Exhibit No. 10.1

 

 

AMENDED AND RESTATED

 

AGREEMENT

 

AS TO LOT 4A, INCREMENT 2

 

By and Among

 

KAUPULEHU DEVELOPMENTS,

 

a Hawaii general partnership,

 

WB KD ACQUISITION, LLC,

 

a Delaware limited liability company,

 

and

 

WB KD ACQUISITION II, LLC,

 

a Delaware limited liability company,

 

May 27, 2009

 

 

TABLE OF CONTENTS

 

 

 

 

 

Page

 

 

 

 

 

 

 

 

 

 

ARTICLE 1

THE PROPERTY

3

 

 

 

 

 

1.1

Increment 2

3

 

 

 

1.2

Step In Rights

3

 

 

 

1.3

Intentionally Omitted

3

 

 

 

1.4

Appurtenant and Other Interests

3

 

 

 

1.5

Further Assurances

3

 

 

 

ARTICLE 2

PURCHASE PRICE; PAYMENTS; MEMBERSHIPS

3

 

 

 

2.1

Purchase Price for KD’s Retained Rights

3

 

 

 

2.2

Intentionally Omitted

3

 

 

 

2.3

Payment of Purchase Price

3

 

 

 

 

 

(a)

Closing Payment

3

 

 

 

 

 

(b)

Percentage Payments

4

 

 

 

 

 

 

 

(i)

Sales of Improved Lots

4

 

 

 

 

 

 

 

(ii)

Sales of Unimproved Areas or Lots

4

 

 

 

 

 

 

 

(iii)

Vertical Construction

4

 

 

 

 

 

 

 

(iv)

Intentionally Omitted

4

 

 

 

 

 

 

 

(v)

Payment Procedure

4

 

 

 

 

 

 

 

(vi)

Release

5

 

 

 

 

 

 

 

(vii)

Bona Fide Sales

5

 

 

 

 

 

 

(c)

Reimbursement

5

 

 

 

 

 

(d)

Intentionally Omitted

6

 

 

 

 

 

(e)

Distribution Payments

6

 

 

 

 

 

(f)

Additional Distributions

6

 

 

 

 

 

(g)

Reports

6

 

 

 

 

 

(h)

No Payments for Non-Residential Areas in Increment 2 or Otherwise

6

 

 

 

 

 

2.4

Beach Club

6

 

 

 

2.5

Club Memberships

7

 

 

 

2.6

Kona Village Room Nights

7

 

 

 

 

 

ARTICLE 3

INTENTIONALLY OMITTED

7

 

-i-

 

TABLE OF CONTENTS

(continued)

 

 

 

Page

 

 

 

 

 

 

ARTICLE 4

INTENTIONALLY OMITTED

7

 

 

 

 

ARTICLE 5

 

CLOSING

7

 

 

 

 

5.1

Closing

7

 

 

 

5.2

Amended and Restated Side Letter Agreement

7

 

 

 

 

ARTICLE 6

 

REPRESENTATIONS, WARRANTIES AND COVENANTS OF KD

8

 

 

 

 

6.1

Organization, Powers, Qualification and Authority

8

 

 

 

6.2

No Conflicts

8

 

 

 

6.3

Title to Property

8

 

 

 

6.4

Compliance with Other Instruments

9

 

 

 

6.5

Litigation, etc.

9

 

 

 

6.6

Foreign or Nonresident Person

9

 

 

 

6.7

Accurate Information

9

 

 

 

6.8

No Further Negotiation

9

 

 

 

6.9

Prior Notice

9

 

 

 

 

ARTICLE 7

REPRESENTATIONS, WARRANTIES AND COVENANTS OF WBKD

9

 

 

 

 

7.1

Organization, Powers, Qualification and Authority

10

 

 

 

7.2

WBKD’s Due Diligence

10

 

 

 

 

ARTICLE 8

INTENTIONALLY OMITTED

10

 

 

 

ARTICLE 9

INTENTIONALLY OMITTED

10

 

 

 

ARTICLE 10

LOT 4C

10

 

 

 

 

10.1

Right of Negotiation

10

 

 

 

10.2

Water Rights

10

 

 

 

10.3

Other Rights

11

 

 

 

 

ARTICLE 11

KD’S RETAINED RIGHTS AND DUTIES WITH RESPECT TO THE PROPERTY POST-CLOSING

11

 

 

 

 

11.1

Prior Agreement Provisions Which Survived Closing and Survive this Agreement

11

 

 

 

11.2

KD to Provide Planning Assistance

11

 

 

 

11.3

KD to Retain Interest in the Property

12

 

 

 

11.4

KD’s Right to Review Changes in Concept Plan

12

 

 

TABLE OF CONTENTS

(continued)

 

 

 

Page

 

 

 

 

 

 

11.5

KD’s Rights under the Step-In Agreement

13

 

 

 

11.6

KD’s Retained Rights

13

 

 

 

 

ARTICLE 12

INTENTIONALLY OMITTED

13

 

 

 

ARTICLE 13

MISCELLANEOUS

13

 

 

 

 

13.1

Notices

13

 

 

 

13.2

Brokers and Finders

14

 

 

 

13.3

Successors and Assigns

14

 

 

 

13.4

Amendments

15

 

 

 

13.5

Interpretation

15

 

 

 

13.6

Governing Law

15

 

 

 

13.7

Attorneys’ Fees

15

 

 

 

13.8

Article 12 of Increment 1 Purchase Agreement; Prior Agreement

16

 

 

 

13.9

Specific Performance

16

 

 

 

13.10

Relationship

16

 

 

 

13.11

Authority

16

 

 

 

13.12

Counterparts

16

 

 

 

13.13

Time of the Essence

16

 

 

 

13.14

Approval or Consent

16

 

 

 

13.15

Good Faith Negotiations

17

 

 

 

13.16

Cooperation

17

 

 

 

13.17

Partial Invalidity

17

 

 

 

13.18

Further Acts

17

 

 

 

13.19

Confidentiality

17

 

 

 

 

ARTICLE 14

DEFINITIONS

17

 

 

Exhibit(s)

Exhibit A:

Concept Plan

Exhibit B:

Estimated Area Values

Exhibit C:

Pro Forma

Exhibit D:

Form of Amended and Restated Side Letter Agreement

 

 

AMENDED AND RESTATED AGREEMENT

 

AS TO LOT 4A, INCREMENT 2

 

THIS AMENDED AND RESTATED AGREEMENT AS TO LOT 4A, INCREMENT 2 (this “Agreement”)
is made and entered as of May 27, 2009, by and among KAUPULEHU DEVELOPMENTS, a
Hawaii general partnership (“KD”), WB KD ACQUISITION, LLC, a Delaware limited
liability company (“WBKD 1”) and WB KD ACQUISITION II, LLC, a Delaware limited
liability company (“WBKD 2”).

 

R E C I T A L S:

 

A.                                 Capitalized terms used herein shall have the
meanings set forth in the text or in Article 14 of this Agreement.

 

B.                                  WBKD 1 purchased KD’s leasehold interest in
Lot 4A on terms and conditions set forth in that certain Purchase and Sale
Agreement dated as of February 13, 2004 (the “Increment 1 Purchase Agreement”).

 

C.                                 At the closing under the Increment 1 Purchase
Agreement, KD surrendered its leasehold interest in Lot 4A to KS, and KS issued
a new lease of Lot 4A (KS Lease No. 29,032) to WBKD 1 (“Lot 4A Lease”).

 

D.                                 The Increment 1 Purchase Agreement provided
that (1) WBKD 1 would subdivide Lot 4A into two development increments,
Increment 1 and Increment 2, and (2) WBKD 1 would proceed with the development
of Increment 1, with KD and WBKD 1 agreeing to negotiate further with regards to
the sale of KD’s interest in, and subsequent development of, Increment 2; the
development of both Increments 1 and 2 to be in accordance with a June 9, 2003
project concept plan attached as Exhibit C to the Increment 1 Purchase
Agreement, which plan has subsequently been amended from time to time in
accordance with the terms of the Increment 1 Purchase Agreement.  WBKD 1 has
assigned its rights under the Increment 1 Purchase Agreement with respect to the
development and sale of Increment 2 to its affiliate, WBKD 2.

 

E.                                   WBKD 1 has completed the subdivision of Lot
4A into (i) Lots 1-38, 43, 45, 48 and 49 as shown on File Plan 2393; and
(ii) Lots 1 to 47 and Road Lots R-1 and R-2 as shown on File Plan 2438.

 

F.                                   The concept plan has been updated by WBKD 1
in the form attached hereto as Exhibit A, the concept plan as updated being
referred to below as the “Concept Plan”.  Increment 1 includes 80 single family
residential lots, the Beach Club (Phase I), the Interpretive Center, coastal
planning areas and roadway lots, all as shown on the Concept Plan.  Increment 2
means and includes all of Lot 4A not included in Increment 1 including, without
limitation, (i) the areas shown on the Concept Plan as Areas F, H, K, L, M, N, O
and P; upon

 

1

 

which WBKD 2 may construct commercial and single-family units and multi-family
units that will comprise the residential subdivisions and mixed use developments
to be developed on Increment 2, (ii) the area designated as “Golf Course and
Landscaping” on the Concept Plan, upon which WBKD 2 may construct a golf course
and golf clubhouse, and (iii) common areas consisting of roads, sidewalks,
utility areas and other areas appurtenant to Increment 2.

 

G.                                 On June 2, 2006, the parties hereto entered
into that certain Agreement as to Lot 4A, Increment 2 (the “Prior Agreement”),
which Prior Agreement set forth the terms and conditions upon which KD agreed to
sell and convey its residual rights in Increment 2 to WBKD 2, including, without
limitation, certain of its rights as to Increment 2 under that certain Agreement
re Step In Rights of Kaupulehu Developments Under Lot 4A Lease dated as of
February 13, 2004 by and among KS, KD, WBKD 1 and Farallon Enclave, LLC (the
“Step In Agreement”).

 

H.                                 KS and WBKD 1 have executed a partial
cancellation and surrender of the Lot 4A Lease with respect to Increment 2 and
KS has issued a new lease with respect to Increment 2 to WBKD 2 (“Increment 2
Lease”).

 

I.                                       WBKD 2 intends to further subdivide the
residential areas shown on the Concept Plan within Increment 2 (referred to
herein as “Residential Areas” or simply “Areas”) into smaller single-family
residential lots and/or to construct condominium units or fractional/interval
ownership units or projects within such Residential Areas.  Such condominium
units or interests in fractional/interval ownership units are herein below
sometimes referred to as “Residential Units” or simply “Units”.  Those
Residential Areas or Residential Units remaining unsold from time to time during
the term of this Agreement are herein below referred to as the “Remaining
Residential Areas” and the “Remaining Residential Units” respectively.

 

J.                                      The approximate area of each Residential
Area within Increment 2 is shown on the Concept Plan.  All residential
components within Increment 2 (i.e., all single-family lots, multi-family units
and fractional/interval ownerships) will be sold in fee simple.  The
non-residential components (e.g., Golf Course and Club House) will remain in
leasehold with KS, all pursuant to the terms of the Increment 2 Lease, except
that the roadways and common areas may be conveyed to WBKD 2 and/or the
community association(s) in fee simple.

 

K.                                KD and WBKD intend and agree that the parties’
respective rights, duties and obligations with respect to Increment 2 under the
Increment 1 Purchase Agreement shall be replaced and superseded in their
entirety by the terms of this Agreement, including, without limitation, the
provisions of Article 12 thereof.

 

L.                                   KD and WBKD intend and agree to amend,
update and restate the Prior Agreement in its entirety to read as set forth
below.

 

A G R E E M E N T:

 

2

 

NOW, THEREFORE, IN CONSIDERATION of the foregoing and the mutual agreements
herein set forth, and other valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, KD and WBKD agree as follows:

 

ARTICLE 1
THE PROPERTY

 

On the Closing Date, KD assigned, sold and conveyed to WBKD 2 and WBKD 2
purchased and accepted from KD, subject to the terms and conditions set forth
herein, the following:

 

1.1                            Increment 2.  Any and all right, title and
interest retained by KD with respect to Increment 2 under Article 12 of the
Increment 1 Purchase Agreement.

 

1.2                            Step In Rights.  Except as set forth in
Section 11.5, any and all right, title and interest of KD with respect to
Increment 2 under the Step In Agreement, the Lot 4A Lease and/or any other
related documents.

 

1.3                            Intentionally Omitted.

 

1.4                            Appurtenant and Other Interests.  Any and all of
KD’s rights, title, interest, privileges and appurtenances in any way related to
Lot 4A which have any use in connection with the acquisition, ownership,
leasing, management, development, improvement, or operation of Increment 2.

 

All of the items described in this Section 1 above are hereinafter collectively
referred to as the “Property.”

 

1.5                            Further Assurances.  At WBKD 2’s reasonable
request from time to time, KD shall execute and deliver any documents or
instruments and take any other steps necessary, in each case, to more fully
effectuate the transfer and conveyance to WBKD 2 of any and all Property
described or referenced above and as may be reasonably requested in connection
with the transfer of the Property to the Increment 2 Lease, including, without
limitation, documents similar to those executed and delivered in connection with
the Lot 4A Lease.

 

ARTICLE 2
PURCHASE PRICE; PAYMENTS; MEMBERSHIPS

 

2.1                            Purchase Price for KD’s Retained Rights.  Upon
the execution and delivery of the Prior Agreement, WBKD 2 paid KD the amount of
TEN MILLION and NO/100 DOLLARS ($10,000,000.00) (the “Closing Payment”).  The
Closing Payment, plus all payments and fees paid and to be paid by WBKD 2
pursuant to Section 2.3 below, are referred to herein as the “Purchase Price”.

 

2.2                            Intentionally Omitted.

 

2.3                            Payment of Purchase Price.

 

3

 

(a)                               Closing Payment.  WBKD 2 has previously paid
KD the Closing Payment in full as required by this Section.

 

(b)                              Percentage Payments.  WBKD 2 will make payments
(the “Percentage Payments”) to KD from any and all Gross Proceeds from the
initial sales of Lots from Increment 2, as follows:

 

(i)                                   Sales of Improved Lots.  From the sale of
Improved Lots, KD will receive a Percentage Payment equal to 8% of the Gross
Proceeds from the sale by WBKD 2 of each Lot;

 

(ii)                                Sales of Unimproved Areas or Lots.  From the
sale of any unimproved Area or Lot prior to the time the vertical improvements
constituting the Units have been constructed thereon, other than a sale under
Section 2.3(b)(i) above or Section 2.3(b)(iii) below, KD, in its sole
discretion, may elect to receive either:  (A) 8% of the Gross Proceeds from the
sale by WBKD 2 of the Lot or Area, or (B) 8% of the Gross Proceeds from the sale
of Units constructed on the Area or Lot to the ultimate user.  KD shall give
written notice of its election to WBKD 2 not later than ten (10) days after KD’s
receipt of the notice of sale and other materials which WBKD 2 is required to
provide to KD under Section 2.3(b)(v) below, which election shall be irrevocable
upon delivery of such written notice to WBKD 2.

 

(iii)                             Vertical Construction.  In the event WBKD 2
elects to construct vertical improvements on a Lot, KD will receive a Percentage
Payment equal to 8% of the estimated value of such Lot (without improvements
thereon) as set forth in WBKD 2’s current budget, which Percentage Payment shall
be paid to KD prior to the commencement of construction; provided, however, that
if such estimated value is less than eighty percent (80%) of the estimated value
as of the date hereof (as set forth on Exhibit B attached hereto), then KD will
have the right to elect to instead receive a Percentage Payment equal to 8% of
the Gross Proceeds from the sale of Units constructed on the Area or Lot to the
ultimate user.  KD shall give written notice of its election to WBKD 2 not later
than ten (10) days after KD’s receipt of the notice of construction from WBKD 2,
which election shall be irrevocable upon delivery of such written notice to WBKD
2.  WBKD 2 shall have the right to amend, from time to time, the estimated value
of any Lot or Area as shown on Exhibit B to reflect the then prevailing market
conditions, provided that any amendment which results in a value that is less
than eighty percent (80%) of the estimated value shown on Exhibit B as of the
date hereof shall require the consent of KD, which consent shall not be
unreasonably withheld, delayed or conditioned.

 

(iv)                            Intentionally Omitted.

 

(v)                               Payment Procedure.  With respect to sales
described in Section 2.3(b)(i), WBKD 2 shall use commercially reasonable efforts
to provide KD written notice of each sale not less than five (5) business days
prior to its closing and shall instruct the escrow for each such sale to pay the
Percentage Payment directly to KD at closing.  With respect to sales described
in Section 2.3(b)(ii), WBKD 2 shall use commercially reasonable efforts to
provide KD written notice of each sale not less than five (5) business days
after the execution of the sale agreement and shall, where applicable, instruct
the escrow for each such sale to pay the

 

4

 

Percentage Payment directly to KD at closing.  WBKD 2’s notice of sale shall
include a copy of the sale agreement between WBKD 2 and the purchaser together
with such additional information concerning the Units to be constructed and sold
by the purchaser on the Lot or Area as may be reasonably requested by KD.  If
WBKD 2 provides purchase money financing to the purchaser of an Area or Lot,
then WBKD 2 may either, at WBKD 2’s option, (1) pay all of the applicable
Percentage Payment at closing of the sale, or (2) pay to KD the Percentage
Payment with respect to the cash portion of the purchase price received by WBKD
2 from the purchaser of an Area or Lot at the closing and pay to KD the
Percentage Payment with respect to the sales price financed and the interest
thereon paid by the purchaser within 10 days after WBKD 2’s receipt of payment
from the purchaser.  For example, assume that WBKD 2 sells an Area or Lot for
the price of $5,000,000.00 by providing $2,000,000.00 in purchase money
financing to the purchaser payable pursuant to the terms of a promissory note,
and that one year after the sale closes receives payment of $1,000,000.00 plus
$180,000.00 in interest pursuant to the promissory note.  In such case, (i) upon
the initial closing, WBKD 2 shall pay to KD the Percentage Payment based on the
$3,000,000.00 received by WBKD 2 at closing, (ii) within 10 days after receiving
the $1,180,000.00 payment of principal and interest, WBKD 2 shall make the
Percentage Payment applicable to the $1,180,000.00, and (iii) within 10 days
after receiving subsequent payments under the promissory note, the applicable
Percentage Payment shall be made to KD.  WBKD 2 shall promptly provide KD with
copies of any note, mortgage or other document used by WBKD 2 to finance the
purchase of any Area or Lot, and any amendments thereto.  WBKD 2 shall also
provide KD with copies of the monthly loan statements issued to each
purchaser/mortgagor financed by WBKD 2 or with a separate statement containing
the same or substantially the same information with respect to each loan.

 

(vi)                            Release.  KD shall provide an executed partial
release in recordable form releasing all of its interest in a particular Lot or
Area or portion thereof within five (5) business days of WBKD 2’s request
therefor.  To avoid any situation where the closing of a sale cannot occur due
to KD’s untimely execution of the partial release mentioned above, and within
five (5) business days of WBKD 2’s written request therefor, KD shall execute
and deposit with the escrow designated by WBKD 2 partial releases with respect
to any sale of a Lot or Area or portion thereof which WBKD 2 anticipates closing
within sixty (60) days of the request, together with instructions authorizing
escrow to release such Lot or Area or portion thereof from KD’s interest at
closing, conditioned on payment to KD at closing of the applicable Percentage
Payment from such sale.

 

(vii)                         Bona Fide Sales.  All sales of Units to ultimate
users and all other sales of Areas, Lots or Units with respect to which KD is
entitled to receive any Percentage Payment, shall be for a fair market value and
be bona fide sales negotiated in good faith at arm’s length.  In addition, each
sale shall divest WBKD 2 of all direct or indirect right, title and interest in
the Area or Lot sold and shall be at a fixed price which (x) includes all
consideration paid or to be paid by the purchaser for the Area or Lot, including
any consideration paid or to be paid for the infrastructure which supports the
Area or Lot, but excluding any consideration paid or to be paid for memberships
in the Beach Club, Golf Club or other amenity club or facilities situated on
Increment 1 or 2, and (y) is not contingent on the amount of any profit, price
or proceeds to be received with respect to the subsequent sale of Units within
the Area or Lot.

 

5

 

(c)                               Reimbursement.  If WBKD 2 makes any Percentage
Payment to KD with respect to any sale of an Area or Lot which is subsequently
rescinded or modified, and if WBKD 2 refunds all or part of the Gross Proceeds
from the sale of the Area or Lot on which the Percentage Payment to KD was based
to the purchaser of the Area or Lot, then KD will promptly repay such Percentage
Payment, or portion thereof allocable to the Gross Proceeds returned to the
purchaser, to WBKD 2.

 

(d)                              Intentionally Omitted.

 

(e)                               Distribution Payments.  If and when the
members in WBKD 2, taken as a whole, have received cash dividends or other cash
distributions from WBKD 2 in their respective capacities as members of WBKD 2
(collectively, “Distributions”) equal to 100% of their capital contributions, KD
shall then be entitled to receive payments (collectively, “Distribution
Payments”) equal to fifty percent (50%) of all subsequent Distributions, as and
when, and to the extent any such Distributions are made (the amount and timing
of all Distributions to be in the sole and absolute discretion of WBKD 2), until
the aggregate amount of such Distribution Payments paid to KD equals EIGHT
MILLION and NO/100 DOLLARS ($8,000,000.00).  Notwithstanding the foregoing, in
the event additional cash capital contributions are made by members of WBKD 2,
payment of the Distribution Payments shall cease until the members of WBKD 2,
taken as a whole, have received Distributions equal to 100% of such additional
capital contributions.

 

(f)                                  Additional Distributions.  Commencing on
the date on which (i) the members of WBKD 2 have received aggregate
Distributions in amount equal to (A) 100% of their capital contributions
(including any additional capital contributions) plus (B) aggregate
Distributions (not including the Distributions described in clause (A)) in an
amount of not less than THIRTY MILLION and NO/100 DOLLARS ($30,000,000.00), and
(ii) KD has received Distribution Payments equal to not less than EIGHT MILLION
and NO/100 DOLLARS ($8,000,000.00), all Percentage Payments thereafter payable
by WBKD 2 to KD pursuant to Section 2.3(b) above shall be increased from 8% to
10% of Gross Proceeds.

 

(g)                               Reports.  WBKD 2 shall provide to KD copies of
such financial reports as are provided to KS under the Increment 2 Lease.  WBKD
2 shall certify to KD on a semi-annual basis the aggregate amount of all capital
contributions to WBKD 2 and all Distributions to members.  Dividends or other
distributions from WBKD 2 to its members shall count as “Distributions” so long
as the dividend payments or distributions are made to such members in their
capacity as members of WBKD 2 and irrespective of how such payments are
classified for tax or accounting purposes.  WBKD 2 shall also provide to KD,
prior to or contemporaneously with WBKD 2’s filing with the County of Hawaii of
any plan approval or subdivision applications as to portions of Increment 2,
copies of such applications together with the then-current project plans and
proforma project financial information and projections (which shall be
substantially in the form attached as set forth in Exhibit C).

 

(h)                               No Payments for Non-Residential Areas in
Increment 2 or Otherwise.  Except as set forth above, no other payments shall be
due to KD in connection with the Property.

 

6

 

2.4                            Beach Club.  WBKD 2 agrees to grant to the retail
purchasers of each Residential Unit to be developed on Increment 2, but subject
to the membership rules, rates and regulations then in effect, as they may be
amended from time to time, the same or substantially the same rights granted to
the purchasers from WBKD 1 of Residential Units in Increment 1 to join and use
the facilities of the Lot 4A Beach Club, the rights to be granted either through
memberships or by use rights through a community or homeowners association.

 

2.5                            Club Memberships.  If WBKD 2 issues club
memberships in the Beach Club and/or Golf Club, WBKD 2 shall grant KD or its
nominees five (5) non-transferable and non-assignable club memberships in the
Beach Club and/or Golf Club, all of which shall be “founder” memberships (if
available).  The “founder” memberships shall have substantially the same rights
and obligations as the other “founder” memberships in the Beach Club and/or Golf
Club and shall remain in effect until such time as the designated user
relinquishes such memberships or until the later of twenty (20) years from the
commencement date of each membership grant or the designated user’s death,
subject to the rights of KS in the event of the termination of the Increment 2
Lease or the ground lease for the Beach Club.  Each of the memberships shall
otherwise be on substantially the same terms and conditions as set forth in that
certain Ancillary Benefits Agreement dated on or about February 13, 2004 by and
between KD and WBKD 1.

 

2.6                            Kona Village Room Nights.  Commencing on the
effective date of the Increment 2 Lease and continuing for a period of seven
(7) years thereafter, not counting, however, any period of time during which
Kona Village is closed for renovations making room nights unavailable, WBKD 2
shall, within fifteen (15) business days after request from KD, pay to KD an
amount equal to best available kama’aina or other rate at Kona Village less TWO
HUNDRED and NO/100 DOLLARS ($200.00) against the cost of room nights at Kona
Village, for up to a total of twenty (20) room nights at Kona Village per year
in the aggregate (to the extent rooms are available).  Such room nights shall be
non-assignable other than to directors, officers, employees, affiliates and
consultants of KD or KD’s partners.  Payments shall be made by WBKD 2 only as
such room nights are actually used.  WBKD 2 shall have the option to make such
payments directly to the owner of Kona Village to be credited against such room
nights.  There shall be no carry over of any unused credits from year to year.

 

ARTICLE 3
INTENTIONALLY OMITTED

 

ARTICLE 4
INTENTIONALLY OMITTED

 

7

 

ARTICLE 5
CLOSING

 

5.1     Closing.  “Closing” under the Prior Agreement occurred on June 2, 2006
(“Closing Date”).

 

5.2     Amended and Restated Side Letter Agreement.  Concurrent with the
execution of this Agreement, and as a condition to the effectiveness hereof, the
applicable parties hereto shall execute and deliver (or cause to be executed and
delivered) to each of the other parties hereto the Amended and Restated Side
Letter Agreement in the form attached hereto as Exhibit D.

 

ARTICLE 6
REPRESENTATIONS, WARRANTIES AND COVENANTS OF KD

 

As an inducement to WBKD to enter into this Agreement and consummate the
transaction contemplated hereby, KD hereby represents and warrants to and agrees
with WBKD as follows:

 

6.1     Organization, Powers, Qualification and Authority.  KD is a Hawaii
general partnership, duly organized, validly existing, and in good standing
under the laws of the State of Hawaii, has all requisite partnership power and
authority to own its properties and assets and carry on its business as now
conducted; and has all requisite power and authority to enter into and perform
and carry out this Agreement.  The sole general partners of KD are Barnwell
Hawaiian Properties, Inc., a Delaware corporation, and Cambridge Hawaii Limited
Partnership, a Hawaii limited partnership, the sole general partner of which is
Barnwell Kona Corporation, a Hawaii corporation.  This Agreement has been duly
approved by the boards of directors of Barnwell Hawaiian Properties, Inc. and
Barnwell Kona Corporation.  No consent of the limited partners of Cambridge
Hawaii Limited Partnership is required to enter into this Agreement, or, if
required, it has been obtained.  Neither the execution nor the delivery of this
Agreement, nor the compliance with and fulfillment of the terms and provisions
hereof: (a) will result in the breach of any term or provision of, or constitute
a default under or conflict with, the general partnership agreement of KD, as
the same may have been amended from time to time, or any agreement or instrument
to which KD is a party or by which it is bound, or (b) is prohibited by or
requires any notification, consent, authorization, approval or registration
under any law, rule or regulation, or any judgment, order, writ, injunction, or
decree which is binding upon KD or the terms of any contract to which KD is a
party or bound, or may give rise to the cancellation of any contract to which KD
is a party or bound.

 

6.2     No Conflicts.  Neither the execution and delivery of this Agreement nor
the performance by KD of its obligations hereunder will conflict with or result
in a breach of (i) any of KD’s organizational documents or (ii) result in a
conflict with, breach or violation of, or default (or event that with the giving
of notice or passage of time or both would constitute a default) under, require
any consent or approval which has not been obtained with respect to, any
agreement or other instrument or obligation by which KD, KD’s general partners
or the Property is bound, or (iii) result in the imposition of a lien upon the
Property.

 

8

 

6.3     Title to Property.  KD has all requisite power and authority to own and
hold the Property.  No mortgage, pledge, lien, encumbrance, charge or security
interest encumbers the Property, except for any lien or encumbrance created or
caused by WBKD 1 on the lessee’s interest under the Lot 4A Lease including,
without limitation, any mortgage held by Farallon Enclave, LLC, and KD has not
previously transferred or assigned the Property or any interest therein.  Except
for KS and Farallon Enclave, LLC, the interests of which KD has previously
disclosed to WBKD, and the claims of record of Kaupulehu Makai Venture and Kona
Village Associates, which claims have previously been disclosed by KD to WBKD,
no other party owns, holds or claims any interest in the Property, other than
KD.

 

6.4     Compliance with Other Instruments.  KD is not in violation of or in
default with respect to any material term or provision of (i) its general
partnership agreement; (ii) any indenture, contract, agreement or instrument to
which it may be a party or by which it may be bound; (iii) any judgment, order,
writ, injunction or decree of any court or of any federal, state, territorial,
municipal or other commission, board or other administrative or governmental
agency or authority, or (iv) to the best of its knowledge, any federal, state,
municipal or other governmental statute, rule, or regulation applicable to it or
by which it may be bound, which involves directly or indirectly the Property.

 

6.5     Litigation, etc.  KD is not a party to or affected by any pending, and
has no notice or knowledge of any threatened, action, suit, proceeding, or
investigation, at law or in equity or otherwise, in, before or by any court or
any governmental board, commission, agency, department or officer, which
involves directly or indirectly the Property.

 

6.6     Foreign or Nonresident Person.  KD is not a “foreign person”, as that
term is used in Section 1445(b)(2) of the Internal Revenue Code of 1986, as
amended, or a “nonresident person”, as that term is used in Section 235-68,
Hawaii Revised Statutes, as amended, and the related regulations.

 

6.7     Accurate Information.  To the best of KD’s knowledge, all statements
made herein are true and correct, do not and will not contain any statement
which, at the time and in the light of the circumstances under which it is made,
is false or misleading with respect to any material fact, or omits to state any
material fact necessary in order to make any such statement not false or
misleading in any material respect.

 

6.8     No Further Negotiation.  KD hereby covenants to WBKD that KD shall not,
directly or indirectly, solicit, encourage or participate in any discussions or
negotiations with, or provide any non-public information to, any person, entity
or group with any potential competing offer to acquire any of the Property
unless and until KS affirmatively terminates WBKD’s rights with respect to
Increment 2 under the Lot 4A Lease or the Increment 2 Lease because of WBKD’s
election not to further perform, or WBKD’s default in performing, its
obligations under such lease.

 

6.9     Prior Notice.  KD agrees that this Agreement satisfies any right of KD
to prior notice or consent to the assignment by WBKD 1 of its right, title and
interest in, to and under the Increment 1 Purchase Agreement, the Lot 4A Lease
and/or Increment 2 to WBKD 2.

 

9

 

 

The representations and warranties set forth in this Article 6 shall survive for
a period of two (2) years following the date hereof.

 

ARTICLE 7
REPRESENTATIONS, WARRANTIES AND COVENANTS OF WBKD

 

As an inducement to KD to enter into this Agreement and consummate the
transaction contemplated hereby, WBKD hereby represents and warrants to and
agrees with KD as follows:

 

7.1                            Organization, Powers, Qualification and
Authority.  Each of WBKD 1 and WBKD 2 is a Delaware limited liability company,
duly organized, validly existing, and in good standing under the laws of the
State of Delaware; has all requisite corporate power and authority to own its
properties and assets and carry on its business as now conducted; and has all
requisite power and authority to enter into and perform and carry out this
Agreement.  This Agreement has been duly approved by the members of WBKD 1 and
WBKD 2.  Neither the execution nor the delivery of this Agreement, nor the
compliance with and fulfillment of the terms and provisions hereof: (a) will
result in the breach of any term or provision of, or constitute a default under
or conflict with, the Certificate of Formation of WBKD 1 or WBKD 2, as the same
may have been amended from time to time, or any agreement or instrument to which
WBKD 1 or WBKD 2 is party or by which it is bound (excluding any agreement or
instrument to which WBKD 1 and Farallon Enclave, LLC are parties), or (b) is
prohibited by or requires any notification, consent, authorization, approval or
registration under any law, rule or regulation, or any judgment, order, writ,
injunction, or decree which is binding upon WBKD 1 or WBKD 2 or the terms of any
contract to which WBKD 1 or WBKD 2 is party or bound, or may give rise to the
cancellation of any contract to which WBKD 1 or WBKD 2 is party or bound (in
each case, excluding any agreement or instrument to which WBKD 1 and Farallon
Enclave, LLC are parties).

 

7.2                            WBKD’s Due Diligence.  Prior to the Closing, WBKD
independently investigated all issues with respect to the Property which WBKD
deemed necessary or desirable to determine the suitability of the Property for
development in its intended use.

 

The representations and warranties set forth in this Article 7 shall survive for
a period of two (2) years following the Closing.

 

ARTICLE 8
INTENTIONALLY OMITTED

 

ARTICLE 9
INTENTIONALLY OMITTED

 

ARTICLE 10
LOT 4C

 

10.1                    Right of Negotiation.  WBKD shall have the exclusive
right to negotiate with KD with respect to Lot 4C (as defined in the Increment 1
Purchase Agreement) for a period of six (6) years from the date hereof;
provided, however, that such exclusive right to negotiate shall

 

10

 

terminate if WBKD, within four (4) years from the date of this Agreement, has
not completed any and all environmental assessments and surveys reasonably
required to support a petition to the State Land Use Commission for
reclassification of Lot 4C.

 

10.2                    Water Rights.  WBKD shall have the right to drill such
wells on Lot 4C as it deems reasonably necessary to provide non-potable water
for the benefit of Lot 4A (including, without limitation, Increment 1 and
Increment 2), subject, however, to KD’s approval of the design and location of
such non-potable water system, which approval will not be unreasonably withheld,
conditioned or delayed.  WBKD shall have the right to render non-potable water
obtained from Lot 4C potable (whether through desalination or otherwise),
subject, however, to KD’s approval of the design, location and other matters
relating to the extraction and delivery of the water, which approval will not be
unreasonably withheld, conditioned or delayed.  WBKD shall be responsible for
obtaining all approvals for such processing, including a conditional use permit
from the State of Hawaii; provided, however, that to the extent that any
approvals from KS are required, KD shall use commercially reasonable efforts to
assist WBKD to obtain such approvals from KS.  At such time as WBKD completes
the development of Increments 1 and 2 and the sale of all Units, Lots and Area
in each such increment, WBKD shall reassign to KD, for use on Lot 4C or
otherwise, all of its right, title and interest in and to the Water Rights to
the extent such rights include water that is in excess of (a) the amounts then
committed by WBKD to any portion of Increment 1 and Increment 2 and (b) the
amounts reasonably needed by WBKD to develop and operate Increments 1 and 2
substantially in accordance with the Concept Plan.

 

10.3                    Other Rights.  So long as Lease 12,260 between KS and KD
(which now covers Lot 4C), the Lot 4A Lease and the Increment 2 Lease have not
been terminated, WBKD shall have the right to use a portion of Lot 4C not to
exceed ten (10) acres in such location as mutually agreed upon between WBKD and
KD, subject to any required third party approvals including, without limitation,
any permits or approvals (including from KS, if applicable) required because Lot
4C is classified as “conservation” land, in connection with the development and
maintenance of Lot 4A, including as a staging area (including parking) and for
related storage.  Upon the request of, and to the extent reasonably required by,
WBKD, KD shall] cooperate with WBKD in securing all third party approvals
required for use of Lot 4C for such purposes; provided, however, that WBKD shall
pay any third party costs and expenses incurred by KD in connection therewith.

 

ARTICLE 11
KD’S RETAINED RIGHTS AND DUTIES WITH
RESPECT TO THE PROPERTY POST-CLOSING

 

11.1                    Prior Agreement Provisions Which Survived Closing and
Survive this Agreement.  The terms of Article 1 (The Property), Sections 2.1,
2.3, 2.4 and 2.6 of Article 2 (Purchase Price; Payments; Memberships; Memorandum
of Agreement), Article 10 (Lot 4C), Article 11 (KD’s Retained Rights and Duties
With Respect to the Property Post-Closing), Article 13 (Miscellaneous) and
Article 14 (Definitions), of the Prior Agreement survived the Closing and this
Agreement and remain in full force and effect as of the date hereof (unless the
context clearly indicates otherwise).  Any claim for breach of any
representations and warranties given by KD and WBKD in Article 6 and Article 7
must be brought within two (2) years following the date hereof.

 

11

 

11.2                    KD to Provide Planning Assistance.  For a period of four
(4) years from the date of this Agreement, KD shall continue to provide the
following assistance to WBKD without charge:

 

(a)                               Upon the request of and to the extent
reasonably required by WBKD, KD shall consult with WBKD regarding any aspect of
the entitlement, planning and development, financing, construction and operation
of the Property, the precise scope of the assistance to be determined in each
instance by WBKD, including, without limitation, negotiations with KS for the
leasing and development of Increment 2; and

 

(b)                              Upon the request of and to the extent
reasonably required by WBKD, KD shall assist WBKD in presentations before public
agencies at both public and private meetings which relate to or affect the
Property, and in dealings with governmental entities, the press, community
leaders, developers of adjacent property, the Kaupulehu Development Monitoring
Committee, and other parties directly or indirectly involved with the Property
or with any interest which may affect the success of the Property.

 

KD shall be reimbursed for reasonable out-of-pocket expenses for any travel or
other expenses incurred in connection with providing assistance, provided that
the same are approved in advance by WBKD in WBKD’s sole and absolute
discretion.  Whether or not WBKD requests any planning assistance from KD, WBKD
shall keep KD informed on a current basis of significant developments relating
to the entitlement, planning, development, financing, construction, and
operation of the Property.

 

KD agrees to indemnify and hold WBKD and its managers, members, officers,
directors, shareholders, partners, employees, agents and affiliates (each an
“Indemnified Party”) harmless from and against any and all costs, expenses,
reasonable attorneys’ fees, suits, liabilities, damages, or claim for damages,
to the extent attributable to the willful misconduct (including, without
limitation, fraud and bad faith) of KD, its agents or employees arising from or
in any way connected to the performance by KD of its obligations under this
Section 11.2.  If any action or proceeding is brought against WBKD with respect
to which indemnity may be sought under this paragraph, KD, upon written notice
from the Indemnified Party, shall assume the investigation and defense thereof,
including the employment of counsel (which shall be reasonably satisfactory to
the Indemnified Party) and payment of all expenses.  The Indemnified Party shall
have the right to employ separate counsel in any such action or proceeding and
to participate in the defense thereof, but KD shall not be required to pay the
fees and expenses of such separate counsel unless such separate counsel is
employed with the written approval and consent of the KD, which shall not be
withheld or refused if the counsel selected by KD has a disqualifying conflict
of interest.  The indemnity in this paragraph shall survive the expiration or
termination of this Agreement.

 

12

 

11.3                    KD to Retain Interest in the Property.  WBKD 2 shall
hold title to each Remaining Residential Area and each Remaining Residential
Unit in Increment 2 subject to the KD’s Retained Rights (as defined below) at
all times from and after the Closing Date, and continuing for each Remaining
Residential Area or Remaining Residential Unit, until WBKD 2 has sold the Area
or Lot and paid KD the applicable Percentage Payment.

 

11.4                    KD’s Right to Review Changes in Concept Plan.  It is
recognized that WBKD 2 will revise and refine the Concept Plan from time to time
as WBKD 2’s planning process progresses.  KD shall have the right to review and
consult with WBKD 2 concerning any substantial changes in the Concept Plan,
including, for example, substantial changes in the location, area, use or Unit
type or count of any Remaining Residential Area designated thereon. 
Notwithstanding the foregoing, KD shall not have any approval rights over any
changes to the Concept Plan.

 

11.5                    KD’s Rights under the Step-In Agreement.  KD’s Retained
Rights with respect to the Property shall include only the rights defined in
Sections 11.3 and 11.4 above and KD’s rights to receive Percentage Payments
pursuant to the Increment 1 Purchase Agreement and not any other rights granted
it under the Step In Agreement.  Notwithstanding anything to the contrary
herein, in the Increment 1 Purchase Agreement, the Lot 4A Lease, the Step In
Agreement, the Increment 2 Lease, or any other document to which KD and WBKD are
a party, and except for the rights described in Sections 11.3 and 11.4 above and
KD’s rights to receive Percentage Payments pursuant to the Increment 1 Purchase
Agreement, in no event shall KD have any right to step in and assume WBKD’s
right, title and interest under the KS Agreements (whether under the Increment 1
Purchase Agreement, the Lot 4A Lease, the Increment 2 Lease, the Step In
Agreement or otherwise), and KD’s Retained Rights under the Step In Agreement
are hereby terminated in full.

 

11.6                    KD’s Retained Rights.  The rights, remedies and
ownership interests retained by KD under Sections 11.3 and 11.4 of this
Agreement, which include KD’s rights to be paid Percentage Payments under
Section 2.3(b) of this Agreement, and KD’s rights to receive Percentage Payments
pursuant to the Increment 1 Purchase Agreement are referred to herein
collectively as KD’s “Retained Rights”.

 

ARTICLE 12
INTENTIONALLY OMITTED

 

ARTICLE 13
MISCELLANEOUS

 

13.1                    Notices.  Any notice required or permitted to be given
under this Agreement shall be in writing and personally delivered or sent by
United States mail, registered or certified mail, postage prepaid, return
receipt requested, or sent by Federal Express or similar nationally recognized
overnight courier service, and addressed as follows, and shall be deemed to have
been given upon the date of delivery (or refusal to accept delivery) at the
address specified below as indicated on the return receipt or air bill:

 

13

 

If to KD:

Alexander C. Kinzler, President

 

Barnwell Hawaiian Properties, Inc.

 

Kaupulehu Developments

 

1100 Alakea Street, Suite 2900

 

Honolulu, HI 96813

 

Facsimile: (808) 531-7181

 

 

with a copy to:

John Jubinsky, Esq.

 

235 Queen Street, 7th Floor

 

Honolulu, HI 96813

 

Facsimile: (808) 533-5840

 

 

If to WBKD:

c/o Westbrook Real Estate Partners L.L.C.

 

13155 Noel Road/LB 54, Suite 700

 

Dallas, TX 75240

 

Attn: Patrick K. Fox, Esq.

 

Facsimile: (972) 934-8333

 

 

with copies to:

Westbrook Real Estate Partners L.L.C.

 

One Bush Street, Suite 1450

 

San Francisco, CA 94104

 

Attn: Mr. Aric Shalev

 

Facsimile: (415) 438-7921

 

 

and:

Discovery Land Company

 

301 North Canon Drive, Suite 328

 

Beverly Hills, CA 90210

 

Attn: Mr. Michael Meldman

 

Facsimile: (310) 859-0705

 

 

with a copy to:

Gibson, Dunn & Crutcher LLP

 

333 South Grand Avenue

 

Los Angeles, CA 90071

 

Attn: Jesse Sharf, Esq.

 

Facsimile: (213) 229-7520

 

or such other address as either party may from time to time specify in writing
to the other in the manner aforesaid.

 

13.2                    Brokers and Finders.  WBKD and KD each hereby represents
and warrants that no broker was involved in this Agreement or the transactions
contemplated hereby.  In the event of a claim for a broker’s fee, finder’s fee,
commission or other similar compensation in connection herewith, (i) WBKD, if
such claim is based upon any agreement alleged to have been made by WBKD, hereby
agrees to indemnify, defend, protect and hold KD harmless against any and all
liability, loss, cost, damage or expense (including reasonable attorneys’ and
paralegals’ fees and costs) which KD may sustain or incur by reason of such
claim and (ii) KD, if such claim is based upon any agreement alleged to have
been made by KD, hereby agrees to indemnify, defend, protect and hold WBKD
harmless against any and all liability, loss, cost, damage or expense (including
reasonable attorneys’ and paralegals’ fees and costs) which WBKD may sustain or
incur by reason of such claim.  The provisions of this Section 13.2 shall
survive the Closing.

 

14

 

13.3                    Successors and Assigns.

 

(a)                               Except as specifically stated otherwise in
this Agreement, this Agreement shall be binding upon, and inure to the benefit
of, the parties hereto and their respective successors and assigns, except that
neither KD nor WBKD may assign its interest under this Agreement or otherwise
encumber or transfer the same whether voluntarily, involuntarily, by operation
of law or otherwise, without the prior reasonable written consent of the other. 
KD may reasonably withhold its consent to any assignee of WBKD’s interest in the
Increment 2 Lease proposed by WBKD whose qualifications, experience,
capabilities, track record and financial strength are not reasonably comparable
to those possessed by WBKD.  Notwithstanding the above, WBKD may assign this
Agreement (and the Increment 2 Lease) to any assignee described in Section 4.24
of the Increment 2 Lease with not less than fifteen (15) days prior written
notice to KD and to any other assignee, with the consent of KD, not to be
unreasonably withheld, provided such assignee satisfies or is deemed to satisfy
the “Qualifications”, as such term is defined in said Section 4.24, in KD’s
reasonable determination, provided, further, that such prior written notice or
consent shall not be required in connection with an assignment to (i) any
leasehold mortgagee in connection with an exercise of its remedies as mortgagee,
(ii) an affiliate of WBKD or (iii) to a joint venture between (A) an affiliate
of WBKD 2’s sole member and (B) Discovery Land Company or an affiliate of
Discovery Land Company.  WBKD shall not be required to pay any premium,
additional rent or other consideration in connection with obtaining any consent
required of KD hereunder.  Notwithstanding anything to the contrary in this
Agreement, KD’s consent to any assignment by WBKD or its successors and assigns
of any Beach Club or Restricted Parcel lease shall not be required.  Any
assignment of this Agreement (and the Increment 2 Lease) by WBKD 2 shall be
expressly conditioned on the assumption by the assignee of WBKD 2’s obligations
to make Percentage Payments to KD in accordance with the terms of
Section 2.3(b).

 

13.4                    Amendments.  This Agreement may be amended or modified
only by a written instrument executed by the party asserted to be bound
thereby.  If this Agreement or any of WBKD’s rights hereunder are assigned or
otherwise made available in whole or in part to a person or entity (an
“Assignee”) as permitted by Section 13.3, KD agrees to amend this Agreement to
make such changes hereto as may be requested by such Assignee in good faith,
provided that such changes shall not affect the Purchase Price or other economic
aspects of the transaction contemplated hereby.

 

13.5                    Interpretation.  Whenever used herein, the term
“including” shall be deemed to be followed by the words “without limitation.” 
Words used in the singular number shall include the plural, and vice-versa, and
any gender shall be deemed to include each other gender.  The captions and
headings of the Articles and Sections of this Agreement are for convenience of
reference only, and shall not be deemed to define or limit the provisions
hereof.

 

15

 

13.6                    Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of Hawaii.

 

13.7                    Attorneys’ Fees.  In the event of any action or
proceeding at law or in equity between WBKD and KD to enforce or interpret any
provision of this Agreement or to protect or establish any right or remedy of
either WBKD or KD hereunder, the unsuccessful party to such action or proceeding
shall pay to the prevailing party all reasonable costs and expenses, including,
without limitation, reasonable attorneys’ and paralegals’ fees and expenses
(including, without limitation, fees, costs and expenses of experts and
consultants), incurred in such action or proceeding and in any appeal in
connection therewith by such prevailing party, whether or not such action,
proceeding or appeal is prosecuted to judgment or other final determination,
together with all costs of enforcement and/or collection of any judgment or
other relief.  The term “prevailing party” shall include, without limitation, a
party who obtains legal counsel or brings an action against the other by reason
of the other’s breach or default and obtains substantially the relief sought,
whether by compromise, settlement or judgment.  If such prevailing party shall
recover judgment in any such action, proceeding or appeal, such costs, expenses
and attorneys’ and paralegals’ and others’ fees shall be included in and as a
part of such judgment.

 

13.8                    Article 12 of Increment 1 Purchase Agreement; Prior
Agreement.  KD and WBKD intend and agree that the parties’ respective rights,
duties and obligations with respect to Increment 2 under the Increment 1
Purchase Agreement, including, without limitation, Article 12 thereof, shall be
restated and replaced in their entirety by the terms of this Agreement.  KD and
WBKD intend and agree that the Prior Agreement shall be amended and restated in
its entirety by this Agreement.

 

13.9                    Specific Performance.  The parties understand and agree
that the Property is unique and for that reason, among others, WBKD will be
irreparably damaged in the event that this Agreement is not specifically
enforced.  Accordingly, in the event of any breach or default in or of this
Agreement or any of the warranties, terms or provisions hereof by KD, WBKD shall
have, in addition to a claim for damages for such breach or default, and in
addition and without prejudice to any right or remedy available at law or in
equity, the right to demand and have specific performance of this Agreement.

 

13.10            Relationship.  It is not intended by this Agreement to, and
nothing contained in this Agreement shall, create any partnership, joint
venture, financing arrangement or other agreement between WBKD and KD.  No term
or provision of this Agreement is intended to be, or shall be, for the benefit
of any person, firm, organization or corporation not a party hereto, and no such
other person, firm, organization or corporation shall have any right or cause of
action hereunder.

 

13.11            Authority.  The individuals signing below represent and warrant
that they have the requisite authority to bind the entities on whose behalf they
are signing.

 

16

 

13.12            Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument.

 

13.13            Time of the Essence.  Time is of the essence in this Agreement
and with respect to all of its terms.

 

13.14            Approval or Consent.  This Agreement and all documents and
agreements to be executed in connection with this Agreement shall be subject to
the following or a similar provision:  Unless otherwise provided herein, no
approval or consent of a party required by any provision hereof shall be
unreasonably or arbitrarily withheld or delayed nor shall a party require as a
condition of such approval or consent the payment of any money other than the
reasonable costs of review of such party’s attorneys and a reasonable service
charge.  Each party shall use its commercially reasonable efforts to cooperate
with the other party in expediting all requests for approval or consent and if
such approval or consent is refused, the party shall so state in writing and
give its reasons therefor.  If a party shall fail to approve or disapprove with
the reasons therefor any requested approval or consent within thirty (30) days
after such party shall have received from a party all documents or information
reasonable necessary for such party to determine such matter, then and in any
such event such request by such party shall be deemed approved.

 

13.15            Good Faith Negotiations.  If, at any time during the
effectiveness of this Agreement, or after the termination thereof, any dispute,
difference or conflict shall arise, and before any step to commence arbitration
or litigation is taken, the parties shall first negotiate in good faith to
resolve such controversy.

 

13.16            Cooperation.  The parties agree to execute any and all
documents at or following the Closing which may reasonably be required to carry
out the purposes of this Agreement.

 

13.17            Partial Invalidity.  In case any one or more of the provisions
contained herein shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect which is not material to the transactions
contemplated hereunder, such invalidity, illegality or unenforceability shall
not affect any other provisions of this Agreement, but this Agreement shall be
construed as if such invalid, illegal or unenforceable provision or provisions
had never been contained herein.

 

13.18            Further Acts.  In addition to the acts recited in this
Agreement to be performed by KD and WBKD, KD and WBKD agree to perform or cause
to be performed any and all such further acts as may be reasonably necessary to
consummate the transactions contemplated hereby.  KD shall cooperate with WBKD
and exercise commercially reasonable efforts to obtain all consents from KS, any
third party and any governmental or regulatory authority which are required
pursuant to any contract or applicable laws in connection with the development
of Increment 2 as contemplated by the terms of this Agreement.

 

17

 

13.19            Confidentiality.  KD and WBKD acknowledge that the terms of
this Agreement, to the extent not already publicly available or publicly
disclosed pursuant to authorization by both KD and WBKD, are confidential and
proprietary information and agree to keep confidential the terms of this
Agreement, except (i) as necessary to comply with applicable law, including the
disclosure obligations of Barnwell Industries, Inc., the parent of KD’s managing
general partner, under the securities laws of the United States, (ii) as
necessary to consummate the transactions contemplated hereby, (iii) to their
respective attorneys, agents and advisors who are instructed to maintain a
similar confidence and (iv) to lenders, prospective lenders, partners, members,
investors, prospective members and prospective investors.

 

ARTICLE 14
DEFINITIONS

 

“Area” means the residential, recreation and other areas, e.g., archaeological
preserve, outlined and labeled as to proposed use on the Concept Plan.

 

“Beach Club” means the beach club to be constructed in two phases and
approximately located in the area labeled “Beach Club” on the Concept Plan. 
“Phase I Beach Club” means a beach club which includes a minimum of (w) 5,000
square feet of indoor and outdoor social area (of which not less than 2,500
square feet will be covered), and will include but not be limited to areas for
casual dining, bar, restroom and showers; (x) pool; (y) parking in satisfaction
of the County requirements for the Phase I Beach Club (together with designated
space for the creation of parking sufficient to satisfy the County requirements
for the Phase II Beach Club), including required handicapped stalls; and
(z) 130,000 square feet of landscape/hardscape area, to be constructed within
Increment 1.  The overall quality of construction and finish of the Phase I
Beach Club will be comparable to the class of facilities at the Hualalai and
Kukio Resorts as of the date of the Increment 1 Purchase Agreement.  “Phase II
Beach Club” means the expansion of the Phase I Beach Club within Increment 1, to
be constructed by the developer of Increment 2 pursuant to a separate or amended
lease agreement for Increment 2.  The overall quality of construction and finish
of the Phase II Beach Club will be comparable to the class of facilities at the
Hualalai and Kukio Resorts as of the date of the Increment 1 Purchase Agreement.

 

“Golf Club” means any private or semi-private membership club that operates a
golf clubhouse or golf course established on Lot 4A.

 

“Gross Proceeds” means one hundred percent (100%) of the actual and full
consideration paid by the purchaser for the applicable Area, Lot or Unit, being
the amount subject to the conveyance tax imposed by HRS §247-2; provided,
however, and notwithstanding the above, Gross Proceeds from the sale of any Unit
in any vertical, multi-family or fractional ownership project within Increment 2
shall mean thirty-two and one-half percent (32.5%) of the Gross Proceeds from
the sale of such Unit.  Gross Proceeds shall include all consideration paid or
to be paid by the purchaser for the Area or Lot, including any consideration
paid or to be paid for the infrastructure which supports the Area or Lot, but
excluding any consideration paid or to be paid for memberships in the Beach
Club, Golf Club or other amenity club or facilities situated on Increment 1 or
2.

 

18

 

“Improved Lot” means a Lot as to which: either (A) (i) a graded pad has been
substantially completed and (ii) infrastructure, roadway access and stubouts for
utilities have been substantially completed to the Lot’s boundary or (B) the
purchaser of such Lot has purchased such Lot subject to the completion of the
items in clause (A) by WBKD.

 

“KS” means Kamehameha Schools and also known as the Trustees of the Estate of
Bernice Pauahi Bishop, the fee owner of Lot 4.

 

“Lot” means each parcel of real property on Increment 2, excluding any vertical
improvements located thereon, but including all of WBKD 2’s rights, privileges
and easements appurtenant to and for the benefit of such parcel, including,
without limitation, all minerals, oil, gas and other hydrocarbon substances on
and under such parcel, as well as all development rights, including, but not
limited to, all development agreements affecting such parcel and all
entitlements, air rights, water, water rights and water stock relating to such
parcel and any and all easements, rights-of-way or appurtenances leased to WBKD
2 and used in connection with the beneficial operation, use and enjoyment of
such parcel, together with all rights of WBKD 2 in and to roadways or easement
areas adjacent thereto or used in connection therewith.

 

“Water Rights” means all of KD’s rights and privileges with respect to water,
water rights and water stock with respect to or relating to Lot 4, including,
without limitation, all right, title and interest of KD in the Water Agreement
and the Exploratory Well Contribution Agreement dated as of February 13, 2004 by
and among KD, KMV, KS and PIA-Kona Limited Partnership.

 

“WBKD” means WBKD 1 and/or WBKD 2, as the context may require.

 

[SIGNATURE PAGE FOLLOWS]

 

19

 

IN WITNESS WHEREOF, KD and WBKD have executed this Agreement as of the date
first above written.

 

“KD”

“WBKD 1”

 

 

KAUPULEHU DEVELOPMENTS,

WB KD ACQUISITION, LLC,

a Hawaii general partnership

a Delaware limited liability company

 

 

By:

BARNWELL HAWAIIAN
PROPERTIES, INC. a Delaware
corporation, General Partner

By: WB KD Member, LLC, a Delaware limited liability company, its sole member

 

By:

  /s/ Alexander C. Kinzler

 

 

By: WB Kaupulehu, LLC, a Delaware
limited liability company, its sole member

 

 

Alexander C. Kinzler

 

 

 

President

By:

  /s/ Patrick K. Fox

 

 

Name:

Patrick K. Fox

By:

CAMBRIDGE HAWAII LIMITED PARTNERSHIP, a Hawaii limited
partnership

Title:

 

“WBKD 2”

Secretary

 

 

 

By: BARNWELL KONA
CORPORATION, a Hawaii
corporation, General Partner

WB KD ACQUISITION II, LLC,
a Delaware limited liability company

 

By:

WB Kaupulehu, LLC, its Member

 

By:

  /s/ Alexander C. Kinzler

 

 

 

 

       Alexander C. Kinzler

 

By:

   /s/ Patrick K. Fox

 

 

       President

 

Name:

   Patrick K. Fox

 

 

Title:

   Secretary

 

 

EXHIBIT A

 

CONCEPT PLAN

 

[See attached.]

 

 

[g189441ke05i001.jpg]

 

 

Exhibit B

ESTIMATED PRICING FOR LOT VALUES IN INCREMENT 2

 

Price Group

 

land Plan
Area

 

Units

 

Unit Price

 

Total Base
Revenue

 

 

 

 

 

 

 

 

 

 

 

Single Family I

 

F

 

4

 

4,000

 

16,000 

 

 

 

 

 

 

 

 

 

 

 

Single Family II

 

K-ocean

 

5

 

2400

 

12,000 

 

 

 

P

 

30

 

2400

 

72,000 

 

 

 

 

 

35

 

2400

 

84,000  

 

 

 

 

 

 

 

 

 

 

 

Single Family III

 

F

 

34

 

1200

 

40,800 

 

 

 

L-ocean

 

14

 

1200

 

16,800 

 

 

 

 

 

48

 

1200

 

57,600  

 

 

 

 

 

 

 

 

 

 

 

Single Family IV

 

K-golf

 

15

 

600

 

9,000 

 

 

 

L-mauka

 

14

 

600

 

8,400 

 

 

 

N

 

42

 

600

 

25,200 

 

 

 

O

 

23

 

600

 

13,800 

 

 

 

 

 

94

 

600

 

56,400 

 

 

 

 

 

 

 

 

 

 

 

Single Family V

 

M

 

18

 

640

 

11,520 

 

 

 

 

 

 

 

 

 

 

 

MF/Fractional

 

 

 

 

 

 

 

 

 

MF-Whole

 

H

 

125

 

500

 

62,500 

 

MF-Whole

 

M

 

46

 

500

 

23,000 

 

MF-Whole

 

M

 

25

 

500

 

12,500 

 

 

 

 

 

196

 

500

 

98,000 

 

Grand Total

 

 

 

395

 

819

 

323,520 

 

 

 

KD-Kona, HI Increment II

Base Case - 395 units

 

 

 

 

 

 

 

 Project Summary ($’s in 000’s)

 

Base Case

 

 

 

 

 Gross Lot Revenues (from above)

 

$375,212

 

 Gross Membership Revenues

 

$40,773

 

 Total Gross Rev.

 

$415,985

 

 Less:

 

 

 

 Residential Sales Comm. & Mgmt Fee

 

$21,387

 

 Membership Sales Comm.

 

$1,223

 

 KD/KS Participation Pmts

 

$0

 

 Subtotal, Selling Costs, Fees et al

 

$22,610

 

 Net Sales Revenues

 

$393,375

 

 Development Costs

 

 

 

 Upfront KD/KS Payment

 

$0

 

 Core Infrastructure

 

$39,467

 

 Onsite Improvements

 

$91,319

 

 Golf Course & Clubhouse

 

$77,776

 

 Soft Costs - Design, Entitle, & FEES

 

$19,926

 

 Mktg, Admin & O/H

 

$18,178

 

 Contingency

 

$17,576

 

 Subtotal, Dev. Costs Before Club Subsidy

 

$264,243

 

 

 

 

 

 Club Subsidy

 

$15,197

 

 Dev. Mgmt Fee - Monthly

 

$600

 

 Subtotal Development Costs

 

$280,039

 

 Net Profits

 

$113,335

 

 Financing Costs

 

$0

 

 Net Levered Profits

 

$113,335

 

 

 

EXHIBIT C

 

PRO FORMA

 

[See attached.]

 

 

KD- Kona, HI, Increment II

Base Case Assumptions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Absorption Schedule:

 

Cls 12/31

 

YR 1

 

YR 2

 

YR 3

 

YR 4

 

YR 5

 

YR 6

 

YR 7

 

YR 8

 

YR 9

 

YR 10

 

YR 11

 

YR 12

 

 

 

 

Lots

 

2009

 

2010

 

2011

 

2012

 

2013

 

2014

 

2015

 

2016

 

2017

 

2018

 

2019

 

2020

 

2021

 

 

Total

 

Single Family I

 

-

 

-

 

2

 

1

 

1

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

 

4

 

Single Family II

 

-

 

-

 

-

 

13

 

12

 

10

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

 

35

 

Single Family III

 

-

 

-

 

-

 

-

 

15

 

14

 

11

 

8

 

-

 

-

 

-

 

-

 

-

 

 

48

 

Single Family IV

 

-

 

-

 

-

 

-

 

-

 

25

 

21

 

18

 

15

 

9

 

6

 

-

 

-

 

 

94

 

Single Family V

 

-

 

-

 

-

 

-

 

-

 

-

 

4

 

4

 

4

 

3

 

3

 

-

 

-

 

 

18

 

MF/Fractional - Fractional Ownership

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

 

-

 

MF/Fractional - Whole Ownership

 

-

 

-

 

-

 

-

 

-

 

18

 

18

 

50

 

43

 

30

 

20

 

17

 

-

 

 

196

 

Total Lots

 

-

 

-

 

2

 

14

 

28

 

67

 

54

 

80

 

62

 

42

 

29

 

17

 

-

 

 

395

 

Avg. Price Single Family I

 

$4,000

 

$4,000

 

$4,120

 

$4,244

 

$4,371

 

$4,502

 

$4,637

 

$4,776

 

$4,919

 

$5,067

 

$5,219

 

$5,376

 

$5,537

 

 

 

 

Avg. Price Single Family II

 

$2,400

 

$2,400

 

$2,472

 

$2,546

 

$2,623

 

$2,701

 

$2,782

 

$2,866

 

$2,952

 

$3,040

 

$3,131

 

$3,225

 

$3,322

 

 

 

 

Avg. Price Single Family III

 

$1,200

 

$1,200

 

$1,236

 

$1,273

 

$1,311

 

$1,351

 

$1,391

 

$1,433

 

$1,476

 

$1,520

 

$1,566

 

$1,613

 

$1,661

 

 

 

 

Avg. Price Single Family IV

 

$640

 

$640

 

$659

 

$679

 

$699

 

$720

 

$742

 

$764

 

$787

 

$811

 

$835

 

$860

 

$886

 

 

 

 

Avg. Price Single Family V

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Avg. Price MF/Fractional - Fraction

 

$0

 

$0

 

$0

 

$0

 

$0

 

$0

 

$0

 

$0

 

$0

 

$0

 

$0

 

$0

 

$0

 

 

 

 

Avg. Price MF/Fractional - Whole O

 

$500

 

$500

 

$515

 

$530

 

$546

 

$563

 

$580

 

$597

 

$615

 

$633

 

$652

 

$672

 

$692

 

 

 

 

Escalation

 

 

 

3.0%

 

3.0%

 

3.0%

 

3.0%

 

3.0%

 

3.0%

 

3.0%

 

3.0%

 

3.0%

 

3.0%

 

3.0%

 

3.0%

 

 

 

 

 

 

EXHIBIT D

 

Form of Amended and Restated Side Letter Agreement

 

May 27, 2009

 

Kaupulehu Developments

1100 Alakea Street, Suite 2900

Honolulu, HI 96813

 

Re:      Amended and Restated Side Letter Agreement

 

Gentlemen:

 

WB KD Acquisition, LLC, WB KD Acquisition II, LLC (“WBKD 2”) and Kaupulehu
Developments (“KD”) have entered into that certain Amended and Restated
Agreement as to Lot 4A, Increment 2 dated May 27, 2009 (the “Increment 2
Agreement”), and, pursuant to the terms and conditions thereof, WBKD 2 and KD
have agreed to, among other things, execute and deliver to each of the other
parties to the Increment 2 Agreement this Amended and Restated Side Letter
Agreement (this “Agreement”), which Agreement amends and restates in its
entirety that certain letter agreement dated as of June 2, 2006 by and between
WBKD 2 and KD, concerning the grant of certain Increment 2 lots.

 

The parties hereto hereby agree as follows:

 

Subject to the terms of the Increment 2 Agreement, WBKD 2 has agreed to convey
to KD or its nominees (herein collectively “KD”) and KD has agreed to accept
three (3) single family residential lots within Increment 2, on the following
terms and conditions:

 

1.         Each lot will have location, view, size, orientation and value
attributes not materially less favorable than the average lot being sold in
Increment 2, not including ocean-front lots or lots in close proximity to the
ocean.

 

2.         Each lot will be selected by mutual agreement between WBKD 2 and KD
and conveyed to KD upon the later to occur of (i) when the pad for that lot and
infrastructure with respect thereto is completed such that a building permit
could be issued to permit residential construction on the lot or (ii) 180 days
after the release of lots in the “first phase” of Increment 2 for sale or
marketing.

 

3.         To assist WBKD 2 in its sales and marketing efforts as to Increment
2, KD agrees (1) to promptly construct a residence upon each lot in compliance
with the covenants, conditions and restrictions and any other agreements
applicable to Increment 2 lots being sold to the general public (and to commence
such construction within 6 months of delivery of such lot to KD,

 

 

subject to obtaining all necessary permits and approvals), and (2) to permit the
showing of such completed residence by WBKD 2’s sales force to prospective
buyers of other lots within Increment 2 for a reasonable time period following
the grant of an occupancy permit for the residence in question and while the
residence is still owned by KD.  WBKD 2 agrees to give KD reasonable advance
notice for any permitted showing.

 

4.         The transfer of each lot shall be at KD’s sole cost and expense,
including all customary closing costs (but there will be no sales commissions or
similar fees) incurred in connection with the conveyance of each lot; provided,
however, that if and to the extent that any release payments are required to be
made by WBKD 2 to KS in connection with the transfer of such lot, WBKD 2 shall
pay up to $60,000 per lot of such release payments.

 

5.         If there is litigation or other disputes between the parties, the
prevailing party shall be entitled to its attorney’s fees and expenses from the
other party.

 

If the foregoing accurately reflects our agreement, please execute and return
the enclosed copy of this letter.

 

 

 

Very truly yours,

 

 

 

WB KD ACQUISITION II, LLC

 

 

 

By:

WB Kaupulehu, LLC, its Member

 

 

 

 

 

 

By:

 

 

 

Name:

Patrick K. Fox

 

 

Title:

Secretary

 

 

Accepted and agreed to as

 

of the date first above written.

 

 

 

 

 

KAUPULEHU DEVELOPMENTS,

 

a Hawaii general partnership

 

 

 

By:

BARNWELL HAWAIIAN

 

 

PROPERTIES, INC., General Partner

 

 

 

 

 

 

 

By:

 

 

 

 

Alexander C. Kinzler

 

 

 

President

 

 

 

 

 

 

 

By:

CAMBRIDGE HAWAII LIMITED

 

 

PARTNERSHIP

 

 

 

 

By:

BARNWELL KONA

 

 

 

CORPORATION, General Partner

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

Alexander C. Kinzler

 

 

 

 

President