Exhibit No. 2.1.
Form of Purchase and Sale Agreement dated
February 13, 2004 by and between Kaupulehu Developments and WB KD
Acquisition, LLC.
PURCHASE AND SALE
AGREEMENT
By and Between
KAUPULEHU
DEVELOPMENTS,
a Hawaii general
partnership,
as Seller
and
WB KD ACQUISITION,
LLC,
a Delaware limited liability
company,
as Developer
February 13, 2004
PURCHASE AND SALE
AGREEMENT
THIS PURCHASE AND SALE AGREEMENT
(this “Agreement”) is made and entered into this 13th
day of February, 2004, by and between KAUPULEHU DEVELOPMENTS, a
Hawaii general partnership (“Seller”), and WB KD
ACQUISITION, LLC, a Delaware limited liability company (herein
referred to as the “Developer”).
R E C I T A L S:
A.
Capitalized terms used herein shall have the meanings set forth in
the text or in Article 14 of this Agreement.
B.
Seller is the ground lessee under the Original Ground Lease with
Kamehameha Schools (“KS”) whereby Seller has a
leasehold interest in and to certain real property referred to as
Lot 4 situated in Kaupulehu, North Kona, Big Island, Hawaii
(“Lot 4”).
C.
Seller has subdivided Lot 4 into three (3) separate parcels,
configured as shown on the plan attached hereto as Exhibit A
(“Lot 4A”, “Lot 4B” and “Lot
4C”).
D.
Developer desires to purchase Seller’s interest in Lot 4A on
the terms and conditions set forth herein. A legal
description of Lot 4A is attached hereto as Exhibit B. Seller
has transferred its entire interest in Lot 4B to a third
party. Seller will retain its leasehold interest in Lot
4C.
E.
Seller and Developer have negotiated with KS the terms and
conditions of a new and separate lease to Lot 4A to be issued by KS
to Developer at Closing (the “Lot 4A
Lease”).
F.
After the acquisition of the Lot 4A Lease at Closing, Developer
intends to further subdivide Lot 4A into two (2) development
increments referred to herein as “Increment 1” and
“Increment 2” as described below.
G.
Lot 4A is approximately 877 acres in area, of which approximately
241 acres are within the Coastal Planning Area Subzones and
approximately 636 acres are developable. Seller and Developer
contemplate that Increments 1 and 2 will be developed in a manner
generally consistent with the concept plan dated June 9, 2003
attached hereto as Exhibit C (the “Concept Plan”) with
Increments 1 and 2 described as follows:
1.
Increment 1 – approximately 80 single-family lots situated
within that portion of Lot 4A shown on the map attached hereto as
Exhibit C as Areas B, C1, C2, D1, D2, E, Beach Club, and
Interpretive Center, upon which will be constructed the Phase I
Beach Club, the Interpretive Center and Public Access Facilities,
and the Residential Subdivisions - Increment 1; and
2.
Increment 2 — means and includes that portion of Lot 4A shown
on Exhibit C as Areas A, F, G2 and H, Golf, and Golf Clubhouse,
upon which the developer of
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Increment 2 may construct single-family
units, multi-family units, the Golf Course, the Golf Clubhouse, and
the Phase II Beach Club.
The approximate area of and the
number of Units to be developed on each Residential Area are shown
on the Concept Plan.
All residential components within
Increments 1 and 2 (i.e. all single-family lots, multi-family units
and fractional ownerships) will be sold in fee simple. The
non-residential components (e.g. Beach Club, Golf Course, Club
House, and Coastal Planning Area Subzones) will remain in leasehold
with KS, all pursuant to the terms of the Lot 4A Lease, except that
the roadways will be conveyed to the community association(s) in
fee simple and portions of the Coastal Planning Area Subzones and
open spaces may be conveyed in fee simple to the community
association(s) or to the purchasers of Residential
Units.
H.
Developer intends to subdivide the residential areas shown on the
Concept Plan (the “Residential Areas”) into smaller
single-family residential lots and/or to construct condominium
units or fractional ownership units or projects within such
Residential Areas. Such single-family lots or condominium
units or fractional interests in such fractional ownership units
are herein below sometimes referred to as “Residential
Units” or simply “Units”. Those Residential
Areas or Residential Units remaining unsold from time to time
during the term of this Agreement are herein below referred to as
the “Remaining Residential Areas” and the
“Remaining Residential Units” respectively.
I.
Seller and Developer desire to set forth their general
understanding herein as to the terms and conditions on which Seller
and Developer might contract to proceed with the joint development
of the Increment 2 Property. In the event that Seller and
Developer are unable to agree on such joint development, then
Increment 2 will be reconveyed to Seller all as more particularly
described in Article 12 of this Agreement.
J.
Seller and Developer intend and agree that this Agreement
supercedes the Purchase and Sale Agreement attached as Exhibit A to
the February 27, 2003 Letter of Intent entered into between
them.
A G R E E M E N T:
NOW, THEREFORE, IN CONSIDERATION of
the foregoing and the mutual agreements herein set forth, and other
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Seller and Developer agree as
follows:
ARTICLE 1
THE PROPERTY
Seller hereby agrees to sell and
convey to Developer and Developer hereby agrees to purchase and
accept from Seller, subject to the terms and conditions set forth
herein, and subject to Seller’s Retained Rights as defined in
Section 11.6 below, the following:
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1.1
Seller’s Leasehold Interest in and to Lot 4A .
All of Seller’s real property rights in and to Lot 4A.
KS will issue a new Lot 4A Lease to Developer at
Closing.
1.2
Appurtenances . All of Seller’s rights,
privileges and easements appurtenant to and for the benefit of the
Lot 4A, including, without limitation, all minerals, oil, gas and
other hydrocarbon substances on and under Lot 4A, as well as all
development rights, including, but not limited to, all development
agreements affecting Lot 4A and all entitlements, air rights,
water, water rights and water stock relating to Lot 4A and any and
all easements, rights-of-way or appurtenances leased to Seller and
used in connection with the beneficial operation, use and enjoyment
of Lot 4A and/or the Intangible Property, together with all rights
of Seller in and to roadways or easement areas adjacent thereto or
used in connection therewith (all of which are collectively
referred to as the “Appurtenances”).
1.3
Intangible Property . Any and all intangible personal
properties owned by Seller which are necessary or useful in
connection with the ownership, improvement or operation of the
Property, including, but not limited to, all contracts, warranties,
guaranties, permits, licenses, certificates, approvals, reports,
surveys and maps (the “Intangible Property”). The
Intangible Property shall be assigned to Developer pursuant to one
or more assignments (“Assignments of Intangible
Property”) except that the water rights to be assigned by
Seller shall be assigned by “Assignment of Water
Rights”.
1.4
Other Interests . Any and all of Seller’s other
rights, title, interest, privileges and appurtenances in any way
related to, or used in connection with the development,
improvement, or operation of Lot 4A.
All of the items described in
Sections 1.1, 1.2, 1.3 and 1.4 above are hereinafter collectively
referred to as the “Property.” The items
described in Sections 1.1 and 1.2 above are hereinafter referred to
collectively as the “Real Property.”
1.5
Further Assurances . At Developer’s reasonable
request from time to time, Seller shall execute and deliver any
documents or instruments and take any other steps necessary, in
each case, to more fully effectuate the transfer and conveyance to
Developer of any and all Property described or referenced
above.
ARTICLE 2
PURCHASE PRICE; PAYMENTS; MEMORANDUM OF AGREEMENT
2.1
Purchase Price for the Increment 1 Property . The
purchase price for the Increment 1 Property shall be the sum of (a)
ELEVEN MILLION FIVE HUNDRED FIFTY THOUSAND and NO/100 DOLLARS
($11,550,000.00) (the “Closing Payment”), plus (b) all
payments and fees paid and to be paid by Developer pursuant to
Sections 2.3 and 2.5 (the Closing Payment, and the payments
described in Item (b) of this sentence are referred to herein as
the “Purchase Price”). The Closing Payment
portion of the Purchase Price shall be adjusted to account for the
prorations contemplated in Section 5.6 hereof.
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2.2
Escrow Instructions . A signed copy of this Agreement,
or a mutually agreed upon short form thereof, shall be deposited
with Title Guaranty Escrow Services, Inc. (the “Escrow
Holder”), and shall serve as the escrow instructions,
together with such further instructions (the “Escrow
Instructions”), if any, as the parties shall provide by
written agreement. Seller, Developer and Escrow Holder agree
and acknowledge that this Agreement shall replace and supercede
those certain escrow instructions by and between Developer and the
Escrow Holder dated as of February 26, 2002.
2.3
Payment of Purchase Price .
(a)
Closing Payment . The Closing Payment shall be paid by
Developer into Escrow prior to Closing by wire transfer of
immediately available funds in accordance with wiring instructions
to be provided by the Escrow Holder.
(b)
Percentage Payments . Except as provided in Section
2.3(d) below, and only with regard to initial sales to ultimate
users (and not on resales by such ultimate users), Developer will
make payments to Seller from any and all gross proceeds generated
from sales of lots from the Increment 1 Real Property (the
“Percentage Payments”) as follows:
(i)
Increment 1: Single-Family Lots . Seller will receive
9% of the gross proceeds generated from the sale by Developer of
all single-family lots in Increment 1 of the Real Property.
“Gross proceeds” for purposes of Section 2.3(b)(i)
shall mean the actual and full consideration paid by the purchaser
for the Unit, being the amount subject to the conveyance tax
imposed by HRS §247-2. Notwithstanding the above, if and
when the aggregate gross proceeds from the sale of single-family
lots in Increment 1 exceed $100,000,000.00, Seller will receive the
following percentages of such aggregate gross proceeds:
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Aggregate Gross Proceeds
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Percentage Payment
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More than $100,000,000 but less
than
$300,000,000
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10
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%
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More than $300,000,000
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14
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%
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(ii)
Single Family Lots Only/Club Memberships . Unless
Seller and Developer are able to agree in advance on how the sales
proceeds will be allocated between an Increment 1 single family lot
and a residence to be constructed by Developer on it, all sales
from Increment 1 shall be sales of single family lots sold without
a residence. Developer agrees to offer all purchasers of
single family lots in Increment 1 the option to apply for (a) a
membership in the Lot 4A Beach Club ensuring the purchaser the
right of full use of the Beach Club’s facilities, subject to
the membership rules, rates and regulations then in effect, as they
may be amended from time to time, and (b) a membership in the Kukio
Golf and Beach Club on the terms and conditions set forth in that
certain “Kukio Agreement” referenced in Section 14 of
Article IV of the Lot 4A Lease. Developer agrees to construct
or bond to completion Phase I of
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the Lot 4A Beach Club according to the timetable
to be set forth in Section 11.b. of Article IV of the Lot 4A
Lease.
(iii)
Payment Procedure . Developer shall use commercially
reasonable efforts to provide Seller written notice of each Unit
sale not less than five (5) business days prior to its closing and,
except as otherwise provided in Section 2.3(d) below, shall
instruct the escrow for each such sale to pay the Percentage
Payment directly to Seller at closing. If Developer provides
purchase money financing to the purchaser of a Unit, then Developer
may either, at Developer’s option, (1) pay all of the
applicable Percentage Payment for such Unit at closing of the sale,
or (2) pay to Seller the Percentage Payment with respect to the
cash portion of the purchase price received by Developer from the
purchaser at the closing and pay to Seller the Percentage Payment
with respect to the sales price financed and the interest thereon
paid by the purchaser within 10 days after Developer’s
receipt of payment from the purchaser. For example, assume
that Developer sells a Unit for the price of $5,000,000.00 by
providing $2,000,000.00 in purchase money financing to the Unit
purchaser payable pursuant to the terms of a promissory note, and
that one year after the sale closes receives payment of
$1,000,000.00 plus $180,000.00 in interest pursuant to the
promissory note. In such case, (i) upon the initial closing,
Developer shall pay to Seller the Percentage Payment based on the
$3,000,000.00 received by Developer at closing, (ii) within 10 days
after receiving the $1,180,000.00 payment of principal and
interest, Developer shall make the Percentage Payment applicable to
the $1,180,000.00, and (iii) within 10 days after receiving
subsequent payments under the promissory note, the applicable
Percentage Payment shall be made to Seller. Developer shall
promptly provide Seller with copies of any note, mortgage or other
document used by Developer to finance the purchase of any Unit, and
any amendments thereto. Developer shall also provide Seller
with copies of the monthly loan statements issued to each
purchaser/mortgagor financed by Developer or with a separate
statement containing the same or substantially the same information
with respect to each loan. For the purpose of determining
whether the aggregate gross proceeds from the sale of Units in
Increment 1 have exceeded the $100,000,000.00 or $300,000,000.00
thresholds under Section 2.3(b)(i), such gross proceeds shall
include the financed portion of each sale, i.e. the principal
amount loaned, but not any interest thereon, at such time(s) as
such portion is collected by Developer.
(iv)
Release of Units . Seller shall provide an executed
partial release in recordable form releasing all of its interest in
a particular Unit in connection with the closing of each sale to an
ultimate user within five (5) business days of Developer’s
request therefor. To avoid any situation where the closing of
a sale of a Unit cannot occur due to Seller’s untimely
execution of the partial release mentioned above, and within five
(5) business days of Developer’s written request therefor,
Seller shall execute and deposit with the escrow designated by
Developer partial releases with respect to any Unit sale which
Developer anticipates closing within sixty (60) days of the
request, together with instructions authorizing escrow to release
the Units from Seller’s interest at closing, conditioned on
payment to Seller at closing of the applicable Percentage Payment
from the sale of the Unit.
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(c)
Bona Fide Sales . All sales of Units to ultimate users
and all other sales of Units with respect to which Seller is
entitled to receive any Percentage Payment, shall be for a fair
market value or bona fide sales negotiated in good faith at
arm’s length.
(d)
Minimum Payments . If prior to December 31, 2005,
Developer has not made payments of Percentage Payments to Seller
pursuant to Section 2.3(b) above equal to or greater than
$2,500,000.00 in the aggregate, then Developer shall pay to Seller
the amount by which the aggregate amount of all prior Percentage
Payments made by Developer to Seller under Section 2.3(b) is less
than $2,500,000.00. If prior to December 31, 2006, Developer
has not made payments of Percentage Payments, including payments
required under this Section 2.3(d) in lieu of Percentage Payments,
in an amount equal to or greater than $5,000,000.00 in the
aggregate, then Developer shall pay to Seller the amount by which
the aggregate amount of all such payments is less than
$5,000,000.00. Any additional payments made by Developer
under this Section 2.3(d) shall be credited against
Developer’s obligation to make Percentage Payments with
respect to the subsequent sale of Units.
(e)
Reimbursement . If Developer makes any Percentage
Payment to Seller with respect to a Unit sale which is subsequently
rescinded or modified, and if Developer refunds all or part of the
gross proceeds from the sale of the Unit on which the Percentage
Payment to Seller was based to the purchaser of the Unit, then
Seller will promptly repay such Percentage Payment, or portion
thereof allocable to the gross proceeds returned to the Unit
purchaser, to Developer.
(f)
No Payments for Non-Residential Areas in Increment 1 .
Except as set forth above, no other payments shall be due to Seller
for purchase of the Increment 1 Property. No additional
payments shall be payable to Seller with respect to the Beach Club,
roadways, Coastal Planning Area Subzones, open spaces, and other
non-residential areas.
2.4
Memorandum of Agreement . Seller and Developer shall
execute and deliver to the Escrow Holder at Closing a Memorandum of
Agreement providing notice of Seller’s Retained Rights and in
the form and substance of Exhibit D attached hereto (the
“Memorandum”), which Memorandum shall be recorded in
the Bureau of Conveyances of the State of Hawaii (the “Bureau
of Conveyances”) at the Closing and shall encumber the Real
Property.
2.5
Interim Payments . Developer shall pay to Seller
$50,000.00 per month (each such payment is hereinafter referred to
as an “Interim Payment” and collectively as the
“Interim Payments”), with the first Interim Payment
having been paid on or about March 1, 2003, with subsequent Interim
Payments having been paid on or about the first day of each
calendar month thereafter, and with Interim Payments continuing
until the date of termination of payment described below.
Payment of the Interim Payments shall terminate on the first to
occur of the following:
(a)
the termination of this Agreement prior to Closing;
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(b)
if all or substantially all of the Increment 1 Property shall be
taken by condemnation;
(c)
the date of the closing of the final sale of fifty percent (50%) or
more of the single family lots in Increment 1 to ultimate users;
and
(d)
Developer’s payment to Seller of Interim Payments in the
aggregate amount of $1,500,000.00 (including Interim Payments made
by Developer under its February 27, 2003 letter agreement with
Seller).
Developer and Seller confirm and agree that as
of the date of this Agreement, Developer has paid Seller Interim
Payments in the aggregate amount of $550,000.00 which aggregate
amount includes the Interim Payment due January 1, 2004.
ARTICLE 3
TITLE TO PROPERTY
3.1
Title Report . A pro forma title report (the
“Title Report”) prepared and issued by the Escrow
Holder’s affiliate, Title Guaranty of Hawaii, Inc. (the
“Title Company”), and covering the Real Property is
attached hereto as Exhibit E. All exceptions to the title to,
and/or encumbrances against the Real Property shown on the Title
Report, together with Seller’s Retained Rights, the interests
of KMV and KVA in the Real Property described in Exhibit G hereto,
and any obligation of the developer of Lot 4A to reimburse KMV for
certain additional costs incurred by KMV for the benefit of Lot 4A,
all as itemized in Exhibit G hereto, shall be deemed
“Permitted Exceptions” for all purposes of this
Agreement.
3.2
Title . At the Closing, Seller shall convey to
Developer, or cause KS to convey to Developer, marketable and
insurable title to the Real Property, and in furtherance thereof,
at the Closing, Developer shall instruct the Title Company to issue
an ALTA Policy of Title Insurance in the amount reasonably
requested by Developer, insuring leasehold title to the Real
Property, in Developer, subject only to the Permitted Exceptions
(the “Title Policy”). The Title Policy shall be
in the form attached hereto as Exhibit E-1 and contain such
customary endorsements as Developer may reasonably require.
Any indemnification of the Title Company to allow it to insure over
any otherwise unpermitted exception to title shall not be allowed
except with the prior written consent of Developer (which shall be
in Developer’s sole and absolute discretion) after full
disclosure to Developer of the nature and substance of such
exception and indemnity. Furthermore, the Title Company shall
obtain, if requested by Developer, such co-insurance and/or
reinsurance agreements as Developer may request, which reinsurance
agreements shall be in ALTA Facultative Reinsurance Agreement Form
(rev. 1987), and shall include direct access agreements, in such
amounts and in such form as shall otherwise be satisfactory to
Developer.
3.3
Intangible Property . At the Closing, Seller shall
transfer and assign to Developer all of Seller’s rights in
and to the Intangible Property upon the terms set forth in the
Assignment(s) of Intangible Property and the Assignment of Water
Rights.
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ARTICLE 4
CONDITIONS TO CLOSING
A.
Conditions to Developer’s Obligation to Purchase
.
The complete satisfaction as of the
Closing of the following conditions shall be a condition precedent
to Developer’s obligation to purchase the
Property:
4.1
Non-Foreign Status of Seller . Seller’s
execution and delivery to Developer, on the Closing Date, of
Seller’s certificate in the form attached hereto as Exhibit F
(the “Non-Foreign Certificate”) stating, under penalty
of perjury, that (a) Seller is not a “foreign person”
for the purposes of Section 1445 of the Internal Revenue Code of
1986, as amended, and that withholding of tax by Developer will not
be required for Seller and its general partners, and (b)
withholding is not required under the provisions of any Hawaii
state laws in connection with the contemplated transfer of the
Property by Seller to Developer.
4.2
Beach Club Memberships . Developer and Seller shall
have agreed to their reasonable satisfaction upon terms and
conditions of the following non-transferable, non-assignable
“Founder’s Memberships” to be provided to
individuals designated by Seller prior to Closing: in the
Kukio Golf and Beach Club (3 such memberships) and in the Lot 4A
Beach Club (5 such memberships). The term and terms and
conditions of such memberships shall have been incorporated into an
agreement executed and delivered by Developer and Seller (the
“Ancillary Benefits Agreement”).
4.3
Representations, Warranties and Covenants . All of
Seller’s representations and warranties contained herein
shall have been true and correct when made and shall, except as
otherwise provided in the Update Certificate, be true and correct
as of the Closing Date, as though made at, and as of, the Closing
Date, and all times in between such dates, and Seller shall have
strictly and timely complied with all of Seller’s covenants
contained in this Agreement.
4.4
Approval of Update Certificate . Seller’s
execution and delivery to Developer at the Closing of the Update
Certificate (as defined in Section 5.3), which Update Certificate
shall indicate (a) no changes or exceptions to Seller’s
representations and warranties made as of the date hereof, (b) no
changes to any matter approved by Developer pursuant to Sections
9.1 or 9.2 below, except as otherwise indicated on the Update
Certificate. If any changes are indicated in the Update
Certificate, such changes shall be acceptable to Developer in
Developer’s sole and absolute discretion.
4.5
No Exercise of Right to Terminate . Developer shall
not have exercised its election to terminate this Agreement
pursuant to Section 5.9(a) and/or Section 9.2 below.
4.6
Kamehameha Schools Agreements .
(a)
Developer shall have received and approved the form of partial
surrender and cancellation of Original Ground Lease with respect to
Lot 4A to be executed by and between
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Seller and KS to permit the issuance of the Lot
4A Lease (the “Partial Surrender”).
(b)
Developer and KS shall have received and approved the form of Lot
4A Lease.
(c)
Developer and KS shall have received and approved the form of
Step-In Agreement.
(d)
Developer, Seller and KS have received and approved all other
agreements to be executed by KS.
(e)
KS shall have confirmed in writing to Developer that it will sign
and deliver to Escrow Agent the KS Agreements (defined below) on
the Closing Date.
The documents described in Subsections (a) to
(d) above are referred to collectively below as the “KS
Agreements”.
4.7
Delivery of Documents . Seller’s due and timely
execution and/or delivery of all of the documents and things to be
executed and/or delivered by Seller pursuant to this Agreement,
including, without limitation, all of the documents and things
specified in Section 5.3 below.
4.8
Commitment to Issue Title Policy . Developer shall
have received the Title Company’s commitment to issue the
Title Policy in the form specified in Section 3.2 above at
Closing.
4.9
Approval . This Agreement and the transactions
contemplated hereby shall have been approved by the
Developer’s investment committee, which approval may be
granted or withheld in such committee’s sole and absolute
discretion, for any reason or no reason whatsoever, and which is
referred to herein as the “Developer’s
Approval”. The Developer’s Approval shall be
given, if at all, or denied within three (3) business days after
satisfaction of the conditions set forth in Section 4.6
above.
B.
Conditions to Seller’s Obligation to Sell.
The following conditions are
conditions precedent to Seller’s obligation to sell the
Property:
4.10
Kamehameha Schools Agreements . Seller shall have
received and approved the form of the KS Agreements.
4.11
Agreement re Ancillary Benefits . The Agreement re
Ancillary Benefits shall have been mutually executed and delivered
by Seller and Developer.
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4.12
Agreement as to Form . Seller and Developer shall have
agreed on the form of all Closing Documents other than the Closing
documents appended to this Agreement as exhibits.
4.13
Delivery of Documents and Closing Payment .
Developer’s due and timely execution and delivery of all
documents and things to be executed and delivered by Developer
(including, without limitation, delivery of the Closing Payment and
all Interim Payments coming due at any time prior to the Closing
Date) pursuant to this Agreement, including, without limitation,
all of the documents and things specified in Section 5.4
below.
ARTICLE 5
CLOSING, RECORDING AND TERMINATION
5.1
Escrow Instructions . Seller and Developer agree to
execute such additional and supplementary escrow instructions as
may be appropriate to enable the Escrow Holder to comply with the
terms of this Agreement.
5.2
Closing Date .
(a)
The “Closing Date” shall be the date fixed by mutual
agreement of the parties as the date on which the documents to be
recorded at Closing as described in Sections 5.3 and 5.4 below will
be recorded with the Bureau of Conveyances. The Closing Date
shall occur on or before the tenth (10th) day following
Developer’s receipt of the KS Agreements in form previously
approved by Seller, Developer and KS and ready for execution by
such parties in connection with Closing.
(b)
In the event the Closing does not occur on or before February 13,
2004 (“the Latest Date for Closing”), this Agreement
shall terminate and the Escrow Holder shall forthwith return to the
depositor thereof all items which may have been deposited with the
Escrow Holder hereunder. Any such return shall not relieve
Seller or Developer of any liability it may have for its wrongful
failure to close. Developer shall, within seven (7) days
after the termination of this Agreement in accordance with the
terms hereof, return to Seller all documents and materials relating
to the Property delivered to Developer hereunder by or on behalf of
Seller or required to be turned over to Seller pursuant to Section
5.9(a) below.
(c)
Section 5.2(b) of this Agreement establishes the Latest Date for
Closing but the Closing Date shall be on the date specified in
Section 5.2(a) if that date occurs before the Latest Date for
Closing.
5.3
Delivery by Seller . Prior to the Closing, Seller
shall deposit with the Escrow Holder the following:
(a)
The Partial Surrender in a form previously approved by Seller,
Developer and KS and executed by Seller;
(b)
The Lot 4A Lease in the form previously approved by Seller,
Developer and KS;
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(c)
The Step-In Agreement in the form previously approved by Seller,
Developer and KS and executed by Seller;
(d)
The Memorandum duly executed and acknowledged by Seller;
(e)
The Assignment(s) of Intangible Property duly executed and
acknowledged by Seller;
(f)
The Assignment of Water Rights duly executed and acknowledged by
Seller;
(g)
The Agreement re Ancillary Benefits duly executed by
Seller;
(h)
A certificate from the Title Company dated within ten (10) days of
the Closing Date, indicating that, as of the date of such
certificate, there are no filings against Seller in said offices
under the Uniform Commercial Code of Hawaii which would be a lien
on any of the Intangible Property (other than such filings, if any,
(i) as are being released at the time of the Closing or (ii) which
have been approved in writing by Developer);
(i)
Originals or copies of any and all contracts, warranties,
guaranties, permits, licenses, certificates, approvals, reports,
survey maps and other items to be assigned to Developer under the
Assignment(s) of Intangible Property if not previously
provided;
(j)
The Non-Foreign Certificate(s) duly executed by Seller;
(k)
Such resolutions and/or authorizations relating to Seller and its
general partners as shall be reasonably required by the Title
Company or by Developer in connection with this
transaction;
(l)
A tentative closing statement prepared by the Escrow Holder in form
and content consistent with this Agreement and otherwise reasonably
satisfactory to Developer and Seller, executed by
Seller;
(m)
A certificate duly executed by Seller and dated as of the Closing
Date confirming the truth, accuracy and completeness of each of the
Seller’s representations and warranties set forth in Article
6 below and noting with specificity any changes or exceptions
thereto based upon events or circumstances intervening after the
execution hereof (the “Update Certificate”);
(n)
A good standing certificate for Seller and its general partners
from the Department of Commerce and Consumer Affairs of the State
of Hawaii (“DCCA”);
(o)
A bulk sales tax clearance from the State Department of Tax, if
required, pursuant to Section 237-43 of the Hawaii Revised
Statutes; and
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(p)
Any and all other documents to be executed by Seller in connection
with the Closing.
5.4
Delivery By Developer . Prior to the Closing,
Developer shall deposit with the Escrow Holder, the
following:
(a)
Any agreements other than the Lot 4A Lease and the Step-In
Agreement to which KS is a party in the form previously
approved by Seller (provided Seller is a party thereto), Developer
and KS and executed by Developer;
(b)
The Memorandum duly executed by Developer;
(c)
The Assignment(s) of Intangible Property duly executed and
acknowledged by Developer,
(d)
The Assignment of Water Rights duly executed and acknowledged by
Developer;
(e)
The Agreement re Ancillary Benefits duly executed by
Developer;
(f)
A tentative closing statement prepared by the Escrow Holder in form
and content consistent with this Agreement and otherwise reasonably
satisfactory to Developer and Seller executed by
Developer;
(g)
Good standing certificates for Developer from DCCA or proof that
Developer has filed necessary entity documents with DCCA;
and
(h)
Any and all other documents to be executed by Developer in
connection with the Closing.
After Developer’s or the
Escrow Holder’s receipt of all of the items specified in
Sections 5.3 and 5.4 hereof, after the complete satisfaction or
waiver by Developer of all of the conditions precedent to
Developer’s obligation to purchase hereunder, and after all
Closing documents, including without limitation, the Closing
documents described in Sections 5.3(b), 5.3(c) and 5.3(d), have
been duly executed by all parties thereto including KS, Developer
shall deliver the Closing Payment to the Escrow Holder as provided
in Section 2.3(a) above.
5.5
Other Instruments . Seller and Developer shall each
deposit such other instruments as are reasonably required by the
Escrow Holder or otherwise required to close the Escrow and
consummate the purchase of the Property in accordance with the
terms hereof.
5.6
Prorations . At the Closing, Developer and Seller
shall prorate the following with respect to the Real Property as of
the Closing Date, on the basis of a thirty-day (30-day)
month:
(a)
Taxes . Real property taxes.
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(b)
Rent . Lot 4A lease rent, if any.
(c)
Other Items . Any other proratable items.
5.7
Costs and Expenses . Each party shall pay all
attorneys’ fees, accounting fees and other expenses incurred
by it in connection with the transactions contemplated
hereby. Seller shall pay (i) one-half (1/2) of all escrow
fees, (ii) sixty percent (60%) of the cost of the premium for the
Title Policy and (iii) all transfer taxes. Developer shall
pay (i) forty percent (40%) of the premium for the Title Policy,
(ii) the cost of any title insurance endorsements, (iii) one-half
(1/2) of all escrow fees and (iv) all recording fees. All
other closing costs shall be apportioned in the manner customary in
Hawaii.
5.8
Closing and Recordation . Provided that the Escrow
Holder has received all of the items required to be delivered
pursuant to this Article 5 (or a waiver in writing from the party
for whose benefit such item is being delivered) and that it has not
received prior written notice from Developer that Developer has
elected to terminate its rights and obligations hereunder, and
provided that Developer has either received the Title Policy, or
the irrevocable commitment of Title Company to provide it with the
Title Policy immediately after recordation of the Lot 4A Lease, or
short form thereof, and other documents to be recorded at the
Closing, the Escrow Holder is authorized and instructed (a) with
respect to the Property, to cause the Title Company to record the
documents delivered to the Escrow Holder in accordance with
recording instructions set forth in a letter to be delivered to the
Escrow Holder and Title Company by Developer (or if no such letter
is received prior to the Closing, in accordance with customary
practice), (b) to deliver those other documents and instruments
delivered into Escrow to the party for whose benefit such documents
or instruments were made and (c) to deliver the Closing Payment, as
adjusted pursuant to Section 5.6 hereof and reflected in the
approved Closing Statements, upon receiving confirmation of
recording of the Lot 4A Lease, or short form thereof, and all other
instruments requested to be recorded by Developer, Seller and
KS. The term “Closing” as used in this Agreement
shall mean and refer to the actions described in subparagraphs (a),
(b) and (c) above.
5.9
Termination of Agreement .
(a)
Failure of Conditions to Developer’s Obligation to
Purchase . If any one or more of the conditions to
Developer’s obligation to purchase, as set forth in Article
4A of this Agreement, is not either fully performed, satisfied or
waived in writing (or deemed waived as provided herein) on or
before the Closing Date or such earlier date as provided elsewhere
herein, then Developer may elect, by written notice as provided in
Section 13.8 hereof, to terminate this Agreement, and in the case
of a default by Seller, to all of its rights and remedies at law
and equity, and Developer shall not have any further obligation to
Seller (except as set forth below and in Section 5.2(b)). If
Developer should elect to terminate this Agreement for any reason
other than Seller’s default, Developer (i) shall not be
entitled to any compensation or other payment whatsoever by Seller
on account of such termination, and (ii) shall deliver to Seller,
without cost or charge, copies of, and the right to use and apply,
subject to obtaining any necessary third-party consents, all plans,
specifications, soil tests, environmental assessments,
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permits, reports and studies
prepared by third parties for or relevant to the Property or any
part thereof, and Developer shall not have any further obligations
to Seller.
(b)
Failure of Conditions to Seller’s Obligation to Sell
. If any one or more of the conditions to Seller’s
obligation to sell, as set forth in Article 4B of this Agreement,
is not either fully performed, satisfied or waived in writing (or
deemed waived as provided herein) on or before the Closing Date, or
on such earlier date as provided elsewhere herein, then Seller may
elect, by written notice as provided in Section 13.8 hereof, to
terminate this Agreement, in which case neither party shall have
any further obligation to the other (except as set forth in
Sections 5.2(b) and 5.9(a)(ii)).
5.10
Developer’s Default . IF THE SALE OF THE
PROPERTY IS NOT CONSUMMATED DUE TO ANY DEFAULT BY DEVELOPER
HEREUNDER, THEN SELLER SHALL RETAIN ALL INTERIM PAYMENTS PAID
PURSUANT TO SECTION 2.5 ABOVE, WHICH, EXCEPT FOR REQUIRING
DEVELOPER’S COMPLIANCE WITH SECTIONS 5.2(b) AND 5.9(a)(ii),
SHALL BE SELLER’S SOLE AND EXCLUSIVE REMEDY.
ARTICLE 6
REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER
As an inducement to Developer to
enter into this Agreement and consummate the transaction
contemplated hereby, Seller hereby represents and warrants to and
agrees with Developer both as of the date hereof and again as of
the Closing Date, and as of all dates and times in between (except
as specifically provided to the contrary herein), as
follows:
6.1
Organization, Powers, Qualification and Authority .
Seller is a Hawaii general partnership, duly organized, validly
existing, and in good standing under the laws of the State of
Hawaii, has all requisite partnership power and authority to own
its properties and assets and carry on its business as now
conducted; and has all requisite power and authority to enter into
and perform and carry out this Agreement. The sole general
partners of Seller are Barnwell Hawaiian Properties, Inc., a
Delaware corporation, and Cambridge Hawaii Limited Partnership, a
Hawaii limited partnership, the sole general partner of which is
Barnwell Kona Corporation, a Hawaii corporation. This
Agreement has been duly approved by the boards of directors of
Barnwell Hawaiian Properties, Inc. and Barnwell Kona
Corporation. No consent of the limited partners of Cambridge
Hawaii Limited Partnership is required to enter into this
Agreement, or, if required, it has been obtained. Neither the
execution nor the delivery of this Agreement, nor the compliance
with and fulfillment of the terms and provisions hereof: (a) will
result in the breach of any term or provision of, or constitute a
default under or conflict with, the general partnership agreement
of Seller, as the same may have been amended from time to time, or
any agreement or instrument to which Seller is a party or by which
it is bound, or (b) is prohibited by or requires any notification,
consent, authorization, approval or registration under any law,
rule or regulation, or any judgment, order, writ, injunction, or
decree which is binding upon Seller or the terms of any contract to
which Seller is a party or bound, or may give rise to the
cancellation of
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any contract to which Seller is a party or
bound; provided, however, that the consent and agreement of KS is
required.
6.2
No Conflicts . Neither the execution and delivery of
this Agreement nor the performance by Seller of its obligations
hereunder will conflict with or result in a breach of (i) any of
Seller’s organizational documents or
