company authorized to do business
in Hawaii, naming Landlord as an additional assured, with minimum limits of not
less than $1,000,000 for injury to one or more persons in any one accident or
occurrence and not less than $100,000 for property damage, or such higher limits
as Landlord may from time to time establish with due regard to the then prudent
business practice in the State of Hawaii as reasonably adequate for Landlord's
protection, and will from time to time deposit promptly with Landlord current
certificates of such insurance. Except as to injury, death or property damage
resulting solely from the negligence of Tenant, Landlord will indemnify and hold
Tenant harmless from and against all claims and demands for loss or damage,
including property damage, personal injury and wrongful death, arising out of or
in connection with the use or occupancy by Landlord or any person claiming by,
through or under Landlord or out of or in connection with any accident or fire
on said land of Landlord not used or occupied by Tenant or persons claiming
under Tenant, or any nuisance made or suffered thereon (unless caused by
Tenant), and will reimburse Tenant for all costs and expenses, including
reasonable attorneys' fees, incurred by Tenant in connection with the defense of
any such claims for which Tenant and those claiming under Tenant shall be found
to be without fault.
13. OVERHANGING TREES. Tenant will not during said term plant,
cultivate or maintain on the demised land any trees whatsoever so close to any
boundary thereof as to
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overhang an adjoining lot, road or trail, and if necessary to comply with this
covenant will remove any trees or branches thereof which at any time shall
overhang an adjoining lot, road or trail.
14. LAND ADJOINING ROAD. Tenant will at all times during said term
maintain and keep any adjoining land lying between the established road and any
parts of said premises used or occupied by Tenant or persons claiming under
Tenant along such road in a safe, neat and orderly condition free from all
brush, weeds and debris of every kind, and will also maintain and keep any ditch
now or hereafter existing within such adjoining land free from all boulders and
other obstructions whatsoever to flood waters.
15. ASSIGNMENT AND SUBLETTING. So long as there shall be in effect
between Tenant and Landlord (or any other person specified by Landlord) a
farming contract and a nut purchase contract providing for macadamia nut farming
operations to be conducted by Landlord or such other person on the macadamia nut
areas demised by this Lease, Tenant may freely assign this Lease without
Landlord's consent or approval to any person who shall enter into or succeed to
Tenant's rights and obligations under such farming contract. Otherwise, Tenant
will not, without the prior written consent of Landlord, except as herein
expressly provided, assign, agree to assign, or mortgage this Lease or sublet or
part with possession of all or any part of said premises; provided, however,
Tenant may without such consent sublet any part or parts of said land used or
occupied by Tenant to others on the express condition that such sublease shall
incorporate all terms and provisions herein contained pertaining to such land
and that such sublease shall be properly accounted for in detail in each annual
report by Tenant herein required to be furnished to Landlord. Landlord shall
not unreasonably withhold any such consent nor require the payment of any moneys
or other consideration for the giving of such consent other than a reasonable
fee as hereinafter provided in paragraph 16.
16. EXPENSES OF LANDLORD. Tenant will pay to Landlord on demand (a)
all costs and expenses, including reasonable attorneys' fees, paid or incurred
by Landlord in enforcing any of the covenants herein contained, in remedying any
breach by Tenant of said covenants, in recovering possession of said premises or
any part thereof, in collecting or causing to be paid any delinquent rent, taxes
or other charges hereunder payable by Tenant, or in connection with any
litigation (other than condemnation proceedings) commenced by or against Tenant
to which Landlord shall without fault be made a party, and (b) a reasonable fee
for reviewing and processing any request by Tenant for Landlord's consent or
approval, which fee shall be a flat-rate service charge as established by the
policy of Landlord then in effect or a sum equal to all costs and expenses paid
or incurred by Landlord, including, without limitation, reasonable fees of
attorneys and other consultants retained by Landlord and the costs of
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Landlord's regular salaried staff in connection therewith, whichever is greater.
17. CONDITION OF PREMISES. Tenant has examined and accepts said
premises in the existing condition thereof and shall be solely responsible for
the adequate design, construction and repair of all improvements now or
hereafter made on or in connection with the areas occupied or used by Tenant or
persons claiming under Tenant and for obtaining all necessary utility services
and connections, and Tenant agrees that Landlord shall have no liability
whatsoever for such condition or any further improvement or development thereof
or any repair of any private roads serving said areas.
18. CONSTRUCTION OF BUILDINGS. Tenant will not at any time erect,
place or maintain on said land any buildings or structures other than fences,
walls and water facilities, nor make or suffer any additions to or alterations
of the basic structure of any buildings thereon, except in accordance with
plans, specifications and plot plans therefor first approved in writing by
Landlord. Landlord shall not unreasonably withhold any such approval.
19. DEDICATION OF LAND. Tenant may, at Tenant's option at any time
during said term, petition the Director of Finance of the County of Hawaii for
dedication for agricultural uses of all or such portion of the land hereby
demised and actually used or occupied by Tenant and as shall qualify therefor
under the provisions of Section 19-55 of the Hawaii County Code, as amended. If
all or a portion of said land is now or hereafter to be developed as an orchard,
Tenant may also, at Tenant's option at any time during said term, apply to the
Board of Agriculture of the Department of Agriculture, State of Hawaii, for
classification of such land as orchard property under the provisions of Section
154-2, Hawaii Revised Statutes, as amended. If at any time after such
dedication or classification Tenant shall fail to observe the restrictions on
the use of such land or shall cancel or cause such dedication or classification
to be cancelled for any reason whatsoever, Tenant will promptly pay or cause to
be paid to Landlord all taxes, penalties and other charges imposed by the County
of Hawaii or the State of Hawaii on account of such cancellation, together with
the amount of all Hawaii general excise or similar taxes payable thereon by
Landlord, whether actually or constructively received.
20. SURRENDER. At the end of said term or other sooner determination
of this Lease, Tenant will peaceably deliver up to Landlord possession of the
land hereby demised, together with all fences, roads, bridges and underground
sewers and drains and, except as hereinafter provided, all macadamia nut and
other trees upon or belonging to the same, all in good order and condition. If
not then in default hereunder Tenant shall have the right upon such termination
of this Lease to remove from said premises all other improvements thereon above
ground level made by Tenant, including, but not limited to, buildings, sheds,
drying platforms, water tanks and surface pipelines, provided that Tenant shall
promptly
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repair to Landlord's reasonable satisfaction all damage caused by such removal.
If Tenant does not wish to remove the same from said premises, Tenant shall give
written notice thereof to Landlord at least six (6) months prior to the end of
said term, and Landlord, within thirty (30), days of the receipt of such notice,
shall advise Tenant in writing of Landlord's decision either to allow said
improvements to remain or to require removal, in which latter case Tenant shall
remove the same and promptly repair to Landlord's satisfaction all damage caused
by such removal. If Tenant shall not then be in default hereunder and if a
growing orchard or other crop shall be in existence on the last day of said
term, Tenant shall have the right upon written notice to Landlord to extend said
term only for the continued cultivation and harvest at maturity of such growing
crop, but in no event for more than six (6) months after the last harvest
preceding expiration of said term at the same rent as was payable for the last
full calendar year of said term.
21. INTEREST ON PAST DUE AMOUNTS. Any rent or other sums payable by
Tenant to Landlord under this Lease which are not paid when due shall bear
interest from the date the same became due until paid at the greater of the
maximum rate then permitted to be contracted for by written contract under the
laws of the State of Hawaii, or in the absence of such maximum rate, at the rate
of one percent (1%) per month.
22. LANDLORD'S AGRICULTURAL OPERATING RIGHTS. Landlord reserves and
shall have the unrestricted right appurtenant to lands located adjacent to or in
the vicinity of the demised premises and now owned or used or hereafter used by
Landlord and its successors or assigns in agricultural operations, to engage in
any type of farming operation, including, but not limited to, open burning,
percolating, evaporating, fertilizing, milling, power generation, water
diversion, plowing, grading, storing, hauling, herbicide and pesticide spraying,
irrigating, crop dusting, and all other activities incidental to the planting,
farming, harvesting and processing of agricultural products and by-products,
which operations may from time to time cause noxious emissions such as noise,
smoke, dust, light, heat, vapor, odor, chemicals, vibration and other nuisances
to be discharged or emitted over and upon the demised premises. Landlord and
its successors and assigns shall not be responsible or liable to Tenant or its
successors or assigns for the consequences from the creation and discharge of
such noxious emissions. Tenant and its assigns from time to time shall
indemnify and hold Landlord and its successors and assigns harmless from any
liability or expense resulting from the Tenant's or such assigns' claims, as the
case may be, arising from such noxious emissions.
23. LANDLORD'S EASEMENT RIGHTS. Landlord reserves, and shall have
appurtenant to lands located adjacent to or in the vicinity of the demised
premises, the non-exclusive right to use all of the demised premises which the
Landlord, in its sole discretion, may require or deem necessary or desirable for
roads, trails, easements or rights-of-way which Landlord,
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in its sole discretion may require or deem necessary or desirable for access,
utilities, pole and wire lines, flumes, ditches, pipelines and other water
courses; together with the right to enter the demised premises for the
construction, installation, maintenance, repair, alteration or replacement of
any such improvements. The Landlord shall exercise its rights under this
paragraph in such a manner to cause the least practicable interference with the
growing of macadamia nuts on the demised land and shall compensate the Tenant
fully for the lost value of all macadamia nut trees damaged or destroyed by the
Landlord's exercise of such rights; provided however, that Landlord shall not be
liable for any consequential or other damages and shall in no event be required
to pay more for any macadamia nut tree than the Landlord will be required to pay
for such tree under paragraph I of this Lease, calculated at the time of
destruction or damage.
AND IT IS HEREBY MUTUALLY AGREED by and between the parties hereto as
follows:
A. CONDEMNATION. In case at any time or times during said term said
premises or any part thereof shall be required, taken or condemned by any
authority having the power of eminent domain, then and in every such case, the
estate and interest of Tenant in the premises so required, taken or condemned
shall at once cease and determine, and Tenant shall not by reason thereof be
entitled to any claim against Landlord or others for compensation or indemnity
for leasehold interest, and all compensation and damages payable for or on
account of any land, water and improvements thereon shall be payable to and be
the sole property of Landlord; provided, however, that all compensation and
damages for or on account of any buildings, sheds, drying platforms, water
tanks, surface pipelines and any trees and crops on the demised land shall be
payable to and be the sole property of Tenant; provided, further, that in case
only part of the land hereby demised shall be so required, taken or condemned,
the base rent hereunder payable for the remainder of said term shall be reduced
(calculated to the nearest dollar) in the proportion that the area of land in
macadamia nut cultivation so required, taken or condemned bears to the total
area of land in macadamia nut cultivation hereby demised, and Landlord shall
refund to Tenant any unearned rent therefor paid in advance prior to such date.
In case one-half or more of the total area of the land in macadamia nut
cultivation hereby demised shall be so required, taken or condemned, thereby
rendering use of the remaining portion of the land in macadamia nut cultivation
to be economically unsound, Tenant shall have the option within one hundred
twenty (120) days after such taking to surrender this Lease and be relieved of
further performance hereunder. Condemnation of any leasehold interest in said
premises or any part thereof shall not terminate this Lease nor excuse Tenant
from full performance of Tenant's covenants for the payment of money or any
other obligations hereunder capable of performance by Tenant, but in such case
Tenant may claim and recover from the condemning
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authority all compensation and damages payable on account of Tenant's leasehold
interest.
B. CONSENT TO MORTGAGE. Tenant may from time to time without
further consent of Landlord assign this Lease by way of mortgage to any bank,
insurance company or other established lending institution as mortgagee,
provided that Tenant shall upon execution of such mortgage promptly deliver a
true copy thereof to Landlord. The mortgagee or its assigns may enforce such
mortgage and acquire title to the leasehold estate in any lawful way, and
pending foreclosure of such mortgage may take possession of and rent said
premises, and upon foreclosure thereof may without further consent of Landlord
sell and assign the leasehold estate by assignment in which the assignee shall
expressly assume and agree to observe and perform all the covenants of Tenant
herein contained, and such assignee may make a purchase money mortgage of this
Lease to the assignor, provided that upon execution of any such assignment or
mortgage a true copy thereof shall be delivered promptly to Landlord and that no
other or further assignment of this Lease for which any provision hereof
requires the written consent of Landlord shall be made without such consent.
The mortgagee or its assigns of such mortgage shall be liable to perform the
obligations herein imposed on Tenant only during the period such person has
possession or ownership of the leasehold estate. Nothing contained in such
mortgage shall release or be deemed to relieve Tenant from the full and faithful
observance and performance of Tenant's covenants herein contained or from any
liability for the nonobservance or nonperformance thereof, nor be deemed to
constitute a waiver of any rights of Landlord hereunder, and the terms,
covenants and conditions of this Lease shall control in case of any conflict
with the provisions of such mortgage.
C. PROTECTION OF MORTGAGE. During the continuance in effect of any
authorized mortgage of this Lease, Landlord will not terminate this Lease
because of any default on the part of Tenant to observe or perform any of the
covenants or conditions herein contained if the mortgagee or its assigns, within
one hundred twenty (120) days after Landlord has mailed to the mortgagee or its
assigns at the last known address thereof a written notice of intention to
terminate this Lease for such cause, shall cure such default, if the same can be
cured by the payment of money or, if such is not the case, shall undertake in
writing to perform and shall thereafter perform all the covenants of this Lease
capable of performance by the mortgagee or its assigns until such time as this
Lease shall be sold upon foreclosure of such mortgage commenced promptly and
completed with due diligence, and upon foreclosure sale of this Lease, the time
for performance of any obligation of Tenant then in default other than payment
of money shall be extended by the time reasonably necessary to complete such
performance with due diligence. Any default consisting of Tenant's failure
promptly to discharge any lien, charge or encumbrance against said premises
junior in priority to such mortgage shall be deemed to be duly cured if such
mortgage shall be foreclosed by appropriate action instituted within said
120-day period and thereafter prosecuted in a
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diligent and timely manner. Ownership by or for the same person of both the fee
and leasehold estates in said premises shall not effect the merger thereof
without the prior written consent of any mortgagee to such merger.
D. DESTRUCTION OF LAND. In case at any time or times during said
term any part or parts of the demised land in macadamia nut cultivation shall be
rendered unfit for the cultivation of macadamia nuts by volcanic action or other
act of God, the base rent hereunder payable for the remainder of said term shall
be reduced in the ratio that the area of the land in macadamia nut cultivation
so affected bears to the total area of land in macadamia nut cultivation hereby
demised, and if a major portion of the land in macadamia nut cultivation hereby
demised shall be rendered unfit for said use by such act of God thereby
rendering the continuance of operations on the remainder of the land to be
economically unsound, Tenant may at Tenant's option surrender this Lease by
giving written notice thereof to Landlord within thirty (30) days after such
casualty and thereby be relieved of any further obligations hereunder.
E. DEFEASANCE. This demise is upon the express condition, that if
Tenant shall fail to pay said rent or any part thereof within thirty (30) days
after the same becomes due, whether the same shall or shall not have been
legally demanded, or shall fail to observe or perform any of the other covenants
herein contained and on the part of Tenant to be observed and performed and such
default shall continue for thirty (30) days after written notice thereof given
to Tenant at the address provided below, specifying said default in detail, or
if Tenant then owning this Lease shall make any assignment for the benefit of
creditors or abandon said premises, or if this Lease or any estate or interest
of Tenant hereunder shall be sold under any attachment or execution, Landlord
may in any such case at once re-enter said premises or any part thereof in the
name of the whole and, upon or without such entry, at Landlord's option
terminate this Lease without service of notice or legal process, and may expel
and remove from said premises Tenant and all persons claiming under Tenant and
their effects without being deemed guilty of any trespass or becoming liable for
any loss or damage occasioned thereby, and may bring an action for summary
possession of said premises, all without prejudice to any other remedy or right
of action which Landlord may have for arrears of rent or for any preceding or
other breach of contract. If this Lease or a memorandum thereof is recorded in
the Bureau of Conveyances of the State of Hawaii, such termination may but need
not necessarily be made effective by recording in such place an affidavit
thereof by Landlord or a judgment thereof by a court of competent jurisdiction.
F. NONWAIVER. Acceptance of rent by Landlord or its agent shall not
be deemed to be a waiver by Landlord of any breach by Tenant of any covenant
herein contained or of Landlord's right to re-enter or terminate for breach of
condition. Waiver by Landlord of any breach by Tenant shall not operate to
extinguish the term, covenant or condition the
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breach of which has been waived nor be deemed to be a waiver of Landlord's right
to declare a forfeiture or termination for any other breach thereof.
G. NOTICES. Any notice or demand to Landlord or Tenant provided for
or permitted by this Lease may be given sufficiently for all purposes in writing
either (1) mailed as registered or certified mail, addressed as follows:
If to Tenant, at X.X. Xxx 0000
Xxxxxxxx, Xxxxxx 00000
If to Landlord, at X.X. Xxx 0000
Xxxxxxxx, Xxxxxx 00000
or at the last address designated by such party in writing to the other, or (2)
delivered personally within the State of Hawaii to Landlord or Tenant or any
officer of Tenant if Tenant is a corporation or any general partner of Tenant if
Tenant is a partnership, as the case may be, and shall be deemed conclusively to
have been given on the date of such mailing or personal delivery.
H. DEFINITIONS. The terms "premises," "land" and "demised land"
herein shall be deemed or taken to include (except where such meaning would be
clearly repugnant to the context) all buildings and other improvements now or
hereafter built on the land hereby demised. The term "Landlord" herein shall
mean and include Landlord, its successors and assigns. The term "Tenant" herein
or any pronoun used in place thereof shall mean and include the masculine or
feminine, the singular or plural number, and jointly and severally individuals,
firms and corporations, and their and each of their respective heirs,
successors, personal representatives and permitted assigns, according to the
context hereof. The headings of paragraphs herein are inserted only for
convenience and reference and shall in no way define, expand or limit the scope
or intent of any provision of this Lease.
I. OWNERSHIP OF TREES; LANDLORD'S PURCHASE OF TREES. The parties
acknowledge that Tenant is the owner of all macadamia nut trees growing on the
demised land at the inception of this Lease. Landlord shall have the right at
any time and from time to time (but no more often than two (2) times in any
calendar year) after June 30, 2019, to purchase any or all macadamia nut trees
growing on the demised land at a price equal to the fair market value of such
trees at the time of such purchase. In case of any partial withdrawal of trees,
the withdrawal will be of trees contiguous to other land areas owned or
controlled by Landlord or will otherwise take trees in a manner and
configuration preserving access to, irrigation of, and macadamia nut operations
on, the balance of the premises as reasonably necessary for Tenant's continued
use and enjoyment of the balance of the premises. At least one hundred twenty
(120) days prior to any such purchase, Landlord shall give Tenant written notice
of Landlord's desire to purchase trees specifying the trees and land area
affected. Landlord and Tenant shall, based upon the factors which would
12
be considered by the appraisers as described in the following paragraph, then
promptly endeavor to reach mutual agreement on the price to be paid by Landlord
to Tenant for the trees.
If Landlord and Tenant shall not have agreed on such price at least
ninety (90) days before the scheduled purchase, either party may give to the
other written notice of a desire to determine the price by appraisal
arbitration, pursuant to chapter 658, Hawaii Revised Statutes, as the same may
be amended or reenacted. If the parties agree upon a single arbitrator, such
arbitrator shall determine such fair market value, and, except as provided below
in this paragraph I, the arbitrator's decision shall be final, conclusive and
binding upon both parties. If the parties fail to agree upon a single
arbitrator or if either party prefers not to have an arbitration by a single
arbitrator, there shall be an arbitration by three (3) appraisers, in which case
either party shall name one of the appraisers by written notice to the other
party, whereupon the other party shall, within ten (10) days after receipt of
such notice, name a second appraiser; and, in case of failure to do so, the
party who has already named an appraiser may have the second appraiser selected
or appointed by a judge of the First Circuit Court of the State of Hawaii; and
the two appraisers so appointed, in either manner, shall select and appoint a
third appraiser; and, if the two appraisers so appointed shall fail to appoint
the third appraiser within ten (10) days after the naming of the second
appraiser, either party may have the third appraiser selected or appointed by
such judge; and the three appraisers so appointed shall thereupon proceed to
determine such fair market value as herein provided, and the decision and award
of any two of them shall be final, conclusive and binding upon both parties,
except as provided below in this paragraph I, or unless such decision and award
shall be vacated, modified or corrected, all as provided in chapter 658. The
appraisers so selected shall be reputable persons experienced in valuing
macadamia nut orchards and shall not be regularly employed by or have any
material interest in either Landlord or Tenant or in any affiliate of either
(or in the outcome of the appraisal proceedings). The appraisers shall appraise
the trees in place as a producing macadamia nut orchard or orchards, assuming
that the owner thereof has all necessary rights to farm and harvest such
orchards and has the same type of arrangements with respect to farming or
operating such orchards and selling the nuts harvested therefrom and the same
obligations for lease rent and other expenses and commitments as Tenant shall
have immediately prior to such time. The appraisers shall have all of the
powers and duties prescribed in chapter 658; and judgment may be entered upon
any arbitration decision and award as provided in chapter 658.
Except as provided below in this paragraph I, in cases of arbitration,
Landlord and Tenant shall each pay the expense of its own appointee and its own
attorneys' and witnesses' fees; and all other expenses of arbitration shall be
divided equally between Landlord and Tenant.
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Notwithstanding the pendency of any such arbitration, except as
provided below in this paragraph I, the affected trees shall be deemed purchased
at the date specified as the purchase date in Landlord's notice of intent to
purchase, and title to such trees shall then pass automatically to Landlord.
Except as provided below in this paragraph I, this Lease shall automatically and
immediately terminate as to the land underlying the purchased trees as of the
earlier of the date of actual or deemed purchase of the trees by Landlord, and
Tenant shall cooperate in executing and acknowledging all documents that may be
necessary or appropriate to subdivide the land underlying the purchased trees
and to subdivide the land underlying the purchased trees and to confirm transfer
of the tree title and the whole or partial surrender of this Lease, as the case
may be.
In the event that any election by Landlord to purchase macadamia nut
trees pursuant to this paragraph I shall become subject to appraisal
arbitration, Landlord shall have the sole right and option (but no more often
than two (2) times in any calendar year) in Landlord's sole discretion from time
to time and at any time, but no more than thirty (30) days following any
arbitration decision and award, to elect not to purchase any or all of the trees
subject to Landlord's initial election to purchase; provided that in such event
any and all reasonable expenses of arbitration shall be borne solely by Landlord
including the expenses of each arbitrator and expenses incurred by each party
for attorneys' and witnesses' fees, and Landlord shall be liable to reimburse
Tenant for such expenses paid by Tenant. In the event of such election not to
purchase trees, the affected trees shall not be deemed subject to any final,
conclusive and binding appraisal arbitration decision and award, shall not be
deemed purchased at the date specified as the purchase date in Landlord's notice
of intent to purchase, title to such trees shall not pass automatically to
Landlord, and this Lease shall not automatically and immediately terminate as to
the land underlying the affected trees.
J. EXTENSIONS OF LEASE TERM. If this Lease shall not otherwise be
sooner terminated, Landlord shall notify Tenant in writing at least one hundred
twenty (120) days (but not more than two hundred forty (240) days) before the
scheduled end of the term or any extension thereof whether Landlord offers to
extend the term for an additional five (5) years. If Landlord does not so offer
to extend the term and if the total term of this Lease to the scheduled end of
the term (as it may have been theretofore extended) shall be less than
ninety-nine (99) years, then Landlord shall be obligated to purchase from Tenant
all the macadamia nut trees on the demised land at the end of the term at a
price determined by mutual agreement of the parties, based upon the factors
which would be considered by the appraisers as described in paragraph I above,
or, failing mutual agreement within thirty (30) days after the deadline for
Landlord to offer to extend the term, by appraisal arbitration in the manner
specified in paragraph I above.
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If Landlord does so offer to extend the term, Tenant shall notify
Landlord in writing within thirty (30) days after receipt of such offer whether
Tenant accepts the offer. If Tenant does not timely accept such offer, the term
shall end as scheduled and Landlord shall have no obligation to purchase the
macadamia nut trees.
If Tenant timely accepts Landlord's offer to extend the term, the term
shall be extended for five (5) years at rents to be determined as prescribed in
the Rent Schedule attached to this Lease.
If the extension of the term shall commence before the rent shall be
determined, Tenant, pending the determination of the rent, shall continue to pay
rent on the same terms in effect for the immediately preceding portion of the
term and shall promptly pay the deficiency, if any, upon the conclusion of the
proceedings to determine the new rent plus interest at the rate of one percent
(1%) per month on the amount of such deficiency computed from the date or dates
when the amount of such deficiency would have been payable but for the pending
rent determination.
K. NEGATION OF PARTNERSHIP. Nothing in this Lease shall be
construed to render Landlord in any way or for any purpose a partner, joint
venturer, or associate in any relationship with Tenant.
IN WITNESS WHEREOF, the parties hereto have executed these presents
the day and year first above written, and effective as of July 1, 1989 as
hereinbefore set forth.
MAUNA KEA AGRIBUSINESS CO., INC.
By /s/ Xxxx X. Xxxxxx
---------------------------------
Xxxx X. Xxxxxx
Its Vice President
By /s/ Xxxxxxxx X. Xxxxxx
---------------------------------
Xxxxxxxx X. Xxxxxx
Its Secretary
Landlord
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MAUNA LOA MACADAMIA PARTNERS, L.P., a
Delaware limited partnership
By Mauna Loa Resources, Inc.
Its Managing General Partner
By /s/ Xxxx X. Xxxxxx
------------------------------
Xxxx X. Xxxxxx
Its President
By /s/ Xxxxxxxx X. Xxxxxx
------------------------------
Xxxxxxxx X. Xxxxxx
Its Secretary
By Mauna Loa Macadamia Nut
Corporation
Its Special General Partner
By /s/ Xxxx X. Xxxxxx
------------------------------
Xxxx X. Xxxxxx
Its President
By /s/ Xxxxxxxx X. Xxxxxx
------------------------------
Xxxxxxxx X. Xxxxxx
Its Secretary
Tenant
16
RENT SCHEDULE
Rents under the foregoing Lease shall be determined and payable as
follows:
A. YEARS 1 THROUGH 10.
i. BASE RENT. For and during each of the first ten (10) fiscal
years (July 1 through June 30) of the term, Tenant shall pay to Landlord a base
annual rent of THIRTY-TWO THOUSAND FIVE HUNDRED SIXTY DOLLARS ($32,560.00),
payable in equal installments semiannually in advance on January 1 and July 1 of
each year.
ii. ADDITIONAL RENT. For each of the first ten (10) fiscal
years of the term, Tenant shall pay to Landlord additional rent of FOUR HUNDRED
SIXTY-FIVE AND 00/100 DOLLARS ($465.00) for every one cent (1CENTS) by which the
average annual "Farm Price" for "Net" pounds of macadamia nuts in the State of
Hawaii for that year, as reported by the Hawaii Agricultural Statistics Service,
exceeds seventy cents (70CENTS) per pound. An example of such a publication is
attached hereto as Exhibit "B" and made a part hereof. Such additional rent
shall be payable within thirty (30) days after the final report of such average
annual price per pound, published as stated above, is available. If the Hawaii
Agricultural Statistics Service shall discontinue issuing such reports, Landlord
and Tenant shall mutually agree on what reports shall be substituted therefor.
B. YEARS 11 THROUGH 45.
i. BASE RENT. For and during each year of the three (3)
ten-year periods succeeding the tenth fiscal year of the term and for one
five-year period following the last of said ten-year periods, Tenant shall pay
to Landlord base annual rental in a sum equal to the then fair market rental of
the demised land for the operation of macadamia orchards (or for any higher and
better use then being made of the land), determined by mutual agreement of
Landlord and Tenant based upon the factors that would be considered by the
appraisers as described in paragraph D below, as of the commencement of the
respective ten-year or five-year rental period, as the case may be, payable in
equal installments semiannually in advance on January 1 and July 1 of each year.
ii. ADDITIONAL RENT. For and during each year of the three (3)
ten-year periods succeeding the tenth fiscal year of the term and for one
five-year period following the last of said ten-year periods, Tenant shall pay
to Landlord additional rent determined pursuant to the following formula:
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Additional Rent = (Annual Average "Farm Price" for "Net" pounds
of Macadamia Nuts in the State of Hawaii, as reported by the Hawaii Agricultural
Statistics Service, for the year under consideration) (Annual Average "Farm
Price" for "Net" pounds of Macadamia Nuts in the State of Hawaii, as reported by
the Hawaii Agricultural Statistics Service, for the year immediately preceding
the commencement of such ten-year or five-year period, as the case may be) x
(Annual Base Rent for the year under consideration) - (Annual Base Rent for the
year under consideration). Such additional rent shall be payable within thirty
(30) days after the final report of such average annual price per pound,
published as stated above, is available. If the Hawaii Agricultural Statistics
Service shall discontinue issuing such reports, Landlord and Tenant shall
mutually agree on what reports shall be substituted therefor.
For example, if (a) the Annual Base Rent for Year 11 is $15,000,
and (b) the average annual "Farm Price" for Years 10 and 11 are $.90 and $.95,
respectively, then the additional rent for year 11 would be ($.95) ($.90) x
($15,000) - ($15,000), or $833.33.
iii. COMMON PROVISIONS. If Landlord and Tenant are unable to
agree upon such fair market rental or the means of determining additional rent,
the same shall be determined by an arbitrator or arbitrators appointed as
provided below, who shall ascertain the fair market rental or the manner of
determining additional rent, or both, as of the commencement of the ten-year or
five-year period for which rent is sought to be determined. Such annual base
rent, whether determined by agreement or arbitration, shall in no event be less
than the average annual total rent (base and additional rent) payable for the
immediately preceding ten-year period.
C. YEARS 46 THROUGH 100.
i. BASE RENT. If Landlord shall offer to extend the term for
one or more five-year extensions and Tenant shall accept such offer, all as
prescribed in paragraph K of the Lease, then, for and during each year of each
extended term, Tenant shall pay to Landlord base annual rental in a sum equal to
the then fair market rental of the demised land for the operation of macadamia
orchards (or for any higher and better use then being made of the land),
determined by mutual agreement of Landlord and Tenant based upon the factors
that would be considered by the appraisers as described in paragraph D below, as
of the commencement of the five-year extended term, payable in equal
installments semiannually in advance on January 1 and July 1 of each year.
ii. ADDITIONAL RENT. If Landlord shall offer to extend the term
for one or more five-year extensions and Tenant shall accept such offer, all as
prescribed in paragraph K of the Lease, then, for and during each year of each
extended term, Tenant shall pay to Landlord additional rent determined pursuant
to the following formula:
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Additional Rent = (Annual Average "Farm Price" for "Net" pounds
of Macadamia Nuts in the State of Hawaii, as reported by the Hawaii Agricultural
Statistics Service, for the year under consideration) (Annual Average "Farm
Price" for "Net" pounds of Macadamia Nuts in the State of Hawaii, as reported by
the Hawaii Agricultural Statistics Service, for the year immediately preceding
the commencement of such five-year extension) x (Annual Base Rent for the year
under consideration) - (Annual Base Rent for the year under consideration).
Such additional rent shall be payable within thirty (30) days after the final
report of such average annual price per pound, published as stated above, is
available. If the Hawaii Agricultural Statistics Service shall discontinue
issuing such reports, Landlord and Tenant shall mutually agree on what reports
shall be substituted therefor.
For example, if (a) the Annual Base Rent for Year 46 is $30,000,
and (b) the average annual "Farm Price" for Years 45 and 46 are $1.20 and $1.30,
respectively, then the additional rent for year 46 would be ($1.30) ($1.20) x
($30,000) - ($30,000), or $2,500.
iii. COMMON PROVISIONS. If Landlord and Tenant are unable to
agree upon such fair market rental or the means of determining additional rent,
the same shall be determined by an arbitrator or arbitrators appointed as
provided below, who shall ascertain the fair market rental or the manner of
determining additional rent, or both, as of the commencement of the five-year
extended term for which rent is sought to be determined. Such annual base rent,
whether determined by agreement or arbitration, shall in no event be less than
the average annual total rent (base and additional rent) payable for the
immediately preceding five- year period.
D. ARBITRATION. If Landlord and Tenant shall not have agreed upon
the fair market rental of the demised land or upon the means of determining
additional rent, or both, at least ninety (90) days prior to the commencement of
a ten-year or five-year period for which rent is to be determined, either party
may give to the other written notice of a desire to have an arbitration to
determine such fair market rental or such additional rent formula, or both,
pursuant to chapter 658, Hawaii Revised Statutes, as the same may be amended or
reenacted. If the parties agree upon a single arbitrator, such arbitrator shall
determine such fair market rental or such additional rent formula, or both, and
his decision shall be final, conclusive and binding upon both parties, subject
to the minimum limitation stated above. If the parties fail to agree upon a
single arbitrator or if either party prefers not to have an arbitration by a
single arbitrator, there shall be an arbitration by three (3) appraisers, in
which case either party shall name one of the appraisers by written notice to
the other party, whereupon the other party shall, within ten (10) days after
receipt of such notice, name a second appraiser, and in case of failure to do
so, the party who has already named an appraiser may have the second appraiser
selected or appointed by a judge of the First Circuit Court of the State of
Hawaii; and the two appraisers so appointed, in either manner, shall select and
appoint a third appraiser, and
19
if the two appraisers so appointed shall fail to appoint the third appraiser
within ten (10) days after the naming of the second appraiser, either party may
have the third appraiser selected or appointed by such judge; and the three
appraisers so appointed shall thereupon proceed to determine such fair market
rental or such additional rent formula, or both, as herein provided, and the
decision and award of any two of them shall be final, conclusive and binding
upon both parties for the particular ten- year or five-year rental period then
under consideration, subject to the minimum limitation stated above, unless such
decision and award shall be vacated, modified or corrected, all as provided in
chapter 658. The appraisers so selected shall be reputable persons experienced
in valuing macadamia nut orchards and shall not be regularly employed by or have
any material interest in either Landlord or Tenant or in any affiliate of either
(or in the outcome of the appraisal proceedings). Such appraisers shall have
all of the powers and duties prescribed by chapter 658; and judgment may be
entered upon any such decision and award as therein provided.
In all cases of arbitration, Landlord and Tenant shall each pay the
expense of its own appointee and its own attorneys' and witnesses' fees; and all
other expenses of arbitration shall be divided equally between Landlord and
Tenant.
If and whenever the fixing of such fair market rental or such additional
rent formula, or both, is under arbitration, Tenant, pending the determination
thereof, shall continue to pay rent on the same terms in effect during the last
preceding rental period and shall promptly pay the deficiency, if any, upon the
conclusion of the arbitration proceedings plus interest at the rate of one
percent (1%) per month on the amount of such deficiency computed from the date
or dates when the amount of such deficiency would have been payable but for the
pendency of the arbitratio
20
