Exhibit 10.1
CONFIDENTIAL PORTIONS OF THIS
AGREEMENT HAVE BEEN OMITTED BASED UPON A REQUEST FOR CONFIDENTIAL
TREATMENT PURSUANT TO RULE 24b-2 OF THE
SECURITIES EXCHANGE ACT OF
1934 AND HAVE BEEN SEPARATELY FILED
WITH THE SECURITIES AND
EXCHANGE COMMISSION
SALE, PURCHASE AND LEASE
TERMINATION AGREEMENT
THIS SALE, PURCHASE AND LEASE
TERMINATION AGREEMENT (this “ Agreement
”), entered into as of the 28th day of March, 2007, by and
among MAUI LAND & PINEAPPLE COMPANY, INC., a Hawaii corporation
(“ Seller ”), W2005 KAPALUA/GENGATE HOTEL
REALTY, L.L.C., a Delaware limited liability company (“
Purchaser ”), and W2005 KAPALUA/GENGATE HOTEL
HOLDINGS, L.L.C., a Delaware limited liability company (the “
Company ”).
WITNESSETH
:
In consideration of the mutual
covenants set forth herein, the parties hereto hereby agree as
follows:
Section
1.
Sale and
Purchase . Seller, for itself
and its successors and assigns, hereby agrees to sell, convey and
contribute to Purchaser, and Purchaser hereby agrees to purchase
and accept from Seller, for the Purchase Price (herein defined) and
on and subject to the terms and conditions set forth herein, the
following:
(a)
Good and
marketable title in fee simple to the tracts or parcels of land
situated in Maui County, Hawaii more particularly described on
Exhibit ”A” attached hereto (collectively, the
“ Lease
Tract ”), being the same
parcels of land leased by Purchaser from Seller pursuant to that
certain Second Amended and Restated Hotel Ground Lease effective as
of January 31, 2001 between Seller, as Lessor, and RCK Hawaii, LLC
d/b/a RCK Hawaii-Maui, a Delaware limited liability company
(“ Original
Lessee ”), as Lessee, the
rights of Original Lessee thereunder having been assigned to
Purchaser pursuant to that certain Assignment and Assumption of
Lessee’s Interest in Ground Lease and Related Agreements
dated March 13, 2006, between Original Lessee and Purchaser
(said Second Amended and Restated Hotel Ground Lease, as assigned
to Purchaser is referred to herein as the “
2001 Lease
”),
together with all rights, appurtenances, mineral rights (if any),
rights of utility availability (including water, sanitary sewer and
drainage) granted or to be granted by any utility, Maui County or
any other governmental authority, all development rights and
privileges appurtenant to the Lease Tract, including rights under
reciprocal easement agreements or other recorded or unrecorded
instruments benefiting the Lease Tract, and rights to any and all
adjacent easements, strips, gores, streets, alleys, rights-of-way
or waterways thereto;
(b)
All buildings and
improvements (the “ Improvements ”) owned by Seller and
located on the Lease Tract, if any;
(c)
All tangible
personal property and fixtures, including all furnishings owned by
Seller and situated on, attached to or used in connection with the
Lease Tract or Improvements (“ Personalty ”);
(d)
All of
Seller’s rights, if any, (including as applicant) under
existing Lahaina Project District 1 approvals (other than
those with respect to Allocations [hereinafter defined]), Special
Management Area permits, other zoning or subdivision approvals, and
water, sewer,
wastewater and
other utility rights that have been issued with respect to the
Hotel (hereinafter defined), and the current and future development
of the Lease Tract other than the portions of the Lease
Tract designated on the map attached as
Exhibit ”J” attached hereto (the Lease Tract,
exclusive of said portions thereof shown on
Exhibit ”J” is referred to herein as the
“ Hotel
Tract ”). All of the
foregoing rights described in this Section 1(d) are referred
to herein collectively as the “ Entitlements ”, which term shall not
include Seller’s rights under any such approvals or permits
to the extent the same benefit lands owned by Seller other than the
Lease Tract; and
(e)
To the extent not
included within paragraphs (a)-(d) above, any and all
(i) warranties, guaranties, indemnities and claims,
(ii) licenses, permits, governmental approvals and similar
documents (and Seller’s rights as applicant with respect
thereto and (iii) at no material cost to Seller, plans,
drawings, architect’s drawings, blue prints, specifications,
site plans, surveys, soil studies, engineering reports and other
technical descriptions which relate in any way to the design,
ownership, use, leasing, maintenance, service or operation of the
Lease Tract, Improvements, Personalty, Entitlements or
Allocations.
The above listed items are herein
collectively called the “ Property
”.
Section
2.
Lease
Termination . On the Closing Date,
Seller and Purchaser shall enter into an agreement, in form and
substance satisfactory to Seller and Purchaser (the “
Lease Termination
”), whereby
such parties terminate the 2001 Lease and the rights and
obligations of the parties thereunder (except for those rights and
obligations that, pursuant to the terms of the 2001 Lease,
expressly survive such termination). Purchaser shall receive
a credit against the Closing Payment for any rent and other
payments made by Purchaser under the 2001 Lease which relate to any
time on or after the Closing Date. In addition, on the
Closing Date, Seller and Purchaser shall execute and acknowledge an
instrument, in form and substance satisfactory to Seller and
Purchaser (the “ Termination of Memorandum of Lease
”), whereby
the parties acknowledge that the 2001 Lease has been terminated and
the parties terminate the Memorandum of Hotel Ground Lease recorded
on April 4, 1996 in the Bureau of Conveyances of the State of
Hawaii as Document No. 96-046331, relating to the lease
ultimately amended and restated by the 2001 Lease.
Section
3.
Purchase
Price .
(a)
As consideration
for the sale, conveyance and contribution of the Property,
Purchaser shall, at Closing:
(1)
for an undivided
five sevenths (5/7) interest in the Property, pay Seller
$25,000,000 (the “ Closing Payment ”); and
(2)
for an undivided
two-sevenths (2/7) interest in the Property (the “
Contributed Portion of the
Property ”), issue to Seller, in
the manner prescribed in Section 3(b) below, a limited liability
company interest in the Company, consisting of:
(i)
a twenty-one and
four-tenths percent (21.4%) interest in the profits and initial
capital of the Company (the “ Equity Interest ”); and
(ii)
a [*] payment
equal to two million five hundred thousand dollars ($2,500,000)
(the “ [*] Payment ”) to be paid, if at
all, upon the allocation to Purchaser of the [*] and [*] for (1)
the number of [*] (up to [*]) necessary to develop at
least
2
[*] square feet
of [*] and (2) designation of up to [*] of the [*] (as depicted on
Exhibit “K”) as a “[*]” [*]. If such
conveyance does not occur within ten (10) years after the date
hereof, Seller’s right to receive the [*] Payment shall
terminate.
The consideration described in
clauses (1) and (2) above is collectively referred to herein as the
“ Purchase Price ”.
(b)
Pursuant to the
Deed (hereinafter defined), the Contributed Portion of the Property
shall be deemed deeded by Seller directly to Purchaser, which
entity is 100% owned by W2005 Kapalua/Gengate Hotel Senior
Mezzanine, L.L.C., a Delaware limited liability company
(“ Senior
Mezzanine ”), which entity is
100% owned by W2005 Kapalua/Gengate Hotel Mezzanine, L.L.C., a
Delaware limited liability company (“ Mezzanine ”), which entity in
turn is 100% owned by the Company. Notwithstanding anything
to the contrary contained in this Agreement, including the use of
words and phrases such as “sell”, “sale”,
“purchase,” and “pay”, it is the
parties’ intent, to the extent that limited liability company
interests in the Company are being issued to Seller in exchange for
the Contributed Portion of the Property, the transaction shall be
treated for federal income tax purposes as the contribution of
property by Seller directly to the Company in exchange for limited
liability interests in the Company, immediately followed by a
contribution by the Company of such property to Mezzanine,
immediately followed by a contribution by Mezzanine of such
property to Senior Mezzanine, immediately followed by a
contribution by Senior Mezzanine of such property to Purchaser,
such subsequent contributions by the Company, Mezzanine and Senior
Mezzanine effected through the Company’s direction to Seller
to deed the Contributed Portion of the Property directly to
Purchaser. For all federal (and to the extent applicable,
state and local income and property) tax purposes, Seller,
Purchaser and the Company generally shall treat the contribution of
the Contributed Portion of the Property as a non-taxable
contribution of property by Seller to the Company in exchange for
an interest in a partnership under Section 721 of the Internal
Revenue Code of 1986, as amended (the portion of the
“ Code
”), taking
into consideration the application of other provisions of the Code,
(e.g., Section 707 of the Code) as required by law.
(c)
Within one (1)
business day after Seller has delivered an executed counterpart of
this Agreement to Title Company (hereinafter defined), Purchaser
shall deposit with Title Company as Earnest Money wired funds in
the amount of $100,000.00, together with such statements as the
Title Company may require to enable it to deposit such amount in an
interest-bearing account. Title Company shall deposit such
amount in an interest-bearing account with a financial institution
satisfactory to Purchaser. Such amount, together with all
interest thereon, is herein called the “
Earnest Money
.”
The Earnest Money shall be held in escrow and delivered by Title
Company in accordance with the provisions hereof.
Section
4.
Post-Closing
Entitlements, Development and Cooperation .
(a)
Entitlements
.
Currently, the Entitlements permit the operation of the existing
hotel located at the Property that contains 548 hotel rooms (the
“ Hotel
”).
Promptly after the Closing, Seller shall authorize Purchaser to
apply for, and shall assist Purchaser in obtaining, Project
District Phase II and III approvals and Special Management Area
permits for the reconfiguration of the Hotel to contain
approximately 470 hotel rooms, up to 107 of which may be sold or
leased as individual hotel room condominium units (the
“ Allocations ”).
Notwithstanding the issuance of the Allocations, the maximum number
of hotel rooms permitted at the Property shall remain 548, provided
Purchaser may utilize such excess Allocations and Entitlements only
in connection with the development of hotel rooms (which may
include
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individual hotel
room condominium units for sale or lease) that are constructed on
or within existing structures on the Property. Purchaser
agrees that it will not request a variance from or waiver,
modification or amendment of the Maui County Code Chapter 19.73
(the “ Project
District Ordinance ”), the agreements
referenced therein, any Project District approval granted with
respect to the Hotel Tract, or a change in zoning without the prior
written consent of Seller. As used herein, the terms
“hotel rooms” and “residential units” means
such rooms and units, respectively, as referenced in
Section 19.73.090.C of the Project District Ordinance.
Seller agrees that until the Allocations are issued, Seller shall
retain rooms and other rights sufficient to allow Maui County
approval of the Allocations as set forth above.
(b)
No
Guaranty . Seller’s grant
of authority to Purchaser to pursue the Allocations as set forth in
Section 4(a) above is in no event a guaranty that Purchaser
will be able to obtain such Allocations, nor is Seller liable for
any loss, cost or expenses incurred by Purchaser in connection with
the pursuit of such allocations, including without limitation, any
loss, costs or expenses incurred by Purchaser in the event such
Allocations are not obtained, except to the extent resulting from
the breach of any obligation of Seller contained in this Agreement
or any of the agreements executed pursuant to or in connection with
this Agreement.
(c)
General
Cooperation . Seller shall cooperate with
and actively assist Purchaser, at no material expense to Seller, in
formulating, submitting, negotiating and obtaining all
approvals, permits, entitlements and allocations (including,
without limitation, those from the State of Hawaii, Maui County and
the Lahaina Project District 1) (collectively, the
“ Condotel
Conversion Entitlements ”) as are necessary or
desirable for Purchaser’s condominiumization of the Hotel,
including the conversion of a number of hotel rooms therein
into condominium units for sale or lease (which shall remain
“hotel rooms” for purposes of Maui County Code Section
19.73.090.C and shall not be “residential units” for
purposes of that ordinance) (all of the foregoing actions are
collectively referred to herein as the “
Development
”).
Such activities by Seller shall include (i) consulting with
Purchaser and its agents, consultants and attorneys in formulating
plans for the Condotel Conversion Entitlements and Development,
(ii) supporting, and not opposing, issuance of the Condotel
Conversion Entitlements and the Development before all applicable
bodies, (iii) upon the request of Purchaser, causing the
appropriate executive of Seller (to be determined by consultation
between Seller and Purchaser, and taking into account the nature
and magnitude of the requested services), to promote and provide
written and/or verbal indications of support of the Condotel
Conversion Entitlements and Development to applicable governmental
agencies, divisions and boards and public utility companies
including, without limitation, the Maui County Department of
Planning, the Maui Planning Commission, the Maui County Department
of Public Works and Environmental Management (and said
Department’s Land Use and Code Division and Development
Services Administration), the Maui County Department of Water
Supply, Kapalua Water Company, Ltd., Kapalua Waste Treatment
Company, Ltd., the Maui County Council, any appeals boards, any
successors to such bodies, and staff of each of the foregoing, upon
receipt by Seller of the written request of Purchaser to do so,
which request shall specifically identify the parties to whom such
communication should be directed, and (iv) promoting issuance of
the Condotel Conversion Entitlements and the Development to, and
expressing support to, the Kapalua Resort Association, and seeking
their support of the issuance of the Condotel Conversion
Entitlements and the Development. All written letters of
support shall be submitted to Purchaser for its approval in writing
prior to dissemination. Notwithstanding any provision of this
Agreement, Seller shall have no authority to bind Purchaser in
connection with any matter relating to the Condotel Conversion
Entitlements or Development, or to purport to be authorized to do
so. All Condotel Conversion Entitlements and similar items
shall be made and issued only in the name of Purchaser.
4
(d)
Additional
Actions . In addition to the
actions described in paragraphs (a) and (c) above, Seller agrees
that it will, upon the written request of Purchaser, support and
promote, and provide general written and/or verbal indications of
support and promotion of, the Condotel Conversion Entitlements and
Development with neighboring landowners, community groups, local
organizations, and other influential groups.
(e)
Owner’s
Policy . If and to the extent
Purchaser maintains such a policy, Seller shall receive
Owner’s Policy and Corporate Rate treatment at the Hotel on
the same terms and conditions as Purchaser and its
affiliates.
(f)
Spa
. Purchaser
will consider entering into a membership and usage agreement with
Seller for the Kapalua Bay Spa, whether or not Purchaser proceeds
with a spa expansion to the Property. Seller agrees that it
will not oppose the expansion to the spa at Purchaser’s
Property so long as the same is done substantially in compliance
with the plans proposed therefor by SB Architects and delivered to
Seller on December 7, 2006 via the SMA Major submittal to the
County of Maui.
(g)
Survival
. The
provisions of this Section shall survive the Closing.
Section
5.
Seller’s
Representations, Warranties and Covenants .
(a)
Seller hereby
represents and warrants to, and covenants with, Purchaser and the
Company that:
(1)
This Agreement,
when executed and delivered by Seller and Purchaser, will
constitute the valid and binding agreement of Seller, enforceable
against Seller in accordance with its terms.
(2)
Seller is a
corporation, duly organized, validly existing and in good standing
under the laws of the State of Hawaii.
(3)
Seller has the
full right, power and authority to execute, deliver and perform its
obligations under this Agreement and to convey the Property to
Purchaser, all without the necessity of obtaining any consent or
approval of, or the taking of any other action with respect to, any
third parties. The Property does not constitute all or
substantially all of the assets of Seller.
(4)
Seller has good
and marketable title in fee simple to the Property, and all parts
thereof, free and clear of all liens or encumbrances of any kind
(except for Permitted Encumbrances [herein defined]) and no other
party has any right to acquire all or any portion of the
Property.
(5)
Other than the
2001 Lease, Seller has not entered into any leases, franchises,
licenses, occupancy agreements, or other agreements (whether
written or oral) demising space in, or otherwise similarly
affecting or relating to, the Lease Tract or the Improvements
(“ Leases
”).
(6)
Other than the
2001 Lease, neither Seller nor the Property is bound by any
contracts or agreements, such as maintenance, service or utility
contracts (“ Property Agreements ”) which relate in any
way to the design, ownership, use, leasing, maintenance, service or
operation of the Property.
5
(7)
No materially
adverse action, suit, proceeding (including any condemnation
proceeding), or notice of violations or deficient condition is
pending or threatened (i) against Seller which would impair the
ability of Seller to consummate the transactions contemplated
hereby or (ii) against the Property.
(8)
After the date
hereof, Seller shall (i) not enter into any Lease, Property
Agreement, or agreement or instrument which would constitute an
encumbrance of the Property or which would be outside the normal
scope of maintaining and operating the Property, without the prior
written consent of Purchaser, (ii) not remove any item of the
Personalty from the Lease Tract or Improvements unless it is
replaced with an item of at least equal value that is properly
suited for its intended purpose and (iii) afford Purchaser and
its representatives the continuing right to inspect, at reasonable
hours, the Property and any and all books, records, contracts and
other documents or data pertaining to the ownership, operation or
maintenance of the Property.
(9)
To the best
knowledge of Seller, the Property is not in violation of or subject
to any existing, pending or threatened investigation or inquiry by
any federal, state or local governmental authority, nor is the
Property subject to any remedial obligations under the Resource
Conservation and Recovery Act, as amended (“
RCRA ”), the Comprehensive
Environmental Response, Compensation and Liability Act, as amended
(“ CERCLA
”), the
Superfund Amendment and Reauthorization Act of 1986, as amended
(“ SARA
”), or any
other federal, state or local environmental law, regulation or
ordinance. Without limiting the generality of the foregoing,
to the best knowledge of Seller, no solid waste, toxic substance,
contaminated material, asbestos, oil or petroleum products or other
substances within the scope of any federal, state or local
environmental law or ordinance, including RCRA, CERCLA and SARA,
has been disposed of or otherwise released on or to the
Property. To the best knowledge of Seller, no pollutants or
effluents have been discharged from the Property into any water
source or system, including without limitation, the surface or
subsurface waters of the Property. To the best knowledge of
Seller, no emissions have been discharged from the Property into
the air which would require a permit under the Federal Water
Pollution Control Act, as amended, or the Clean Air Act, as
amended, or any other federal, state or local environmental law,
regulation or ordinance. To the best knowledge of Seller, no
underground storage tanks are located on or under the
Property.
(10)
To the best
knowledge of Seller, no portion of the Property has ever been used
as a landfill, dump, or site for injection wells, and Seller shall
not use or permit any portion of the Property to be used for any
such purpose.
(11)
Seller owns the
Entitlements, and no other person has the right to acquire all or
any rights under any of the Entitlements. Seller has the full
right, power and authority to assign the existing Entitlements to
Purchaser without the necessity of obtaining any consent or
approval of, or the taking of any other action with respect to, any
governmental authority or other third party, other than those for
which consent will be obtained at or prior to Closing. Seller
agrees that it will not request any governmental authority to enact
any change to th
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