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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) August 13, 1997
C. BREWER HOMES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-22948 99-014505
- --------------------------------- ----------- ------------------
State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
255-A EAST WAIKO ROAD, WAILUKU, HAWAII 96793
- -------------------------------------- ------------
(Address of Principal Executive Offices) (Zip Code)
808-242-6833
------------
Registrants telephone number, including area code
1
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Item 5. Other Events
On December 18, 1997, C. Brewer Homes, Inc. (the "Company") announced that the
Company and Mauna Loa Macadamia Partners, L.P. ("Mauna Loa") executed a
definitive merger agreement pursuant to which the Company will be merged into
Mauna Loa and Mauna Loa will survive the Merger as a partnership (the "Merger").
Upon consummation of the Merger, stockholders of the Company will receive .667
limited partnership units of Mauna Loa (subject to adjustment) for each share of
common stock of the Company. The merger agreement is subject to approval by the
holders of (i) C. Brewer Homes, Inc. common stock and (ii) Mauna Loa partnership
units, and other typical closing conditions. The full text of a press release
announcing the execution of the merger agreement is attached hereto as Exhibit
99.1 and incorporated herein by reference.
Under a Release and Separation Agreement dated August 13, 1997, the Company and
Edward T. Foley, the Company's Executive Vice President and Chief Financial
Officer, agreed that upon the consummation of the Merger, Mr. Foley will be
entitled to a payment of $50,000. In addition, the Company and Mr. Foley entered
into a Consultant Agreement dated August 14, 1997 that provides that Mr. Foley
will be paid a Consulting Fee equal to his current monthly salary for six months
following his separation from the Company as an employee as provided for in the
Release and Separation Agreement.
In the third quarter of fiscal year 1998, the Company began operating as its own
general contractor for the purposes of constructing the remaining 62 homes at
its Kaimana project on the island of Maui. As a result, the Company and Fletcher
Pacific Construction Co., Ltd. agreed to terminate their contract dated as of
May 30, 1995. (Filed as to Exhibit 10.7 of the Registrant's Quarterly Report on
Form 10-Q dated September 30, 1995).
As part of the Company's expanded business strategy to develop and sell lots and
parcels of land in addition to homebuilding, the Company has entered into
Purchase and Sale Agreements for its Nanea at Kehalani subdivision and its Iao
II parcel for $2.2 million and $2.0 million, respectively. Both agreements are
subject to various closing conditions and will terminate if the closings do not
occur by March 31, 1998, and June 1, 1998, respectively.
2
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Item 7. Financial Statements and Exhibits
(c) Exhibits
Exhibit
Number Description
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2.3 Agreement and Plan of Merger dated December 18, 1997.
10.62 Release and Separation Agreement, dated August 13, 1997, between the
Registrant and Edward T. Foley.
10.63 Consultant Agreement, dated August 14, 1997, between the Registrant
and Edward T. Foley.
10.64 Purchase and Sale Agreement, dated September 12, 1997, between the
Registrant and Stanford S. Carr Development Corporation regarding
the Iao II parcel and Eha Street extension.
10.65 Fletcher Pacific Contract termination letter, dated November 12,
1997, from the Registrant to Fletcher Pacific Construction Co., Ltd.
10.66 Purchase and Sales Agreement, dated December 15, 1997, between the
Registrant and Jesse E. Spencer regarding the "Nanea at Kehalani"
subdivision.
99.1
Press Release dated December 18, 1997.
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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.
C. BREWER HOMES, INC.
(Registrant)
By /s/ Edward T. Foley
--------------------------
Edward T. Foley
Executive Vice President and
Chief Financial Officer
3
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EXHIBIT INDEX
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<CAPTION>
Exhibit
Number Description
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2.3 Agreement and Plan of Merger dated December 18, 1997.
10.62 Release and Separation Agreement, dated August 13, 1997,
between the Registrant and Edward T. Foley.
10.63 Consultant Agreement, dated August 14, 1997, between the
Registrant and Edward T. Foley.
10.64 Purchase and Sale Agreement, dated September 12, 1997,
between the Registrant and Stanford S. Carr Development
Corporation regarding the Iao II parcel and Eha Street
extension.
10.65 Fletcher Pacific Contract termination letter, dated
November 12, 1997, from the Registrant to Fletcher Pacific
Construction Co., Ltd.
10.66 Purchase and Sales Agreement, dated December 15, 1997,
between the Registrant and Jesse E. Spencer regarding the
"Nanea at Kehalani" subdivision.
99.1 Press Release dated December 18, 1997.
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EXHIBIT 2.3
AGREEMENT
AND
PLAN OF MERGER
C. BREWER HOMES, INC.
MAUNA LOA MACADAMIA PARTNERS, L.P.
December 18, 1997
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TABLE OF CONTENTS
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PAGE
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ARTICLE I
DEFINITIONS.............................................................................. 1
ARTICLE II
THE MERGER AND RELATED MATTERS........................................................... 7
2.1 The Merger...................................................................... 7
2.2 Conversion of the Corporation's Stock........................................... 8
2.3 Adjustments for Dilution and Other Matters...................................... 9
2.4 Exchange Procedures............................................................. 10
2.5 Admission, Voting and Distributions............................................. 11
2.6 No Liability.................................................................... 11
2.7 Withholding Rights.............................................................. 11
2.8 Limited Partnership Agreement of Surviving Entity; Fiscal Year.................. 12
2.9 Management of the Surviving Entity.............................................. 12
2.10 Options......................................................................... 12
ARTICLE III
THE CLOSING.............................................................................. 13
3.1 Closing......................................................................... 13
3.2 Filings......................................................................... 13
3.3 Documents to be Delivered....................................................... 13
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ARTICLE IV
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REPRESENTATIONS AND WARRANTIES OF THE CORPORATION.................................. 14
4.1 Incorporation, Standing, and Power................................... 14
4.2 Capitalization....................................................... 14
4.3 Subsidiaries......................................................... 15
4.4 Financial Statements................................................. 15
4.5 SEC/Regulatory Filings............................................... 15
4.6 Authority of the Corporation......................................... 15
4.7 Insurance............................................................ 16
4.8 Title to Assets...................................................... 17
4.9 Real Estate.......................................................... 17
4.10 Litigation........................................................... 17
4.11 Taxes................................................................ 18
4.12 Compliance with Laws and Regulations................................. 19
4.13 Performance of Obligations........................................... 19
4.14 Employees............................................................ 19
4.15 Brokers and Finders.................................................. 20
4.16 Material Contracts................................................... 20
4.17 Absence of Material Change........................................... 22
4.18 Licenses and Permits................................................. 22
4.19 No Material Liabilities; Environmental............................... 22
4.20 Employee Benefit Plans............................................... 24
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4.21 Corporate Records......................................................... 27
4.22 Power of Attorney......................................................... 27
4.23 Disclosure Documents, Reports and Applications............................ 27
4.24 Accuracy of Information Furnished......................................... 28
4.25 Accounting Records........................................................ 28
4.26 Intellectual Property Rights.............................................. 29
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIP................................... 29
5.1 Organization, Standing, and Power......................................... 29
5.2 Capitalization............................................................ 29
5.3 Subsidiaries.............................................................. 30
5.4 Financial Statements...................................................... 30
5.5 SEC/Regulatory Filings.................................................... 30
5.6 Authority of the Partnership.............................................. 30
5.7 Insurance................................................................. 31
5.8 Title to Assets........................................................... 31
5.9 Real Estate............................................................... 32
5.10 Litigation................................................................ 32
5.11 Taxes..................................................................... 32
5.12 Compliance with Laws and Regulations...................................... 34
5.13 Performance of Obligations................................................ 34
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5.14 Employees....................................................................... 34
5.15 Brokers and Finders............................................................. 34
5.16 Material Contracts.............................................................. 34
5.17 Absence of Material Change...................................................... 35
5.18 Licenses and Permits............................................................ 36
5.19 No Material Liabilities; Environmental.......................................... 36
5.20 Partnership Records............................................................. 38
5.21 Disclosure Documents, Reports and Applications.................................. 38
5.22 Accuracy of Information Furnished............................................... 39
5.23 Accountants' Letters............................................................ 39
5.24 Validity of Units............................................................... 39
ARTICLE VI
COVENANTS OF THE CORPORATION
PENDING EFFECTIVE TIME OF THE MERGER...................................................... 39
6.1 Limitation on the Corporation's Conduct Prior to Effective Time................. 39
6.2 No Solicitation, Etc............................................................ 41
6.3 Affirmative Conduct of the Corporation Prior to Effective Time.................. 42
6.4 Access to Information........................................................... 44
6.5 Notices......................................................................... 45
6.6 Stockholders' Meeting........................................................... 45
6.7 Termination of Corporation Stock Option Plan.................................... 45
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ARTICLE VII
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COVENANTS OF THE PARTNERSHIP........................................................ 45
7.1 Limitation on the Partnership's Conduct Prior to Effective Time........... 45
7.2 Affirmative Conduct of the Partnership Prior to Effective Time............ 46
7.3 Access to Information..................................................... 48
7.4 Notices................................................................... 48
7.5 Unitholders' Meeting...................................................... 48
ARTICLE VIII
ADDITIONAL COVENANTS................................................................ 49
8.1 Regulatory Matters........................................................ 49
8.2 Certain Legal Impediments to Merger....................................... 50
8.3 Additional Agreements; Parties............................................ 50
8.4 Publicity................................................................. 50
8.5 Affiliates Agreements and Stability Agreements............................ 51
ARTICLE IX
CONDITIONS PRECEDENT TO THE MERGER....................................................... 51
9.1 Stockholder and Unitholder Approval....................................... 51
9.2 No Judgments or Orders.................................................... 51
9.3 Regulatory Approvals...................................................... 51
9.4 Tax Matters............................................................... 52
9.5 S-4 and Proxy Statement................................................... 52
9.6 NYSE Listing.............................................................. 52
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<CAPTION>
ARTICLE X
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CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE CORPORATION............................................ 52
10.1 Legal Opinion............................................................................... 52
10.2 Representations and Warranties; Performance of Covenants.................................... 52
10.3 Authorization of Merger and Amendments to Limited Partnership
Agreement................................................................................... 52
10.4 Absence of Certain Changes.................................................................. 53
10.5 Certificates................................................................................ 53
ARTICLE XI
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PARTNERSHIP............................................ 53
11.1 Legal Opinion............................................................................... 53
11.2 Representations and Warranties; Performance of Covenants.................................... 53
11.3 Authorization of Merger..................................................................... 54
11.4 Absence of Conditions....................................................................... 54
11.5 Third Party Consents........................................................................ 54
11.6 Absence of Certain Changes.................................................................. 54
11.7 Certificates................................................................................ 54
11.8 Blue Sky Matters............................................................................ 55
11.9 Agreements.................................................................................. 55
11.10 Stability Agreements........................................................................ 55
11.11 Loan Extension.............................................................................. 55
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11.12 Amendments to Partnership Agreement............................ 55
ARTICLE XII
EMPLOYEE MATTERS......................................................... 55
12.1 Employee Retention............................................. 55
12.2 Employee Benefits.............................................. 55
12.3 Prior Service Credit........................................... 56
12.4 Indemnification of Directors and Officers...................... 56
ARTICLE XIII
TERMINATION.............................................................. 56
13.1 Termination.................................................... 56
13.2 Effect of Termination.......................................... 57
ARTICLE XIV
MISCELLANEOUS............................................................ 58
14.1 Expenses....................................................... 58
14.2 Notices........................................................ 58
14.3 Successors and Assigns......................................... 59
14.4 Counterparts................................................... 59
14.5 Effect of Representations and Warranties....................... 59
14.6 Third Parties.................................................. 59
14.7 Schedules; Exhibits; Integration............................... 59
14.8 Governing Law.................................................. 60
14.9 Captions....................................................... 60
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14.10 Severability.................................................. 60
14.11 Waiver, Modification and Amendment............................ 60
14.12 Attorney's Fees............................................... 61
14.13 Jury Waiver................................................... 61
</TABLE>
EXHIBITS
A Form of Affiliate's Agreement
B Opinion of Partnership's Counsel
C Opinion of Corporation's Counsel
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AGREEMENT AND PLAN OF MERGER
----------------------------
This AGREEMENT AND PLAN OF MERGER ("Agreement") is made and entered
into as of the 18th day of December 1997, by and between Mauna Loa Macadamia
Partners, L.P., a Delaware limited partnership ("the Partnership"), and C.
Brewer Homes, Inc., a Delaware corporation (the "Corporation").
R E C I T A L S:
- - - - - - - -
WHEREAS, the Partnership and the Corporation desire to effect a merger
(the "Merger") in accordance with the terms of this Agreement.
WHEREAS, the Board of Directors of Mauna Loa Resources Inc., in its
capacity as the managing general partner of the Partnership, and the Board of
Directors of the Corporation believe that it is in the best interests of the
Partnership, the Corporation, and their respective unitholders and stockholders
to provide for the Merger of the Corporation with and into the Partnership upon
the terms and subject to the conditions set forth herein.
WHEREAS, the Partnership and the Corporation desire to make certain
representations, warranties, covenants, and agreements in connection with the
contemplated Merger.
NOW, THEREFORE, on the basis of the foregoing recitals and in
consideration of the mutual representations, warranties, covenants, and
agreements contained herein, the Partnership and the Corporation hereby agree as
follows:
ARTICLE I
DEFINITIONS
Except as otherwise expressly provided for in this Agreement, or
unless the context otherwise requires, as used throughout this Agreement the
following terms shall have the respective meanings specified below:
1.1 "Affiliate" of, or a Person "Affiliated" with, a specific Person
is a Person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the Person
specified.
1.2 "Alternative Transaction" means any of the following involving
the Corporation (other than transactions with the Partnership): any merger,
consolidation, share exchange, or other business combination; a sale, lease,
exchange, mortgage, pledge, transfer,
<PAGE>
or other disposition of assets of the Corporation (as applicable) representing
10% or more of the Corporation's assets (other than in the ordinary course of
business and other than the sale for reasonably equivalent value of any or all
of the assets listed in Schedule 1.2 hereto); a sale of shares of capital stock
or securities convertible or exchangeable into or otherwise evidencing, or any
agreement or instrument evidencing, the right to acquire capital stock
(exclusive of the sale of shares upon the exercise of options outstanding at
December 1, 1997), representing 10% or more of the voting power of the
Corporation; or a tender offer or exchange offer for at least 10% of the
outstanding shares of the Corporation.
1.3 "Average Price of Partnership Units" means the average of the
closing price of the Partnership's Class A Depositary Units on the NYSE as
reported in The Wall Street Journal for the twenty (20) consecutive trading days
ending on the third trading day immediately prior to the Closing Date. The term
"trading day" shall mean a day on which trading generally takes place on the
NYSE and on which trading in the Partnership Units has not been halted or
suspended.
1.4 "Bankruptcy Exception" has the meaning set forth in Section 4.6.
1.5 "Burial Site" means any portion of a property which may qualify
as a "burial site" as defined under Haw. Rev. Stat. Section 6E-2.
1.6 "Business Day" means any day other than Saturday, Sunday, or a
day recognized as a holiday by either the Partnership or the Corporation.
1.7 "Class B Units" means the Class B Units authorized by the Limited
Partnership Agreement as of the date hereof.
1.8 "Certificate of Merger" has the meaning set forth in Section 2.1.
1.9 "Closing" has the meaning set forth in Section 3.1.
1.10 "Closing Date" means the date on which the Closing is to be
conducted, as provided by Section 3.1.
1.11 "Code" means the Internal Revenue Code of 1986, as amended.
1.12 "Conservation Laws" means any applicable federal, state, or local
statute, law, ordinance, rule, regulation, or order relating to the
conservation, preservation, management or protection of an Endangered Species
and related Critical Habitat, including without limitation: (i) the Endangered
Species Act of 1973, as amended, 16 U.S.C. Section 1531 et seq.; and (ii) Hawaii
laws regarding Conservation of Aquatic Life, Wildlife, and Land Plants, as
amended, Haw. Rev. Stat. Chapter 195D, as such laws have been amended or
supplemented now or in the future.
2
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1.13 "Corporation Options" means options, rights, or warrants to
purchase Corporation Stock granted by the Corporation.
1.14 "Corporation Real Property" has the meaning set forth in Section
4.9.
1.15 "Corporation Scheduled Contracts" has the meaning set forth in
Section 4.16.
1.16 "Corporation Schedules" means the Schedules prepared and
delivered by the Corporation pursuant to this Agreement.
1.17 "Corporation Stock" means the Class A Common Stock and the Class
B Common Stock of the Corporation.
1.18 "Corporation Stock Option Plan" means the C. Brewer Homes, Inc.
1993 Stock Option Plan and each program thereunder.
1.19 "Critical Habitat" means any portion of the properties owned on
leased by the Partnership or the Corporation which may qualify as "critical
habitat" as defined under the Conservation Laws.
1.20 "Delaware RULPA" means the Delaware Revised Uniform Limited
Partnership Act, as amended.
1.21 "Depositary" means the Person then serving as the Partnership's
depositary under the Depositary Agreement.
1.22 "Depositary Agreement" means the depositary agreement between the
Partnership and the Depositary, as amended or supplemented from time to time.
1.23 "Depositary Receipt" means a depositary receipt, executed and
delivered by the Depositary or agents appointed by the Depositary in accordance
with the Depositary Agreement, evidencing ownership of one or more Depositary
Units.
1.24 "Depositary Unit" means a Partnership Unit on deposit with the
Depositary pursuant to the Depositary Agreement.
1.25 "DGCL" means the Delaware General Corporation Law, as amended.
3
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1.26 "Effective Time" means the date and time of filing of the
Certificate of Merger with the Secretary of State of Delaware or such later
effective time as may be agreed by the parties and set forth in such
Certificate.
1.27 "Employee Benefit Plan" has the meaning set forth in Section 3(2)
of ERISA.
1.28 "Employee Pension Benefit Plan" has the meaning set forth in
Section 3(2) of ERISA.
1.29 "Employee Plans" has the meaning set forth in Section 4.20(a).
1.30 "Endangered Species" means any: (i) aquatic life, wildlife and
plant that is included in the definition of "endangered species" under the
Conservation Laws; and (ii) aquatic life, wildlife and plant included in the
definition of "threatened species" under the Conservation Laws.
1.31 "Environmental Law" means any applicable federal, state, or local
statute, law, ordinance, rule, regulation, or order relating to the environment,
natural resources, or human health, including without limitation: (i) the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended (including the Superfund Amendments and Reauthorization Act of 1986), 42
U.S.C. Section 2601 et seq.; (ii) the Resource Conservation and Recovery Act of
1976, as amended, 42 U.S.C. Section 6901 et seq.; (iii) the Federal Water
Pollution Control Act, as amended, 33 U.S.C. Section 1251 et seq.; (iv) the
Clean Air Act, as amended, 42 U.S.C. Section 7401 et seq.; (v) the Toxic
Substances Control Act, as amended, 15 U.S.C. Section 2601 et seq.; (vi) the
Occupational Safety and Health Act, as amended, 29 U.S.C. Section 651, insofar
as such Act relates to environmental, natural resources or human health matters;
(vii) the Emergency Planning and Community Right-To-Know Act of 1986, 42 U.S.C.
Section 1101 et seq.; (viii) the Safe Drinking Water Act, 42 U.S.C. Section 300f
et seq.; and (ix) Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C.
Section 136 et seq., as such laws have been amended or supplemented now or in
the future.
1.32 "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
1.33 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
1.34 "Exchange Agent" means the Person appointed by the General
Partner of the Partnership, which may be a Person serving as the Depositary or
as the Transfer Agent, to effect the exchange of certificates contemplated by
Section 2.4.
4
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1.35 "Exchange Ratio" has the meaning set forth in Section 2.2(a).
1.36 "Financial Statements of the Partnership" means (i) the audited
financial statements and notes thereto of the Partnership and the related
opinions thereon included in the Partnership's Annual Reports on Form 10-K for
the years ended December 31, 1994, 1995, and 1996 and (ii) the unaudited interim
financial statements and notes thereto of the Partnership included in the
Partnership's Quarterly Reports on Form 10-Q for the quarters ended March 31,
June 30, and September 30, 1997.
1.37 "Financial Statements of the Corporation" means (i) the audited
financial statements and notes thereto of the Corporation and the related
opinions thereon included in the Corporation's Annual Reports on Form 10-K for
the years ended March 31, 1995, 1996, and 1997 and (ii) the unaudited interim
financial statements and notes thereto of the Corporation included in the
Corporation's Quarterly Reports on Form 10-Q for the quarters ended June 30 and
September 30, 1997.
1.38 "General Partner" means the managing general partner of the
Partnership, which at the date of this Agreement is Mauna Loa Resources Inc.;
"General Partners" means the Partnership's managing general partner and any
other Person who may then be an additional general partner of the Partnership.
1.39 "Hazardous Substances" means: (i) substances that are defined or
listed in, or otherwise classified pursuant to, or the use or disposal of which
are regulated by, any Environmental Law as "hazardous substances," "hazardous
materials," "hazardous wastes," "toxic substances," "pollutants" or
"contaminants"; (ii) oil, petroleum, or petroleum products; and (iii) asbestos
in any form or electrical equipment that contains any oil or dielectric fluid
containing levels of polychlorinated biphenyls in excess of 50 parts per
million.
1.40 "Historic Site" means any portion of a property which may qualify
as "historic property" as defined under Haw. Rev. Stat. Section 6E-2.
1.41 "Immediate Family" means a Person's spouse, parents, in-laws,
children, and siblings.
1.42 "IRS" means the Internal Revenue Service.
1.43 "Knows", "known" and "knowledge", when used with reference to the
Corporation or the Partnership, means the actual knowledge of any director or
executive officer of the Corporation or the General Partner of the Partnership,
respectively, or the knowledge which such a director or executive officer should
have after reasonable inquiry with respect to the matter in question.
5
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1.44 "Limited Partnership Agreement" means the Agreement of Limited
Partnership of Mauna Loa Macadamia Partners, L.P., as amended from time to time.
1.45 "NYSE" means the New York Stock Exchange.
1.46 "Partnership Scheduled Contracts" has the meaning set forth in
Section 5.14.
1.47 "Partnership Schedules" means the schedules prepared and
delivered by the Partnership pursuant to this Agreement.
1.48 "Partnership Units" mean the Class A Units of the Partnership.
1.49 "Person" means any individual, corporation, association,
partnership, limited liability company, trust, joint venture, other entity,
government, or governmental department or agency.
1.50 "Proxy Statement" means the Joint Proxy Statement/Prospectus that
is used to solicit proxies for the Stockholders' Meeting and the Unitholders'
Meeting, and to offer and sell the Partnership Units to be issued in connection
with the Merger.
1.51 "Related Group of Persons" means Affiliates, members of an
Immediate Family, or Persons the obligations of whom would be attributed to
another Person pursuant to the regulations promulgated by the SEC.
1.52 "S-4" means the registration statement on Form S-4 to be filed
with the SEC relating to the registration under the Securities Act of the
Depositary Units to be issued in connection with the Merger.
1.53 "SEC" means the Securities and Exchange Commission.
1.54 "SEC Filings of the Corporation" means all reports, registration
statements, proxy statements, or other filings made by the Corporation with the
SEC during the time period from March 31, 1993 through the date of this
Agreement.
1.55 "SEC Filings of the Partnership" means all reports, registration
statements, proxy statements, or other filings made by Partnership with the SEC
during the time period from December 31, 1992 through the date of this
Agreement.
1.56 "Securities Act" means the Securities Act of 1933, as amended.
1.57 "Stockholders' Meeting" means the meeting of the Corporation's
stockholders referred to in Section 6.6, including any adjournments or
postponements thereof.
6
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1.58 "Surviving Entity" means the business entity surviving the
Merger.
1.59 "Taxes" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, business,
occupation, premium, windfall profits, environmental (including taxes under
Section 59A of the Code), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, workers' compensation,
disability, Pension Guaranty Benefit Corporation premium, real property,
personal property, ad valorem, sales, use, transfer, conveyance, registration,
value added, alternative, or add-on minimum, estimated, or other taxes, or
assessments in the nature of taxes, of any kind whatsoever and however
denominated, including any interest, penalty, or addition thereto, whether
disputed or not.
1.60 "Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to or required to be filed
in connection with any Taxes, including any schedule or attachment thereto, and
including any amendment thereof.
1.61 "Transfer Agent" means the Depositary or any bank, trust company,
or other Person appointed by the Partnership to act as transfer agent for
Depositary Receipts.
1.62 "Transfer Application" means a request for admission as a
Substituted Limited Partner or Additional Limited Partner, an agreement to be
bound by the terms of the Limited Partnership Agreement and the Depositary
Agreement, a power of attorney, and the provision of such other information as
the Partnership shall request in such forms as are approved by the Partnership,
as provided by the Limited Partnership Agreement.
1.63 "Understanding" means any contract, agreement, understanding,
commitment, or offer, whether written or oral, which is, or to the knowledge of
the Corporation or the Partnership, as applicable, if accepted by another
Person is reasonably likely to become, a binding obligation of such entity.
1.64 "Unit Certificate" means a non-negotiable certificate issued by
the Partnership evidencing ownership of one or more Partnership Units.
1.65 "Unitholders' Meeting" means the meeting of Partnership
unitholders referred to in Section 7.5, including any adjournments or
postponements thereof.
ARTICLE II
THE MERGER AND RELATED MATTERS
2.1 The Merger. The Merger shall become effective at the date and
----------
time of filing with the Secretary of State of Delaware of a duly executed and
verified certificate of
7
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merger ("Certificate of Merger") (or at such later effective date and time as
may be agreed by the parties and set forth in the Certificate of Merger) in
accordance with applicable provisions of Delaware law. At the Effective Time,
the effects of the Merger shall be as provided in the applicable provisions of
Delaware law, including without limitation Section 17-211(h) of the Delaware
RULPA and/or Sections 259(a) and 263 of the DGCL. Without limiting the
generality of the foregoing and subject thereto, at the Effective Time the
following transactions will be deemed to have occurred simultaneously:
(a) The Corporation shall be merged with and into the Partnership with
the Partnership being the Surviving Entity, the separate corporate existence of
the Corporation shall cease, and the Partnership shall continue its existence as
the Surviving Entity under the laws of the State of Delaware;
(b) All the properties, rights, privileges, powers, and franchises of
the Partnership and the Corporation shall be vested in the Partnership as the
Surviving Entity, and all debts, liabilities, obligations and duties of the
Partnership and the Corporation shall become the debts, liabilities,
obligations, and duties of the Partnership as the Surviving Entity;
(c) The Partnership as the Surviving Entity shall succeed to and
assume all the rights, privileges, liabilities, and obligations of the
Corporation, under each and every note, license, agreement, contract,
arrangement, or other instrument or obligation of the Partnership and the
Corporation;
(d) Each Partnership Unit issued and outstanding immediately prior to
the Effective Time shall remain an issued and outstanding Partnership Unit of
the Surviving Entity and shall not be converted or otherwise affected by the
Merger; and
(e) Each share of Corporation Stock issued and outstanding immediately
prior to the Effective Time shall be automatically canceled, shall cease to be
an issued and outstanding share of the Corporation's stock and shall be
converted into Partnership Units to be represented by Unit Certificates or
Depositary Receipts and/or the right to receive cash, as provided in Section
2.2.
2.2 Conversion of the Corporation's Stock.
-------------------------------------
(a) Exchange Ratio. Subject to the other provisions of this Article
--------------
II, (i) each share of Corporation Stock, regardless of class, issued and
outstanding immediately prior to the Effective Time shall, by virtue of the
Merger, be converted into six hundred and sixty-seven thousandths (.667) of a
Partnership Unit (the "Exchange Ratio"), and (ii) each share of Corporation
Stock, regardless of class, that is held by the Partnership or that is held as
treasury stock by the Corporation, shall be cancelled.
8
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(b) No Further Transfers. Immediately prior to the Effective Time,
--------------------
the share transfer books of the Corporation shall be closed and no transfer of
Corporation Stock shall thereafter be made or recognized.
(c) No Fractional Units. Notwithstanding any other provisions of this
-------------------
Agreement, each holder of shares of Corporation Stock who would otherwise have
been entitled to receive a fraction of a Partnership Unit (after taking into
account all shares of Corporation Stock held by such holder) shall receive, in
lieu thereof, cash (without interest) in an amount equal to such fractional part
of a Partnership Unit multiplied by the Average Price of Partnership Units. No
holder of Corporation Stock converted in the Merger will be entitled to
distributions, voting rights, or any other rights as a unitholder in respect of
any fractional share of a Partnership Unit.
(d) Calculations. The Average Price of Partnership Units, and any
------------
calculation required by Section 2.3, shall be prepared by the Partnership prior
to the anticipated Effective Time and shall be set forth in a certificate
executed by the Chief Financial Officer of the General Partner and furnished to
the Corporation on the Closing Date. Such certificate shall show the manner of
calculation in reasonable detail, and shall be conclusive absent manifest
error. For purposes of this Agreement, any calculation of the Exchange Ratio or
of a portion of a Partnership Unit shall be rounded to the nearest one-
thousandth (.001), and any cash payment shall be rounded to the nearest cent.
(e) Dissenting Shares. Each outstanding share of Corporation Stock as
-----------------
to which a written demand for appraisal has been delivered in accordance with
Section 262 of the DGCL at or prior to the vote of the Corporation's
stockholders on the Merger and not withdrawn at or prior to the time of such
vote and which is not voted in favor of the Merger shall not be converted into
Partnership Units (and/or the right to receive cash in lieu of fractional units)
unless and until the holder (a "Dissenting Stockholder") shall have failed to
perfect or shall have effectively withdrawn or lost his or her right to
appraisal of and payment for his or her shares of Corporation Stock under such
Section 262, at which time such holder's shares shall be converted in accordance
with Sections 2.2(a) through 2.2(d). The Corporation agrees that prior to the
Effective Time it will not, except with the prior written consent of the
Partnership, voluntarily make any payment with respect to, or settle or offer to
settle, any such demand. Each Dissenting Stockholder who becomes entitled,
pursuant to the provisions of said Section 262, to payment for his or her shares
of Corporation Stock shall receive payment therefor from the Partnership (but
only after the amount thereof shall have been agreed upon or finally determined
pursuant to such provisions).
2.3 Adjustments for Dilution and Other Matters.
------------------------------------------
(a) Antidilution. If prior to the Effective Time, the outstanding
------------
Partnership Units or shares of Corporation Stock shall have been increased,
decreased, changed into, or exchanged for a different number or kind of units or
securities, in each case as a result of a
9
<PAGE>
reorganization, recapitalization, reclassification, split, reverse split or
other similar change in capitalization (provided that no such action may be
taken by the Partnership or the Corporation without the other party's prior
written consent as provided herein), then an appropriate adjustment or
adjustments will be made to the Exchange Ratio.
(b) Exercise of Certain Options. If prior to the Effective Time the
---------------------------
Corporation issues more than 10,000 shares of Corporation Stock as a result of
the exercise of Corporation Options, the Exchange Ratio shall be adjusted so as
to equal the amount, rounded to the nearest one-thousandth, obtained by dividing
5,563,891 by the number of shares of Corporation Stock issued and outstanding
immediately prior to the Effective Time.
2.4 Exchange Procedures.
-------------------
(a) Exchange Agent. No later than the Effective Time, the Partnership
--------------
shall deposit with the Depositary Unit Certificates for the number of
Partnership Units issuable in the Merger, and will cause the Depositary to
deliver to the Exchange Agent Depositary Receipts in respect of the Unit
Certificates so deposited. The Partnership shall also deposit with the Exchange
Agent an amount of cash sufficient to cover payments in lieu of fractional
Partnership Units. The Exchange Agent shall not be entitled to vote or exercise
any rights of ownership with respect to Depositary Receipts held by it from time
to time hereunder, except that it shall receive and hold all distributions paid
with respect to Partnership Units represented thereby for the account of the
Persons entitled thereto. Not later than five Business Days prior to the
Effective Time, the Partnership shall give written notice to the Corporation of
the name, address, contact person and telephone number of the Exchange Agent.
(b) Exchange of Certificates. As promptly as practicable after the
------------------------
Effective Time, the Partnership shall cause the Exchange Agent to send to each
holder of record of Corporation Stock immediately prior to the Effective Time
transmittal materials (including the Partnership's then-current form of Transfer
Application) for use in exchanging Corporation Stock certificates. Each holder
of a certificate formerly representing Corporation Stock who surrenders or has
surrendered such certificate (or customary affidavits and indemnification
regarding the loss or destruction of such certificate) to the Exchange Agent,
together with properly executed transmittal materials and an executed Transfer
Application, shall, upon acceptance thereof, be entitled to a Depositary Receipt
(or if no Transfer Application is submitted shall be entitled to a Unit
Certificate) representing the number of whole Partnership Units to which such
holder is entitled (and cash in lieu of fractional Partnership Units to which
such holder would otherwise be entitled). The Exchange Agent shall accept such
stock certificate upon compliance with such reasonable and customary terms and
conditions as the Exchange Agent may impose to effect an orderly exchange
thereof in accordance with normal practices. The Partnership shall not be
obligated to deliver Unit Certificates, Depositary Receipts, or cash in lieu of
fractional Partnership Units to which any former holder of Corporation Stock is
entitled as a result of the Merger until such holder
10
<PAGE>
surrenders his certificate or certificates representing shares of Corporation
Stock (or customary affidavits and indemnification regarding the loss or
destruction of such certificate) for exchange, together with properly executed
transmittal materials, as provided in this Section 2.4. If any Depositary
Receipt or Unit Certificate, or any check representing cash and/or declared but
unpaid distributions, is to be issued in a name other than that in which a
certificate surrendered for exchange is issued, the certificate so surrendered
shall be properly endorsed and otherwise in proper form for transfer and the
Person requesting such exchange shall affix any requisite stock transfer tax
stamps to the certificate surrendered or provide funds for their purchase or
establish to the satisfaction of the Exchange Agent that such taxes are not
payable.
(c) Affiliates. Certificates surrendered for exchange by any Person
----------
constituting an "affiliate" of the Corporation for purposes of Rule 145 under
the Securities Act who has been so designated by the Partnership in a notice
delivered to the Exchange Agent, shall not be exchanged for Depositary Receipts
or Unit Certificates, until the Partnership notifies the Exchange Agent that it
has received a written agreement from such Person as contemplated by Section
8.5(a).
2.5 Admission, Voting and Distributions. Stockholders of record of
-----------------------------------
the Corporation immediately prior to the Effective Time shall be admitted to the
Partnership as limited partners in accordance with the provisions of the Limited
Partnership Agreement, as amended pursuant to Section 2.8, and (until such
holder's Partnership Units are transferred of record, as provided by the Limited
Partnership Agreement then in effect) shall thereafter be entitled to vote, and
to receive distributions from the Partnership, in respect of the number of whole
Partnership Units into which such holder's shares of Corporation Stock have been
converted in the Merger. The Partnership Units into which any such holder's
Corporation Stock is converted and for which no Depositary Receipt has been
issued to such holder shall be transferable only as and to the extent provided
by the Limited Partnership Agreement with respect to Partnership Units
represented by Unit Certificates. Until surrendered or exchanged in accordance
with the provisions of Section 2.4 of this Agreement, at and after the Effective
Time each certificate theretofore representing shares of Corporation Stock shall
for all purposes represent only the right to receive Unit Certificates or
Depositary Receipts with respect to the number of whole Partnership Units into
which such shares have been converted, together with cash in lieu of fractional
Partnership Units.
2.6 No Liability. Neither the Partnership, the Corporation, nor the
------------
Exchange Agent shall be liable to any holder of shares of Corporation Stock for
any Partnership Units (or distributions with respect thereto) or cash delivered
to a public official pursuant to any applicable abandoned property, escheat, or
similar law.
2.7 Withholding Rights. The Partnership or the Exchange Agent shall
------------------
be entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of shares of Corporation Stock such
amounts as the Partnership or
11
<PAGE>
the Exchange Agent is required to deduct and withhold with respect to the making
of such payment under the Code, or any provision of state, local, or foreign tax
law. To the extent that amounts are so withheld by the Partnership or the
Exchange Agent, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the shares of Corporation Stock
in respect of which such deduction and withholding was made by the Partnership
or the Exchange Agent.
2.8 Limited Partnership Agreement of Surviving Entity; Fiscal Year.
--------------------------------------------------------------
At the Unitholders' Meeting to be held pursuant to Section 7.5, there shall be
submitted for approval of the unitholders amendments to the Partnership's
Certificate of Limited Partnership and its Limited Partnership Agreement: (a)
changing the name of the Partnership to Hawaii Land & Farming Company, L.P.; (b)
eliminating the provisions thereof pertaining to Class B Units; (c) replacing
all existing provisions concerning mandatory distributions of cash flow with
provisions that confer on the General Partner discretion to determine the amount
and timing of all distributions; (d) eliminating provisions concerning the
Partnership's special general partner (subject to the acquisition by the present
General Partner of the general partnership interest held by the special general
partner, or the conversion of such interest to a limited partnership interest
represented by Partnership Units); (e) modifying the Limited Partnership
Agreement in such respects as may in the good faith business judgment of the
General Partner be necessary or desirable to reflect the broadened scope of the
Partnership's business following the Merger; and (f) accomplishing such other
changes, if any, as may be proposed by the General Partner. The Partnership's
Certificate of Limited Partnership and Limited Partnership Agreement, as it is
proposed by the General Partner to be amended, shall be subject to approval by
the Negotiating Committee of the Corporation's Board of Directors (which
approval shall not be unreasonably withheld or delayed). Such amendments shall
be effective prior to the Effective Time. At the Effective Time, the Limited
Partnership Agreement of the Partnership, as in effect immediately prior to the
Effective Time, shall continue to be the limited partnership agreement of the
Surviving Entity until it shall be further amended in accordance with its terms.
The Partnership's fiscal year of January 1 to December 31 shall not be altered
in connection with the Merger.
2.9 Management of the Surviving Entity. At the Effective Time of the
----------------------------------
Merger, Mauna Loa Resources Inc. shall continue to serve as the General Partner
of the Partnership, and neither its corporate structure (including its articles
and bylaws) nor its directors and officers shall be affected by the transactions
contemplated hereby, although it is anticipated that prior to the Effective Time
Mauna Loa Resources Inc. will change its name to HLF, Inc. and that as soon as
practicable after the Effective Time the number of members of its Board of
Directors will be increased from five (5) to seven (7), consisting of the
following persons (unless unable or unwilling to serve): John W.A. Buyers, Kent
T. Lucien, David A. Heenan, Seth A. Bakes, Paul C.T. Loo, James H. Case, and
Ralph C. Hook, Jr.
2.1 Options. Pursuant to the terms of the Corporation Stock Option
-------
Plan, each option issued thereunder that has not been exercised prior to the
Effective Time shall be
12
<PAGE>
cancelled as of the Effective Time. No such option shall be assumed by the
Partnership or otherwise converted into the right to receive Partnership Units.
The Corporation shall be permitted to enter into agreements with holders of each
unexercised in-the-money Corporation Stock Option providing for the cancellation
and settlement thereof immediately prior to the Effective Time in consideration
of a cash payment by the Corporation in the amount specified in such agreement;
provided, however, that the form and substance of such agreements shall require
the written approval of the Partnership's General Partner (which shall not be
unreasonably withheld or delayed), and (iii) the aggregate amount paid by the
Corporation pursuant to such agreements with all optionees shall not exceed
$50,000.
ARTICLE III
THE CLOSING
3.1 Closing. Upon the terms and subject to the conditions of this
-------
Agreement, the closing of the Merger (the "Closing") will take place at 9:00
a.m. (Hawaii time), on the first Friday (unless such date is not a Business Day,
in which case it will be the preceding Business Day) occurring after the
satisfaction of the conditions set forth in Articles IX, X, and XI, or at such
other time and date as the parties may agree. The Closing will be conducted at
the offices of Carlsmith Ball Wichman Case & Ichiki, 1001 Bishop Street, Suite
2200, Honolulu, Hawaii, or such other location as the parties may agree.
3.2 Filings. On the Closing Date, or as soon as practicable
-------
thereafter, the Partnership shall cause to be duly filed with the Delaware
Secretary of State, as required by applicable law and regulations, a duly
executed Certificate of Merger, together with all requisite supporting
documents. The Partnership and the Corporation shall each execute, deliver,
certify, file and/or record every document, certificate, or other instrument
that is required under Delaware law or required under the law of any other state
in which the Partnership or the Corporation is qualified to do business or owns
property in order for the effectiveness of the Merger to be recognized.
3.3 Documents to be Delivered. At the Closing, the parties hereto
-------------------------
shall deliver, or cause to be delivered, such documents or certificates as may
be necessary, in the reasonable opinion of counsel for any of the parties, to
effectuate the transactions contemplated by this Agreement. From and after the
Effective Time, each of the parties hereto hereby covenants and agrees, without
the necessity of any further consideration whatsoever, to execute, acknowledge,
and deliver any and all other documents and instruments and take any and all
such other action as may be reasonably necessary or desirable to effectuate the
transactions set forth herein or contemplated hereby, and the appropriate
partners, officers and directors of the parties hereto shall execute and
deliver, or cause to be executed and delivered, all such documents as may
reasonably be required to effectuate such transactions. Without limiting the
foregoing, if at any time the Surviving Entity shall consider or be advised that
any further assignment, conveyance or assurance is
13
<PAGE>
necessary or advisable to vest, perfect or confirm of record in the Surviving
Entity the title to or its assumption of any property, right or obligation of
the Partnership or the Corporation, or otherwise to carry out the provisions
hereof, the proper representatives of the Partnership, or of the Corporation
immediately prior to the Effective Time, shall execute and deliver any and all
proper deeds, assignments, assurances and assumptions and do all things
necessary or proper to vest, perfect or convey title to such property or right
in or accomplish or evidence the assumption of any obligation by the Surviving
Entity, and otherwise to carry out the provisions hereof.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE CORPORATION
The Corporation represents and warrants to the Partnership as follows:
4.1 Incorporation, Standing, and Power. The Corporation has been
----------------------------------
duly incorporated and is validly existing as a corporation in good standing
under the laws of the State of Delaware. The Corporation has all requisite
corporate power and authority to own, lease, and operate its properties and
assets and to carry on its business as presently conducted, and is duly
qualified and in good standing to do business in each jurisdiction in which the
nature of its business or the location of any of its owned or leased properties
makes such qualification necessary, other than in such jurisdictions where the
failure to be so licensed would not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the business,
financial condition, or results of operations of the Corporation.
4.2 Capitalization. The authorized capital stock of the Corporation
--------------
consists of 20,000,000 shares of Class A Common Stock, $0.01 par value,
5,750,000 shares of Class B Common Stock, $0.01 par value, and 1,000,000 shares
of Preferred Stock, $0.01 par value, issuable in series. As of December 1,
1997, 3,492,847 shares of Class A Common Stock, 4,838,818 shares of Class B
Common Stock, and no shares of Preferred Stock were outstanding. Since December
1, 1997, the Corporation has not issued any shares of its capital stock, except
pursuant to exercise of Corporation Options, and since that date has not issued
or agreed to issue any options, warrants or rights to acquire any shares of its
capital stock. All of the outstanding shares of Corporation Stock are duly
authorized, validly issued, fully paid and nonassessable, and neither are
entitled to, nor were issued in violation of, any preemptive rights. Except for
Corporation Options to acquire a total of 204,000 shares of the Class A Common
Stock, as of the date of this Agreement, there were no outstanding options,
warrants, or other rights in or with respect to the unissued shares of
Corporation Stock nor any securities convertible into such stock, and the
Corporation is not obligated to issue any additional shares of Corporation Stock
or any additional options, warrants, or other rights in or with respect to the
unissued shares of such stock or any other securities convertible into such
stock. Schedule 4.2 sets forth, as of the date of this Agreement, the name of
each holder
14
<PAGE>
of a Corporation Option, the number of shares of Corporation Stock covered
thereby, the exercise price per share thereunder and the expiration date
thereof.
4.3 Subsidiaries. Except as disclosed in the SEC Filings of the
------------
Corporation, the Corporation does not own, directly or indirectly, any
outstanding stock of or other equity or voting interest in any corporation,
partnership, joint venture, or other entity.
4.4 Financial Statements. The Corporation has previously made
--------------------
available to the Partnership copies of the Financial Statements of the
Corporation. Each of the Financial Statements of the Corporation (as well as
the financial statements of the Corporation included in any of its subsequent
Annual Reports on Form 10-K or Quarterly Reports on Form 10-Q): (a) presents or
will present fairly the financial condition of the Corporation as of the
respective dates indicated and its results of operations and changes in
financial position/cash flow, as applicable, for the respective periods then
ended (subject, in the case of unaudited interim financial statements, to normal
recurring adjustments and the absence of certain footnote information); (b) have
been or will be prepared in accordance with generally accepted accounting
principles consistently applied (except as otherwise indicated in such financial
statements for periods ended prior to the date of this Agreement or, in the case
of financial statements for periods ended after the date of this Agreement,
except for such changes as may be required by the Financial Accounting Standards
Board); and (c) are, or in the case of subsequent reports will be, in accordance
with the books and records of the Corporation, which books and records are and
will be complete and accurate in all material respects.
4.5 SEC/Regulatory Filings. Since March 31, 1993 the Corporation has
----------------------
filed all material reports, registrations, and statements that were required to
be filed with the SEC and any other applicable federal, state, or local
governmental or regulatory authority (other than tax authorities). The
Corporation has previously made available to the Partnership a copy of all SEC
Filings of the Corporation. As of their respective dates, the SEC Filings of
the Corporation complied in all material respects with the requirements of their
respective forms, the information contained therein was true and correct in all
material respects and did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
4.6 Authority of the Corporation. The execution and delivery by the
----------------------------
Corporation of this Agreement and, subject to the requisite approval of the
stockholders of the Corporation, the consummation of the transactions
contemplated hereby, have been duly and validly authorized by all necessary
corporate action on the part of the Corporation, including without limitation
approval by a vote of the Board of Directors of the Corporation, and this
Agreement is a valid and binding obligation of the Corporation, enforceable in
accordance with its terms, except as the enforceability thereof may be limited
by bankruptcy, liquidation, receivership, conservatorship, insolvency,
moratorium, or other similar laws affecting the
15
<PAGE>
rights of creditors generally and by general equitable principles (the
"Bankruptcy Exception"). Except as set forth in Schedule 4.6, neither the (i)
execution and delivery by the Corporation of this Agreement; (ii) the
consummation of the Merger or the transactions contemplated hereby; nor (iii)
compliance by the Corporation with any of the provisions hereof, will: (a)
conflict with or result in a breach of any provision of the certificate of
incorporation, as amended, or bylaws, as amended, of the Corporation; (b)
subject to receipt of such consents and the giving of such notifications as are
set forth in Schedule 4.6, constitute a breach of or result in a default (or
give rise to any rights of termination, cancellation or acceleration, or any
right to acquire any securities or assets) under any of the terms, conditions,
or provisions of any note, bond, mortgage, indenture, franchise, license,
permit, agreement, or other instrument or obligation to which the Corporation is
a party, or by which the Corporation or any of its properties or assets is
bound, if, in any such circumstances, such event would reasonably be expected to
have consequences materially adverse to the Corporation; or (c) violate any
order, writ, injunction, decree, statute, rule, or regulation applicable to the
Corporation or any of its properties or assets, if such violation would
reasonably be expected to have consequences materially adverse to the
Corporation. Except as set forth in Schedule 4.6, no consent of, approval of,
notice to, or filing with any regulatory agency or governmental authority having
jurisdiction over any aspect of the business or assets of the Corporation, and
no consent of, approval of, or notice to any other Person that, in either case,
if not obtained or given would reasonably be expected to have consequences
materially adverse to the Corporation, is required in connection with the
execution and delivery by the Corporation of this Agreement or the consummation
by the Corporation of the Merger or the transactions contemplated hereby, except
(i) the approval of this Agreement and the transactions contemplated hereby by
the stockholders of the Corporation; (ii) the filing of the Certificate of
Merger with the Delaware Secretary of State and of appropriate merger documents
with other relevant authorities pursuant to Section 3.2; and (iii) such filings,
approvals, consents, or waivers as are required under federal or state
securities laws.
4.7 Insurance. Set forth on Schedule 4.7 is a list of all bonds and
---------
all policies of insurance affording coverage to the Corporation as of December
9, 1997, showing the name of the issuer or insurance company, the nature of the
coverage, limits, the annual premiums and the expiration dates. The Corporation
has made available to the Partnership copies of all such policies of insurance
and bonds. The Corporation has coverage under such policies of insurance and
bonds with respect to its assets and businesses against such casualties and
contingencies and in such amounts, types, and forms as its directors and
executive officers believe to be appropriate for its businesses, operations,
properties, and assets. All such insurance policies and bonds are in full force
and effect. Except as set forth on Schedule 4.7, no insurer under any such
policy or bond has canceled or indicated an intention to cancel or not to renew
or to materially amend any such policy or bond or generally disclaimed liability
thereunder, there is no default under any such policy or bond and all material
claims of the Corporation thereunder have been filed in a timely fashion.
16
<PAGE>
4.8 Title to Assets. The Corporation has good and marketable title
---------------
to all its material properties and assets (other than real property) owned or
stated to be owned by the Corporation (including without limitation all personal
and intangible properties reflected in the Corporation's September 30, 1997
Quarterly Report on Form 10-Q or acquired thereafter and in either case not
subsequently disposed of for fair value in the ordinary course of business).
All such properties and assets are free and clear of all mortgages, liens,
encumbrances, pledges, or charges of any kind or nature except: (a) as set forth
in the SEC Filings of the Corporation; (b) for liens or encumbrances for current
taxes not yet due; (c) for liens that are not substantial in character, amount,
or extent or that do not materially detract from the value, or interfere with
present use, of the property subject thereto or affected thereby, or otherwise
materially impair the conduct of business of the Corporation; or (d) as set
forth on Schedule 4.8.
4.9 Real Estate. Schedule 4.9 sets forth a list of real property
-----------
owned by the Corporation as of the date hereof (the "Corporation Real
Property"). The Corporation as of the date of this Agreement leases no real
property other than a house on Maui and its offices on the islands of Maui and
Hawaii. The Corporation has good and marketable title to the Corporation Real
Property, free and clear of all mortgages, covenants, conditions, restrictions,
easements, liens, security interests, charges, claims, assessments, and
encumbrances (collectively "encumbrances"), except (a) for rights of lessors,
lessees, co-lessees, or sublessees in such matters that are reflected in the
applicable lease; (b) for taxes not yet due and payable or being contested by
the Corporation in good faith; (c) for encumbrances of public record; (d) for
such imperfections of title and encumbrances, if any, as do not materially
detract from the value of or materially interfere with the present use of such
property; and (e) as described in the SEC Filings of the Corporation or set
forth on Schedule 1.2 or Schedule 4.9.
4.10 Litigation. Except as specifically identified in the SEC Filings
----------
of the Corporation or on Schedule 4.10, there are no private or governmental
suits, claims, actions, or proceedings pending, nor to the Corporation's
knowledge, threatened against the Corporation (whether as a defendant, cross-
defendant or third party defendant) or against any of its directors, officers,
or employees relating to the performance of their duties in such capacities or
against or affecting any properties of the Corporation that individually or in
the aggregate has had or would reasonably be expected to have a material adverse
effect upon the business, financial condition, or results of operations of the
Corporation or materially to hinder or delay the Merger or that may involve a
payment by the Corporation in excess of $100,000 of applicable insurance
coverage. Also, except as specifically identified in the SEC Filings of the
Corporation or on Schedule 4.10, there are no material judgments, decrees,
stipulations, or orders against the Corporation enjoining it or any of its
directors, officers, or employees in respect of, or the effect of which is to
prohibit, any business practice or the acquisition of any property or the
conduct of business in any area.
17
<PAGE>
4.11 Taxes.
-----
(a) The Corporation has filed all Tax Returns required to be filed by
it on or before the date hereof and has paid all Taxes, together with any
interest and penalties owing in connection therewith, shown on such Tax Returns
to be due in respect of the periods covered by such Tax Returns or which are
required to be paid by it without the filing of a Tax Return. The Corporation
does not have any known liability for Taxes with respect to such periods in
excess of the amounts so paid, except (a) to the extent accruals or reserves
therefor are set forth in the Financial Statements of the Corporation, (b) for
such taxes as are being contested in good faith, or (c) as otherwise set forth
in Schedule 4.11. Schedule 4.11 sets forth a complete list of (i) all Tax
Returns of the Corporation for periods ending before the date of this Agreement
which have not yet been filed and the due dates therefor; (ii) dates through
which the IRS or any other taxing authority has examined the Tax Returns of the
Corporation; (iii) all Tax Returns of the Corporation for which the statute of
limitations for the assessment of Taxes has not yet expired, the expiration
date(s) of such statutes of limitations, and whether such statutes of
limitations have been requested to be extended; and (iv) all Tax Returns of the
Corporation that have been examined by any taxing authority or are presently
under examination by any taxing authority and the results or status of such
examinations. Except as set forth on Schedule 4.11, neither the IRS nor any
other taxing authority is now asserting or to the knowledge of the Corporation
threatening or proposing to assert any deficiency or claim for material
additional Taxes of the Corporation, nor is any administrative or court
proceeding pending with respect thereto. Except as set forth in Schedule 4.11,
the Corporation has not entered into a closing agreement or similar arrangement
with the IRS or any other taxing authority that is presently in effect. The
Corporation has made available to the Partnership true and complete copies of
all Tax Returns filed by the Corporation for all years for which the statute of
limitations for the assessment of Taxes has not yet expired. The Corporation has
complied with the information reporting requirements under the Code in all
material respects.
(b) As of the Effective Time, the Corporation will have timely filed
all Tax Returns not due as of the date hereof but required to be filed prior to
the Effective Time (taking into account valid extensions) and paid all Taxes,
together with any interest and penalties owing in connection therewith, shown on
such Tax Returns to be due in respect of the periods covered by such Tax Returns
or which are required to be paid by it without the filing of a Tax Return. The
positions taken by the Corporation in connection with the Tax Returns described
in the preceding sentence and in Section 4.11(a) were (or in the case of the
returns not yet filed, will be) asserted with reasonable cause and in good
faith. The Corporation has made available to the Partnership true and complete
copies of its Tax Returns for the fiscal year ended March 31, 1997.
(c) Except as set forth in Schedule 4.11, the Corporation has not
agreed to nor is required to make any adjustment under Section 481(a) of the
Code by reason of a change in accounting method or otherwise. Except as set
forth in Schedule 4.11, to the
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knowledge of the Corporation, the Corporation has no liability for Taxes,
including employment taxes, of any Person other than the Corporation under
Treasury Regulation Section 1.1502-6, or as a transferee or successor, or
otherwise. Except as set forth in Schedule 4.11, the Corporation has not made,
nor is it obligated to make, nor is it a party to any agreement that would
reasonably be expected to obligate it to make, any payments that are not
deductible pursuant to Section 280G of the Code.
4.12 Compliance with Laws and Regulations. The Corporation is not in
------------------------------------
default under or in breach of any provision of its certificate of incorporation
or bylaws, each as amended, or in violation of any law, ordinance, rule, or
regulation promulgated by any governmental agency or regulatory authority, where
such default, breach or violation would reasonably be expected to have a
material adverse effect on the business, financial condition, or results of
operations of the Corporation. Except as disclosed in SEC Filings of the
Corporation, no governmental agency or regulatory authority has initiated or, to
the best knowledge of the Corporation threatened, any proceeding or
investigation into the business or operations of the Corporation.
4.13 Performance of Obligations. The Corporation has performed in all
--------------------------
material respects all of the obligations required to be performed by it to date,
is not in default under or in breach of any term or provision of any material
covenant, contract, lease, indenture or any other covenant to which it is a
party, is subject or is otherwise bound, and no event has occurred that, with
the giving of notice or the passage of time or both, would constitute such
default or breach, where such nonperformance, default or breach would have a
material adverse effect on the business, financial condition, or results of
operations of the Corporation. To the Corporation's knowledge, except as
disclosed in the SEC Filings of the Corporation, no party with whom the
Corporation has an agreement that is of material importance to the business of
the Corporation is in default thereunder.
4.14 Employees.
---------
(a) There are no controversies pending or, to the knowledge of the
Corporation threatened, between the Corporation and any of its employees that
are likely to have a material adverse effect on the business, financial
condition, or results of operations of Corporation. The Corporation is not a
party to any collective bargaining agreement with respect to any of its
employees or any labor organization to which its employees or any of them
belong.
(b) Except as disclosed on Schedule 4.14, in the SEC Filings of the
Corporation, or as otherwise specifically provided by this Agreement, there are
no Understandings with respect to the employment of any officer or employee of
the Corporation that are not terminable by the Corporation without liability on
not more than thirty (30) days' notice.
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(c) Except as disclosed in the Financial Statements of the
Corporation, in the SEC Filings of the Corporation, or on Schedule 4.14, all
material sums due for employee compensation have been paid or accrued and all
employer contributions for employee benefits, including deferred compensation
obligations, and any benefits under any Employee Plan have been duly and
adequately paid or provided for in accordance with plan documents.
(d) Schedule 4.14 sets forth the name of each director, officer,
employee, agent, or representative of the Corporation and every other Person
entitled to receive any benefit, any increase in benefits, any acceleration of
vesting or benefits, or any payment of any amount under any existing employment
agreement, severance plan, or other benefit plan or Understanding as a result of
the consummation of any transaction contemplated in this Agreement (other than
financial advisors, accountants, attorneys, proxy solicitors, information
agents, printers, or other Persons providing services to the Corporation or the
Partnership of a type customarily provided in connection with transactions like
those contemplated by this Agreement), and with respect to each such Person,
sets forth the nature of such benefit, increase, or acceleration, or the amount
of such payment, the event triggering the benefit increase, acceleration or
payment, and the date of, and parties to, such employment agreement, severance,
or other benefit plan or Understanding. The Corporation has previously made
available to the Partnership a complete and accurate listing of the names and
current annual salary rates of all Persons employed by the Corporation showing
for each such Person the amounts paid or payable as salary, bonus payments, and
any indirect compensation for the year ended March 31, 1997, the names of all of
the directors and officers of the Corporation, and the names of all Persons, if
any, holding tax or other powers of attorney for the Corporation.
4.15 Brokers and Finders. Except for financial advisory services
-------------------
performed for the Corporation by Hambrecht & Quist pursuant to an agreement
dated July 8, 1997, a copy of which has been furnished to the Partnership,
neither the Corporation nor any of its officers, directors, employees, or
agents, has employed any broker or finder or incurred any liability for any
financial advisory fees, brokerage fees, commissions, or finder's fees in
connection with this Agreement or the transactions contemplated hereby.
4.16 Material Contracts. Except as set forth as an exhibit to the
------------------
Corporation's 1997 Annual Report on Form 10-K, any of the subsequent SEC Filings
of the Corporation, on Schedule 4.16 or elsewhere in the Corporation Schedules
(all items described in this Section 4.16, including those so set forth as
exhibits, being referred to herein as "Corporation Scheduled Contracts"), the
Corporation is not as of the date of this Agreement a party or otherwise subject
to:
(a) any employment, deferred compensation, bonus, or consulting
contract that requires payment by the Corporation of $100,000 or more per annum;
20
<PAGE>
(b) any contract or agreement that restricts the Corporation (or would
restrict any Affiliate of the Corporation after the Effective Time) from
competing in any line of business with any Person or using or employing the
services of any Person;
(c) any lease of real or personal property providing for annual lease
payments by or to the Corporation in excess of $100,000 per annum;
(d) any mortgage of real property or any pledge, conditional sales
contract, security agreement, option, or any other similar agreement with
respect to any interest of the Corporation in personal property, which real or
personal property in any such case has a value of $100,000 or more;
(e) any agreement to acquire equipment or any commitment to make
capital expenditures in excess of $100,000;
(f) other than agreements entered into in the ordinary course of
business (including agreements entered into in connection with land development
and sales and home building and sales of the properties identified in Schedule
1.2), any agreement for the purchase, sale or lease of any real or personal
property, or for the grant of any preferential right to purchase, sell or lease
any such property or asset, that in any such case involves aggregate
consideration of $100,000 or more;
(g) any agreement for the borrowing of any money (other than
liabilities or borrowings made in the ordinary course of business since
September 30, 1997 not exceeding, individually or in the aggregate, $500,000 at
any one time outstanding);
(h) any guarantee or indemnification agreement made outside the
ordinary course of business which involves potential liability likely to exceed
$100,000;
(i) any material agreement which would be terminable other than at the
election of the Corporation as a result of the consummation of the transactions
contemplated by this Agreement;
(j) any Understanding of any other kind (other than Understandings
entered into by the Corporation in the ordinary course of its business or that
otherwise relate to the sale of the properties identified in Schedule 1.2) that
either (i) is not terminable on 30 days' or less notice and involves future
payments or receipts or performances of services or delivery of items requiring
payment of $100,000 or more to or by the Corporation or (ii) that is otherwise
material to the business, financial condition, or results of operations of the
Corporation.
The Corporation has made available to the Partnership copies of all Corporation
Scheduled Contracts, including all amendments and supplements thereto.
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4.17 Absence of Material Change. Except as set forth in the
--------------------------
Corporation's Quarterly Reports on Form 10-Q for the quarters ended June 30,
1997 or September 30, 1997, or in other SEC Filings of the Corporation, or
Schedules 1.2, 4.16 or elsewhere in this Agreement or the Corporation Schedules,
since March 31, 1997, the business of the Corporation has been conducted only in
the ordinary course, substantially in the same manner as theretofore conducted
and there has not occurred: (i) any event (including the incurrence of
liabilities of any nature, whether or not accrued, contingent or otherwise)
that, individually or in the aggregate, have had or would reasonably be expected
to have a material adverse effect on the business, financial condition or
results of operations of the Corporation; (ii) any amendment to the certificate
of incorporation or bylaws of the Corporation; (iii) any declaration, setting
aside, or payment of any dividend or any other distribution in respect of the
capital stock of the Corporation; or (iv) any change by the Corporation in
accounting principles or methods or tax methods, except as required or permitted
by the Financial Accounting Standards Board.
4.18 Licenses and Permits. Other than as may be required to be
--------------------
obtained from time to time by the Corporation in connection with the future
development of properties it now or in the future owns or leases, the
Corporation has all material licenses and permits that are necessary for the
conduct of its business, and such licenses are in full force and effect, except
for any failure to be in full force and effect that would not, individually or
in the aggregate, reasonably be expected to have a material adverse effect on
the business, financial condition, or results of operations of the Corporation.
4.19 No Material Liabilities; Environmental.
--------------------------------------
(a) Schedule 4.19 sets forth all material liabilities of the
Corporation, including liabilities for Hazardous Substances or under any
Environmental Law, contingent or otherwise, that are not reflected or reserved
against in the Financial Statements of the Corporation, except for liabilities
disclosed in the SEC Filings of the Corporation and liabilities incurred or
accrued since September 30, 1997 in the ordinary course of business that have
not had and are not reasonably expected to have a material adverse effect on the
business, financial condition, or results of operations of the Corporation.
Except as set forth in Schedule 4.19, the Corporation knows of no basis for the
assertion against it of any liability, obligation, or claim that could
reasonably be expected to have a material adverse effect on the business,
financial condition, or results of operations of the Corporation.
(b) Except as set forth in Schedule 4.19 or in the SEC Filings of the
Corporation, to the Corporation's knowledge, all of the properties and
operations of the Corporation are in compliance in all material respects with
all Environmental Laws applicable to such properties and operations.
(c) Except as set forth in Schedule 4.19 or in the SEC Filings of the
Corporation, to the Corporation's knowledge, the Corporation has obtained and is
in
22
<PAGE>
compliance with all material permits, licenses, and authorizations that are
required for its operations under Environmental Laws.
(d) Except as set forth in Schedule 4.19 or in the SEC Filings of the
Corporation, or except to the extent that as a result thereof, no material
liability has been incurred or would reasonably be expected to be incurred by
the Corporation: (i) to the Corporation's knowledge, no Hazardous Substances
exist on, about, or within or have been used, generated, stored, transported,
disposed of on, or released from, any of the properties of the Corporation
except in accordance in all material respects with Environmental Laws; (ii) the
Corporation has no knowledge that any prior owners, occupants, or operators of
any such properties ever deposited, disposed of, or allowed to be deposited or
disposed of, in, on, or under or handled or processed on, or released, emitted,
or discharged from, such properties any Hazardous Substances except in
accordance in all material respects with Environmental Laws; and (iii) the use
that the Corporation has made, makes, or intends to make of its properties will
not result in the use, generation, storage, transportation, accumulation,
disposal, or release of any Hazardous Substance on, in, or from any such
properties except in accordance in all material respects with applicable
Environmental Laws.
(e) Except as set forth in Schedule 4.19 or in the SEC Filings of the
Corporation, there is no action, suit, proceeding, investigation, or inquiry
before any court, administrative agency or other governmental authority pending,
or, to the knowledge of the Corporation, threatened against the Corporation
relating in any way to any violation of any applicable Environmental Law.
Except as set forth in Schedule 4.19 or in the SEC Filings of the Corporation,
to the knowledge of the Corporation, it has no material liability for remedial
action with respect to an Environmental Law, nor has the Corporation received
any written requests for information relating to any material violation of any
Environmental Law from any governmental authority with respect to the condition,
use, or operation of any of its properties, nor has it received any written
notice from any governmental authority or any written notice from any other
Person with respect to any material violation of or material liability for any
remedial action under any Environmental Law.
(f) Except as set forth in Schedule 4.19 or in the SEC Filings of the
Corporation, to the knowledge of the Corporation, there are no material Historic
Sites or Burial Sites on its properties.
(g) Except as set forth in Schedule 4.19 or in the SEC Filings of the
Corporation, to the knowledge of the Corporation: (i) there are no Endangered
Species or Critical Habitats on its properties; and (ii) the Corporation has
received no written notice of an investigation of Endangered Species or Critical
Habitat on its properties.
(h) The Corporation has made available to the Partnership true copies
of all environmental assessments and reports obtained by the Corporation since
January 1, 1993 with respect to properties of the Corporation and will after the
date of this Agreement upon
23
<PAGE>
request of the Partnership make available to the Partnership such additional
environmental assessments and reports as the Corporation may subsequently obtain
concerning properties of the Corporation.
(i) As used in this Section 4.19, the term "properties" shall include
all real property now owned, operated or leased by the Corporation, and all
property of which the Corporation could be deemed an "owner" or "operator" under
any applicable Environmental Law.
4.20 Employee Benefit Plans.
----------------------
(a) Schedule 4.20 sets forth all Employee Benefit Plans and any
collective bargaining agreements or labor contracts in which the Corporation
participates, or by which it is bound, including, without limitation: (i) any
profit sharing, stock bonus, employee stock ownership, deferred compensation,
bonus, stock option, stock appreciation rights, phantom stock, stock purchase,
pension, retainer, consulting, retirement, welfare, or incentive plan or
agreement; (ii) any plan providing for "fringe benefits" to its employees,
including but not limited to vacation, holiday, sick leave, disability,
severance, medical, hospitalization, dental, vision, counseling, life insurance
and other insurance plans, personal leave, employee discount, educational, and
related benefits; (iii) any written employment agreement and any other
employment agreement not terminable at will; or (iv) any other Employee Benefit
Plan (all of the foregoing being referred to collectively as the "Employee
Plans"). Except as set forth in Schedule 4.20, (i) the Corporation is in
compliance in all material respects with the reporting and disclosure
requirements of Part 1 of Subtitle IB of ERISA and the corresponding provisions
of the Code to the extent applicable to all Employee Benefit Plans; (ii) the
Corporation has performed in all material respects all of its obligations under
all Employee Plans required to be performed heretofore; and (iii) there are no
actions, suits or claims pending or, to the knowledge of the Corporation,
threatened against any Employee Plan or the assets of such plans, and to the
best knowledge of the Corporation, no facts exist which are likely to give rise
to any material actions, suits or claims against such plans or the assets of
such plans. The Corporation shall notify the Partnership in writing of any such
actions, suits, or claims existing after the date of this Agreement but before
the Effective Time.
(b) The Employee Pension Benefit Plans described on Schedule 4.20 have
been duly authorized by the Board of Directors of the Corporation. Except as set
forth in Schedule 4.20, each such plan and associated trust intended to be
qualified under Section 401(a) and to be exempt from tax under Section 501(a) of
the Code, respectively, has either received a favorable determination letter
from the IRS, has applied for such a determination letter (or will apply for
such a determination letter) before the expiration of the remedial amendment
period set forth in Section 401(b) of the Code, as the IRS may extend such
period, and to the knowledge of the Corporation no event has occurred that will
or is likely to give rise to disqualification of any such plan which is intended
to be qualified under
24
<PAGE>
Section 401(a) of the Code or loss of the exemption from tax of any such
trust which is intended to be exempt from tax under Section 501(a) of the Code.
Except as disclosed in Schedule 4.20, no event has occurred that will or is
likely to subject any such plans to material tax under Section 511 of the Code.
Except as disclosed in Schedule 4.20, none of such plans has engaged in a merger
or consolidation with any other plan or transferred assets or liabilities from
any other plan. No prohibited transaction (within the meaning of Section 406 of
ERISA or Section 4975 of the Code) has occurred with respect to any of such
plans that could subject the Corporation to material excise tax or penalty. All
costs of each Employee Pension Benefit Plan have been provided for on the basis
of consistent methods in accordance with sound actuarial assumptions and
practices. No Employee Pension Benefit Plan maintained by the Corporation, or
any entity that is part of a group that includes that Corporation and that is
treated as a single employer under Section 414 of the Code ("Controlled Group
Member") has incurred any "accumulated funding deficiency" (as defined in
Section 302(2) of ERISA), whether or not waived, taking into account
contributions made within the period described in Section 412(c)(10) of the
Code; nor has the Corporation failed to make any contributions or pay any amount
due and owing as required by law or the terms of any Employee Benefit Plan or
employment agreement. No nondeductible contributions (within the meaning of
Section 4972 of the Code) have been made with respect to any Employee Pension
Benefit Plan that could subject the Corporation to any excise tax or penalty.
Since the last valuation date for each Employee Pension Benefit Plan, there has
been no amendment or change to such plan that would increase the amount of
benefits thereunder.
(c) Except as set forth on Schedule 4.20, the Corporation (or any
Controlled Group Member) does not sponsor or participate in, nor has it
sponsored or participated in, any Employee Pension Benefit Plan to which Section
4021 of ERISA applies that would create a liability under Title IV of ERISA.
(d) The Corporation (or any Controlled Group Member) does not sponsor
or participate in, nor has it sponsored or participated in, any Employee Pension
Benefit Plan that is a "multiemployer plan" (within the meaning of Section 3(37)
of ERISA) or "multiple employer plan" (within the meaning of Section 413 of the
Code).
(e) All group health plans of the Corporation (including any plans of
Affiliates of the Corporation that must be taken into account under Section
162(i) or (k) of the Code as in effect immediately prior to the Technical and
Miscellaneous Revenue Act of 1988 and Section 4980B of the Code) have been
operated in compliance in all material respects with the group health plan
continuation coverage requirements and notice requirements of Section 4980B of
the Code and Sections 601 through 608 of ERISA to the extent such requirements
are applicable.
(f) To the best knowledge of the Corporation, there have been no acts
or omissions by the Corporation that have given rise to or may give rise to
material fines,
25
<PAGE>
penalties, or related charges under Sections 502(c) or (i) or 4071 of ERISA or
Chapter 43 of the Code which could be imposed on the Corporation.
(g) Except as described in Schedule 4.14 or Schedule 4.20, the
Corporation does not maintain any Employee Benefit Plan or employment agreement
pursuant to which any benefit or other payment will be required to be made by
the Corporation to, or pursuant to which any benefit or other payment will
accrue or vest in, any director, officer, or employee of the Corporation, in
either case as a result of the consummation of the transactions contemplated by
the Agreement.
(h) To the best knowledge of the Corporation, no "reportable event,"
as defined in Section 4043 of ERISA, has occurred with respect to any of the
Employee Pension Benefit Plans.
(i) To the best knowledge of the Corporation, all amendments required
to bring each of the Employee Pension Benefit Plans into conformity with all of
the applicable provisions of Section 401(a) of the Code have been made, or will
be made before the expiration of the remedial amendment period, if applicable,
as set forth under Section 401(b) of the Code, as such period may be extended by
the IRS.
(j) The Corporation has made available to the Partnership true and
correct copies of all documents with respect to the plans and agreements
referred to in Schedule 4.20, including all amendments and supplements thereto,
and all related summary plan descriptions. For each of the Employee Benefit
Plans of the Corporation referred to in Schedule 4.20, the Corporation has made
available to the Partnership true and correct copies of (i) to the extent
required to be filed, the Form 5500, 5500-C or 5500-R that was filed in each of
the three most recent plan years, including without limitation, all schedules
thereto and all financial statements with attached opinions of independent
accountants to the extent required; (ii) if applicable, the most recent
determination letter from the IRS; (iii) if applicable, the statement of assets
and liabilities as of the most recent valuation date; and (iv) if applicable,
the statement of changes in fund balance and in financial position or the
statement of changes in net assets available for benefits under each of said
plans for the most recently ended plan year. The documents referred to in
subdivisions (iii) and (iv) fairly present the financial condition of each of
said plans as of and at such dates and the results of operations of each of said
plans, all in accordance with generally accepted accounting principles or on the
cash method of accounting applied on a consistent basis.
(k) Except as set forth in Schedule 4.20, the Corporation has no
obligation to provide, or any liability with respect to, any post-retirement
benefits for any current or former employee under any "welfare benefit plan"
(within the meaning of Section 3(1) of ERISA).
26
<PAGE>
(l) The written terms of each of the Employee Plans and any related
trust agreement, group annuity contract, insurance policy or other agreement,
have been administered in substantial compliance with the applicable
requirements of ERISA.
(m) All contributions to the Employee Plans for all periods ending
prior to the Effective Time (including periods from the first day of the current
plan year to the Effective Time) will be made or accrued prior to the Effective
Time by the Corporation, as applicable, in accordance with prior practice.
(n) All material expenses and liabilities up to the Effective Time
with respect to all of the Corporation Employee Plans have been, or will on the
Effective Time, be fully and properly accrued on the Corporation's books and
records (subject to normal recurring audit adjustments in the case of unaudited
books, records, and financial statements) to the extent required by generally
accepted accounted principles.
4.21 Corporate Records. The minute books of the Corporation
-----------------
accurately reflect (or in the case of meetings held between October 1, 1997 and
the date of this Agreement will in due course so reflect) all material actions
taken since January 1, 1993, by the respective stockholders, boards of directors
and committees of the Corporation (other than the Compensation Committee which
does not prepare minutes of its meetings), and contain true and complete copies
of its certificate of incorporation, bylaws, and other charter documents, and
all amendments thereto.
4.22 Power of Attorney. Except as set forth in Schedule 4.22, or
-----------------
included or provided for in the Corporation Scheduled Contracts, the Corporation
has not granted to any Person a power of attorney or similar authorization that
is still in effect.
4.23 Disclosure Documents, Reports and Applications. None of the
----------------------------------------------
information supplied or to be supplied by or on behalf of the Corporation for
inclusion in the S-4 or the Proxy Statement, or incorporated by reference
therein, or any amendments or supplements thereto will, at the respective times
such documents are filed or become effective, and in the case of the Proxy
Statement or any amendment thereof or supplement thereto at the date it is
mailed to stockholders of the Corporation and unitholders of the Partnership and
at the times of the Stockholders' Meeting and Unitholders' Meeting, contain any
untrue statement of a material fact, or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
Corporation represents, warrants, and agrees that through the Effective Time of
the Merger, each of the reports, registrations, statements, applications and
other filings filed by it or the Corporation with the SEC or any other
governmental agency or regulatory authority will be filed on a timely basis,
will comply in all material respects with all of the applicable statutes, rules,
and regulations enforced or promulgated by the governmental agency or regulatory
authority with which it will be filed, and that the information contained
therein will be true and correct in all material respects (and
27
<PAGE>
in the case of such filings with the SEC will not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they will be made, not misleading). Any financial
statement contained in any such report, registration, statement, application, or
other filing that is intended to present the financial position of the
Corporation will fairly present its financial position and will be prepared in
accordance with generally accepted accounting principles consistently applied
during the periods involved. Notwithstanding anything to the contrary set forth
in this Section 4.23, the Corporation makes no representation or warranty with
respect to any information supplied by or relating to the Partnership.
4.24 Accuracy of Information Furnished. The representations and
---------------------------------
warranties made by the Corporation hereby or in the Corporation Schedules
contain no statements of material fact that are untrue or misleading, and do not
omit to state any material fact that is necessary under the circumstances to
prevent the statements contained herein or therein from being misleading.
4.25 Accounting Records.
------------------
(a) The Corporation maintains records that accurately, validly, and
fairly reflect its transactions and dispositions of assets and maintains a
system of internal accounting controls, policies and procedures sufficient to
make it reasonable to expect that (i) such transactions are executed in
accordance with its management's general or specific authorization, (ii) such
transactions are recorded in conformity with generally accepted accounting
principles and in such a manner as to permit preparation of financial statements
in accordance with generally accepted accounting principles and any other
criteria applicable to such statements and to maintain accountability for
assets, (iii) access to assets is permitted only in accordance with management's
general or specific authorization, (iv) the recorded accountability for assets
is compared with existing assets at reasonable intervals and appropriate action
is taken with respect to any differences, and (v) records of such transactions
are retained, protected, and duplicated in accordance with prudent business
practices.
(b) The data processing equipment, data transmission equipment,
related peripheral equipment, and software used by the Corporation in the
operation of its business (including any disaster recovery facility) to generate
and retrieve such records are adequate for the needs of the Corporation.
(c) The Corporation has made available to the Partnership for
inspection all management letters and opinions and all reviews, correspondence,
and other documents in the files of the Corporation, prepared by any certified
public accounting firm and delivered to the Corporation since March 31, 1995.
28
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4.26 Intellectual Property Rights. Schedule 4.26 contains a true,
----------------------------
correct, and complete list of all trademarks, service marks and patents used by
the Corporation that are material to the conduct of its business. Except as set
forth in Schedule 4.26, the Corporation owns, has the exclusive right to use,
sell, license, or dispose of, has the exclusive right to bring actions for the
infringement of, and has taken all appropriate actions and made all applicable
applications and filings pursuant to any applicable laws to perfect or protect
its interest in, all such trademarks, services marks and patents. Neither the
execution, delivery and performance of this Agreement nor the consummation of
the Merger or any of the other transactions contemplated hereby will materially
impair the right of the Corporation or the Surviving Entity to use, sell,
license, or dispose of or to bring any action for the infringement of, any such
trademarks, service marks or patents. The Corporation has taken all reasonable
steps necessary or appropriate to safeguard and maintain its proprietary rights
in all such trademarks, service marks, and patents.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIP
The Partnership represents and warrants to the Corporation as follows:
5.1 Organization, Standing, and Power. The Partnership has been duly
---------------------------------
formed and is validly existing as a limited partnership in good standing under
the laws of the State of Delaware. The Partnership has all requisite
partnership power and authority to own, lease, and operate its properties and
assets and to carry on its business as presently conducted, and is duly
qualified and in good standing to do business in each jurisdiction in which the
nature of its business or the location of any of its owned or leased properties
makes such qualification necessary, other than in such jurisdictions where the
failure to be so licensed would not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the business,
financial condition, or results of operations of the Partnership.
5.2 Capitalization. As of the date of this Agreement, 7,500,000
--------------
Class A Units ("Partnership Units") and no Class B Units are issued and
outstanding. All of the outstanding Partnership Units are duly authorized,
validly issued, fully paid and nonassessable, and neither are entitled to, nor
were issued in violation of, any preemptive rights. Except for warrants issued
or to be issued to Jefferies & Company, Inc. to acquire up to 125,000
Partnership Units at an exercise price of $5.00 per unit, which warrants will
expire if not exercised within five years from the Effective Time, there are no
outstanding options, warrants, or other rights to acquire Partnership Units or
Class B Units from the Partnership, nor any securities convertible into such
units, and the Partnership is not obligated to issue any such additional units
or any additional options, warrants, or other rights in or with respect to, nor
any securities convertible into, such units. The Partnership Units collectively
represent a 99% interest in the Partnership. The Partnership's General Partners
own in the aggregate a 1% interest in the Partnership.
29
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5.3 Subsidiaries. Except as disclosed in the SEC Filings of the
------------
Partnership, the Partnership does not own, directly or indirectly, any
outstanding stock of or other equity or voting interest in any corporation,
partnership, joint venture, or other entity.
5.4 Financial Statements. The Partnership has previously furnished
--------------------
to the Corporation copies of the Financial Statements of the Partnership. The
Financial Statements of the Partnership (as well as the financial statements of
the Partnership included in any of its subsequent Annual Reports on Form 10-K or
Quarterly Reports on Form 10-Q): (a) present or will present fairly the
financial condition of the Partnership as of the respective dates indicated and
its results of operations and changes in financial position/cash flow, as
applicable, for the respective periods then ended (subject, in the case of
unaudited interim financial statements, to normal recurring adjustments and the
absence of certain footnote information); (b) have been or will be prepared in
accordance with generally accepted accounting principles consistently applied
(except as otherwise indicated in such financial statements for periods ended
prior to the date of this Agreement or, in the case of financial statements for
periods ended after the date of this Agreement, except for such changes as may
be required by the Financial Accounting Standards Board); and (c) are, or in the
case of subsequently filed reports will be, in accordance with the books and
records of the Partnership, which books and records are and will be complete and
accurate in all material respects.
5.5 SEC/Regulatory Filings. Since December 31, 1992, the Partnership
----------------------
has filed all material reports, registrations, and statements that were required
to be filed with the SEC and any other applicable federal, state, or local
governmental agency or regulatory authority (other than tax authorities). The
Partnership has previously made available to the Corporation a copy of all SEC
Filings of the Partnership. As of their respective dates, the SEC Filings of
the Partnership complied in all material respects with the requirements of their
respective forms and did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
5.6 Authority of the Partnership. The execution and delivery by the
----------------------------
Partnership of this Agreement, and, subject to the requisite approval of the
unitholders of the Partnership, the consummation of the transactions
contemplated hereby, have been duly and validly authorized by all necessary
partnership action on the part of the Partnership, including without limitation
approval by a vote of the Board of Directors of the General Partner, and this
Agreement is a valid and binding obligation of the Partnership, enforceable in
accordance with its terms, subject to the Bankruptcy Exception. Except as set
forth in Schedule 5.6, neither the (i) execution and delivery by the Partnership
of this Agreement; (ii) the consummation of the Merger or the transactions
contemplated hereby; nor (iii) compliance by the Partnership with any of the
provisions hereof, will: (a) conflict with or result in a breach of any
provision of its Limited Partnership Agreement or Certificate of Limited
Partnership; (b)
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subject to receipt of such consents and the giving of such notifications as are
set forth in Schedule 5.6, constitute a breach of or result in a default (or
give rise to any rights of termination, cancellation or acceleration, or any
right to acquire any securities or assets) under any of the terms, conditions,
or provisions of any note, bond, mortgage, indenture, franchise, license,
permit, agreement, or other instrument or obligation to which the Partnership is
a party, or by which the Partnership or any of its properties or assets is
bound, if, in any such circumstances, such event would reasonably be expected to
have consequences materially adverse to the Partnership; or (c) violate any
order, writ, injunction, decree, statute, rule, or regulation applicable to the
Partnership or any of its properties or assets, if such violation would
reasonably be expected to have consequences materially adverse to the
Partnership. Except as set forth in Schedule 5.6, no consent of, approval of,
notice to, or filing with any regulatory agency or governmental authority having
jurisdiction over any aspect of the business or assets of the Partnership, and
no consent of, approval of, or notice to any other Person that, in either case,
if not obtained or given would have consequences materially adverse to the
Partnership, is required in connection with the execution and delivery by the
Partnership of this Agreement or the consummation by the Partnership of the
Merger or the transactions contemplated hereby, except (i) the approval of this
Agreement and the transactions contemplated hereby by the unitholders of the
Partnership; (ii) the filing of the Certificate of Merger with the Delaware
Secretary of State and of appropriate merger documents with other relevant
authorities pursuant to Section 3.2; and (iii) such filings, approvals,
consents, or waivers as are required under federal or state securities laws.
5.7 Insurance. Set forth on Schedule 5.7 is a list of all bonds and
---------
all policies of insurance affording coverage to the Partnership as of December
15, 1997, showing the name of the issuer or insurance company, the nature of the
coverage, limits, the annual premiums and the expiration dates. The Partnership
has made available to the Corporation copies of all such policies of insurance
and bonds. The Partnership has coverage under such policies of insurance and
bonds with respect to its assets and businesses against such casualties and
contingencies and in such amounts, types, and forms as the General Partner's
directors and executive officers believe to be appropriate for the Partnership's
businesses, operations, properties, and assets. All such insurance policies and
bonds are in full force and effect. Except as set forth on Schedule 5.7, no
insurer under any such policy or bond has canceled or indicated an intention to
cancel or not to renew or to materially amend any such policy or bond or
generally disclaimed liability thereunder, there is no default under any such
policy or bond and all material claims of the Partnership thereunder have been
filed in a timely fashion.
5.8 Title to Assets. The Partnership has good and marketable title
---------------
to all its material properties and assets (other than real property) owned or
stated to be owned by the Partnership (including without limitation all personal
and intangible properties reflected in the Partnership's September 30, 1997
Quarterly Report on Form 10-Q or acquired thereafter and in either case not
subsequently disposed of for fair value in the ordinary course of business). All
such properties and assets are free and clear of all mortgages, liens,
encumbrances,
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<PAGE>
pledges, or charges of any kind or nature except: (a) as set forth in the SEC
Filings of the Partnership; (b) for liens or encumbrances for current taxes not
yet due; (c) for liens that are not substantial in character, amount, or extent
or that do not materially detract from the value, or interfere with present use,
of the property subject thereto or affected thereby, or otherwise materially
impair the conduct of business of the Partnership; or (d) as set forth on
Schedule 5.8.
5.9 Real Estate. Schedule 5.9 sets forth a list of real property,
-----------
including leaseholds, owned or leased by the Partnership as of the date hereof
(the "Partnership Real Property"). The Partnership has good and marketable title
to the Partnership Real Property owned by it and valid leasehold interests in
the Partnership Real Property leased by it, as described on Schedule 5.9, free
and clear of all mortgages, covenants, conditions, restrictions, easements,
liens, security interests, charges, claims, assessments, and encumbrances
(collectively "encumbrances"), except (a) for rights of lessors, lessees, co-
lessees, or sublessees in such matters that are reflected in the applicable
lease; (b) for current taxes not yet due and payable or being contested by the
Partnership in good faith; (c) for encumbrances of public record; (d) for such
imperfections of title and encumbrances, if any, as do not materially detract
from the value of or materially interfere with the present use of such property;
and (e) as described in the SEC Filings of the Partnership or set forth on
Schedule 5.9.
5.10 Litigation. Except as specifically identified in the SEC Filings
----------
of the Partnership or on Schedule 5.10, there are no private or governmental
suits, claims, actions, or proceedings pending, nor to the Partnership's
knowledge, threatened against the Partnership or its General Partners (whether
as a defendant, cross-defendant or third-party defendant) or any of their
directors, officers, or employees relating to the performance of any of their
duties on behalf of the Partnership or against or affecting any properties of
the Partnership that individually or in the aggregate has had or would
reasonably be expected to have a material adverse effect upon the business,
financial condition, or results of operations of the Partnership or materially
to hinder or delay the Merger or that may involve a payment by the Partnership
in excess of $100,000 of applicable insurance coverage. Also, except as
specifically identified in the SEC Filings of the Partnership or on Schedule
5.10, there are no material judgments, decrees, stipulations, or orders against
the Partnership or its General Partners enjoining any of them in respect of, or
the effect of which is to prohibit, the Partnership from engaging in any
business practice or acquiring any property or conducting any business in any
area. Schedule 5.10 lists all pending litigation in which the Partnership is
named as a defendant, cross-defendant, or third-party defendant.
5.11 Taxes.
-----
(a) The Partnership has filed all Tax Returns required to be filed by
it on or before the date hereof and has paid all Taxes, together with any
interest and penalties owing in connection therewith, shown on such Tax Returns
to be due in respect of the periods covered
32
<PAGE>
by such Tax Returns or which are required to be paid by it without the filing of
a Tax Return. The Partnership does not have any known liability for Taxes with
respect to such periods in excess of the amounts so paid, except (a) to the
extent accruals or reserves therefor are set forth in the Financial Statements
of the Partnership, (b) for such taxes as are being contested in good faith, or
(c) as otherwise set forth in Schedule 5.11. Schedule 5.11 sets forth a complete
list of (i) all Tax Returns of the Partnership for periods ending before the
date of this Agreement which have not yet been filed and the due dates therefor;
(ii) dates through which the IRS or any other taxing authority has examined the
Tax Returns of the Partnership; (iii) all Tax Returns of the Partnership for
which the statute of limitations for the assessment of Taxes has not yet
expired, the expiration date(s) of such statutes of limitations, and whether
such statutes of limitations have been requested to be extended; and (iv) all
Tax Returns of the Partnership that have been examined by any taxing authority
or are presently under examination by any taxing authority and the results or
status of such examinations. Except as set forth on Schedule 5.11, neither the
IRS nor any other taxing authority is now asserting or to the knowledge of the
Partnership threatening or proposing to assert any deficiency or claim for
material additional Taxes of the Partnership, nor is any administrative or court
proceeding pending with respect thereto. Except as set forth in Schedule 5.11,
the Partnership has not entered into a closing agreement or similar arrangement
with the IRS or any other taxing authority that is presently in effect. The
Partnership has made available to the Corporation true and complete copies of
all Tax Returns filed by the Partnership for all years for which the statute of
limitations for the assessment of Taxes has not yet expired. The Partnership has
complied with the information reporting requirements under the Code in all
material respects.
(b) As of the Effective Time, the Partnership will have timely filed
all Tax Returns not due as of the date hereof but required to be filed prior to
the Effective Time (taking into account valid extensions) and paid all Taxes,
together with any interest and penalties owing in connection therewith, shown on
such Tax Returns to be due in respect of the periods covered by such Tax Returns
or which are required to be paid by it without the filing of a Tax Return. The
positions taken by the Partnership in connection with the Tax Returns described
in the preceding sentence and in Section 5.11(a) were (or in the case of the
returns not yet filed, will be) asserted with reasonable cause and in good
faith. The Partnership will deliver to the Corporation when available true and
complete copies of its Tax Returns for the fiscal year ended December 31, 1997.
(c) Except as set forth in Schedule 5.11, the Partnership has not
agreed to nor is required to make any adjustment under Section 481(a) of the
Code by reason of a change in accounting method or otherwise. Except as set
forth in Schedule 5.11, to the knowledge of the Partnership, the Partnership has
no liability for Taxes, including employment taxes, of any Person other than the
Partnership or as a transferee or successor or otherwise. Except as set forth
in Schedule 5.11, the Partnership has not made, nor is it obligated to make, nor
is it a party to any agreement that would reasonably be expected to obligate it
to make, any payments that are not deductible pursuant to Section 280G of the
Code.
33
<PAGE>
5.12 Compliance with Laws and Regulations. The Partnership is not in
------------------------------------
default under or in breach of any provision of its Certificate of Limited
Partnership or Limited Partnership Agreement, as amended, or in violation of any
law, ordinance, rule, or regulation promulgated by any governmental agency or
regulatory authority, where such default, breach or violation would reasonably
be expected to have a material adverse effect on the business, financial
condition, or results of operations of the Partnership. Except as disclosed in
SEC Filings of the Partnership or in Schedule 5.12, no governmental agency or
regulatory authority has initiated or, to the best knowledge of the Partnership
threatened, any proceeding or investigation into the business or operations of
the Partnership.
5.13 Performance of Obligations. The Partnership has performed in all
--------------------------
material respects all of the obligations required to be performed by it to date,
is not in default under or in breach of any term or provision of any material
covenant, contract, lease, indenture or any other covenant to which it is a
party, is subject or is otherwise bound, and no event has occurred that, with
the giving of notice or the passage of time or both, would constitute such
default or breach, where any such nonperformance, default or breach would have a
material adverse effect on the business, financial condition, or results of
operations of the Partnership. To the Partnership's knowledge, no party with
whom the Partnership has an agreement that is of material importance to the
business of the Partnership is in default thereunder.
5.14 Employees. The Partnership does not now have, and never has had,
---------
any employees. Schedule 5.14 lists all employees of the General Partner.
5.15 Brokers and Finders. Except for financial advisory services
-------------------
performed for the Partnership by Jefferies & Company, Inc., pursuant to an
agreement dated March 24, 1997, a copy of which has been furnished to the
Corporation, neither the Partnership nor its General Partners nor any of their
respective officers, directors, employees, or agents, has employed any broker or
finder or incurred any liability for any financial advisory fees, brokerage
fees, commissions, or finder's fees in connection with this Agreement or the
transactions contemplated hereby.
5.16 Material Contracts. Except as set forth as an exhibit to the
------------------
Partnership's 1996 Annual Report on Form 10-K or any of the subsequent SEC
Filings of the Partnership, or on Schedule 5.16 or elsewhere in the Partnership
Schedules (all items described in this Section 5.16, including those so set
forth as exhibits, being referred to herein as "Partnership Scheduled
Contracts"), the Partnership is not a party or otherwise subject to:
(a) any employment, deferred compensation, bonus, or consulting
contract that requires payment by the Partnership of $100,000 or more per annum;
34
<PAGE>
(b) any contract or agreement that restricts the Partnership (or would
restrict any Affiliate of the Partnership after the Effective Time) from
competing in any line of business with any Person or using or employing the
services of any Person;
(c) any lease of real or personal property providing for annual lease
payments by or to the Partnership in excess of $100,000 per annum;
(d) any mortgage of real property or any pledge, conditional sales
contract, security agreement, option, or any other similar agreement with
respect to any interest of the Partnership in personal property, that in any
such case has a value of $100,000 or more;
(e) any agreement to acquire equipment or any commitment to make
capital expenditures of $100,000 or more;
(f) other than agreements entered into in the ordinary course of
business, any agreement for the purchase, sale or lease of any real or personal
property, or for the grant of any preferential right to purchase, sell or lease
any such property, that in any such case involves aggregate consideration of
$100,000 or more;
(g) any agreement for the borrowing of any money (other than
liabilities or borrowings made in the ordinary course of business since
September 30, 1997 not exceeding, individually or in the aggregate, $500,000 at
any one time outstanding);
(h) any guarantee or indemnification agreement which involves
potential liability likely to exceed $100,000;
(i) any material agreement which would be terminable other than at the
election of the Partnership as a result of the consummation of the transactions
contemplated by this Agreement;
(j) any Understanding of any other kind that either (i) is not
terminable on 30 days' or less notice and involves future payments or receipts
or performances of services or delivery of items requiring payment of $100,000
or more to or by the Partnership or (ii) that is otherwise material to the
business, financial condition, or results of operations of the Partnership.
The Partnership has made available to the Corporation copies of all Partnership
Scheduled Contracts, including all amendments and supplements thereto.
5.17 Absence of Material Change. Except as set forth in the
--------------------------
Partnership's Quarterly Reports on Form 10-Q for the quarters ended March 31,
1997, June 30, 1997, or September 30, 1997, or in other SEC Filings of the
Partnership, Schedule 5.16 or 5.17 or elsewhere in the Partnership Schedules,
since December 31, 1996, the business of the
35
<PAGE>
Partnership has been conducted only in the ordinary course, substantially in the
same manner as theretofore conducted and there has not occurred: (i) any event
(including the incurrence of liabilities of any nature, whether or not accrued,
contingent or otherwise) that, individually or in the aggregate, have had or
would reasonably be expected to have a material adverse effect on the business,
financial condition or results of operations of the Partnership; (ii) any
amendment to the Limited Partnership Agreement or Certificate of Limited
Partnership of the Partnership; (iii) any declaration, setting aside or payment
of any distribution in respect of the Partnership Units, Class B Units or the
interests of the General Partner in the Partnership other than normal cash
distributions to holders of such units or interests and payment of fees to the
General Partner in the ordinary course of business; or (iv) any change by the
Partnership in accounting principles or methods or tax methods, except as
required or permitted by the Financial Accounting Standards Board.
5.18 Licenses and Permits. The Partnership has all material licenses
--------------------
and permits that are necessary for the conduct of its business, and such
licenses are in full force and effect, except for any failure to be in full
force and effect that would not, individually or in the aggregate, reasonably be
expected to have a material adverse effect on the business, financial condition,
or results of operations of the Partnership.
5.19 No Material Liabilities; Environmental.
--------------------------------------
(a) Schedule 5.19 sets forth all material liabilities of the
Partnership, including liabilities for Hazardous Substances or under any
Environmental Law, contingent or otherwise, that are not reflected or reserved
against in the Financial Statements of the Partnership, except for liabilities
disclosed in the SEC Filings of the Partnership and liabilities incurred or
accrued since September 30, 1997 in the ordinary course of business that have
not had and are not reasonably expected to have a material adverse effect on the
business, financial condition, or results of operations of the Partnership.
Except as set forth in Schedule 5.19, the Partnership knows of no basis for the
assertion against it of any liability, obligation, or claim that would
reasonably be expected to have a material adverse effect on the business,
financial condition, or results of operations of the Partnership.
(b) Except as set forth in Schedule 5.19 or in the SEC Filings of the
Partnership, to the Partnership's knowledge, all of the properties and
operations of the Partnership are in compliance in all material respects with
all Environmental Laws applicable to such properties and operations.
(c) Except as set forth in Schedule 5.19 or in the SEC Filings of the
Partnership, to the Partnership's knowledge, the Partnership has obtained and is
in compliance with all material permits, licenses, and authorizations that are
required for its operations under Environmental Laws.
36
<PAGE>
(d) Except as set forth in Schedule 5.19 or in the SEC Filings of the
Partnership, or except to the extent that as a result thereof, no material
liability has been incurred or would reasonably be expected to be incurred by
the Partnership: (i) to the Partnership's knowledge, no Hazardous Substances
exist on, about, or within or have been used, generated, stored, transported,
disposed of on, or released from, any of the properties of the Partnership
except in accordance in all material respects with Environmental Laws; (ii) the
Partnership has no knowledge that any prior owners, occupants, or operators of
any such properties ever deposited, disposed of, or allowed to be deposited or
disposed of, in, on, or under or handled or processed on, or released, emitted,
or discharged from, such properties any Hazardous Substances except in
accordance in all material respects with Environmental Laws; and (iii) the use
that the Partnership has made, makes, or intends to make of its properties will
not result in the use, generation, storage, transportation, accumulation,
disposal, or release of any Hazardous Substance on, in, or from any such
properties except in accordance in all material respects with applicable
Environmental Laws.
(e) Except as set forth in Schedule 5.19 or in the SEC Filings of the
Partnership, there is no action, suit, proceeding, investigation, or inquiry
before any court, administrative agency or other governmental authority pending,
or, to the knowledge of the Partnership, threatened against the Partnership
relating in any way to any violation of any applicable Environmental Law.
Except as set forth in Schedule 5.19 or in the SEC Filings of the Partnership,
to the knowledge of the Partnership, it has no material liability for remedial
action with respect to an Environmental Law, nor has the Partnership received
any written requests for information relating to any material violation of any
Environmental Law from any governmental authority with respect to the condition,
use, or operation of any of its properties, nor has it received any written
notice from any governmental authority or any written notice from any other
Person with respect to any material violation of or material liability for any
remedial action under any Environmental Law.
(f) Except as set forth in Schedule 5.19 or in the SEC Filings of the
Partnership, to the knowledge of the Partnership, there are no material Historic
Sites or Burial Sites on its properties.
(g) Except as set forth in Schedule 5.19 or in the SEC Filings of the
Partnership, to the knowledge of the Partnership: (i) there are no Endangered
Species or Critical Habitats on its properties; and (ii) the Partnership has
received no written notice of an investigation of Endangered Species or Critical
Habitat on its properties.
(h) The Partnership has made available to the Corporation true copies
of all environmental assessments and reports obtained by the Partnership since
January 1, 1993 with respect to properties of the Partnership and will after the
date of this Agreement upon request of the Corporation make available to the
Corporation such additional environmental assessments and reports as the
Partnership may subsequently obtain concerning properties of the Partnership.
37
<PAGE>
(i) As used in this Section 5.19, the term "properties" shall include
all real property now owned, operated or leased by the Partnership, and all
property of which the Partnership could be deemed an "owner" or "operator" under
any applicable Environmental Law.
5.20 Partnership Records. The records of the Partnership and the
-------------------
minute books of the General Partner accurately reflect (or in the case of
meetings held between October 1, 1997 and the date of this Agreement will in due
course so reflect) all material actions taken since January 1, 1993, by the
unitholders of the Partnership and by the board of directors or stockholders of
the General Partner, and contain true and complete copies of the Partnership's
Certificate of Limited Partnership, Limited Partnership Agreement, and all
amendments thereto. The Partnership maintains records that accurately, validly,
and fairly reflect its transactions and dispositions of assets and maintains a
system of internal accounting controls, policies and procedures sufficient to
make it reasonable to expect that (i) such transactions are executed in
accordance with its management's general or specific authorization, and (ii)
such transactions are recorded in conformity with generally accepted accounting
principles and in such a manner as to permit preparation of financial statements
in accordance with generally accepted accounting principles and any other
criteria applicable to such statements and to maintain accountability for
assets.
5.21 Disclosure Documents, Reports and Applications. None of the
----------------------------------------------
information supplied or to be supplied by or on behalf of the Partnership for
inclusion in the S-4 or the Proxy Statement, or incorporated by reference
therein, or any amendments or supplements thereto will, at the respective times
such documents are filed or become effective, and in the case of the Proxy
Statement or any amendment thereof or supplement thereto at the date it is
mailed to holders of Partnership Units and stockholders of the Corporation and
at the times of the Unitholders' Meeting and Stockholders' Meeting, contain any
untrue statement of a material fact, or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
Partnership represents, warrants, and agrees that through the Effective Time of
the Merger, each of the reports, registrations, statements, applications and
other filings filed by it with the SEC or any other governmental agency or
regulatory authority will be filed on a timely basis, will comply in all
material respects with all of the applicable statutes, rules, and regulations
enforced or promulgated by the governmental agency or regulatory authority with
which it will be filed, and that the information contained therein will be true
and correct in all material respects (and in the case of such filings with the
SEC will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they will be made, not
misleading). Any financial statement contained in any such report,
registration, statement, application, or other filing that is intended to
present the financial position of the Partnership will fairly present its
financial position and will be prepared in accordance with generally accepted
accounting principles
38
<PAGE>
consistently applied during the periods involved. Notwithstanding anything to
the contrary set forth in this Section 5.21, the Partnership makes no
representation or warranty with respect to any information supplied by or
relating to the Corporation.
5.22 Accuracy of Information Furnished. The representations and
---------------------------------
warranties made by the Partnership hereby or in the Partnership Schedules
contain no statements of material fact that are untrue or misleading, and do not
omit to state any material fact that is necessary under the circumstances to
prevent the statements contained herein or therein from being misleading.
5.23 Accountants' Letters. The Partnership has made available to the
--------------------
Corporation for inspection all management letters and opinions and all reviews,
correspondence, and other documents in the files of the Partnership, prepared by
any certified public accounting firm and delivered to the Partnership since
December 31, 1994.
5.24 Validity of Units. The Partnership Units issuable to holders of
-----------------
Corporation Stock upon consummation of the Merger will be duly authorized,
validly issued, fully paid, and (except as otherwise provided by the Delaware
RULPA) nonassessable at the Effective Time.
ARTICLE VI
COVENANTS OF THE CORPORATION
PENDING EFFECTIVE TIME OF THE MERGER
The Corporation covenants and agrees with the Partnership as follows:
6.1 Limitation on the Corporation's Conduct Prior to Effective Time.
---------------------------------------------------------------
Except (i) as contemplated by this Agreement, (ii) as required by the
Corporation's lender or bonding agent, (iii) for sales of property identified in
Schedule 1.2, (iv) for expenditures pursuant to Corporation Scheduled Contracts
and (v) for the potential development expenditures identified in Schedule 6.1
(and related agreements, contracts and Understandings), between the date hereof
and the Effective Time the Corporation will conduct its businesses only in the
normal and customary manner and in accordance with sound business practices, and
the Corporation shall not, without the prior written consent of the Partnership
(which shall not be unreasonably withheld or delayed):
(a) issue any Corporation Stock (except pursuant to the exercise of
Corporation Options outstanding as of the date hereof), any other securities of
the Corporation (including long term debt, other than substantially in
conformity with its current credit arrangements or substituted credit
arrangements that are substantially the same as its current credit arrangements)
or any rights, options, or other securities that would permit any Person to
39
<PAGE>
acquire any Corporation Stock or any other securities (including long term debt)
of the Corporation;
(b) declare, set aside, or pay any dividend or make any other
distribution upon, or purchase or redeem any shares of, Corporation Stock;
(c) amend its certificate of incorporation or its bylaws;
(d) grant any general or uniform increase in the rate of pay of
employees or employee benefits;
(e) grant increases in salary, incentive compensation, or employee
benefits or pay bonuses to any Person (except for (i) such salary increases as
are made in the ordinary course of business that do not in the aggregate exceed
$100,000 per annum; and (ii) such other increases as are required by any pre-
existing contract, arrangement or plan disclosed on the Corporation Schedules);
(f) make any capital expenditure or development expenditure, in either
case in excess of $100,000, except for ordinary repairs, renewals, and
replacements;
(g) compromise or otherwise settle or adjust any assertion or claim of
a deficiency in taxes (or interest thereon or penalties in connection therewith)
in excess of $200,000 (net of any amounts paid or payable under any tax
indemnity), extend the statute of limitations with any tax authority or file any
pleading in court in any tax litigation or any appeal from an asserted
deficiency in excess of $100,000 (net of any amounts paid or payable under any
tax indemnity);
(h) adopt or amend any Employee Plan or other benefit plan or
arrangement of any such type except for such amendments as are required by law
or do not materially increase the costs or benefits of such plan or arrangement;
(i) change any of the Corporation's accounting policies except such
changes as may be required by the Financial Accounting Standards Board;
(j) grant any Person a power of attorney or similar authority other
than in connection with tax audits or the S-4;
(k) make any material investment by merger, purchase of stock or
securities, contributions to capital, property transfers, or otherwise in any
other Person;
(l) amend, modify, or terminate, except in accordance with its terms,
any Corporation Scheduled Contract or enter into any agreement, contract or
Understanding that, if in effect on the date hereof, would be a Corporation
Scheduled Contract;
40
<PAGE>
(m) sell, lease, mortgage, pledge or otherwise dispose of any of its
assets (other than as listed in Schedule 1.2) that are material, individually
or in the aggregate, to the Corporation, except (i) in the ordinary course of
business consistent with past practice (ii) as disclosed to the Partnership in
writing prior to the date hereof; (iii) assets listed on Schedule 1.2 that are
sold for reasonably equivalent value; and (iv) sales of land and homes in the
ordinary course of business consistent with past practice;
(n) take any action that would reasonably be expected to affect
materially and adversely or to delay the ability of the Partnership or the
Corporation to obtain any approvals, consents, or waivers required for the
transactions contemplated by this Agreement or to affect materially and
adversely the ability of the Corporation to perform its covenants or agreements
under this Agreement on a timely basis; or
(o) agree to, or make any commitment to, take any of the actions
prohibited by this Section 6.1.
6.2 No Solicitation, Etc.
---------------------
(a) The Corporation shall not, and shall cause its officers,
directors, employees, agents, legal and financial advisors, and Affiliates not
to, directly or indirectly, initiate or solicit any Alternative Transaction.
The Corporation immediately shall cease and cause to be terminated any
activities, discussions, or negotiations conducted prior to the date of this
Agreement with any parties other than the Partnership with respect to any
Alternative Transaction.
(b) The Corporation shall not, and shall cause each of its officers,
directors, employees, agents, legal and financial advisors, and Affiliates not
to, directly or indirectly, consider, recommend or accept any proposal to
effectuate, or participate in any negotiations or discussions regarding, or
furnish any information with respect to, or otherwise cooperate in any way in
connection with, or assist or participate in, facilitate or encourage, any
effort or attempt to effect, any Alternative Transaction; provided that the
Corporation may provide information or undertake such discussions or
negotiations in connection with or consider, recommend or accept an unsolicited,
bona fide written offer from a Person other than the Partnership to effect an
Alternative Transaction if the Board of Directors of the Corporation reasonably
and in good faith determines, based on advice of its outside counsel, that the
failure to provide such information to or undertake such discussions or
negotiations with the Person submitting, or to consider, recommend or accept,
such unsolicited written offer could cause the members of the Corporation's
Board of Directors to breach their fiduciary duties under applicable laws.
(c) The Corporation promptly shall communicate to the Partnership the
terms of any proposal that it may receive in respect of any Alternative
Transaction, and the
41
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Corporation shall keep the Partnership informed as to the status of any actions,
including negotiations or discussions or the provision of information, taken
pursuant to subsection (b) of this Section 6.2.
(d) In the event that the Corporation recommends or accepts, or
executes any letter of intent, agreement in principle or definitive agreement
concerning, any Alternative Transaction, (i) the Partnership shall be entitled
to terminate this Agreement, and (ii) the Corporation shall make a payment to
the Partnership of $1 million in cash upon consummation of the Alternative
Transaction as to which the Partnership has exercised its termination right
under Section 6.2(d)(i) or, if such Alternative Transaction is not consummated,
upon consummation of any other Alternative Transaction (other than any other
Alternative Transaction which is either (i) a sale by the Corporation of its
capital stock which is not intended to and does not result in a change in
control of the Corporation or (ii) a tender offer or exchange offer for less
than 50% of the Corporation's outstanding stock which is not solicited or
encouraged by the Corporation's Board of Directors) that is consummated within
12 months following the date on which the Partnership exercised its termination
right under Section 6.2(d)(i).
6.3 Affirmative Conduct of the Corporation Prior to Effective Time.
--------------------------------------------------------------
Between the date hereof and the Effective Time, the Corporation shall:
(a) use and devote its best efforts consistent with this Agreement to
maintain and preserve intact its present business organization and to maintain
and preserve its relationships and goodwill with customers, suppliers, lenders,
employees, and others having business relationships with the Corporation;
(b) use commercially reasonable efforts to keep in full force and
effect all of the existing material permits, entitlements and licenses of the
Corporation;
(c) use commercially reasonable efforts to maintain insurance coverage
at least equal to that now in effect on all properties for which it is
responsible and on its respective business operations;
(d) perform its material contractual obligations and not become in
material default on any thereof;
(e) duly and timely file all reports and returns required to be filed
with any federal, state, or local governmental authority, unless any extensions
have been duly granted by such authority;
(f) duly observe and substantially comply with and perform all
material obligations and duties imposed by all federal and state laws, and
rules, regulations, and orders imposed by federal or state governmental
authorities;
42
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(g) maintain its assets and properties in good condition and repair,
normal wear and tear excepted;
(h) promptly advise the Partnership in writing of any event or any
other transaction within the Corporation's knowledge whereby any Person or
Related Group of Persons acquires, directly or indirectly, record or beneficial
ownership or control (as defined in Rule 13d-3 promulgated by the SEC under the
Exchange Act) of five percent (5%) or more of the outstanding Corporation Stock
prior to the record date fixed for the Stockholders' Meeting or any adjournment
thereof to approve this Agreement and the transactions contemplated hereby;
(i) promptly notify the Partnership regarding receipt from any tax
authority of any notification of the commencement of an audit, any request to
extend the statute of limitations, any statutory notice of deficiency, any
revenue agent's report, any notice of proposed assessment, or any other similar
notification of potential adjustments to the tax liabilities of the Corporation,
or any actual or threatened collection enforcement activity by any tax authority
with respect to tax liabilities of the Corporation;
(j) furnish to the Partnership, as soon as practicable, and in any
event within fifteen days after it is prepared, (i) a copy of any material
report submitted to the Board of Directors or any committee thereof of the
Corporation, provided, however, that the Corporation need not furnish to the
Partnership commnications from the Corporation's financial adivisor concerning
the Merger (other than those referred to or included in the S-4) or
communications of the Corporation's legal counsel regarding the Corporation's
rights and obligations under this Agreement or the transactions contemplated
hereby or books, records, and documents covered by confidentiality agreements or
the attorney-client privilege, or which are attorneys' work product, (ii) copies
of all reports, filings, certificates, correspondence, and other documents filed
with or received from the SEC or any other governmental agency or regulatory
authority, to the extent permitted by law (and the Corporation shall use its
reasonable best efforts to obtain any waiver or consent necessary to provide
such materials under applicable law), (iii) such other existing reports as the
Partnership may reasonably request relating to the Corporation, and (iv) all
proxy statements, information statements, financial statements, reports,
letters, and communications sent by the Corporation to its stockholders or other
security holders;
(k) promptly notify the Partnership of any fact or event that does or
could reasonably be expected to cause the Corporation Schedules to be incorrect
in any material respect as of the date of this Agreement or as of the Closing
Date;
(l) use commercially reasonable efforts to obtain any requisite third
party consent with respect to any contract, agreement, lease, license,
amendment, permit, or release that is material to the business of the
Corporation or that is contemplated or required to be
43
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obtained by the Corporation in connection with this Agreement or the Merger,
without the imposition of materially burdensome conditions;
(m) promptly notify the Partnership of the filing of any material
litigation, or the filing of any governmental or regulatory action, including
any investigation or notice of investigation or similar proceeding, and of any
information acquired by the Corporation concerning any material claims asserted
or threatened against the Corporation or any of its assets; and
(n) prepare and timely file all tax returns and amendments thereto
required to be filed by the Corporation on or before the Effective Time. The
Partnership shall have a reasonable opportunity to review all such returns and
amendments thereto on a pre-filing basis. The Corporation shall discharge all
taxes, assessments and governmental charges in the nature of taxes upon or
against it or any of its properties or assets, and all tax liabilities at any
time existing, before the same shall become delinquent and before penalties
accrue thereon, except to the extent and as long as: (i) the same are being
contested in good faith and by appropriate proceedings pursued diligently and in
such manner as not to cause any material adverse effect upon the condition
(financial or otherwise) or operations of the Corporation; and (ii) the
Corporation shall have set aside on its books appropriate reserves relating
thereto, if any.
6.4 Access to Information. The Corporation will afford the
---------------------
Partnership and its representatives, counsel, accountants, agents, and employees
access during normal business hours to all of the Corporation's businesses,
operations, properties, books, files, and records, other than (a) books,
records, and documents covered by the attorney-client privilege, or that are
attorneys' work product, and (b) books, records, and documents that the
Corporation is legally obligated to keep confidential. Such right of access
shall be exercised by the Partnership in such manner as to minimize any
disruption of, or interference with, the normal business operations of the
Corporation. Upon the request of the Partnership, the Corporation will request
that the independent auditors of the Corporation provide reasonable access to
auditors' work papers with respect to the businesses and properties of the
Corporation, including tax accrual work papers prepared for the Corporation
during the preceding sixty (60) months. No examination or review conducted by
the Partnership under this Section 6.4 shall constitute a waiver or
relinquishment on the part of the Partnership of the right to rely upon the
representations and warranties made by Corporation herein; provided, that the
Partnership shall disclose in writing to the Corporation any fact or
circumstance it may discover that the Partnership believes renders any
representation or warranty made by the Corporation hereunder incorrect in any
respect. The Partnership covenants and agrees that it and its representatives,
counsel, accountants, agents, and employees will hold in strict confidence all
documents and information concerning the Corporation so obtained (except to the
extent that such documents or information are a matter of public record or
require disclosure in the S-4 or Proxy Statement), and if the transactions
44
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contemplated herein are not consummated, such confidence shall be maintained and
all such documents shall be returned to the Corporation.
6.5 Notices. The Corporation will promptly notify the Partnership of
-------
any event of which the Corporation obtains knowledge which has had or may
reasonably be expected to have a material adverse effect on the business,
financial condition, results of operations or prospects of the Corporation or in
the event that the Corporation determines that it is or is likely to become
unable to fulfill any of the conditions to the performance of the Partnership's
obligations hereunder, as set forth in Articles IX or XI herein.
6.6 Stockholders' Meeting. The Corporation will take all action
---------------------
necessary in accordance with applicable law and its certificate of incorporation
and bylaws to convene a meeting of its stockholders to consider and vote upon
this Agreement and the transactions contemplated hereby. The Board of Directors
of the Corporation shall, except to the extent it is advised by its outside
counsel that to do so could constitute a violation of its fiduciary duties,
recommend that the Corporation's stockholders approve this Agreement and the
transactions contemplated hereby, and the Board of Directors of the Corporation
shall, except to the extent it is advised by its outside counsel that to do so
could constitute a violation of its fiduciary duties, use its reasonable best
efforts (including if the Partnership so requests the retention of a proxy
solicitation firm and an information agent) to obtain the requisite vote of its
stockholders to approve this Agreement and the transactions contemplated hereby.
6.7 Termination of Corporation Stock Option Plan. The Corporation
--------------------------------------------
will take all steps necessary to cause the Corporation Stock Option Plan to be
terminated as of or prior to the Effective Time.
ARTICLE VII
COVENANTS OF THE PARTNERSHIP
PENDING EFFECTIVE TIME OF THE MERGER
The Partnership covenants and agrees with Corporation as follows:
7.1 Limitation on the Partnership's Conduct Prior to Effective Time.
---------------------------------------------------------------
Between the date hereof and the Effective Time, except as contemplated by this
Agreement, the Partnership will conduct its businesses only in the normal and
customary manner and in accordance with sound business practices, and the
Partnership shall not, without the prior written consent of the Corporation
(which shall not be unreasonably withheld or delayed):
(a) take any action that would cause the number of Partnership Units
outstanding immediately prior to the Effective Time to exceed 7,500,000, or
(except for the warrants referred to in Section 5.1) issue any rights, options,
or other securities that would
45
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entitle any Person to acquire any Partnership Units or Class B Units; purchase,
redeem or otherwise acquire Partnership Units; or make any cash or other
distributions to holders of Partnership Units or Class B Units other than normal
cash distributions to holders of Partnership Units, and normal cash
distributions and payment of fees to the General Partner, in the ordinary course
of business consistent with past practice;
(b) change any of the Partnership's accounting policies, except such
changes as may be required by the Financial Accounting Standards Board;
(c) make any material investment by merger, purchase of stock or
securities, contributions to capital, property transfers, or otherwise in any
other Person;
(d) take any action that would reasonably be expected to affect
adversely or delay the ability of the Corporation or the Partnership to obtain
any approvals, consents, or waivers required for the transactions contemplated
by this Agreement or to affect adversely the ability of the Partnership to
perform its covenants or agreements under this Agreement on a timely basis;
(e) amend the Limited Partnership Agreement or Certificate of Limited
Partnership of the Partnership (except as provided in Section 2.8) without the
prior written approval of the Corporation (which approval shall not be
unreasonably withheld or delayed); or
(f) agree to, or make any commitment to, take any of the actions
prohibited by this Section 7.1.
7.2 Affirmative Conduct of the Partnership Prior to Effective Time.
--------------------------------------------------------------
Between the date hereof and the Effective Time, the Partnership shall:
(a) use and devote its best efforts consistent with this Agreement to
maintain and preserve intact its present business organization and to maintain
and preserve its relationships and goodwill with customers, suppliers, lenders,
and others having business relationships with the Partnership;
(b) use commercially reasonable efforts to keep in full force and
effect all of the existing material permits, entitlements and licenses of the
Partnership;
(c) perform its material contractual obligations and not become in
material default on any thereof;
(d) duly and timely file all reports and returns required to be filed
with any federal, state, or local governmental authority, unless any extensions
have been duly granted by such authority;
46
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(e) duly observe and substantially comply with and perform all
material obligations and duties imposed by all federal and state laws, and
rules, regulations, and orders imposed by federal or state governmental
authorities;
(f) promptly notify the Corporation regarding receipt from any tax
authority of any notification of the commencement of an audit, any request to
extend the statute of limitations, any statutory notice of deficiency, any
revenue agent's report, any notice of proposed assessment, or any other similar
notification of potential adjustments to the tax liabilities arising from the
Partnership;
(g) furnish to the Corporation, as soon as practicable, (i) copies of
all reports, filings, certificates, correspondence, and other documents filed
with or received from the SEC or any other governmental agency or regulatory
authority pertaining to the transactions contemplated hereby, to the extent
permitted by law (and the Partnership shall use its reasonable best efforts to
obtain any waiver or consent necessary to provide such materials under
applicable law), (ii) all proxy statements, information statements, financial
statements, reports, letters, and communications sent by the Partnership to its
unitholders, and (iii) a copy of any material report concerning the Partnership
submitted to the Partnership or to the Board of Directors of the General
Partner, or any committee thereof, provided, however, that there need not be
furnished to the Corporation communications from the Partnership's financial
adivisor concerning the Merger (other than those referred to or included in the
S-4) or communications of legal counsel regarding the Partnership's rights and
obligations under this Agreement or the transactions contemplated hereby or
books, records, and documents covered by confidentiality agreements or the
attorney-client privilege, or which are attorneys' work product;
(h) promptly notify the Corporation of any fact or event that does or
could reasonably be expected to cause the Partnership Schedules to be incorrect
in any material respect as of the date of this Agreement or as of the Closing
Date;
(i) use commercially reasonable efforts to obtain any requisite third
party consent with respect to any contract, agreement, lease, license,
amendment, permit, or release that is material to the business of the
Partnership or that is contemplated or required to be obtained by the
Partnership in connection with this Agreement or the Merger, without the
imposition of materially burdensome conditions; and
(j) promptly notify the Corporation of the filing of any material
litigation, or the filing of any governmental or regulatory action, including
any investigation or notice of investigation or similar proceeding, and of any
information acquired by the Partnership concerning any material claims asserted
or threatened against the Partnership or any of its assets.
47
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7.3 Access to Information. The Partnership will afford the
---------------------
Corporation and its representatives, counsel, accountants, agents, and employees
access during normal business hours to all of the Partnership's businesses,
operations, properties, books, files, and records, other than (a) books,
records, and documents covered by the attorney-client privilege, or that are
attorneys' work product, and (b) books, records, and documents that the
Partnership is legally obligated to keep confidential. Such right of access
shall be exercised by the Corporation in such manner as to minimize any
disruption of, or interference with, the normal business operations of the
Partnership. Upon the request of the Corporation, the Partnership will request
that the independent auditors of the Partnership provide reasonable access to
auditors' work papers with respect to the businesses and properties of the
Partnership, including tax accrual work papers prepared for the Partnership
during the preceding sixty (60) months. No examination or review conducted by
the Corporation under this Section 7.3 shall constitute a waiver or
relinquishment on the part of the Corporation of the right to rely upon the
representations and warranties made by Partnership herein; provided, that the
Corporation shall disclose in writing to the Partnership any fact or
circumstance it may discover that the Corporation believes renders any
representation or warranty made by the Partnership hereunder incorrect in any
respect. The Corporation covenants and agrees that it and its representatives,
counsel, accountants, agents, and employees will hold in strict confidence all
documents and information concerning the Partnership so obtained (except to the
extent that such documents or information are a matter of public record or
require disclosure in the S-4 or Proxy Statement), and if the transactions
contemplated herein are not consummated, such confidence shall be maintained and
all such documents shall be returned to the Partnership.
7.4 Notices. The Partnership will promptly notify the Corporation of
-------
any event of which the Partnership obtains knowledge which has had or may
reasonably be expected to have a material adverse effect on the business,
financial condition, results of operations or prospects of the Partnership or in
the event that the Partnership determines that it is or is likely to become
unable to fulfill any of the conditions to the performance of the Corporation's
obligations hereunder, as set forth in Articles IX or X herein.
7.5 Unitholders' Meeting. The Partnership will take all action
--------------------
necessary in accordance with applicable law and its Limited Partnership
Agreement to convene a meeting of its unitholders to consider and vote upon this
Agreement and the transactions contemplated hereby, and the amendments to its
Certificate of Limited Partnership and Limited Partnership Agreement
contemplated by Section 2.8.
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ARTICLE VII
ADDITIONAL COVENANTS
8.1 Regulatory Matters.
------------------
(a) The Partnership and the Corporation shall promptly prepare and the
Partnership shall file with the SEC the S-4, in which the Proxy Statement will
be included as a prospectus. The Partnership shall use all reasonable efforts
to have the S-4 declared effective under the Securities Act as promptly as
practicable after such filing, and the Corporation and Partnership shall
promptly thereafter mail the Proxy Statement to their respective stockholders
and unitholders. The Partnership shall also use reasonable efforts to obtain
any necessary state securities law or "Blue Sky" permits and approvals required
to carry out the transactions contemplated by this Agreement, and obtain the
approval for listing on the NYSE of the Depositary Units to be issued in the
Merger. Each party shall immediately notify the other party in writing in the
event that such party becomes aware that the S-4 or Proxy Statement at any time
contains any untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading or that the S-4 or the Proxy Statement otherwise is required to be
amended or supplemented, which notice shall specify, in reasonable detail, the
circumstances thereof.
(b) The parties hereto shall cooperate with each other and use
reasonable efforts to prepare and file promptly all necessary documentation, to
effect all applications, notices, petitions and filings, to obtain as promptly
as practicable all permits, consents, approvals, and authorizations of all third
parties and governmental agencies and regulatory authorities that are necessary
or advisable to consummate the transactions contemplated by this Agreement and
(subject to Sections 11.4 and 11.5) to comply with the terms and conditions of
all such permits, consents, approvals, and authorizations and to the extent
practicable each will consult the other on, in each case subject to applicable
laws relating to the exchange of information, all the information relating to
the Partnership or the Corporation, as the case may be, which appear in any
filing made with, or written materials submitted to, any third party or any
governmental authority in connection with the transactions contemplated by this
Agreement. In exercising the foregoing right, each of the parties hereto shall
act reasonably and as promptly as practicable. The parties hereto agree that
they will consult with each other with respect to the obtaining of all permits,
consents, approvals, and authorizations of all third parties and governmental
authorities necessary or advisable to consummate the transactions contemplated
by this Agreement and each party will keep the other apprised of the status of
matters relating to completion of the transactions contemplated herein.
(c) The Partnership and the Corporation shall, upon request, furnish
each other with all information concerning themselves, their respective
partners, directors, officers,
49
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and stockholders or unitholders, and such other matters as may be reasonably
necessary or advisable in connection with the Proxy Statement or the S-4 or any
other statement, filing, notice, or application made by or on behalf of the
Partnership or the Corporation to the SEC or any other governmental authority in
connection with the transactions contemplated by this Agreement.
(d) The Partnership and the Corporation shall promptly advise each
other upon receiving any communication from any Person whose consent or approval
is required for consummation of the transactions contemplated by this Agreement
which seeks to impose material conditions upon the grant of such approval or
consent, or which causes such party to believe that there is a reasonable
likelihood that such consent or approval will not be obtained, or that the
receipt thereof will be delayed beyond June 15, 1998.
8.2 Certain Legal Impediments to Merger. The Partnership and the
-----------------------------------
Corporation each agree to use commercially reasonable efforts to lift or rescind
any injunction or restraining order or other order adversely affecting the
ability of the parties to consummate the transactions contemplated hereby and to
use commercially reasonable efforts to defend any litigation seeking to enjoin,
prevent or delay the consummation of the transactions contemplated hereby or
seeking material damages.
8.3 Additional Agreements; Parties. Subject to the terms and
------------------------------
conditions herein provided, each of the parties hereto agrees to use
commercially reasonable efforts to take promptly, or cause to be taken promptly,
all actions and to do promptly or cause to be done promptly, all things
necessary, proper, or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement as
promptly as practicable, including using commercially reasonable efforts to
obtain all necessary actions or nonactions, extensions, waivers, consents, and
approvals from other Persons, effecting all necessary registrations,
applications, and filings and (subject to Sections 11.4 and 11.5) obtaining any
required contractual consents and regulatory approvals.
8.4 Publicity. The initial press release announcing this Agreement
---------
shall be a joint press release or dual press releases, which in either case
shall (subject to the proviso in the last sentence of this Section 8.4) be
issued only with the prior approval of the other party as to the content and
timing thereof. Thereafter the Partnership and the Corporation shall consult
with each other in issuing any press releases or otherwise making public
statements with respect to the transactions contemplated hereby and in making
any filings with any governmental authority or with any national securities
exchange with respect thereto. Neither party shall issue any such press release
or public statement concerning the transactions contemplated hereby without the
prior approval of the other party, which shall not be unreasonably withheld or
delayed; provided that if either party hereto, on the advice of counsel,
determines that a disclosure is required by law, it may make such disclosure
without the approval of the other party, but only after affording such party a
reasonable opportunity to review and comment upon the disclosure.
50
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8.5 Affiliates Agreements and Stability Agreements.
----------------------------------------------
(a) At least 40 days prior to the anticipated Closing Date, the
Corporation after consulting with its counsel shall deliver to the Partnership a
letter identifying all Persons who are, at the time this Agreement is submitted
for approval to the stockholders of the Corporation, "affiliates" of Corporation
for purposes of Rule 145 under the Securities Act, and the Corporation shall
update that letter as of the Closing Date. The Corporation shall use all
reasonable efforts to cause each such affiliate to deliver to the Partnership at
or prior to the Closing Date a written "Affiliates" agreement, substantially in
the form of Exhibit A.
(b) Prior to the Closing Date, the Corporation shall use all
reasonable efforts to cause each Person or group of Persons who holds five
percent (5%) or more of the Corporation Stock (regardless of whether such Person
is an "affiliate") to deliver to the Partnership an agreement (a "Stability
Agreement") to the effect that during the six (6) month period following the
Merger such Person or group will not sell Partnership Units received in the
Merger.
ARTICLE IX
CONDITIONS PRECEDENT TO THE MERGER
The obligations of each party hereto to consummate the transactions
contemplated herein are subject to the satisfaction, on or before the Closing
Date, of the following conditions:
9.1 Stockholder and Unitholder Approval. The transactions
-----------------------------------
contemplated hereby shall have received all requisite approvals of the
stockholders of the Corporation and the unitholders of the Partnership.
9.2 No Judgments or Orders. No judgment, decree, injunction, order,
----------------------
or proceeding shall be outstanding by any governmental agency or entity or any
regulatory authority or court which prohibits, enjoins or restrains consummation
of the Merger or the other transactions contemplated by this Agreement.
9.3 Regulatory Approvals. To the extent required by applicable law
--------------------
or regulation, there shall have been obtained or granted all approvals, waivers,
or consents of any governmental agency or regulatory authority necessary for
consummation of the Merger and the transactions contemplated hereby, all such
approvals, waivers, or consents shall remain in full force and effect, and the
applicable waiting period under all laws shall have expired. All other statutory
or regulatory requirements for the valid completion of the transactions
contemplated hereby shall have been satisfied, and there shall be in effect no
statute, rule, or regulation that prohibits or makes illegal consummation of the
Merger.
51
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9.4 Tax Matters. The Partnership and the Corporation shall have
-----------
received an opinion in a form reasonably satisfactory to each of them to the
effect that the Merger will not disqualify the Surviving Entity from qualifying
as an "Electing 1987 Partnership" under Section 7704(g) of the Code, from each
of Carlsmith Ball Wichman Case & Ichiki, counsel to the Partnership, and
Brobeck, Phleger & Harrison LLP, special tax counsel to the Partnership.
9.5 S-4 and Proxy Statement. The S-4 shall have become effective
-----------------------
under the Securities Act and shall not be subject to any stop order or
proceeding seeking a stop order and copies of the Proxy Statement shall have
been timely mailed.
9.6 NYSE Listing. The Depositary Receipts issuable to holders of
------------
Corporation Stock upon consummation of the Merger shall have been duly
authorized for listing on the NYSE, subject to official notice of issuance.
ARTICLE X
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE CORPORATION
All of the obligations of the Corporation to effect the transactions
contemplated hereby shall be subject to the satisfaction, on or before the
Closing Date, of the following conditions, any of which may be waived in writing
by the Corporation:
10.1 Legal Opinion. The Corporation shall have received the opinion
-------------
of counsel to the Partnership reasonably satisfactory to the Corporation, dated
as of the Closing Date, as to the matters set forth in Exhibit B hereto.
10.2 Representations and Warranties; Performance of Covenants. All
--------------------------------------------------------
covenants, terms and conditions of this Agreement to be complied with and
performed by the Partnership at or before the Closing Date shall have been
complied with and performed in all material respects; and the representations
and warranties of the Partnership contained herein shall have been true and
correct in all material respects on and as of the date of this Agreement (or on
the date when made in the case of a representation or warranty which by its
express provisions is made with respect to a date prior to the date of this
Agreement), and on and as of the Closing Date with the same effect as though
such representations and warranties had been made on and as of the Closing Date,
provided that representations and warranties that are made as of a specific date
need be true in all material respects only as of such date.
10.3 Authorization of Merger and Amendments to Limited Partnership
-------------------------------------------------------------
Agreement. All actions necessary to authorize the execution, delivery and
- ---------
performance of this Agreement by the Partnership, and the consummation of the
transactions contemplated hereby, including the adoption and effectiveness of
the amendments to the Limited Partnership Agreement and Certificate of Limited
Partnership contemplated by Section 2.8,
52
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shall have been duly and validly taken by the General Partner and unitholders of
the Partnership, as required by its governing documents and by applicable law.
10.4 Absence of Certain Changes. Between the date of this Agreement
--------------------------
and the Effective Time, there shall not have occurred any change or event (other
than changes or events resulting from non-catastrophic weather conditions) that
has had or could reasonably be expected to have a material adverse effect on the
business, financial condition or results of operations of the Partnership,
including without limitation any such material adverse effect resulting from
changes to the health or nut-bearing capacity of the orchards owned or leased by
the Partnership.
10.5 Certificates. There shall have been delivered to the Corporation
------------
on the Closing Date (i) a certificate dated the Closing Date and executed by the
Chief Executive Officer and the Chief Financial Officer of the General Partner
of the Partnership certifying compliance with all of the provisions of Sections
10.2, 10.3 and 10.4; (ii) a certificate of the Secretary of the General Partner
attaching and certifying the adoption and continued effectiveness of all
resolutions of the Board of Directors of the General Partner authorizing this
Agreement, the Merger and the transactions contemplated hereby, certifying that
the unitholders of the Partnership have approved the Merger and the amendments
to the Limited Partnership Agreement, and certifying the incumbency and
signatures of the officers of the General Partner; and (iii) certificates issued
by the Department of Commerce and Consumer Affairs of the State of Hawaii and
the Secretary of State of the State of Delaware, each dated not earlier than two
(2) days prior to the Closing Date, certifying the valid existence and good
standing of the General Partner and the Partnership, respectively.
ARTICLE XI
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PARTNERSHIP
All of the obligations of the Partnership to effect the transactions
contemplated hereby shall be subject to the satisfaction, on or before the
Closing Date, of the following conditions, any of which may be waived in writing
by the Partnership:
11.1 Legal Opinion. The Partnership shall have received the opinion
-------------
of counsel to the Corporation reasonably satisfactory to the Partnership, dated
as of the Closing Date, as to the matters set forth in Exhibit C hereto.
11.2 Representations and Warranties; Performance of Covenants. All
--------------------------------------------------------
the covenants, terms, and conditions of this Agreement to be complied with and
performed by Corporation at or before the Closing Date shall have been complied
with and performed in all material respects; and the representations and
warranties of the Corporation contained herein shall have been true and correct
in all material respects on and as of the date of this Agreement (or on the date
when made in the case of a representation or warranty which by its
53
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express provisions is made with respect to a date prior to the date of this
Agreement), and on and as of the Closing Date with the same effect as though
such representations and warranties had been made on and as of the Closing Date,
provided that representations and warranties that are made as of a specific date
need be true in all material respects only as of such date.
11.3 Authorization of Merger. All actions necessary to authorize the
-----------------------
execution, delivery and performance of this Agreement by the Corporation, and
the consummation of the transactions contemplated hereby, shall have been duly
and validly taken by the Board of Directors and stockholders of the Corporation,
as required by its governing documents and by applicable law.
11.4 Absence of Conditions. There shall not be any action taken by
---------------------
any governmental entity or agency or regulatory authority in connection with the
grant of any approval, waiver, or consent referred to in Section 9.3, or any
statute, rule, regulation or order enacted, entered, proposed, or deemed
applicable to the Merger, which does or would impose any condition or
restriction upon the Corporation, the Partnership or the Surviving Entity that
the Partnership reasonably determines in the good faith exercise of its business
judgment is or would be materially burdensome to any such entity.
11.5 Third Party Consents. The Corporation and the Partnership shall
--------------------
have obtained all consents of other parties to their material mortgages, notes,
leases, franchises, agreements, licenses, and permits as may be necessary to
permit the Merger and the transactions contemplated herein to be consummated
without a material default, acceleration, breach, or loss of rights or benefits
thereunder, and no such consent shall impose any condition or restriction on the
Corporation, the Partnership or the Surviving Entity that the Partnership
reasonably determines in the good faith exercise of its business judgment is or
would be materially burdensome to any such entity.
11.6 Absence of Certain Changes. Between the date of this Agreement
--------------------------
and the Effective Time, there shall not have occurred any change or event that
has had or could reasonably be expected to have a material adverse effect on the
business, financial condition or results of operations of Corporation.
11.7 Certificates. There shall have been delivered to the Partnership
------------
on the Closing Date (I) a certificate executed by the Chief Executive Officer
and the Chief Financial Officer of the Corporation certifying compliance with
all of the provisions of Sections 11.2, 11.3, 11.5 (insofar as it pertains to
the Corporation) and 11.6; (ii) a certificate of the Secretary of the
Corporation attaching and certifying the adoption and continued effectiveness of
all resolutions of the Corporation's Board of Directors authorizing this
Agreement, the Merger and the transactions contemplated hereby, certifying that
the stockholders of the Corporation have approved the Merger, and certifying the
incumbency and signatures of the officers of the Corporation; and (iii) a
certificate issued by the Secretary of State of the State of Delaware
54
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dated not earlier than two (2) days prior to the Closing Date certifying the
valid existence and good standing of the Corporation.
11.8 Blue Sky Matters. The issuance of Partnership Units in the
----------------
Merger shall have been qualified or registered with the appropriate governmental
entity under any applicable state securities or Blue Sky laws, and such
qualifications or registrations shall be in effect on the Closing Date, if
required by such laws.
11.9 Agreements. Each of those Persons identified by the Corporation
----------
pursuant to Section 8.5(a) shall have executed and delivered to the Partnership
agreements acceptable to the Partnership in substantially the form of Exhibit A.
11.10 Stability Agreements. Each of the Persons referred to in
--------------------
Section 8.5(b) shall have executed and delivered to the Partnership a Stability
Agreement reasonably acceptable to the Partnership.
11.11 Loan Extension. The Corporation shall have secured an extension
--------------
of the maturity date of its existing credit facility with Bank of Hawaii to a
date which is not earlier than August 31, 1998 without material adverse changes
to the terms and conditions of such credit facility.
11.12 Amendments to Partnership Agreement. The amendments to the
-----------------------------------
Partnership's Certificate of Limited Partnership and its Limited Partnership
Agreement contemplated by Section 2.8 shall have been duly adopted by the
Partnership's unitholders and made effective.
ARTICLE XII
EMPLOYEE MATTERS
12.1 Employee Retention. Subject to the employee requirements of the
------------------
Surviving Entity, as determined in the sole good faith business judgment of the
Partnership's General Partner, the Partnership shall endeavor to provide
employment at the Effective Time to all current employees of the Corporation,
but nothing in this Agreement shall limit the discretion of the Surviving Entity
as to retention of any such employees following the Effective Time.
12.2 Employee Benefits. Employee benefits provided to employees of
-----------------
the Corporation who are retained by the Surviving Entity following the Effective
Time shall, in the aggregate, be substantially equivalent to the employee
benefits to which the Corporation's employees were entitled and that were in
effect as of the date hereof. The General Partner shall also use reasonable
efforts to cause the Partnership to adopt, and to obtain any requisite approval
by the Partnership's unitholders of, a plan providing for issuance to the
Surviving
55
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Entity's employees of options to acquire Partnership Units, Partnership Unit
appreciation rights, or similar equity-based compensation. Notwithstanding the
foregoing, nothing herein contained shall require the Partnership to adopt or
maintain any particular plan, program, policy, or arrangement following the
Effective Time, except that unless otherwise agreed by the parties prior to the
Effective Time, the Partnership shall assume the Corporation's existing 401(k)
plan.
12.3 Prior Service Credit. Employees of the Corporation who become
--------------------
participants in any employee benefit plan, practice, or policy of the Surviving
Entity shall be given credit thereunder for all service prior to the Effective
Time with the Corporation, or any predecessor employer (to the extent such
credit was given by the Corporation), for purposes of eligibility and vesting,
for determination of benefits such as vacation and sick leave allowances, and
for such other purposes, if any for which such service is either taken into
account or recognized by the Surviving Entity.
12.4 Indemnification of Directors and Officers. The Partnership
-----------------------------------------
agrees that all rights to indemnification or exculpation existing as of December
1, 1997 in favor of the directors and officers of the Corporation as provided in
its certificate of incorporation, bylaws, or in any indemnification agreements
or arrangements listed and identified as such on the Corporation Schedules
shall, with respect to matters occurring prior to the Effective Time, survive
the Merger and continue in full force and effect for a period of six years
following the Effective Time.
ARTICLE XII
TERMINATION
13.1 Termination. This Agreement may be terminated at any time prior
-----------
to the Effective Time of the Merger upon the occurrence of any of the following:
(a) by the mutual consent of the Partnership and the Corporation if
the Board of Directors of the Corporation and of the General Partner of the
Partnership so determine;
(b) by the Corporation or the Partnership, if the Board of Directors
of the Corporation or of the General Partner of the Partnership so determines,
if any governmental authority or regulatory agency shall have denied any
approval, waiver, or consent required for consummation of the Merger and such
denial has become final and nonappealable;
(c) by the Partnership, if the Board of Directors of its General
Partner so determines, if (i) the Corporation's Board of Directors fails to
recommend approval of the Agreement to the stockholders of the Corporation or
withdraws, revokes, or materially modifies its recommendation in a manner
adverse to the Partnership; (ii) the stockholders of
56
<PAGE>
the Corporation fail to approve the Agreement at the Stockholders' Meeting; or
(iii) there occurs a material breach by the Corporation of any representation,
warranty, or agreement contained herein which is not cured or not curable within
thirty (30) days after written notice of such breach is given to the Corporation
(but in the case of such event that is curable within such 30-day period, this
Agreement shall not be terminated pursuant to this Section 13.1(c) or Section
13.1(e) unless such 30-day period has first elapsed);
(d) by the Corporation, if its Board of Directors so determines, (i)
in the event of a material breach by the Partnership of any representation,
warranty, or agreement contained herein which is not cured or not curable within
thirty (30) days after written notice of such breach is given to the Partnership
(but in the case of such event that is curable within such 30-day period this
Agreement shall not be terminated pursuant to this Section 13.1(d) or Section
13.1(e) unless such 30-day period has first elapsed); or (ii) in the event the
unitholders of the Partnership fail to approve the Agreement and the amendments
to the Agreement of Limited Partnership at the Unitholders' Meeting; or
(e) by the Partnership or the Corporation, if the Board of Directors
of the Corporation or of the General Partner of the Partnership so determines,
in the event that the Merger is not consummated on or prior to June 30, 1998
(except that such date shall be extended until August 31, 1998 (i) upon the
request of the Partnership's General Partner, if the Corporation's Board of
Directors consents thereto (which consent shall not be unreasonably withheld) if
necessary to obtain approval of the Partnership's unitholders; or (ii) upon the
request of the Corporation, if the Partnership's General Partner consents
thereto, if necessary to obtain the approval of the Corporation's stockholders,
provided, however, that a party shall not be entitled to terminate this
Agreement pursuant to this Section 13.1(e) if the failure to consummate the
Merger by such time is due to the breach of any representation, warranty or
agreement in this Agreement by the party seeking to terminate;
(f) by the Partnership or Corporation, if the Board of Directors of
the Corporation or of the General Partner of the Partnership so determines, if
any governmental or regulatory authority or agency, or court of competent
jurisdiction, shall have issued a final and nonappealable permanent order or
injunction enjoining, or otherwise prohibiting the consummation of the Merger
and the time for appeal or petition for reconsideration of such order or
injunction shall have expired without such appeal or petition being granted;
(g) by the Board of Directors of the Partnership's General Partner, in
accordance with Section 6.2(d).
13.2 Effect of Termination. If this Agreement is terminated pursuant
---------------------
to this Article XIII, this Agreement shall be void and have no further effect,
except that no termination of this Agreement under this Article XIII for any
reason or in any manner shall release, or be construed as so releasing, the
Corporation or the Partnership from its or their respective obligations, (a)
under the last sentence of Section 6.4, the last sentence of
57
<PAGE>
Section 7.3, or under Sections 6.2(d) or 14.1 hereof, or (b) from any liability
or damage to the other party hereto arising out of in connection with or
otherwise relating to, directly or indirectly, said party's intentional breach,
default or failure to perform any of its covenants, agreements, duties or
obligations arising hereunder.
ARTICLE XIV
MISCELLANEOUS
14.1 Expenses. Each party hereto shall pay its own costs and expenses,
--------
including but not limited to those of its attorneys and accountants, in
connection with this Agreement and the transactions contemplated hereby;
provided that if the Merger is not consummated the costs of printing, filing and
mailing the S-4 and the Proxy Statement shall be divided equally between the
parties and each party shall upon demand promptly reimburse the other for any
amounts owed by reason of this Section 14.1.
14.2 Notices. Any notice, request, instruction or other document to
-------
be given hereunder by any party hereto to another shall be in writing and
delivered personally or by facsimile transmission or sent by registered or
certified mail, postage prepaid, with return receipt requested, addressed as
follows:
To Corporation: C. Brewer Homes, Inc.
255-A East Waiko Road
Wailuku, Hawaii 96793
Attention: Seth A. Bakes
Facsimile Number: (808) 242-5316
With copies to: Goodsill Anderson Queen & Stifel
1099 Alakea Street, Suite 1800
Honolulu, HI 96813
Attention: David J. Reber, Esq.
Facsimile Number: (808) 547-5880
58
<PAGE>
To the Partnership: Mauna Loa Macadamia Partners, L.P.
827 Fort Street
Honolulu, Hawaii 96813
Attention: Kent T. Lucien
Facsimile Number: (808) 547-5880
With copies to: Carlsmith Ball Wichman Case & Ichiki
Pacific Tower, Suite 2200
1001 Bishop Street
Honolulu, Hawaii 96813
Attention: William E. Atwater, Esq.
Facsimile Number: (808) 523-0842
Any such notice, request, instruction, or other document shall be
deemed received on the date delivered personally or sent by facsimile
transmission, or on the third Business Day after it was sent by registered or
certified mail, postage prepaid. Any of the Persons shown above may change its
address for purposes of this Section by giving notice in accordance herewith.
14.3 Successors and Assigns. All terms and conditions of this
----------------------
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective transferees, successors, and permitted assigns;
provided, however, that this Agreement and all rights, privileges, duties, and
obligations of the parties hereto may not be assigned or delegated by either
party hereto without the prior written consent of the other party hereto.
14.4 Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which, taken together, shall constitute one original
document.
14.5 Effect of Representations and Warranties. The representations
----------------------------------------
and warranties of Corporation and the Partnership contained in this Agreement
shall terminate immediately after the Effective Time.
14.6 Third Parties. Except for Sections 12.3 and 12.4, this Agreement
-------------
shall not benefit or create any right or cause of action on the part of any
Person other than the Partnership and the Corporation.
14.7 Schedules; Exhibits; Integration. This Agreement, together with
--------------------------------
the Schedules and exhibits hereto, constitutes the entire agreement between the
parties pertaining to the subject matter hereof and supersedes all prior
agreements and understandings of the parties in connection therewith, except
that the existing Confidentiality Agreement between the parties shall remain in
effect. In the event there is any absolute unconditional representation
contained in this Agreement, said representation shall be modified by any
59
<PAGE>
contrary information specifically referring to said representation that is set
forth in any Schedule.
14.8 Governing Law. This Agreement shall be governed by, and
-------------
interpreted in accordance with, the laws of the State of Delaware (however, not
to the exclusion of any applicable Federal law), without regard to Delaware
statutes or judicial decisions regarding choice of law questions.
14.9 Captions. The captions contained in this Agreement are for
--------
convenience of reference only and do not form a part of this Agreement and shall
not affect the interpretation hereof.
14.10 Severability. If any portion of this Agreement shall be deemed
------------
by a court of competent jurisdiction to be unenforceable, the remaining portions
shall be valid and enforceable only if, after excluding the portion deemed to be
unenforceable, the remaining terms hereof shall provide for the consummation of
the transactions contemplated herein without a materially adverse impact on the
financial or business benefits to the parties hereto that would otherwise be
provided by this Agreement.
14.11 Waiver, Modification and Amendment. Prior to the Effective Time,
----------------------------------
any provision of this Agreement may be waived by the party benefitted by that
provision or by both parties. No waiver of any term, provision or condition of
this Agreement, in any one or more instances, shall be deemed to be or construed
as a further or continuing waiver of any such term, provision or condition.
Except as otherwise required by law, and except that the Exchange Ratio may not
be reduced (other than pursuant to the adjustment provisions set forth in
Section 2.3) without the approval of the stockholders of the Corporation, this
Agreement may be modified, amended or terminated, and any waiver may be given,
on behalf of the Corporation or the Partnership by action of the Board of
Directors of the Corporation or of the General Partner of the Partnership,
respectively, without action by their respective stockholders or unitholders and
whether before or after the meetings of such stockholders and unitholders
contemplated hereby. This Agreement may be modified or amended only by an
instrument of equal formality signed by the parties or their duly authorized
agents. Except as otherwise required by law, any reference herein to action by
the Corporation or the Partnership shall mean action by or pursuant to
authorization of the Board of Directors of the Corporation or the Board of
Directors of the Partnership's General Partner, respectively.
60
<PAGE>
14.12 Attorney's Fees. In the event either party to this Agreement
---------------
brings an action or suit against the other party by reason of any breach of any
covenant, agreement, representation, warranty or other provision hereof, or any
breach by such other party of any duty or obligation created hereunder, the
prevailing party, as determined by the court or other body having jurisdiction,
shall be entitled to have and recover of and from the losing party, as
determined by the court or other body having jurisdiction, all reasonable costs
and expenses incurred or sustained by such prevailing party in connection with
such suit or action, including, without limitation, reasonable legal fees and
court costs (whether or not taxable as such).
14.13 Jury Waiver. THE PARTIES HERETO WAIVE TRIAL BY JURY IN ANY
-----------
MATTER ARISING OUT OF THIS AGREEMENT OR RELATED TO THIS AGREEMENT OR IN
CONNECTION WITH ANY TRANSACTION OR MATTER CONTEMPLATED IN THIS AGREEMENT.
IN WITNESS WHEREOF, the parties to this Agreement have duly executed
this Agreement as of the day and year first above written.
MAUNA LOA MACADAMIA PARTNERS, L.P.
By: MAUNA LOA RESOURCES INC.
Its General Partner
By: /s/ Kent T. Lucien
---------------------------------------------
Name: Kent T. Lucien
Title: President
"Partnership"
C. BREWER HOMES, INC.
By: /s/ Seth A. Bakes
----------------------------------------------
Name: Seth A. Bakes
Title: President
"Corporation"
61
<PAGE>
EXHIBIT A
---------
AFFILIATE'S AGREEMENT
---------------------
Mauna Loa Macadamia Partners, L.P.
P.O. Box 1826
Honolulu, Hawaii 96805
Ladies and Gentlemen:
Reference is made to the Agreement and Plan of Merger, dated as of
December __, 1997 (the "Merger Agreement"), by and between Mauna Loa Macadamia
Partners, L.P. (the "Partnership") and C. Brewer Homes, Inc. (the
"Corporation"), which Merger Agreement provides for the merger of the
Corporation with and into the Partnership (the "Merger"). Capitalized terms used
and not defined herein shall have the meanings set forth in the Merger
Agreement.
In the Merger, shares of the Corporation's common stock will be
converted into the right to receive Partnership Units. I have been informed
that the Merger constitutes a transaction covered by Rule 145 under the
Securities Act of 1933, as amended (the "Securities Act"); that I may be deemed
to be an "affiliate" of the Corporation within the meaning of Rule 145; and
that, accordingly, the Partnership Units I acquire in connection with the Merger
may only be disposed of in conformity with the provisions hereof.
1. I represent, warrant and agree as follows:
a. I have full power to execute this Affiliate's Agreement and
to make the representations, warranties and agreements herein, and to perform my
obligations hereunder.
b. I will not sell, transfer or dispose of any Partnership
Units which I acquire in connection with the Merger or any securities which may
be paid as a dividend or otherwise distributed thereon or with respect thereto
or issued or delivered in exchange or substitution therefor (all such Units and
other securities being referred to as "Restricted Securities"), or any option,
right or other interest with respect to any Restricted Securities, unless such
sale, transfer or disposition is effected (i) pursuant to an exemption from the
registration requirements of the Securities Act as provided in Section 3 hereof,
or (ii) pursuant to an effective registration statement under, and in compliance
with, the Securities Act (provided that I may make bona fide gifts or
distributions without consideration so long as the recipients thereof agree not
to sell, transfer or otherwise dispose of the Partnership Units except as
provided herein).
<PAGE>
c. I have consulted such legal and financial counsel as I have
deemed appropriate in connection with the execution of this Affiliate's
Agreement.
2. I understand that the Partnership is under no obligation to
register the sale, transfer or other disposition of the Restricted Securities by
me or on my behalf under the Securities Act or to take any other action
necessary in order to make available an exemption from registration requirements
of the Securities Act.
3. The Partnership acknowledges that the provisions of Section 1(b)
of this Affiliate's Agreement will be satisfied as to any sale by me of
Restricted Securities pursuant to Rule 145(d) under the Securities Act, as
evidenced by a broker's letter stating that the requirements of Rule 145 have
been met; provided, however, that if counsel for the Partnership reasonably
believes that the provisions of Rule 145 have not been complied with, or if
requested by the Partnership in connection with a proposed disposition, I shall
furnish to the Partnership a copy of a "no action" letter or other communication
from the staff of the SEC or an opinion of counsel in form and substance
satisfactory to the Partnership and its counsel, to the effect that the
applicable provisions of paragraphs (c), (e), (f) and (g) of Rule 144 under the
Securities Act have been complied with or that the disposition may be otherwise
effected in the manner requested in compliance with the Securities Act.
4. I also understand that stop transfer instructions will be given
to the Partnership's transfer agent with respect to the Restricted Securities
and that there will be placed on the certificates evidencing the Restricted
Securities, or any substitutions therefor, a legend stating in substance:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), APPLIES AND MAY ONLY BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN
THE REGISTERED HOLDER HEREOF AND HAWAII LAND & FARMING COMPANY, L.P., A
COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF HAWAII LAND
& FARMING COMPANY, L.P., "
The Partnership agrees that such stop transfer instructions and legend
will be promptly removed if the provisions of Section 3 are complied with, and
further, after the expiration of 12 months from the date the Restricted
Securities issued in the Merger were acquired from the Partnership, upon
request, the Partnership will remove such legend.
5. This Affiliate's Agreement shall be binding upon and enforceable
against my administrators, executors, representatives, heirs, legatees,
devisees, successors, assigns and any pledgee holding the Restricted Securities
as collateral.
2
<PAGE>
6. In the event any party to this Agreement brings an action or suit
against any other party by reason of any breach of any covenant, agreement,
representation, warranty or other provision hereof, or any breach of any duty or
obligation created hereunder by such other party, the prevailing party, as
determined by the court or other body having jurisdiction, shall be entitled to
have and recover of and from the losing party, as determined by the court or
other body having jurisdiction, all reasonable costs and expenses incurred or
sustained by such prevailing party in connection with such suit or action,
including, without limitation, legal fees and court costs (whether or not
taxable as such).
7. THE PARTIES HERETO WAIVE TRIAL BY JURY IN ANY MATTER ARISING OUT
OF THIS AGREEMENT OR RELATED TO THIS AGREEMENT OR IN CONNECTION WITH ANY
TRANSACTION OR MATTER CONTEMPLATED IN THIS AGREEMENT.
IN WITNESS WHEREOF, I have executed the foregoing Affiliate's
Agreement this ___day of ________________, 1998.
Very truly yours,
---------------------------------
Name:
Agreed to and accepted this
__________ day of __________________, 1998:
MAUNA LOA MACADAMIA PARTNERS, L.P.
By: _________________________________________
Title:
3
<PAGE>
EXHIBIT B
FORM OF OPINION OF THE PARTNERSHIP'S COUNSEL
--------------------------------------------
The opinion of counsel required by Section 10.1 of the Agreement and
Plan of Merger (the "Agreement") shall be dated as of the Closing Date, shall be
in form and substance reasonably satisfactory to the Corporation and shall
contain opinions to the effect set forth below. (All capitalized terms not
otherwise defined herein have the meanings specified in the Agreement).
1. Any consent or approval of, notice to or filing with, and any
waiting period imposed by, any governmental agency or regulatory authority which
is required or applicable under Delaware, Hawaii or Federal law in connection
with the execution and delivery of the Agreement by the Partnership and the
consummation by the Partnership of the transactions contemplated thereby has
been obtained as specified in such opinion, or has expired.
2. The portion of the S-4 (including the Proxy Statement and any
amendments or supplements thereto) relating to the Partnership as of the
effective date of the S-4 and as of the date of mailing of the Proxy Statement
and the respective dates of the Stockholders' Meeting and Unitholders' Meeting,
complied as to form in all material respects with the requirements of the
Securities Act and the Exchange Act and all applicable rules and
<PAGE>
regulations thereunder (except no opinion need be expressed as to operating
statistics, financial statements, financial schedules or other financial or
statistical data, or as to material relating to and supplied by the
Corporation).
3. The amendments to the Partnership's Certificate of Limited
Partnership and its Limited Partnership Agreement, as described in the S-4, have
been duly adopted and are effective.
4. The Partnership Units issuable to holders of Corporation Stock
upon consummation of the Merger in the manner contemplated by the Agreement will
be duly authorized, validly issued, fully paid and (except as otherwise provided
by the Delaware RULPA) nonassessable.
Counsel shall further state that although such counsel has not itself
confirmed the accuracy or completeness of, or otherwise verified the information
included in the S-4 or the Proxy Statement, on the basis of the information
developed in the course of such counsel's performance of legal services for the
Partnership in connection with the Agreement and in connection with preparation
of the S-4 and Proxy Statement, including such counsel's participation in
conferences with representatives of the Partnership and its auditors, such
counsel has not become aware of any information which has caused such counsel to
believe that the S-4, insofar as its contents relate to the Partnership (other
than the operating statistics, financial statements, financial schedules, and
other financial and statistical data contained therein), as of its effective
date, failed to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, or that the Proxy
Statement (as amended or supplemented, if so amended or supplemented) insofar as
its contents relate to the Partnership (other than the operating statistics,
financial statements, financial schedules, and other financial and statistical
data contained
2
<PAGE>
therein) as of the date of mailing and as of the respective times of the
Stockholders' Meeting and Unitholders' Meeting, contained any untrue statement
of a material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
In rendering its opinion, such counsel may rely, to the extent that
such counsel deems reliance necessary or appropriate, as to matters of the law
of states in which such counsel is not admitted to practice, upon the opinion of
counsel admitted to practice in such states, and as to matters of fact upon
certificates of government officials, officers of the Partnership or of its
General Partners and the Partnership's registrar and transfer agent. The opinion
may be limited to matters of Delaware, Hawaii and Federal law, and such counsel
may expressly exclude any opinions as to choice of law matters and antitrust
matters and may add such other qualifications and explanations of the basis of
its opinions as may be reasonably acceptable to the Corporation.
3
<PAGE>
EXHIBIT C
FORM OF OPINION OF THE CORPORATION'S COUNSEL
--------------------------------------------
The opinion of counsel required by Section 11.1 of the Agreement and
Plan of Merger (the "Agreement") shall be dated as of the Closing Date, shall be
in form and substance reasonably satisfactory to the Partnership and shall
contain opinions to the effect set forth below. (All capitalized terms not
otherwise defined herein have the meanings specified in the Agreement).
1. The execution and delivery by the Corporation of the Agreement,
the consummation of the transactions contemplated thereby, and compliance by the
Corporation with the provisions thereof will not constitute a breach of or
result in a default (or give rise to any rights of termination, cancellation or
acceleration, or any right to acquire any securities or assets) under any of the
terms, conditions or provisions of any Corporation Scheduled Contract or, to
such counsel's knowledge, of any contract then in effect that, if in effect on
the date of the Agreement, would constitute a Corporation Scheduled Contract.
2. Any consent or approval of, notice to or filing with, and any
waiting period imposed by, any governmental agency or regulatory authority which
is required or applicable under Delaware, Hawaii or Federal law in connection
with the execution and delivery of the Agreement by the Corporation and the
consummation by the Corporation of
<PAGE>
the transactions contemplated thereby has been obtained as specified in such
opinion, or has expired.
3. The portion of the S-4 (including the Proxy Statement and any
amendments or supplements thereto) relating to the Corporation as of the
effective date of the S-4 and as of the date of mailing of the Proxy Statement
and the respective dates of the Unitholders' Meeting' Meeting and Unitholders'
Meeting, complied as to form in all material respects with the requirements of
the Securities Act and the Exchange Act and all applicable rules and regulations
thereunder (except no opinion need be expressed as to operating statistics,
financial statements, financial schedules or other financial or statistical
data, or as to material relating to and supplied by the Partnership).
4. To such counsel's knowledge, there are no Persons who should be
deemed "affiliates" of the Corporation as of the time of the Stockholders'
Meeting, other than those Persons identified pursuant to Section 8.5(a) of the
Agreement.
Counsel shall further state that although such counsel has not itself
confirmed the accuracy or completeness of, or otherwise verified the information
included in the S-4 or the Proxy Statement, on the basis of the information
developed in the course of such counsel's performance of legal services for the
Corporation in connection with the Agreement and in connection with preparation
of the S-4 and Proxy Statement, including such counsel's participation in
conferences with representatives of the Corporation and its auditors, such
2
<PAGE>
counsel has not become aware of any information which has caused such counsel to
believe that the S-4, insofar as its contents relate to the Corporation (other
than the operating statistics, financial statements, financial schedules, and
other financial and statistical data contained therein), as of its effective
date, failed to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, or that the Proxy
Statement (as amended or supplemented, if so amended or supplemented) insofar as
its contents relate to the Corporation (other than the operating statistics,
financial statements, financial schedules, and other financial and statistical
data contained therein) as of the date of mailing and as of the respective times
of the Unitholders' Meeting' Meeting and Unitholders' Meeting, contained any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
In rendering its opinion, such counsel may rely, to the extent that
such counsel deems reliance necessary or appropriate, as to matters of the law
of states in which such counsel is not admitted to practice, upon the opinion of
counsel admitted to practice in such states, and as to matters of fact upon
certificates of government officials, officers of the Corporation and the
Corporation's registrar and transfer agent. The opinion may be limited to
matters of Delaware, Hawaii and Federal law, and such counsel may expressly
exclude any opinions as to choice of law matters and antitrust matters and may
add such other qualifications and explanations of the basis of its opinions as
may be reasonably acceptable to the Partnership.
3
<PAGE>
EXHIBIT 10.62
C. BREWER HOMES, INC.
August 13, 1997
Re: Edward T. Foley
Re: Release and Separation Agreement
Dear Mr. Foley:
This is to confirm our discussions regarding the terms of your separation
from employment with C. Brewer Homes ("Company"). The Board certainly recognizes
and appreciates the contributions you have made to C. Brewer Homes and we wish
you well in your future endeavors. To avoid any disputes or misunderstandings
which may arise from your employment and separation from employment with the
Company, and to protect the interests of both parties, we have mutually agreed
to the following terms:
1. Employment Term and Last Day of Active Service. Your last day of active
----------------------------------------------
service as Executive Vice President and Chief Financial Officer with the
Company will be at the discretion of the Company's Board of Directors, but
shall be no sooner than October 31, 1997 and no later than March 31, 1998;
in any event, you expressly understand that the Company reserves the right
to terminate your employment for cause at any time. During the remainder of
your employment your duties will generally continue as in your previous
employment with the Company and will include, but will not be limited to,
the following: preparation and submission of SEC reports; preparation of
press releases; maintenance of relationship with the Bank of Hawaii;
management of cash; duties related to the completion of certain
transaction(s), as designated by the Company's Board of Directors; and, any
other duties normally performed by the Chief Financial Officer. These
duties shall be performed in a diligent and professional manner.
During the remaining term of your employment, your work locations will
generally be divided between CBCL headquarters and CBHI headquarters.
Normally, you will spend Monday, Wednesday and Thursday at CBHI
headquarters in Maui, and Tuesday and Friday at CBCL headquarters in Oahu.
If the aforesaid scheduled work locations will be varied in any manner
during the course of a particular week, you will advise the Company's
President of your scheduled work locations for the following week by Friday
of the preceding week. Notwithstanding the foregoing, if business necessity
so dictates, you will have the right to rearrange your work locations for
the current week upon giving reasonable notice to the Company's President
thereof, including the nature of the business which requires the change in
work locations. Your compensation will remain unchanged, with a salary of
eleven thousand, two hundred and fifty dollars ($11,250.00) per month,
stock options (25,000 shares at $9.75 and 10,000 shares at $2.0625), and
1
<PAGE>
standard Company benefits. In addition, should certain transaction(s), as
designated by the Company's Board of Directors, be completed successfully
in the judgment of the Company's Board of Directors, you shall receive a
cash bonus payment of fifty thousand dollars ($50,000.00), in lieu of
participation in MICP. You shall not accumulate any further vacation time
and hereby agree to waive any and all rights that you may have to accrued
vacation pay, or any vacation pay which may subsequently accrue pursuant to
the Company's vacation policy, in return for a lump sum payment of
$11,250.00 on the date of your separation from employment, if such date
occurs on or before December 31, 1997, or a lump sum payment of $22,500.00
on the date of your separation from employment, if such date occurs on or
after January 1, 1998.
2. Consulting Agreement and Reference Statement. As of your last day of
--------------------------------------------
active service, in order to assist with the transitional issues with a new
Chief Financial Officer, the Company will enter into a consulting agreement
with you which is attached as Exhibit "A-1" ("Consulting Agreement"). In
the event that any potential or future employers call the Company for
information concerning your employment with the Company, the Company agrees
that it will provide only the following information concerning your
----
employment with the Company, and no further information without your
express prior written consent:
A statement that you decided to resign your position with the Company
as Executive Vice President and Chief Financial Officer because you
were unwilling to relocate to Maui after the move of CBHI
headquarters to Maui. In addition, the Company may confirm the dates
of your employment with the Company, the amount of your compensation,
and your job description.
The separation will be characterized to the public as set forth in a Press
Release, which will state that you have resigned your position with the
Company as Executive Vice President and Chief Financial Officer effective
as of ________________, 199_, in order to pursue other interests.
3. Outplacement and Business Development Expenses. You will receive up to an
----------------------------------------------
additional $15,000 for approved Outplacement consulting service. Such
expenses would include Outplacement counseling, travel to an interview site
(travel expenses to be consistent with the C. Brewer Homes Travel Expense
Reimbursement Policy) and communications expenses (such as telephone and
fax expense). You will submit your expense reimbursement request to the
Company's Controller with appropriate documentation. This provision is
applicable through the date of the termination of the Consulting Agreement
and your entitlement to any unused funds shall thereafter lapse.
4. Return of Property. As of the date of your separation from employment, you
------------------
will turn over to the Company our keys and other Company materials,
records, supplies or
2
<PAGE>
equipment you may have in your possession, subject to an extension which
may be granted at the discretion of the Company's President.
6. Continuation of Health Care Benefits. As part of the Consulting Agreement,
------------------------------------
the Company will continue your present health care (medical and dental)
insurance coverage until the date of the termination of the Consulting
Agreement or the date you secure reasonably equivalent alternate coverage,
whichever is earlier. The Company will contribute the same premium share
for this insurance coverage as it would for an active salaried employee.
You must contribute your portion of the premium to be eligible for this
provision. As of the date of the termination of the Consulting Agreement,
if reasonably equivalent alternative coverage is not available, you may
elect to continue medical and/or dental coverage under the Company's
medical and dental plans, at your own expense for a period of 18 months.
7. Defined Contribution Benefits. You will cease to be an eligible active
-----------------------------
participant in the Company's Defined Contribution Plan as of the date of
your separation from employment. You will be eligible for any contributions
under that plan for your eligible service under the terms of that Plan.
8. Other Benefits/Stock Options.
----------------------------
a. Your coverage under the other insurance plans (group life, AD&D,
travel accident, etc.) will expire as of the date of your separation.
Some of these plans have conversion features which will be
communicated to you by the C. Brewer Human Resources Department.
b. Any normal reimbursable business expense, as customarily
determined under the Company's expense reimbursement policy, incurred
before your separation date, will be paid within fourteen days
following the receipt of the expense form by the Company.
c. Subject to the explicit terms of your stock option plan, you may
exercise any vested shares in accordance with the Plan. In the event
you exercise any of the above options and you sell the shares
associated with such options, you agree to market those shares in a
reasonable and orderly manner .
9. Release of Claims. In consideration of the above paragraphs, you hereby
-----------------
release the Company and any related entities and their directors, officers,
employees, and agents from any and all claims (including, but not limited
to, claims for personal injury, emotional distress, breach of contract or
for violation of Title VII of the Civil Rights Act of 1964, the Age
Discrimination in Employment Act, the Rehabilitation Act of 1973, the
Americans with Disabilities Act of 1990, the Hawaii Civil Rights Commission
Act, and the Hawaii Employment Practices Law, H.R.S. Chapter 378) you now
have, known or
3
<PAGE>
unknown, arising out of your employment with or separation from employment
with the Company. This Release of Claims by the you does not apply to any
claims which may arise because of breach of this agreement.
In consideration for the covenants and understandings herein, the Company
releases you from any and all claims the Company may have, known or
unknown, against you arising out of your employment with or separation from
employment with the Company. This Release of Claims by the Company does not
apply to any claims which may arise because of breach of this agreement.
10. Confidentiality. You agree to refrain from disclosing to the general
---------------
public any confidential information about the Company which you acquired
while an employee of the Company.
11. Defense of Claims. You and the Company expressly understand and
-----------------
acknowledge that this Agreement may be pleaded as a defense to, and may be
used as the basis for an injunction against any action, suit,
administrative or other proceedings which may be instituted, prosecuted or
attempted as a result of an alleged breach of this Agreement by either
party, or arising out of your employment or separation from the Company.
12. Arbitration. You and the Company expressly understand and agree that any
-----------
disputes arising out of (l) the terms and conditions of this Agreement; (2)
your employment or separation of employment with the Company; or (3) any
claims which either party contends are not waived and released by the
operation of paragraph 9 above shall be subject, absent settlement by the
parties, to final and binding arbitration in accordance with the Model
Employment Arbitration Procedures of the American Arbitration Association.
The Arbitrator, who shall be domiciled in Hawaii, shall be required to
abide by the provisions of this Agreement and the policies and practices of
the Employer in force as of the last date of your active service, and the
Arbitrator shall not modify or alter those provisions and policies.
In arbitrations under this Agreement, each party shall bear the costs, fees
and expenses of presenting its own case, and half of the Arbitrator's fees
and administrative expenses, unless otherwise ordered by the Arbitrator.
13. Nonadmissions Clause. It is understood and agreed by the parties hereto
--------------------
that this Agreement sets forth the terms of your separation from the
Company and that nothing contained herein shall be construed in any other
manner.
14. Entire Agreement. This Agreement contains the entire understanding of you
----------------
and the Company, and fully supersedes any and all prior agreements,
negotiations or understandings pertaining to the subject matter of this
Agreement. Each of the parties hereto acknowledges that no party or agent
of any party has made any promise,
4
<PAGE>
representation or warranty whatsoever, either express or implied, not
contained in this Agreement concerning the subject matter hereof to induce
any other party to execute this Agreement, and each of the parties hereto
acknowledge that it has not executed this Agreement, in reliance of any
such promises, representations or warranties not specifically contained in
this Agreement.
15. Review and Agreement. We will provide you ample time and opportunity to
--------------------
consider the terms of this Agreement and to consult with an attorney if you
choose to do so. If you agree to all the provisions of this Agreement,
please return the executed original of this Agreement to me. You shall have
twenty-one (21) days from the date you receive this letter within which to
sign this Agreement. You shall have seven (7) days from the date you sign
the Agreement within to revoke your signature.
16. Cooperation. All Parties agree to cooperate fully and execute any and all
-----------
supplementary documents and to take all additional actions which may be
necessary or appropriate to give full force and effect to the basic terms
and intent of this Agreement.
C. Brewer Homes, Inc.
By /s/ Seth A. Bakes
-------------------------------------
Seth A. Bakes
President and Chief Executive Officer
Date: 8/14/97
-------
Agreed and Accepted
/s/ Edward T. Foley
- ---------------------
Edward T. Foley
Date: 8/14/97
-------
5
<PAGE>
EXHIBIT 10.63
CONSULTANT AGREEMENT
BETWEEN
C. BREWER HOMES, INC.
And
EDWARD T. FOLEY
Dated: August 14, 1997
EXHIBIT "A-1"
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page No.
-------
<S> <C>
PARTIES...................................................................... 1
PREAMBLE..................................................................... 1
Section 1.0 Appointment and Engagement as Independent Contractor....... 1
Section 2.0 Term of Agreement.......................................... 1
Section 3.0 Description of Work........................................ 1
Section 4.0 Compensation and Medical/Dental Benefits................... 1
Section 5.0 Relationship of the Parties................................ 2
Section 6.0 Termination of this Agreement.............................. 2
Section 7.0 Assignment................................................. 2
Section 8.0 Non-Waiver................................................. 3
Section 9.0 Indemnification............................................ 2
Section 10.0 Confidentiality............................................ 3
Section 11.0 Personal Representatives, Successors and Assigns........... 3
Section 12.0 Severability............................................... 3
Section 13.0 Situs and Governing Law.................................... 3
Section 14.0 Entire Agreement........................................... 3
Section 15.0 Cooperation................................................ 3
Section 16.0 Arbitration................................................ 4
SIGNATURES................................................................... 4
EXHIBIT "A" Description of Work.............................................. i
EXHIBIT "B" Fees............................................................. ii
</TABLE>
<PAGE>
CONSULTANT AGREEMENT
--------------------
THIS AGREEMENT made this 14th day of August and effective as of the
___ day of ___________ (hereinafter the "Effective Date"), by and between Edward
T. Foley (hereinafter referred to as "Consultant") and C. Brewer Homes Inc.
(hereinafter referred to as "Company").
WITNESSETH:
WHEREAS, Company desires to retain Consultant as an independent
contractor to provide certain services with respect to the matters outlined
herein;
WHEREAS, Consultant desires to provide said services with respect to
the matters outlined herein;
NOW, THEREFORE, in consideration of the mutual covenants and promises
herein contained, the parties hereto agree as follows:
Section 1.0 Appointment and Engagement as Independent Contractor. Company
----------------------------------------------------
agrees to engage Consultant as an independent contractor to provide services in
connection with the matters described in Section 3.0 herein. Consultant agrees
to properly perform his obligations as provided herein all in accordance with
the terms, provisions, covenants and conditions set forth herein.
Section 2.0 Term of Agreement. The term of this Agreement shall commence on
-----------------
the Effective Date and shall continue for a period of six (6) continuous months
and, except as specified under Section 6.0 below, shall terminate on ________,
1998.
Section 3.0 Description of Work. Consultant shall perform the services
-------------------
described in Exhibit "A-1" attached hereto and made a part hereof by this
reference. Consultant's principal contact at Company shall be the Company's
President or such other representative designated by him/her.
Section 4.0 Compensation and Medical/Dental Benefits. Consultant shall be
----------------------------------------
compensated as shown on Exhibit "B-1" attached hereto and made a part hereof by
this reference and shall provide medical and dental benefits which were provided
to Consultant immediately before his separation from employment with the
Company. The Company will continue the medical and dental insurance coverage
until the date of the termination of this Agreement or the date you secure
reasonably equivalent alternate coverage, whichever is earlier. The Company will
contribute the same premium share for this insurance coverage as it would for an
active salaried employee. You must contribute your portion of the premium to be
eligible for this provision. As of the date of the termination of this
Agreement, if reasonably equivalent alternative coverage is
1
<PAGE>
not available, you may elect to continue medical and/or dental coverage under
the Company's medical and dental plans, at your own expense for a period of 18
months.
The compensation and provision of medical and dental benefits provided in
this Agreement shall constitute the entire compensation to be paid to Consultant
by the Company for those benefits and Consultant shall be solely responsible for
all costs incurred in its performance of services hereunder, except as otherwise
provided herein.
Section 5.0 Relationship of the Parties. The parties to this Agreement
---------------------------
intend and hereby agree that the Consultant shall be an independent contractor
and he shall have control and discretion with respect to the performance of his
obligations hereunder and shall have the authority and control over the manner
and details of the work which is to be performed hereunder. Consultant shall be
solely responsible for the use, discipline and supervision of Consultant's
employees, if any, and for providing all tools, texts, equipment or supplies
generally used by Consultant in its business. Consultant shall be responsible
for complying with all applicable federal, state and local laws regarding the
operation of Consultant's business or employment of employees, including but not
limited to federal, state and local taxes and general excise. Nothing contained
herein shall be construed to create any employment, partnership, joint venture
or co-ownership relationship between the parties hereto. Company and Consultant
shall not be responsible for any liabilities or obligations incurred or created
by other party except as specifically agreed to in writing. Consultant shall
have no authority to execute any document in the name or on behalf of Company,
enter into any oral or written commitments involving Company or otherwise
obligate Company in any manner whatsoever.
Section 6.0 Termination of this Agreement. In the event that Consultant
-----------------------------
shall be in substantial breach of any of the terms of this Agreement or the
Release and Settlement Agreement and Consultant fails to cure such breach, after
reasonable notice thereof and opportunity to cure his breach, then Company may
upon written notice terminate this Agreement. Any disputes arising out of this
Section 6.0 concerning whether the Consultant has substantially breached this
Agreement, shall be resolved pursuant to the arbitration provision set forth in
Section 16.0 below.
This Agreement shall terminate immediately should Consultant obtain
employment at any time during the term of this Agreement, and only fees due to
Consultant for work performed under this Agreement until the date Consultant
obtains employment shall be paid to Consultant. In addition, this Agreement
shall terminate immediately in the event of the death of Consultant. The
Company shall pay to the legal representative of Consultant, in the event of the
death of Consultant, any fees due to Consultant for work performed under this
Agreement until the date of the death of Consultant.
Section 7.0 Assignment. Consultant shall not assign or otherwise transfer
----------
in any manner its interest in or obligations under this Agreement.
2
<PAGE>
Section 8.0 Non-Waiver. It is expressly understood and agreed that the
----------
failure of Company to insist in any one or more instances upon strict
performance of any of the terms and conditions of this Agreement, or to exercise
any rights herein conferred, shall not be deemed a waiver or relinquishment of
any Company's right to assert or rely upon such terms, conditions, or rights in
any other instance.
Section 9.0 Indemnification. Consultant shall indemnify, defend and hold
---------------
harmless Company and its respective officers, employees, successors and assigns
from and against any and all claims, losses, costs, causes of action, damages
and expenses of any nature, including reasonable attorneys' fees, arising out of
any negligence, gross negligence or willful and wanton conduct by Consultant or
its employees or any technician or subconsultant hired by it.
Section 10.0 Confidentiality. At all times during the term of this
---------------
Agreement and thereafter, Consultant will hold in strictest confidence, and not
disclose to any person, firm or corporation, any confidential information,
manner of doing business, techniques, process, trade secret, or any other
confidential matter relating to the business of C. Brewer Homes, or its
divisions, subsidiaries and affiliates which Consultant may now know or may
learn while performing hereunder or which is developed hereunder for C. Brewer
Homes and its divisions, affiliates and subsidiaries by Consultant
("Confidential Information").
At the time of the termination of this Agreement, Consultant will deliver to
Company, and will not keep in his possession nor deliver to any person, any and
all documents containing Confidential Information.
Section 11.0 Personal Representatives, Successors and Assigns. This
------------------------------------------------
Agreement shall be binding upon and inure to the benefit of the parties hereto,
their personal representatives, successors and assigns.
Section 12.0 Severability. The invalidity or unenforceability of any
------------
provision hereof shall in no way affect the validity or enforceability of any
other provision.
Section 13.0 Situs and Governing Law. This Agreement shall be construed and
-----------------------
enforced in accordance with the laws of the State of Hawaii.
Section 14.0 Entire Agreement. This Agreement represents the entire
----------------
Agreement between the parties with respect to the subject matter hereof, and
supersedes any prior negotiation, agreements and understandings with respect
thereto. No change or modification of this Agreement shall be enforceable
against any party unless the same be in writing and signed by the party against
whom enforcement is sought.
Section 15.0 Cooperation. All Parties agree to cooperate fully and execute
-----------
any and all supplementary documents and to take all additional actions which may
be necessary or appropriate to give full force and effect to the basic terms and
intent of this Agreement.
3
<PAGE>
Section 16.0 Arbitration. You and the Company expressly understand and
-----------
agree that any disputes arising out of the terms and conditions of this
Agreement shall be subject, absent settlement by the parties, to final and
binding arbitration in accordance with the Commercial Arbitration Procedures of
the American Arbitration Association.
IN WITNESS WHEREOF, the parties have hereunto set their hands on the day
and year first above written.
C. Brewer Homes, Inc.
By /s/ Seth A. Bakes
-------------------------------------
Seth A. Bakes
President and Chief Executive Officer
/s/ Edward T. Foley
-------------------------
Edward T. Foley
Date: 8/14/97
-------
4
<PAGE>
Consultant Agreement
Exhibit A-1
Description of Work
Consultant will be reasonably available to:
a. Respond to the inquiries regarding historical events, practices,
procedures, and policies for C. Brewer Homes which occurred or were
utilized during the Consultant's previous employment;
b. Assist the Board of Directors, the President, Chief Executive Officer, new
Chief Financial Officer and Controller with any transitional issues; and
c. Other projects as mutually agreed upon.
"Reasonably available" shall mean that Consultant shall make himself available
for consultation on a regular basis, and shall perform this Agreement in a
manner that is acceptable to the Company. The Consultant will be available to
meet at mutually agreed upon times and places as reasonably necessary, which
will include the Company's headquarters on Maui, with any required and
reasonable travel, telephone, or other expenses to be reimbursed by the Company.
The Company understands that Consultant will be actively seeking new employment
following his separation as an employee of the Company. The Company understands
that the Consultant's availability may be affected by periodic travel to places
outside of Hawaii, or permanent relocation outside of Hawaii.
i
<PAGE>
Exhibit B-1
Fees
For the duration of the Consultant Agreement, Consultant will receive $11,250.00
per month for services performed under this Agreement. If Consultant provides
more than forty (40) hours of consulting time in a month, Consultant will be
paid at an hourly rate to be mutually agreed upon by the Company and Consultant.
All consultant fees will be payable on the last day of every month during the
term of this Agreement.
ii
<PAGE>
EXHIBIT 10.64
PURCHASE AND SALE AGREEMENT
THIS AGREEMENT made and entered into as of this 12th day of September,
1997, by and between, C. BREWER HOMES, INC., a Delaware corporation (hereinafter
referred to as "Seller") and STANFORD S. CARR DEVELOPMENT CORPORATION, a Hawaii
corporation (hereinafter referred to as "Purchaser").
W I T N E S S E T H:
WHEREAS, upon the terms and conditions hereinafter set forth Seller
desires to sell and Purchaser desires to purchase certain property located at
Wailuku, Maui, Hawaii.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, Purchaser and Seller agree as follows:
1. Purchase-Sale. On the terms herein set forth, Purchaser agrees to
-------------
purchase from Seller and Seller agrees to sell to Purchaser, all of Seller's
right, title and interest in and to 24.642 acres, more or less, in Wailuku,
Maui, commonly referred to by Seller as being located in the Wailuku Industrial
Park, Phase II, Increment 2, and the pending Eha Street Extension Subdivision,
and being more particularly described as follows:
Wailuku Industrial Park, Phase II, Increment 2 parcels
<PAGE>
Purchase and Sale Agreement Page 2
1. Tax Map No.: (11) 3-4-22:027 (0.114 acre)
2. Tax Map No.: (11) 3-4-30:019 (5.750 acres)
Pending Eha Street Extension Subdivision parcels
1. Lot 7 (15.283 acres)
2. Lot 8 (3.373 acres)
3. Lot 10 (0.122 acre)
and collectively referred to in this Agreement as the "Property". It is
understood and agreed that the sale and purchase of the Property, or any portion
thereof, is expressly conditioned upon the following:
A. Seller shall have obtained final approval for the Eha Street
Subdivision (the "Subdivision"), upon terms acceptable to Seller in its sole and
absolute discretion, into the number and substantially similar configuration of
lots shown on the survey map of Warren S. Unemori Engineering, Inc. dated March
18, 1993, as revised July 18, 1997, a copy of which is attached hereto as
Exhibit "All and incorporated for all purposes herein; and
B. Seller shall have obtained all of the right, title and interest in
and to that undivided one-half interest in Royal Patent 6,156, Land Commission
Award 4463, Apana 1 and 2, to Kalaehaeha currently held by Irma Akina, as
determined by ~hat certain Judgment entered on February 11, 1994 in Civil No.
920169 (3), Second Circuit, State of Hawaii, in Wailuku Agribusiness Co. v.
Kaia, et al., which Judgment is recorded in
<PAGE>
Purchase and Sale Agreement Page 3
the Bureau of Conveyances of the State of Hawaii as Document No. 94-
061442.
Without limiting the generality of Paragraphs 4 and 6 of this
Agreement, it is specifically understood and agreed that in the event that
either of the foregoing conditions precedent is not satisfied on or before June
1, 1998 (unless extended pursuant to said Paragraph 4), then this Agreement
shall automatically terminate and the Deposit (as defined herein), including all
interest accrued thereon, shall be returned to Purchaser. In such event, Seller
shall be responsible for any escrow cancellation fees, this Agreement shall be
of no further force or effect, and both parties shall be released from any
liability hereunder.
2. Purchase Price. The total purchase price (the "Purchase Price") for
--------------
the property shall be TWO MILLION AND N01100 DOLLARS ($2,000,000.00) in cash.
3. Deposit and Payment of Purchase Price.
-------------------------------------
A. A deposit of FIFTY THOUSAND and N01100 DOLLARS ($50,000.00) (the
"Initial Deposit") shall be deposited by Purchaser in an interest-bearing escrow
account with Title Guaranty Escrow Services, Inc. in Honolulu, Hawaii ("Escrow")
within four (4) working days of acceptance of this Agreement. If Purchaser
terminates this Agreement as provided in Paragraph 5
<PAGE>
Purchase and Sale Agreement Page 4
below prior to expiration of the Due Diligence Period (as hereinafter defined)
or pursuant to the conditions contained in paragraph 6 below, the Initial
Deposit together with any interest earned thereon but less any escrow
cancellation fee shall be immediately refunded to Purchaser. Upon such
termination and disbursement of the funds in Escrow in accordance with the
foregoing, both parties hereto shall be released from all liability hereunder.
B. on the expiration of the Due Diligence Period, Purchaser shall make
an additional deposit in the sum of FIFTY THOUSAND AND N01100 DOLLARS
($50,000.00) (the "Additional Deposit").
C. The Initial Deposit and Additional Deposit (together the "Deposit")
shall become nonrefundable unless Seller breaches this Agreement or unless this
Agreement is terminated by Purchaser as may be permitted by and in accordance
with this Agreement. Except as otherwise specifically provided herein, all
interest, if any, earned on the Deposit shall be credited to Purchaser. The
balance of the Purchase Price shall be paid on or before the Closing Date (as
hereinafter defined), in cash.
4. Closing Date; Possession. The purchase and sale of the Property
------------------------
shall take place in the office of Escrow within sixty (60) days after the end of
the Due Diligence Period or
<PAGE>
Purchase and Sale Agreement Page 5
thirty (30) days after the occurrence of all conditions precedent as set forth
in Paragraph 6 hereunder, whichever last occurs (the "Closing Date"). Provided,
however, that in the event that said conditions, specifically including
subparagraph 6B(6) do not occur on or before June 1, 1998 and the parties do not
mutually agree to extend the Closing Date, this Agreement shall terminate and
the Deposit, including all interests accrued thereto, shall be returned to
Purchaser; Seller shall be responsible for any escrow cancellation fees, this
Agreement shall be of no further force or effect and both parties shall be
released from any liability hereunder, without limiting the generality of the
foregoing, Seller and Purchaser hereby acknowledge and agree that time is of the
essence of this Agreement, and no extensions of the Closing Date shall be made,
regardless of the time, expense and effort expended by the parties, unless both
parties, in their sole and absolute discretion, agree in a writing executed by
the parties prior to the Closing Date or of said June 1, 1998 date, as the case
may be. Possession of the Property, shall be delivered by Seller to Purchaser on
the Closing Date.
5. Approval of Documents and Property; Due Diligence Period. Purchaser
---------------------------------------------------------
shall have until the expiration of the Due Diligence Period to approve or
disapprove: the status of title to the Property; the physical condition of the
Property; and all other investigations and information deemed important by
<PAGE>
Purchase and Sale Agreement Page 6
Purchaser relating to the Property and the feasibility of Purchaser's potential
ownership of the Property. In connection therewith and without limiting the
general provision of information required above, Seller shall provide the
following:
(a) a preliminary title report to Purchaser within fifteen (15) days
of Seller's execution of this Agreement. if Purchaser objects to any matters
disclosed in said preliminary title report, other than the Permitted Exception
(as defined below), then Purchaser shall either notify Seller in writing of such
objections within five (5) days after receipt of such preliminary title report,
or be deemed to have approved the same. If Purchaser objects to any matters
disclosed in the preliminary title report other than the Permitted Exception,
Seller shall have the right, but not the obligation, to correct such defects in
a manner satisfactory to Purchaser prior to closing, and if not so corrected,
Purchaser shall have the option to cancel this Agreement. If Purchaser cancels
this Agreement, then the Initial deposit, together with any accrued interest
thereon, less any escrow cancellation fee, shall be fully refunded to Purchaser,
and both parties hereto shall be released from all liability hereunder. The term
"Permitted Exception" shall mean that certain unrecorded lease of TMK: (11) 3-4-
022:27.
(b) Prior to the expiration of the Due Diligence, Seller and Purchaser
shall provide to Escrow a copy of a
<PAGE>
Purchase and Sale Agreement Page 7
resolution of its Board of Directors ratifying the execution of this Purchase
and Sale Agreement and authorizing appropriate officers to execute any and all
further documents to effect the sale of the property as provided herein. If said
resolution by Seller's Board of Directors is not provided on or before the
expiration of the Due Diligence period, Purchaser may terminate this Agreement
and Seller agrees to reimburse to Purchaser all reasonable out-of-pocket
expenses expended by Purchaser, in no event however to exceed $25,000.00. If
said resolution by Purchaser's Board of Directors is not provided on or before
the expiration of the Due Diligence period, Seller may terminate this Agreement
and Purchaser agrees to reimburse Seller all reasonable out-of-pocket expenses
expended by Seller, in no event, however, to exceed $25,000.00.
(c) Seller hereby represents that, to the best of Seller's knowledge,
the Property is free and clear of any contamination and "hazardous substances",
"hazardous materials", "hazardous wastes" or "toxic substances", under
Environmental Laws. For purposes hereof, "Environmental Laws" shall mean the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. Sect. 9601 et sea.; the Hazardous materials Transportation Act, 39 U.S.C.
Sect. 1801 et seq.; the Solid Waste Disposable Act, as amended by the Resource
Conservation and Recovery Act, 42 U.S.C. Sect. 6901 et seq.; the Federal Clean
Water Act, 33 U.S.C. Sect. 1251 et seq.; the Clean
<PAGE>
Purchase and Sale Agreement Page 8
Air Act, 42 U.S.C. Sect. 7401 et seq.; the Hawaii Environmental Quality
Controls, Chapter 342, Hawaii Revised Statutes, including as to all such
Environmental Laws all amendments thereto, replacements thereof, and regulations
adopted and publications promulgated thereto. Purchaser shall at its own expense
engage a consultant to do a Phase I Environmental Assessment of the Property.
However, if any hazardous waste or toxic substances as above-described are found
to be present on the Property, Seller shall have the opportunity to undertake,
at its sole expense, all remedial work to remove the hazardous waste or toxic
substances from the Property, in which case the Due Diligence period shall be
extended for a reasonable period of time to permit said remedial work. If Seller
chooses not to undertake said remedial work, Seller agrees to reimburse
Purchaser for the cost of the Phase I Environmental Assessment, not to exceed
TEN THOUSAND AND N01100 DOLLARS ($10,000.00), and any other reasonable out-of-
pocket expenses as provided for herein above. In said event, this Agreement
shall be cancelled and the Deposit and all interest accrued shall be fully
reimbursed to Purchaser with Seller being responsible for any cancellation fees.
(d) Within thirty (30) days of the execution of this Agreement, Seller
shall have the Property staked and provide, at its expense, an ALTA boundary
survey of the Property revealing all encroachments or other defects. Purchaser
hereby acknowledges the existence of those encroachments along the
<PAGE>
Purchase and Sale Agreement Page 9
southwesterly boundaries of TMK: (ii) 3-4-30:19 and 20, as shown on the survey
map attached hereto as Exhibit "A", (the "Acknowledged Encroachments") emanating
from R.P. 6064, L.C. Aw. 3256 to Holoua, R.P. 4064, L.C. Aw. 3497, Apana 1 to
Kaulahea and R.P. 5531, L.C. Aw. 1742, Apana 1 to Z. Kaauwai. if encroachments
or other defects exist, Seller shall have the right, but not the obligation, to
cure such encroachments or defects to Purchaser's satisfaction, at Seller's
expense, on or before the Closing. If such encroachments or defects, including
the Acknowledged Encroachments, have not been cured to Purchaser's satisfaction
on or before the Closing Date, then Purchaser may at its option, either proceed
to closing, cancel this Agreement by written notice to Seller or provide written
notice to Seller that, except for the Acknowledged Encroachments, it would elect
to proceed. If Purchaser elects to proceed, then Purchaser shall take the
Property subject to said Acknowledged Encroachments and, as of the Closing,
shall assume all of the obligations and liabilities, if any, that Seller has
with respect to the Acknowledged Encroachments and, further, shall indemnify and
hold Seller harmless from and against any claims or demands that have arisen or
may arise with respect to the Acknowledged Encroachments. If Purchaser provides
written notice to Seller prior to the end of the Due Diligence Period that,
except for the Acknowledged Encroachments, it would elect to proceed, then
Seller and Purchaser shall have the right, but not the obligation, to attempt to
negotiate a written amendment of this
<PAGE>
Purchase and Sale Agreement Page 10
Agreement in order to accommodate Seller's concerns as to any existing or
potential claims with respect to the Acknowledged Encroachments and/or
Purchaser's concerns as to any potential loss of land area or potential payment
to those persons necessary to satisfy any such existing or potential claims.
Should the parties enter into such a written amendment no later than December 1,
1997, then the parties shall close the transactions contemplated by this
Agreement, as so amended. Should the parties fail to enter into a written
amendment no later than December 1, 1997, for any reason or for no reason
whatsoever (it being expressly understood and agreed that the parties may enter
or refuse to enter into such an amendment in their sole and absolute discretion
and, further, that the failure to negotiate or enter into such an amendment
shall not constitute a breach of this Agreement nor grounds for any extension of
the Closing Date or the June 1, 1998 date) then the Deposit, together with any
accrued interest earned thereon, but less any escrow cancellation fee, shall be
returned to Purchaser, whereupon both parties hereto shall be released from all
liability hereunder. If this Agreement: is cancelled by Purchaser, then the
Deposit shall be fully refunded to Purchaser.
If Purchaser, in its sole discretion, disapproves of any matters,
Purchaser may terminate this Agreement by written notice given to Seller as
hereinafter provided on or before the expiration of the Due Diligence Period. If
Purchaser does not
<PAGE>
Purchase and Sale Agreement Page 11
elect to terminate this Agreement pursuant to this Paragraph by written notice
to Seller given on or before expiration of the Due Diligence Period, this
Agreement shall continue in full force and effect. If Purchaser terminates this
Agreement on or before expiration of the Due Diligence Period, the Deposit,
together with any accrued interest earned thereon, but less any escrow
cancellation fee, shall be returned to Purchaser, whereupon both parties hereto
shall be released from all liability hereunder.
The "Due Diligence Period" shall mean the period commencing on the
date hereof and terminating at 5:00 p.m., Hawaii Standard Time, on the sixtieth
(60th) day thereafter.
6. Conditions Precedent to Closing.
-------------------------------
A. Conditions to Seller's Obligations. Seller shall have no
----------------------------------
obligation to consummate the sale of the Property unless:
(1) Purchaser deposits the Initial Deposit within four (4) working
days after acceptance of this Agreement by Seller and the Additional Deposit on
or before the expiration of the Due Diligence Period;
(2) All terms, covenants and conditions of this Agreement to be
compiled with and performed by Purchaser on or before the Closing Date shall
have been duly complied with and performed;
<PAGE>
Purchase and Sale Agreement Page 12
(3) Purchaser has deposited the balance of the Purchase Price in
Escrow; and
(4) Purchaser has not previously terminated this Agreement as provided
by and in accordance with this Agreement.
B. Conditions to Purchaser's Obligations. Purchaser's obligation to
-------------------------------------
close shall be specifically contingent upon the following:
(1) Purchaser shall have approved the title documents and property
within the Due Diligence Period as provided in Paragraph 5 above.
(2) Seller shall have paid all costs, expenses and charges of any kind
whatsoever relating to the Property through closing date (excluding costs
incurred by Purchaser), its development or improvements to be constructed
thereon, including but not limited to payments due to any architects and or
engineers, consultants who prepared plans for improvements to be constructed on
the Property, and payment for any site work performed on the Property. Seller
shall cause the title insurance company issuing title insurance to Purchaser
<PAGE>
Purchase and Sale Agreement Page 13
to include an endorsement insuring Purchaser's title against claims for
mechanics' liens.
(3) Seller will provide to Purchaser, but only to the extent Seller is
aware of and in physical possession of the same, all plans, architectural and
engineering drawings and specifications, subdivision documents, appraisals,
market studies, and other pertinent documents relating to or obtained in
connection with the proposed development. Seller makes no representation or
warranty with respect to, and shall have no liability with respect to any such
documents.
7. Land Use and Zoning. Purchaser acknowledges and agrees that the
-------------------
Property is presently classified Agricultural under the State Land Use Laws, is
designated Light Industrial under the County Wailuku-Kahului Community Plan and
is zoned "Interim". Purchaser shall be responsible for obtaining at Purchaser's
sole cost and expense all necessary State land use classifications, County
community plan designations and County zoning to permit for the development of
the Property into a Single-Family Residential subdivision. Upon the execution of
this Agreement, Seller agrees to join in or authorize Purchaser in the filing of
any petitions or applications necessary to permit Purchaser to proceed with
obtaining all land entitlements required. To that end, Purchaser shall be
responsible for any and all cost incurred, including, but not limited to, any
and all
<PAGE>
Purchase and Sale Agreement Page 14
fees and costs for planning consultants, engineering, architectural, attorneys,
market consultants, appraisals, assessments, dedications, impact fees and other
governmental requirements imposed in connection therewith, to the extent that
the same is necessary. Prior to closing, Seller shall have the right to review
and approve any such petition or application, which approval shall not be
unreasonably withheld. p
8. Property Sold "As Is". Except as specifically set forth herein,
---------------------
Seller makes no warranties or representations, express or implied, with respect
to the Property or any proposed use of the above, and is selling the Property to
Purchaser "As Is, Where Is". Seller shall convey the Property by limited
warranty deed containing the "As Is, Where Is" limitation in the form attached
hereto as Exhibit "B" and incorporated for all purposes hereof.
9. Inspection. Purchaser and Purchaser's agents shall have the right
----------
on not less than 48 hours' notice to Seller to enter upon the Property at
reasonable times prior to the Closing ]Date for the purpose of making
appraisals, taking core samples and other studies and inspections. Purchaser
shall provide Seller with a copy of a certificate of general liability coverage
for said activities with standard commercial limits. Purchaser hereby
indemnifies and agrees to hold Seller harmless from any uninsured loss,
liability, damage, cost or expense
<PAGE>
Purchase and Sale Agreement Page 15
(including reasonable attorneys' fees) incurred by Seller as a result of any
such entry.
10. Prorations and Charges.
----------------------
A. Real property taxes shall be prorated and apportioned as of the
Closing Date, except that Seller and Purchaser shall each be responsible for
one-half (1/2) of any deferred, or rollback taxes and any assessments or other
requirements imposed as a condition to or as a result of the rezoning or
reclassification of the Property.
B. Closing Costs and Attorney's Fees. Each party shall pay the fees of
---------------------------------
its attorneys and the costs of preparing all documents which this Agreement
requires such parties to furnish. Seller shall pay the costs of evidence of
title, the boundary ALTA survey and staking, preparing the conveyance documents,
recording fees, expenses to clear title and to record the conveyance documents,
Seller's notary fees, the conveyance tax, and one-half of the escrow fees.
Purchaser shall pay Purchaser's notary fees, title insurance obtained by
Purchaser, one-half of the escrow fee, the cost of preparing any mortgage
documents, the cost of any lender's title policy, and all recording fees for any
mortgage documents.
11. Default.
-------
A. If Purchaser does not terminate this
<PAGE>
Purchase and Sale Agreement Page 16
Agreement-. pursuant to Paragraph 5 hereof and all conditions precedent: have
occurred, but then fails to close the purchase of the Property through no fault
of Seller (except in the case of termination of this Agreement by Purchaser as
may be permitted by and in accordance with this Agreement), Seller shall, as its
sole and exclusive remedy, be entitled to retain the Initial Deposit, plus
accrued interest thereon, if any, as liquidated damages, in which case this
Agreement shall terminate and both parties shall be released from their
obligations hereunder, and neither party shall have any further liability to the
other. In the alternative, Seller shall have the right to tender the Deed to
Purchaser and to require specific performance of this Agreement or to pursue all
other legal remedies available to Seller.
B. If Seller fails to close the sale of the Property on the Closing
Date through no fault of Purchaser, then, at Purchaser's option, either (a) the
Initial Deposit and all interest accrued shall be returned to the Purchaser and
Seller shall be responsible for all of Escrow's termination fees, or (b)
Purchaser may sue Seller for specific performance, and Purchaser shall be
entitled to any remedies at law and in equity.
12. Assignment. After Purchaser places the Initial Deposit in Escrow,
----------
but not before, Purchaser may assign all or any portion of its interest under
this Agreement to an Affiliate (as defined herein below); provided, however,
that such
<PAGE>
Purchase and Sale Agreement Page 17
assignment shall not release Purchaser from Purchaser's obligations hereunder
and provided, further, that, prior to expiration of the Due Diligence Period,
Purchaser may give Seller written notice of Purchaser's assignee. If such notice
is given to Seller not less than five days prior to expiration of the Due
Diligence Period, the items to be delivered by Seller pursuant to Paragraph 9
shall be prepared, in favor of such assignee; otherwise, such items will be
revised prior to Closing to reflect the assignee.
For the purposes of this Section 11, "Affiliate" shall mean (i) a
corporation (the Parent Corporation) which controls the Purchaser, (ii) a
corporation, other than the Purchaser, which is controlled by the Parent
Corporation or the Purchaser, (iii) a corporation which is controlled by a
corporation which, in turn, is controlled by the Parent Corporation Lon or by
the Purchaser, or (iv) a general partnership, joint venture or limited liability
company in which the Purchaser or a corporation described in clause (i), (ii) or
(iii) is partner, joint venturer or a member with a controlling interest in such
entity. For purposes of the foregoing, control of a corporation means the power
to elect the members of the governing body of such corporation which constitute
fifty percent or more of the votes of such governing body, and a controlling
interest in a partnership, joint venture or limited liability company means (a)
at least a twenty percent (20'1) interest in, and (b)
<PAGE>
Purchase and Sale Agreement Page 18
the power to decide official action for, such partnership, joint venture or
limited liability company.
13. No Representation or Agency. Neither Purchaser nor any of its
---------------------------
brokers, realtors, agent, officers, directors or employees are authorized to
represent Seller, or act as an agent for Seller, in any manner with respect to
the Property.
14. Miscellaneous.
-------------
A. Notices. Any notice required or permitted to be given under this
-------
Agreement may be given by written, telegraphic or facsimile transmission.
Written notice shall be deemed to have been given when sent by courier service,
delivery fee prepaid, addressed as follows:
If to Seller: C. Brewer Homes, Inc.
255-A E. Waiko Road
Wailuku, Maui, Hawaii 96793
Attn: Seth A. Bakes
With a copy to: Law offices of Wesley Y.S. Chang
841 Bishop Street, Suite 702
Honolulu, Hawaii 96813
If to Purchaser: Stanford S. Carr Development Corp.
841 Bishop Street, Suite 2118
Honolulu, Hawaii 96813
Attn: Stanford S. Carr
With a copy to: Kobayashi Sugita & Goda
999 Bishop Street, Suite 260b
Honolulu, Hawaii 96813
ATTN: Janeen-Ann A. Olds, Esq.
or to such other address as either party from time to time may specify in
writing to the other. Notice by telegraph shall be
<PAGE>
Purchase and Sale Agreement Page 19
deemed given upon transmission with instructions to deliver to the appropriate
party at the address provided above. Facsimile notice to the parties shall be
deemed to have been given upon transmission as follows:
If to Seller: (808) 242-6833
Attn: Seth A. Bakes
With a copy to: (808) 521-0087
Attn: Gary R. Phillips, Esq.
If to Purchaser: (808) 537-1801
Attn: Stanford S. Carr
With a copy to: (808) 539-8799
Attn: Janeen-Ann A. Olds, Esq.
B. Successors and Assigns. This Agreement shall be binding upon, and
----------------------
inure to the benefit of, the parties hereto and their respective permitted
successors and assigns.
C. Amendment and Modification. This Agreement may be amended or
--------------------------
modified by, and only by, a written instrument executed by Seller and Purchaser.
D. Confidentiality. Purchaser agrees not to divulge the Purchase Price
---------------
at any time prior to the closing of the transaction other than to the title
insurer issuing any title policy to Purchaser, Escrow, and professionals
assisting Purchaser in Purchaser's due diligence efforts. In the event of its
termination, Seller and Purchaser shall hold in strictest confidence all data
and information obtained from each other in connection with this Agreement.
<PAGE>
Purchase and Sale Agreement Page 20
E. Merger of Prior Agreements. This Agreement supercedes all prior
--------------------------
agreements and understanding between the parties hereto relating to the subject
matter hereof.
F. No Party Deemed Drafter. The parties agree that no party shall be
-----------------------
deemed to be the drafter of this Agreement and, further, that if this Agreement
is ever construed by court of law, such court shall not construe this Agreement
or any provision thereof against any party as the drafter of this Agreement.
G. Time is of the Essence. Time is of the essence in this Agreement.
----------------------
H. Currency. All sums stated in this Agreement are stated as, and
--------
shall be paid in lawful currency of the United States of America.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
Purchaser: Seller:
STANFORD S. CARR DEVELOPMENT C. BREWER HOMES, INC.
CORPORATION
By /s/ STANFORD S. CARR By /s/ SETH A. BAKES
---------------------- -------------------
Its President Its President & CEO
By /s/ EDWARD FOLEY
-------------------
Its Executive Vice
President & CFO
<PAGE>
EXHIBIT 10.65
November 10, 1997
Fletcher Pacific Construction Co., Ltd.
707 Richards Street, Suite 400
Honolulu, Hawaii 96813
Attention: Mr. Denny Watts
Re: Construction Contract for Kaimana (the Contract)
Gentlemen,
In response to the concerns raised in your letter of September 12, 1997, we have
arrived at understandings which we believe are satisfactory to both C. Brewer
Homes, Inc., and Fletcher Pacific Construction Company, Ltd. The following
describes these understandings which facilitate the termination of the Contract.
The items are numbered to concur with your letter of September 12, 1997.
1. It has been agreed that the Contract shall terminate on November 19, 1997.
The monthly General Conditions rate of $30,061.50 divided by the thirty days
in November equals a daily rate of $1,002.05. Therefore, the General
Conditions for November total $19,038.95, which will be reflected in the
Application for Final Payment as set forth in Paragraph 9.10 of the AIA
General Conditions.
2. Repairs to damaged improvements are under way. Fletcher Pacific agrees to
complete the repairs by November 19, 1997.
3. Satisfactory arrangements for the yard and trailers have been agreed to. C.
Brewer Homes will take over the yard and Fletcher Pacific will remove the
trailers and storage bins on or before November 19, 1997.
4. The Stored Materials Account and remaining material inventory have been
reconciled.
5. Fletcher Pacific agrees to complete punchlist work items by November 19,
1997.
6. Fletcher Pacific agrees to remain responsible for warranty work required for
those units constructed by Fletcher Pacific.
7. Restoration of areas for staging, equipment and material storage, cleaning
of courtyards and drains of all construction debris, removal and disposal of
any soil polluted with hazardous materials, such as motor oil, hydraulic
fluid, and other chemicals is under way and will be completed by November
19, 1997.
<PAGE>
8. Halemalu is independent of this Contract and shall be dealt with outside of
this Contract.
9. To facilitate the termination of the Contract, both C. Brewer Homes and
Fletcher Pacific agree that no additional funding of the Lot Preparation
Escrow Account will be made by either party. The Lot Preparation Escrow
Account has been closed. C. Brewer Homes and Fletcher Pacific further agree
that each will not seek reimbursement of the monies deposited from the other
party. C. Brewer Homes and Fletcher Pacific further agree that the foregoing
agreements and the closing of the Soil Preparation Escrow Account shall not
be construed as acceptance by either party of responsibility for soil
preparation. As such, both parties shall continue to reserve their rights in
regards to this issue.
10. The anticipated final amount due under the Contract is indicated on the
accompanying Final Contract Amount Summary dated 11/14/97. This amount is
subject to minor corrections arising out of the final reconciliation of
accounts, but otherwise subject to change only as a result of any change
orders executed in connection with changes made after November 1, 1997 to
the eight homes currently under construction. On payment of said sum, no
further sums will be due Fletcher Pacific from C. Brewer Homes under or in
connection with the Contract.
Therefore, except for other payment, performance and warranty obligations which,
by their nature, survive termination, the Contract is terminated as of November
19, 1997.
I have enjoyed working with you during the last few months and I appreciate your
help in turning over the operations from Fletcher Pacific to C. Brewer Homes.
Please call me with any questions or comments regarding the items contained in
this letter.
Sincerely,
/s/ SETH A. BAKES
- --------------------------------
Seth A. Bakes
President and CEO
Approved and Accepted
Fletcher Pacific Construction Company, Ltd.
By: /s/ DENNY WATTS
-----------------------------
Its: President
----------------------------
<PAGE>
FLETCHER PACIFIC CONSTRUCTION CO., LTD.
KAIMANA @ KEHALANI 11/4/97
FINAL CONTRACT AMOUNT SUMMARY
1. Final billing for 103 homes completed including lot options $12,737,588.69
2. Paid To-date (Thru Progress Billing No. 28 - September 1997) $12,182,845.83
3. October 1997 Progress Billing (Due at the end of November) $ 386,118.65
4. Projected November 1997 Billing $ 115,644.43
5. Final Billing for Retention $ 52,979.78
<PAGE>
EXHIBIT 10.66
PURCHASE AND SALES AGREEMENT AND INSTRUCTIONS TO ESCROW
THIS AGREEMENT dated as of December 15, 1997 (the "Effective Date") is entered
into by and between C. BREWER HOMES, INC., a Delaware corporation, whose
address is 255-A East Waiko Road, Wailuku, Hawaii 96793, hereinafter referred to
as "Seller" and JESSE E. SPENCER, an individual resident of Hawaii, whose
address is P.O. Box 97, Kihei, Hawaii 96753, hereinafter referred to as "Buyer".
This agreement shall constitute a contract for the purchase and sale between
Seller and Buyer when and if executed by both Seller and Buyer, subject to the
terms and conditions contained herein. This agreement shall also serve as
instructions to Title Guaranty Escrow Services, Inc., whose address is Suite C,
2103 Wells St., Wailuku, Hawaii 96793, hereinafter referred to as "Escrow
Agent".
W I T N E S S E T H
Whereas the Seller owns the fee simple interest in and to that certain
property identified as Nanea Subdivision (C-7 subdivision) (the "Property") The
land consists of the area within the perimeter boundaries of a proposed 80 lot
subdivision (the "Project"), located in Seller's Kehalani community, more
particularly described in the attached Exhibit "A", which by this reference is
incorporated herein and made a part hereof; and
Whereas Buyer desires to purchase the Property from Seller only if Seller is
able to obtain (a) final subdivision approval from the County of Maui separating
the Property from the larger parcel of which it is a part (the "First
Subdivision"), (b) the approvals from the appropriate agencies of the County of
Maui of construction plans for Project site improvements and infrastructure,
such that Buyer shall be able to immediately apply for and receive a permit to
begin site work for the proposed subdivision upon the closing of this
transaction and (c) certain other conditions are met as provided herein; and
Whereas Seller desires to sell and convey to the Buyer the Property and Buyer
desires to purchase the Property from the Seller pursuant to the terms,
conditions and provisions hereof;
NOW THEREFORE, it is hereby agreed as follows:
1. SALE AND PURCHASE:
------------------
In consideration of the Purchase Price as hereinafter defined below, and
subject to the terms and conditions hereinafter set forth, the Seller agrees to
sell, assign and transfer to the Buyer on the Close of Escrow and all interest
in the Property and the Buyer agrees to purchase from said Property from the
Seller.
1
<PAGE>
2. PURCHASE PRICE, INITIAL DEPOSIT
-------------------------------
2.1 The purchase price for the Property to be paid by Buyer to the Seller
shall be TWO MILLION TWO HUNDRED THOUSAND DOLLARS ($2,200,000.00), and shall be
paid as follows:
(a) INITIAL DEPOSIT. Within three days after the execution of this
Agreement by both the Seller and the Buyer, the Buyer shall deliver to the
Escrow Agent the sum of FIFTY THOUSAND DOLLARS ($50,000.00) in cash or certified
funds, as the initial deposit. The said initial deposit shall be non-refundable
unless the Buyer shall have notified and advised the Seller in writing prior to
the expiration of the feasibility study period as hereinafter defined, that it
does not intend to proceed with the purchase, and it wishes to terminate this
Agreement. Once the feasibility study period has expired, the initial deposit
shall not be refunded to the Buyer, except as specifically provided herein.
Upon successful completion of the transaction herein contemplated, the initial
deposit and any interest which may have accrued thereon until closing, shall be
applied and fully credited toward the purchase price.
(b) BALANCE OF PURCHASE PRICE. At least two days prior to the Escrow
Closing, as hereinafter defined, the Buyer shall deposit with the Escrow Agent
the balance of the purchase price for the property herein defined, in cash, or
certified or official bank check or irrevocable transfer of immediately
available funds.
2.2 If the transaction herein contemplated shall fail and the Escrow
fails to close due solely to the material breaches of the Seller, for which
Seller is responsible, the initial deposit shall be refunded to the Buyer,
together with any accrued interest, but only if the Seller shall have failed to
cure its material breaches and/or default prior to the close of Escrow after
being notified of material breaches and/or default and having been given a
reasonable opportunity by the Buyer to cure same, and provided further that the
Buyer also shall not have committed any material breaches, or shall not be in
material breach or default of this Agreement. If at any time Buyer is in
material breach and/or default of this Agreement prior to the close of Escrow,
and after being notified of material breaches and/or default, Seller shall give
Buyer a reasonable opportunity to cure same, and if Buyer shall fail to cure
said material breach, Seller may cancel this Agreement.
2.3 Closing shall occur within 30 days after Seller shall notify Buyer
that the conditions of closing shall have been satisfied under Section 6.2
below. The parties will close the transaction on or before March 31, 1998, the
close of Seller's fiscal year. If for any reason the transaction does not close
by March 31, 1998, time being of the essence, either party may cancel this
agreement by written notice to the other, and any right of either party to
extend performance to cure any default under this Agreement shall not apply,
notwithstanding any provision of this Agreement to the contrary.
2
<PAGE>
3. ESCROW OPENING AND INVESTMENT OF INITIAL DEPOSIT
------------------------------------------------
3.1 Upon mutual execution of this Agreement, the Seller and the Buyer
shall deliver a copy of the executed Agreement to the Escrow Agent, and upon
acknowledgment of receipt of same by the Escrow Agent, the escrow for the sale
and purchase of the Property shall be deemed open.
3.2 The Escrow Agent shall prepare such other and further documents as
may be reasonably necessary or applicable in order to facilitate the transaction
herein contemplated, and the Seller and the Buyer shall comply with such
reasonable requests as may be made by the Escrow Agent.
3.3 The initial deposit shall be held in an interest bearing account of
the Escrow Agent until the close of escrow, or its release to Buyer or Seller as
required herein. Escrow Agent shall otherwise have no responsibility to invest
any asset held by it pursuant to this paragraph.
3.4 At the Escrow Closing or anytime prior thereto, the Buyer shall be
entitled to any interest earned on the initial deposit and said interest shall
be the sole property of the Buyer. However, if the deposit shall be distributed
to Seller as required herein in the event of Buyer's default, the interest will
be distributed to Seller.
4. SELLER'S PROPERTY INFORMATION
-----------------------------
4.1 Within 15 days after the mutual execution of this Agreement, the
Seller agrees to provide the following information (Seller's Property
Documents), to the Buyer to the extent that they are available to the Seller and
have not already been provided to the Buyer.
(a) all contracts, agreements, and leases affecting the ownership or
use of the Property;
(b) all permits, certificates, licenses, from Federal, State, or
County agencies, now in force, affecting the Property;
(c) any soil, ground water, mechanical, structural, environmental and
other similar reports or documentation in Seller's possession;
(d) any engineering, surveying, site, or other plans and
specifications prepared by or for Seller, for the construction of any
improvements on the Property (but specifically excluding home plans);
3
<PAGE>
(e) copies of correspondence from any Federal, State, or County
agencies regarding the Property.
Seller does not warrant the accuracy of any reports, information or
communications provided by or obtained from any consultant, government agency or
other third party. All information for which Seller is the source is true (or
was true when stated) to the best knowledge and belief of Seller.
5. BUYER'S FEASIBILITY STUDY AND TITLE MATTERS
-------------------------------------------
5.1 For a period of Forty Five (45) days (hereinafter the "feasibility
study period"), commencing on the Effective Date, the Buyer shall have a right
to conduct a feasibility study, to conduct such surveys, engineering and
environmental studies, and market studies to satisfy itself of the advisability
of acquiring the Property in its sole judgment and discretion. The Buyer agrees
to bear any and all such costs and expenses associated with such study,
including, but not limited to attorney's fees, appraisals, survey fees,
environmental report fees, and the Buyer agrees to hold the Seller free and
harmless therefrom. Also, during the feasibility study period Buyer shall take
all necessary steps to satisfy Buyer that adequate and acceptable financing
shall be available for the purchase and development of the Property.
5.2 The Seller agrees that the Buyer may enter the Property to conduct
such investigations as the Buyer deems necessary and appropriate during the
feasibility study period. If this Agreement is terminated for any reason,
regardless of the fault or causes of termination, the Buyer shall repair,
restore any damage or destruction to the Property resulting from or arising out
of Buyers' activities on the Property. In addition the Buyer shall return to
the Seller all of the Seller's Property Information which the Seller previously
supplied to the Buyer. Buyer agrees to give Seller at least two days' notice
prior to entering the Property and will conduct its investigations in a manner
so as not to interfere with Seller's existing or ongoing activities and uses of
the Property.
5.3 The Buyer hereby agrees to indemnify and hold harmless the Seller
and the Property harmless from and against all liability, loss damages, expenses
or claims, including reasonable attorney's fees, arising out of the acts or
omissions of the Buyer, its agents, employees, independent contractors or
assignees relating to the permitted access or authorization granted herein,
including without limitation any claim, loss or liability related to personal
injury, property damage and the claims of lien of contractors and/or material
providers. If any claims of liens are asserted against the Property as a result
of the Buyer's exercise of the permitted access and of Buyer's conducting the
feasibility study, the Buyer shall immediately arrange and pay for and cause the
recording of a release of any such claim or lien in accordance with the laws of
the State of Hawaii.
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5.4 At the expiration of the feasibility study period, the Buyer shall
notify the Seller whether or not it intends to proceed with the purchase. If
the Buyer determines, in its sole discretion, that it does not wish to proceed
with the purchase and so notifies the Seller, the Agreement and the Escrow shall
terminate forthwith with no further obligations on either party, except for the
obligations of the Buyer set forth in (P)(P) 5.1 through 5.3 above; and the
initial deposit shall be refunded to the Buyer together with all accrued and
unpaid interest. Failure by the Buyer to notify the Seller in writing before
the end of said feasibility study period of Buyer's election to terminate this
agreement shall be deemed its election to proceed with the purchase. If Buyer
proceeds with the purchase, Buyer agrees and acknowledges that in purchasing the
Property, Buyer has relied and will be relying solely on the results of Buyer's
own investigations as to all aspects of the Property and is acquiring the
Property "as is" in its state and condition as of the closing. Seller is making
no representation or warranty whatsoever to Buyer or Buyer's lender as to the
physical condition of the Property; its suitability for development; its legal
status under applicable laws, rules and regulations; conditions or requirements
which may be imposed by the County of Maui in connection with final subdivision
approval; the availability of water, sewer or other utility services; the
condition or compaction or soils and their suitability for construction and
development; drainage or ground water conditions or environmental matters.
5.5 Title Matters: Seller shall deliver to Buyer a preliminary title
report on the Property within 15 days from the date of this Agreement. Buyer
shall have 10 business days from Buyer's receipt of the report to send written
notice to Seller disapproving of any encumbrances reflected in the report.
Buyer shall have the right in Buyer's discretion to disapprove any encumbrance.
If Buyer fails to send such notice, the encumbrances reflected in the report
shall be deemed to be approved by Buyer. If Buyer disapproves any encumbrance,
then Seller may either (a) terminate this Agreement whereupon Buyer's deposit
will be returned in full to Buyer, with any accrued interest, and both parties
shall be released from further obligations under this Agreement, or (b) agree in
writing to cause such encumbrance to be removed prior to closing. If Seller
elects to cancel under (a) above, Buyer shall have the right in its discretion
to elect to waive its objection to the encumbrance and proceed with the closing,
accepting title subject to said encumbrance, notwithstanding Seller's
termination. All elections under the preceding two sentences shall be made
promptly and in writing. The encumbrances approved (or deemed approved) by
Buyer are herein called the "Permitted Title Exceptions".
In addition, the Permitted Title Exceptions will include (a) any utility
easements, subdivision agreement or other encumbrances imposed by the County of
Maui as a condition of the First Subdivision, provided that such encumbrances
are consistent with normal practice of the County of Maui in subdivision
approvals and such encumbrances will not have any material adverse affect on the
development and sale of the Property by Buyer as an 80-lot residential
subdivision; and (b) the Declaration of Covenants, Conditions and Restrictions
for Kehalani, dated March 17, 1995, recorded in the State of Hawaii Bureau of
Conveyances as Document No. 95-040251, as amended (the "CC&Rs).
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At closing, Seller will convey to Buyer title to the Property by limited
warranty deed (in substantially the form attached hereto as Exhibit B), free and
clear of all encumbrances except the "Permitted Title Exceptions".
6. SELLER'S WARRANTIES AND REPRESENTATIONS;
AND SELLER'S CONDITIONS OF CLOSING;
6.1 Seller hereby makes the following warranties and representations,
effective now and as of the Close of Escrow:
(a) Seller is the sole owner in fee simple of the Property;
(b) Seller is a corporation organized and existing pursuant to the
laws of the State of Delaware and is currently authorized to do business in
Hawaii and is in good standing;
(c) Upon ratification by Seller's Board of Directors as provided in
Section 10.5 below, Seller will have the legal power, right and authority to
execute and deliver this Agreement and instruments necessary to consummate the
transaction contemplated hereby;
(d) The Property is not encumbered by any taxes or other liabilities
in an aggregate amount exceeding the amount to be paid by Buyer for the Property
as of the date of this Agreement and as of the Close of Escrow;
(e) Seller has not incurred any brokerage commission for which the
Buyer is responsible;
(f) The persons executing this Agreement and the instruments referred
to herein on behalf of Seller are duly authorized on behalf of Seller to execute
this Agreement and said instruments;
(g) Seller is not in material breach with respect to any of its
obligations or liabilities to any government agency or third party pertaining
to the Property;
(h) Seller has not within the preceding 12 months received any notice
from any Federal, State, or County authority alleging any fire, health,
building, pollution, environmental, zoning or other violation of law with
respect to the Property, which has not been entirely corrected or will not be
corrected prior to the escrow closing date.
(i) Seller is not aware of any possible condemnation of any part of
the Property or the widening, change of grade or limitation on the use of
streets abutting the
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Property or concerning any special taxes or assessments to be levied against the
Property, or any part thereof, or concerning any changes in zoning
classification of the Property or any part thereof.
(j) Seller has not within the preceding 12 months received any notice
from any insurance company or bonding company of any defects or inadequacies of
the Property or any part thereof, which would adversely affect the insurability
of the same or cause the imposition of extraordinary premiums or charges
therefor or of any termination or threatened termination of any policy of
insurance or bond which has not been corrected or will not be corrected as of
the date of closing.
(k) Seller is not aware of any violations of law with regard to
hazardous materials or hazardous waste on the Property, nor has Seller received
within the last 12 months any notices from any governmental agency for any
violation of laws regarding any hazardous material or hazardous waste on the
Property.
(l) Seller's representations in (h), (i), (j) and (k) speak only as of
the date of this agreement. Seller will promptly notify Buyer if after the date
of this agreement Seller becomes aware of any notice or circumstance which would
invalidate or qualify any such representation as of the closing date.
6.2 The following items are conditions which shall be for the benefit of
Buyer as conditions of closing. If any condition shall not be met, without any
fault of Seller, Buyer may in his discretion (a) elect to waive said condition
and proceed with closing (with no adjustment to the purchase price) or (b)
terminate this agreement and receive a full refund of all deposits, with any
accrued interest and thereupon Buyer and Seller will be released from further
liability on this agreement. Said conditions are as follows:
(a) Seller shall have obtained final subdivision approval for the
First Subdivision;
(b) Seller shall have obtained approval from the County of Maui, and
any other government agencies, of the civil construction drawings for the on
site subdivision improvements for the Project (provided that Buyer shall pay any
fees for grading permits, building permits or other fees associated with plan
review);
(c) Seller shall have obtained County of Maui District Phase III
approval for the Project;
(d) Seller shall have obtained approval of the County of Maui Arborist
Committee of the landscaping plan for the Project; and
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(e) Seller shall not be in breach of any of its obligations under
this agreement.
7. BUYER'S WARRANTIES AND REPRESENTATIONS; AND COVENANTS
-----------------------------------------------------
7.1 Buyer hereby represents and warrants to Seller as follows now and as
of the closing date of escrow:
(a) Buyer at Buyer's own cost and expense, will conduct or is
conducting studies of the Property to determine the advisability of acquiring
the same. Buyer is proceeding with this purchase on the basis of Buyer's
satisfaction with investigation and conclusions of Buyer's own investigation;
(b) Buyer has the legal power, right and authority to execute and
deliver this Agreement and instruments necessary to consummate the transaction
contemplated hereby;
(c) Buyer has not incurred any brokerage commission for which the
Seller is responsible;
(d) The persons executing this Agreement and the instruments referred
to herein on behalf of Buyer have the legal power, right and actual authority to
bind Buyer to the terms and conditions hereof;
7.2 Buyer agrees that he shall be solely responsible for the following,
whether or not they shall arise prior to closing:
(a) Sewer hook up fees for the individual lots in the propose
subdivision;
(b) Approvals from the County of Maui beyond those approvals Seller
agrees to obtain contained in paragraph 6 above;
(c) All fees and costs required for water meters and water
transmission and storage charges assessed by the County of Maui;
(d) Any engineering or consulting fees for work beyond that already
prepared by Seller or for work Seller has agreed to perform herein; and
(e) To the extent any such item shall not be paid or completed at
closing, Buyer's obligations hereunder shall survive the closing.
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8. ACTIONS PENDING CLOSE OF ESCROW
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8.1 During the period from the effective date of this Agreement until
the escrow closing date, Seller shall:
(a) maintain the Property in the ordinary course of business, and
perform reasonable maintenance and repairs as necessary. Should a portion of
the Property be substantially and materially damaged or destroyed without the
fault of the Seller, Buyer shall have the following options: (1) accept
conveyance of the Property in a damaged or partially damaged condition, together
with the full amount of any and all insurance proceeds, if any, payable to
Seller as a result of such loss, damage or destruction; or (2) terminate the
Agreement and recover the initial deposit upon notice to Seller. The damage or
destruction shall be deemed "material" and "substantial" if it damages or
destroys more than 25% of the value of the Property. In the event the damages
or destruction are note deemed "substantial" and/or "material", the Buyer shall
have the option outlined in (1) herein. It is expressly agreed by the parties
hereto that the options herein provided shall be the sole and exclusive remedies
available to the Buyer;
(b) keep in force up until the escrow closing date, at its expense,
all policies of insurance relating to the property;
(c) promptly and fully pay all trade accounts and costs and expenses
of operation and maintenance of the Property incurred prior to the escrow
closing date which would normally be for the account of the owner of the
Property; provided, however, that all items of expense relating to the Property
which would normally be for the account of the owner of the Property and which
relate to a period of time beginning before and ending after the escrow closing
date shall be prorated as set forth herein.
(d) Seller shall not enter into any agreements which bind the Property
whose effective terms extend past the escrow closing date, without written
consent of the Buyer, which shall not be unreasonably withheld. Upon consent,
the Buyer shall be deemed to have agreed to assume any such agreements after the
escrow closing date.
8.2 During the period from the effective date of this Agreement to the
escrow closing date, Buyer shall:
(a) conduct the feasibility study and other investigations in relation
with the Property during the feasibility study period;
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(b) submit to the Seller or the Escrow Agent within a reasonable time,
all documents or information required by the Seller or the Escrow Agent to
consummate this transaction.
9. POST-CLOSING COVENANTS.
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9.1 Seller's Post-Closing Covenants: Seller agrees that after the
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closing Seller will perform the following covenants in connection with, and to
assist, the development of the Project:
(a) Off-site Drainage Improvements. If, at the time of closing,
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Seller shall not have completed construction of "off-site drainage improvements"
which are or shall be required by the County of Maui as a condition of final
subdivision approval of the Project into 80 residential lots (the "Project
Subdivision"), Seller will construct said improvements promptly and diligently,
and in a manner which will not delay the County of Maui's final approval of the
Project Subdivision, the Buyer's development of the Project or the Buyer's sale
of homes in the Project. The term "off-site drainage improvements" means
facilities in and around Waiele Road required by the County to be constructed by
Seller as a condition of subdivision and development of the Project.
If all of any portion of the County's off-site drainage improvements
are not completed at the time of the County's final approval of the Project
Subdivision and if the County requires a bond or other financial guarantee with
respect thereto as a condition of said final approval, Seller will provide said
bond or financial guarantee in a timely manner and will perform all obligations
secured by said bond in a timely manner so as not to delay the development and
sale of homes in the Project.
(b) Affordable Housing Credits. The Project is subject to the
--------------------------
requirement by the County of Maui to develop or provide a minimum number of
homes or lots which are "affordable", consistent with Maui County's regulations
and standards concerning affordability. Seller has existing affordable housing
credits as a result of prior projects which may be made available for the
benefit of the Project. The parties agree that the Buyer shall have full
control over pricing the individual houses and lots in the Project without
regard to the County's affordable housing requirements. If, as a result of said
pricing, the total number of houses and lots (if any) in the Project which shall
meet the County's affordable housing requirements are insufficient to satisfy
the legal obligation of the Project, the Seller will assign affordable housing
credits to the Project in an amount sufficient to meet said requirements. If,
however, the total number of houses and lots in the Project (without requiring
assignments of credits by the Seller) shall exceed the Project's obligation to
the County for affordable housing, Buyer will assign said excess credits to
Seller for use by Seller in future developments at Kehalani.
Buyer agrees to cooperate concerning said credits and will require
that its lot purchasers participate in the required process before appropriate
government agencies to qualify the units as affordable (if and to the extent
that the prices qualify).
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(c) Park Assessments. Seller will have the obligation to satisfy
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the County of Maui's requirements for park dedication (or financial
contribution in lieu of dedication) as required by County rules and
regulations. This obligation will be satisfied in a timely manner so as not
to delay or hinder the County's final approval of the Project Subdivision or
the development and sale of lots and homes in the Project. Seller will have
the option of bonding the park requirements in lieu of actual dedication.
(d) Water Meters. Seller will cooperate with Buyer in Buyer's efforts
------------
to obtain water meters for each of the proposed 80 lots in the Project, by
communicating to the Board of Water Supply Seller's willingness to use a portion
of its water source credits or allotments under the existing Central Maui Source
Development Agreement among Seller, other venture partners and the Board.
However, Seller shall not be liable if Buyer shall be unable to obtain such
meters due to moratorium or shortage or any failure or refusal by the Board of
Water Supply to cooperate or consent to the allocations of source capacity to
the Project as requested by Buyer and Seller. Seller shall not be required to
incur any cost or financial obligation with respect to said requests or said
meters. Buyer shall be responsible for satisfying the County's requirements
with respect to storage and transmission, as well as the water system
development fees and cost of installing water meters.
(e) Cooperation. Seller will generally cooperate with Buyer to assist
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Buyer in processing Buyer's Project approvals.
9.2 Buyer's Post-Closing Covenants. Buyer agrees to perform the
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following covenants after the closing:
(a) Conform to Plan. Buyer will develop the Project as a single
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family home residential subdivision with 80 residential lots, plus road lots,
landscaping lots, easements and other features, all as shown on the subdivision
plan entitled "Nanea at Kehalani", dated August 14, 1997, by Warren S. Unemori
Engineering, Inc., with amendments as may be required by the County as part of
the subdivision process (the "Subdivision Plan"), and the construction drawings
which have been submitted to the County of Maui and which shall have been
approved prior to closing by the County of Maui (the "Construction Drawings").
Buyer will not change or deviate from the Subdivision Plan or the Construction
Drawings in any material respect without Seller's prior written approval, which
approval shall not be unreasonably withheld, it being understood that the
Seller's primary goal will be to assure the visual and functional integration of
the Project with the existing and future subdivisions of Seller at Kehalani and
with the Project infrastructure.
(b) Comply with CC&Rs. The Buyer will comply with the CC&Rs and
-----------------
will require all lot buyers in the Project to comply with the CC&Rs, including
but not limited to the requirements for construction design and landscaping
approvals. All signage and landscaping shall also be subject to design
approval under the CC&Rs. Buyer will pay dues
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and common expense charges applicable to all of the lots which shall accrue
prior to the sale of each lot.
Seller agrees that it will review, at no cost to Buyer, up to five
different proposed plans for the grading, home construction and landscaping of
lots. A design review for a standard or typical house and lot development
package shall be considered to be a single plan review even if it will be used
for more than one lot. If the total number of plan reviews in the project
pursuant to the CC&Rs exceed five, Seller shall have the right to charge Buyer
(or any lot purchaser) for each such additional review to compensate Seller
reasonably for its time and expenses of performing said review.
(c) Dedications. The Buyer will complete construction of and will
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dedicate to the County of Maui all roads and cul-de-sacs in the subdivision
and the access road (Kaupo Street) to Waiele Road in a timely manner. Also,
the Buyer will install all landscaping within the subdivision including all
landscaping strips (Lots 90, 91 and 92 as shown on the plan) in accordance
with requirements of the Arborist Committee and the County of Maui and will
dedicate said strips to the Homeowners Association for maintenance and
preservation as a common expense. Buyer will construct and convey to Maui
Electric Company and other utility providers all electrical, water, sewer and
other utility services and easements, and will also establish appropriate
easements for common driveway areas shown on the plan.
(d) Comply with Laws. Buyer will comply with all applicable laws,
----------------
rules, regulations and permits, including but not limited to building codes,
subdivision rules, NPDES permit, zoning and land use rules, H.R.S. Chapter 484
(Uniform Land Sales Practices Act), the Interstate Land Sales Full Disclosure
Act, and the terms and conditions of all governmental approvals relating to
the Project.
(e) Cooperation. Buyer will generally cooperate with Seller in
------------
Seller's performance of its post-closing covenants.
(f) Assignment. The Buyer will not transfer to any third party the
----------
Project as a whole or make any bulk sale of all or substantially all of the
lots in the Project prior to obtaining final subdivision approval for the
Project and prior to completing and performing substantially all of Buyer's
post-closing covenants hereunder, without Seller's prior written approval,
which approval will not be unreasonably or arbitrarily withheld or delayed, it
being understood that the Seller needs to be assured that the Project will be
developed as agreed and without adversely affecting other developments of
Seller in Kehalani, and that the developer will be capable, financially
strong, cooperative and reputable.
9.3 Survival of Covenants. Buyer and Seller agree that all of the
---------------------
foregoing post-closing covenants of Buyer and Seller shall survive the
closing.
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10. OTHER TERMS AND OBLIGATIONS
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10.1 Should a portion of the Property be taken by eminent domain or
condemnation, Buyer shall have the following options: (1) accept conveyance of
the Property subject to such taking or condemnation, together with the full
amount of any payments or awards payable to Seller as a result of such taking or
condemnation; or (2) terminate the Agreement and recover the initial deposit,
upon notice to the Seller.
10.2 Risk and title in and to the Property shall pass from the Seller to
the Buyer on and not before the Close of Escrow and the Buyer shall be entitled
to possession of the Property on and after Close of Escrow.
10.3 Except as otherwise provided in this agreement, Seller shall be
responsible for, and shall indemnify Buyer against, any and all obligations,
liabilities, claims and losses arising out of the ownership, development, use,
possession or control of the Property prior to the Close of Escrow, and the
Buyer shall be responsible for, and shall indemnify Seller against, all
obligations, liabilities, claims and losses arising out of the ownership,
development, use, possession or control of the Property after the Close of
Escrow, and each shall hold the other free and harmless therefrom and agrees to
defend the other with respect thereto.
10.4 Buyer and Seller will each maintain the confidentiality of all
proprietary or confidential information provided to it by the other party,
except that Buyer may disclose to his lender information necessary to implement
his loan transaction.
10.5 Seller may terminate this agreement by written notice to Buyer if
this agreement shall not have been duly authorized and ratified by the Seller's
Board of Directors within 30 days from the date of this agreement.
11. BREACH OF REPRESENTATIONS
-------------------------
If there is any material breach by either party of any warranties and
representations as set forth in this Agreement and/or respective obligations
herein, which is discovered by the other before the Close of Escrow, each shall
obligated to and have an opportunity to correct such breaches at its own expense
any time prior to the Close of Escrow, after the receipt of notice of breaches
from the non-breaching party. If all such breaches are not corrected within
that time, they constitute default, and non-defaulting party shall have the
option to (1) postpone the Close of Escrow for a reasonable period thereafter to
permit the correction of such matters, or (2) complete this sale and purchase,
notwithstanding
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failure(s) to correct breaches, in which case any claim for breaches shall be
waived, or (3) to terminate the Agreement with no further obligations to sell or
to purchase the Property, in which case the provisions of this Agreement shall
govern the rights and obligations of the respective parties. Parties failure to
affirmatively elect either option shall be construed as an election of option
(2). The remedies provided for herein shall be applicable only to breaches of
representations and covenants only.
12. SELLER'S DEFAULT AND TERMINATION BY BUYER
-----------------------------------------
12.1 In the event the Seller shall have failed to convey title to Buyer
in breach of its obligations hereunder or to cure prior to the Close of Escrow
any material breaches or default of its obligations set forth in this Agreement
("Seller's Default"), after the Buyer shall have notified the Seller of such
breaches and/or default, and given the Seller a reasonable opportunity to cure
such breaches and/or default, the Buyer, as Buyer's sole remedy, shall have a
right to terminate this Agreement and the Escrow by notifying the Seller of its
intent to do so, provided only if the Buyer himself is not in material breach or
in default of its own warranties and representations, or obligations set forth
in this Agreement.
12.2 In the event that Buyer shall exercise its right to terminate this
Agreement and the Escrow in accordance with the provisions of this paragraph,
the Buyer shall be entitled to the return of the Initial Deposit, with accrued
interest, if any, and the Seller shall be entitled to a return of any
information or documents provide to Buyer. In addition, the Seller shall be
responsible for the payment of any escrow cancellation fees. Each is thereafter
released from any further obligations, except as otherwise provided in this
Agreement. Without limiting the generality of the foregoing, Buyer hereby
releases and waives any right it may have to seek or claim the remedy of
specific performance or any lien on the Property in the event of Seller's breach
of this agreement.
13. BUYER'S DEFAULT AND TERMINATION BY SELLER
-----------------------------------------
13.1 If the Buyer shall have failed to purchase the Property in breach
of its obligations hereunder or to cure prior to the Close of Escrow any
material breaches or default of its obligations set forth in this Agreement
("Buyer's Default"), after the Seller shall have notified the Buyer of such
breaches and/or default, and given the Buyer a reasonable opportunity to cure
such breaches and/or default, the Seller, as Seller's sole and exclusive remedy,
shall have a right to terminate this Agreement and the Escrow by notifying the
Buyer of its intent to do so, provided only if the Seller himself is not in
material breach or in default of its own warranties and representations, or
obligations set forth in this Agreement.
13.2 In the event the Seller shall exercise its right to terminate the
Agreement and the Escrow in accordance with the provision of Section 13, it is
expressly agreed that the
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remedies available to the Seller shall be limited as set forth in 13.3 below,
and each is thereafter released from any further obligations, except as
otherwise provide in this Agreement. In addition the Buyer shall be responsible
for the payment of any escrow cancellation fees.
13.3 Buyer and Seller hereby acknowledge and agree that , in the event
of Buyer's default, Seller will suffer damages in an amount which will, due to
the special nature of the transaction contemplated by this Agreement, be
impractical or extremely difficult to ascertain. In addition, Buyer wishes to
have a limitation placed upon the potential liability of Buyer to Seller in the
event of Buyer's default and wishes to induce Seller to waive other remedies
which Seller may have in the event of Buyer's default. Buyer and Seller after
due negotiation, hereby acknowledge and agree that the amount of the deposits
plus accrued interest represents a reasonable estimate of the damages Seller
will sustain in the even of Buyer's default.
13.4 Buyer and Seller agree that if Seller terminates this Agreement and
cancels the escrow as a result of Buyer's default, Seller shall be entitled to
retain all deposits and any accrued interest as liquidated damages. Such
retention of the said deposits and any accrued interest by Seller is intended
to constitute a forfeiture or penalty under the applicable laws of the State of
Hawaii. The liquidated damages provided for hereunder shall be Seller's sole and
exclusive remedy whether at law or equity in the event of Buyer's default; all
other claims to damages or other remedies being hereby expressly waived by
Seller. Following termination of this Agreement, and retention of the deposit
as liquidated damages by the Seller, pursuant to this section, all of the rights
and obligations of Buyer and Seller under this Agreement shall be terminated.
13.5 Buyer and Seller acknowledge that they have read and understand the
provisions of this section and agree to be bound by its terms.
14. ESCROW CLOSING AND FEES
-----------------------
14.1 The Escrow Closing shall consist of the transfer by the Seller of
the Property to the Buyer, and the payment by the Buyer for the Property, and
execution of such other documents as are reasonably necessary, and shall be held
at the office of the Escrow Agent at the time specified in Section 2.3 or such
other date, time and place as may be mutually agreed upon in writing by the
Seller and the Buyer.
14.2 The Escrow Closing shall occur only when each of the following
obligations have been satisfied or waived by the party for whose benefit such
condition has been imposed.
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(a) The Buyer shall have failed to give notice to the Seller on or
before the expiration of the Feasibility Study Period that it intends to
terminate this agreement;
(b) Neither Seller nor the Buyer shall have given notice to the other
terminating the Agreement, pursuant to Articles 12 and 13 herein;
(c) The full Purchase Price set forth herein and all costs and
expenses chargeable to the Buyer have been delivered to the Escrow Agent;
(d) The Seller and the Buyer have each rendered substantial
performance of all covenants, agreements, conditions and obligations required by
this Agreement to be performed prior to the specific date specified in the
Agreement or if no date is specified, before the Closing Date;
(e) Each document required to be delivered by either party as set
forth in the Agreement has been timely delivered to and deposited with the
Escrow Agent;
14.3 If any of the foregoing conditions are neither satisfied nor waived
within the time specified therefor, the party who has the obligations to fulfill
such conditions shall be deemed in default, to the extent that satisfaction of
such is within the reasonable control of that party, and the party for whose
benefits the conditions is imposed, may, provided that it is not then in
material breach of default of any obligations hereunder or that it has caused
nor been responsible for such conditions to remain unsatisfied, terminate and
rescind this Agreement by written notice delivered to the other party and the
Escrow Agent. The making of such demand shall be optional and not mandatory.
The non-defaulting party shall then be entitled to avail itself of remedies
specified in this Agreement.
14.4 At the Close of Escrow, the Seller and the Buyer, through Escrow
Agent shall exchange with each other such documents as specified in this
Agreement, and tender and receive the purchase price, and the amounts of pro-
rated fees and costs, pursuant to Paragraph 17 below.
14.5 The Seller and the Buyer shall each bear one half of the escrow
fees charged by the Escrow Agent.
15. BUYER'S DELIVERY TO ESCROW AGENT
--------------------------------
15.1 The Buyer shall deliver to the Escrow Agent at least two days prior
to the scheduled Escrow Closing Date the following:
(a) the balance of the purchase price;
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(b) the amounts, if any, required by the Buyer under Paragraph
17, entitled "Proration, Fees and Costs";
(c) one half of the Escrow Agent's fees;
(d) amount of conveyance or transfer taxes, or other taxes which
may be due upon the transfer of the Property.
16. SELLER'S DELIVERY TO ESCROW AGENT
---------------------------------
16.1 Seller shall deliver to the Escrow Agent at least two days prior to
the scheduled Escrow Closing Date the following:
(a) any and all documents necessary to convey complete title, free
and clear of all liens and encumbrances (except the Permitted Title Exceptions)
to the Property from Seller to Buyer;
(b) a resolution executed by the Seller's Board of Directors
evidencing approval of and authorization to execute this Agreement and all other
documents relating to the transactions contemplated herein and indicating the
Seller's representative who is authorized to execute documents on behalf of the
Seller;
(c) the amounts, if any, required by the Seller under Paragraph
17, entitled "Proration, Fees and Costs";
(d) one half of the Escrow Agent's fees;
17. PRORATION, FEES AND COSTS
-------------------------
17.1 The following items shall be prorated as of the Escrow Closing Date
on the basis of a thirty (30) day month and as of midnight before the closing
date.
(a) all county, city and special district taxes, if any, based on
the latest information available, including but not limited to real and personal
property taxes;
(b) utilities, including but not limited to water, sewage fees,
and electricity;
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(c) any and all other charges attributable to the ownership
possession of the Property.
In the event any of these charges are not net determined as of the Close
of Escrow, the Seller and the Buyer agree to prorate the same thereafter when
the information becomes available.
17.2 At the Escrow Closing, Seller shall pay the costs of preparing
documents transferring title to the Buyer and such other documents to be
delivered by Seller. Seller shall bear all costs necessary to convey title to
the Buyer.
17.3 Buyer shall pay and be responsible for the costs of recording the
deed or such other documents which the Buyer requires recording and for any and
all taxes, including conveyance taxes, which may be imposed as a result of the
purchase of the property.
17.4 Seller will pay the cost of the preliminary title search. Buyer
will pay the cost of Buyer's title insurance.
17.5 Any expenses not allocated by the foregoing shall be apportioned
and allocated in the manner customary in the State of Hawaii.
18. NOTICES
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Unless otherwise specifically provided herein, all notices, demands or
other communications given hereunder shall be in writing and shall be deemed to
have been duly delivered when delivered personally or by facsimile, telegram, or
as of the second business day after mailing by United States registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to Seller, to: C. Brewer Homes, Inc.
Attn: Seth Bakes
255-A Waiko Road
Wailuku, Hawaii 96793
Tel. 242-6833
Fax. 242-5316
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If to Buyer to: Jesse E. Spencer
c/o Douglas R. Spencer, Esq.
P.O. Box 959
Kihei, HI 96753
Tel. 808-874-8708
Fax. 808-874-4944
If to Escrow Agent to: Title Guaranty Escrow Services
Attn: Dennis Hinahara
Suite C, 2103 Wells Street
Wailuku, HI 96793
Tel. 808-244-7924
Fax. 808-242-6529
19. ASSIGNMENT BY BUYER
-------------------
This Agreement and any rights hereunder may not be assigned to any other
party without the written consent of the Seller, however, said written consent
shall not be unreasonably withheld.
20. BROKERAGE COMMISSIONS
---------------------
Buyer and Seller each represent and warrants to the other it has not
incurred any liability for brokerage fees, commissions or finder's fees in
connection with the transaction contemplated by this Agreement. Each party
agrees to indemnify and hold harmless the other from and against any claims or
liabilities arising from a breach of the representation and warranty by such
party contained in this paragraph.
21. MERGER OF SELLER
----------------
The Buyer has been informed that Seller may be participating in a
corporate merger. As part of preparing for the merger, Seller may request
consents, acknowledgements or estoppel certificates from Buyer. Buyer agrees
that it will (a) maintain the confidentiality of Buyer's information about the
merger, and (b) cooperate with Seller and execute such documents as Seller may
reasonably request, provided, however, that each such document shall not result
in any financial outlay by Buyer or assumption of any risk, liability or
obligation, and will not alter Buyer's substantive rights and liabilities under
this agreement.
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22. GENERAL PROVISIONS
------------------
22.1 The representations, warranties, covenants, agreements and
indemnities set forth in or made pursuant to this Agreement shall remain
operative, shall be deemed made upon the execution of this Agreement, but shall
not survive the Close of Escrow, unless it shall specifically be designed to
survive the Close of Escrow by specific references.
22.2 The use herein of (i) the neuter gender includes the masculine and
the feminine, and (ii) the singular number includes the plural, whenever the
context so requires.
22.3 Captions in this Agreement are inserted for convenience of
reference only and do not define, describe, amplify or limit the scope of the
intent of this Agreement or any of the terms hereof.
22.4 This Agreement contains the entire agreement between the parties
relating to the transactions contemplated hereby. All prior or contemporaneous
agreements, understandings, representations and statements, oral or written, are
merged herein.
22.5 No modification, waiver, amendment, discharge or change of this
Agreement will be valid unless the same is in writing and signed by the party
against which the enforcement of such modification, waiver, amendment, discharge
or change is or may be sought. Waiver of any one breach will not be deemed to
be waiver of any other breach of the same, or any other provision hereof. No
termination of this Agreement and no waiver of any condition or right of
termination of this Agreement expressly provided for in this Agreement shall
limit either party's liability for any default under this Agreement.
22.6 Any controversy or claim arising out of or relating to this
Agreement, or breach thereof, shall be settled by arbitration in accordance with
the commercial arbitration rules of the American Arbitration Association, Maui
County, State of Hawaii as the sole and exclusive recourse therefore and
judgment upon any award rendered by such arbitrator may be entered in any court
having jurisdiction thereof. In the event of such dispute, the prevailing party
shall be entitled to receive reasonable attorney's fees and costs, in addition
to any such other relief and remedies which may be ordered by the arbitrator.
22.7 All terms of this Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their respective legal
representatives, successors and permissible assigns, if any.
22.8 In the event any term, covenant, condition, provision or agreement
herein contained is held to be invalid or void by any court of competent
jurisdiction, the invalidity of any such terms, covenant, condition, provision
or agreement shall in no way affect any other term, covenant, condition,
provision or agreement herein contained.
20
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22.9 Buyer and Seller shall fully cooperate with one another in
connection with the requirements imposed by this Agreement, and each agrees to
take such further action and to execute and deliver such further documents, with
acknowledgment or affidavit if required, as may be reasonably necessary to carry
out the purposes of this Agreement and to facilitate the satisfaction of any
conditions set forth herein. This Agreement, and documents required in
furtherance hereof, shall be deemed fully executed when either (1) a single
original document bears the signatures of all parties or (2) all parties have
signed individual copies of an original document and transmitted copies so
executed to all other parties, such that a copy of each signature required by
such document is in the possession of each party to the document.
22.10 This Agreement shall be construed and enforced in accordance with
the laws of the State of Hawaii.
22.11 Time is of the essence hereof.
22.12 Buyer and Seller agree that for all purposes hereunder, the term
"the date" of execution of this Agreement or the Effective Date shall be the
date set forth at the beginning of this Agreement.
22.13 This Agreement has been negotiated at arms length by and between
the Seller and the Buyer, and has been jointly drafted by attorneys for both the
Seller and the Buyer, and should there be any ambiguities within the Agreement,
they shall be given common sense interpretation, and shall not be interpreted
against one party or the other.
22.14 The parties shall meet their own legal and other costs and
expenses in connection with or as a consequence of the negotiation, preparation,
execution and the Closing of Escrow and any documentation referred to herein.
22.15 Wherever in this Agreement the consent of either party is
required, it is agreed that such consent shall not be unreasonably withheld or
delayed.
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In Witness whereof the parties have executed this Agreement on the date
last written.
C. BREWER HOMES, INC.
Date: December 15, 1997
JESSE E. SPENCER
By: /s/ SCOTT NUNOKAWA Date:
---------------------
SCOTT NUNOKAWA
Its: Vice President By /s/ JESSE E. SPENCER
-----------------------
/s/ SETH A. BAKES
- --------------------
Its: President & CEO
By: SETH A. BAKES
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EXHIBIT B
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LAND COURT | REGULAR SYSTEM
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AFTER RECORDATION, RETURN BY: MAIL( ) PICK-UP( )
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LotKEYBOARD(insert Lot#)
Grantor: C. Brewer Homes, Inc., a Delaware corporation
Grantee: KEYBOARD(Grantee's names)
KEYBOARD(Grantor's address)
SPECIAL WARRANTY DEED
AND
SUPPLEMENTAL DECLARATION
KNOW ALL MEN BY THESE PRESENTS:
I. SUPPLEMENTAL DECLARATION. That C. BREWER HOMES, INC., a Delaware
corporation, whose principal place of business and post office address is at
255-A East Waiko Road, Wailuku, Hawaii, 96793, as the Declarant under that
certain Declaration of Covenants, Conditions and Restrictions of Kehalani dated
March 17, 1995, recorded in the Bureau of Conveyances of the State of Hawaii as
Document No. 95-040251 (the "Declarant"), pursuant to Article VII of the
Declaration, does hereby subject to the provisions of said Declaration all of
that certain real property more particularly described in Exhibit "A" attached
hereto and incorporated herein by reference (the "Property"), which Property is
hereby annexed to the property subject to the Declaration. This instrument
shall constitute a Supplemental Declaration, as such term is defined in the
Declaration, and the Property shall be a part of the Neighborhood, as such term
is defined in the Declaration, designated "Nanea at Kehalani" (the "Project").
<PAGE>
II. SPECIAL WARRANTY DEED AND COVENANTS. That C. BREWER HOMES, INC. a
Delaware corporation, whose principle place of business and post office address
is 255-A East Waiko Road, Wailuku, Hawaii 96793 ("Grantor"), in consideration of
the sum of TEN DOLLARS ($10.00) and other good and valuable consideration to it
paid by KEYBOARD (GRANTEE IN CAPS & status), whose residence and post office
address is KEYBOARD (Grantee's address) ("Grantee"), the receipt of which is
hereby acknowledged, does by these presents hereby grant, bargain, sell and
convey unto Grantee, as KEYBOARD (TENANCY IN CAPS), absolutely and in fee
simple, all of the Property (as defined in Section I above).
AND, the reversions, remainders, rents, issues and profits thereof and all
of the estate, right, title and interest of Grantor, both at law and in equity,
therein and thereto.
TO HAVE AND TO HOLD the same, together with all buildings, improvements,
tenements, hereditaments, rights, easements, privileges and appurtenances
thereunto belonging or appertaining or held and enjoyed therewith unto Grantee
as aforesaid, absolutely and forever;
TOGETHER with those certain easements, if any, described in said Exhibit
"A", and with the rights of access described in said Exhibit "A".
SUBJECT, HOWEVER, to the encumbrances, easements, conditions and
restrictions contained herein and in said Exhibit "A" attached hereto and
incorporated herein by reference;
SUBJECT, FURTHER, to the Hawaii Right to Farm Act, Hawaii Revised Statutes
Chapter 165, as amended, which limits the circumstances under which pre-existing
farming activities may be deemed as a nuisance.
EXCEPTING AND RESERVING in favor of Grantor and its successors and assigns
the following:
(A) The right to grant utility easements over, upon and across any of the
easement areas described in Exhibit "A" or to grant or modify utility easements
to reflect "as built" conditions in order to facilitate any future adjustments
or modifications of the utility easements affecting said Property; provided,
however, that such right shall expire (1) year from the date hereof.
(B) All water and water rights within or appurtenant to the Property;
provided, however, that in the exercise of said rights, Grantor and its
successors and assigns shall not have the right to drill for water or otherwise
disturb the surface of the land or any improvements thereon.
SUBJECT TO, AND EXCEPTING AND RESERVING, as appurtenant to the lands which
are located adjacent to or in the vicinity of the Project in agricultural
operation (the "Agricultural Properties"), the unrestricted right to engage in
any type of farming operation, including, but not limited to, open burning,
percolating, evaporating, fertilizing, milling, generating power, water
diversion, plowing, grading, storing, hauling, spraying pesticides or
herbicides,
<PAGE>
irrigating, crop dusting, and all other activities incidental to the planting
farming, harvesting and processing of agricultural products and by-products
which operations may from time to time cause the transmission, discharge, or
emission of surface water runoff, noise, smoke, dust, light, heat, vapors,
chemicals, vibrations or other nuisances over or upon the Property. Grantee
hereby accepts the foregoing conditions and any inconvenience, irritation or
annoyance which Grantee may experience as a result of the presence and operation
of the Agricultural Properties in the vicinity of the Project, and Grantee does
hereby assume, on Grantee's own behalf and on behalf of Grantee's tenants,
lessees, families, servants, guests, invitees, licensees, employees, or other
persons who may occupy or otherwise use the Property, any and all risks of
impairment of the use and enjoyment of the Property, loss of market value of the
Property, or any damage to property or personal injury or illness arising from
the presence and operation of the Agricultural Properties. Grantee hereby
further understands and acknowledges that neither Grantor, the Kehalani
Community Association, the owners of the Agricultural Properties, nor any of
their related entities, affiliates, successors-in-title or assigns, may be held
liable for any impairment of the use and enjoyment of the Property, loss of
market value of the Property, or any damage to property or personal injury or
illness arising from the presence and operation of the Agricultural Properties.
AND Grantor does hereby covenant with Grantee that Grantor has good right
to convey the Property, that the interest of Grantor is free and clear from all
encumbrances made by, through or under Grantor, except as herein mentioned and
as set forth in said Exhibit "A", and except for current real property taxes, if
any, which are to be prorated as of the date of recording of this instrument,
and that Grantor will warrant and defend the same unto Grantee, against the
lawful claims and demands of all persons claiming by, through or under Grantor,
except as aforesaid.
AND Grantee acknowledges and agrees that the Property is being conveyed to
Grantee in "AS IS" condition at the time of recording of this instrument, that
Grantor is expressly disclaiming any expressed or implied warranties of any kind
with respect to the condition of the Property, including, with limitation, any
warranties relating to the absence of hazardous materials in, on and under the
Property, the nature and quality of the soils and of all materials in, on, under
and above the Property and/or warranties relating to any view easements or
rights.
AND Grantee acknowledges the annexation provided for in Section I of this
instrument and further acknowledges and agrees that the Property is being sold
to Grantee subject to all of the obligations, disclosures, reservations and
easements described in the Declaration, as more particularly described in
Section I above.
AND Grantee hereby covenants and agrees with Grantor that (a) the Property
shall be used subject to the restrictions set forth in the Declaration as
supplemented by any rules of the Kehalani Community Association adopted pursuant
to the Declaration; (b) Grantee will pay all assessments and impositions of the
Kehalani Community Association and observe, perform, comply with and abide by
all other provisions of the Declaration and the Articles of Incorporation and
By-Laws of the Kehalani Community Association, as described in the Declaration,
as such documents
<PAGE>
may be amended from time to time; and (c) Grantee will utilize the Property in
full compliance with all applicable codes, laws, ordinances, rules and
regulations.
AND Grantee hereby further covenants and agrees that Grantee shall irrigate
and maintain all landscaping contained within the portion of the County of Maui
Right-of-Way abutting KEYBOARD (Street Name), and located immediately adjacent
to the Property.
All covenants herein are covenants running with the land hereby conveyed
and shall be binding upon and shall inure to the benefit of the respective
heirs, personal and legal representatives, successors, successors in trust and
assigns of the parties hereto, according to the context thereof. The terms
"Grantor" and "Grantee", as and when used herein, or any pronouns used in place
thereof, shall mean and include the masculine and feminine, the singular or
plural number, individuals or corporations and each of their respective heirs,
personal and legal representatives, successors, successors in trust and assigns,
according to the context thereof, and that if these presents shall be signed by
two (2) or more Grantors or Grantees, all covenants of such parties shall be and
for all purposes deemed to be joint and several.
This instrument may be executed in several counterparts, each of which
shall be deemed an original, and said counterparts shall together constitute one
and the same instrument, binding all of the parties hereto, notwithstanding that
all of the parties are not signatory to the original or the same counterparts.
For all purposes, including, without limitation, recordation filing and delivery
of this instrument, duplicate unexecuted and unacknowledged pages of the
counterparts may be discarded and the remaining pages assembled as one document.
<PAGE>
EXHIBIT 99.1
[COMPANY LOGO APPEARS HERE]
C. BREWER HOMES, INC.
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NEWS NEWS NEWS NEWS NEWS NEWS NEWS NEWS NEWS NEWS
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CONTACT: Seth A. Bakes, President/CEO
Telephone: 808/242-6833
FOR IMMEDIATE RELEASE
December 18, 1997
MAUNA LOA MACADAMIA PARTNERS AND C. BREWER HOMES SIGN MERGER AGREEMENT
Mauna Loa Macadamia Partners, L.P. (Mauna Loa) and C. Brewer Homes, Inc.
(Homes) announced today that they have executed a definitive merger agreement.
As previously announced, upon consummation of the merger, stockholders of Homes
will receive .667 limited partnership units of Mauna Loa (subject to adjustment)
for each share of common stock.
The merger plan is subject to approval by the holders of both Mauna Loa
partnership units and Homes common stock, and other typical closing conditions.
The parties hope to complete the merger in the second calendar quarter of 1998.
Mauna Loa Macadamia Partners L.P. is the world's largest grower of
macadamia nuts, owning or leasing 4,027 acres of orchards on the island of
Hawaii. Mauna Loa's Class A Units trade on the New York Stock Exchange (symbol
- - NUT).
C. Brewer Homes, Inc. is a land developer and homebuilder in Hawaii with
operations on the islands of Maui, Kauai and Hawaii. Homes owns 2,689 acres of
land. Homes' Class A common stock trades on NASDAQ (symbol - CBHI).
This press release contains forward-looking statements regarding future
events and future performance of Mauna Loa and Homes that involve risks and
uncertainties that could cause actual results to differ materially. We refer
you to documents that Mauna Loa and Homes files from time to time with the
Securities and Exchange Commission, such as Form 10-K, Form 10-Q and Form 8K
reports, which contain a description of certain factors that could cause actual
results to differ from current expectations and the forward-looking statements
contained in this press release.
255-A East Waiko Road. Wailuku, Hawaii 96793. Phone: (808) 242-6833.
Fax: (808) 242-5316
