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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported)
March 22, 2000 (March 14, 2000)
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ML MACADAMIA ORCHARDS, L.P.
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(Exact name of registrant as specified in its charter)
DELAWARE 1-9145 99-0248088
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(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
828 FORT STREET, HONOLULU, HAWAII 96813
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(Address of Principal Executive Offices) (Zip Code)
808-532-4130
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Registrant's telephone number, including area code
1
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On March 14, 2000, ML Macadamia Orchards, L.P. (the "Partnership") announced
that the Partnership agreed to purchase 142 acres of mature macadamia trees
and substantially all of the assets used in the macadamia farming business
from Ka'u Agribusiness Company, Inc., a Hawaii corporation, Ka'u Sugar,
Inc., a Hawaii corporation, Macadamia Orchards, Inc., a Hawaii corporation,
and Mauna Kea Agribusiness Company, Inc., a Hawaii corporation (collectively
referred to herein as "Seller").
The acquired assets consist primarily of farming equipment, vehicles, a
husking plant, a well, leasehold improvements, office furniture and
equipment and inventories related to macadamia farming. In addition, the
Seller will assign to the Partnership its interest in approximately 16 farm
service contracts to farm macadamia orchards owned by other growers. The
Partnership will also be purchasing from Seller approximately 142 tree acres
of mature macadamia orchards, which consist of an ownership interest in the
trees and a leasehold interest in the underlying land. The orchards are all
located in the Ka'u region on the island of Hawaii.
The purchase price for all the assets to be acquired is $9 million in cash.
The Partnership will use $5 million of its working capital for the purchase
and plans to borrow the balance of $4 million from a local lending
institution.
The entities comprising the Seller are subsidiaries or affiliates of C.
Brewer and Company, Ltd. ("CBCL"), a Hawaii company. The Partnership's
general partner, ML Resources, Inc. ("MLR" or "Managing Partner"), a Hawaii
company, is also a subsidiary of CBCL.
The Managing Partner makes all decisions relating to the management of the
Partnership, and as such, has the duty to act in good faith and to manage
the Partnership in a manner that is fair and reasonable to all unitholders.
Certain officers and directors of CBCL and/or its affiliates also act as
officers and directors of the Managing Partner and certain directors of the
Managing Partner are substantial shareholders of Buyco, Inc., the parent
company of CBCL.
A committee of the Managing Partner's Board of Directors composed of two
persons who are independent of CBCL and its affiliates (the "Conflicts
Committee") reviews, on an annual basis, or more frequently as such
committee may deem appropriate, the Managing Partner's management of the
Partnership and any conflicts of interest that may have arisen or may arise
as a result of the relationships among CBCL and its affiliates, the Managing
Partner and the Partnership.
The agreement to purchase the assets of Seller was negotiated by the
Conflicts Committee, independent of the Managing Partner's Board. Those
directors of the Managing Partner with conflicts of interest, also recused
themselves from involvement in negotiations for Seller.
Prior to the acquisition, Seller was in the business of farming macadamia
orchards mostly for other orchard owners and partly for themselves. Seller
farmed approximately 7,195
2
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acres of macadamia orchards, including 4,027 acres owned by the Partnership.
The Partnership will use all the assets involved in the purchase for the
same purpose.
In connection with the acquisition, the Partnership and Seller will enter
into various contracts to provide specific services to the other. The
Partnership will provide macadamia farming services to Seller for
approximately 700 acres at cost plus 15%. The Partnership will also provide
accounting services to certain subsidiaries and affiliates of Seller for
cost plus 15%. Seller will provide certain management services for
Partnership, such as executive management, legal, land management, human
relations and insurance services for approximately $100,000 per year.
ITEM 7. EXHIBITS
<TABLE>
(c) Exhibits.
<C> <S>
2.1 Asset Purchase Agreement dated March 14, 2000
99.1 Press Release dated March 14, 2000
</TABLE>
SIGNATURES
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.
ML MACADAMIA ORCHARDS, L.P.
(Registrant)
By ML RESOURCES, INC.
Managing General Partner
DATED: March 22, 2000 By /s/ Gregory A. Sprecher
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GREGORY A. SPRECHER
Senior Vice President and
Chief Financial Officer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Page
Number Description Number
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<C> <S> <C>
2.1 Asset Purchase Agreement dated March 14, 2000 5-45
99.1 Press Release dated March 14, 2000 46-48
</TABLE>
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "CONTRACT") is made and entered
into as of this 14th day of March, 2000, by and among KAU AGRIBUSINESS CO.,
INC., a Hawaii corporation, KAU SUGAR, INC., a Hawaii corporation, MAUNA KEA
MACADAMIA ORCHARDS, INC., a Hawaii corporation, and MAUNA KEA AGRIBUSINESS CO.,
INC., a Hawaii corporation (collectively referred to herein as "Seller" and
individually referred to herein as "Corporation") and ML MACADAMIA ORCHARDS,
L.P., a Delaware limited partnership (referred to herein as "Purchaser").
R E C I T A L S:
1. Seller and certain Affiliates (hereinafter defined) of Seller own
the Property (hereinafter defined).
2. Seller desires to sell to Purchaser and Purchaser desires to
purchase from Seller the Property and certain related assets on the terms and
subject to the conditions hereinafter set forth.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Seller and Purchaser hereby agree as
follows:
ARTICLE I
DEFINITIONS
Unless the context otherwise specifies or requires, for the purposes
of this Contract the following terms shall have the meanings set forth below:
"ACCOUNTANTS" shall mean the accounting firm of
PricewaterhouseCoopers.
"Accounts Receivable" shall have the meaning ascribed to it in Section
7.2(a).
"AFFILIATE" of a Person shall mean a Person who, directly or
indirectly through one or more intermediaries, owns or controls, is owned or
controlled by, or is under common control or ownership with the Person in
question; provided, however, that Buyco, Inc. and the stockholders of Buyco,
Inc. shall not be considered affiliates.
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"BILL OF SALE" shall mean a bill of sale duly executed by Seller
conveying to Purchaser all of Seller's right, title, and interest in and to the
Tangible Personal Property on the Closing Date, in the form set forth in EXHIBIT
A hereto.
"BOOKS AND RECORDS" shall mean all financial and other books and
records maintained by or for the benefit of Seller, or its Affiliates, as the
case may be, solely in connection with the operation of the Property and all
building plans, specifications and drawings, engineering, soils and farming
reports and other documents prepared solely in connection with the construction,
maintenance, repair, management, farming or operation of any portion of the
Property which are within the possession or control of Seller, or Seller's
Affiliates, agents or representatives.
"CERCLA" means the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, as amended (42 U.S.C. Section 9601 ET SEQ.) and any
regulations promulgated thereunder.
"CLOSING" shall mean, with respect to the purchase and sale of the
Property, consummation of its purchase by Purchaser as contemplated by this
Contract.
"CLOSING DATE" shall be the date on which the Closing occurs and shall
be set by the parties after necessary documents have been prepared and are ready
for execution. It is currently contemplated by the parties that the Closing Date
shall be May 1, 2000.
"CLOSING STATEMENTS" shall mean the Preliminary Closing Statement and
the Final Closing Statement.
"CODE" shall mean the Internal Revenue Code of 1986, as amended, and
the relevant rules and regulations promulgated thereunder.
"CONFIDENTIAL INFORMATION" shall mean information, including a
formula, pattern, compilation, program, device, method, technique, or process,
that: (i) derives independent economic value, actual or potential, from not
being generally known to the public or to other persons who can obtain economic
value from its disclosure or use; and (ii) is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy.
"CONTRACT DATE" means the date specified above in the first paragraph
of this Contract.
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"CONTROL" has the meaning given to such term in the definition of
"Affiliate".
"CORPORATION" means each of the corporations who are the sellers
herein.
"CUT-OFF TIME" shall mean 11:59 p.m. (Hawaii Time) on the day before
the Closing Date.
"DEED" means the Warranty Deed, and any other deed from Seller or its
Affiliates to Purchaser delivered pursuant to SECTION 8.2(a) below.
"EFFECTIVE DATE" shall mean the date that this Contract has been fully
executed by Seller and Purchaser. Purchaser and Seller hereby acknowledge and
stipulate that the Effective Date is and for all purposes shall be March 14,
2000.
"EMPLOYMENT BENEFITS" shall mean any benefit provided to any Property
Employee by the Seller or its Affiliates whether pursuant to a collective
bargaining agreement, an Employment Contract or any written policy, procedure or
practice of such company.
"EMPLOYMENT CONTRACTS" shall mean all employment contracts (excluding
collective bargaining agreements) relating to Property employees. The
Employment Contracts are listed on EXHIBIT B.
"ENVIRONMENTAL ACTIVITY" means any past, present or future storage,
holding, existence, release, threatened release, emission, discharge,
generation, processing, use, abatement, disposition, handling or transportation
of any Hazardous Substance from, under, into or on the Real Property, or
otherwise relating to the Real Property or the ownership, use, operation or
occupancy thereof, or any threat of such activity.
"ENVIRONMENTAL LAWS" means any and all laws, statutes, ordinances,
rules, regulations, judgments, orders, decrees, permits, licenses, or other
governmental restrictions or requirements relating to health, the environment,
any Hazardous Substance or any Environmental Activity in effect in any and all
jurisdictions in which Seller is or from time to time may be doing business, or
where the Real Property is located, including without limitation CERCLA, the
Hazardous Materials Transportation Act, as amended (49 U.S.C. Sections 1801 ET
SEQ.), the
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Clean Air Act, as amended (42 U.S.C. Sections 7401 ET SEQ.), the
Clean Water Act, as amended (33 U.S.C. Sections 1251 ET SEQ.), and the
regulations adopted pursuant thereto.
"EQUIPMENT LEASES" shall mean all leases, rental or other
agreements for the use of any of the FF&E, together with all amendments
thereto. Such Equipment Leases are listed on Exhibit C attached hereto.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, and the rules and regulations promulgated thereunder.
"ERISA AFFILIATE" shall have the meaning given to such term in SECTION
5.3(i)(8).
"EXCISE TAX EXEMPTION CERTIFICATE" means the certificate, duly
executed by Purchaser and Seller, in the form set forth on EXHIBIT D and filed
with the appropriate Governmental Authority at Closing.
"FARMING SERVICE CONTRACTS" shall mean any and all existing farming
service contracts for the provision of labor, services, materials or supplies to
or for the benefit of the owners of macadamia orchards (which contracts are
listed on EXHIBIT E), together with all amendments thereto.
"FF&E" shall mean all fixtures, furniture, furnishings, equipment,
machinery, computers, apparatus, appliances, and other articles of depreciable
personal property now owned or leased by Seller and/or its Affiliates and used
or usable in connection with their farming or accounting services, subject to
such depletions and replacements as shall occur and be made in the normal course
of business.
"FINAL CLOSING STATEMENT" shall have the meaning given to such term in
SECTION 7.1.
"GENERAL ASSIGNMENT" shall mean an assignment, duly executed and
acknowledged by Seller and Purchaser, assigning to Purchaser (to the extent
assignable) all of Seller's right, title and interest in and to the Intangible
Personal Property and certain other assets as of 12:01 a.m. (Hawaii Time) on the
Closing Date, in the form set forth in EXHIBIT F attached hereto and made a part
hereof.
4.
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"GOVERNMENTAL AUTHORITIES" shall mean the federal government, the
applicable governmental authority of the County of Hawaii or State of Hawaii and
any governmental agency connected with any of them which has jurisdiction over
the construction, reconstruction, operation or use of the Property.
"HAWAII TIME" shall mean Hawaii Standard Time.
"HAZARDOUS SUBSTANCE" means any substance, material or waste which
is regulated by any federal, state or local governmental or
quasi-governmental authority, and includes, without being limited to: (a) any
substance, material or waste defined, used or listed as a "hazardous waste",
"extremely hazardous waste", "restricted hazardous waste", "hazardous
substance", "hazardous material", "toxic substance" or other similar or
related terms as defined, used or listed in any Environmental Laws; (b) any
petroleum products, asbestos or polychlorinated biphenyls; (c) any additional
substances or materials which are now or hereafter hazardous or toxic
substances under any Environmental Laws relating to the Real Property; and
(d) as of any date of determination, any additional substances or materials
which are hereafter incorporated in or added to the definition of "hazardous
substance" for purposes of any Environmental Law.
"IMPROVEMENTS" shall mean all macadamia nut trees, buildings,
structures, irrigation lines, and other improvements, including the orchard
improvements and such fixtures as shall constitute real property, located on the
Land.
"Intangible Personal Property" shall mean all of the Personal Property
which is not Tangible Personal Property, and which is used in the farming and
accounting operations of the Seller. Examples of such Intangible Personal
Property are listed in Exhibit F.
"IRS" shall mean the Internal Revenue Service.
"KEY EMPLOYEES" shall have the meaning given to such term in EXHIBIT G
attached hereto.
"LAND" shall mean the land as more particularly described on EXHIBIT H
attached hereto.
5.
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"LEASES" shall mean the leases to be executed between the Seller and
the Purchaser whereby Seller leases the Land or licenses use of the Land to
Purchaser.
"NON-FOREIGN STATUS CERTIFICATE" shall mean a certificate, to be
executed by Seller, in the form set forth in EXHIBIT I attached hereto.
"OPERATING EQUIPMENT" shall mean all vehicles, both on-the-road and
off-the-road, owned by Seller and/or its Affiliates, whether in use or held in
reserve storage for future use, in connection with the farming or accounting
operations of the Seller, subject to such depreciation as shall be made in the
normal course of business.
"ORCHARD IMPROVEMENTS" shall mean only those trees and other
Improvements located on the Land.
"ORCHARD LAND" shall mean the approximately 142 tree acres within
approximately 232 gross acres of land described in SECTION I of EXHIBIT J.
"OWN" has the meaning given to such term in the definition of
"Affiliate".
"OWNERSHIP" has the meaning given to such term in the definition of
"Affiliate".
"PERMITS" shall mean all of Seller's and Seller's Affiliates right,
title, and interest in all licenses and permits used or relating to the
ownership or operation of the Property in accordance with its current use.
"PERSON" shall mean any natural person, partnership, corporation,
association, trust or trustee, or any other legal entity.
"PERSONAL PROPERTY" shall mean all of the Property, other than the
Real Property, which is used in the farming and accounting operations of the
Seller.
"Plans" shall have the meaning given to such term in Section
5.3(i)(1).
"PRELIMINARY CLOSING STATEMENT" shall have the meaning given to such
term in SECTION 7.1.
6.
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"PROPERTY" shall mean all of the assets and liabilities comprising the
business currently conducted by Seller in performing farming services for owners
of macadamia nut orchards and accounting services for said owners and the Seller
and some of its affiliates.
"PROPERTY EMPLOYEES" shall mean all persons actively employed by
either Corporation, as well as all persons on disability or worker's
compensation or other leave and all persons with recall or reinstatement rights
under any such companies' written policies, procedures and practices, including
Key Employees, but excluding those persons listed on Exhibit K.
"PURCHASE PRICE" shall have the meaning given such term in Section
2.2.
"PURCHASER'S DOCUMENTS" shall have the meaning given such term in
SECTION 8.3.
"REAL PROPERTY" shall mean the Land and the Improvements on the Land.
"RELEASE DOCUMENTS" shall have the meaning given such term in SECTION
8.2.
"RETAINED LITIGATION" means the litigation matters referred to in
Section 5.3(e) and described in EXHIBIT L attached hereto.
"SELLER'S DOCUMENTS" shall have the meaning given such term in Section
8.2.
"TANGIBLE PERSONAL PROPERTY" shall mean FF&E, Operating Equipment,
Vehicles, and any other tangible personal property used in the farming and
accounting operations of the Seller and not included in the definitions of Real
Property and Intangible Personal Property. Examples of such Tangible Personal
Property are listed in Exhibit A.
"VEHICLES" shall mean the tractors, automobiles, trucks and other
on-the-road or off-the-road vehicles, described on EXHIBIT M attached hereto and
made a part hereof.
ARTICLE II
PURCHASE AND SALE OF PROPERTY
7.
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1.1 PURCHASE AND SALE. On the terms and subject to the conditions of this
Contract, Seller hereby agrees to sell, transfer, convey and deliver the
Property to Purchaser; and Purchaser hereby agrees to purchase the Property from
Seller and to assume certain obligations of Seller arising out of or relating to
the Property, as hereinafter provided.
1.2 PURCHASE PRICE. The total purchase price for all of the Property
shall be Nine Million Dollars ($9,000,000) (the "Purchase Price"), subject,
however, to the adjustments and prorations as provided in ARTICLE VII below.
The Purchase Price shall be wired on the Closing Date to an account designated
by Seller.
1.3 PURCHASE PRICE ALLOCATION. Purchaser and Seller agree to allocate
the Purchase Price among the assets comprising the Property in accordance
with the rules and principles of section 1060 of the Code, and the
regulations promulgated thereunder. All tax returns and reports filed by
Purchaser and Seller with respect to the transactions contemplated by this
Contract shall be prepared in a manner consistent with such allocation.
Purchaser and Seller shall cooperate with one another in an effort to agree
upon such allocation prior to the Closing. In this regard, within fifteen
(15) days after the Contract Date, Purchaser shall prepare and submit to
Seller for its review Internal Revenue Service Form 8594. Seller shall have
fifteen (15) days to object to the allocation of the Purchase Price on such
Form 8594. If Seller does not object within such fifteen (15) day period,
Seller shall be deemed to have approved the filing of Form 8594 in the manner
proposed by Purchaser. If Seller objects to the Form 8594 proposed by
Purchaser within such fifteen (15) day period, Seller and Purchaser shall
endeavor to mutually determine the proper allocation of the Purchase Price on
such form prior to the Close of Escrow. In the event that Purchaser and
Seller cannot reach agreement as to the proper allocation of the Purchase
Price on Form 8594 prior to the Close of Escrow, Accountants shall determine
the proper allocation required by section 1060 of the Code and shall prepare
and submit to Purchaser and Seller Form 8594 consistent therewith. Such Form
8594 shall be prepared by Accountants concurrently with the preparation of
the Final Closing Statements pursuant to SECTION 7.1. Both Purchaser and
Seller hereby agree to be bound by such allocation, and to file such Form
8594 with their respective tax
8.
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returns and to report the transactions contemplated hereby in a manner
consistent with the allocation of the Purchase Price as set forth on such
Form 8594.
ARTICLE III
CLOSING DATE
1.4 CLOSING PROCEDURES. The parties hereto agree that this Contract shall
constitute the agreements for the transfer of all of the Property from Seller to
Purchaser.
1.5 CLOSING DATE.
(1) The transaction shall close on the Closing Date. As used in this
Contract, the Closing Date shall mean the time the Leases are filed for record
in the Bureau of Conveyances of the State of Hawaii.
(2) Provided that neither party hereto has received written notice of
the failure of any condition precedent specified in ARTICLE IX hereof to the
obligations of such party, then, when Purchaser and Seller are each prepared to
execute the documents and instruments and transfer the funds required thereof by
this Contract, they shall:
(1) prepare closing statements for Purchaser and for Seller
based on the Preliminary Closing Statement and ARTICLE VII of this Contract;
(2) insert the Closing Date as the date of any document to be
delivered but not theretofore dated:
(3) deliver the Leases to Purchaser by causing them to be
recorded in the Bureau of Conveyances of the State of Hawaii and with the
Assistant Registrar of the Land Court of the State of Hawaii, as the case may
be;
(4) deliver to Purchaser: the Bill of Sale, General Assignment,
Non-Foreign Status Certificate, and any other document required to be delivered
to Purchaser.
(5) deliver to Seller: all sums to be received by Seller from
Purchaser LESS all amounts to be paid by Seller
9.
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pursuant to SECTION 3.3 for fees and expenses payable by Seller and all
amounts required to be paid in satisfaction of liens and encumbrances on the
Real Property pursuant to the terms of this Contract or otherwise pursuant to
the instructions of Seller; the General Assignment executed, in counterpart,
by Purchaser; the Excise Tax Exemption Certificate executed in counterpart by
Purchaser; and any other document required to be delivered to Seller at the
Closing Date;
1.6 COSTS OF TRANSACTION. Costs of the transaction shall be allocated as
follows:
(1) Purchaser shall pay the fees for recording the Leases.
(2) Purchaser shall pay all fees and costs in connection with
Purchaser's financing, if any.
(3) Seller shall pay all conveyance taxes imposed upon the issuance
of the Leases to Purchaser.
1.7 OTHER COSTS. Except as otherwise expressly provided to the contrary
herein, each party shall pay all of its own legal, accounting and consulting
fees and all other costs and expenses incurred in connection with the
transaction contemplated by this Contract.
10.
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ARTICLE IV
SUBMITTALS TO PURCHASER
Seller has heretofore furnished Purchaser with, and Purchaser hereby
acknowledges receipt of, the following:
(1) copies of the Farming Service Contracts, Equipment Leases, and
Employment Contracts, together with the Schedules of Litigation and Vehicles,
shown on EXHIBITS L AND M, respectively;
(2) Operating Statements of the Seller for the periods ending
December 31, 1997, December 31, 1998, and December 31, 1999, copies of which are
attached hereto as EXHIBIT N;
(3) copies of the property tax bills for the Land for the 1999-2000
fiscal year;
Except as expressly provided in ARTICLE V hereof, Purchaser acknowledges that
Seller has made no warranty or representation, either express or implied,
concerning the documents described in this Article IV, or the matters disclosed
therein, including (without limitation) the completeness or accuracy thereof.
If, prior to the Closing Date, Purchaser discovers that any of the items listed
above are inaccurate or any of Seller's representations contained herein are
incorrect or misleading in any materially adverse way then Purchaser shall give
Seller written notice of such fact. Seller shall then have 10 days (and the
Closing Date may be postponed until the end of such 10 day period) to either
cure such matter or elect not to cure in which latter event Purchaser, as its
sole and exclusive remedy, may terminate this Contract by delivering a written
notice to Seller within 5 days thereafter.
ARTICLE V
REPRESENTATIONS, WARRANTIES AND COVENANTS
1.8 PURCHASER'S REPRESENTATIONS AND WARRANTIES. Purchaser hereby
represents and warrants to Seller as follows:
(1) POWER AND AUTHORITY. Purchaser is a limited partnership, duly
organized, validly existing and in good standing under the laws of the State of
Delaware; Purchaser has the power and authority to enter into this Contract and
the
11.
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"other documents" required to be executed by Purchaser pursuant to SECTION
8.3 below, to perform its obligations hereunder and to consummate the
transactions contemplated herein; neither the execution and delivery hereof by
Purchaser nor the performance by Purchaser of Purchaser's obligations hereunder
will violate or constitute an event of default under any material terms or
material provisions of any material agreement, document, instrument judgment,
order or decree to which Purchaser is a party or by which Purchaser is bound.
(2) AUTHORIZATION; VALID OBLIGATION. All actions required to be
taken by or on behalf of Purchaser to authorize Purchaser to make, deliver and
carry out the terms of this Contract have been or will be duly taken prior to
the Closing Date. No consent to the execution, delivery and performance of this
Contract by Purchaser is required from any partner, board of directors,
shareholder, creditor, investor, judicial or administrative body, Governmental
Authority or other Person, other than any such consent which already has been
unconditionally given. This Contract is a valid and binding obligation of
Purchaser, enforceable in accordance with its terms, except as the same may be
affected by bankruptcy, insolvency, moratorium or similar laws, or by legal or
equitable principles relating to or limiting the rights of contracting parties
generally.
(3) AS IS PURCHASE.
(1) Prior to the execution of this Contract, Purchaser has been
afforded access to books and records of Seller relating to the operation of the
Property, the documents referred to in Article IV, and to other information
available to Seller with respect thereto. Seller has made no representations or
warranties as to the accuracy or completeness of such information except as
expressly set forth in SECTION 5.3.
(2) To the extent deemed necessary or desirable by Purchaser,
Purchaser (A) has conducted its own investigation of the Property; (B) has
investigated any applicable restrictions, covenants, easements, conditions,
zoning laws, building codes, environmental matters, and other land use
regulations affecting the Property; (C) has made inquiries, inspections, tests,
audits, studies and analyses in connection
12.
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with purchasing the Property; and (D) has approved the results of its
investigation (including, without limitation, any engineering and structural
tests, economic feasibility studies, soils and geological reports, reviews of
books and records, environmental and asbestos reports, financial statements,
title exceptions, projections relating to the operation of the Property, and
other documents obtained or prepared by or for Purchaser in connection with
its review). Purchaser hereby acknowledges that Seller has not made any
representations and warranties other than those set forth in SECTION 5.3 and
ARTICLE XII. Purchaser has made its own inspections, tests, audits, studies
and investigations conducted in connection with, and on Purchaser's own
judgment with respect to, its purchase of the Property.
(4) FINANCIAL RESOURCES. Purchaser has adequate financial resources
to make timely payment of all sums due from Purchaser hereunder and to perform
all of its obligations hereunder.
(5) SECURITIES LAWS. If Purchaser is raising funds to purchase the
Property, Purchaser has and will continue to comply with all applicable federal
and state securities laws and regulations. Purchaser shall indemnify, defend,
and hold Seller harmless from any and all loss, damage, claim, cost and expense
and any other liability whatsoever (including, without limitation, reasonable
attorneys' fees, charges, and costs) by reason of or arising out of Purchaser's
failure to fully comply with such securities laws and regulations. This
indemnity shall survive the Closing or other termination of this Contract.
1.9 PURCHASER'S COVENANTS. Purchaser hereby covenants with Seller as
follows:
(1) INDEMNIFICATION. Purchaser shall indemnify, defend and hold
harmless Seller from and against any and all loss, damage, claim, cost and
expense and any other liability whatsoever (including, without limitation,
reasonable attorneys' fees, charges and costs) incurred by Seller by reason of
any claim, demand or litigation relating to the Property and arising from acts,
omissions, occurrences or matters that take place after the Cut-off Time, except
to the extent arising from any act, negligence, willful misconduct or omission
of Seller, or any of their respective predecessors, successors, assigns, agents,
13.
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representatives or employees. In addition, and without limiting the
generality of the foregoing: (i) Purchaser shall assume and perform all of
Seller's, Seller's Affiliates', or the Corporations' obligations under the
Farming Service Contracts, Equipment Leases, and other property assigned to,
or acquired by Purchaser and any other agreement or with respect to any other
right assigned to Purchaser by Seller, and shall, from and after the Cut-off
Time, defend, indemnify and hold harmless Seller and Seller's Affiliates,
from and against any and all loss, damage, claim, cost and expense and any
other liability whatsoever, except to the extent arising from any act,
negligence, willful misconduct or omission of Seller, Seller's Affiliates, or
any of their respective predecessors, successors, assigns, agents,
representatives or employees: (ii) Purchaser shall from and after the Cut-off
Time, defend, indemnify and hold harmless Seller and Seller's Affiliates,
from and against any and all loss, damage, claim, cost and expense and any
other liability whatsoever (including, without limitation, reasonable
attorneys' fees, charges and costs) arising from or relating to the Property
or any portion thereof at or after the Cut-off Time, except to the extent
arising from any act, negligence, willful misconduct or omission of Seller or
Seller's Affiliates, or any of their respective predecessors, successors,
assigns, agents, representatives or employees.
(2) CONFIDENTIALITY. Purchaser shall, prior to the Closing Date,
hold as confidential, all Confidential Information concerning Seller
disclosed in connection with this transaction and designated as such by
Seller in writing; and Purchaser shall not, at any time prior to the Closing
Date, release any such information relating to Seller or the Property to
third parties without Seller's prior written consent, except pursuant to a
court order requiring such release or as otherwise may be required by law.
Seller hereby gives its consent to Purchaser's disclosure of information
relating to the Property to (l) its lenders to the extent reasonably
necessary in order to obtain such lenders' participation in the contemplated
transaction, (2) Governmental Authorities, and (3) its directors, officers,
employees, accountants, counsel and other professional consultants, in each
instance to the extent reasonably necessary to verify information given to
Purchaser by Seller or otherwise to carry out the purposes of this Contract.
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(3) APPRAISALS AND STUDIES. If this transaction fails to close by
reason of Purchaser's default under the terms of this Contract or by reason of
Purchaser's failure to meet a condition precedent to the Closing, Purchaser
shall, within fifteen (15) days after written request therefor from Seller,
deliver to Seller, at Purchaser's sole cost and expense, copies of all
appraisals, market studies and inspection reports which were prepared by or on
behalf of or otherwise delivered to Purchaser in connection with this
transaction, but only to the extent consented to by the consultants providing
such appraisals, studies or reports.
1.10 SELLER'S REPRESENTATIONS AND WARRANTIES. Seller represents and
warrants to Purchaser as follows:
(1) POWER AND AUTHORITY. Each of the corporations comprising Seller
are corporations, duly organized, validly existing and in good standing under
the laws of the State of Hawaii. Seller has the power and authority to enter
into this Contract, and other documents required to be executed by Seller at
Closing pursuant to SECTION 8.4 hereof, to perform its obligations under this
Contract, and to consummate the transactions contemplated herein. The execution
and delivery hereof and the performance by Seller of its obligations hereunder
will not violate or constitute an event of default under any material terms or
material provisions of any agreement, document, instrument, judgment, order or
decree to which Seller is a party or by which Seller is bound other than the
provisions of any loan documents relating to any loans secured by mortgages
encumbering the Property which loans shall be repaid at Closing entirely out of
the proceeds of this sale.
(2) AUTHORIZATION; VALID OBLIGATION. Seller has, or, prior to the
Closing Date, shall have, caused all actions required to be taken by or on
behalf of Seller to authorize Seller to make, deliver and carry out the terms of
this Contract. No consent to the execution, delivery and performance of this
Contract by Seller is required from any partner, board of directors,
shareholder, creditor, investor, judicial or administrative body, Governmental
Authority or other Person, other than any such consent which already has been
unconditionally given. This Contract is a valid and binding obligation of
Seller, enforceable in accordance with its terms,
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except as the same may be affected by bankruptcy, insolvency, moratorium or
similar laws, or by legal or equitable principles relating to or limiting the
rights of contracting parties generally.
(3) FARMING SERVICE CONTRACTS, EQUIPMENT LEASES, AND EMPLOYMENT
CONTRACTS. To the best of Seller's knowledge: (1) there are no written Farming
Service Contracts, Equipment Leases or Employment Contracts which will affect or
be obligations of Purchaser or of the Property or any portion thereof following
the Close of Escrow, other than the Farming Service Contracts, Equipment Leases,
and Employment Contracts described on EXHIBITS E, C, AND B attached hereto or
otherwise agreed to in writing by Purchaser; (2) except as shown on the copies
of the Farming Service Contracts, Equipment Leases or Employment Contracts
heretofore delivered or subsequently delivered to Purchaser prior to the Close
of Escrow, there are no amendments to said Farming Service Contracts, Equipment
Leases and Employment Contracts, and (3) each Farming Service Contract,
Equipment Lease and Employment Contract is a valid and subsisting agreement and
is in full force and effect in accordance with the terms thereof and no default
by Seller or, to the best of Seller's knowledge, any other Person exists under
any Farming Service Contract, Equipment Lease, and Employment Contract.
(4) ACCURACY OF DOCUMENTS. To the best of Seller's knowledge, the
Employment Contracts, Equipment Leases, and Farming Service Contracts delivered
to Purchaser under the terms of this Contract were complete and correct, in all
material respects, on the date of delivery and, subject to the rights of Seller
under this Contract with respect thereto, will be so upon the Closing..
(5) LITIGATION. There is no pending or, to the best of Seller's
knowledge, threatened litigation which could become a liability of the Property
or any portion thereof following the Closing, other than as shown on EXHIBIT L
hereto (the "Retained Litigation"). Pursuant to SECTION 5.4(f) below, Seller
shall indemnify Purchaser against any claims or damages arising from the
Retained Litigation.
(6) GOVERNMENT REGULATION. Seller has not received any written
notice from any Governmental Authority that the
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Property or any portion thereof is in violation of any law, regulation,
ordinance, order or other requirements materially affecting the Property or
any portion thereof or any Corporation, which notice remains uncured.
(7) CONDEMNATION. Neither Seller nor any Affiliate of Seller has
received any written notice and none of such Persons is otherwise aware that the
Property or any portion thereof is or will be imminently subjected to or
affected by any condemnation, eminent domain or similar proceedings.
(8) OPERATING STATEMENTS. Except as otherwise shown on EXHIBIT N,
the operating statements attached as EXHIBIT N have been prepared in all
material respects, using general accepted accounting principles applied on a
basis consistent with the accounting practices of Seller with respect to the
Property as of December 31, 1997, December 31, 1998, and December 31, 1999.
Such operating statements fairly present the results of operations of the
Property for the indicated periods.
(9) COMPENSATION AND BENEFITS PLANS.
(1) Seller has made available to Purchaser information with
respect to all employee benefit plans (as defined in Section 3(3) of ERISA), all
multiemployer plans (as defined in Section 3(37) or Section 4001(a)(3) of ERISA)
and all bonus, incentive, deferred compensation, supplemental retirement,
severance, consulting, indemnification or other contracts or agreements, (i)
which are maintained for the benefit of, or relating to, any current or former
employee of any Corporation, (ii) which are maintained by any Corporation or
which any Corporation currently has in effect or to which any Corporation
contributes or (iii) with respect to which any Corporation has incurred or may
incur any liability, including such plans, agreements and arrangements
maintained by any ERISA Affiliate (the "Plans").
(2) Neither Seller, nor any Corporation nor any ERISA Affiliate
nor Purchaser has incurred or expects to incur any withdrawal liability that has
not been satisfied in full with respect to any multiemployer plan or any
liability in connection with the reorganization or termination of any
multiemployer plan.
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(3) Except as disclosed in writing to Purchaser, none of the
Plans provides for the payment of separation, severance, termination or similar
type benefits to any person or obligates Purchaser to pay separation, severance,
termination or similar type benefits solely as a result of the transaction
contemplated by this Agreement.
(4) Except as disclosed in writing to Purchaser, none of the
Plans provides for or promises retiree medical or life insurance benefits to any
current or former employee of any Corporation.
(5) Each Plan is now and has been operated in all material
respects in compliance with the requirements of all applicable law, including,
without limitation, ERISA and the Code, and all persons who participate in the
operation of such Plans and all Plan fiduciaries (within the meaning of Section
3(21) of ERISA) have acted in all material respects in accordance with the
provisions of all applicable law, including ERISA and the Code. All
contributions required to be made to any Plan have been made on or before their
due dates. No legal action, suit or claim is pending or threatened with respect
to any Plan (other than claims for benefits in the ordinary course) and no fact
or event exists that could give rise to any such action, suit or claim.
(6) Each Plan which is intended to be qualified under Section
401(a) of the Code or Section 401(k) of the Code is so qualified and each trust
established in connection with any Plan which is intended to be so qualified is
exempt from Federal income taxation under Section 501(a) of the Code and has
been determined by the IRS to be so exempt, and no fact or event has occurred
since the date of such determination by the IRS to adversely affect the
qualified status of any such Plan or the exempt status of any such trust.
(7) There has been no prohibited transaction (within the meaning
of Section 406 of ERISA or Section 4975 of the Code) with respect to any Plan
which resulted or could result in a material liability to any Corporation which
has not been satisfied in full. Neither Seller, any Corporation nor any ERISA
Affiliate nor the Purchaser has incurred or expects to incur any liability to
the Pension Benefit Guaranty Corporation (the
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"PBGC") or other liability under Title IV of ERISA with respect to any Plan
subject to Title IV of ERISA (collectively, "Title IV Plans"). All required
premium payments to the PBGC with respect to Title IV Plans have been made on
or before their due date. No event which could result in the termination of
any Title IV Plan under Section 4041 of ERISA has occurred or is expected to
occur with respect to any Title IV Plan and neither the Seller, any
Corporation nor any ERISA Affiliate nor Purchaser has incurred or reasonably
expects to incur any liabilities under Section 4062 of ERISA. Neither the
Seller, any Corporation nor any ERISA Affiliate is required to provide
security to any Plan under Section 401(a)(29) of the Code or Section 307 of
ERISA. No Title IV Plan has incurred an accumulated funding deficiency
(within the meaning of Section 302 of ERISA or Section 412 of the Code),
whether or not waived, as of the most recently ended plan year of such Title
IV Plan and none of the assets of Seller, any Corporation or any ERISA
Affiliate nor Purchaser is or will be the subject of any lien arising under
Section 302(f) of ERISA or Section 412(n) of the Code.
(8) For purposes of this SECTION 5.3(i), "ERISA AFFILIATE"
means each entity that is a member of a controlled group or affiliated
service group of which Seller or any Corporation is a member or that is under
common control with Seller or any Corporation (within the meaning of Sections
414(b), 414(c), 414(m) and 414(o) of the Code). All references to ERISA and
the Code include reference to the applicable rulings and regulations
promulgated thereunder and each reference to any specific section of ERISA or
the Code includes reference to any successor section thereto.
(10) ENVIRONMENTAL ACTIVITY. Seller is in compliance with the
provisions of all Environmental Laws relating to the Property and the ownership,
use, operations and occupancy thereof. Neither Seller nor, to the best of
Seller's knowledge, any other Person has engaged in any Environmental Activity,
nor has any Environmental Activity otherwise occurred, in violation of any
applicable Environmental Laws. Seller has no material liability, absolute or
contingent, in connection with any Environmental Activity. Seller has not
received any notice from any federal, state, county, municipal or other
governmental department, agency or authority concerning nor does Seller
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have any knowledge of the existence of any Hazardous Substance discharge or
seepage.
(11) BULK SALES LAW. The principal business of Seller is not the sale
of merchandise, including the manufacture of goods sold by Seller.
(12) SERVICEMARKS. There are no federally registered servicemarks
used by Seller and/or its Affiliates exclusively in connection with the
ownership or operation of the Property.
(13) TITLE TO ASSETS. The Seller has good and marketable title to, or
a valid leasehold interest in, the Property free and clear of any security
interests therein or restrictions on transfer except for: (1) lessor's interests
in the Equipment Leases, and (2) required consents to transfers of certain
contracts and leases, all of which have been obtained.
1.11 SELLER'S COVENANTS. Seller hereby covenants as follows:
(1) OPERATION OF PROPERTY THROUGH THE CLOSE OF ESCROW. Seller agrees
that between the Effective Date and the earlier of the Close of Escrow or
termination of this Contract:
(1) MODIFICATIONS OF LEASES AND AGREEMENTS. The Farming Service
Contracts, Employment Contracts, and Equipment Leases and any agreements set
forth in the exhibits attached hereto will not be amended, no other leases of or
with respect to the Property will be entered into, and no other agreements
affecting the Property or any portion thereof or compensation and benefit plans
affecting the Property employees will be entered into, by Seller, without the
prior written consent of Purchaser (which consent as to Farming Service
Contracts, Employment Contracts and Equipment Leases will not be unreasonably
withheld, delayed or conditioned); excepting, however, Equipment Leases and
Farming Service Contracts, in the ordinary course of business, for supplies to
replenish the normal inventory levels of the businesses operated by the Seller
or required in connection with or necessary for customary services to be
performed prior to or within sixty (60) days after the Closing Date, at price
rates comparable to those previously paid by Seller or at rates paid by
comparable businesses for such supplies and services provided that notice
thereof at least three (3) business days prior to
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entering into and within one (1) business day after entering into shall be
given to Purchaser.
(2) INSURANCE POLICIES. All existing insurance policies (or
replacements thereof) affecting the Property or any portion thereof will be kept
in full force and effect; provided, however, Seller shall not be in breach of
this subsection if Seller has given Purchaser twenty (20) days written notice
that an existing insurance policy shall expire and a replacement policy is not
available at a reasonably equivalent price and Purchaser shall fail to notify
Seller in writing within said period that Purchaser elects to pay the cost of
the increase in price if the replacement policy is available;
(3) ALTERATIONS. No alterations to the physical condition of
the Land or Improvements costing in excess of an aggregate amount of Twenty-Five
Thousand Dollars ($25,000) will be commenced without the prior written consent
of Purchaser; provided that in the case of any casualty restoration Seller shall
obtain the prior written approval by Purchaser of the plans and specifications
in respect thereof (which approval shall not be unreasonably withheld);
(4) REFURBISHMENTS. No refurbishments to the FF&E costing in
excess of an aggregate amount of Ten Thousand Dollars ($10,000) will be made
without the prior written consent of Purchaser, which consent will not be
unreasonably withheld.
(5) OPERATIONS AND SERVICES. The business will be operated in
substantially the manner in which it was operated on the Effective Date and
inventories will be procured and maintained in normal operating amounts, and all
services with respect to the Property that are now required to be provided will
be provided, in order so to operate the business;
(1)
(6) RENEWAL OF PERMITS. Due diligence will be used to keep in
full force and effect (or to renew, when necessary) all Permits;
(7) REMOVAL OF FF&E. None of the FF&E will be removed from the
Property except in the ordinary course of business; and
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(8) NOTICES OF CERTAIN DEFAULTS. Seller shall promptly notify
Purchaser of any notices from any Governmental Authority regarding violation or
any law relating to the Property or any business being operated thereon and of
any material default by Seller or the Corporations or by the other party thereto
existing on or after the Effective Date and prior to the Close of Escrow under
any of the Employment Contracts, Equipment Leases, or Farming Service Contracts,
and actually known to Seller.
(9) Further, notwithstanding anything in SECTION 5.3(i) above to
the contrary, Seller shall use its good faith efforts in attempting to postpone
any definitive substantive renegotiation with respect to the Employment
Contracts and collective bargaining agreements until after the Closing.
(2) EXCISE TAX. Seller shall pay any general excise tax due on the
sale to Purchaser of any of the Property. In this regard Seller and Purchaser
shall use their mutual good faith efforts to cooperate and shall finalize,
execute and file the Excise Tax Exemption Certificate at Closing so as to
eliminate any general excise tax liability in connection with the sale of the
Property.
(3) CONFIDENTIALITY. Seller shall hold as confidential all
Confidential Information of Purchaser hereby disclosed to Seller by Purchaser in
connection with said transaction; and Seller shall not, at any time, release any
such information to third parties without Purchaser's prior written consent,
except pursuant to a court order requiring such release or as otherwise may be
required by law. Purchaser hereby gives its consent to Seller's disclosure of
such information to Seller's consultants and contractors, and to Governmental
Authorities, in each instance to the extent reasonably necessary to verify
information given to Seller by Purchaser or otherwise to carry out the purposes
of this Contract.
(4) INDEMNIFICATION. Seller shall indemnify, defend and hold
harmless Purchaser from and against any and all loss, damage, claim, cost or
expense and any other liability whatsoever (including, without limitation,
reasonable attorneys' fees, charges and costs) incurred by Purchaser by reason
of any claims, demands or litigation instituted by or on behalf of a third party
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relating to the Property, Seller, Seller's Affiliates, the Corporations, which
arise from acts, occurrences, omissions or matters that take place prior to the
Cut-off Time.
(5) CORPORATIONS. From the Effective Date until the earlier of the
Close of Escrow or termination of this Contract, Seller shall cause the business
operations and corporate affairs of each Corporation to be conducted in the
ordinary course consistent with the respective past practice of each such
Corporation.
1.12 SURVIVAL. Purchaser and Seller each hereby covenants and agrees with
the other that the representations, warranties, covenants and indemnities of
Purchaser and Seller (as the case may be) set forth in, respectively, in
ARTICLES V, VI, VII, XI, XII AND XVI, shall survive the Closing without
limitation as to duration; provided, however the representations and warranties
made by Purchaser and Seller shall survive the Closing for a twelve (12) month
period commencing upon the Closing. Notwithstanding the foregoing, in no event
shall Purchaser have the right to bring any claim or claims against Seller after
the Close of Escrow in connection with the breach or purported breach of any
representation or warranty made by Seller in SECTION 5.3 hereof unless such
claim or claims aggregate in excess of Twenty-Five Thousand Dollars
($25,000.00).
ARTICLE VI
PROPERTY EMPLOYEES
1.13 ASSUMPTION OF COLLECTIVE BARGAINING AGREEMENT. As of the Cut-off
Time, Purchaser shall assume all collective bargaining agreements covering
Property employees and shall fully honor and maintain each such collective
bargaining agreements including all renewals thereof.
1.14 TERMS OF EMPLOYMENT. At the Cut-off Time, the non-bargaining unit
Property Employees employed by Seller shall be hired by Purchaser at
substantially the same rate of pay and with substantially the same benefits as
provided by Seller.
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1.15 SENIORITY. Purchaser shall determine seniority rights in its
discretion except as required by any Employment Contract or collective
bargaining agreements.
1.16 INDEMNITY. Purchaser agrees to, and shall indemnify, defend, and hold
harmless Seller and their Affiliates against all alleged labor or employment
claims, liabilities, Employment Costs, or obligations (including reasonable
attorneys' fees and experts' fees) with respect to the Property Employees which
accrue on or after the Cut-off Time.
Purchaser hereby agrees to defend, indemnify and hold Seller and their
respective Affiliates harmless from and against any and all liability, loss,
claim, demand, cost, expense (including, without limitation, reasonable
attorneys' fees, charges and costs) and any other liability whatsoever which
Seller or any of their Affiliates may incur as a result of Purchaser's complete
or partial withdrawal from a Plan or Purchaser's failure to make a contribution
or a withdrawal liability payment to each such Plan when due.
6.5 ACCRUED VACATIONS. Seller shall use its best efforts to secure from
the Union an agreement that accrued vacations need not be paid in cash at the
Closing, but may be assumed by the Purchaser and honored by Purchaser in
accordance with the collective bargaining agreement. If the Union will not agree
that accrued vacations need not be paid in cash at the Closing, the Seller will
cooperate with the Union in efforts to secure waivers of the requirement to pay
cash from the collective bargaining employees entitled to accrued vacations. If
the Union will not agree to assumption of the accrued vacation liability by the
Purchaser and if the particular employee will not sign a waiver, then Seller
will pay such accrued vacation in cash. Purchaser shall assume all accrued
vacation liability for collective bargaining employees if the Union agrees that
vacation liability need not be paid in cash. If the Union does not so agree,
Purchaser will assume accrued vacation liability for all collective bargaining
employees who sign waivers.
ARTICLE VII
CLOSING STATEMENTS, ADJUSTMENTS AND PRORATIONS
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1.17 PREPARATION OF PRELIMINARY AND FINAL CLOSING STATEMENTS. The
parties hereto shall cooperate with one another, both before and after the
Closing Date, for the purpose of making such inventories, examinations and
audits of the Property, and of the books and records of the Seller, as are
necessary to make the adjustments and prorations required under this ARTICLE
VII, or under any other provisions of this Contract. Based upon such
preliminary audits and inventories, three days prior to the Closing Date
Seller will prepare and deliver to Purchaser a "PRELIMINARY CLOSING
STATEMENT" (herein so called), which will show the net amount due either to
Seller or to Purchaser as the result thereof, and such net amount will be
added to or subtracted from the payment of the cash balance of the Purchase
Price to be paid to Seller pursuant to SECTION 2.2 hereof. Within 90 days
following the Closing Date, Seller shall deliver to each of the parties a
"FINAL CLOSING STATEMENT" (herein so called) setting forth the final
determination of all items to be included on the Closing Statements and an
auditors report from Accountants expressing an opinion that the adjustments
and prorations in the Final Closing Statement are presented fairly, in all
material respects, in conformity with this VII Article herein. The net
amount due Seller or Purchaser, if any, by reason of adjustments in the
Preliminary Closing Statement as shown in the Final Closing Statement, shall
be paid in cash by the party obligated therefor within 10 days following that
party's receipt of the Final Closing Statement. The adjustments, prorations
and determinations of the Accountants shall be conclusive and binding on the
parties hereto.
Seller and Purchaser shall have the right to have its representatives
present, both before and after the Closing Date, for the purpose of observing
the taking of any inventories, and such representatives shall be given
reasonable access to the books and records of the Property which are relevant to
the preparation of the Closing Statements. The provisions of this ARTICLE VII
shall survive the Closing.
1.18 ADJUSTMENT AND PRORATIONS. It is the intention of Purchaser and
Seller that adjustments and prorations be made as hereinafter provided in this
SECTION 7.2 with respect to the Property and its operation. Therefore, the
following matters and item shall be apportioned on an accrual basis as of the
Cut-off
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Time between the parties hereto or, where applicable, credited in total
to a particular party:
(1) ACCOUNTS RECEIVABLE. For purposes of this Contract, "Accounts
RECEIVABLE" shall include all receivables pursuant to farming service contracts
and accounting services as of the Closing Date. Seller shall retain ownership
of such receivables.
(2) TAXES AND ASSESSMENTS. All ad valorem taxes, general excise
taxes, special or general assessments, water and sewer rents, rates and charges
and other municipal permit fees owed by or applicable to the Property. If the
amount of any such item is unascertainable on the Closing Date, the credit
therefor shall be based on the most recent available bill. If the actual amount
of any such item, when later determined, and prorated for the applicable period,
differs from the credit given therefor on the Preliminary Closing Statement, the
parties shall promptly make the appropriate adjustment, and the party owing sums
by reason of such adjustment shall promptly remit such sums to the other party.
(3) UTILITY CONTRACTS. Telephone service contracts (but excluding
Equipment Leases and service contracts for telephone equipment) and contracts
for the supply of heat, steam, electric power, gas, lighting and any other
utility service, with Seller receiving a credit for all deposits, if any, made
by Seller as security under any such public service contracts if the same is
transferable and provided such deposit remains on deposit for the benefit of
Purchaser. At Seller's option, cut-off readings will be secured for all
utilities as of the Cut-off Time.
(4) FARMING SERVICE CONTRACTS, EMPLOYMENT CONTRACTS AND EQUIPMENT
LEASES. Any amounts prepaid or payable under any Farming Service Contracts,
Employment Contracts, Equipment Leases. All security deposits held by Seller
shall be transferred to Purchaser and all obligations with respect to such
security deposits shall be assumed by Purchaser.
(5) LICENSE FEES. Fees paid or payable for Permits.
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(6) INSURANCE. Seller shall retain all prepaid premiums with respect
to insurance policies whether or not insurance is continued under the Brewer
umbrella or is cancelled at the Closing.
(7) COMPENSATION. Compensation of the staff and other employees of
the Property not covered by the Employment Contracts. The Compensation of the
employees working as of the Cut-off Time will be prorated as of the end of their
respective shifts.
(8) ACCOUNTANTS' FEES. Seller and Purchaser shall each pay one-half
(1/2) of the fees and expenses charged by the Accountants in connection with the
preparation of the Closing Statements and, if applicable, IRS Form 8594.
(9) OTHER. Such items as are provided for in this Contract or as are
normally prorated and adjusted in a sale of this type, including without
limitation, all petty cash funds.
1.19 ACCOUNTS RECEIVABLE. Purchaser is not purchasing any of the
receivables of the Property, and Seller shall be solely responsible for the
collection of such accounts receivable of the Property (the "ACCOUNTS
RECEIVABLE"). Purchaser agrees to cause the Purchaser's employees to
co-operate with Seller's representative in reviewing such Accounts
Receivable, and in answering any inquiries with respect thereto. Purchaser
further agrees to promptly remit to Seller any funds received by it in
payment of such Accounts Receivable. With regard to any collection made from
any person or entity who is indebted to the Property both with respect to
Accounts Receivable accruing prior to the Closing Date and to the Accounts
Receivable accruing subsequent to the Closing Date, such collection shall be
applied as designated, but if there is no designation, then any such
collections received within 90 days after the Closing Date shall be applied
first to the indebtedness accrued prior to the Closing Date, but thereafter,
any such collections shall be applied first to the payment in full of any
amounts due to Purchaser on accounts accruing subsequent to the Closing Date.
1.20 PAYABLES. Purchaser is not assuming trade payables with respect to
the Property except to the extent that Purchaser receives a credit therefor on
the Closing Statements. Seller
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shall be responsible for paying all payables which have accrued prior to the
Cut-off Date.
1.21 ACCOUNTING. Unless otherwise specified herein, all accounting terms
used herein shall be interpreted, and all accounting determinations to be made
pursuant to this Contract, and all financial information required to be
delivered hereunder shall be prepared in all material respects using general
accepted accounting principles applied on a basis consistent with the accounting
practices of Seller with respect to the Property as of the Closing Date.
ARTICLE VIII
DELIVERY OF DOCUMENTS
1.22 INFORMATION TO PURCHASER. Seller and Purchaser will cooperate in
familiarizing Purchaser with the operation of the Property and in Purchaser's
preparations to assume ownership thereof on the Closing Date and, in connection
therewith, shall afford Purchaser access to the Property at reasonable times and
in a reasonable manner, provided, however, Purchaser shall provide Seller with
prior notice of Purchaser's intended entry onto the Property and, at the
election of Seller, a representative of Seller shall accompany Purchaser during
each such entry. Subject to the aforementioned notice and other requirements,
Purchaser and Seller agree that it shall be reasonable for Purchaser to have not
more than three (3) of Purchaser's employees, agents or representatives at the
Property during daylight hours prior to the Closing Date for such purposes.
Purchaser shall assure that its conduct, and that of its employees, agents and
representatives, during such process is at all times unobtrusive and does not
interfere with the operation of the Property by Seller in the ordinary course of
business.
1.23 CLOSING DOCUMENTS TO BE DELIVERED BY SELLER TO PURCHASER.
(1) Seller shall deliver the following original documents to
Purchaser on the Closing Date, each of which shall be executed, and, where
appropriate, acknowledged by Seller, and dated as of the Closing Date:
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(1) The Leases;
(2) Three counterparts of the General Assignment;
(3) Three counterparts of the Bill of Sale;
(4) Three counterparts of the Excise Tax Exemption Certificate;
(5) All documents necessary to transfer title to Purchaser of
all Vehicles owned by Seller and used in the Property business;
(6) Recordable releases of lien or reconveyance documents with
respect to any deeds of trust or mortgages encumbering the Property (the
"RELEASE DOCUMENTS");
(7) Any other documents, reasonably required by Purchaser to
consummate the purchase and sale of the Property.
(2) Seller shall also deliver the proposed Preliminary Closing
Statement to Purchaser prior to the Closing Date.
(3) Seller shall also deliver to Purchaser on the Closing Date a
favorable written opinion of J. Alan Kugle, Esq. dated as of the Closing Date as
to: (i) the power and authority of Seller to execute, deliver and perform this
Contract and the documents described in this Section 8.2 ("SELLER'S DOCUMENTS");
(ii) the due authorization, execution and delivery by Seller of Seller's
Documents, and (iii) the legality, validity, enforceability and binding effect
as to Seller of the Seller's Documents, except as they may be limited by (1)
laws of general applicability respecting insolvency or creditors' rights, and
(2) the discretion of a court to enforce equitable remedies: and (iv) to the
best knowledge of said counsel, that the execution and delivery of Seller's
Documents, and the consummation of the transactions contemplated hereby, does
not require the consent or approval of any Governmental Authority. Such opinion
may be subject to such qualifications, limitations, and exceptions as are
customary for legal opinions rendered by lawyer in the State of Hawaii in
similar transactions.
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1.24 CLOSING DOCUMENTS AND FUNDS TO BE DELIVERED BY PURCHASER TO SELLER.
(1) Purchaser shall deliver to Seller or the Closing Date the
following funds and original documents (each of which shall be executed, and,
where appropriate, acknowledged by Seller, and dated as of the Closing Date;
(1) The Purchase Price plus the amounts described in ARTICLE
VII, in cash or other immediately available federal funds, in the form and
amount required by SECTION 2.2 and ARTICLE VII;
(2) Three counterparts of the General Assignment;
(3) Three counterparts of the Excise Tax Exemption Certificate,
duly executed by Purchaser;
(4) Any other documents, reasonably required by Seller to
consummate the purchase and sale of the Property.
(2) Purchaser shall also deliver to Seller on the Closing Date, a
favorable written opinion of counsel for Purchaser in connection with the
transaction, dated as of the Closing Date, as to: (i) the power and authority of
Purchaser to execute and deliver this Contract and the documents described in
items (2) - (4) above, ("PURCHASER'S DOCUMENTS"); (ii) the due authorization,
execution and delivery by Purchaser of Purchaser's Documents; (iii) the
legality, validity and binding effect of Purchaser's Documents, except as they
may be limited to (1) laws of general applicability respecting insolvency or
creditors' rights, and (2) the discretion of a court to enforce equitable
remedies; and (iv) to the best knowledge of said counsel, that the execution of
the transaction contemplated hereby does not require the consent or approval of
any Governmental Authority. Such opinion may be subject to such qualifications,
limitations, and exceptions as are customary for legal opinions rendered by
lawyers in the State of Hawaii in similar transactions.
1.25 SELLER'S DELIVERIES TO PURCHASER AT CLOSING. Seller shall deliver to
Purchaser contemporaneously with the Closing original counterparts of the
following documents together with,
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to the extent obtainable by Seller through its reasonable efforts,
appropriate consents:
(1) Leases;
(2) Equipment Leases;
(3) Farming Service Contracts;
(4) Books and Records;
(5) Permits: and
(6) Keys to all entrance doors, guest rooms, offices, store rooms and
Vehicles.
The documents and keys described in this SECTION 8.4 shall be deemed to be
appropriately delivered if left in the Property in possession of an authorized
representative of Purchaser who has acknowledged in writing receipt thereof.
ARTICLE IX
CONDITIONS PRECEDENT TO CLOSING
1.26 CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATIONS. The obligation of
Purchaser to purchase the Property is subject to the satisfaction, not later
than the Closing Date, of the following conditions:
(1) REPRESENTATIONS AND WARRANTIES OF SELLER. There has been no
material breach of any of Seller's representations, warranties and covenants in
this Contract set forth in SECTION 5.3 and SECTION 5.4 as of the Closing Date.
For purposes of this SECTION 9.1(a) only, a "material" breach shall be a breach
which in the reasonable judgment of Purchaser, exercised in good faith, exposes
Purchaser or the Property to costs, expenses or damages in excess of Fifty
Thousand Dollars ($50,000). If such representations, warranties and covenant of
Seller have been breached prior to the Closing Date and Purchaser has notified
Seller of such breach, but such breach is not "material" then Purchaser shall
have no right to terminate this Contract but, upon specific written request
therefor by Purchaser, a reasonable
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estimation of such amount shall be withheld from the Purchase Price by the
Purchaser pending determination of the amount of, and Seller shall indemnify,
defend and hold Purchaser harmless from and against all losses, damages,
costs and expenses (whether or not they eventually exceed Fifty Thousand
Dollars ($50,000)), including, without limitation, reasonable attorneys'
fees, charges and costs, incurred by Purchaser by reason of such breach.
(2) NO MATERIAL CHANGES. There shall have been no casualty or
condemnation for which Purchaser has elected to terminate this Contract pursuant
to ARTICLE XIII herein.
(3) SELLER'S DELIVERIES. Seller shall have delivered the items
described in SECTION 8.2 and Purchaser's representative shall have acknowledged
that Seller is prepared to deliver the items described in SECTION 8.4.
The conditions set forth in this SECTION 9.1 are solely for the benefit of
Purchaser and may be waived only by Purchaser. Purchaser shall at all times
have the right to waive any condition. Any such waiver or waivers shall be in
writing and shall be delivered to Seller and Escrow Agent. Neither Seller nor
Purchaser shall act or fail to act for the purpose of permitting or causing any
condition to fail. If any of the conditions in this SECTION 9.1 is not
satisfied or has not been so waived by Purchaser prior to the Closing Date,
Purchaser shall give written notice to Seller describing the condition that has
not been satisfied or waived. If the condition specified in SECTION 9.1 is not
satisfied prior to the Closing Date, either Purchaser or Seller may postpone the
Closing Date, by one or more postponements, in increments of not more than one
(1) week for each postponement, for the purpose of attempting to satisfy such
condition, which postponement shall be effected by giving written notice thereof
to Seller (or Purchaser). If any of the conditions specified in this SECTION
9.1 is not satisfied prior to the Closing Date, Seller shall be entitled to
postpone the Closing Date, by one or more postponement, to a date not later than
thirty (30) days after the originally scheduled Closing Date, for the purpose of
attempting to satisfy such conditions, which postponements shall be effected by
giving written notice thereof to Purchaser.
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1.27 CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS. The Close of Escrow and
Seller's obligations with respect to the transactions contemplated by this
Contract are subject to the satisfaction, not later than the Closing Date of the
following conditions:
(1) FUNDS. Purchaser shall have delivered to Seller on the Closing
Date, all cash or other immediately available funds due from Purchaser in
accordance with SECTION 2.2 of this Contract.
(2) REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER. There
shall be no material breach of any of Purchaser's representations, warranties
and covenants in this Contract including, but not limited to, those set forth in
SECTIONS 5.1 and 5.2 as of the Closing Date.
(3) PURCHASER'S DELIVERIES. Purchaser shall have delivered to
Purchaser the items described in SECTION 8.3.
The conditions set forth in this SECTION 9.2 are solely for the benefit of
Seller and may be waived only by Seller. Seller shall at all times have the
right to waive any condition. Any such waiver or waivers shall be in writing
and shall be delivered to Purchaser. Neither Purchaser nor Seller shall act or
fail to act for the purpose of permitting or causing any condition to fail.
1.28 FAILURE OF CONDITION. Except as otherwise provided in this Contract,
if the transaction fails to close on or before the Closing Date for any reason
whatsoever (other than a reason for which Purchaser or Seller has the express
right to postpone Closing), including, without limitation, a failure of a
condition precedent set forth in this ARTICLE IX, either Purchaser or Seller, if
not then in default hereunder, may terminate this Contract in accordance with
the provisions of SECTION 10.1 or 10.2, as the case may be; and, thereupon:
(1) each party shall pay its own costs and expenses; and
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(2) each party shall be released from all obligations under this
Contract except for the provisions which expressly survive termination of this
Contract.
ARTICLE X
DEFAULTS AND REMEDIES
1.29 SELLER'S DEFAULTS. Seller shall be considered to be in default
hereunder if Seller fails to meet, comply with, or perform any material
covenant, agreement, representation, warranty or obligation on its part required
within the time limits and in the manner required in this Contract, and such
failure was not caused by Purchaser's default.
1.30 PURCHASER'S REMEDIES. If Seller is in default hereunder, Purchaser
may exercise either one of the following as its sole and exclusive remedies:
(1) Terminate this Contract by written notice delivered to Seller on
or before the Closing Date; or
(2) Enforce specific performance of this Contract against Seller, in
which event Purchaser shall be deemed to have accepted Seller's title to the
Property and waived any breach by Seller of any of its representations and
warranties made hereunder, except for any matters or breaches that were caused
by an act or omission of Seller in violation of this Contract or which are
curable by Seller.
Purchaser hereby waives any right to any damages (whether actual,
incidental, consequential, punitive or otherwise and whether or not the remedy
of specific performance is available) or any other legal or equitable remedies
(other than those specified in (a) and (b) above) which it may otherwise have
for Seller's default.
1.31 PURCHASER'S DEFAULTS. Purchaser shall be considered to be in default
hereunder if Purchaser fails to meet, comply with, or perform any material
covenant, agreement, representation, warranty, or obligation on its part
required within the time limits and in the manner required in this Contract, and
such failure was not caused by Seller's default.
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1.32 SELLER'S REMEDY.
(1) If Purchaser is in default hereunder then, as Seller's sole
remedy for such default and upon written notice of termination from Seller to
Purchaser, this contract shall terminate (except for this SECTION 10.4 and
any other provisions which expressly survive termination of this contract).
The parties acknowledge and agree that upon Purchaser's default, Seller will
incur certain costs and other damages in an amount that would be extremely
difficult or impractical to ascertain. Without limiting the generality of
the foregoing: (a) such costs and damages will include administrative costs
incurred by Seller in the processing and review of this contract and other
documents relating to this transaction, and damages suffered by reason of
Seller's withdrawing the Property from the open market; (B) Seller is
entering into this contract with Purchaser in reliance upon Purchaser's
commitment to purchase the Property from Seller on or before the Closing Date
and upon the warranty, representation and covenant which Purchaser hereby
makes with respect to this SECTION 10.4, that this SECTION 10.4 is valid and
binding on Purchaser and enforceable in accordance with its terms and that
upon request Purchaser will execute and deliver to Seller a written
acknowledgment by Purchaser of the termination of this contract, as provided
in this SECTION 10.4;
(2) Purchaser acknowledges and agrees that the sum of Fifty Thousand
Dollars ($50,000) bears a reasonable relationship to the damages which the
parties estimate may be suffered by Seller by reason of failure of the closing
of the Transaction to occur; and
(3) Upon delivery to Purchaser by Seller of a notice of termination,
Purchaser shall pay to Seller, as liquidated damages, the sum of Fifty Thousand
Dollars ($50,000) which damages (except as otherwise provided in this Section
10.4) shall be Seller's sole monetary remedy hereunder in the event of such a
breach by Purchaser, and shall forthwith return to Seller all documents and
instruments theretofore provided to Purchaser by or on behalf of Seller.
ARTICLE XI
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NOTICE OF NONCOMPLIANCE WITH BULK SALES LAW
In connection with Seller's sale to Purchaser of the Property, Seller
hereby agrees to indemnify, defend and hold Purchaser harmless from any and all
liability Purchaser may incur by reason of Seller's noncompliance with the
Hawaii Bulk Sales Law (Section 490:6-101 ET SEQ. of the Hawaii Revised
Statutes).
ARTICLE XII
BROKER
Seller and Purchaser mutually represent and warrant to each other that
neither Seller nor Purchaser knows of any broker or other Person who has claimed
or may have the right to claim a commission, finder's fee, brokerage fee or
other fee or payment in connection with this transaction.
ARTICLE XIII
CASUALTY
CASUALTY. If any substantial damage to the Property shall occur
prior to the Closing Date by reason of fire, earthquake, lava flow, or other
casualty, Seller will give Purchaser immediate notice of such event. If the
cost to repair and restore the Property exceeds the sum of (i) the insurance
proceeds available for restoration plus (ii) the deductible amount on the
applicable insurance policy, then Purchaser shall have the right to terminate
this Contract by giving written notice to Seller to such effect by the
earlier to occur of (a) the Closing Date, or (b) five (5) days after Seller
has notified Purchaser of the casualty. If Purchaser does not elect to
terminate this Contract, then the closing of the transaction contemplated
hereby shall take place as herein provided with abatement of the Purchase
Price in an amount equal to the cost to repair or restore the Property that
exceeds the amount of proceeds from casualty insurance paid or payable with
respect to the casualty, and at the Closing, Seller shall pay or assign to
Purchaser (by written instrument in the case of any assignment, but without
recourse) any proceeds from all fire and other casualty insurance paid or
payable with respect to the casualty (less sums theretofore expended, if any,
by Seller for temporary
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repairs or barricades), and the Seller shall have no liability or obligation
with respect to the condition of the Property as the result of such casualty.
ARTICLE XIV
NOTICES
1.33 NOTICES IN WRITING. Whenever any notice, demand or request is
required or permitted hereunder, such notice, demand or request shall be made in
writing and shall be personally delivered to the individuals listed below, sent
via prepaid courier or overnight courier or telecopier, or deposited in the
United States mail, registered or certified, return receipt requested, postage
prepaid, addressed to the addresses (and individuals) set forth below:
As to Seller: J. Alan Kugle, Esq.
P. O. Box 1826
Papaikou, Hawaii 96781
Telephone Number: (808) 969-8107
Telecopier Number: (808) 969-8151
As to Purchaser: James H. Case, Esq.
Suite 2200, Pacific Tower
1001 Bishop Street
Honolulu, Hawaii 96809
Telephone Number: ( 808) 523-2500
Telecopier Number: ( 808) 523-0842
With a copy to: Mr. Gregory A. Sprecher
ML Resources, Inc.
808 Fort Street Mall, Suite 205
Honolulu, Hawaii 96813-4321
Telephone Number: (808) 532-4133
Telecopier Number: (808) 532-4131
1.34 RECEIPT. Any notice, demand or request that shall be served upon any
party shall be deemed sufficiently given to and
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received by such party for all purposes hereunder, (i) if sent via courier,
at the time such notice, demand or request is delivered, to the address
specified by the party to receive such notice, or (ii) if sent via telecopy,
at the time of receipt by such party, or (iii) if sent via registered or
certified mail, three ( 3) days after it is deposited in the United States
mail.
1.35 DEEMED DELIVERY. The inability to deliver any notice, demand or
request because the individual to whom it is properly addressed in accordance
with this ARTICLE XIV refused delivery thereof or no longer can be located at
that address shall constitute delivery thereof to such individual.
1.36 CHANGE OF ADDRESS. Each party hereto shall have the right from time
to time to designate by written notice to the other parties hereto such other
person or persons and such other place or places as said party may desire
written notices to be delivered or sent in accordance herewith.
ARTICLE XV
SUCCESSORS AND ASSIGNS
1.37 TRANSFERS BY SELLER. Seller shall have the right to assign all of its
right, title, and interest in this Contract to any Affiliate of Seller without
the prior written consent of Purchaser, PROVIDED that no transfer or assignment
will be valid unless all of Seller's right, title and interest in the Contract
are held by the same Person who shall have assumed all of the obligations and
liabilities hereunder. Any other transfer or assignment shall require the
written consent of Purchaser which consent may be withheld in Purchaser's sole
and absolute discretion.
1.38 TRANSFERS BY PURCHASER. Purchaser shall have the right to assign or
partially assign all of its right, title and interest in this Contract to a
subsidiary to be formed without the prior written consent of Seller. Any other
transfer or assignment shall require the written consent of Seller which consent
may be withheld in Seller's sole and absolute discretion. No assignment or
transfer made by Purchaser shall be of any force or effect whatsoever unless and
until Purchaser shall have delivered to Seller a counterpart of such assignment,
duly
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executed by Purchaser and the assignee, and an assumption agreement with the
respect thereto in favor of Seller, duly executed by Purchaser and the
assignee, both of which documents shall be in form and substance satisfactory
to Seller. Notwithstanding anything to the contrary contained herein, no
such assignment shall relieve the assigning party from its liability under
this Contract. Any assignment made in violation hereof or which does not
comply with the provisions hereof is and shall be null and void.
ARTICLE XVI
MISCELLANEOUS
1.39 APPROVALS. Whenever the approval or consent of either Purchaser or
Seller is called for under the terms of this Contract, such approval or consent
shall not be unreasonably withheld and shall be given or denied within three (3)
business days of receipt of a request by Purchaser or Seller, as the case may
be, for such approval or consent (unless a different period for such approval or
consent is expressly provided for in this Contract). The failure by Purchaser
or Seller to notify the other party of its denial of approval or consent prior
to 5:00 p.m. (Hawaii Time) on the third business day (or such different period
for such approval or consent as is expressly provided for in this Contract)
after the day on which such request is received by the party from whom approval
or consent is sought shall be deemed to be approval or consent, as of the end of
said third business day, by the party from whom approval or consent is sought.
1.40 AMENDMENT. No provision of this Contract or of any documents or
instrument entered into, given or made pursuant to this Contract may be amended,
changed, waived, discharged or terminated except by an instrument in writing
signed by the party against whom enforcement of the amendment, change, waiver,
discharge or termination is sought.
1.41 ENTIRE CONTRACT. This Contract together with the exhibits attached
hereto embodies the entire agreement between the parties hereto with relation to
the transactions contemplated hereby, and there have been and are no covenants,
agreements,
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representations, warranties or restrictions between the parties hereto with
regard thereto other than those set forth herein.
1.42 TIME. Time shall be of the essence of this transaction.
1.43 PARTIES. The covenants and agreements herein contained shall extend
to and be obligatory upon the heirs, executors, administrators, successors and
assigns of the respective parties hereto.
1.44 NUMBER AND GENDER OF WORDS. Words of any gender used in this Contract
shall be held and construed to include any other gender, and words of a singular
number shall be held to include the plural and vice versa, unless the context
requires otherwise.
1.45 CAPTIONS. The captions used in connection with the Articles and
Sections of this Contract are for convenience only and shall not be deemed to
construe or to limit the meaning of the language of this Contract.
1.46 THIRD PARTIES. Nothing in this Contract, express or implied, is
intended to confer upon any person, other than the parties hereto and their
respective heirs, executors, personal representatives, successors and assigns,
any rights or remedies under or by reason of this Contract.
1.47 KNOWLEDGE. The phrase to the best of Seller's knowledge or other
references to Seller's knowledge shall only mean to the knowledge of senior
management and operational personnel in a direct or indirect decision making
capacity employed by Seller.
1.48 FURTHER ASSURANCES. Each of Seller and Purchaser will, at any time
and from time to time after the Closing Date, upon the request of the other,
execute, acknowledge and deliver, or will cause to be done, executed,
acknowledged and delivered all such further acts, deeds, assignments, transfers,
conveyances, powers of attorney and assurances as may reasonably be required to
consummate the transactions described herein.
1.49 GOVERNING LAW. This Contract shall be construed under and be governed
by the laws of the State of Hawaii, and all
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obligations of the parties hereto created under this contract shall be
performable in Hawaii County, Hawaii.
1.50 COUNTERPARTS. This Contract may be executed in any number of
counterparts, each of which shall be an original, but such counterparts together
shall constitute one and the same instrument.
1.51 EXHIBITS. All exhibits described in this Contract and attached hereto
are by this reference incorporated fully herein. The term "this Contract" shall
be considered to include all such exhibits.
1.52 INVALID PROVISIONS. If any provision of this Contract is held to be
illegal, invalid or unenforceable under present or future laws, such provisions
shall be fully severable; the Contract shall be construed and enforced as if
such illegal, invalid or unenforceable provision had never comprised a part of
the Contract: and the remaining provisions of the Contract shall remain in full
force and effect and shall not be affected by the illegal, invalid or
unenforceable provision or by its severance from this Contract. Furthermore, in
lieu of such illegal, invalid or unenforceable provision, there shall be added
automatically as a part of this Contract, a provision as similar in terms to
such illegal, invalid or unenforceable provision as may be possible and be
legal, valid or enforceable.
1.53 ATTORNEYS' FEES. If any dispute between Seller and Purchaser,
relating to the transactions contemplated in this Contract, should result in
litigation, the prevailing party shall be reimbursed for all reasonable costs
incurred in connection therewith, including, without limitation, reasonable
attorneys' fees and court costs. The prevailing party shall be determined by
the court based upon an assessment of which party's major arguments or positions
taken in the proceedings could fairly be said to have prevailed over the other
party's major arguments or positions on major disputed issues.
1.54 INTERPRETATION. The parties agree that each party and its counsel
have reviewed and revised this Contract and that the normal rule of construction
to the effect that any ambiguities are to be resolved against the drafting party
shall not be
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employed in the interpretation of this Contract or any amendments or exhibits
thereto.
1.55 NO WAIVER. No failure of any party to exercise any power given such
party hereunder or to insist upon strict compliance by the other party with its
obligations hereunder shall constitute a waiver of any party's right to demand
strict compliance with the terms of this Contract.
1.56 RECORDING. Seller and Purchaser represent, warrant and covenant that
it will not record this Contract (or a memorandum or other evidence of this
Contract) or cause it to be recorded in the public records for the county in
which any of the Property is located or in any other jurisdiction, except that
in the event of a default by Seller of its obligations hereunder, Purchaser may
record this Contract (or a memorandum or other evidence of this Contract) or
cause the same to be recorded in any such public records.
1.57 ANNOUNCEMENTS. Seller and Purchaser shall consult with each other
with regard to all press releases and other announcements issued at or prior to
the Closing Date concerning this Contract or the transactions contemplated
hereby and, except as may be required by applicable laws or the applicable rules
and regulations of any governmental agency or stock exchange, neither Seller nor
Purchaser shall issue any such press release or other such publicity without the
prior consent of the other party.
1.58 CONSENT TO JURISDICTION. Each party hereto hereby consents to
jurisdiction in the United States District Court for Hawaii and in the Third
Circuit Court in and for the County of Hawaii, State of Hawaii, for purposes of
any litigation to construe or enforce any obligations hereunder, or any other
document or instrument entered into given or made pursuant to this Contract, or
any of them, or any obligation arising therefrom, and each party hereto
expressly covenants and agrees that service of process may be made, and personal
jurisdiction over said party obtained, by serving a copy of the Summons and
Complaint upon said party in accordance with the applicable laws of the State of
Hawaii at such address of said party as may from time to time by specified in
accordance with the notice provisions contained herein or at such other address
as may then be proper under said laws. Nothing contained herein, however,
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shall prevent Seller or Purchaser from bringing any action or exercising any
rights against the other within any other competent jurisdiction. The
initiation of any such proceeding or the taking of such action in any other
jurisdiction will not, however, constitute a waiver of the agreement
contained herein that the laws of the State of Hawaii will govern the rights
and obligations of the parties hereto under this Contract.
1.59 DEFENSE OF CLAIMS. Within twenty (20) days after service of
process on, or other notification to an indemnified party (INDEMNITEE) with
respect to any matter which could reasonably be expected to result in a loss,
expense, claim, damage or liability for which indemnification or defense may
be sought under this Contract, such indemnified party shall give written
notice of such legal action to the other party hereto ("INDEMNITOR") and
Indemnitor shall have the right to assume control of such legal action and
take over the defense thereof and sole responsibility therefor. If the
Indemnitee fails to give such notice then, if and to the extent the
Indemnitor is prejudiced thereby, the obligations of the Indemnitor to
indemnify, defend and hold harmless the Indemnitee shall abate. In the
absence of assumption of defense by the Indemnitor, the Indemnitee will use
its best efforts to defend, and to permit the Indemnitor to participate fully
in the defense of any claim, demand or other matter to which such party's
indemnification under this Contract applies. No such claim, demand or other
matter shall be compromised or settled by the Indemnitee in any manner which
might adversely affect the interest of the Indemnitor without the prior
written consent of the Indemnitor (which consent shall not be unreasonably
withheld, delayed, or conditioned).
1.60 NEGATION OF PARTNERSHIP OR JOINT VENTURE. Nothing in this Contract
contained shall constitute, or be construed to be or create, a partnership,
joint venture or lease (except for the Leases) between Seller and Purchaser.
Seller hereby acknowledges to Purchaser and Purchaser hereby acknowledges to
Seller that neither party owes any fiduciary duty or obligation to the other.
1.61 REPRESENTATION BY COUNSEL. Each party to this Contract acknowledges
to the other that it has been represented at all times by competent legal
counsel in connection with this Contract and the transactions contemplated
hereby.
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1.62 SUBMISSION OF CONTRACT. No Contract with respect to the purchase and
sale of the Property shall exist, and this writing shall have no binding force
or effect, until it is executed and delivered by Purchaser and by Seller. If
Seller executes this Contract prior to Purchaser, then this Contract shall be
void, at Seller's sole option, unless Purchaser also executes the Contract and
delivers it to Seller within two (2) business days after the date on which
Seller executed the Contract.
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ARTICLE XVII
POST CLOSING AGREEMENTS
1.63 NEW FARMING SERVICE CONTRACT. Seller now performs farming services
operations for certain macadamia nut orchards which are owned by Seller or its
Affiliates. Effective as of the Closing Date Purchaser will enter into new
farming service contracts with Seller providing that Purchaser will perform
farming services for Seller's orchards in accordance with the terms and
conditions contained in the farming service contract attached hereto as Exhibit
O.
1.64 NEW ACCOUNTING SERVICES CONTRACT. Seller now performs accounting
services for (1) orchards which it farms under Farming Services Contracts, (2)
orchards owned by Seller, and (3) for certain of Seller's Affiliates. Effective
as of the Closing Date, Purchaser will perform accounting services for Seller
and its affiliates of the same type as Seller performed just before the Closing
Date in accordance with the terms and conditions contained in the accounting
services contract attached hereto as Exhibit P. Seller shall have the right to
terminate this contract as of the last day of any month by giving notice of such
termination to Purchaser during the previous month.
1.65 NEW MANAGEMENT SERVICES CONTRACT. Various of Seller's affiliates now
perform executive management, legal, land management, human relations, and
insurance services to Seller. Effective as of the Closing Date, such Seller's
Affiliates will perform management services for Purchaser under the terms and
conditions contained in the management services contract attached hereto as
Exhibit Q..
1.66 EASEMENTS. Seller or Seller's Affiliates will grant Purchaser such
easements over lands owned by Seller or Seller's Affiliates as may be necessary
to allow Purchaser access for its equipment, personnel and irrigation lines to
carry out farming services for Purchaser's own orchards as well as those
orchards which Purchaser will be farming under farming services contracts.
1.67 MULTI-EMPLOYER EMPLOYMENT BENEFITS. Seller and Purchaser will enter
into a multi-employer employment benefits agreement whereby Seller and Seller's
affiliates will continue to
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provide employment benefits to non-bargaining unit employees of Purchaser
pursuant to an agreement attached hereto as Exhibit R.
IN WITNESS WHEREOF, Purchaser and Seller have caused this Contract to be
executed as of the day and year first above written.
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PURCHASER:
ML MACADAMIA ORCHARDS, L. P.
a Delaware limited partnership
Date Executed: By ML RESOURCES, INC.
Its General Partner
By_____________________________
Gregory A. Sprecher
Its Senior Vice President
SELLER:
KAU AGRIBUSINESS, CO., INC.
a Hawaii corporation
Date Executed:
By:_________________________________
Title:
Printed Name:
MAUNA KEA AGRIBUSINESS CO., INC.,
a Hawaii corporation
Date Executed:
By__________________________________
Title:
Printed Name:
MAUNA KEA MACADAMIA ORCHARDS, INC.,
Hawaii corporation
By__________________________________
Date Executed: Title:
_________________________ Printed Name:
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KAU SUGAR, INC., a Hawaii corporation
Date Executed: By__________________________________
______________________________ Title:
Printed Name:
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CONTACT: GREGORY A. SPRECHER
FOR IMMEDIATE RELEASE Senior Vice President
Tuesday, March 14, 2000 Telephone: (808) 532-4133
ML MACADAMIA ORCHARDS, L.P.
INCREASES DISTRIBUTION BY 25%
AND PURCHASES MACADAMIA ORCHARDS
AND FARMING OPERATIONS
Honolulu, Hawaii -ML Macadamia Orchards, L.P. (NYSE: NUT) announced a
25% increase in the cash distribution to its limited partners to be effective to
unitholders of record on March 31, 2000. A first quarter cash distribution of
$0.125 per Class A Unit (an effective rate of $0.50 per year) was declared
Friday, March 10, 2000, at a meeting of the Board of Directors of its general
partner, ML Resources, Inc. for payment on May 15, 2000. This increase reflects
the strong performance of the Partnership in 1999, which was 140% higher than in
1998. The Partnership has steadily increased its annual cash distributions from
$.20 in 1996, to $.30 in 1997, $0.40 in 1999, and now $0.50 for 2000. This
distribution will be the 56th consecutive distribution paid since the
Partnership's inception in 1986.
The Partnership also announced that an agreement was reached to
purchase additional macadamia orchards and the macadamia farming operations of
Ka'u Agribusiness Company, Inc. ("KACI"). The Partnership will be acquiring 142
acres of mature macadamia orchards from KACI, located in the Ka'u region on the
island of Hawaii. The purchase price for the macadamia orchards and farming
operations is $9 million, and the anticipated annual cash benefits of the
acquisition are approximately $1.6
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million. KACI currently performs all of the farming operations for the
Partnership's 4,027 acres and for approximately 2,750 additional acres owned
by other growers. The Partnership will be acquiring all the assets necessary
to farm these orchards and intends to retain the entire workforce and
continue the same type of operation.
The Board and management of the Partnership have investigated several
alternative investment opportunities over the past two years to expand its
operations and take advantage of its unique tax status. The Partnership stated
that the purchase of the macadamia farming operations would generate additional
revenues that were not tied directly to the price of macadamia nuts and would
provide a savings by farming its own orchards. The transaction is expected to be
completed in the second quarter this year. KACI is a wholly owned subsidiary of
C. Brewer and Company, Limited ("CBCL"). ML Resources, Inc., the Partnership's
general partner, is also a subsidiary of CBCL.
Management is grateful for the successful growth of the Partnership,
even with recent droughts, as well as its success in increasing the cash
distribution to unitholders three times over the last four years.
This press release contains forward-looking statements regarding future
events and future performance of the Partnership that involve risks and
uncertainties that could cause actual results to differ materially from those
expressed or implied by such statements. These include statements, among others,
regarding the Partnership's success in operating the macadamia farming business
that it is purchasing, which are based on certain assumptions and forecasts. The
Partnership files documents with the Securities and Exchange Commission, such as
Form 10-K, Form 10-Q, and Form 8-K reports, which contain a description of these
and other risks and uncertainties that could cause
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actual results to differ from current expectations and the forward-looking
statements contained in this press release.
ML Macadamia Orchards, L.P. is the world's largest grower of macadamia
nuts, owning or leasing 4,027 acres of orchards on the island of Hawaii, where
macadamia yields are the highest in the world.
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