SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
Commission file number 0-4674
MAUI LAND & PINEAPPLE COMPANY, INC.
(Exact name of registrant as specified in its charter)
HAWAII 99-0107542
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
P.O. Box 187, KAHULUI, MAUI, HAWAII 96732
(Address of principal executive offices)
Registrant's telephone number, including area code:
(808) 877-3351
NONE
Former name, former address and former fiscal year,
if changed since last report
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes /x/ No / /
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at November 1, 1995
Common Stock, no par value 1,797,125 shares
MAUI LAND & PINEAPPLE COMPANY, INC.
AND SUBSIDIARIES
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets - September 30, 1995 (Unaudited)
& December 31, 1994 3
Condensed Statements of Operations and Retained Earnings,
Three Months Ended September 30, 1995 & 1994 (Unaudited) 4
Condensed Statements of Operations and Retained Earnings,
Nine Months Ended September 30, 1995 & 1994 (Unaudited) 5
Condensed Statements of Cash Flows
Nine Months Ended September 30, 1995 & 1994 (Unaudited) 6
Notes to Condensed Financial Statements (Unaudited) 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II. OTHER INFORMATION 11
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
-2-
PART I. - FINANCIAL INFORMATION
Item 1. Financial Statements
MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
Unaudited
09/30/95 12/31/94
(Dollars in Thousands)
ASSETS
<S> <C> <C>
Current Assets
Cash $ 1,167 $ 2,269
Accounts and notes receivable 16,925 13,507
Inventories 25,258 20,537
Other current assets 4,034 4,647
-------- --------
Total current assets 47,384 40,960
Property 190,281 274,490
Accumulated depreciation (95,463) (94,296)
-------- --------
Property - net 94,818 180,194
Other Assets 12,311 14,257
-------- --------
TOTAL 154,513 235,411
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Notes payable 21,913 27,951
Trade accounts payable 5,776 5,596
Other current liabilities 7,898 8,510
-------- --------
Total current liabilities 35,587 42,057
Long-Term Liabilities
Long-term debt and capital lease obligations 26,727 99,180
Accrued retirement benefits 22,466 22,077
Other long-term liabilities 9,050 11,668
-------- --------
Total long-term liabilities 58,243 132,925
Stockholders' Equity
Common stock, no par value - 1,800,000
shares authorized, 1,797,125 issued and
outstanding 12,318 12,318
Retained earnings 48,365 48,111
-------- --------
Stockholders' Equity 60,683 60,429
-------- --------
$154,513 $235,411
TOTAL ======== ========
</TABLE>
See accompanying Notes to Condensed Financial Statements.
-3-
MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
9/30/95 9/30/94
(Dollars in Thousands
Except Share Amounts)
<S> <C> <C>
REVENUES
Net sales $27,394 $23,686
Operating income 6,031 6,749
Other income 660 2,641
------- -------
Total Revenues 34,085 33,076
------- -------
COSTS AND EXPENSES
Cost of goods sold 21,736 17,586
Operating expenses 5,392 5,936
Shipping and marketing 3,634 3,810
General and administrative 3,977 4,205
Equity in (earnings) losses of
joint ventures (8,576) 3,015
Interest 1,149 1,520
------- -------
Total Costs and Expenses 27,312 36,072
------- -------
INCOME (LOSS) BEFORE INCOME TAXES 6,773 (2,996)
INCOME TAXES (CREDIT) 2,454 (1,128)
------- -------
NET INCOME (LOSS) 4,319 (1,868)
RETAINED EARNINGS, BEGINNING OF PERIOD 44,046 51,471
------- -------
RETAINED EARNINGS, END OF PERIOD 48,365 49,603
======= =======
PER COMMON SHARE
Net Income (Loss) $ 2.40 $ (1.04)
======= =======
</TABLE>
See accompanying Notes to Condensed Financial Statements.
-4-
MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
9/30/95 9/30/94
(Dollars in Thousands
Except Share Amounts)
<S> <C> <C>
REVENUES
Net sales $64,797 $64,944
Operating income 21,563 21,350
Other income 3,882 3,704
------- -------
Total Revenues 90,242 89,998
------- -------
COSTS AND EXPENSES
Cost of goods sold 48,876 46,771
Operating expenses 17,324 17,296
Shipping and marketing 9,609 10,370
General and administrative 12,449 11,650
Equity in (earnings) losses of
joint ventures (4,390) 3,480
Interest 5,952 4,298
------- -------
Total Costs and Expenses 89,820 93,865
------- -------
INCOME (LOSS) BEFORE INCOME TAXES 422 (3,867)
INCOME TAXES (CREDIT) 168 (1,450)
------- -------
NET INCOME (LOSS) 254 (2,417)
RETAINED EARNINGS, BEGINNING OF PERIOD 48,111 52,020
------- -------
RETAINED EARNINGS, END OF PERIOD 48,365 49,603
======= =======
PER COMMON SHARE
Net Income (Loss) $ .14 $ (1.35)
======= =======
</TABLE>
See accompanying Notes to Condensed Financial Statements.
-5-
MAUI LAND & PINEAPPLE COMPANY, INC.
AND SUBSIDIARIES
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
September 30
1995 1994
(Dollars in Thousands)
<S> <C> <C>
Net Cash From (Used In) Operating
Activities $(4,897) $ 6,578
------- --------
Investing Activities
Purchases of property (4,906) (37,022)
Proceeds from disposal of property 3,056 3,013
Reimbursements from Kaahumanu
Center Associates 11,224 --
Other (2,682) 1,821
------- --------
Net Cash From (Used In) Investing
Activities 6,692 (32,188)
------- --------
Financing Activities
Payments of long-term debt & capital
lease obligations (16,298) (23,656)
Proceeds from long-term debt 13,288 50,298
Proceeds (payment) of short-term debt 113 50
------- -------
Net Cash From (Used In) Financing
Activities (2,897) 26,692
------- -------
Net Cash Increase (Decrease) (1,102) 1,082
Cash At Beginning of Period 2,269 1,223
------- -------
Cash At End of Period $ 1,167 $ 2,305
======= =======
Supplemental Disclosure of Cash Flow and Non-Cash Information -
Interest (net of amounts capitalized) of $6,597,000 and
$4,947,000 was paid during the nine months ended September 30,
1995 and 1994, respectively. Income tax refunds (net of
payments) of $1,509,000 and $6,347,000 were received during the
nine months ended September 30, 1995 and 1994, respectively. See
also Notes 4 and 5 to Condensed Financial Statements.
</TABLE>
See accompanying Notes to Condensed Financial Statements.
-6-
MAUI LAND & PINEAPPLE COMPANY, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
1. In the opinion of management, the accompanying condensed
financial statements contain all normal and recurring
adjustments necessary to present a fair statement of
financial position and results of operations for the interim
periods ended September 30, 1995 and 1994.
2. The Company's reports for interim periods utilize numerous
estimates of production, general and administrative
expenses, and other costs for the full year. Consequently,
amounts in the interim reports are not necessarily
indicative of results for the full year.
3. The effective tax rate for 1995 and 1994 differs from the
statutory federal rate of 34% primarily because of the state
tax provision and refundable state tax credits.
4. On October 31, 1995, the partners of Kaptel Associates,
which owns The Ritz-Carlton Kapalua Hotel, concluded an
agreement to dissolve the partnership. Effective October
31, 1995, the Company and The Ritz-Carlton Hotel Company
transferred their respective 25% interests in the
partnership to the remaining partner, NI Hawaii Resorts,
Inc. Because of the dissolution agreement, the Company's
equity in the losses of Kaptel Associates recorded through
June 30, 1995 were reversed in the third quarter of 1995.
The reversal of these losses are reflected as decreases in
costs and expenses of $8.9 million and $5 million,
respectively, for the third quarter and the first nine
months of 1995. The Company's balance sheet as of September
30, 1995 reflects the reversal of the $8.9 million accrued
losses previously reflected as a noncurrent liability.
5. Effective April 30, 1995, the Employees' Retirement System
of the State of Hawaii (ERS) converted its $30.6 million
loan to an additional 49% ownership in Kaahumanu Center
Associates (KCA). Effective with the conversion of the ERS
loan, the Company and the ERS each have a 50% interest in
KCA. The Company no longer consolidates KCA and is
accounting for its investment in KCA by the equity method.
This has resulted in a decrease in the Company's
consolidated assets and consolidated debt of approximately
$76 million.
-7-
6. Inventories as of September 30, 1995 and December 31, 1994
were as follows (in thousands):
09/30/95 12/31/94
Pineapple products $19,417 $15,261
Real estate held for sale 340 336
Merchandise, materials and supplies 5,501 4,940
------- -------
Total Inventories $25,258 $20,537
======= =======
7. Average common shares outstanding for the interim periods
ended September 30, 1995 and 1994 were 1,797,125.
-8-
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
RESULTS OF OPERATIONS
Consolidated
Consolidated net income for the third quarter of 1995 was $4.3
million compared to a net loss of $1.9 million for the third
quarter of 1994.
For the first nine months of 1995, consolidated net income was
$254,000 compared to a net loss of $2.4 million for last year's
first nine months.
Because of the dissolution agreement (see Notes to Condensed
Financial Statements), the Company's equity in the losses of
Kaptel Associates, recorded through June 30, 1995, were reversed
in the third quarter of 1995. The reversal of these losses
resulted in increases to net income of $5.7 million and $3.2
million, respectively, for the third quarter and the first nine
months of 1995. For the third quarter and first nine months of
1994, the Company's equity in losses of Kaptel Associates
increased net losses by $865,000 and $1.7 million, respectively.
Pineapple
The Company's pineapple operations produced higher revenues for
the third quarter of 1995 compared to last year's third quarter
as case volume sales and average sales prices improved. Revenues
for the first nine months of 1995 were about the same as the
first nine months of 1994. Pineapple operations reported
increased operating losses for the third quarter and first nine
months of 1995 compared to the same periods in 1994 due
principally to higher average cost of sales resulting largely
from localized drought conditions.
Resort
Revenues from the Kapalua resort were higher for the third
quarter, but lower for the first nine months of 1995 compared to
the same periods in 1994. Both the third quarter and the first
nine months of 1995 contributed operating profits compared to
operating losses last year. Operating profits include the
Company's equity in the losses of Kaptel for 1994 and the
reversal of losses attributable to this joint venture investment
in 1995.
Operating profits from the resort's ongoing operations increased
in the third quarter of 1995 compared to the third quarter of
1994. For the first nine months of 1995, the operating profits
from ongoing operations were lower than the same period in 1994.
Resort room occupancies were higher for the third quarter of
1995, but lower for the first nine months compared to the same
periods in 1994.
-9-
Merchandise sales and paid rounds of golf were lower for the 1995
third quarter and first nine months compared to 1994. Higher
average golf rates and reductions in expenses partially offset
these decreases.
Commercial & Property
The Commercial & Property segment contributed lower revenues for
the third quarter of 1995 due to fewer land sales in 1995 and the
exclusion of Kaahumanu Center Associates from the consolidated
financial statements as of May 1995 (see Notes to Condensed
Financial Statements). For the first nine months of 1995,
revenues were higher than the same period in 1994 due to
increased lease revenue from Kaahumanu center. Operating profits
for the third quarter and the first nine months of 1995 were
lower than the same periods in 1994 principally because of higher
interest and depreciation expenses related to the redevelopment
of Kaahumanu Center.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1995, total debt, including capital leases, was
$50 million compared to $128.6 million at December 31, 1994. The
decrease was due to the debt related to Kaahumanu Center being
reflected in the separate financial statements of Kaahumanu
Center Associates (KCA) as of April 30, 1995 (see Notes to
Condensed Financial Statements). Also, construction-related
reimbursements which the Company received from KCA in May of 1995
were used principally to pay down borrowings.
Net cash flow used in operating activities was $4.9 million for
the first nine months of 1995. Negative cash flow was due
principally to increases in pineapple inventories because of peak
canning during the summer and because of increases in accounts
receivable as a result of the timing of sales.
In October of 1995, the partners of Kaptel Associates, which owns
The Ritz-Carlton Kapalua Hotel, concluded an agreement to
dissolve the partnership (See Notes to Condensed Financial
Statements). The partners also agreed in principle to amend the
terms of the Company's ground lease for the hotel property and
the related loan. The Company had borrowed $4.8 million from the
partnership for construction of certain off-site improvements
related to the hotel. Principal and interest are payable solely
from rental income receivable by the Company under the hotel
ground lease. The modification of these arrangements are
contingent on the partnership's ability to modify the terms of
its bank financing.
-10-
PART II OTHER INFORMATION
Item 5. Other Information
On October 31, 1995, the partners of Kaptel Associates, which
owns The Ritz-Carlton Kapalua Hotel, concluded an agreement to
dissolve the partnership. Effective October 31, 1995, the
Company and The Ritz-Carlton Hotel Company transferred their
respective 25% interests in the partnership to the remaining
partner, NI Hawaii Resorts, Inc.
Because of the dissolution agreement, the Company's equity in the
losses of Kaptel Associates recorded through June 30, 1995 were
reversed in the third quarter of 1995. The reversal of these
losses resulted in increases to net income of $5.7 million ($3.18
per share) and $3.2 million ($1.78 per share), respectively, for
the third quarter and the first nine months of 1995. The
Company's balance sheet as of September 30, 1995 reflects the
reversal of the $8.9 million accrued losses previously reflected
as noncurrent liability.
The following pro forma statement of operations has been derived
from the Company's consolidated statement of operations for the
year ended December 31, 1994. The statement reflects the effects
of the dissolution agreement on the historical statement of
operations as if it had taken place prior to January 1, 1994. It
is being presented for informational purposes only and does not
purport to be indicative of the operating results of the Company
had the dissolution of Kaptel Associates occurred prior to
January 1, 1994, nor the results from future operations.
-11-
PART II, Item 5. (Continued)
MAUI LAND & PINEAPPLE COMPANY, INC.
PRO FORMA STATEMENT OF OPERATIONS (UNAUDITED)
YEAR ENDED DECEMBER 31, 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
----------------------------------
Pro Forma
Actual Adjustments Pro Forma
------ ----------- ---------
<S> <C> <C> <C>
Net Sales & Gross Revenue $125,882 -- $125,882
-------- -------- --------
Cost of goods sold 67,623 67,623
Other operating costs and expenses 40,119 40,119
General and administrative 14,352 14,352
Equity in losses of joint ventures 4,844 (4,119)(1) 725
Interest 5,682 5,682
-------- -------- --------
Total Costs and Expenses 132,620 (4,119) 128,501
======== ======== ========
LOSS BEFORE INCOME TAX (6,738) 4,119 (2,619)
INCOME TAX CREDIT (2,829) 1,483 (2) (1,346)
-------- -------- --------
NET LOSS (3,909) 2,636 (1,273)
======== ======== ========
Per Common Share:
Net Loss $ (2.18) $ (0.71)
======== ======== ========
</TABLE>
(1) Represents the Company's equity in the losses of Kaptel Associates for
the year ended December 31, 1994.
(2) Represents the estimated tax effect of the pro forma adjustment.
-12-
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(10) Material Contracts
A. Dissolution Agreement, dated October 31, 1995.
Attached.
(27) Financial Data Schedule
As of September 30, 1995 and for the nine months then ended.
Attached.
(b) Reports on Form 8-K
A report on Form 8-K, dated June 29, 1995 and filed on July
3, 1995, included Item 5, Other Information, and no
financial statements.
-13-
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MAUI LAND & PINEAPPLE COMPANY, INC.
November 13, 1995 /s/ PAUL J. MEYER
Date Paul J. Meyer
Executive Vice President/Finance
-14-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the Maui
Land & Pineapple Company, Inc. Balance Sheet as of September 30, 1995 and the
Statement of Operations for the nine months then ended, and is qualified in its
entirely by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 1,167
<SECURITIES> 0
<RECEIVABLES> 16,925
<ALLOWANCES> 0
<INVENTORY> 25,258
<CURRENT-ASSETS> 47,384
<PP&E> 190,281
<DEPRECIATION> 95,463
<TOTAL-ASSETS> 154,513
<CURRENT-LIABILITIES> 35,587
<BONDS> 26,727
<COMMON> 12,318
0
0
<OTHER-SE> 48,365
<TOTAL-LIABILITY-AND-EQUITY> 154,513
<SALES> 64,797
<TOTAL-REVENUES> 90,242
<CGS> 48,876
<TOTAL-COSTS> 66,200
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,952
<INCOME-PRETAX> 422
<INCOME-TAX> 168
<INCOME-CONTINUING> 254
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 254
<EPS-PRIMARY> .14
<EPS-DILUTED> .14
</TABLE>
DISSOLUTION AGREEMENT
THIS DISSOLUTION AGREEMENT (the "Agreement") set forth on
this 31st day of October, 1995, by and between MAUI HOTELS
("Maui"), a Georgia Limited Partnership, whose General Partner is
The Ritz-Carlton Hotel Company, KAPALUA INVESTMENT CORP.
("Kapalua"), a Hawaii corporation, and NI HAWAII RESORT, INC. ("NI
Hawaii"), a Hawaii corporation, the foregoing constituting all the
general partners of KAPTEL ASSOCIATES ("Kaptel" or the
"Partnership"), a Hawaii General Partnership (for purposes of this
Agreement the respective partners are collectively referred to as
the "Partners");
WITNESSETH THAT:
WHEREAS, Kaptel, NI Hawaii and The Long-Term Credit Bank of
Japan, Ltd. (the "Lender") entered into a Letter of Credit
Agreement dated September 26, 1990, as additional security for
obligations of Kaptel under that certain Construction Loan
Agreement in the amount of $186,250,000.00 (the "Loan");
WHEREAS, The Letter of Credit Agreement required NI Hawaii
to secure two letters of credit in the aggregate amount of
$35,000,000.00 (collectively the "Letters of Credit") in favor of
the Lender whereby Lender may draw upon the Letters of Credit upon
the occurrence of an event of default under the Loan and its
related documents;
WHEREAS, the Lender informed Kaptel that it is currently in
default under the Loan and the Lender exercised its right to draw
$35,000,000.00 on the Letters of Credit;
WHEREAS, Maui and Kapalua informed NI Hawaii that they do
not intend to meet any capital call made for the purpose of
reimbursing NI Hawaii for each Partner's respective obligation
under the Amended and Restated Partnership Agreement of Kaptel
Associates (the "Partnership Agreement") and that Maui and Kapalua
agree to forego and waive the dilution process set forth in the
Partnership Agreement by entering into this Agreement to transfer
to NI Hawaii all of their respective Partnership interests in
Kaptel;
WHEREAS, it is the understanding of the Partners that upon
completing said transfer, the Partnership shall dissolve, wind up
and terminate pursuant to this Agreement;
NOW, THEREFORE, for mutual promises, obligations and good
and valuable consideration, the parties intending to be legally
bound, the parties hereby agree as follows:
1. Appointment of Managing Partner.
As of the date of this Agreement, Maui agrees to resign as
Managing Partner of the Partnership and Maui and Kapalua agree to
appoint NI Hawaii as the Managing Partner. Upon appointing NI
Hawaii as the Managing Partner, Maui agrees to provide NI Hawaii
with any and all information, communication, documents and files in
connection with its role as Managing Partner and agrees to further
assist and cooperate in good faith with NI Hawaii during the
transition of the Managing Partner role from Maui to NI Hawaii.
2. Transfer of Partnership Interest.
Maui and Kapalua agree that the amount of their respective
capital calls exceed the value of their respective Partnership
points and that if the Partners were to proceed with the dilution
process set forth in Section 3.3.4 of the Partnership Agreement,
their respective points in the Partnership would be zero.
Therefore, the Partners consent to and hereby waive proceeding with
the capital call process set forth in Section 3.3.7 of the
Partnership Agreement and the dilution process set forth in Section
3.3.4 of the Partnership Agreement and further agree that the
provisions of Section 3.3.4 thereof (including without limitation
the provisions of Section 3.3.4(i)) shall be inapplicable. As
consideration for the indemnity agreement set forth in Section 6,
and the releasing of Maui and Kapalua from their obligations
pursuant to the Partnership Agreement, Maui and Kapalua agree that
effective October 31, 1995, (the "Date of Dissolution"), Maui and
Kapalua will transfer their respective 25% interests in the
Partnership, which constitutes their entire interest in the
Partnership, to NI Hawaii at which time they shall cease to be
Partners of the Partnership and shall retain no interest, in equity
or otherwise, in the Partnership nor receive any future revenues,
distribution, compensation or proceeds from liquidation, if any.
In addition, the Partners agree that as of the Date of Dissolution,
Maui and Kapalua shall have no further duties, authority or
obligations in connection with the Partnership, unless expressly
set forth herein.
3. Dissolution.
As a result of Maui and Kapalua transferring an aggregate
of 50% of the Partnership interest to NI Hawaii, NI Hawaii will own
100% of the Partnership and the Partners agree that the Partnership
shall be dissolved as of the Date of Dissolution and the
Liquidating Partner, as defined herein, shall be authorized to wind
up, liquidate and terminate the Partnership.
4. Appointment of Liquidating Partner and Winding up of
Partnership.
NI Hawaii shall be the Liquidating Partner and shall have
exclusive rights and responsibilities for winding up the
Partnership business. After the Date of Dissolution, no other
Partner shall have authority to act on behalf of or bind the
Partnership or participate in its management or control for
purposes of winding up its business or otherwise. As Liquidating
Partner, NI Hawaii shall be responsible for the distribution and
transfer of all Partnership assets and liabilities to NI Hawaii and
the termination of the Partnership. NI Hawaii shall have the
authority to act on behalf of or bind the Partnership for purposes
of winding up the Partnership's business or related matters which
shall include, but is not limited to, the full power and authority
to:
(a) Distribute, sell, transfer, hypothecate, pledge, or
otherwise encumber or dispose of all the Partnership's
assets;
(b) Represent and act on behalf of the Partnership
in all matters affecting it during the winding
up period, including the power to engage
professional and technical services of others
(including without limitations, accountants,
attorneys) and to institute and defend any
legal proceedings that may be pending or
brought by or against the Partnership;
(c) Prepare, execute, file, record, and publish on
behalf of the Partners and the Partnership any
agreements, documents, or instruments,
including federal and state tax returns to
reflect the dissolution and termination of the
Partnership;
(d) Pay or otherwise settle or discharge all of
the debts, liabilities, and other obligations
of the Partnership;
(e) Take all other action necessary, appropriate, or
incidental to the foregoing powers or to the
performance of the duties of the Liquidating Partner
under this Agreement, which shall include but are not
limited to, the publishing of the notice of
dissolution to creditors and the filing of the General
Partnership Dissolution Statement with the Department
of Commerce and Consumer Affairs, State of Hawaii;
(f) receive compensation and reimbursement for any and all
costs and expenses incurred in connection with its
duties as Managing Partner and Liquidating Partner;
(g) On the Termination Date, which shall be defined as the
date upon which all Partnership assets are assigned,
transferred and conveyed to NI Hawaii, the Liquidating
Partner shall have authority to execute any deeds,
bills of sale, assignments or other conveyance
documents by and for the Partnership that shall be
necessary or appropriate to evidence or effect the
transfer of the Partnership assets, which shall
include but are not limited to, any and all leases,
hotel ground lease, operating agreement, contracts,
permits, rights, licenses, rental, revenues, goodwill,
improvements, income and settlements.
5. Distribution of Assets.
The Partners agree that any and all Partnership assets shall
be distributed, transferred and conveyed to NI Hawaii and Maui and
Kapalua shall receive no distribution from the Partnership. The
Partners waive any right to an accounting for the winding up of the
Partnership.
6. Indemnification.
NI Hawaii shall indemnify, defend and hold harmless, each
of the other Partners from and against all debts, liabilities,
claims and obligations of any nature in any way relating to the
Partnership's assets or its obligations ("Partnership Obligations")
that: (a) are known to exist by NI Hawaii (whether or not the
amount thereof is ascertainable) as of the Date of Dissolution; or
(b) are attributable to any action taken by the Managing Partner or
Liquidating Partner acting in such capacity after the Date of
Dissolution; or (c) arise in the course of operations of the
Partnership assets conducted after the Date of Dissolution.
7. Mutual Representations and Warranties.
The Partners represent and warrant to each other that,
except as stated in the Partnership books and reflected in the
Partnership's financial statements as of September 30, 1995, that:
(a) each Partner has not incurred, or is not aware of potentially
incurring, any obligations or liability, on behalf of or as
apparent agent of the Partnership or the other Partners, or for
which the Partners may be charged, or for which the Partners intend
to claim, refund or reimbursement from the Partnership; and (b) the
Partners have not received, discharged or transferred any credit,
moneys, property, or other assets of the Partnership. These
representations and warranties shall survive the final termination
of the Partnership.
8. Waiver
Maui and Kapalua hereby waive any and all claims, if any,
against NI Hawaii arising from or connected with its roles as
Managing Partner or Liquidating Partner, or arising out of the
winding up of the Partnership, except for losses, claims, expenses,
damages, liabilities, or obligations arising from or connected with
NI Hawaii's willful misconduct or the breach by NI Hawaii of its
obligations under this Agreement.
Maui and Kapalua also hereby waive any claims for damages,
if any, arising out of NI Hawaii's discussions or negotiations for
its own account and interest with Lender during the winding up
period, which includes but is not limited to, any discussions with
The Long-Term Credit Bank of Japan, Ltd. ("Lender") on its own
behalf regarding the restructuring of or purchase of the Loan (the
"Loan Restructure"). Maui and Kapalua hereby waive any and all
claims or causes of action arising out of potential conflicts of
interest of NI Hawaii in its capacity as General Partner, Managing
Partner or Liquidating Partner associated with the winding up of
the Partnership and the negotiations with the Lender for the Loan
Restructure. Subject to the exceptions set forth in the first
paragraph of Section 8, Maui and Kapalua knowingly and willingly
waive any and all claims and/or causes of action arising out of any
breach of fiduciary duties by NI Hawaii, if any, pursuant to the
Partnership Agreement or under general partnership law arising out
of the winding up of the Partnership and/or negotiations with the
Lender for the Loan Restructure.
9. Memorandum of Understanding.
The Partners agree that the Memorandum of Understanding
dated June 15, 1995, by and among Maui Hotels, Kapalua Investment
Corp., NI Hawaii Resort, Inc., Kapalani L.P., and Maui Land &
Pineapple Company, Inc., continues to be in effect and the Partners
shall proceed in good faith to cause their respective affiliates to
consummate the terms of certain modifications to: (1) that certain
Hotel Ground Lease dated September 26, 1990, and certain other
agreements (including the modifications contemplated by those
certain letters dated June 13, 1995, executed by Kapalua Land
Company and dated June 15, 1995, executed by NI Hawaii); and (2)
that certain Operating Agreement dated September 26, 1990.
10. Notices.
All notices, requests, demands, and other communications
under this agreement shall be in writing, an shall be deemed to
have been duly given on the date of delivery if personally
delivered to the person to whom notice is to be given, or on the
third day after mailing if mailed to the person to whom notice is
to be given by first class mail, postage prepaid, and properly
addressed to that person as follows:
Kapalua Investment Corp.
c/o Kapalua Land Company, Ltd.
500 Office Road
Kapalua, Maui, Hawaii 96761
Attention: Donald A. Young
NI Hawaii Resort, Inc.
745 Fort, Hawaii Building 8th Floor
Honolulu, Hawaii 96813
Attention: Toru Okuyama/Alan M. Goda, Esq.
Maui Hotels
c/o The Ritz-Carlton Hotel Company
3414 Peachtree Road, N.E., Suite 300
Atlanta, Georgia 30326
Attention: J. Richard Stephens
11. Miscellaneous.
11.1 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Hawaii.
11.2 Entire Agreement. This Agreement constitutes the
entire agreement between the Partners relating to the subject
matter hereof, superseding all prior agreements or undertakings,
oral or written.
11.3 Interpretation. No provisions of this Agreement shall
be construed against or interpreted to the disadvantage of any
party hereto by any court or other governmental or judicial
authority by reason of such party having or being deemed to have
structured or dictated such provision.
11.4 Counterparts, Captions, Appendices. This Agreement
may be executed in counterparts, each of which shall be deemed an
original and all which shall constitute one and the same
instrument. The captions are for convenience of reference only,
and shall not affect the meaning or construction to be given any of
the provisions hereof.
11.5 Attorney's Fees. If any action, suit or proceeding
is brought by any party hereto with respect to this Agreement, the
prevailing party in any such action, suit or proceeding shall be
entitled to recover from the other party or parties, in addition to
such other relief as the court may award, all reasonable attorney's
fees and costs of the action, suit or proceeding incurred by the
prevailing party in connection with such action, suit or
proceedings.
11.6 Amendments. The terms of this Agreement may not be
amended, waived or extended except by a written instrument signed
by the party against whom any such amendment, waiver or extension
is to be enforced.
11.7 Successors and Assigns. This Agreement shall inure
to the benefit of and shall be binding upon each of the parties and
their respective heirs, executors, administrators, legatees,
distributees, representatives, assignees, and other successors.
11.8 Confidentiality. Any information or communication in
connection with this Agreement shall remain confidential and shall
not be provided to any third party without the prior written
consent of the other parties, excluding the attorneys and
accountants of each party or as required by law or under court
order in which case the other parties shall consent (where said
consent shall not unreasonably be withheld) to such disclosure
after receipt of the nature of the demand for such disclosure and
the content of the information to be disclosed prior to said
disclosure to any third party.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized corporate
officers or their respective General Partners, each on the day and
year first above written.
KAPALUA INVESTMENT CORP.
By /S/ PAUL J. MEYER
Name: Paul J. Meyer
Office: Executive Vice President/Finance
"Kapalua"
MAUI HOTELS, a Georgia Limited Partnership
By THE RITZ-CARLTON HOTEL
COMPANY, Its General Partner
By /S/ RUFUS A. CHAMBERS
Name: Rufus A. Chambers
Office: Secretary
"Maui"
NI HAWAII RESORT, INC.
By /S/ TORU OKUYAMA
Name: Toru Okuyama
Office: Vice President-Secretary
"NI Hawaii"
