Exhibit 10
PURCHASE AND SALE
AGREEMENT
THIS PURCHASE AND SALE AGREEMENT
(“Agreement”) is made effective March 14, 2006
(the “Effective Date”) by and between MAUI LAND
& PINEAPPLE COMPANY, INC. , a Hawaii corporation, whose
address is 120 Kane St., Kahului, Hawaii 96732
(“Seller”) and DAVID C. COLE and MARGARET COLE,
husband and wife, or their designee, whose address is 35 Kapalua
Bay Drive, Lahaina, Hawaii 96761 (David C. Cole and Margaret Cole
hereinafter referred to as “Buyer”).
For good and valuable consideration,
the receipt and sufficiency of which are acknowledged, Seller and
Buyer agree as follows:
1.
Property . Subject to the terms and conditions set
forth in this Agreement, Seller agrees to sell to Buyer and Buyer
agrees to buy from Seller the real properties identified as the
southern portion of Tax Map Key No. (2) 2-3-7:1, consisting of
approximately 190 acres, more or less, including access to and from
Kekaulike Road on the mauka portion of the property, and Lower Kula
Highway on the makai portion of the property, located in Kula,
Maui, Hawaii, as shown in Exhibit A , together with one
two-inch (2”) County of Maui Department of Water Supply water
meter, providing potable water, as well as all of Seller’s
interest in any other appurtenant rights, privileges, easements,
licenses, permits, or rights of way appurtenant to such real
property (“Property”), which water meter is currently
located upon the Property. The Buyer and Seller understand and
agree that an accurate survey of the Property has not been
completed as of the date of this Contract, and the results of the
survey will accurately describe the boundaries of the Property, and
acreage of the Property to be transferred to the Buyer.
2.
Purchase Price
. The purchase price
(“Purchase Price”) for the Property shall be Four
million nine hundred nine thousand and no/100 dollars
($4,909,000.00), based upon a 190.09 acre purchase (therefore,
at the rate of $25,823.00 per acre). The purchase price shall be
adjusted, prorata, based upon the actual acreage transferred to the
Buyer, determined upon the completion of the survey, and
realignment of the Property, as more particularly described
herein.
3.
Payment of Purchase
Price . Buyer shall
pay the Purchase Price as follows:
a.
Upon full execution of this
Agreement, Buyer shall make a cash deposit of FIFTY THOUSAND
U.S. DOLLARS (US $50,000.00) with Escrow (defined
below).
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b.
The deposit required under
paragraphs 3(a) shall be held in Escrow in an interest-bearing
account and at Closing shall be applied to the Purchase Price. Upon
the expiration of the Due Diligence Period, these deposits shall
become non-refundable, unless Seller is in default. Accordingly,
Buyer hereby irrevocably instructs Escrow that, if the Due
Diligence Period expires and Buyer has not exercised its Due
Diligence right to cancel, then if Buyer fails to close in
accordance with the terms of this Agreement for any reason (other
than a material breach of this Agreement by Seller), Escrow shall,
upon written demand from Seller, and without any requirement for
further authorization or approval from Buyer, disburse
Buyer’s deposit to Seller. Seller and Buyer acknowledge that
this forfeiture of the deposits is intended and understood to be
compensation for the losses that Seller will incur if Buyer fails
to close, including without limitation lost opportunities to market
the Property, and not as a penalty, and further that the sum to be
forfeited is a reasonable estimate of the damages Seller will
suffer if Buyer defaults.
c.
Buyer shall pay the balance of the
Purchase Price in cash at Closing.
d.
Buyer’s obligations under this
Agreement are not contingent on or subject to mortgage
financing.
4.
Due Diligence
.
a.
Due Diligence Period
. From the date of execution
of this Agreement until 5:00 p.m. (HST) on the 60th day
following the Effective Date (the “Due Diligence
Period”), Buyer, at Buyer’s expense, may review, survey
and investigate (a) the physical and environmental condition of the
Property, (b) the character, quality, and general utility of the
Property, (c) the zoning, land use, environmental and building
requirements and restrictions applicable to the Property, (d) the
state of title to the Property, and (e) any and all other documents
and matters Buyer feels are necessary to evaluate the Property and
determine its acceptability to Buyer (“Due Diligence”).
The Seller shall make available to Buyer, for Buyer’s review
and use, copies of all maps, surveys, appraisals, reports or other
investigative studies conducted by Seller regarding the Property.
Such information shall include, but not be limited to, future
anticipated farming activities upon the Property and adjacent
properties owned by the Seller, water supplies, reservoirs and
waterlines located on the Property and maintenance and repair of
such facilities, existing and future agreements with third parties
regarding the use and maintenance of the water supplies and
facilities, anticipated easements for access and utilities,
available precipitation reports, any existing leases issued to
third parties for the use of the Property, and a history of the
farming of the Property and occupancy of the residential
improvements located thereon. Seller shall permit Buyer to inspect
and, at Buyer’s expense, copy the files provided by Seller
pursuant to this section (excluding any confidential or privileged
materials).
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b.
Title Report
. No later than fifteen
(15) days after the Effective Date, Seller shall secure a
current title report regarding the Property (the “Title
Report”) from Escrow, and provide a copy of it to Buyer. No
later than five (5) days following Seller’s delivery of the
Title Report and copies of documents listed in the Title Report to
Buyer, Buyer shall notify Seller in writing of any liens,
restrictions or other encumbrances shown on the Title Report that
are objectionable. No later than ten (10) days following
Buyer’s delivery of such notification to Seller, Seller shall
notify Buyer whether Seller agrees to remove any such objectionable
encumbrance from title prior to Closing. If Seller does not agree
to remove an encumbrance and Buyer nevertheless waives the Due
Diligence right to cancel this Agreement set forth below and
proceeds to close its purchase, Buyer’s objections to that
encumbrance shall be deemed waived. All liens, restrictions and
other encumbrances shown on the Title Report, excluding any that
Seller agrees to remove, shall be called “Permitted
Encumbrances”.
c.
Realignment of the Property
Boundaries. The
Buyer and Seller understand and agree that the Seller received in
February 2006 a separate lot determination from the County of Maui,
recognizing seven (7) lots within the existing Tax Map Key No. (2)
2-3-7:1, which includes the approximate 190 -acre Property
identified on the map attached hereto as Exhibit “A”.
However, the lot configuration established by the County does not
follow the original Land Grant boundaries (which the Property is
based upon) and therefore a consolidation and resubdivision of a
portion of said tax map parcel is required in order to establish
the Property as a separate parcel. This consolidation and
resubdivision will allow for some realignment of the boundaries
shown on Exhibit A to better accommodate the physical topography of
the land. Therefore, during the Due Diligence period, the Seller
and Buyer shall mutually agree upon the realignment of the
boundaries of the 190-acre Property, so as to follow, to the extent
reasonably possible, existing topographical features, such as
gulches, reservoirs, and roadways, to create a mutually acceptable
alignment of the property’s boundaries to facilitate farming,
access and use of the parcel, and to provide a more suitable
post-closing parcel configuration. The Buyer and Seller shall
strive to eliminate, to the extent reasonably possible, access
easements over the mauka extent of the Property which benefit
adjacent or neighboring parcels owned by Seller.
In accordance with Maui County Code
Section 18.04.020(B) it is expressly agreed that the sale of the
Property pursuant to this Agreement shall not close unless and
until final subdivision approval is granted for the consolidation
and resubdivision described herein.
d.
Allocation of Future Subdivision
Rights. Under the
existing Agricultural Zoning Ordinance, Maui County Code Section
19.30A.030.G, Tax Map Key No. (2) 2-3-7:1 has the potential
to be subdivided into thirty-six (36) developable lots. Nine (9)
potential agricultural lots are intended to be allocated to the
Property as follows:
3 lots of 2-acre minimum
size
2 lots of 15-acre minimum
size
2 lots of 25-acre minimum
size
2 lots of 40-acre minimum
size
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In the event that the total agricultural
subdivision potential is less than 36, and thus the above
allocation needs to be adjusted due to unforeseen circumstances,
the revised allocation shall be mutually agreed upon by the parties
prior to the end of the Due Diligence period.
e.
Allocation of Nonpotable Water
Supply. For a
period of twenty (20) years after Closing, Seller shall work
cooperatively with Buyer to facilitate the Buyer’s desire to
pursue agricultural activities on the Property by allowing Buyer to
utilize some of the water currently used by Seller in farming the
Property and adjacent properties, to the extent that there is water
available above and beyond what is required by Seller for its
ongoing agricultural activities. (Note, this clause is separate and
independent from the potable 2” county water meter
transferred as part of the Property, for which Buyer shall have
exclusive use and ownership.) Any such water used by Buyer
shall be subject to a reasonable fee approximately equivalent, but
not greater than, the going rate charged for agricultural water by
the Department of Water Supply.
The Seller currently enjoys the use
of two (2) two inch (2”) water meters (hereinafter the
“Retained Meters”) for its farming operations upon and
in the vicinity of the Property. In the event Seller’s
farming operations in the vicinity of the Property are terminated,
or if other water resources become available for Seller’s
farming operations which would eliminate the Seller’s need
for the Retained Meters, Seller and Buyer shall meet and make a
good faith effort to reach mutually agreeable terms for the
transfer (including appropriate reasonable compensation, but
keeping in mind the various existing restrictions placed on said
meter) of one (1) of the Retained Meters to Buyer for Buyer’s
use in farming of the Property, which meter shall thereafter run
with the land, or as may otherwise be deemed prudent and beneficial
by the Buyer, at Buyer’s sole discretion.
f.
Waterline and Access
Easements. Within
thirty (30) days of the Effective Date, the Seller shall provide a
map to the Buyer which shall identify all existing waterlines,
reservoirs and access easements that exist on the Property for the
benefit of the Seller, the County of Maui, or any other party, for
the Buyer’s review. Seller shall further provide the Buyer
with a summary of all easements affecting the Property, including
proposed access easements needed to provide access to the land
grants adjacent to the makai portion of the Property, together with
copies of such easements, for the Buyer’s review and
analysis. Seller and Buyer agree that Seller shall provide an
access easement from Kekaulike Highway onto Grant 1522, and over
Grant 2085 to the Property, along the eastern boundaries of said
Grants.
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g.
Due Diligence Cancellation
Right . If during
the Due Diligence Period, Buyer determines in its sole discretion
that the Property is not acceptable for any reason, Buyer shall
have the right before the expiration of the Due Diligence Period to
terminate this Agreement by giving written notice to Seller. Upon
such termination by Buyer, this Agreement shall terminate,
Buyer’s deposits together with any interest earned thereon,
less any incurred escrow fees or expenses, shall be refunded to
Buyer, all documents/information about the Property obtained by
Buyer shall be delivered forthwith to Seller and the parties hereto
shall be released from all further obligations and liabilities
hereunder, except that Buyer shall restore any damage done to the
Property as a result of its Due Diligence inspections. If Buyer
fails to exercise this right to cancel on or before such date and
time, then Buyer shall be deemed to have waived its right to cancel
this Agreement. Buyer shall defend, indemnify, and hold Seller
harmless against any losses, damages, costs, and expenses including
reasonable attorney’s fees, arising from any entry on the
Property by Buyer or any of its agents, employees, contractors or
representatives to conduct Due Diligence.
5.
Escrow, Closing, Prorations and
Expenses.
a.
Escrow . The transfer of the Property shall occur
through First American Title Company, Kahului Branch, attention
Stacie Teshima . (“Escrow”).
b.
Closing Date
. Payment of the Purchase
Price and recording of the Warranty Deed conveying the Property to
Buyer (“Closing”) shall occur no later than 90
days days following the County of Maui’s issuance of
final subdivision approval for the consolidation and resubdivision
described above. Provided, however, that Seller shall have the sole
right to extend Closing by up to an additional 120 days ,
whereby Closing could occur up to 210 days beyond the date
of said final subdivision approval. Seller shall provide Buyer with
at least 15 days prior notice of any change in the closing
date.
c.
Seller’s Closing
Obligations . On or
before Closing Date, Seller shall deliver the following to
Escrow:
(1)
Four (4) duplicate original copies
of a Warranty Deed in a form reasonably acceptable to Buyer and
Seller, duly executed and acknowledged by Seller, conveying to
Buyer Seller’s fee simple interest in the Property free and
clear of any liens or encumbrances, except the Permitted
Encumbrances;
(2)
A State of Hawaii conveyance tax
certificate appropriately completed and executed by
Seller;
(3)
Certifications in the forms required
by Section 1445(e) of the Internal Revenue Code (FIRPTA), and
Section 235-68 of the Hawaii Revised States, as amended
(HARPTA), duly executed by Seller;
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(4)
Resolutions of Seller authorizing
the execution of this Agreement and the transaction contemplated
herein; and
(5)
Such funds as are necessary to cover
expenses which are to be paid by Seller under this Agreement.
Seller may, as an alternative to providing such funds, deposit with
Escrow a written authorization satisfactory to Escrow providing for
the payment of such expenses out of the sales proceeds due
Seller.
(6)
Seller shall have the property
surveyed by a surveyor licensed in the State of Hawaii, and provide
a map (with surveyor’s stamp) and accompanying report,
showing the perimeter of the Property and the location of any
improvements within the vicinity of the perimeter boundaries of the
Property.
d.
Buyer’s Closing
Obligations . On or
before the Closing Date, Buyer shall deliver to Escrow such cash
funds as are necessary to pay the balance of the Purchase Price and
to cover expenses which are to be paid by Buyer under this
Agreement.
e.
Closing Costs.
Seller shall pay the following
closing costs: (a) costs of drafting the deed; (b)
Seller’s notary fees; (c) conveyance tax; (d) the recording
fees for the deed; (e) 50% of Escrow�
