<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) March 24, 1998
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
<PAGE>
Item 5. Other Events
EXTENSION OF MATURITY OF CREDIT FACILITY
On March 25, 1998, C. Brewer Homes, Inc. (the "Company") executed a First
Amendment to the Master Facility Agreement (the "Loan Amendment") with its
lenders, Bank of Hawaii and City Bank (the "Lenders"). The Loan Amendment
extends the maturity of the existing Master Facility Agreement from May 31, 1998
to December 1, 1998. This extension satisfies a condition specified in the
Amended and Restated Merger Agreement dated as of December 18, 1997 (the "Merger
Agreement") between the Company and Mauna Loa Macadamia Partners, L.P. (the
"Partnership"), pursuant to which it is contemplated that the Company will be
merged into the Partnership (the "Merger"). In addition, the Loan Amendment
amends, among other things, provisions in the Master Facility Agreement relating
to the allocation of the net sales proceeds from the sale of the homes at its
Kaimana subdivision between the commercial mortgage loans and the working
capital line of credit portions of the Master Facility Agreement. The Loan
Amendment also specifies the manner in which the net sales proceeds from the
sales of the Nanea subdivision of the Kehalani master planned community and the
Iao II parcel will be applied, including amounts to be set aside for certain
infrastructure improvements at Kehalani.
CLOSING OF SALE OF NANEA
On March 24, 1998, the Company completed the sale of the Nanea subdivision of
its Kehalani master planned community for $2.2 million to an unrelated third
party. In the Loan Amendment, the Lenders agreed to allow the Company to set
aside, in an escrow account, $800,000 of the proceeds from the Nanea sale to
fund off-site drainage improvements at Kehalani required by the County of
Maui. This requirement relates to the Nanea poject as well as to the portions
of Kehalani still owned by the Company. Of the balance of the proceeds from
the sale of Nanea, $1.3 million were paid to the Lenders and applied in
accordance with the provisions of the Loan Agreement.
CLOSING OF SALE OF IAO II
On April 16, 1998, the Company completed the sale of its Iao II land parcel for
approximately $2.0 million to an unrelated third party. In accordance with the
Loan Amendment, approximately $1.9 million of the proceeds from the Iao II sale
were paid to the Lenders and applied in accordance with the provisions of the
Loan Amendment. As of April 17, 1998, the outstanding indebtedness under the
Master Facility Agreement, as amended by the Loan Agreement, was approximately
$21.2 million.
STABILITY AGREEMENTS
In satisfaction of another requirement of the Merger Agreement, the Company has
obtained, from each holder of 5% or more of the outstanding Class B Common Stock
of the Company, a "Stability Agreement" between such holders and the
Partnership, each of which provides in effect that such holder will not sell any
of the Class A depository units ("Class A Units") representing limited partner's
interests in the Partnership, to be received on consummation of the Merger, for
a period of one year.
<PAGE>
STOCK OPTION CANCELLATION AND REPLACEMENT AGREEMENTS
Under the terms of the Merger Agreement and the Company's 1993 Stock
Option/Stock Issuance Plan (the "Plan"), each option issued under the Plan that
has not been exercised prior to the effective time of the Merger will be
cancelled as of the effective time of the Merger. At March 31, 1998 there are
outstanding options to purchase 204,000 shares of the Company's Class A Common
Stock, with exercise prices ranging from $2.0625 per share to $12.00 per share.
If more than 10,000 shares of Class A Common Stock were to be issued upon the
exercise of such options, the exchange ratio to be used in converting the
Company's Common Stock into Class A Units in the Merger would be reduced. The
Company has entered into two types of agreements with holders of options with an
exercise price of less than $5.00 per share that the Company believes should
assure that, if the Merger is consummated, none of the outstanding options will
be exercised and accordingly no adjustment to the exchange ratio will be made.
One form of agreement, which the Company has entered into with two optionees
(Clinton R. Churchill and Edward T. Foley) who will not continue as either a
director or officer of the Partnership or its general partner after the Merger,
provides that the options covered by such agreements will be cancelled
immediately prior to the time the Merger becomes effective in exchange for a
payment in the amount (if any) (the "Option Cancellation Amount") that the
exercise price is exceeded by the average market price of the Class A Common
Stock on the 20 trading days ending on the third trading day prior to the
effective date of the Merger. The second form of agreement, which the Company
and the Partnership have entered into with optionees who are expected to be
officers of the Partnership or directors of the general partner of the
Partnership after the Merger (Seth A. Bakes, John W. A. Buyers, David A. Heenan,
Paul C. T. Loo and Kent T. Lucien), provides that the option covered by such
agreement will be cancelled immediately prior to the Merger in exchange (i) for
a comparable replacement option to be issued by the Partnership after the Merger
or, (ii) if such replacement options are not approved by the holders of the
Class A Units of the Partnership at a special meeting of the Unitholders to
approve the Merger and proposed Partnership option plan, for the payment of the
Option Cancellation Amount.
OFFICER CONTRACTS
The Company and Edward T. Foley, the Company's Executive Vice President and
Chief Financial Officer, have executed a letter agreement dated April 8, 1998
amending Mr. Foley's Release and Separation Agreement (filed as Exhibit 10.62 of
the Registrant's Current Report on Form 8-K dated August 13, 1997) and his
Consultant Agreement (filed as Exhibit 10.63 of the Registrant's Current Report
on Form 8-K dated August 13, 1997). The amendments extend Mr. Foley's last day
of active service from March 31, 1998 to June 30, 1998 and reduce his consulting
time from 40 hours per month to 10 hours per month for six months following his
separation from the Company as an employee as provided for in the Release and
Separation Agreement.
In April 1998, the Company memorialized its agreement with Eben Dale, its
corporate secretary and employee, and Ka'u Agribusiness Co., Inc. ("Ka'u"),
an affiliate of the general partner of the Partnership, pursuant to which Mr.
Dale continues to provide corporate secretary services for the Company and
also provides land management and legal services to Ka'u. Pursuant to the
agreement, made effective as of December 1, 1997, Ka'u pays a fee to the
Company for Mr. Dale's salary and benefits paid to Dale by the Company, plus
any reimbursable expenses incurred by Dale for Ka'u. The contract terminates
on the
2
<PAGE>
earlier to occur of the Merger, thirty days after written notice by any party
thereto or November 30, 1998.
Item 7. Financial Statements and Exhibits
(c) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -------------------------------------------------------------
<C> <S>
10.67 Amendment dated February 11, 1998, to Purchase and Sale Agreement
between C. Brewer Homes, Inc. and Stanford S. Carr Development
Corporation regarding the Iao II parcel and Eha Street extension.
10.68 First Amendment to Master Facility Agreement, dated March 25,
1998, but effective as of March 23, 1998, between C. Brewer
Homes, Inc. and Bank of Hawaii.
10.69 Assignment of Account by and between C. Brewer Homes, Inc. and
Bank of Hawaii dated March 23, 1998.
10.70 Letter dated March 23, 1998, to Gene Tsuji of Bank of Hawaii,
Construction & Income Property Loan Department regarding
Extension of Guaranty by C. Brewer and Company, Ltd.
10.71 Stability Agreement, dated March 13, 1998, between the Mauna Loa
Macadamia Partners, L.P. and John J. F. Sherrerd.
10.72 Stability Agreement, dated March 13, 1998, between the Mauna Loa
Macadamia Partners, L.P. and Kathleen C. Sherrerd.
10.73 Stability Agreement, dated March 10, 1998, between the Mauna Loa
Macadamia Partners, L.P. and L. Charles DeVoe-Trustee.
10.74 Stability Agreement, dated March 10, 1998, between the Mauna Loa
Macadamia Partners, L.P. and Marvin J. Tilker.
10.75 Stability Agreement, dated March 12, 1998, between the Mauna Loa
Macadamia Partners, L.P. and Ing Family Partnership.
10.76 Stability Agreement, dated March 10, 1998, between the Mauna Loa
Macadamia Partners, L.P. and Jean E. Rolles.
10.77 Stability Agreement, dated February 25, 1998, between the Mauna
Loa Macadamia Partners, L.P. and J. W. A. Buyers.
10.78 Stability Agreement, dated March 18, 1998, between the Mauna Loa
Macadamia Partners, L.P. and Jane Buyers Russo, Rebecca W.
Buyers-Basso, Elsie Buyers Viehman-Trustees of the J. W. A.
Buyers Educational Trust (the "Trust").
3
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10.79 Stability Agreement, dated March 18, 1998, between the Mauna Loa
Macadamia Partners, L.P. and Jane Buyers Russo, Rebecca W.
Buyers-Basso, Elsie Buyers Viehman-Trustees of the J. W. A.
Buyers Generation Skipping Trust (the "Trust").
10.80 Stock Option Settlement Agreement, dated April 14, 1998 between
the C. Brewer Homes, Inc. and Edward T. Foley.
10.81 Stock Option Settlement Agreement, dated April 14, 1998 between
the C. Brewer Homes, Inc. and Clinton R. Churchill.
10.82 Stock Option Replacement Agreement, dated April 14, 1998 between
the Mauna Loa Macadamia Partners, L.P., C. Brewer Homes, Inc. and
Seth A. Bakes.
10.83 Stock Option Replacement Agreement, dated April 14, 1998 between
the Mauna Loa Macadamia Partners, L.P., C. Brewer Homes, Inc. and
John W. A. Buyers.
10.84 Stock Option Replacement Agreement, dated April 14, 1998 between
the Mauna Loa Macadamia Partners, L.P., C. Brewer Homes, Inc. and
David A. Heenan.
10.85. Stock Option Replacement Agreement, dated April 14, 1998 between
the Mauna Loa Macadamia Partners, L.P., C. Brewer Homes, Inc. and
Paul C. T. Loo.
10.86 Stock Option Replacement Agreement, dated April 14, 1998 between
the Mauna Loa Macadamia Partners, L.P., C. Brewer Homes, Inc. and
Paul C. T. Loo.
10.87 Stock Option Replacement Agreement, dated April 14, 1998 between
the Mauna Loa Macadamia Partners, L.P., C. Brewer Homes, Inc. and
Kent T. Lucien.
10.88 Letter Agreement effective as of December 1, 1997 between C.
Brewer Homes, Inc., Eben Dale and Ka'u Agribusiness Co., Inc.
10.89 Letter Agreement dated April 8, 1998 between the C. Brewer Homes,
Inc. and Edward T. Foley amending Release and Separation
Agreement and Consultant Agreement.
</TABLE>
4
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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
<PAGE>
AMENDMENT TO PURCHASE AND SALE AGREEMENT
THIS AGREEMENT made and entered into as of this 11th day of February,
1998, by and between C. BREWER HOMES, INC., a Delaware corporation ("Seller"),
and STANFORD S. CARR DEVELOPMENT CORPORATION, a Hawaii corporation
("Purchaser").
R E C I T A L S:
WHEREAS, Seller and Purchaser have entered into that certain Purchase and
Sale Agreement ("Agreement") dated of September 12, 1997;
WHEREAS, pursuant to Section 5(d) of the Agreement, Seller has provided to
Purchaser that certain ALTA boundary survey dated October 6, 1997 prepared by
Warren S. Unemori Engineering, Inc. ("ALTA Survey");
WHEREAS, the ALTA Survey reveals a number of encroachments onto the subject
property;
WHEREAS, Seller has annotated the ALTA Survey to identify by tax map key
the various parcels from which the encroachments appear to emanate, a copy of
which has been delivered to Purchaser;
WHEREAS, Seller has prepared the chart describing said tax map key parcels
together with a description of the encroachment relating to said parcels, a copy
of which is attached hereto as Exhibit "C" and incorporated for all purposes
hereof;
WHEREAS, pursuant to Section 5(d) of the Agreement, Purchaser has notified
Seller that it desires to proceed with the transactions contemplated by the
Agreement, provided that the concerns of Seller and Purchaser relating to said
encroachments are accommodated;
WHEREAS, Seller and Purchaser are entering into this Amendment to
accommodate said concerns, pursuant to and in compliance with Section 5(d) of
the Agreement; and
WHEREAS, Seller and Purchaser are entering into this Amendment to
substitute the form of the Warranty Deed by which title will be conveyed from
Seller to Purchaser.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, and for other valuable consideration, receipt whereof is
hereby acknowledged, Seller and Purchaser agree as follows:
<PAGE>
1. Section 1 of the Agreement shall be amended to delete on page 1, line 4
"24.642 acres" and to substitute "24.520 acres" and to delete on page 2, line 6
"3. Lot 10 (0.122)".
2. Exhibit "B" attached hereto and incorporated for all purposes hereof
shall substitute for Exhibit "B" referred to in Section 8 of the Agreement.
3. Section 1 of the Agreement is hereby amended to add the following
sentence after the sentence ending with the phrase, "... collectively referred
to in this Agreement as the >Property=":
"Notwithstanding the foregoing, the exact area and dimensions of that
portion of the Property comprised of the Pending Eha Street Extension
Subdivision shall be as described in the Subdivision, as defined in Section
1.A. below."
4. Section 1.A. of the Agreement is hereby amended to add the following
after the phrase, "... incorporated for all purposes herein":
"..., and as may be further revised to exclude from the area to be sold by
Seller and purchased by Purchaser all or a portion of the encroachments
depicted on the ALTA survey map of Warren S. Unemori Engineering, Inc.
dated October 6, 1997 ("ALTA Survey"), receipt whereof is hereby
acknowledged by Seller and Purchaser;"
5. Section 2 of the Agreement is hereby amended to add the following after
the phrase "... shall be TWO MILLION AND NO/100 DOLLARS ($2,000,000.00) in
cash":
"... as may be adjusted pursuant to the terms of this Agreement."
6. Section 5(d) is amended in its entirety to read as follows:
"(d) Seller has had the Property staked and has provided, at its expense,
the ALTA Survey of the Property. The ALTA Survey depicts various
encroachments on the Property. Seller will make a good faith effort to
adjust the boundaries of the Subdivision to exclude all of the
encroachments listed in Exhibit "C" (except for those areas relating to
Items 2, 3, 4 and 7 ), including all of the "L"-shaped area depicted in the
southeast corner of the ALTA Survey. If the Subdivision is approved as set
forth above and the parties close the transactions contemplated herein,
then Seller shall continue to own the areas so excluded from the
Subdivision after the closing and may, in its sole discretion and without
the approval of Purchaser, retain such areas or convey or grant easements
in all or a portion of such areas. The Purchase Price shall not be reduced
to reflect any of the excluded areas. Notwithstanding the preceding
sentence, the Purchase Price shall be reduced to reflect Area "A" (1,574
sq. ft.), Area "B" (1,506 sq. ft.), Area "C" (1,463 sq. ft.), Area "D"
(1,139 sq. ft.) and Area "E" (91 sq. ft.), for an aggregate square footage
of 5,773 sq. ft. or .122 acre, as shown on Exhibit "D"
2
<PAGE>
attached hereto and incorporated for all purposes hereof. With respect to
such Areas "A" through "E", inclusive, the amount of the reduction in the
Purchase Price shall be calculated as follows: 5,773 sq. DIVIDED by
1,068,091.2 sq. ft. (24.520 acres) MULTIPLIED by $2,000,000.00 OR
$10,809.94 such that the adjusted Purchase Price shall be $1,989,190.06.
If Seller obtains final approval of the Subdivision as described
hereinabove on or before June 1, 1998, then Purchaser shall proceed with
the closing and take title subject to the encroachments not excluded from
the Subdivision. In the event that Purchaser, no later than fifteen (15)
days following the date on which the Subdivision as described hereinabove
is given final approval by the County of Maui, notifies Seller in writing
that Purchaser desires Seller to grant easements in favor of certain
persons with respect to certain encroachments, Purchaser shall also take
title subject any such easements so granted by Seller to such persons
designated by Purchaser. In addition, Purchaser shall indemnify, defend
and hold Seller harmless from and against all claims, demands, costs,
expenses, fees, losses or liabilities arising out of, or relating to, such
encroachments identified on the ALTA Survey and as described in Exhibit
"C", regardless of whether easements have been granted by Seller. The
foregoing indemnification shall survive the closing of the transactions
contemplated by this Agreement."
7. Except as set forth above and notwithstanding the time limitations
contained in Section 5(d) of the Agreement prior to the amendment thereof as set
forth in Section 6 of this Amendment, the Agreement shall remain unchanged and
is in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first above written.
Purchaser: Seller:
STANFORD S. CARR DEVELOPMENT C. BREWER HOMES, INC.
CORPORATION
By /s/ Standford S. Carr By /s/ Seth A. Bakes
------------------------------- ---------------------------
Its President Its President and Chief
Executive Officer
By /s/ Edward T. Foley
------------------------------------
Its Executive Vice President and
Chief Financial Officer
<PAGE>
EXHIBIT "B"
LAND COURT REGULAR SYSTEM
AFTER RECORDATION, RETURN BY: MAIL ( ) PICK-UP ( )
Total No. of Pages:
TMK No(s)_______:
LIMITED WARRANTY DEED
KNOW ALL BY THESE PRESENTS:
That C. BREWER HOMES, INC., a Delaware corporation, whose address is
at 255-A E. Waiko Road, Wailuku, HI 96793 (the "Grantor"), for and in
consideration of the sum of TEN AND NO/100 DOLLARS ($10.00) and other good and
valuable consideration paid to Grantor by STANFORD S. CARR DEVELOPMENT
CORPORATION, a Hawaii corporation, whose address is at 841 Bishop Street, Suite
2118, Honolulu, Hawaii 96813 (the "Grantee"), receipt whereof is hereby
acknowledged, does by these presents grant, bargain, sell and convey unto said
Grantee, as ITS SOLE PROPERTY, absolutely and in fee simple:
All of that certain real property more
particularly described in Exhibit "A" attached hereto and
incorporated herein by reference (the "Property").
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.
<PAGE>
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 said Grantee as aforesaid, absolutely and forever.
And the Grantor does hereby covenant and agree to and with said
Grantee that the Grantor is lawfully seised of the property described in Exhibit
"A" for an estate in fee simple; that Grantor has good right to convey and to
sell the property described herein; and that Grantor has not heretofore done,
committed or willingly suffered to be done or committed, any act or thing
whatsoever whereby the title and estate conveyed hereunder, or any part thereof,
are or shall be charged or encumbered, except as is set forth in Exhibit "A",
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 is herein provided;
TO HAVE AND TO HOLD the same unto Grantee as aforesaid, to Grantee's
use and benefit forever.
SUBJECT, HOWEVER, 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 a nuisance.
EXCEPTING AND RESERVING in favor of Grantor and its successors and
assigns 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 Property 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, 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, odors, 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 risk 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
<PAGE>
acknowledges that neither Grantor, 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.
Grantee acknowledges that the Property is being conveyed in an "AS IS,
WHERE IS" condition "WITH ALL FAULTS". Grantee herein represents to Grantor
that Grantee knows, will have examined and will have investigated, to the full
and complete satisfaction of Grantee, the physical nature and condition of the
Property, or Grantee will have waived such knowledge, examination and
investigation. Grantee further acknowledges that, except as expressly set forth
in that certain Purchase and Sale Agreement by and between the parties dated
September 12, 1997 (the "Purchase and Sale Agreement"), as amended February
__,1998, neither Grantor nor any agent, attorney, employee or representative of
Grantor has made or will make any representation whatsoever regarding the
Property or the subject matter of the sale provided for in said Purchase and
Sale Agreement, or any part thereof, including, without limiting the generality
of the foregoing, representations as to the condition of the Property, the value
or profitability of the Property or the suitability of the Property for
Grantee's intended use or for any use whatsoever, any applicable building,
zoning or fire laws or regulations or compliance therewith or the existence of
or compliance with any required permits or licenses, if any, of any governmental
agencies, the availability or existence of any water, sewer or other utilities,
public or private, any warranty as to the structural, mechanical, electrical,
air-conditioning, and ventilating systems of the Property, the existence or
absence of any hazardous materials, the accuracy or validity of any documents
furnished to Grantee or executed with respect to the Property, surveys, permits,
or soils reports. Grantee agrees that Grantee has relied and will be relying
solely on Grantee's own inspection and review of all aspects of the Property
with respect to all of the foregoing matters; provided, however, that Grantee
may rely upon the representations and warranties of Grantor expressly set forth
in the Purchase and Sale Agreement. Grantee assumes the risk that adverse
physical conditions may not have been revealed by its own investigations and
examinations. Further, Grantee assumes the risk of all changes in zoning, land
use, and other laws, ordinances, rules or regulations and adverse governmental
action of any kind that might affect the Property or Grantee's intended use of
the Property.
IT IS MUTUALLY AGREED that the terms "Grantor" and "Grantee", as and
when used herein, or any pronouns used in place thereof, shall mean and include
the masculine or feminine, the singular or plural number, individuals or
corporations and their and each of their respective successors, successors in
trust, heirs, legal representatives and permitted 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.
<PAGE>
-- THE NEXT PAGE IS THE SIGNATURE PAGE --
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed these presents on
the ______ day of February, 1998.
C. BREWER HOMES, INC., a Delaware
corporation
By
--------------------------------
Name:
Title:
By
--------------------------------
Name:
Title:
Grantor
STANFORD S. CARR DEVELOPMENT
CORPORATION, a Hawaii corporation
By
--------------------------------
Name:
Title:
By
--------------------------------
Name:
Title:
Grantee
<PAGE>
FIRST AMENDMENT TO MASTER FACILITY AGREEMENT
THIS FIRST AMENDMENT TO MASTER FACILITY AGREEMENT (the "Amendment") dated
March 25, 1998, but effective as of March 23, 1998 (the "Effective Date") is
made by and between C. BREWER HOMES, INC., a Delaware corporation (the
"Borrower") and BANK OF HAWAII, a Hawaii corporation (the "Bank").
R E C I T A L S:
A. The Bank and the Borrower are parties to that certain unrecorded
Master Facility Agreement (Consolidated and Restructured) dated July 25, 1997
(the "Master Facility Agreement") under which the Bank made available to
Borrower the following facilities:
1. A revolving construction line of credit (the "Construction LOC")
on a revolving basis up to the principal amount of FOUR MILLION AND NO/100
DOLLARS ($4,000,000.00).
2. A commercial mortgage loan in the original principal amount of
NINE MILLION AND NO/100 DOLLARS ($9,000,000.00) (the "Mauka Land Loan").
3. A revolving working capital line of credit (the "Working Capital
LOC") under which the Bank will extend credit to the Borrower from time to time
until the Maturity Date on a revolving basis up to the principal amount of SIX
MILLION AND NO/100 DOLLARS ($6,000,000.00).
4. A commercial mortgage loan in the original principal amount of
THREE MILLION TWO HUNDRED THOUSAND AND NO/100 DOLLARS ($3,200,000.00) (the
"Makai Land Loan").
5. A commercial mortgage loan in the original principal amount of
FOUR MILLION SIX HUNDRED TWENTY THOUSAND AND NO/100 DOLLARS ($4,620,000.00) (the
"Puueo Land Loan").
6. A commercial mortgage loan in the original principal amount of
FOUR MILLION SIX HUNDRED TWENTY-THREE THOUSAND FOUR HUNDRED EIGHT AND NO/100
DOLLARS ($4,623,408.00) (the "Other Land Loan").
B. The Construction LOC, the Mauka Land Loan, the Working Capital LOC,
the Makai Land Loan, the Puueo Land Loan, and the Other Land Loan are
hereinafter collectively referred to as the "Facilities" and, as the context
requires, each may be referred to as a "Facility". Under the terms of the
Master Facility Agreement, the total maximum outstanding balances under the
Facilities shall not exceed in the aggregate, at any one time, $31,443,408.00.
Unless otherwise defined in this Amendment, capitalized terms have the same
meaning given in the Master Facility Agreement.
<PAGE>
C. Repayment of the Notes evidencing the Facilities was secured by the
following collateral documents (collectively, the "Collateral Documents"):
1. First Mortgage, Security Agreement and Financing Statement made
by Borrower, as mortgagor, in favor of Bank, as mortgagee, recorded in the
Bureau of Conveyances of the State of Hawaii as Document No. 95-115642, as
amended by that certain Amendment to First Mortgage, Security Agreement and
Financing Statement recorded in said Bureau as Document No. 96-130600, as
further amended by that certain Second Amendment to First Mortgage, Security
Agreement and Financing Statement recorded in said Bureau as Document No.
97-100779 (as amended, the "Mortgage").
2. Financing Statement made by Borrower, as debtor, in favor of
Bank, as secured party, recorded in said Bureau as Document No. 95-115643.
3. Financing Statement made by Borrower, as debtor, in favor of
Bank, as secured party, recorded in said Bureau as Document No. 97-100780.
4. An unrecorded Assignment of Sales Contracts, Escrow Deposits and
Escrow Agreement made by Borrower in favor of Bank dated August 31, 1995.
5. An unrecorded Assignment of Sales Contracts, Escrow Deposits and
Escrow Agreement and Amendment made by Borrower in favor of Bank dated July 25,
1997.
6. An unrecorded Hazardous Materials Indemnity Agreement dated
August 31, 1995, made by Borrower in favor of Bank.
7. An unrecorded Hazardous Materials Indemnity Agreement and
Amendment dated July 25, 1997, made by Borrower in favor of Bank.
D. Under the terms of Section 3.1 of the Master Facility Agreement, a
Bulk Sale of Property triggers a mandatory reduction in principal equal to one
hundred percent (100%) of the gross sales proceeds less reasonable closing costs
to be applied to the Facilities in the order specified in the Master Facility
Agreement.
E. Under the terms of Section 3.1 of the Master Facility Agreement, a
sale of all or any portion of the Other Parcels triggers a mandatory reduction
in principal equal to one hundred percent (100%) of gross sales proceeds less
reasonable closing costs to be applied to the Facilities in the order specified
in the Master Facility Agreement.
F. The Borrower has entered into the following agreements:
1. Purchase and Sales Agreement and Instructions to Escrow dated
December 15, 1997 (the "Nanea Purchase Agreement") with Jesse E. Spencer, as
buyer for the sale of the 80-lot Nanea subdivision (the "Nanea Parcel"), which
is a portion of the Property.
2
<PAGE>
2. Purchase and Sale Agreement dated September 12, 1997, as amended
by an Amendment to Purchase and Sale Agreement dated February 11, 1998 (the
"Iao II Purchase Agreement") with Stanford S. Carr Development Corporation, as
buyer for the property commonly known as "Iao II" (the "Iao II Parcel").
G. The Borrower is required to undertake and complete certain
infrastructure improvements to the Nanea Parcel (collectively, the
"Infrastructure Improvements"), which improvements are more particularly
described in the Nanea Purchase Agreement.
H. The Borrower has requested, and the Bank has agreed, to set aside
funds from the sale of the Iao II Parcel to pay for roadway improvements (as
required by the County of Maui) to extend Kuikahi Roadway in order to connect
Waiale Road to Honoapiilani Highway (collectively, the "Roadway Improvements").
I. Under the terms of the Master Facility Agreement, the sale of the
Nanea Parcel would be deemed a Bulk Sale of Property while the sale of the Iao
II Parcel would be deemed a sale of Other Parcels.
J. C. Brewer and Company, Limited, a Hawaii corporation (the "Guarantor")
executed that certain unrecorded Guaranty dated July 25, 1997 in favor of the
Bank (the "Guaranty") in which the Guarantor guaranteed the Borrower's
obligations with respect to the Working Capital LOC.
K. Borrower has requested and the Bank has agreed to, among other things,
amend the terms of the Master Facility Agreement, subject to and upon the terms
and conditions set forth herein.
NOW, THEREFORE, in consideration of: an agent's fee of $29,750.00, due upon
the execution of this Amendment; a facility fee of $37,160.00, $18,580.00 of
which shall be due and payable to the Bank on June 1, 1998 and the remaining
$18,580.00 which shall be due and payable on September 1, 1998; the mutual
covenants herein provided and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree that
the Master Facility Agreement and the Collateral Documents are amended as
follows:
1. EXTENSION OF MATURITY DATE. The definition of "Maturity Date" in
Section 11.1 of the Master Facility Agreement is hereby amended in its entirety
to read as follows:
"MATURITY DATE" shall mean December 1, 1998.
2. ALLOCATION OF PARTIAL RELEASE PRICE.
a. With respect to Units closing on or after the Effective
Date, Sections 3.1(c)(2)(i) and 3.1(f)(2)(i) are hereby amended so that the
percentage of Net Sales Proceeds from the sale of each Unit to be applied as a
mandatory principal reduction for the Working Capital LOC and the Other Land
Loan is in accordance with the following table for sales of Units closing during
the applicable time periods specified as follows:
3
<PAGE>
<TABLE>
<CAPTION>
% OF NET SALES PROCEEDS FROM EACH UNIT
FACILITY INTERIM PERIOD REMAINING TERM
-------- -------------- --------------
<S> <C> <C>
Construction LOC 70% 70%
Working Capital LOC 20% 27%
Other Land Loan 3% 3%
---- ----
Total % of Net Sales Proceeds 93% 100%
</TABLE>
b. The "Interim Period" shall commence on the Effective Date
and end on the earlier of: (i) the later to occur of the closing date of the
Nanea Purchase Agreement or the closing date of the Iao II Purchase Agreement
(such later date to be referred to as the "Outside Closing Date"); and
(ii) April 1, 1998.
c. The "Remaining Term" shall commence on the date immediately
succeeding the last day of the Interim Period and end on the Maturity Date.
d. The percentage of Net Sales Proceeds from the sale of each
Unit to be applied as a mandatory principal reduction for the Construction LOC
remains unchanged at 70% pursuant to Section 3.1 (a)(2)(i). If the outstanding
balance of the Construction LOC has been fully paid, the percentage of the
partial release price allocated to the Construction LOC shall be applied in
accordance with Section 3.1(a)(2)(i) in the order of priority specified as
follows:
i. The Other Land Loan.
ii. The Puueo Land Loan.
iii. The Mauka Land Loan.
iv. The Makai Land Loan.
v. The Working Capital LOC.
e. If the outstanding balance of the Working Capital LOC has
been fully paid, the percentage of the partial release price allocated to the
Working Capital LOC shall be applied to and allocated among the other Facilities
at the Bank's sole discretion pursuant to Section 3.1(c)(2)(i).
f. If the outstanding balance of the Other Land Loan has been
fully paid, the percentage of the partial release price allocated to the Other
Land Loan shall be applied in accordance with Section 3.1(f)(2)(i) in the order
of priority specified as follows:
i. Construction LOC.
ii. The Puueo Land Loan.
iii. The Mauka Land Loan.
iv. The Makai Land Loan.
4
<PAGE>
v. The Working Capital LOC.
g. During the Interim Period, the remaining 7% of Net Sales
Proceeds from the sale of each Unit shall be deposited into an interest-bearing
account under the control of the Bank and assigned to the Bank as additional
security for the Facilities (the "Assigned Account").
3. MANDATORY PAYMENT REDUCTION FOR SALE OF NANEA PARCEL.
Notwithstanding the provisions of Section 3.1(a)(2)(iii), if the sale of the
Nanea Parcel pursuant to the Nanea Purchase Agreement closes prior to April 1,
1998, 20% of the net sales proceeds (the "Nanea Set Aside Amount") shall be set
aside and the remaining 80% of the net sales proceeds shall be applied in
accordance with Section 3.1(a)(2)(iii) the order of priority specified as
follows:
a. Other Land Loan.
b. The Puueo Land Loan.
c. Any one, several or all Facilities not specified in (a) and
(b) above as the Bank shall determine in its sole discretion.
For purposes of this Paragraph 3, "net sales proceeds" means
gross sales proceeds less reasonable closing costs approved by the Bank and less
$800,000.00 for Infrastructure Improvements (such $800,000.00 to be referred to
as the "Infrastructure Funds"). The Infrastructure Funds shall be deposited
into an escrow account with Title Guaranty Escrow Services, Inc. (the "Escrow
Account"), to be disbursed as provided in Paragraph 7 below.
If the Nanea Purchase Agreement closes prior to April 1, 1998 and
prior to the Iao II Purchase Agreement, the Nanea Set Aside Amount shall be
deposited into the Assigned Account. If the Nanea Purchase Agreement closes
prior to April 1, 1998 but after the Iao II Purchase Agreement, then the Nanea
Set Aside Amount shall be applied as a mandatory payment reduction to the
Working Capital LOC. If the Nanea Purchase Agreement closes after April 1,
1998, then the net sales proceeds shall be applied as specified above in this
Paragraph 3; provided that the Bank may, in its sole discretion, first apply the
net sales proceeds (or a portion thereof) toward accrued interest under the
Master Facility Agreement. With the exception of the sale of the Nanea Parcel
pursuant to the Nanea Purchase Agreement, as specified in this Paragraph 3, upon
the occurrence of any Bulk Sale of Property, the provisions of Section
3.1(a)(2)(iii) shall apply.
4. MANDATORY PAYMENT REDUCTION FOR SALE OF IAO II PARCEL.
Notwithstanding the provisions of Section 3.1(a)(2)(iv), if the sale of the Iao
II Parcel pursuant to the Iao II Purchase Agreement closes prior to April 1,
1998, 20% of the net sales proceeds (the "Iao II Set Aside Amount") shall be set
aside and the remaining 80% of the net sales proceeds shall be applied in
accordance with Section 3.1(a)(2)(iv) in the order of priority specified as
follows:
a. The Other Land Loan.
b. The Puueo Land Loan
5
<PAGE>
c. The Mauka Land Loan.
d. The Makai Land Loan.
e. The Construction LOC.
f. The Working Capital LOC.
For purposes of this Paragraph 4, "net sales proceeds" means
gross sales proceeds less reasonable closing costs approved by the Bank and less
$294,000.00 for Road Improvements (such $294,000.00 to be referred to as
"Roadway Funds"). The Roadway Funds shall be deposited into the Assigned
Account and segregated in a subaccount of the Assigned Account (such segregated
subaccount to be referred to as the "Roadway Account") to be disbursed as
provided in Paragraph 5 below.
If the Iao II Purchase Agreement closes prior to April 1, 1998
and prior to the Nanea Purchase Agreement, the Iao II Set Aside Amount shall be
deposited into the Assigned Account. If the Iao II Purchase Agreement closes
prior to April 1, 1998 but after the Nanea Purchase Agreement, then the Iao II
Set Aside Amount shall be applied as a mandatory payment reduction to the
Working Capital LOC. Unless otherwise agreed by the parties hereto in writing,
if the Iao II Purchase Agreement closes after April 1, 1998, then the net sales
proceeds shall be applied in accordance with Section 3.1(a)(2)(iv) in the order
of priority specified above in clauses (a) through (f) in this Paragraph 4;
provided that the Bank may, in its sole discretion, first apply the net sales
proceeds (or a portion thereof) toward the accrued interest under the Master
Facility Agreement. With the exception of the sale of the Iao II Parcel
pursuant to the Iao II Purchase Agreement as specified in this Paragraph 4, upon
the occurrence of any sale of the Other Parcels, the provisions of
Section 3.1(a)(2)(iv) shall apply.
5. DISBURSEMENTS FROM ASSIGNED ACCOUNT. For purposes of this
Paragraph 5, all references to the Assigned Account shall be deemed to include
the Roadway Account, except as specifically stated otherwise. From time to time
and so long as no Event of Default has occurred or is continuing, the Bank shall
make disbursements from the Assigned Account in accordance with the following
terms and conditions:
a. DISBURSEMENT TO WORKING CAPITAL LOC DUE TO SALE OF NANEA
PARCEL AND IAO II PARCEL. On the earlier to occur of the Outside Closing Date
or April 1, 1998 (such later date to be referred to as the "Disbursement Date"),
funds in the Assigned Account (except for the Roadway Funds in the Roadway
Account) shall be disbursed in the following manner:
i. If the Disbursement Date occurs on the Outside Closing
Date, the funds shall be applied as a mandatory principal payment to the Working
Capital LOC.
ii. If the Disbursement Date occurs on April 1, 1998, the
Bank may, in its sole discretion, apply the funds to the accrued interest under
the Master Facility Agreement. The remaining funds, if any, (or all of the
funds if the Bank does not apply any funds to accrued interest) may be applied
as a mandatory principal payment to the Other Land Loan.
b. DISBURSEMENT FOR ROADWAY IMPROVEMENTS FROM ROADWAY ACCOUNT.
Before any disbursements of Roadway Funds are made, Borrower shall submit and
the Bank shall have approved a budget (which budget categories shall be limited
to consultant costs relating to civil
6
<PAGE>
engineering, soils engineering and archaelogical monitoring and to construction
grading and construction contingency), CPM schedule and, as available, copies of
construction and other consultant contracts (collectively, the "Roadway
Documents") evidencing the Roadway Improvements can be completed for no more
than $294,000.00. Whenever a disbursement of Roadway Funds from the Roadway
Account is to be used to pay for the cost of construction of Roadway
Improvements (whether such disbursement is used by the Borrower to pay for such
improvement or to reimburse the Borrower for Borrower's payments for such
improvement), the Bank shall have received, in each case in form and substance
satisfactory to the Bank, each of the following:
i. Evidence of the actual cost of such work on the Roadway
Improvements for which payment is being requested (which cost shall conform to
the Bank-approved budget).
ii. Sworn statements, waivers of lien, affidavits and acceptable
assurances of payment by the contractors, subcontractors and materialmen, and/or
the subcontractors thereof, which shall cover all work, labor and materials,
including but not limited to equipment and fixtures of all kinds, done,
performed or furnished for the construction of the Roadway Improvements.
iii. A copy of any construction or other consultant contract to
the extent that such contract was not in effect at the time the Roadway Funds
were first disbursed and the requested disbursement is for work related to such
contract.
Disbursements for Roadway Improvements are to be made no more
frequently than once per month, pursuant to all of the provisions hereof and in
accordance with the Roadway Documents. Under no circumstances shall the Bank be
required to disburse more than $294,000.00 for Roadway Improvements. If Roadway
Funds remain undisbursed from the Roadway Account upon completion and payment in
full of the Roadway Improvements, such undisbursed funds shall be applied as a
mandatory principal payment to the Other Land Loan.
c. CONDITIONS TO ALL DISBURSEMENTS FROM ASSIGNED ACCOUNT. If an
Event of Default under any of the Loan Documents occurs and is continuing, any
funds then held in the Assigned Account may be used, at the Bank's sole
discretion, to offset amounts due and owing to the Bank pursuant to the Loan
Documents.
6. WORKING CAPITAL ADVANCES. During the period of time commencing
on the Effective Date and ending on the date that the accrued interest due on
April 1, 1998 is paid, any request for a Working Capital Advance during such
period (other than a request for a Working Capital Advance to pay for interest
accrued under the Facilities) shall include evidence in form and substance
satisfactory to the Bank that the Borrower is financially capable of paying the
accrued interest to be due and owing on April 1, 1998 under the Master Facility
Agreement.
7. INFRASTRUCTURE FUNDS AND ESCROW ACCOUNT. Borrower agrees to:
a. Execute irrevocable escrow instructions (the "Escrow
Instructions") in the form attached hereto as Exhibit "A" and incorporated
herewith with respect to the distribution of Infrastructure Funds from the
Escrow Account.
7
<PAGE>
b. Deliver to the Bank (each in form and substance satisfactory
to the Bank):
i. A budget for direct construction costs (such costs to
be limited to those cost categories listed in Exhibit "B" attached hereto and
incorporated herewith) and the Infrastructure Improvements prior to any
disbursement of any Infrastructure Funds from the Escrow Account; and
ii. Copies of applicable construction and other consultant
contracts prior to any disbursement of any Infrastructure Funds from the Escrow
Account for work related to such contracts.
Section 9 of the Master Facility Agreement is hereby amended to
include the following as an Event of Default:
The Borrower shall fail to comply with the provisions of the
Escrow Instructions attached as Exhibit "A" to the First
Modification (including, but not limited to, Borrower's issuance
of a Payment Request which fails to conform to the Bank-approved
budget, Borrower's failure to use the Infrastructure Funds in
accordance with the Bank-approved budget and Borrower's failure
to deliver copies of Payment Requests (as defined in the Escrow
Instructions) to the Bank pursuant to the Escrow Instructions
within 3 Business Days of Bank's demand for receipt of such
copies).
8. FEES. The agent's fee and the facility fee are considered earned as
of the Effective Date, notwithstanding that portions of the facility fee are not
due until later dates.
It is further agreed that:
1. All references to the Master Facility Agreement in the Notes and
the Collateral Documents shall be deemed to mean the Master Facility Agreement
as hereby amended.
2. Except as specifically amended hereby, all other terms,
conditions, and provisions contained in the Notes, the Master Facility Agreement
and the Collateral Documents shall remain in full force and effect and
unchanged.
3. The Guarantor hereby: (a) consents to the foregoing First
Amendment to Master Facility Agreement; (b) agrees that none of the foregoing
shall affect or release the Guarantor from any of its obligations under the
Guaranty; and (c) specifically acknowledges and confirms that the Guaranty shall
apply to the note evidencing the Working Capital LOC, the Master Facility
Agreement and the Collateral Documents, as modified by this First Modification
to Master Facility Agreement.
8
<PAGE>
4. This Agreement shall be considered null and void unless the Bank
receives an executed copy of this Agreement by March 31, 1998.
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this Agreement to be duly executed and delivered on the date first above
written.
BANK OF HAWAII, a Hawaii corporation
By /s/ Gene H. Tsuji
------------------------------------
Name: GENE H. TSUJI
Title: Assistant Vice President
C. BREWER HOMES, INC.,
a Delaware corporation
By /s/ Seth A. Bakes
------------------------------------
SETH A. BAKES
Its President and Chief Executive
Officer
By /s/ Edward T. Foley
------------------------------------
EDWARD T. FOLEY
Its Executive Vice President and
Chief Financial Officer
C. BREWER AND COMPANY, LIMITED,
a Hawaii corporation
By /s/ Kent T. Lucien
------------------------------------
Name: KENT T. LUCIEN
Title: Executive Vice President
9
<PAGE>
March 23, 1998
Title Guaranty Escrow Services, Inc.
2103 Wells Street, Suite C
Wailuku, Maui, Hawaii 96793
Attention: Mr. Dennis Hinahara
RE: PURCHASE AND SALE AGREEMENT AND INSTRUCTIONS TO ESCROW DATED
DECEMBER 15, 1997 BY AND BETWEEN C. BREWER HOMES, INC.,
SELLER, AND JESSE E. SPENCER, BUYER (THE "AGREEMENT")
Ladies and Gentlemen:
These instructions constitute additional, separate escrow instructions
in connection with the Agreement. Capitalized terms used herein and not
otherwise defined shall have the meanings assigned to such terms in the
Agreement.
As further security for the construction of the off-site drainage
improvements described in Paragraph 9.1(a) of the Agreement (the
"Improvements"), Seller does hereby instruct you (hereinafter sometimes referred
to as "Escrow Holder") as follows:
1. From the sales proceeds remaining after payment of Seller's
one-half share of your fees as Escrow Agent and payment of the amounts required
by the Seller under Paragraph 17 of the Agreement entitled "Proration, Fees and
Costs," you are to deduct and deposit into an interest-bearing account to be
designated in writing by the Seller the sum of EIGHT HUNDRED THOUSAND DOLLARS
($800,000.00) (the "Escrow Fund"). Interest earned on the Escrow Fund shall
accrue for the benefit of Seller.
2. Amounts in the Escrow Fund shall be disbursed by you within one
(1) Business Day of the receipt by you of a Payment Request executed by Seller
and in the form attached hereto as Annex A. You shall not be held liable for
the sufficiency or correctness as to form, manner, execution or validity of any
Payment Request executed by Seller and delivered to you, nor as to the identity,
authority or rights of any person executing such Payment Request, and your
duties hereunder shall be limited to the safekeeping of the Escrow
Fund, and for their disposition in accordance with the terms of this letter. In
furtherance and
<PAGE>
Title Guaranty Escrow Services, Inc.
March 23, 1998
Page 2
not in limitation of the foregoing, you shall accept a Payment Request document
that appears on its face to be in order, without responsibility for further
investigation, regardless of any demand, notice or information to the contrary.
3. Seller hereby agrees, for the benefit of Buyer and Bank of
Hawaii, as the Lender (the "Lender") pursuant to that certain Master Facility
Agreement (Consolidated and Restructured) dated July 25, 1997, as amended, by
and between Seller and Lender, that Seller shall provide Buyer and Lender with
copies of any such Payment Request delivered to Escrow Holder. However, the
failure by Seller to provide Buyer and Lender with copies of any such Payment
Request shall not be grounds for withholding the disbursement of funds requested
in a Payment Request executed by Seller and delivered to Escrow Holder.
4. Notwithstanding anything to the contrary contained herein, Seller
shall have the right, without the consent of Lender or Buyer, to pledge the
Escrow Fund as security for any bond provided to the County of Maui for the
completion of the Improvements.
5. On the completion of the Improvements, Seller shall furnish you
with a Certificate of Completion in the form attached hereto as Annex B. Any
amounts remaining in the Escrow Fund shall, on receipt of the Certificate of
Completion, be delivered to the Lender (attention: Mr. Gene Tsuji, phone
537-8700) or as directed by the Lender.
6. Any charges incurred in connection with your administration of
the Escrow Fund shall be paid by Seller.
7. The instructions provided herein are irrevocable and may not be
modified, countermanded or terminated in any way except by a written instrument
signed by Seller, Buyer and the Lender.
"Business Day" means any day other than a Saturday, a Sunday or a day
on which banks in Honolulu, Hawaii are authorized or required by law to close.
<PAGE>
Title Guaranty Escrow Services, Inc.
March 23, 1998
Page 3
Please signify your acceptance of the foregoing by signing in the
space provided for below.
Very truly yours,
C. BREWER HOMES, INC.,
a Delaware corporation
By: /s/ Scott Nunokawa
---------------------------
Name: SCOTT NUNOKAWA
Title: Vice President
By: /s/ SETH A. BAKES
---------------------------
Name: Seth A. Bakes
Title: President & Chief Executive Officer
Seller
APPROVED AND ACCEPTED
TITLE GUARANTY ESCROW
SERVICES, INC.
By: /s/ Lynette Aipa Date: 3/24/98
-------------------------------- ---------------
<PAGE>
EXHIBIT "B"
MAKAI OFFSITE DRAINAGE
Consultants
Civil Engineering
Soil Engineering
Archaeological Monitoring
Offsite Work
Phase 1
Mobilization
36" ASRP
30" ASRP
36" Fab Bend
30" Connection
Catch Basin Type "B"
4' x 3' Grated Inlet
Manhole 7' Deep
Manhole 9' Deep
Manhole 10' Deep
R & R Outlet Structure
R & R Outlet Pipe
Asphalt Restoration
Traffic Control
Contingency
Phase 2
Mobilization
Raise Waiale Basin Spillway
Geotextile Marring
Grassing
54" ASRP
54" Fab Bend
Mixing Manhole
Excavation & Backfill
Pavement Restoration
Traffic Control
Contingency
<PAGE>
ASSIGNMENT OF ACCOUNT
THIS ASSIGNMENT is made this 23rd day of March, 1998, by and between
C. BREWER HOMES, INC., a Delaware corporation (the "Assignor") in favor
of the BANK OF HAWAII ("BOH"), a Hawaii corporation.
RECITALS:
A. The Assignor and BOH are parties to that certain unrecorded Master
Facility Agreement (Consolidated and Restructured) dated July 25, 1997 (the
"Master Facility Agreement") under which BOH made available to the Assignor the
following facilities:
1. A revolving construction line of credit (the "Construction LOC")
on a revolving basis up to the principal amount of FOUR MILLION AND NO/100
DOLLARS ($4,000,000.00).
2. A commercial mortgage loan in the original principal amount of
NINE MILLION AND NO/100 DOLLARS ($9,000,000.00) (the "Mauka Land Loan").
3. A revolving working capital line of credit (the "Working Capital
LOC") under which BOH will extend credit to the Assignor from time to time until
the Maturity Date on a revolving basis up to the principal amount of SIX MILLION
AND NO/100 DOLLARS ($6,000,000.00).
4. A commercial mortgage loan in the original principal amount of
THREE MILLION TWO HUNDRED THOUSAND AND NO/100 DOLLARS ($3,200,000.00) (the
"Makai Land Loan").
5. A commercial mortgage loan in the original principal amount of
FOUR MILLION SIX HUNDRED TWENTY THOUSAND AND NO/100 DOLLARS ($4,620,000.00) (the
"Puueo Land Loan").
6. A commercial mortgage loan in the original principal amount of
FOUR MILLION SIX HUNDRED TWENTY-THREE THOUSAND FOUR HUNDRED EIGHT AND NO/100
DOLLARS ($4,623,408.00) (the "Other Land Loan").
B. The Construction LOC, the Mauka Land Loan, the Working Capital LOC,
the Makai Land Loan, the Puueo Land Loan, and the Other Land Loan are
hereinafter collectively referred to as the "Facilities". Unless otherwise
defined in this Assignment, capitalized terms have the same meaning given in the
Master Facility Agreement.
C. Under the terms of Section 3.1 of the Master Facility Agreement, a
Bulk Sale of Property triggers a mandatory reduction in principal equal to one
hundred percent (100%) of the
<PAGE>
gross sales proceeds less reasonable closing costs to be applied to the
Facilities in the order specified in the Master Facility Agreement.
D. Under the terms of Section 3.1 of the Master Facility Agreement, a
sale of all or any portion of the Other Parcels triggers a mandatory reduction
in principal equal to one hundred percent (100%) of gross sales proceeds less
reasonable closing costs to be applied to the Facilities in the order specified
in the Master Facility Agreement.
E. The Assignor has entered into the following agreements:
1. Purchase and Sales Agreement and Instructions to Escrow dated
December 15, 1997 (the "Nanea Purchase Agreement") with Jesse E. Spencer, as
buyer for the sale of the 80-lot Nanea subdivision (the "Nanea Parcel"), which
is a portion of the Property.
2. Purchase and Sale Agreement dated September 12, 1997, as amended
by an Amendment to Purchase and Sale Agreement dated February 11, 1998 (the
"Iao II Purchase Agreement") with Stanford S. Carr Development Corporation, as
buyer for the property commonly known as "Iao II" (the "Iao II Parcel").
F. The Assignor is required to undertake and complete certain
infrastructure improvements to the Nanea Parcel (collectively, the
"Infrastructure Improvements"), which improvements are more particularly
described in the Nanea Purchase Agreement.
G. Under the terms of the Master Facility Agreement, the sale of the
Nanea parcel would be deemed a Bulk Sale of Property while the sale of the Iao
II parcel would be deemed a sale of Other Parcels.
H. Assignor has requested and BOH has agreed to, among other things,
amend the terms of the Master Facility Agreement, subject to and upon the terms
and conditions set forth in that certain unrecorded First Modification to Master
Facility Agreement dated the date hereof (the "First Modification").
I. Pursuant to and as more particularly specified in the First
Modification, a portion of the proceeds from the sale of the Nanea Parcel and
the Iao II Parcel shall be deposited into an account at BOH (the "Account"),
which account shall be under the control of BOH.
NOW, THEREFORE, Assignor agrees as follows:
A. DEPOSIT OF FUNDS. BOH and Assignor agree that certain funds shall be
deposited into the Account by direct payment to BOH from the escrow company
closing the Nanea Purchase Agreement and the Iao II Purchase Agreement in
accordance with the First Modification.
B. ASSIGNMENT. In consideration of BOH's agreement to make the
Assignor's requested modifications contained in the First Modification, and in
order to secure the repayment
2
<PAGE>
of the Facilities and the performance by Assignor of all covenants, terms and
agreements contained in all documents now or hereafter related to or securing
the Facilities, Assignor hereby grants, assigns, pledges, sets over and
transfers to BOH, its successors and assigns, all of Assignor's right, title and
interest in and to all funds now or hereafter on deposit in the Account,
together with all monies and claims for monies now and hereafter due or payable
thereon or in respect thereof, and together with all interest thereon and
substitutions, proceeds and renewals thereof (the "Collateral").
C. REPRESENTATIONS. Assignor represents to BOH that Assignor will own
the Collateral, that no one other than BOH shall have a security interest in or
other claim to the Collateral and that Assignor does not know of anything that
would make the Collateral uncollectible by BOH.
D. DUTIES AND PROMISES CONCERNING THE COLLATERAL. Assignor agrees that:
1. Assignor will help prepare, and will sign, any documents and do
anything else BOH asks to carry out Assignor's promises and duties under this
Assignment and to protect the security interest of BOH against the claims of
anyone else.
2. Assignor will not, and Assignor will not let anyone else:
a. Sell, assign or transfer the Collateral or any right to it
to anyone else;
b. Let anything happen which will make the Collateral become
subject to any claim or liable to seizure in bankruptcy or otherwise, or which
will impair the interest of BOH in the Collateral.
E. RIGHTS AND REMEDIES. Upon the occurrence of a default under this
Assignment or any document evidencing or securing the Facilities, BOH shall have
the following rights and remedies:
1. At its sole discretion, BOH may apply the Collateral to reduce
the unpaid balance of the Facilities.
2. BOH may substitute itself for Assignor with respect to the
Collateral, in which case BOH may do anything with the Collateral that Assignor
could. BOH can have the Collateral transferred to its name and exercise all
rights to which BOH may be entitled as the owner of the Collateral.
3. BOH shall have all the rights and remedies of a secured party
under the Hawaii Uniform Commercial Code or any other applicable law. All
rights and remedies of BOH will be cumulative.
3
<PAGE>
4. In order to be able to do what BOH is entitled to do hereunder,
BOH can endorse or assign the Collateral.
F. INDEMNITY. Assignor agrees to indemnify BOH against and hold BOH
harmless from any and all liability, loss or damages, including all costs,
expenses, and reasonable attorneys' fees, which BOH may incur by reason of this
Assignment or any actions taken by BOH pursuant to this Assignment. Should BOH
incur any liability, costs or expenses mentioned in this paragraph, the Assignor
shall immediately upon demand reimburse BOH for the full amount thereof, and BOH
may apply the Collateral in or toward the satisfaction of, or reimbursement for
said loss or damage.
G. EFFECT. This instrument shall be binding upon and inure to the
benefit of the Assignor, BOH and their respective successors and assigns.
H. RELEASE. This Assignment will be released when there are no funds
remaining in the Account pursuant to the disbursement procedures outlined in the
First Modification.
IN WITNESS WHEREOF, the Assignor has executed these presents on the day and
year first above written.
C. BREWER HOMES, INC.,
a Delaware corporation
By /s/ Seth A. Bakes
-------------------------------
SETH A. BAKES
Its President and Chief
Executive Officer
By /s/ Edward T. Foley
-------------------------------
EDWARD T. FOLEY
Its Executive Vice President
and Chief Financial Officer
4
<PAGE>
March 23, 1998
Mr. Gene Tsuji
Bank of Hawaii
Construction & Income Property Loan Department
130 Merchant Street, Suite 1740
Honolulu, Hawaii 96813
Re: Extension of Guaranty by C. Brewer and Company, Ltd.
----------------------------------------------------
Dear Gene:
This letter serves as confirmation of our agreement to amend the
June 30, 1998 date contained in Paragraph no. 18 of that certain Guaranty made
by the undersigned in favor of the Bank of Hawaii (the "Bank") dated July 25,
1997 (the "Guaranty") to January 15, 1999. Accordingly, the Bank of Hawaii must
notify the undersigned of the Bank's intention to exercise its rights under the
Guaranty by January 15, 1999, rather than by June 30, 1998. The undersigned
reaffirms that the January 15, 1999 deadline applies only to the notification of
the undersigned of the Bank's intention to exercise its rights under the
Guaranty and does not, for example, mean that the Bank must have obtained funds
from, or a judgment against, the undersigned by such deadline. The undersigned
further agrees that the Bank's acceptance of this letter agreement does not
signify any agreement to extend the Maturity Date (as defined in the Guaranty)
beyond December 1, 1998 nor to waive any of the Bank's rights with respect to,
or under, the Guaranty.
The undersigned agrees to the date change from June 30, 1998 to
January 15, 1999 in consideration of the Bank's agreement to extend the Maturity
Date.
<PAGE>
Bank of Hawaii
March 23, 1998
Page 2
Please acknowledge your acceptance and agreement of the foregoing by
signing below.
Very truly yours,
C. BREWER AND COMPANY, LIMITED,
a Delaware corporation
By /s/ KENT T. LUCIEN
---------------------------
Name: Kent T. Lucien
Title: Executive Vice President
APPROVED AND AGREED:
BANK OF HAWAII,
a Hawaii corporation
By
-------------------------------------
Name:
Title:
Dated:
----------------------
<PAGE>
STABILITY AGREEMENT
This STABILITY AGREEMENT (the "Agreement") is made and entered into as
of the 13 day of March 1998, by and between Mauna Loa Macadamia Partners, L.P.,
a Delaware limited partnership (the "Partnership"), and John J. F. Sherrerd (the
"Person").
R E C I T A L S
WHEREAS, C. Brewer Homes, Inc. (the "Corporation") has agreed to
merge with and into the Partnership (the "Merger"), as set forth in that Amended
and Restated Agreement and Plan of Merger dated as of December 18, 1997, by and
between the Partnership and the Corporation (the "Merger Agreement");
WHEREAS, the capitalized terms used and not defined herein shall have
the meanings set forth in the Merger Agreement;
WHEREAS, the Corporation covenanted in the Merger Agreement to use
all reasonable efforts to cause each person or group of persons who holds five
percent (5%) or more of the Corporation Class B Stock to deliver to the
Partnership a Stability Agreement, to the effect that during the one (1) year
period following the Effective Time of the Merger such person or group will not
sell Partnership Class A Units received in exchange for Corporation Class B
Stock.
NOW, THEREFORE, on the basis of the foregoing recitals and in
consideration of the mutual representations, warranties, covenants, and
agreements contained herein, and for other good and valuable consideration, the
Partnership and the Person hereby agree as follows:
<PAGE>
1. NO SALE OF PARTNERSHIP UNITS. If the Merger is consummated as
set forth in the Merger Agreement, then the Person shall not sell, transfer, or
otherwise dispose of any Partnership Class A Units received in the Merger,
directly or indirectly, for or during a period of one (1) year following the
Effective Time of the Merger. That one-year period is referred to herein as the
"Stability Period."
2. GIFT OF PARTNERSHIP UNITS ALLOWED. Nothing in this Agreement
shall prevent the Person from making bona fide gifts or transfers or other
disposition without consideration of the Partnership Class A Units received in
exchange for Corporation Class B Stock, directly or indirectly, to any person or
entity during the Stability Period; provided, however, that the donee of a gift
of such Partnership Class A Units shall not sell, transfer, or otherwise dispose
of without consideration such Partnership Class A Units for or during a period
of one (1) year following the Effective Time of the Merger.
3. BINDING EFFECT. This Agreement shall be binding upon and
enforceable against the Person's administrators, executors, representatives,
heirs, legatees, devisees, successors, assigns, and any pledgee holding the
Corporation Class B Stock or Partnership Class A Units as collateral.
4. LITIGATION EXPENSES. If 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).
5. WAIVER OF JURY TRIAL. Each party hereto waives 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 the Agreement.
2.
<PAGE>
6. AUTHORITY. Each party hereto has full power to execute this
Agreement, and to make the representations, warranties, and agreements herein,
and to perform any obligations hereunder.
7. ADVICE OF COUNSEL. Each party hereto has had the opportunity to
consult with legal and financial counsel prior to the execution of this
Agreement.
IN WITNESS WHEREOF, the parties to this Agreement have duly executed
this Agreement as of the day and year first written above.
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"
/s/ John J. F. Sherrerd
-----------------------------------------
"Person"
3.
<PAGE>
STABILITY AGREEMENT
This STABILITY AGREEMENT (the "Agreement") is made and entered into as
of the 13 day of March 1998, by and between Mauna Loa Macadamia Partners, L.P.,
a Delaware limited partnership (the "Partnership"), and Kathleen C. Sherrerd
(the "Person").
R E C I T A L S
WHEREAS, C. Brewer Homes, Inc. (the "Corporation") has agreed to
merge with and into the Partnership (the "Merger"), as set forth in that Amended
and Restated Agreement and Plan of Merger dated as of December 18, 1997, by and
between the Partnership and the Corporation (the "Merger Agreement");
WHEREAS, the capitalized terms used and not defined herein shall have
the meanings set forth in the Merger Agreement;
WHEREAS, the Corporation covenanted in the Merger Agreement to use
all reasonable efforts to cause each person or group of persons who holds five
percent (5%) or more of the Corporation Class B Stock to deliver to the
Partnership a Stability Agreement, to the effect that during the one (1) year
period following the Effective Time of the Merger such person or group will not
sell Partnership Class A Units received in exchange for Corporation Class B
Stock.
NOW, THEREFORE, on the basis of the foregoing recitals and in
consideration of the mutual representations, warranties, covenants, and
agreements contained herein, and for other good and valuable consideration, the
Partnership and the Person hereby agree as follows:
<PAGE>
1. NO SALE OF PARTNERSHIP UNITS. If the Merger is consummated as
set forth in the Merger Agreement, then the Person shall not sell, transfer, or
otherwise dispose of any Partnership Class A Units received in the Merger,
directly or indirectly, for or during a period of one (1) year following the
Effective Time of the Merger. That one-year period is referred to herein as the
"Stability Period."
2. GIFT OF PARTNERSHIP UNITS ALLOWED. Nothing in this Agreement
shall prevent the Person from making bona fide gifts or transfers or other
disposition without consideration of the Partnership Class A Units received in
exchange for Corporation Class B Stock, directly or indirectly, to any person or
entity during the Stability Period; provided, however, that the donee of a gift
of such Partnership Class A Units shall not sell, transfer, or otherwise dispose
of without consideration such Partnership Class A Units for or during a period
of one (1) year following the Effective Time of the Merger.
3. BINDING EFFECT. This Agreement shall be binding upon and
enforceable against the Person's administrators, executors, representatives,
heirs, legatees, devisees, successors, assigns, and any pledgee holding the
Corporation Class B Stock or Partnership Class A Units as collateral.
4. LITIGATION EXPENSES. If 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).
5. WAIVER OF JURY TRIAL. Each party hereto waives 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 the Agreement.
2.
<PAGE>
6. AUTHORITY. Each party hereto has full power to execute this
Agreement, and to make the representations, warranties, and agreements herein,
and to perform any obligations hereunder.
7. ADVICE OF COUNSEL. Each party hereto has had the opportunity to
consult with legal and financial counsel prior to the execution of this
Agreement.
IN WITNESS WHEREOF, the parties to this Agreement have duly executed
this Agreement as of the day and year first written above.
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"
/s/ Kathleen C. Sherrerd
--------------------------------------
"Person"
3.
<PAGE>
STABILITY AGREEMENT
This STABILITY AGREEMENT (the "Agreement") is made and entered into as
of the __ day of March 1998, by and between Mauna Loa Macadamia Partners, L.P.,
a Delaware limited partnership (the "Partnership"), and L. Charles DeVoe -
Trustee Under Deed of John J. F. Sherrerd (the "Person").
R E C I T A L S
WHEREAS, C. Brewer Homes, Inc. (the "Corporation") has agreed to
merge with and into the Partnership (the "Merger"), as set forth in that Amended
and Restated Agreement and Plan of Merger dated as of December 18, 1997, by and
between the Partnership and the Corporation (the "Merger Agreement");
WHEREAS, the capitalized terms used and not defined herein shall have
the meanings set forth in the Merger Agreement;
WHEREAS, the Corporation covenanted in the Merger Agreement to use
all reasonable efforts to cause each person or group of persons who holds five
percent (5%) or more of the Corporation Class B Stock to deliver to the
Partnership a Stability Agreement, to the effect that during the one (1) year
period following the Effective Time of the Merger such person or group will not
sell Partnership Class A Units received in exchange for Corporation Class B
Stock.
NOW, THEREFORE, on the basis of the foregoing recitals and in
consideration of the mutual representations, warranties, covenants, and
agreements contained herein, and for other good and valuable consideration, the
Partnership and the Person hereby agree as follows:
<PAGE>
1. NO SALE OF PARTNERSHIP UNITS. If the Merger is consummated as
set forth in the Merger Agreement, then the Person shall not sell, transfer, or
otherwise dispose of any Partnership Class A Units received in the Merger,
directly or indirectly, for or during a period of one (1) year following the
Effective Time of the Merger. That one-year period is referred to herein as the
"Stability Period."
2. GIFT OF PARTNERSHIP UNITS ALLOWED. Nothing in this Agreement
shall prevent the Person from making bona fide gifts or transfers or other
disposition without consideration of the Partnership Class A Units received in
exchange for Corporation Class B Stock, directly or indirectly, to any person or
entity during the Stability Period; provided, however, that the donee of a gift
of such Partnership Class A Units shall not sell, transfer, or otherwise dispose
of without consideration such Partnership Class A Units for or during a period
of one (1) year following the Effective Time of the Merger.
3. BINDING EFFECT. This Agreement shall be binding upon and
enforceable against the Person's administrators, executors, representatives,
heirs, legatees, devisees, successors, assigns, and any pledgee holding the
Corporation Class B Stock or Partnership Class A Units as collateral.
4. LITIGATION EXPENSES. If 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).
5. WAIVER OF JURY TRIAL. Each party hereto waives 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 the Agreement.
2.
<PAGE>
6. AUTHORITY. Each party hereto has full power to execute this
Agreement, and to make the representations, warranties, and agreements herein,
and to perform any obligations hereunder.
7. ADVICE OF COUNSEL. Each party hereto has had the opportunity to
consult with legal and financial counsel prior to the execution of this
Agreement.
IN WITNESS WHEREOF, the parties to this Agreement have duly executed
this Agreement as of the day and year first written above.
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"
/s/ L. Charles DeVoe - Trustee
--------------------------------------
L. Charles DeVoe
Under Deed of John J. F. Sherrerd
"Person"
3.
<PAGE>
STABILITY AGREEMENT
This STABILITY AGREEMENT (the "Agreement") is made and entered into as
of the 10 day of March 1998, by and between Mauna Loa Macadamia Partners, L.P.,
a Delaware limited partnership (the "Partnership"), and Marvin J.Tilker (the
"Person").
R E C I T A L S
WHEREAS, C. Brewer Homes, Inc. (the "Corporation") has agreed to
merge with and into the Partnership (the "Merger"), as set forth in that Amended
and Restated Agreement and Plan of Merger dated as of December 18, 1997, by and
between the Partnership and the Corporation (the "Merger Agreement");
WHEREAS, the capitalized terms used and not defined herein shall have
the meanings set forth in the Merger Agreement;
WHEREAS, the Corporation covenanted in the Merger Agreement to use
all reasonable efforts to cause each person or group of persons who holds five
percent (5%) or more of the Corporation Class B Stock to deliver to the
Partnership a Stability Agreement, to the effect that during the one (1) year
period following the Effective Time of the Merger such person or group will not
sell Partnership Class A Units received in exchange for Corporation Class B
Stock.
NOW, THEREFORE, on the basis of the foregoing recitals and in
consideration of the mutual representations, warranties, covenants, and
agreements contained herein, and for other good and valuable consideration, the
Partnership and the Person hereby agree as follows:
<PAGE>
1. NO SALE OF PARTNERSHIP UNITS. If the Merger is consummated as
set forth in the Merger Agreement, then the Person shall not sell, transfer, or
otherwise dispose of any Partnership Class A Units received in the Merger,
directly or indirectly, for or during a period of one (1) year following the
Effective Time of the Merger. That one-year period is referred to herein as the
"Stability Period."
2. GIFT OF PARTNERSHIP UNITS ALLOWED. Nothing in this Agreement
shall prevent the Person from making bona fide gifts or transfers or other
disposition without consideration of the Partnership Class A Units received in
exchange for Corporation Class B Stock, directly or indirectly, to any person or
entity during the Stability Period; provided, however, that the donee of a gift
of such Partnership Class A Units shall not sell, transfer, or otherwise dispose
of without consideration such Partnership Class A Units for or during a period
of one (1) year following the Effective Time of the Merger.
3. BINDING EFFECT. This Agreement shall be binding upon and
enforceable against the Person's administrators, executors, representatives,
heirs, legatees, devisees, successors, assigns, and any pledgee holding the
Corporation Class B Stock or Partnership Class A Units as collateral.
4. LITIGATION EXPENSES. If 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).
5. WAIVER OF JURY TRIAL. Each party hereto waives 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 the Agreement.
2.
<PAGE>
6. AUTHORITY. Each party hereto has full power to execute this
Agreement, and to make the representations, warranties, and agreements herein,
and to perform any obligations hereunder.
7. ADVICE OF COUNSEL. Each party hereto has had the opportunity to
consult with legal and financial counsel prior to the execution of this
Agreement.
IN WITNESS WHEREOF, the parties to this Agreement have duly executed
this Agreement as of the day and year first written above.
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"
/s/ Marvin J. Tilker
--------------------------------------
"Person"
3.
<PAGE>
STABILITY AGREEMENT
This STABILITY AGREEMENT (the "Agreement") is made and entered into as
of the 12 day of March 1998, by and between Mauna Loa Macadamia Partners, L.P.,
a Delaware limited partnership (the "Partnership"), and ING FAMILY PARTNERSHIP
(the "Person").
R E C I T A L S
WHEREAS, C. Brewer Homes, Inc. (the "Corporation") has agreed to
merge with and into the Partnership (the "Merger"), as set forth in that Amended
and Restated Agreement and Plan of Merger dated as of December 18, 1997, by and
between the Partnership and the Corporation (the "Merger Agreement");
WHEREAS, the capitalized terms used and not defined herein shall have
the meanings set forth in the Merger Agreement;
WHEREAS, the Corporation covenanted in the Merger Agreement to use
all reasonable efforts to cause each person or group of persons who holds five
percent (5%) or more of the Corporation Class B Stock to deliver to the
Partnership a Stability Agreement, to the effect that during the one (1) year
period following the Effective Time of the Merger such person or group will not
sell Partnership Class A Units received in exchange for Corporation Class B
Stock.
NOW, THEREFORE, on the basis of the foregoing recitals and in
consideration of the mutual representations, warranties, covenants, and
agreements contained herein, and for other good and valuable consideration, the
Partnership and the Person hereby agree as follows:
<PAGE>
1. NO SALE OF PARTNERSHIP UNITS. If the Merger is consummated as
set forth in the Merger Agreement, then the Person shall not sell, transfer, or
otherwise dispose of any Partnership Class A Units received in the Merger,
directly or indirectly, for or during a period of one (1) year following the
Effective Time of the Merger. That one-year period is referred to herein as the
"Stability Period."
2. GIFT OF PARTNERSHIP UNITS ALLOWED. Nothing in this Agreement
shall prevent the Person from making bona fide gifts or transfers or other
disposition without consideration of the Partnership Class A Units received in
exchange for Corporation Class B Stock, directly or indirectly, to any person or
entity during the Stability Period; provided, however, that the donee of a gift
of such Partnership Class A Units shall not sell, transfer, or otherwise dispose
of without consideration such Partnership Class A Units for or during a period
of one (1) year following the Effective Time of the Merger.
3. BINDING EFFECT. This Agreement shall be binding upon and
enforceable against the Person's administrators, executors, representatives,
heirs, legatees, devisees, successors, assigns, and any pledgee holding the
Corporation Class B Stock or Partnership Class A Units as collateral.
4. LITIGATION EXPENSES. If 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).
5. WAIVER OF JURY TRIAL. Each party hereto waives 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 the Agreement.
2.
<PAGE>
6. AUTHORITY. Each party hereto has full power to execute this
Agreement, and to make the representations, warranties, and agreements herein,
and to perform any obligations hereunder.
7. ADVICE OF COUNSEL. Each party hereto has had the opportunity to
consult with legal and financial counsel prior to the execution of this
Agreement.
IN WITNESS WHEREOF, the parties to this Agreement have duly executed
this Agreement as of the day and year first written above.
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"
/s/
-----------------------------------
Co-Trustee of the Sheridan Ing Trust, General
Partner of ING FAMILY PARTNERSHIP
"Person"
3.
<PAGE>
STABILITY AGREEMENT
This STABILITY AGREEMENT (the "Agreement") is made and entered into as
of the 10 day of March 1998, by and between Mauna Loa Macadamia Partners, L.P.,
a Delaware limited partnership (the "Partnership"), and Jean E. Rolles (the
"Person").
R E C I T A L S
WHEREAS, C. Brewer Homes, Inc. (the "Corporation") has agreed to
merge with and into the Partnership (the "Merger"), as set forth in that Amended
and Restated Agreement and Plan of Merger dated as of December 18, 1997, by and
between the Partnership and the Corporation (the "Merger Agreement");
WHEREAS, the capitalized terms used and not defined herein shall have
the meanings set forth in the Merger Agreement;
WHEREAS, the Corporation covenanted in the Merger Agreement to use
all reasonable efforts to cause each person or group of persons who holds five
percent (5%) or more of the Corporation Class B Stock to deliver to the
Partnership a Stability Agreement, to the effect that during the one (1) year
period following the Effective Time of the Merger such person or group will not
sell Partnership Class A Units received in exchange for Corporation Class B
Stock.
NOW, THEREFORE, on the basis of the foregoing recitals and in
consideration of the mutual representations, warranties, covenants, and
agreements contained herein, and for other good and valuable consideration, the
Partnership and the Person hereby agree as follows:
<PAGE>
1. NO SALE OF PARTNERSHIP UNITS. If the Merger is consummated as
set forth in the Merger Agreement, then the Person shall not sell, transfer, or
otherwise dispose of any Partnership Class A Units received in the Merger,
directly or indirectly, for or during a period of one (1) year following the
Effective Time of the Merger. That one-year period is referred to herein as the
"Stability Period."
2. GIFT OF PARTNERSHIP UNITS ALLOWED. Nothing in this Agreement
shall prevent the Person from making bona fide gifts or transfers or other
disposition without consideration of the Partnership Class A Units received in
exchange for Corporation Class B Stock, directly or indirectly, to any person or
entity during the Stability Period; provided, however, that the donee of a gift
of such Partnership Class A Units shall not sell, transfer, or otherwise dispose
of without consideration such Partnership Class A Units for or during a period
of one (1) year following the Effective Time of the Merger.
3. BINDING EFFECT. This Agreement shall be binding upon and
enforceable against the Person's administrators, executors, representatives,
heirs, legatees, devisees, successors, assigns, and any pledgee holding the
Corporation Class B Stock or Partnership Class A Units as collateral.
4. LITIGATION EXPENSES. If 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).
5. WAIVER OF JURY TRIAL. Each party hereto waives 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 the Agreement.
2.
<PAGE>
6. AUTHORITY. Each party hereto has full power to execute this
Agreement, and to make the representations, warranties, and agreements herein,
and to perform any obligations hereunder.
7. ADVICE OF COUNSEL. Each party hereto has had the opportunity to
consult with legal and financial counsel prior to the execution of this
Agreement.
IN WITNESS WHEREOF, the parties to this Agreement have duly executed
this Agreement as of the day and year first written above.
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"
/s/ Jean E. Rolles
----------------------------------------
"Person"
3.
<PAGE>
STABILITY AGREEMENT
This STABILITY AGREEMENT (the "Agreement") is made and entered into as
of the 25 day of February 1998, by and between Mauna Loa Macadamia Partners,
L.P., a Delaware limited partnership (the "Partnership"), and J. W. A. Buyers
(the "Person").
R E C I T A L S
WHEREAS, C. Brewer Homes, Inc. (the "Corporation") has agreed to
merge with and into the Partnership (the "Merger"), as set forth in that Amended
and Restated Agreement and Plan of Merger dated as of December 18, 1997, by and
between the Partnership and the Corporation (the "Merger Agreement");
WHEREAS, the capitalized terms used and not defined herein shall have
the meanings set forth in the Merger Agreement;
WHEREAS, the Corporation covenanted in the Merger Agreement to use
all reasonable efforts to cause each person or group of persons who holds five
percent (5%) or more of the Corporation Class B Stock to deliver to the
Partnership a Stability Agreement, to the effect that during the one (1) year
period following the Effective Time of the Merger such person or group will not
sell Partnership Class A Units received in exchange for Corporation Class B
Stock.
NOW, THEREFORE, on the basis of the foregoing recitals and in
consideration of the mutual representations, warranties, covenants, and
agreements contained herein, and for other good and valuable consideration, the
Partnership and the Person hereby agree as follows:
<PAGE>
1. NO SALE OF PARTNERSHIP UNITS. If the Merger is consummated as
set forth in the Merger Agreement, then the Person shall not sell, transfer, or
otherwise dispose of any Partnership Class A Units received in the Merger,
directly or indirectly, for or during a period of one (1) year following the
Effective Time of the Merger. That one-year period is referred to herein as the
"Stability Period."
2. GIFT OF PARTNERSHIP UNITS ALLOWED. Nothing in this Agreement
shall prevent the Person from making bona fide gifts or transfers or other
disposition without consideration of the Partnership Class A Units received in
exchange for Corporation Class B Stock, directly or indirectly, to any person or
entity during the Stability Period; provided, however, that the donee of a gift
of such Partnership Class A Units shall not sell, transfer, or otherwise dispose
of without consideration such Partnership Class A Units for or during a period
of one (1) year following the Effective Time of the Merger.
3. BINDING EFFECT. This Agreement shall be binding upon and
enforceable against the Person's administrators, executors, representatives,
heirs, legatees, devisees, successors, assigns, and any pledgee holding the
Corporation Class B Stock or Partnership Class A Units as collateral.
4. LITIGATION EXPENSES. If 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).
5. WAIVER OF JURY TRIAL. Each party hereto waives 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 the Agreement.
2.
<PAGE>
6. AUTHORITY. Each party hereto has full power to execute this
Agreement, and to make the representations, warranties, and agreements herein,
and to perform any obligations hereunder.
7. ADVICE OF COUNSEL. Each party hereto has had the opportunity to
consult with legal and financial counsel prior to the execution of this
Agreement.
IN WITNESS WHEREOF, the parties to this Agreement have duly executed
this Agreement as of the day and year first written above.
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"
/s/ J. W. A. Buyers
------------------------------------------
"Person"
3.
<PAGE>
STABILITY AGREEMENT
This STABILITY AGREEMENT (the "Agreement") is made and entered into as
of the 18 day of March 1998, by and between Mauna Loa Macadamia Partners, L.P.,
a Delaware limited partnership (the "Partnership"), and Jane Buyers Russo,
Rebecca W. Buyers-Basso, Elsie Buyers Viehman, Trustees of the J. W. A. Buyers
Educational Trust (the "Trust").
R E C I T A L S
WHEREAS, C. Brewer Homes, Inc. (the "Corporation") has agreed to
merge with and into the Partnership (the "Merger"), as set forth in that Amended
and Restated Agreement and Plan of Merger dated as of December 18, 1997, by and
between the Partnership and the Corporation (the "Merger Agreement");
WHEREAS, the capitalized terms used and not defined herein shall have
the meanings set forth in the Merger Agreement;
WHEREAS, the Corporation covenanted in the Merger Agreement to use
all reasonable efforts to cause each person or group of persons who holds five
percent (5%) or more of the Corporation Class B Stock to deliver to the
Partnership a Stability Agreement, to the effect that during the one (1) year
period following the Effective Time of the Merger such person or group will not
sell Partnership Class A Units received in exchange for Corporation Class B
Stock.
NOW, THEREFORE, on the basis of the foregoing recitals and in
consideration of the mutual representations, warranties, covenants, and
agreements contained herein, and for other good and valuable consideration, the
Partnership and the Person hereby agree as follows:
<PAGE>
1. NO SALE OF PARTNERSHIP UNITS. If the Merger is consummated as
set forth in the Merger Agreement, then the Person shall not sell, transfer, or
otherwise dispose of any Partnership Class A Units received in the Merger,
directly or indirectly, for or during a period of one (1) year following the
Effective Time of the Merger. That one-year period is referred to herein as the
"Stability Period."
2. GIFT OF PARTNERSHIP UNITS ALLOWED. Nothing in this Agreement
shall prevent the Person from making bona fide gifts or transfers or other
disposition without consideration of the Partnership Class A Units received in
exchange for Corporation Class B Stock, directly or indirectly, to any person or
entity during the Stability Period; provided, however, that the donee of a gift
of such Partnership Class A Units shall not sell, transfer, or otherwise dispose
of without consideration such Partnership Class A Units for or during a period
of one (1) year following the Effective Time of the Merger.
3. BINDING EFFECT. This Agreement shall be binding upon and
enforceable against the Person's administrators, executors, representatives,
heirs, legatees, devisees, successors, assigns, and any pledgee holding the
Corporation Class B Stock or Partnership Class A Units as collateral.
4. LITIGATION EXPENSES. If 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).
5. WAIVER OF JURY TRIAL. Each party hereto waives 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 the Agreement.
2.
<PAGE>
6. AUTHORITY. Each party hereto has full power to execute this
Agreement, and to make the representations, warranties, and agreements herein,
and to perform any obligations hereunder.
7. ADVICE OF COUNSEL. Each party hereto has had the opportunity to
consult with legal and financial counsel prior to the execution of this
Agreement.
IN WITNESS WHEREOF, the parties to this Agreement have duly executed
this Agreement as of the day and year first written above.
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"
/s/ Jane Buyers Russo
-----------------------------------------
Jane Buyers Russo, As Trustee
JWA Buyers Educational Trust
/s/ Rebecca W. Buyers Basso
-----------------------------------------
Trustee
JWAB Educational Trust
/s/ Elsie Buyers Viehman as Trustee
-----------------------------------------
J. W. A. Buyers Educational Trust
"Person"
3.
<PAGE>
STABILITY AGREEMENT
This STABILITY AGREEMENT (the "Agreement") is made and entered into as
of the 18 day of March 1998, by and between Mauna Loa Macadamia Partners, L.P.,
a Delaware limited partnership (the "Partnership"), and Jane Buyers Russo,
Rebecca W. Buyers-Basso, Elsie Buyers Viehman, Trustees of the J. W. A. Buyers
Generation Skipping Trust (the "Trust").
R E C I T A L S
WHEREAS, C. Brewer Homes, Inc. (the "Corporation") has agreed to
merge with and into the Partnership (the "Merger"), as set forth in that Amended
and Restated Agreement and Plan of Merger dated as of December 18, 1997, by and
between the Partnership and the Corporation (the "Merger Agreement");
WHEREAS, the capitalized terms used and not defined herein shall have
the meanings set forth in the Merger Agreement;
WHEREAS, the Corporation covenanted in the Merger Agreement to use
all reasonable efforts to cause each person or group of persons who holds five
percent (5%) or more of the Corporation Class B Stock to deliver to the
Partnership a Stability Agreement, to the effect that during the one (1) year
period following the Effective Time of the Merger such person or group will not
sell Partnership Class A Units received in exchange for Corporation Class B
Stock.
NOW, THEREFORE, on the basis of the foregoing recitals and in
consideration of the mutual representations, warranties, covenants, and
agreements contained herein, and for other good and valuable consideration, the
Partnership and the Person hereby agree as follows:
<PAGE>
1. NO SALE OF PARTNERSHIP UNITS. If the Merger is consummated as
set forth in the Merger Agreement, then the Person shall not sell, transfer, or
otherwise dispose of any Partnership Class A Units received in the Merger,
directly or indirectly, for or during a period of one (1) year following the
Effective Time of the Merger. That one-year period is referred to herein as the
"Stability Period."
2. GIFT OF PARTNERSHIP UNITS ALLOWED. Nothing in this Agreement
shall prevent the Person from making bona fide gifts or transfers or other
disposition without consideration of the Partnership Class A Units received in
exchange for Corporation Class B Stock, directly or indirectly, to any person or
entity during the Stability Period; provided, however, that the donee of a gift
of such Partnership Class A Units shall not sell, transfer, or otherwise dispose
of without consideration such Partnership Class A Units for or during a period
of one (1) year following the Effective Time of the Merger.
3. BINDING EFFECT. This Agreement shall be binding upon and
enforceable against the Person's administrators, executors, representatives,
heirs, legatees, devisees, successors, assigns, and any pledgee holding the
Corporation Class B Stock or Partnership Class A Units as collateral.
4. LITIGATION EXPENSES. If 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).
5. WAIVER OF JURY TRIAL. Each party hereto waives 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 the Agreement.
2.
<PAGE>
6. AUTHORITY. Each party hereto has full power to execute this
Agreement, and to make the representations, warranties, and agreements herein,
and to perform any obligations hereunder.
7. ADVICE OF COUNSEL. Each party hereto has had the opportunity to
consult with legal and financial counsel prior to the execution of this
Agreement.
IN WITNESS WHEREOF, the parties to this Agreement have duly executed
this Agreement as of the day and year first written above.
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"
/s/ Jane Buyers Russo
-----------------------------------------
Jane Buyers Russo, As Trustee
JWA Buyers Generation Skipping Trust
/s/ Rebecca W. Buyers Basso
-----------------------------------------
Trustee
JWAB Generation Skipping Trust
/s/ Elsie Buyers Viehman as Trustee
-----------------------------------------
J. W. A. Buyers Generation Skipping Trust
"Person"
3.
<PAGE>
STOCK OPTION SETTLEMENT AGREEMENT
This Agreement ("Agreement") dated this 14 day of April, 1998, is
made between C. BREWER HOMES, INC., a Delaware corporation ("Homes"), and
EDWARD T. FOLEY ("Optionee").
R E C I T A L S:
1. Homes maintains the C. Brewer Homes, Inc. 1993 Stock Option/Stock
Issuance Plan ("Homes Option Plan") under which Optionee has been issued certain
outstanding in-the-money options.
2. Pursuant to the Amended and Restated Agreement and Plan of Merger
effective as of December 18, 1997, by and between Mauna Loa Macadamia Partners,
L.P. ("Partnership") and Homes ("Merger Agreement") which provides for the
merger of Homes into the Partnership ("Merger"), no outstanding options under
the Homes Option Plan shall be assumed by the Partnership or otherwise converted
into a right to receive any interest in the Partnership and, further, Homes
shall be permitted to enter into agreements with holders of each unexercised
in-the-money-option providing for the cancellation and cash settlement of the
option immediately prior to the date of consummation of the Merger ("Effective
Time" as defined in the Merger Agreement).
3. After the Effective Time, Optionee will not be a director,
officer, or employee of the Partnership or Mauna Loa Resources, Inc., the
Partnership's general partner, who could be entitled to any continuing options
or replacement options and, in accordance with the Merger Agreement, the parties
desire to enter into this Agreement in order to provide for the cancellation of
the Optionee's in-the-money options as of immediately prior to the Effective
Time and to provide for a cash payment to the Optionee in settlement thereof.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants herein contained, and for other good and valuable
consideration, the adequacy of which are hereby acknowledged, the parties,
intending to be legally bound, agree and covenant as follows:
1. NONEXERCISE AND CANCELLATION OF OPTION.
The Optionee is currently the holder of a certain unexercised
in-the-money stock option granted under the Homes Option Plan ("Option") as
follows:
<TABLE>
<CAPTION>
<S> <C>
a. Date of Grant: January 28, 1997
<PAGE>
b. Expiration Date: January 27, 2007
c. Aggregate Number of Shares
of Homes Common Stock
Subject to the Option: 10,000
d. Per Share Exercise Price
for the Option: $2.0625
e. Aggregate Exercise Price for
the Option: $20,625
</TABLE>
The Optionee hereby agrees not to exercise the Option prior to the Effective
Time and, pursuant to the terms of the Homes Option Plan and this Agreement, the
Option shall be canceled and shall be null and void as of the Effective Time.
2. SETTLEMENT OF OPTION.
Contingent on and immediately prior to the consummation of the Merger,
Homes shall make a cash or cash equivalent payment ("Option Settlement Amount")
to the Optionee, in settlement of the cancellation of the Option, in an amount
(if any) equal to: (a) the aggregate number of shares of Homes common stock
that are subject to the canceled Option, (b) multiplied by the average of the
closing selling price per share of such common stock as reported on the NASDAQ
National Market System for the 20 consecutive trading days ending on the third
trading day immediately prior to the Effective Time, and (c) less the aggregate
option exercise price for the Option. For this purpose, if the Homes common
stock is not traded on an applicable trading date, the closing price on that
date shall be equal to the closing selling price per share on the last preceding
date for which such quotation exists. The Option Settlement Amount as described
in this paragraph shall be paid to Optionee by Homes as of immediately prior to
the Effective Time.
3. WITHHOLDING TAXES. Optionee acknowledges that withholding may be
required with respect to federal and state income and payroll taxes arising from
payment to Optionee of the Option Settlement Amount. Optionee agrees that Homes
may withhold from the Option Settlement Amount such portion thereof as Homes
determines, in its sole discretion, is necessary or advisable with respect to
any such withholding obligations.
4. TERMINATION. This Agreement shall terminate automatically without
further action in the event that the Merger is not consummated by August 31,
1998. Upon such termination of this Agreement, the respective obligations of
the parties hereto shall immediately become void and have no further force and
effect.
5. NO RELIANCE. Optionee acknowledges that Homes has not provided
Optionee with advice, warranties or representations regarding any of the legal
or tax effects of
<PAGE>
this Agreement or the transactions contemplated hereby. Optionee represents
that he has obtained such legal and tax advice with respect thereto from
Optionee's own legal and tax advisors as Optionee has deemed appropriate.
6. REPRESENTATIONS OF OPTIONEE. Optionee represents that the above
Section 1 accurately sets forth, as to Optionee, the number of shares of Homes
common stock subject to the Option held by Optionee and the exercise price and
expiration date thereof. Optionee represents that Optionee is the sole legal
and beneficial owner, and has good title to, the Option indicated as owned by
Optionee, and that such Option is owned by Optionee free and clear of liens,
security interests, charges or other encumbrances. Optionee represents that
Optionee has the legal right, power, capacity and authority to execute, deliver
and perform this Agreement, and that this Agreement is the valid and binding
obligation of Optionee enforceable in accordance with its terms, except as the
enforcement thereof may be limited by general principles of equity. Optionee
represents that the execution, delivery and performance of this Agreement will
not (a) conflict with or result in the breach of, or default or actual or
potential loss of any benefit under, any provision of any agreement, instrument
or obligation to which the Optionee or the Optionee's spouse is a party or by
which any of Optionee's properties or the Optionee's spouse's properties are
bound, or give any other party to any such agreement, instrument or obligation a
right to terminate or modify any term thereof; (b) require the consent or
approval of any third party; (c) result in the creation or imposition of any
lien, mortgage or encumbrance on the Option or any other assets of the Optionee
or the Optionee's spouse; or (d) violate any law, rule or regulation to which
the Optionee or the Optionee's spouse is subject.
7. INTEGRATION. This Agreement 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.
8. HEADINGS. The descriptive headings of the Sections of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.
9. NOTICES. Any notice or communication required or permitted
hereunder, shall be deemed to have been given if in writing and (a) delivered in
person, (b) delivered by confirmed facsimile transmission (c) sent by overnight
carrier, postage prepaid with return receipt requested or (d) mailed by
certified or registered mail, postage prepaid with return receipt requested,
addressed as follows:
If to Homes, addressed to:
C. Brewer Homes, Inc.
3.
<PAGE>
Attention: Seth A. Bakes
255-A East Waiko Road
Wailuku, Hawaii 96793
Fax No.: (808) 242-5316
If to Optionee, addressed to:
Edward T. Foley
255-A East Waiko Road
Wailuku, Hawaii 96793
Fax No.: (808) 242-5316
or at such other address and to the attention of such other person as a party
may notice to the others in accordance with this Section 9. Any such notice or
communication shall be deemed received on the date delivered personally or
delivered by confirmed facsimile transmission, on the first business day after
it was sent by overnight carrier, postage prepaid with return receipt requested,
or on the fourth business day after it was sent by certified or registered mail,
postage prepaid with return receipt requested.
10. GOVERNING LAW. This Agreement and the legal relations between the
parties shall be governed by and construed in accordance with the laws of the
State of Hawaii applicable to contracts between Hawaii parties made and
performed in such State.
11. EXPENSES. Each party hereto shall pay its own costs and
expenses, including, but not limited to, those of its attorneys, in connection
with this Agreement and transactions covered and contemplated hereby.
12. ATTORNEYS' FEES. In the event either of the parties 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 in whose favor final judgment is entered shall
be entitled to have and recover of and from the losing party 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).
13. NO ASSIGNMENT. Neither this Agreement nor any rights, duties or
obligations hereunder shall be assignable by Homes or Optionee, in whole or in
part, except that Homes may assign any of its rights, duties or obligations
hereunder to the Partnership. Any attempted assignment in violation of this
prohibition shall be null and void. Subject to the
4.
<PAGE>
foregoing, all of the terms and provisions hereof shall be binding upon, and
inure to the benefit of, the successors of the parties hereto.
14. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
party hereto and delivered to the other party. Such delivery may be
accomplished by and be effective upon facsimile transmission to the other party,
provided an originally executed copy of this Agreement is subsequently furnished
to such party.
15. JURY WAIVER. The parties hereto agree to waive trial by jury in
any dispute over this Agreement or related thereto in any manner.
The undersigned agree to the terms of this Agreement and voluntarily
enter into it with the intent to be bound thereby.
C. BREWER HOMES, INC.
Dated: April 14, 1998 By /s/ Seth A. Bakes
--------------------------------------
Its: President & CEO
-----------------------------------
"Homes"
Dated: April 14, 1998 /s/ Edward T. Foley
-------------------------------------
EDWARD T. FOLEY
"Optionee"
5.
<PAGE>
STOCK OPTION SETTLEMENT AGREEMENT
This Agreement ("Agreement") dated this 14 day of April, 1998, is
made between C. BREWER HOMES, INC., a Delaware corporation ("Homes"), and
CLINTON R. CHURCHILL ("Optionee").
R E C I T A L S:
1. Homes maintains the C. Brewer Homes, Inc. 1993 Stock Option/Stock
Issuance Plan ("Homes Option Plan") under which Optionee has been issued certain
outstanding in-the-money options.
2. Pursuant to the Amended and Restated Agreement and Plan of Merger
effective as of December 18, 1997, by and between Mauna Loa Macadamia Partners,
L.P. ("Partnership") and Homes ("Merger Agreement") which provides for the
merger of Homes into the Partnership ("Merger"), no outstanding options under
the Homes Option Plan shall be assumed by the Partnership or otherwise converted
into a right to receive any interest in the Partnership and, further, Homes
shall be permitted to enter into agreements with holders of each unexercised in-
the-money-option providing for the cancellation and cash settlement of the
option immediately prior to the date of consummation of the Merger ("Effective
Time" as defined in the Merger Agreement).
3. After the Effective Time, Optionee will not be a director,
officer, or employee of the Partnership or Mauna Loa Resources, Inc., the
Partnership's general partner, who could be entitled to any continuing options
or replacement options and, in accordance with the Merger Agreement, the parties
desire to enter into this Agreement in order to provide for the cancellation of
the Optionee's in-the-money options as of immediately prior to the Effective
Time and to provide for a cash payment to the Optionee in settlement thereof.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants herein contained, and for other good and valuable
consideration, the adequacy of which are hereby acknowledged, the parties,
intending to be legally bound, agree and covenant as follows:
1. NONEXERCISE AND CANCELLATION OF OPTION.
<PAGE>
The Optionee is currently the holder of a certain unexercised
in-the-money stock option granted under the Homes Option Plan ("Option") as
follows:
a. Date of Grant: August 29, 1997
b. Expiration Date: August 28, 2007
c. Aggregate Number of Shares of Homes
Common Stock Subject to the Option: 5,000
d. Per Share Exercise Price for the Option: $2.4375
e. Aggregate Exercise Price for the Option: $12,187.50
The Optionee hereby agrees not to exercise the Option prior to the Effective
Time and, pursuant to the terms of the Homes Option Plan and this Agreement, the
Option shall be canceled and shall be null and void as of the Effective Time.
2. SETTLEMENT OF OPTION.
Contingent on and immediately prior to the consummation of the Merger,
Homes shall make a cash or cash equivalent payment ("Option Settlement Amount")
to the Optionee, in settlement of the cancellation of the Option, in an amount
(if any) equal to: (a) the aggregate number of shares of Homes common stock
that are subject to the canceled Option, (b) multiplied by the average of the
closing selling price per share of such common stock as reported on the NASDAQ
National Market System for the 20 consecutive trading days ending on the third
trading day immediately prior to the Effective Time, and (c) less the aggregate
option exercise price for the Option. For this purpose, if the Homes common
stock is not traded on an applicable trading date, the closing price on that
date shall be equal to the closing selling price per share on the last preceding
date for which such quotation exists. The Option Settlement Amount as described
in this paragraph shall be paid to Optionee by Homes as of immediately prior to
the Effective Time.
3. WITHHOLDING TAXES. Optionee acknowledges that withholding may be
required with respect to federal and state income and payroll taxes arising from
payment to Optionee of the Option Settlement Amount. Optionee agrees that Homes
may withhold from the Option Settlement Amount such portion thereof as Homes
determines, in its sole discretion, is necessary or advisable with respect to
any such withholding obligations.
4. TERMINATION. This Agreement shall terminate automatically without
further action in the event that the Merger is not consummated by August 31,
1998. Upon such
<PAGE>
termination of this Agreement, the respective obligations of the parties hereto
shall immediately become void and have no further force and effect.
5. NO RELIANCE. Optionee acknowledges that Homes has not provided
Optionee with advice, warranties or representations regarding any of the legal
or tax effects of this Agreement or the transactions contemplated hereby.
Optionee represents that he has obtained such legal and tax advice with respect
thereto from Optionee's own legal and tax advisors as Optionee has deemed
appropriate.
6. REPRESENTATIONS OF OPTIONEE. Optionee represents that the above
Section 1 accurately sets forth, as to Optionee, the number of shares of Homes
common stock subject to the Option held by Optionee and the exercise price and
expiration date thereof. Optionee represents that Optionee is the sole legal
and beneficial owner, and has good title to, the Option indicated as owned by
Optionee, and that such Option is owned by Optionee free and clear of liens,
security interests, charges or other encumbrances. Optionee represents that
Optionee has the legal right, power, capacity and authority to execute, deliver
and perform this Agreement, and that this Agreement is the valid and binding
obligation of Optionee enforceable in accordance with its terms, except as the
enforcement thereof may be limited by general principles of equity. Optionee
represents that the execution, delivery and performance of this Agreement will
not (a) conflict with or result in the breach of, or default or actual or
potential loss of any benefit under, any provision of any agreement, instrument
or obligation to which the Optionee or the Optionee's spouse is a party or by
which any of Optionee's properties or the Optionee's spouse's properties are
bound, or give any other party to any such agreement, instrument or obligation a
right to terminate or modify any term thereof; (b) require the consent or
approval of any third party; (c) result in the creation or imposition of any
lien, mortgage or encumbrance on the Option or any other assets of the Optionee
or the Optionee's spouse; or (d) violate any law, rule or regulation to which
the Optionee or the Optionee's spouse is subject.
7. INTEGRATION. This Agreement 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.
8. HEADINGS. The descriptive headings of the Sections of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.
9. NOTICES. Any notice or communication required or permitted
hereunder, shall be deemed to have been given if in writing and (a) delivered in
person, (b) delivered by confirmed facsimile transmission (c) sent by overnight
carrier, postage prepaid with return receipt
3.
<PAGE>
requested or (d) mailed by certified or registered mail, postage prepaid with
return receipt requested, addressed as follows:
If to Homes, addressed to:
C. Brewer Homes, Inc.
Attention: Seth A. Bakes
255-A East Waiko Road
Wailuku, Hawaii 96793
Fax No.: (808) 242-5316
If to Optionee, addressed to:
Clinton R. Churchill
c/o James Campbell Estate
1001 Kamokila Boulevard
Kapolei, Hawaii 96707
Fax No.: 674-3349
or at such other address and to the attention of such other person as a party
may notice to the others in accordance with this Section 9. Any such notice or
communication shall be deemed received on the date delivered personally or
delivered by confirmed facsimile transmission, on the first business day after
it was sent by overnight carrier, postage prepaid with return receipt requested,
or on the fourth business day after it was sent by certified or registered mail,
postage prepaid with return receipt requested.
10. GOVERNING LAW. This Agreement and the legal relations between the
parties shall be governed by and construed in accordance with the laws of the
State of Hawaii applicable to contracts between Hawaii parties made and
performed in such State.
11. EXPENSES. Each party hereto shall pay its own costs and
expenses, including, but not limited to, those of its attorneys, in connection
with this Agreement and transactions covered and contemplated hereby.
12. ATTORNEYS' FEES. In the event either of the parties 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 in whose favor final judgment is entered
4.
<PAGE>
shall be entitled to have and recover of and from the losing party 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).
13. NO ASSIGNMENT. Neither this Agreement nor any rights, duties or
obligations hereunder shall be assignable by Homes or Optionee, in whole or in
part, except that Homes may assign any of its rights, duties or obligations
hereunder to the Partnership. Any attempted assignment in violation of this
prohibition shall be null and void. Subject to the foregoing, all of the terms
and provisions hereof shall be binding upon, and inure to the benefit of, the
successors of the parties hereto.
14. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
party hereto and delivered to the other party. Such delivery may be
accomplished by and be effective upon facsimile transmission to the other party,
provided an originally executed copy of this Agreement is subsequently furnished
to such party.
15. JURY WAIVER. The parties hereto agree to waive trial by jury in
any dispute over this Agreement or related thereto in any manner.
The undersigned agree to the terms of this Agreement and voluntarily
enter into it with the intent to be bound thereby.
C. BREWER HOMES, INC.
Dated: April 14, 1998 By /s/ Seth A. Bakes
----------------------------
Its: President & CEO
-----------------------
"Homes"
Dated: April 14, 1998 /s/ Clinton R. Churchill
----------------------------
CLINTON R. CHURCHILL
"Optionee"
5.
<PAGE>
STOCK OPTION REPLACEMENT AGREEMENT
This Agreement ("Agreement") dated this 14 day of April, 1998, is
made among C. BREWER HOMES, INC., a Delaware corporation ("Homes"), MAUNA LOA
MACADAMIA PARTNERS, L.P., a Delaware limited partnership ("Partnership"), and
SETH A. BAKES ("Optionee").
R E C I T A L S:
1. Homes maintains the C. Brewer Homes, Inc. 1993 Stock Option/Stock
Issuance Plan ("Homes Option Plan") under which Optionee has been issued a
certain outstanding option.
2. Pursuant to the Amended and Restated Agreement and Plan of Merger
effective as of December 18, 1997, by and between the Partnership and Homes
("Merger Agreement") which provides for the merger of Homes into the Partnership
("Merger"), no outstanding options under the Homes Option Plan shall be assumed
by the Partnership or otherwise converted into a right to receive any interest
in the Partnership.
3. The parties desire to enter into this Agreement in order to
provide for the cancellation of the Optionee's stock option under the Homes
Option Plan and the replacement of a comparable unit option under the Unit
Option Plan, subject to approval of the Unit Option Plan by the unitholders of
the Partnership and consummation of the Merger.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants herein contained, and for other good and valuable
consideration, the adequacy of which is hereby acknowledged, the parties,
intending to be legally bound, agree and covenant as follows:
1. NONEXERCISE AND CANCELLATION OF OPTION.
The Optionee is currently the holder of a certain unexercised stock
option granted under the Homes Option Plan ("Option") as follows:
<TABLE>
<S> <C> <C> <C>
a. Date of Grant: January 27, 1997
b. Expiration Date: January 26, 2007
c. Aggregate Number of Shares of Homes Common Stock
Subject to the Option: 50,000
<PAGE>
d. Per Share Exercise Price for the Option: $2.1250
e. Aggregate Exercise Price for the Option: $106,250.00
</TABLE>
The Optionee hereby agrees not to exercise the Option prior to the Effective
Time and, pursuant to the terms of the Homes Option Plan and this Agreement, the
Option shall be canceled and shall be null and void as of the Effective Time
("Canceled Stock Option").
2. REPLACEMENT OPTION.
In the manner described hereunder, the Partnership hereby agrees to
grant a replacement unit option ("Replacement Unit Option") under the Unit
Option Plan contingent upon (a) the consummation of the Merger, (b) the approval
of the Unit Option Plan by a majority of the unitholders of the Partnership, and
(c) the Optionee's continued employment as an officer and employee of Homes
until immediately prior to the Effective Time and Optionee's agreement to serve
as an officer and employee of the Partnership after the Effective Time.
Specifically, as a replacement of the Canceled Stock Option, on an aggregate
basis, the Partnership shall issue to Optionee a Replacement Unit Option to
purchase the number of Class A Units of the Partnership equal to the product of
the "Conversion Ratio" (as defined in the Merger Agreement) multiplied by the
aggregate number of shares of Homes common stock that are subject to the
Canceled Stock Option. The exercise price per unit of the Replacement Unit
Option shall be equal to the exercise price per share of the Canceled Stock
Option divided by the Conversion Ratio. In the event that the grant of the
Replacement Unit Option would result in an option to acquire a fractional Class
A Unit, such fractional Class A Unit shall not be issued, and the aggregate
exercise price for the Replacement Unit Option shall be reduced by the
proportionate amount of the aggregate exercise price attributable to the
fractional Class A Unit.
The Replacement Unit Option shall be exercisable in accordance with
the same vesting dates and expiration date as exist under the Canceled Stock
Option, disregarding acceleration of such dates attributable to the Merger.
Thus, the Replacement Unit Option shall have an expiration date of ten years
from the date of original grant of the Canceled Stock Option, and shall be
exercisable for 25% of the option units upon the completion of one year of
service as an employee of Homes measured from the date of grant of the Canceled
Stock Option, and for the remaining option units in 36 equal monthly
installments upon completion of each additional month of service thereafter as
an employee of Homes or the Partnership. However, unless as otherwise provided
herein, the benefits, rights, and features of the Replacement Unit Option shall
be governed by the terms and conditions of the Unit Option Plan. New unit
option agreements granting the Replacement Unit Option under the Unit Option
Plan shall be distributed to the Optionee as soon as practicable following the
Effective Time.
The Replacement Unit Option as determined and granted in accordance
with this Section 2 as of the Effective Time shall be as follows:
<PAGE>
<TABLE>
<S> <C> <C> <C>
a. Date of Grant: Effective Time
b. Expiration Date: January 26, 2007
c. Aggregate Number of
Partnership Units Subject to the Option: 33,333
d. Per Share Exercise Price for the Option: $3.1875
e. Aggregate Exercise Price for the Option: $106,248.93
</TABLE>
3. DEEMED CANCELLATION OF OPTION.
If conditions (a) and (c) of the first paragraph of Paragraph 2 are
met, but the Unit Option Plan is not approved by a majority of the unitholders
of the Partnership, then Homes and the Optionee agree that (a) Optionee shall
not exercise the Option, (b) the Option shall become null and void at the
Effective Time, and (c) in settlement of the cancellation of the Option, Homes
shall make a cash or cash equivalent payment ("Option Settlement Amount") to the
Optionee, in an amount, if any, equal to: (a) the aggregate number of shares of
Homes common stock that are subject to the canceled Option, (b) multiplied by
the average of the closing selling price per share of such common stock as
reported on the NASDAQ National Market System for the 20 consecutive trading
days ending on the third trading day immediately prior to the Effective Time,
and (c) less the aggregate option exercise price for the Option. For this
purpose, if the Homes common stock is not traded on an applicable trading date,
the closing price on that date shall be equal to the closing selling price per
share on the last preceding date for which such quotation exists. The Option
Settlement Amount as described in this paragraph shall be paid to Optionee as of
the Effective Time by the Partnership as soon as reasonably practicable after
the Effective Time.
4. TERMINATION.
This Agreement shall terminate automatically without further action in
the event that the Merger is not consummated by August 31, 1998. Upon such
termination of this Agreement, the respective obligations of the parties hereto
shall immediately become void and have no further force and effect.
<PAGE>
5. NO RELIANCE.
Optionee acknowledges that neither Homes nor the Partnership has
provided Optionee with advice, warranties or representations regarding any of
the legal or tax effects of this Agreement or the transactions contemplated
hereby. Optionee represents that he has obtained such legal and tax advice with
respect thereto from Optionee's own legal and tax advisors as Optionee has
deemed appropriate.
6. REPRESENTATIONS OF OPTIONEE.
Optionee represents that the above Section 1 accurately sets forth, as
to Optionee, the number of shares of Homes common stock subject to the Option
held by Optionee and the exercise price and expiration date thereof. Optionee
represents that Optionee is the sole legal and beneficial owner, and has good
title to, the Option indicated as owned by Optionee, and that such Option is
owned by Optionee free and clear of liens, security interests, charges or other
encumbrances. Optionee represents that Optionee has the legal right, power,
capacity and authority to execute, deliver and perform this Agreement, and that
this Agreement is the valid and binding obligation of Optionee enforceable in
accordance with its terms, except as the enforcement thereof may be limited by
general principles of equity. Optionee represents that the execution, delivery
and performance of this Agreement will not (a) conflict with or result in the
breach of, or default or actual or potential loss of any benefit under, any
provision of any agreement, instrument or obligation to which the Optionee or
the Optionee's spouse is a party or by which any of Optionee's properties or the
Optionee's spouse's properties are bound, or give any other party to any such
agreement, instrument or obligation a right to terminate or modify any term
thereof; (b) require the consent or approval of any third party; (c) result in
the creation or imposition of any lien, mortgage or encumbrance on the Option or
any other assets of the Optionee or the Optionee's spouse; or (d) violate any
law, rule or regulation to which the Optionee or the Optionee's spouse is
subject.
7. INTEGRATION.
This Agreement 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.
8. HEADINGS.
The descriptive headings of the Sections of this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
4.
<PAGE>
9. NOTICES.
Any notice or communication required or permitted hereunder, shall be
deemed to have been given if in writing and (a) delivered in person, (b)
delivered by confirmed facsimile transmission (c) sent by overnight carrier,
postage prepaid with return receipt requested or (d) mailed by certified or
registered mail, postage prepaid with return receipt requested, addressed as
follows:
If to Homes, addressed to:
C. Brewer Homes, Inc.
Attention: Seth A. Bakes
255-A East Waiko Road
Wailuku, Hawaii 96793
Fax No.: (808) 242-5316
If to the Partnership, addressed to:
Mauna Loa Macadamia Partners, L.P.
Attention: Gregory A. Sprecher
828 Fort Street, Suite 205
Honolulu, Hawaii 96813
Fax No.: (808) 532-4131
If to Optionee, addressed to:
Seth A. Bakes
255-A Waiko Road
Wailuku, Hawaii 96793
Fax No.: (808) 242-5316
or at such other address and to the attention of such other person as a party
may notice to the others in accordance with this Section 8. Any such notice or
communication shall be deemed received on the date delivered personally or
delivered by confirmed facsimile transmission, on the first business day after
it was sent by overnight carrier, postage prepaid with return receipt requested,
or on the fourth business day after it was sent by certified or registered mail,
postage prepaid with return receipt requested.
5.
<PAGE>
10. GOVERNING LAW.
This Agreement and the legal relations between the parties shall be
governed by and construed in accordance with the laws of the State of Hawaii
applicable to contracts between Hawaii parties made and performed in such State.
11. EXPENSES.
Each party hereto shall pay its own costs and expenses, including, but
not limited to, those of its attorneys, in connection with this Agreement and
transactions covered and contemplated hereby.
12. ATTORNEYS' FEES.
In the event either of the parties 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 in whose favor final judgment is entered shall be entitled to have and
recover of and from the losing party 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).
13. NO ASSIGNMENT.
Neither this Agreement nor any rights, duties or obligations hereunder
shall be assignable by Homes, the Partnership, or Optionee, in whole or in part,
except that Homes may assign any of its rights, duties or obligations hereunder
to the Partnership. Any attempted assignment in violation of this prohibition
shall be null and void. Subject to the foregoing, all of the terms and
provisions hereof shall be binding upon, and inure to the benefit of, the
successors of the parties hereto.
14. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other party. Such delivery may be accomplished by and be
effective upon facsimile transmission to the other party, provided an originally
executed copy of this Agreement is subsequently furnished to such party.
6.
<PAGE>
15. JURY WAIVER.
The parties hereto agree to waive trial by jury in any dispute over
this Agreement or related thereto in any manner.
The undersigned agree to the terms of this Agreement and voluntarily
enter into it with the intent to be bound thereby.
C. BREWER HOMES, INC.
Dated: April 14, 1998 By Edward T. Foley
------------------------------------------
Its: Executive Vice President
--------------------------------------
"Homes"
MAUNA LOA MACADAMIA PARTNERS, L.P.
By Mauna Loa Resources, Inc.
Its General Partner
Dated: April 14, 1998 By /s/ Kent T. Lucien
-------------------------------------------
Its: President
------------------------------------
"Partnership"
Dated: April 14, 1998 /s/ Seth A. Bakes
---------------------------------------------
SETH A. BAKES
"Optionee"
7.
<PAGE>
STOCK OPTION REPLACEMENT AGREEMENT
This Agreement ("Agreement") dated this 14 day of April , 1998, is
---- -------
made among C. BREWER HOMES, INC., a Delaware corporation ("Homes"), MAUNA LOA
MACADAMIA PARTNERS, L.P., a Delaware limited partnership ("Partnership"), and
JOHN W.A. BUYERS ("Optionee").
R E C I T A L S:
1. Homes maintains the C. Brewer Homes, Inc. 1993 Stock Option/Stock
Issuance Plan ("Homes Option Plan") under which Optionee has been issued a
certain outstanding option.
2. Pursuant to the Amended and Restated Agreement and Plan of Merger
effective as of December 18, 1997, by and between the Partnership and Homes
("Merger Agreement") which provides for the merger of Homes into the Partnership
("Merger"), no outstanding options under the Homes Option Plan shall be assumed
by the Partnership or otherwise converted into a right to receive any interest
in the Partnership.
3. The parties desire to enter into this Agreement in order to
provide for the cancellation of the Optionee's stock option under the Homes
Option Plan and the replacement of a comparable unit option under the Unit
Option Plan, subject to approval of the Unit Option Plan by the unitholders of
the Partnership and consummation of the Merger.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants herein contained, and for other good and valuable
consideration, the adequacy of which is hereby acknowledged, the parties,
intending to be legally bound, agree and covenant as follows:
1. NONEXERCISE AND CANCELLATION OF OPTION.
The Optionee is currently the holder of a certain unexercised stock
option granted under the Homes Option Plan ("Option") as follows:
<TABLE>
<S> <C> <C> <C>
a. Date of Grant: August 29, 1997
<PAGE>
b. Expiration Date: August 28, 2007
c. Aggregate Number of Shares Subject
to the Option: 5,000
d. Per Share Exercise Price for the Option: $2.4375
e. Aggregate Exercise Price for the Option: $12,187.50
</TABLE>
The Optionee hereby agrees not to exercise the Option prior to the Effective
Time and, pursuant to the terms of the Homes Option Plan and this Agreement, the
Option shall be canceled and shall be null and void as of the Effective Time
("Canceled Stock Option").
2. REPLACEMENT OPTION.
In the manner described hereunder, the Partnership hereby agrees to
grant a replacement unit option ("Replacement Unit Option") under the Unit
Option Plan contingent upon (a) the consummation of the Merger, (b) the approval
of the Unit Option Plan by a majority of the unitholders of the Partnership, and
(c) the Optionee's continued service as a director of Homes until immediately
prior to the Effective Time and Optionee's agreement to serve as a director of
the Partnership's general partner after the Effective Time. Specifically, as a
replacement of the Canceled Stock Option, on an aggregate basis, the Partnership
shall issue to Optionee a Replacement Unit Option to purchase the number of
Class A Units of the Partnership equal to the product of the "Conversion Ratio"
(as defined in the Merger Agreement) multiplied by the aggregate number of
shares of Homes common stock that are subject to the Canceled Stock Option. The
exercise price per unit of the Replacement Unit Option shall be equal to the
exercise price per share of the Canceled Stock Option divided by the Conversion
Ratio. In the event that the grant of the Replacement Unit Option would result
in an option to acquire a fractional Class A Unit, such fractional Class A Unit
shall not be issued, and the aggregate exercise price for the Replacement Unit
Option shall be reduced by the proportionate amount of the aggregate exercise
price attributable to the fractional Class A Unit.
The Replacement Unit Option shall be exercisable in accordance with
the same vesting dates and expiration date as exist under the Canceled Stock
Option, disregarding acceleration of such dates attributable to the Merger.
Thus, the Replacement Unit Option shall have an expiration date of ten years
from the date of grant of the Canceled Stock Option, and shall be exercisable
in 18 equal and successive monthly installments over the Optionee's period of
service as a member of the Board of Directors of Homes or the Managing
Partner or as an employee of Homes or the Partnership, with the first
installment to commence upon the completion of six months of service measured
from the date of grant of the Canceled Stock Option. However, unless as
otherwise provided herein, the benefits, rights, and
<PAGE>
features of the Replacement Unit Option shall be governed by the terms and
conditions of the Unit Option Plan. New unit option agreements granting the
Replacement Unit Option under the Unit Option Plan shall be distributed to the
Optionee as soon as practicable following the Effective Time.
The Replacement Unit Option as determined and granted in accordance
with this Section 2 as of the Effective Time shall be as follows:
<TABLE>
<S> <C> <C> <C>
a. Date of Grant: Effective Time
b. Expiration Date: August 28, 2007
c. Aggregate Number of
Partnership Units Subject to the Option: 3,333
d. Per Share Exercise Price for the Option: $3.6563
e. Aggregate Exercise Price for the Option: $12,186.45
</TABLE>
3. DEEMED CANCELLATION OF OPTION.
If conditions (a) and (c) of the first paragraph of Paragraph 2 are
met, but the Unit Option Plan is not approved by a majority of the unitholders
of the Partnership, then Homes and the Optionee agree that (a) Optionee shall
not exercise the Option, (b) the Option shall become null and void at the
Effective Time, and (c) in settlement of the cancellation of the Option, Homes
shall make a cash or cash equivalent payment ("Option Settlement Amount") to the
Optionee, in an amount, if any, equal to: (a) the aggregate number of shares of
Homes common stock that are subject to the canceled Option, (b) multiplied by
the average of the closing selling price per share of such common stock as
reported on the NASDAQ National Market System for the 20 consecutive trading
days ending on the third trading day immediately prior to the Effective Time,
and (c) less the aggregate option exercise price for the Option. For this
purpose, if the Homes common stock is not traded on an applicable trading date,
the closing price on that date shall be equal to the closing selling price per
share on the last preceding date for which such quotation exists. The Option
Settlement Amount as described in this paragraph shall be paid to Optionee as of
the Effective Time by the Partnership as soon as reasonably practicable after
the Effective Time.
4. TERMINATION.
This Agreement shall terminate automatically without further action in
the event that the Merger is not consummated by August 31, 1998. Upon such
termination of this
3.
<PAGE>
Agreement, the respective obligations of the parties hereto shall immediately
become void and have no further force and effect.
5. NO RELIANCE.
Optionee acknowledges that neither Homes nor the Partnership has
provided Optionee with advice, warranties or representations regarding any of
the legal or tax effects of this Agreement or the transactions contemplated
hereby. Optionee represents that he has obtained such legal and tax advice with
respect thereto from Optionee's own legal and tax advisors as Optionee has
deemed appropriate.
6. REPRESENTATIONS OF OPTIONEE.
Optionee represents that the above Section 1 accurately sets forth, as
to Optionee, the number of shares of Homes common stock subject to the Option
held by Optionee and the exercise price and expiration date thereof. Optionee
represents that Optionee is the sole legal and beneficial owner, and has good
title to, the Option indicated as owned by Optionee, and that such Option is
owned by Optionee free and clear of liens, security interests, charges or other
encumbrances. Optionee represents that Optionee has the legal right, power,
capacity and authority to execute, deliver and perform this Agreement, and that
this Agreement is the valid and binding obligation of Optionee enforceable in
accordance with its terms, except as the enforcement thereof may be limited by
general principles of equity. Optionee represents that the execution, delivery
and performance of this Agreement will not (a) conflict with or result in the
breach of, or default or actual or potential loss of any benefit under, any
provision of any agreement, instrument or obligation to which the Optionee or
the Optionee's spouse is a party or by which any of Optionee's properties or the
Optionee's spouse's properties are bound, or give any other party to any such
agreement, instrument or obligation a right to terminate or modify any term
thereof; (b) require the consent or approval of any third party; (c) result in
the creation or imposition of any lien, mortgage or encumbrance on the Option or
any other assets of the Optionee or the Optionee's spouse; or (d) violate any
law, rule or regulation to which the Optionee or the Optionee's spouse is
subject.
7. INTEGRATION.
This Agreement 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.
8. HEADINGS.
The descriptive headings of the Sections of this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
4.
<PAGE>
9. NOTICES.
Any notice or communication required or permitted hereunder, shall be
deemed to have been given if in writing and (a) delivered in person, (b)
delivered by confirmed facsimile transmission (c) sent by overnight carrier,
postage prepaid with return receipt requested or (d) mailed by certified or
registered mail, postage prepaid with return receipt requested, addressed as
follows:
If to Homes, addressed to:
C. Brewer Homes, Inc.
Attention: Seth A. Bakes
255-A East Waiko Road
Wailuku, Hawaii 96793
Fax No.: (808) 242-5316
If to the Partnership, addressed to:
Mauna Loa Macadamia Partners, L.P.
Attention: Gregory A. Sprecher
828 Fort Street, Suite 205
Honolulu, Hawaii 96813
Fax No.: (808) 532-4131
If to Optionee, addressed to:
John W.A. Buyers
P.O. Box 1826
Papaiko, Hawaii 96781-1826
Fax No.: (808) 969-8151
or at such other address and to the attention of such other person as a party
may notice to the others in accordance with this Section 8. Any such notice or
communication shall be deemed received on the date delivered personally or
delivered by confirmed facsimile transmission, on the first business day after
it was sent by overnight carrier, postage prepaid with return receipt requested,
or on the fourth business day after it was sent by certified or registered mail,
postage prepaid with return receipt requested.
5.
<PAGE>
10. GOVERNING LAW.
This Agreement and the legal relations between the parties shall be
governed by and construed in accordance with the laws of the State of Hawaii
applicable to contracts between Hawaii parties made and performed in such State.
11. EXPENSES.
Each party hereto shall pay its own costs and expenses, including, but
not limited to, those of its attorneys, in connection with this Agreement and
transactions covered and contemplated hereby.
12. ATTORNEYS' FEES.
In the event either of the parties 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 in whose favor final judgment is entered shall be entitled to have and
recover of and from the losing party 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).
13. NO ASSIGNMENT.
Neither this Agreement nor any rights, duties or obligations hereunder
shall be assignable by Homes, the Partnership, or Optionee, in whole or in part,
except that Homes may assign any of its rights, duties or obligations hereunder
to the Partnership. Any attempted assignment in violation of this prohibition
shall be null and void. Subject to the foregoing, all of the terms and
provisions hereof shall be binding upon, and inure to the benefit of, the
successors of the parties hereto.
14. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other party. Such delivery may be accomplished by and be
effective upon facsimile transmission to the other party, provided an originally
executed copy of this Agreement is subsequently furnished to such party.
6.
<PAGE>
15. JURY WAIVER.
The parties hereto agree to waive trial by jury in any dispute over
this Agreement or related thereto in any manner.
The undersigned agree to the terms of this Agreement and voluntarily
enter into it with the intent to be bound thereby.
C. BREWER HOMES, INC.
Dated: By /s/ Seth A. Bakes
----------------- ----------------------------------------------
Its: President & CEO
------------------------------------------
"Homes"
MAUNA LOA MACADAMIA PARTNERS, L.P.
By Mauna Loa Resources, Inc.
Its General Partner
Dated: April 14, 1998 By Kent T. Lucien
Its: President
---------------------------------------
"Partnership"
Dated: April 14, 1998 /s/ John W. A. Buyers
-------------------------------------------------
JOHN W.A. BUYERS
"Optionee"
7.
<PAGE>
STOCK OPTION REPLACEMENT AGREEMENT
This Agreement ("Agreement") dated this 14 day of April ,
------ --------
1998, is made among C. BREWER HOMES, INC., a Delaware corporation ("Homes"),
MAUNA LOA MACADAMIA PARTNERS, L.P., a Delaware limited partnership
("Partnership"), and DAVID A. HEENAN ("Optionee").
R E C I T A L S:
1. Homes maintains the C. Brewer Homes, Inc. 1993 Stock Option/Stock
Issuance Plan ("Homes Option Plan") under which Optionee has been issued a
certain outstanding option.
2. Pursuant to the Amended and Restated Agreement and Plan of Merger
effective as of December 18, 1997, by and between the Partnership and Homes
("Merger Agreement") which provides for the merger of Homes into the Partnership
("Merger"), no outstanding options under the Homes Option Plan shall be assumed
by the Partnership or otherwise converted into a right to receive any interest
in the Partnership.
3. The parties desire to enter into this Agreement in order to
provide for the cancellation of the Optionee's stock option under the Homes
Option Plan and the replacement of a comparable unit option under the Unit
Option Plan, subject to approval of the Unit Option Plan by the unitholders of
the Partnership and consummation of the Merger.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants herein contained, and for other good and valuable
consideration, the adequacy of which is hereby acknowledged, the parties,
intending to be legally bound, agree and covenant as follows:
1. NONEXERCISE AND CANCELLATION OF OPTION.
The Optionee is currently the holder of a certain unexercised stock
option granted under the Homes Option Plan ("Option") as follows:
<TABLE>
<S> <C> <C>
a. Date of Grant: August 29, 1997
b. Expiration Date: August 28, 2007
<PAGE>
c. Aggregate Number of Shares of Homes
Common Stock Subject to the Option: 5,000
d. Per Share Exercise Price for the Option: $2.4375
e. Aggregate Exercise Price for the Option: $12,187.50
</TABLE>
The Optionee hereby agrees not to exercise the Option prior to the Effective
Time and, pursuant to the terms of the Homes Option Plan and this Agreement, the
Option shall be canceled and shall be null and void as of the Effective Time
("Canceled Stock Option").
2. REPLACEMENT OPTION.
In the manner described hereunder, the Partnership hereby agrees to
grant a replacement unit option ("Replacement Unit Option") under the Unit
Option Plan contingent upon (a) the consummation of the Merger, (b) the approval
of the Unit Option Plan by a majority of the unitholders of the Partnership, and
(c) the Optionee's continued service as a director of Homes until immediately
prior to the Effective Time and Optionee's agreement to serve as a director of
the Partnership's general partner after the Effective Time. Specifically, as a
replacement of the Canceled Stock Option, on an aggregate basis, the Partnership
shall issue to Optionee a Replacement Unit Option to purchase the number of
Class A Units of the Partnership equal to the product of the "Conversion Ratio"
(as defined in the Merger Agreement) multiplied by the aggregate number of
shares of Homes common stock that are subject to the Canceled Stock Option. The
exercise price per unit of the Replacement Unit Option shall be equal to the
exercise price per share of the Canceled Stock Option divided by the Conversion
Ratio. In the event that the grant of the Replacement Unit Option would result
in an option to acquire a fractional Class A Unit, such fractional Class A Unit
shall not be issued, and the aggregate exercise price for the Replacement Unit
Option shall be reduced by the proportionate amount of the aggregate exercise
price attributable to the fractional Class A Unit.
The Replacement Unit Option shall be exercisable in accordance with
the same vesting dates and expiration date as exist under the Canceled Stock
Option, disregarding acceleration of such dates attributable to the Merger.
Thus, the Replacement Unit Option shall have an expiration date of ten years
from the date of grant of the Canceled Stock Option, and shall be exercisable
in 18 equal and successive monthly installments over the Optionee's period of
service as a member of the Board of Directors of Homes or the Managing
Partner or as an employee of Homes or the Partnership, with the first
installment to commence upon the completion of six months of service measured
from the date of grant of the Canceled Stock Option. However, unless as
otherwise provided herein, the benefits, rights, and
<PAGE>
features of the Replacement Unit Option shall be governed by the terms and
conditions of the Unit Option Plan. New unit option agreements granting the
Replacement Unit Option under the Unit Option Plan shall be distributed to the
Optionee as soon as practicable following the Effective Time.
The Replacement Unit Option as determined and granted in accordance
with this Section 2 as of the Effective Time shall be as follows:
<TABLE>
<S> <C> <C>
a. Date of Grant: Effective Time
b. Expiration Date: August 28, 2007
c. Aggregate Number of
Partnership Units Subject to
the Option: 3,333
d. Per Share Exercise Price
for the Option: $3.6563
e. Aggregate Exercise Price
for the Option: $12,186.45
</TABLE>
3. DEEMED CANCELLATION OF OPTION.
If conditions (a) and (c) of the first paragraph of Paragraph 2 are
met, but the Unit Option Plan is not approved by a majority of the unitholders
of the Partnership, then Homes and the Optionee agree that (a) Optionee shall
not exercise the Option, (b) the Option shall become null and void at the
Effective Time, and (c) in settlement of the cancellation of the Option, Homes
shall make a cash or cash equivalent payment ("Option Settlement Amount") to the
Optionee, in an amount, if any, equal to: (a) the aggregate number of shares of
Homes common stock that are subject to the canceled Option, (b) multiplied by
the average of the closing selling price per share of such common stock as
reported on the NASDAQ National Market System for the 20 consecutive trading
days ending on the third trading day immediately prior to the Effective Time,
and (c) less the aggregate option exercise price for the Option. For this
purpose, if the Homes common stock is not traded on an applicable trading date,
the closing price on that date shall be equal to the closing selling price per
share on the last preceding date for which such quotation exists. The Option
Settlement Amount as described in this paragraph shall be paid to Optionee as of
the Effective Time by the Partnership as soon as reasonably practicable after
the Effective Time.
4. TERMINATION.
3.
<PAGE>
This Agreement shall terminate automatically without further action in
the event that the Merger is not consummated by August 31, 1998. Upon such
termination of this Agreement, the respective obligations of the parties hereto
shall immediately become void and have no further force and effect.
5. NO RELIANCE.
Optionee acknowledges that neither Homes nor the Partnership has
provided Optionee with advice, warranties or representations regarding any of
the legal or tax effects of this Agreement or the transactions contemplated
hereby. Optionee represents that he has obtained such legal and tax advice with
respect thereto from Optionee's own legal and tax advisors as Optionee has
deemed appropriate.
6. REPRESENTATIONS OF OPTIONEE.
Optionee represents that the above Section 1 accurately sets forth, as
to Optionee, the number of shares of Homes common stock subject to the Option
held by Optionee and the exercise price and expiration date thereof. Optionee
represents that Optionee is the sole legal and beneficial owner, and has good
title to, the Option indicated as owned by Optionee, and that such Option is
owned by Optionee free and clear of liens, security interests, charges or other
encumbrances. Optionee represents that Optionee has the legal right, power,
capacity and authority to execute, deliver and perform this Agreement, and that
this Agreement is the valid and binding obligation of Optionee enforceable in
accordance with its terms, except as the enforcement thereof may be limited by
general principles of equity. Optionee represents that the execution, delivery
and performance of this Agreement will not (a) conflict with or result in the
breach of, or default or actual or potential loss of any benefit under, any
provision of any agreement, instrument or obligation to which the Optionee or
the Optionee's spouse is a party or by which any of Optionee's properties or the
Optionee's spouse's properties are bound, or give any other party to any such
agreement, instrument or obligation a right to terminate or modify any term
thereof; (b) require the consent or approval of any third party; (c) result in
the creation or imposition of any lien, mortgage or encumbrance on the Option or
any other assets of the Optionee or the Optionee's spouse; or (d) violate any
law, rule or regulation to which the Optionee or the Optionee's spouse is
subject.
4.
<PAGE>
7. INTEGRATION.
This Agreement 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.
8. HEADINGS.
The descriptive headings of the Sections of this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
9. NOTICES.
Any notice or communication required or permitted hereunder, shall be
deemed to have been given if in writing and (a) delivered in person, (b)
delivered by confirmed facsimile transmission (c) sent by overnight carrier,
postage prepaid with return receipt requested or (d) mailed by certified or
registered mail, postage prepaid with return receipt requested, addressed as
follows:
If to Homes, addressed to:
C. Brewer Homes, Inc.
Attention: Seth A. Bakes
255-A East Waiko Road
Wailuku, Hawaii 96793
Fax No.: (808) 242-5316
If to the Partnership, addressed to:
Mauna Loa Macadamia Partners, L.P.
Attention: Gregory A. Sprecher
828 Fort Street, Suite 205
Honolulu, Hawaii 96813
Fax No.: (808) 532-4131
5.
<PAGE>
If to Optionee, addressed to:
David A. Heenan
c/o James Campbell Estate
1001 Kamokila Blvd.
Kapolei, Hawaii 96707
Fax No.: 545-5712
or at such other address and to the attention of such other person as a party
may notice to the others in accordance with this Section 8. Any such notice or
communication shall be deemed received on the date delivered personally or
delivered by confirmed facsimile transmission, on the first business day after
it was sent by overnight carrier, postage prepaid with return receipt requested,
or on the fourth business day after it was sent by certified or registered mail,
postage prepaid with return receipt requested.
10. GOVERNING LAW.
This Agreement and the legal relations between the parties shall be
governed by and construed in accordance with the laws of the State of Hawaii
applicable to contracts between Hawaii parties made and performed in such State.
11. EXPENSES.
Each party hereto shall pay its own costs and expenses, including, but
not limited to, those of its attorneys, in connection with this Agreement and
transactions covered and contemplated hereby.
12. ATTORNEYS' FEES.
In the event either of the parties 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 in whose favor final judgment is entered shall be entitled to have and
recover of and from the losing party 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).
6.
<PAGE>
13. NO ASSIGNMENT.
Neither this Agreement nor any rights, duties or obligations hereunder
shall be assignable by Homes, the Partnership, or Optionee, in whole or in part,
except that Homes may assign any of its rights, duties or obligations hereunder
to the Partnership. Any attempted assignment in violation of this prohibition
shall be null and void. Subject to the foregoing, all of the terms and
provisions hereof shall be binding upon, and inure to the benefit of, the
successors of the parties hereto.
14. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other party. Such delivery may be accomplished by and be
effective upon facsimile transmission to the other party, provided an originally
executed copy of this Agreement is subsequently furnished to such party.
15. JURY WAIVER.
The parties hereto agree to waive trial by jury in any dispute over
this Agreement or related thereto in any manner.
The undersigned agree to the terms of this Agreement and voluntarily
enter into it with the intent to be bound thereby.
C. BREWER HOMES, INC.
Dated: By /s/ Seth A. Bakes
----------------- -------------------------------------------
Its: President & CEO
------------------------------------
"Homes"
7.
<PAGE>
MAUNA LOA MACADAMIA PARTNERS, L.P.
By Mauna Loa Resources, Inc.
Its General Partner
Dated: April 14, 1998 By /s/ Kent T. Lucien
----------------------------------------
Its: President
--------------------------------------
"Partnership"
Dated: April 14, 1998 /s/ David A. Heenan
----------------------------------
DAVID A. HEENAN
"Optionee"
8.
<PAGE>
STOCK OPTION REPLACEMENT AGREEMENT
This Agreement ("Agreement") dated this 14 day of April ,
---- -------
1998, is made among C. BREWER HOMES, INC., a Delaware corporation ("Homes"),
MAUNA LOA MACADAMIA PARTNERS, L.P., a Delaware limited partnership
("Partnership"), and PAUL C.T. LOO ("Optionee").
R E C I T A L S:
1. Homes maintains the C. Brewer Homes, Inc. 1993 Stock Option/Stock
Issuance Plan ("Homes Option Plan") under which Optionee has been issued a
certain outstanding option.
2. Pursuant to the Amended and Restated Agreement and Plan of Merger
effective as of December 18, 1997, by and between the Partnership and Homes
("Merger Agreement") which provides for the merger of Homes into the Partnership
("Merger"), no outstanding options under the Homes Option Plan shall be assumed
by the Partnership or otherwise converted into a right to receive any interest
in the Partnership.
3. The parties desire to enter into this Agreement in order to
provide for the cancellation of the Optionee's stock option under the Homes
Option Plan and the replacement of a comparable unit option under the Unit
Option Plan, subject to approval of the Unit Option Plan by the unitholders of
the Partnership and consummation of the Merger.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants herein contained, and for other good and valuable
consideration, the adequacy of which is hereby acknowledged, the parties,
intending to be legally bound, agree and covenant as follows:
1. NONEXERCISE AND CANCELLATION OF OPTION.
The Optionee is currently the holder of a certain unexercised stock
option granted under the Homes Option Plan ("Option") as follows:
<TABLE>
<S> <C>
a. Date of Grant: January 28, 1997
b. Expiration Date: January 27, 2007
<PAGE>
c. Aggregate Number of
Shares of Homes Common
Stock Subject to the Option: 5,000
d. Per Share Exercise Price
for the Option: $2.0625
e. Aggregate Exercise Price
for the Option: $10,312.50
</TABLE>
The Optionee hereby agrees not to exercise the Option prior to the Effective
Time and, pursuant to the terms of the Homes Option Plan and this Agreement, the
Option shall be canceled and shall be null and void as of the Effective Time
("Canceled Stock Option").
2. REPLACEMENT OPTION.
In the manner described hereunder, the Partnership hereby agrees to
grant a replacement unit option ("Replacement Unit Option") under the Unit
Option Plan contingent upon (a) the consummation of the Merger, (b) the approval
of the Unit Option Plan by a majority of the unitholders of the Partnership, and
(c) the Optionee's continued service as a director of Homes until immediately
prior to the Effective Time and Optionee's agreement to serve as a director of
the Partnership's general partner after the Effective Time. Specifically, as a
replacement of the Canceled Stock Option, on an aggregate basis, the Partnership
shall issue to Optionee a Replacement Unit Option to purchase the number of
Class A Units of the Partnership equal to the product of the "Conversion Ratio"
(as defined in the Merger Agreement) multiplied by the aggregate number of
shares of Homes common stock that are subject to the Canceled Stock Option. The
exercise price per unit of the Replacement Unit Option shall be equal to the
exercise price per share of the Canceled Stock Option divided by the Conversion
Ratio. In the event that the grant of the Replacement Unit Option would result
in an option to acquire a fractional Class A Unit, such fractional Class A Unit
shall not be issued, and the aggregate exercise price for the Replacement Unit
Option shall be reduced by the proportionate amount of the aggregate exercise
price attributable to the fractional Class A Unit.
The Replacement Unit Option shall be exercisable in accordance with
the same vesting dates and expiration date as exist under the Canceled Stock
Option, disregarding acceleration of such dates attributable to the Merger.
Thus, the Replacement Unit Option shall have an expiration date of ten years
from the date of grant of the Canceled Stock Option, and shall be exercisable
in 18 equal and successive monthly installments over the Optionee's period of
service as a member of the Board of Directors of Homes or the Managing
Partner or as an employee of Homes or the Partnership, with the first
installment to commence upon the completion of six months of service measured
from the date of grant of the Canceled Stock Option. However, unless as
otherwise provided herein, the benefits, rights, and
<PAGE>
features of the Replacement Unit Option shall be governed by the terms and
conditions of the Unit Option Plan. New unit option agreements granting the
Replacement Unit Option under the Unit Option Plan shall be distributed to the
Optionee as soon as practicable following the Effective Time.
The Replacement Unit Option as determined and granted in accordance
with this Section 2 as of the Effective Time shall be as follows:
<TABLE>
<S> <C>
a. Date of Grant: Effective Time
b. Expiration Date: January 27, 2007
c. Aggregate Number of
Partnership Units Subject
to the Option: 3,333
d. Per Share Exercise Price for
the Option: $3.0938
e. Aggregate Exercise Price
for the Option: $10,311.64
</TABLE>
3. DEEMED CANCELLATION OF OPTION.
If conditions (a) and (c) of the first paragraph of Paragraph 2 are
met, but the Unit Option Plan is not approved by a majority of the unitholders
of the Partnership, then Homes and the Optionee agree that (a) Optionee shall
not exercise the Option, (b) the Option shall become null and void at the
Effective Time, and (c) in settlement of the cancellation of the Option, Homes
shall make a cash or cash equivalent payment ("Option Settlement Amount") to the
Optionee, in an amount, if any, equal to: (a) the aggregate number of shares of
Homes common stock that are subject to the canceled Option, (b) multiplied by
the average of the closing selling price per share of such common stock as
reported on the NASDAQ National Market System for the 20 consecutive trading
days ending on the third trading day immediately prior to the Effective Time,
and (c) less the aggregate option exercise price for the Option. For this
purpose, if the Homes common stock is not traded on an applicable trading date,
the closing price on that date shall be equal to the closing selling price per
share on the last preceding date for which such quotation exists. The Option
Settlement Amount as described in this paragraph shall be paid to Optionee as of
the Effective Time by the Partnership as soon as reasonably practicable after
the Effective Time.
4. TERMINATION.
3.
<PAGE>
This Agreement shall terminate automatically without further action in
the event that the Merger is not consummated by August 31, 1998. Upon such
termination of this Agreement, the respective obligations of the parties hereto
shall immediately become void and have no further force and effect.
5. NO RELIANCE.
Optionee acknowledges that neither Homes nor the Partnership has
provided Optionee with advice, warranties or representations regarding any of
the legal or tax effects of this Agreement or the transactions contemplated
hereby. Optionee represents that he has obtained such legal and tax advice with
respect thereto from Optionee's own legal and tax advisors as Optionee has
deemed appropriate.
6. REPRESENTATIONS OF OPTIONEE.
Optionee represents that the above Section 1 accurately sets forth, as
to Optionee, the number of shares of Homes common stock subject to the Option
held by Optionee and the exercise price and expiration date thereof. Optionee
represents that Optionee is the sole legal and beneficial owner, and has good
title to, the Option indicated as owned by Optionee, and that such Option is
owned by Optionee free and clear of liens, security interests, charges or other
encumbrances. Optionee represents that Optionee has the legal right, power,
capacity and authority to execute, deliver and perform this Agreement, and that
this Agreement is the valid and binding obligation of Optionee enforceable in
accordance with its terms, except as the enforcement thereof may be limited by
general principles of equity. Optionee represents that the execution, delivery
and performance of this Agreement will not (a) conflict with or result in the
breach of, or default or actual or potential loss of any benefit under, any
provision of any agreement, instrument or obligation to which the Optionee or
the Optionee's spouse is a party or by which any of Optionee's properties or the
Optionee's spouse's properties are bound, or give any other party to any such
agreement, instrument or obligation a right to terminate or modify any term
thereof; (b) require the consent or approval of any third party; (c) result in
the creation or imposition of any lien, mortgage or encumbrance on the Option or
any other assets of the Optionee or the Optionee's spouse; or (d) violate any
law, rule or regulation to which the Optionee or the Optionee's spouse is
subject.
4.
<PAGE>
7. INTEGRATION.
This Agreement 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.
8. HEADINGS.
The descriptive headings of the Sections of this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
9. NOTICES.
Any notice or communication required or permitted hereunder, shall be
deemed to have been given if in writing and (a) delivered in person, (b)
delivered by confirmed facsimile transmission (c) sent by overnight carrier,
postage prepaid with return receipt requested or (d) mailed by certified or
registered mail, postage prepaid with return receipt requested, addressed as
follows:
If to Homes, addressed to:
C. Brewer Homes, Inc.
Attention: Seth A. Bakes
255-A East Waiko Road
Wailuku, Hawaii 96793
Fax No.: (808) 242-5316
If to the Partnership, addressed to:
Mauna Loa Macadamia Partners, L.P.
Attention: Gregory A. Sprecher
828 Fort Street, Suite 205
Honolulu, Hawaii 96813
Fax No.: (808) 532-4131
5.
<PAGE>
If to Optionee, addressed to:
Paul C.T. Loo
1001 Bishop Street, Suite 1600
Honolulu, Hawaii 96813
Fax No.: 525-6901
or at such other address and to the attention of such other person as a party
may notice to the others in accordance with this Section 8. Any such notice or
communication shall be deemed received on the date delivered personally or
delivered by confirmed facsimile transmission, on the first business day after
it was sent by overnight carrier, postage prepaid with return receipt requested,
or on the fourth business day after it was sent by certified or registered mail,
postage prepaid with return receipt requested.
10. GOVERNING LAW.
This Agreement and the legal relations between the parties shall be
governed by and construed in accordance with the laws of the State of Hawaii
applicable to contracts between Hawaii parties made and performed in such State.
11. EXPENSES.
Each party hereto shall pay its own costs and expenses, including, but
not limited to, those of its attorneys, in connection with this Agreement and
transactions covered and contemplated hereby.
12. ATTORNEYS' FEES.
In the event either of the parties 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 in whose favor final judgment is entered shall be entitled to have and
recover of and from the losing party 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).
6.
<PAGE>
13. NO ASSIGNMENT.
Neither this Agreement nor any rights, duties or obligations hereunder
shall be assignable by Homes, the Partnership, or Optionee, in whole or in part,
except that Homes may assign any of its rights, duties or obligations hereunder
to the Partnership. Any attempted assignment in violation of this prohibition
shall be null and void. Subject to the foregoing, all of the terms and
provisions hereof shall be binding upon, and inure to the benefit of, the
successors of the parties hereto.
14. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other party. Such delivery may be accomplished by and be
effective upon facsimile transmission to the other party, provided an originally
executed copy of this Agreement is subsequently furnished to such party.
15. JURY WAIVER.
The parties hereto agree to waive trial by jury in any dispute over
this Agreement or related thereto in any manner.
The undersigned agree to the terms of this Agreement and voluntarily
enter into it with the intent to be bound thereby.
C. BREWER HOMES, INC.
Dated: By /s/ Seth A. Bakes
----------------- --------------------------------
Its: President & CEO
----------------------------
"Homes"
7.
<PAGE>
MAUNA LOA MACADAMIA PARTNERS, L.P.
By Mauna Loa Resources, Inc.
Its General Partner
Dated: April 14, 1998 By /s/ Kent T. Lucien
Its: President
--------------------------------------
"Partnership"
Dated: April 14, 1998 /s/ Paul C.T. Loo
--------------------------------------------
PAUL C.T. LOO
"Optionee"
8.
<PAGE>
STOCK OPTION REPLACEMENT AGREEMENT
This Agreement ("Agreement") dated this 14 day of April, 1998, is
made among C. BREWER HOMES, INC., a Delaware corporation ("Homes"), MAUNA LOA
MACADAMIA PARTNERS, L.P., a Delaware limited partnership ("Partnership"), and
PAUL C.T. LOO ("Optionee").
R E C I T A L S:
1. Homes maintains the C. Brewer Homes, Inc. 1993 Stock Option/Stock
Issuance Plan ("Homes Option Plan") under which Optionee has been issued a
certain outstanding option.
2. Pursuant to the Amended and Restated Agreement and Plan of Merger
effective as of December 18, 1997, by and between the Partnership and Homes
("Merger Agreement") which provides for the merger of Homes into the Partnership
("Merger"), no outstanding options under the Homes Option Plan shall be assumed
by the Partnership or otherwise converted into a right to receive any interest
in the Partnership.
3. The parties desire to enter into this Agreement in order to
provide for the cancellation of the Optionee's stock option under the Homes
Option Plan and the replacement of a comparable unit option under the Unit
Option Plan, subject to approval of the Unit Option Plan by the unitholders of
the Partnership and consummation of the Merger.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants herein contained, and for other good and valuable
consideration, the adequacy of which is hereby acknowledged, the parties,
intending to be legally bound, agree and covenant as follows:
1. NONEXERCISE AND CANCELLATION OF OPTION.
The Optionee is currently the holder of a certain unexercised stock
option granted under the Homes Option Plan ("Option") as follows:
<TABLE>
<S> <C> <C> <C>
a. Date of Grant: August 29, 1997
b. Expiration Date: August 28, 2007
c. Aggregate Number of Shares of Homes Common Stock
Subject to the Option: 5,000
<PAGE>
d. Per Share Exercise Price for the Option: $2.4375
e. Aggregate Exercise Price for the Option: $12,187.50
</TABLE>
The Optionee hereby agrees not to exercise the Option prior to the Effective
Time and, pursuant to the terms of the Homes Option Plan and this Agreement, the
Option shall be canceled and shall be null and void as of the Effective Time
("Canceled Stock Option").
2. REPLACEMENT OPTION.
In the manner described hereunder, the Partnership hereby agrees to
grant a replacement unit option ("Replacement Unit Option") under the Unit
Option Plan contingent upon (a) the consummation of the Merger, (b) the approval
of the Unit Option Plan by a majority of the unitholders of the Partnership, and
(c) the Optionee's continued service as a director of Homes until immediately
prior to the Effective Time and Optionee's agreement to serve as a director of
the Partnership's general partner after the Effective Time. Specifically, as a
replacement of the Canceled Stock Option, on an aggregate basis, the Partnership
shall issue to Optionee a Replacement Unit Option to purchase the number of
Class A Units of the Partnership equal to the product of the "Conversion Ratio"
(as defined in the Merger Agreement) multiplied by the aggregate number of
shares of Homes common stock that are subject to the Canceled Stock Option. The
exercise price per unit of the Replacement Unit Option shall be equal to the
exercise price per share of the Canceled Stock Option divided by the Conversion
Ratio. In the event that the grant of the Replacement Unit Option would result
in an option to acquire a fractional Class A Unit, such fractional Class A Unit
shall not be issued, and the aggregate exercise price for the Replacement Unit
Option shall be reduced by the proportionate amount of the aggregate exercise
price attributable to the fractional Class A Unit.
The Replacement Unit Option shall be exercisable in accordance
with the same vesting dates and expiration date as exist under the Canceled
Stock Option, disregarding acceleration of such dates attributable to the
Merger. Thus, the Replacement Unit Option shall have an expiration date of ten
years from the date of grant of the Canceled Stock Option, and shall be
exercisable in 18 equal and successive monthly installments over the Optionee's
period of service as a member of the Board of Directors of Homes or
the Managing Partner or as an employee of Homes or the Partnership, with the
first installment to commence upon the completion of six months of service
measured from the date of grant of the Canceled Stock Option. However, unless
as otherwise provided herein, the benefits, rights, and features of the
Replacement Unit Option shall be governed by the terms and conditions of the
Unit Option Plan. New unit option agreements granting the Replacement Unit
Option under the
<PAGE>
Unit Option Plan shall be distributed to the Optionee as soon as practicable
following the Effective Time.
The Replacement Unit Option as determined and granted in accordance
with this Section 2 as of the Effective Time shall be as follows:
<TABLE>
<S> <C> <C> <C>
a. Date of Grant: Effective Time
b. Expiration Date: August 28, 2007
c. Aggregate Number of
Partnership Units Subject to the Option: 3,333
d. Per Share Exercise Price for the Option: $3.6563
e. Aggregate Exercise Price for the Option: $12,186.45
</TABLE>
3. DEEMED CANCELLATION OF OPTION.
If conditions (a) and (c) of the first paragraph of Paragraph 2 are
met, but the Unit Option Plan is not approved by a majority of the unitholders
of the Partnership, then Homes and the Optionee agree that (a) Optionee shall
not exercise the Option, (b) the Option shall become null and void at the
Effective Time, and (c) in settlement of the cancellation of the Option, Homes
shall make a cash or cash equivalent payment ("Option Settlement Amount") to the
Optionee, in an amount, if any, equal to: (a) the aggregate number of shares of
Homes common stock that are subject to the canceled Option, (b) multiplied by
the average of the closing selling price per share of such common stock as
reported on the NASDAQ National Market System for the 20 consecutive trading
days ending on the third trading day immediately prior to the Effective Time,
and (c) less the aggregate option exercise price for the Option. For this
purpose, if the Homes common stock is not traded on an applicable trading date,
the closing price on that date shall be equal to the closing selling price per
share on the last preceding date for which such quotation exists. The Option
Settlement Amount as described in this paragraph shall be paid to Optionee as of
the Effective Time by the Partnership as soon as reasonably practicable after
the Effective Time.
4. TERMINATION.
This Agreement shall terminate automatically without further action in
the event that the Merger is not consummated by August 31, 1998. Upon such
termination of this
3.
<PAGE>
Agreement, the respective obligations of the parties hereto shall immediately
become void and have no further force and effect.
5. NO RELIANCE.
Optionee acknowledges that neither Homes nor the Partnership has
provided Optionee with advice, warranties or representations regarding any of
the legal or tax effects of this Agreement or the transactions contemplated
hereby. Optionee represents that he has obtained such legal and tax advice with
respect thereto from Optionee's own legal and tax advisors as Optionee has
deemed appropriate.
6. REPRESENTATIONS OF OPTIONEE.
Optionee represents that the above Section 1 accurately sets forth, as
to Optionee, the number of shares of Homes common stock subject to the Option
held by Optionee and the exercise price and expiration date thereof. Optionee
represents that Optionee is the sole legal and beneficial owner, and has good
title to, the Option indicated as owned by Optionee, and that such Option is
owned by Optionee free and clear of liens, security interests, charges or other
encumbrances. Optionee represents that Optionee has the legal right, power,
capacity and authority to execute, deliver and perform this Agreement, and that
this Agreement is the valid and binding obligation of Optionee enforceable in
accordance with its terms, except as the enforcement thereof may be limited by
general principles of equity. Optionee represents that the execution, delivery
and performance of this Agreement will not (a) conflict with or result in the
breach of, or default or actual or potential loss of any benefit under, any
provision of any agreement, instrument or obligation to which the Optionee or
the Optionee's spouse is a party or by which any of Optionee's properties or the
Optionee's spouse's properties are bound, or give any other party to any such
agreement, instrument or obligation a right to terminate or modify any term
thereof; (b) require the consent or approval of any third party; (c) result in
the creation or imposition of any lien, mortgage or encumbrance on the Option or
any other assets of the Optionee or the Optionee's spouse; or (d) violate any
law, rule or regulation to which the Optionee or the Optionee's spouse is
subject.
7. INTEGRATION.
This Agreement 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.
8. HEADINGS.
4.
<PAGE>
The descriptive headings of the Sections of this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
9. NOTICES.
Any notice or communication required or permitted hereunder, shall be
deemed to have been given if in writing and (a) delivered in person, (b)
delivered by confirmed facsimile transmission (c) sent by overnight carrier,
postage prepaid with return receipt requested or (d) mailed by certified or
registered mail, postage prepaid with return receipt requested, addressed as
follows:
If to Homes, addressed to:
C. Brewer Homes, Inc.
Attention: Seth A. Bakes
255-A East Waiko Road
Wailuku, Hawaii 96793
Fax No.: (808) 242-5316
If to the Partnership, addressed to:
Mauna Loa Macadamia Partners, L.P.
Attention: Gregory A. Sprecher
828 Fort Street, Suite 205
Honolulu, Hawaii 96813
Fax No.: (808) 532-4131
5.
<PAGE>
If to Optionee, addressed to:
Paul C.T. Loo
1001 Bishop Street, Suite 1600
Honolulu, HI 96813
Fax No.: 525-6901
or at such other address and to the attention of such other person as a party
may notice to the others in accordance with this Section 8. Any such notice or
communication shall be deemed received on the date delivered personally or
delivered by confirmed facsimile transmission, on the first business day after
it was sent by overnight carrier, postage prepaid with return receipt requested,
or on the fourth business day after it was sent by certified or registered mail,
postage prepaid with return receipt requested.
10. GOVERNING LAW.
This Agreement and the legal relations between the parties shall be
governed by and construed in accordance with the laws of the State of Hawaii
applicable to contracts between Hawaii parties made and performed in such State.
11. EXPENSES.
Each party hereto shall pay its own costs and expenses, including, but
not limited to, those of its attorneys, in connection with this Agreement and
transactions covered and contemplated hereby.
12. ATTORNEYS' FEES.
In the event either of the parties 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 in whose favor final judgment is entered shall be entitled to have and
recover of and from the losing party 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).
6.
<PAGE>
13. NO ASSIGNMENT.
Neither this Agreement nor any rights, duties or obligations hereunder
shall be assignable by Homes, the Partnership, or Optionee, in whole or in part,
except that Homes may assign any of its rights, duties or obligations hereunder
to the Partnership. Any attempted assignment in violation of this prohibition
shall be null and void. Subject to the foregoing, all of the terms and
provisions hereof shall be binding upon, and inure to the benefit of, the
successors of the parties hereto.
14. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other party. Such delivery may be accomplished by and be
effective upon facsimile transmission to the other party, provided an originally
executed copy of this Agreement is subsequently furnished to such party.
15. JURY WAIVER.
The parties hereto agree to waive trial by jury in any dispute over
this Agreement or related thereto in any manner.
The undersigned agree to the terms of this Agreement and voluntarily
enter into it with the intent to be bound thereby.
C. BREWER HOMES, INC.
Dated: By /s/ Seth A. Bakes
---------------- ----------------------------------------------
Its: President & CEO
---------------------------------------
"Homes"
7.
<PAGE>
MAUNA LOA MACADAMIA PARTNERS, L.P.
By Mauna Loa Resources, Inc.
Its General Partner
Dated: April 14, 1998 By Kent T. Lucien
Its: President
---------------------------------------
"Partnership"
Dated: April 14, 1998 /s/ Paul C.T. Loo
------------------------------------------------------
PAUL C.T. LOO
"Optionee"
8.
<PAGE>
STOCK OPTION REPLACEMENT AGREEMENT
This Agreement ("Agreement") dated this 14 day of April, 1998, is
made among C. BREWER HOMES, INC., a Delaware corporation ("Homes"), MAUNA LOA
MACADAMIA PARTNERS, L.P., a Delaware limited partnership ("Partnership"), and
KENT T. LUCIEN ("Optionee").
R E C I T A L S:
1. Homes maintains the C. Brewer Homes, Inc. 1993 Stock Option/Stock
Issuance Plan ("Homes Option Plan") under which Optionee has been issued a
certain outstanding option.
2. Pursuant to the Amended and Restated Agreement and Plan of Merger
effective as of December 18, 1997, by and between the Partnership and Homes
("Merger Agreement") which provides for the merger of Homes into the Partnership
("Merger"), no outstanding options under the Homes Option Plan shall be assumed
by the Partnership or otherwise converted into a right to receive any interest
in the Partnership.
3. In accordance with the Merger Agreement, the parties desire to
enter into this Agreement in order to provide for the cancellation of the
Optionee's stock option under the Homes Option Plan and the replacement of a
comparable unit option under the Unit Option Plan.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants herein contained, and for other good and valuable
consideration, the adequacy of which is hereby acknowledged, the parties,
intending to be legally bound, agree and covenant as follows:
1. NONEXERCISE AND CANCELLATION OF OPTION.
The Optionee is currently the holder of a certain unexercised stock
option granted under the Homes Option Plan ("Option") as follows:
<TABLE>
<S> <C> <C> <C>
a. Date of Grant: August 29, 1997
b. Expiration Date: August 28, 2007
c. Aggregate Number of Shares of Homes
<PAGE>
Common Stock Subject to the Option: 5,000
d. Per Share Exercise Price for the Option: $2.4375
e. Aggregate Exercise Price for the Option: $12,187.50
</TABLE>
The Optionee hereby agrees not to exercise the Option prior to the Effective
Time and, pursuant to the terms of the Homes Option Plan and the Merger
Agreement, the Option shall be canceled and shall be null and void as of the
Effective Time ("Canceled Stock Option").
2. REPLACEMENT OPTION.
In the manner described hereunder, the Partnership hereby agrees to
grant a replacement unit option ("Replacement Unit Option") under the Unit
Option Plan contingent upon (a) the consummation of the Merger, (b) the approval
of the Unit Option Plan by a majority of the unitholders of the Partnership, and
(c) the Optionee's continued service as a director of Homes until immediately
prior to the Effective Time and Optionee's agreement to serve as a director of
the Partnership's general partner after the Effective Time. Specifically, as a
replacement of the Canceled Stock Option, on an aggregate basis, the Partnership
shall issue to Optionee a Replacement Unit Option to purchase the number of
Class A Units of the Partnership equal to the product of the "Conversion Ratio"
(as defined in the Merger Agreement) multiplied by the aggregate number of
shares of Homes common stock that are subject to the Canceled Stock Option. The
exercise price per unit of the Replacement Unit Option shall be equal to the
exercise price per share of the Canceled Stock Option divided by the Conversion
Ratio. In the event that the grant of the Replacement Unit Option would result
in an option to acquire a fractional Class A Unit, such fractional Class A Unit
shall not be issued, and the aggregate exercise price for the Replacement Unit
Option shall be reduced by the proportionate amount of the aggregate exercise
price attributable to the fractional Class A Unit.
The Replacement Unit Option shall be exercisable in accordance with
the same vesting dates and expiration date as exist under the Canceled Stock
Option, disregarding acceleration of such dates attributable to the Merger.
Thus, the Replacement Unit Option shall have an expiration date of ten years
from the date of grant of the Canceled Stock Option, and shall be exercisable in
18 equal and successive monthly installments over the Optionee's period of
service as a member of the Board of Directors of Homes or the Managing Partner
or as an employee of Homes or the Partnership, with the first installment to
commence upon the completion of six months of service measured from the date
of grant of the Canceled Stock Option. However, unless as otherwise
provided herein, the benefits, rights, and features of the Replacement
Unit Option shall be governed by the terms and conditions of the Unit
Option Plan. New unit option agreements granting the Replacement Unit
Option under the
<PAGE>
Unit Option Plan shall be distributed to the Optionee as soon as practicable
following the Effective Time.
The Replacement Unit Option as determined and granted in accordance
with this Section 2 as of the Effective Time shall be as follows:
<TABLE>
<S> <C> <C> <C>
a. Date of Grant: Effective Time
b. Expiration Date: August 28, 2007
c. Aggregate Number of
Partnership Units Subject to the Option: 3,333
d. Per Share Exercise Price for the Option: $3.6563
e. Aggregate Exercise Price for the Option: $12,186.45
</TABLE>
3. DEEMED CANCELLATION OF OPTION.
If conditions (a) and (c) of the first paragraph of Paragraph 2 are
met, but the Unit Option Plan is not approved by a majority of the unitholders
of the Partnership, then Homes and the Optionee agree that (a) Optionee shall
not exercise the Option, (b) the Option shall become null and void at the
Effective Time, and (c) in settlement of the cancellation of the Option, Homes
shall make a cash or cash equivalent payment ("Option Settlement Amount") to the
Optionee, in an amount, if any, equal to: (a) the aggregate number of shares of
Homes common stock that are subject to the canceled Option, (b) multiplied by
the average of the closing selling price per share of such common stock as
reported on the NASDAQ National Market System for the 20 consecutive trading
days ending on the third trading day immediately prior to the Effective Time,
and (c) less the aggregate option exercise price for the Option. For this
purpose, if the Homes common stock is not traded on an applicable trading date,
the closing price on that date shall be equal to the closing selling price per
share on the last preceding date for which such quotation exists. The Option
Settlement Amount as described in this paragraph shall be paid to Optionee as of
the Effective Time by the Partnership as soon as reasonably practicable after
the Effective Time.
4. TERMINATION.
This Agreement shall terminate automatically without further action in
the event that the Merger is not consummated by August 31, 1998. Upon such
termination of this
3.
<PAGE>
Agreement, the respective obligations of the parties hereto shall immediately
become void and have no further force and effect.
5. NO RELIANCE.
Optionee acknowledges that neither Homes nor the Partnership has
provided Optionee with advice, warranties or representations regarding any of
the legal or tax effects of this Agreement or the transactions contemplated
hereby. Optionee represents that he has obtained such legal and tax advice with
respect thereto from Optionee's own legal and tax advisors as Optionee has
deemed appropriate.
6. REPRESENTATIONS OF OPTIONEE.
Optionee represents that the above Section 1 accurately sets forth, as
to Optionee, the number of shares of Homes common stock subject to the Option
held by Optionee and the exercise price and expiration date thereof. Optionee
represents that Optionee is the sole legal and beneficial owner, and has good
title to, the Option indicated as owned by Optionee, and that such Option is
owned by Optionee free and clear of liens, security interests, charges or other
encumbrances. Optionee represents that Optionee has the legal right, power,
capacity and authority to execute, deliver and perform this Agreement, and that
this Agreement is the valid and binding obligation of Optionee enforceable in
accordance with its terms, except as the enforcement thereof may be limited by
general principles of equity. Optionee represents that the execution, delivery
and performance of this Agreement will not (a) conflict with or result in the
breach of, or default or actual or potential loss of any benefit under, any
provision of any agreement, instrument or obligation to which the Optionee or
the Optionee's spouse is a party or by which any of Optionee's properties or the
Optionee's spouse's properties are bound, or give any other party to any such
agreement, instrument or obligation a right to terminate or modify any term
thereof; (b) require the consent or approval of any third party; (c) result in
the creation or imposition of any lien, mortgage or encumbrance on the Option or
any other assets of the Optionee or the Optionee's spouse; or (d) violate any
law, rule or regulation to which the Optionee or the Optionee's spouse is
subject.
7. INTEGRATION.
This Agreement 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.
8. HEADINGS.
4.
<PAGE>
The descriptive headings of the Sections of this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
9. NOTICES.
Any notice or communication required or permitted hereunder, shall be
deemed to have been given if in writing and (a) delivered in person, (b)
delivered by confirmed facsimile transmission (c) sent by overnight carrier,
postage prepaid with return receipt requested or (d) mailed by certified or
registered mail, postage prepaid with return receipt requested, addressed as
follows:
If to Homes, addressed to:
C. Brewer Homes, Inc.
Attention: Seth A. Bakes
255-A East Waiko Road
Wailuku, Hawaii 96793
Fax No.: (808) 242-5316
If to the Partnership, addressed to:
Mauna Loa Macadamia Partners, L.P.
Attention: Gregory A. Sprecher
828 Fort Street, Suite 205
Honolulu, Hawaii 96813
Fax No.: (808) 532-4131
If to Optionee, addressed to:
Kent T. Lucien
Wainaku Executive Center
26-238 Hawaii Belt Road
Hilo, Hawaii 96720
Fax No.: (808) 969-8151
or at such other address and to the attention of such other person as a party
may notice to the others in accordance with this Section 8. Any such notice or
communication shall be deemed received on the date delivered personally or
delivered by confirmed facsimile transmission, on
5.
<PAGE>
the first business day after it was sent by overnight carrier, postage prepaid
with return receipt requested, or on the fourth business day after it was sent
by certified or registered mail, postage prepaid with return receipt requested.
10. GOVERNING LAW.
This Agreement and the legal relations between the parties shall be
governed by and construed in accordance with the laws of the State of Hawaii
applicable to contracts between Hawaii parties made and performed in such State.
11. EXPENSES.
Each party hereto shall pay its own costs and expenses, including, but
not limited to, those of its attorneys, in connection with this Agreement and
transactions covered and contemplated hereby.
12. ATTORNEYS' FEES.
In the event either of the parties 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 in whose favor final judgment is entered shall be entitled to have and
recover of and from the losing party 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).
13. NO ASSIGNMENT.
Neither this Agreement nor any rights, duties or obligations hereunder
shall be assignable by Homes, the Partnership, or Optionee, in whole or in part,
except that Homes may assign any of its rights, duties or obligations hereunder
to the Partnership. Any attempted assignment in violation of this prohibition
shall be null and void. Subject to the foregoing, all of the terms and
provisions hereof shall be binding upon, and inure to the benefit of, the
successors of the parties hereto.
6.
<PAGE>
14. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other party. Such delivery may be accomplished by and be
effective upon facsimile transmission to the other party, provided an originally
executed copy of this Agreement is subsequently furnished to such party.
15. JURY WAIVER.
The parties hereto agree to waive trial by jury in any dispute over
this Agreement or related thereto in any manner.
The undersigned agree to the terms of this Agreement and voluntarily
enter into it with the intent to be bound thereby.
C. BREWER HOMES, INC.
Dated: By /s/ Seth A. Bakes
----------------- ---------------------------------------------
Its: President & CEO
--------------------------------------
"Homes"
MAUNA LOA MACADAMIA PARTNERS, L.P.
By Mauna Loa Resources, Inc.
Its General Partner
Dated: April 14, 1998 By /s/ Kent T. Lucien
---------------------------------------------
Its: President
---------------------------------------
"Partnership"
Dated: April 14, 1998 /s/ Kent T. Lucien
-------------------------------------------------
KENT T. LUCIEN
"Optionee"
7.
<PAGE>
Effective December 1, 1997, Ka'u Agribusiness Co., Inc. (Ka'u), C. Brewer Homes,
Inc. (CBHI) and Eben Dale (Dale) agree that Dale, an employee of CBHI, will
continue to be an employee of CBHI, provide corporate secretary services for
CBHI and provide land management and legal services to Ka'u.
Dale shall divide his time 15% for CBHI and 85% for Ka'u. The fee to be paid by
Ka'u to CBHI shall be 85% of Dale's compensation (salary plus other benefits
provided to him by CBHI). Dale's salary and benefits shall not change, except
for the car allowance which is increased from $350 per month to $600 per month
effective December 1, 1997. Dale's reimbursable expenses shall be paid by the
party for which they were incurred. Dale will notify CBHI and Ka'u if the
division of time differs from the 15%-85% provided herein.
All matters of CBHI and Ka'u which Dale has or gains knowledge shall be kept
confidential. CBHI and Ka'u agree that because of the unique nature of this
contract there shall be no duty of disclosure by Dale to either CBHI or Ka'u.
This contract shall terminate on the earliest to occur of 1) November 30, 1998
2) thirty (30) days written notice of termination by any of the parties 3) the
merger of CBHI into Mauna Loa Macadamia Partners, L.P.
CBHI and Dale make no representations or warranties as to the services provided.
This contract supersedes all previous communications, understandings and
agreements by and among CBHI, Ka'u and Dale pertaining to the performance of
services by Dale.
In Witness Whereof, the parties have executed this agreement as of December 1,
1997.
/s/ W. K. Tallett /s/ Seth A. Bakes
- ----------------------------- ------------------------------
W. K. TALLETT--KA'U SETH A. BAKES--CBHI
/s/ Eben Dale
- -----------------------------
EBEN DALE
<PAGE>
April 8, 1998
Mr. Edward T. Foley
444 Lunalilo Home Road
Honolulu, Hawaii 96825
Dear Mr. Foley:
This will confirm the following amendments to the Release and Separation
Agreement, dated August 13, 1997, and the Consultant Agreement (Exhibit "A-1"
attached to the Release and Separation Agreement), between yourself and C.
Brewer Homes.
I. AMENDMENT TO RELEASE AND SEPARATION AGREEMENT
Paragraph 1 of the Release and Separation Agreement shall be amended to
read as follows, and with the exception of this amendment, the Release and
Settlement Agreement remains unchanged:
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 later than June 30, 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; 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 Oahu and CBHI headquarters on Maui. You shall
be reimbursed for parking expenses on Oahu up to an amount of $150.00 per
month for the months of April 1998, May 1998, and June 1998, should you
remain in employment during those months. 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 standard Company benefits. Notwithstanding the
foregoing, however, in connection with the merger of C. Brewer Homes, Inc.
and Mauna Loa Macadamia Partners, L.P., you will agree to cancel such stock
options and receive a cash settlement for each unexercised in-the-money
option immediately prior to the date of the consummation of the merger in
accord with the Stock Cancellation and Replacement Agreement.
<PAGE>
Mr. Edward T. Foley
April 8, 1998
Page 2
In addition, should the merger of C. Brewer Homes, Inc. and Mauna Loa
Macadamia Partners, L.P. be completed by September 30, 1998, 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 $22,500.00 on the date of your separation from employment, if
such date occurs before June 30, 1998, or a lump sum payment of $33,750.00
if the date of your separation from employment is June 30, 1998.
II. AMENDMENT TO THE CONSULTANT AGREEMENT
Exhibit B-1 of the Consultant Agreement shall be amended to read as
follows, and with the exception of this amendment, the Consultant Agreement
remains unchanged:
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 ten (10) 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.
Please review the above and indicate your acceptance of these amendments by
signing as indicated below. Thank you for your attention to this matter.
C. Brewer Homes, Inc.
By /s/ Seth A. Bakes
-------------------------------------
SETH A. BAKES
President and Chief Executive Officer
AGREED AND ACCEPTED:
/s/ Edward T. Foley
- ---------------------------------------------
EDWARD T. FOLEY
Executive Vice President Chief Financial Officer
Date: April 8, 1998
