Exhibit 10.30

 

ASSET PURCHASE AGREEMENT

 

THIS ASSET PURCHASE AGREEMENT (“Agreement”), is made and entered into as of this
20th of December, 2019 (the “Effective Date”), by and between HAWAII WATER
SERVICE COMPANY, INC., a Hawaii corporation or its designee entity
(“Purchaser”), KAPALUA WATER COMPANY, LTD., a Hawaii corporation (“KWC”),
KAPALUA WASTE TREATMENT COMPANY, LTD, a Hawaii corporation (“KWTC”) (KWC and
KWTC, jointly and severally, “Seller”), and MAUI LAND & PINEAPPLE COMPANY, INC.,
a Hawaii corporation (“MLP”) (collectively “Parties”).

 

WHEREAS, KWC and KWTC are wholly-owned subsidiaries of MLP;

 

WHEREAS, KWC is a utility company regulated by the Public Utilities Commission
of the State of Hawaii (“Commission”), currently providing potable and
non-potable water services to residential and commercial customers located in
Kapalua;

 

WHEREAS, KWTC is a utility company regulated by the Commission, currently
providing wastewater collection and transmission services from residential and
commercial customers located in Kapalua to the wastewater treatment plant
located in Lahaina operated by the County of Maui (“Lahaina Wastewater Treatment
Plant”);

 

WHEREAS, KWC and KWTC, provide water services and wastewater services,
respectively (collectively, the “Business”), within the areas identified in
Exhibit A-1 (Service Area of KWC) and Exhibit A-2 (Service Area of KWTC)
attached hereto and incorporated herein by reference (collectively, the “Service
Areas”).

 

WHEREAS, KWC and KWTC are or at Closing will be the owners of:

 

(a)     the facilities, equipment, fixtures and other property necessary and to
operate the Business (collectively, the “Assets”) identified and more
specifically described in Exhibit B-1 (Assets of KWC), Exhibit B-2 (Assets of
KWTC), and Exhibit C (Capital Expenditure Projects for KWC and KWTC currently
being made by Aqua Engineers, Inc. (“Operator”), the company that currently
provides Seller with operation and maintenance services under certain existing
agreements (the “Aqua O&M Agreements”) attached hereto and incorporated herein
by reference);

 

(b)     the perpetual easements in which the Assets are or shall be located, and
the rights-of-way, rights of entry and licenses necessary and desirable to
conduct the Business and to access, operate, maintain, remove and replace the
Assets (collectively, the “Easements”);     

 

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(c)     the parcels of real estate owned in fee simple by KWC that are
identified as Lots 26 and 31 of the “Honolua Ridge -- Phase I” subdivision (TMKs
(2) 4-2-8-26 & -27) and Lot 27 of the “Honolua Ridge -- Phase II” subdivision
(TMKs (2) 4-2-9-27) (collectively, the “Real Property”) and

 

(d)     the intangible and other right described herein necessary or desirable
to operate the Business (collectively, the “Rights”).

 

WHEREAS, because KWC and KWTC are regulated utility companies in the State of
Hawaii and subject to the rules and regulations thereof, the sale of the Assets,
together with the Real Property, the Easements and the Rights (collectively, the
“Acquired Assets”) are subject to the review and approval of the Commission; and

 

WHEREAS, Seller desires to sell to Purchaser all of the Acquired Assets, and
Purchaser desires to purchase from Seller the same as an on-going business (the
“Contemplated Transaction”), pursuant to the terms and conditions described
herein at the closing (“Closing”).

 

NOW, THEREFORE, AND FOR VALUABLE CONSIDERATION, the sufficiency and receipt
thereof which is hereby acknowledged by the Parties, and in consideration of the
mutual covenants and promises set forth in this Agreement, the Parties hereby
agree as follows:

 

1.         PURCHASE AND SALE OF ACQUIRED ASSETS. Subject to the terms and
conditions set forth in this Agreement, Seller and MLP agree to sell, assign,
transfer and deliver to Purchaser, and Purchaser agrees to purchase and accept
from Seller, at Closing, all of Seller’s and MLP’s right, title and interest in
the Acquired Assets free and clear of all liens and encumbrances as set forth
below.

 

  1.1.    Acquired Assets. The Acquired Assets include, without limitation:

 

(a)     all fixed assets recorded on each of KWC and KWTC’s balance sheet,
together with any other tangible or intangible assets useful or necessary for
the continued operations of the Business (including but not limited to spare
parts, inventory, etc.), free and clear of all liens and encumbrances except as
provided below with respect to the Real Property, as set forth in Exhibits B-1 ,
B-2, and C attached hereto and incorporated herein by reference, including, but
not limited to, the following:

 

(1)     all potable and non-potable water transmission facilities, pumping
equipment, conduits, connections, tanks, mains, pipelines, meters and other
equipment and appliances used and/or owned by KWC for the provision of potable
and non-potable water to the Service Areas (collectively, “Water System”);

 

(2)     all wastewater collection and transmission equipment and facilities,
wells, pumping equipment, conduits, connections, tanks, lagoons, sewage pumping
stations, mains, pipelines, meters, and other equipment and appliances used
and/or owned by KWTC for the provision of wastewater collection and transmission
from the Service Areas to the connection to the county sewer system located on
or near Lower Honoapiilani Road by the parking lot for Merriman’s Kapalua, One
Bay Club Place, Lahaina, HI 96761 (collectively, “Wastewater System”);

 

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(b)     the goodwill and other Rights relating to the Business;

 

(c)     rights to use potable and non-potable water from current source(s)
utilized by KWC in the provision of water services to the Service Areas, as
further described in the forms attached hereto and incorporated herein by
reference as said agreements may be modified pursuant to Sections 3.5 and 3.6 of
this Agreement:

i.      Exhibit D, Water Delivery Agreement (Non-Potable Water); and

ii.     Exhibit E, Water Delivery Agreement (Well Water) (collectively, the
“Water Delivery Agreements”);

 

(d)     the Easements, whether transferred at Closing or after Closing, as
explained more fully in Section 4.3 below, and other easements, licenses
rights-of-way or rights of entry necessary or desirable to build, construct,
reconstruct, rebuild, repair, maintain and operate the Water System and the
Wastewater System (collectively, the “Systems”);

 

(e)     the Certificates of Public Convenience Necessity (“CPCNs”) issued to KWC
and KWTC (pursuant to Commission approval of transfer of same) to enable
continuing operation of the Systems in the Service Areas;

 

(f)     any contributions in aid of construction (“CIAC”), as reflected in KWC’s
and KWTC’s accounting records;

 

(g)     any manufacturer or service warranties related to equipment and other
utility assets comprising the Systems;

 

(h)     customer deposits, if any, held by KWC or KWTC related to the Business;
any deposits by KWC or KWTC held by government agencies, contractors, lessors
and other vendors; and any accounts receivable and rights to payment for
services provided after the Closing Date;

 

(i)     all assignable existing contracts relating to the Business (including,
but not limited to existing contracts with Seller’s service providers), books,
files, financial records, tax returns, and accounts, for the Business, excluding
the Aqua O&M Agreements which Seller shall terminate prior to or at Closing;

 

(j)     all prepaid rent, utilities, taxes and other prepaid expenses and/or
security deposits given;

 

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(k)     all payments from insurance contracts and/or policies for casualty to
the Assets occurring between the Effective Date and the Closing Date which
Seller has not already applied to restore, repair or replace the damaged Assets;

 

(l)     all other intangible assets owned by KWC or KWTC and used in the
Business, including but not limited to vehicles, office and computer equipment,
software, furniture, fixtures, and other equipment, any propriety rights or
designs, and any intellectual trade secrets;

 

(m)     the telephone number(s), email addresses and website urls used by the
Business;

 

(n)     all existing inventory of KWC and KWTC including, but not limited to
component parts and spare parts;

 

(o)     all rights to the trade names “Kapalua Water Company” and “Kapalua Waste
Treatment Company”, as more specifically set forth below in Section 1.3;

 

(p)     any customer and vendor lists of the Business;

 

(q)     all licenses, authorizations, and other approvals necessary or required
to provide authorized services, or to operate the Business and/or related to the
Business;

 

(r)     all claims against third parties, if any, arising from ownership of the
Acquired Assets that exist at Closing; and

 

(s)     all other property which includes, without limitation, all customer
service contracts and all site plans, plans and specifications, “as-built” plans
and drawings, and, to the extent transferable, permits and other governmental
reviews, approvals and entitlements related to the Systems and much of the
foregoing as have been heretofore prepared, applied for, obtained or otherwise
are in the name or possession of, under the control of or available to KWC, KWTC
or MLP, relating to the Business.

 

(t)     the right, subject to Hawaii Public Utilities Commission approval, to
provide wastewater and potable and non-potable water services to the “Kapalua
Mauka” future expansion area (TMK 4-2-001-042 and TMK 4-3-001-006) that is more
particularly described in the County of Maui’s zoning code as “West Maui Project
District 2 -- Kapalua Mauka”.

 

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(u)     the Real Property, subject to only those liens and encumbrances deemed
acceptable by Purchaser prior to the end of the Due Diligence Period.

 

1.2.     Excluded Assets. Notwithstanding anything contained in Section 1.1 to
the contrary, the Acquired Assets shall not include the following assets,
properties or rights of Seller or MLP relating to the Business (“Excluded
Assets”):

 

(a)     all cash and accounts receivable of the Business existing immediately
prior to the Closing (except for cash associated with CIAC set forth in Section
1.1(f) or customer deposits set forth in Section 1.1(h)); and

 

(b)     Seller’s internal corporate governance records and items, including,
without limitation, corporate minute and stock books, and corporate seal; and

 

(c)     The existing potable water wells and Honolua Ditch owned by MLP that are
the source of potable and non-potable water, respectively, used by KWC in the
operation of its Business, and the transmission infrastructure and storage
facilities (including the Kapalua Plantation Reservoir and the Village Reservoir
(collectively, the “Reservoirs”)) located between those sources and the points
of water delivery under the Water Delivery Agreements, all of which are owned
and retained by MLP.

 

1.3.     Only Certain Liabilities Being Assumed; Retained Liabilities. Except
those liabilities and service commitments expressly as described in Schedule 1.3
hereof (“Assumed Liabilities”), Purchaser will not assume or be obligated to
satisfy or perform any of the liabilities, or commitments, whether fixed or
contingent, which relate to the Seller’s Business prior to the Closing Date, the
Acquired Assets or the Excluded Assets including any other liabilities,
obligations or commitments of Seller and MLP whether fixed or contingent, or
known or unknown, including but not limited to Seller’s tax, environmental and
water quality liabilities that exist prior to the Closing Date including without
limitation taxes arising from the sale of the Acquired Assets (“Retained
Liabilities”) which shall remain the sole responsibility of Seller and MLP and
be paid, performed and discharged solely by Seller and MLP.

 

1.4     Use of Name. Effective as of Closing, Purchaser shall be entitled to
utilize the trade names “Kapalua Water Company” and “Kapalua Waste Treatment
Company”. Upon request by Purchaser, Seller shall change its corporate names and
consent to Purchaser’s registration of such name with the Department of Commerce
and Consumer Affairs, of the State of Hawaii, Business Registration Division.

 

2.       PURCHASE PRICE. In consideration of the sale of the Acquired Assets,
Purchaser will, in full payment thereof, pay to Seller a total price of THREE
MILLION EIGHT HUNDRED THIRTY-FOUR THOUSAND FIVE HUNDRED THIRTY-NINE DOLLARS
($3,834,539.00) (“Purchase Price”), as may be adjusted by the Capital
Expenditures Adjustment, as set forth in Section 2.1 below.

 

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The Purchase Price is calculated as follows:

 

CATEGORY

DESCRIPTION

AMOUNT

Rate Base Assets

Capital cost of Acquired Assets owned by KWC (Exhibit B-1) and KWTC (Exhibit
B-2), being the original cost of such assets net of accumulated depreciation
from the in-service date to the Effective Date, and related contribution in aid
of construction, advances in aid of construction, deferred income taxes, and
Commission adjustments for excess capacity.

KWC:    $1,197, 786.00

KWTC:  $ 136,753.00

               $1,334,539.00

 

These calculations are subject to Purchaser’s verification during the Due
Diligence Period.

Additional Consideration

Additional consideration paid by Purchaser for intangible assets of KWC and KWTC

$2,500,000.00

 

2.1.        Modification of Purchase Price Pursuant to Seller’s Capital
Expenditures. Purchaser and Seller agree that at Closing the Purchase Price
shall be adjusted by the following amounts (collectively, the “Capital
Expenditures Adjustment”):

 

(a)     accumulated depreciation of the Acquired Assets included in Seller’s
rate base from the Effective Date to the Closing Date (as defined in Section 6
below) shall be deducted from the Purchase Price;

 

(b)     capital expenditures made and funded by KWC, KWTC and/or MLP for
projects or assets that are placed in service and approved for inclusion in the
rate base of KWC or KWTC from and after the Effective Date through the Closing
Date and included in Acquired Assets (including projects listed in Exhibit C),
reduced by the depreciation accumulated from the date placed in-service to the
Closing Date, shall be added to the Purchase Price; and

 

(c)     accumulated depreciation of the Assets other than those listed in the
preceding paragraphs from the Effective Date to the Closing Date shall be
deducted from the Purchase Price.

 

2.2        Escrow. The purchase and sale of the Assets shall be conducted
through escrow at Title Guaranty Escrow Services, Inc., Main Branch attn: Jeremy
Trueblood (“Escrow”) pursuant to instructions consistent with the provisions of
this Agreement. All amounts payable to Seller (other than the amounts specified
in Section 4.3(d)) shall be released by Escrow only upon Seller’s delivery to
Escrow and Purchaser of an approved Report of Bulk Sale or Transfer (Form G-8A)
from the State of Hawaii Department of Taxation dated no earlier than ten (10)
days prior to the Closing Date indicating that all taxes due and payable by
Seller, including all taxes due under the relevant provisions of Hawaii law and
under Form G-8A, have been paid, and the satisfaction of all conditions to
Closing.

 

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3.         PURCHASER’S REVIEW OF THE BUSINESS, THE ACQUIRED ASSETS, REAL
PROPERTY AND EASEMENTS.

 

3.1    Due Diligence Period. Purchaser shall conduct Purchaser’s review of the
Acquired Assets, Easements, and Seller’s business beginning upon the execution
of this Agreement and for a period of 60 days, with up to three 30 day
extensions if requested by Purchaser (the “Due Diligence Period”). In addition
to the specific documents and records referenced in Sections 3.2 and 3.3, Seller
and MLP shall give Purchaser and its counsel, accountants and other
representatives, on reasonable prior notice, access during normal business hours
to all properties, books, accounts, records, contracts and documents of or
relating to the Business, the Acquired Assets and operations, excluding only
privileged documents. Seller and MLP shall furnish to Purchaser and its
representatives and consultants such additional data and information concerning
the Business, operations and the Assets that may be reasonably requested as part
of a customary due diligence review (“Due Diligence Review”). Notwithstanding
any of the foregoing, in no event, shall the fact that Purchaser had the
opportunity to conduct the Due Diligence Review be used by Seller or MLP as a
defense or otherwise to Purchaser’s enforcement of a Seller or MLP
representation, warranty or covenant

 

3.2     Seller’s Documents and Records.

 

(a)      Documents in KWC’s, KWTC’s or MLP’s Possession. Within five (5)
business days of the Effective Date, Seller and MLP shall provide to Purchaser,
all non-privileged material documents in the possession of KWC, KWTC or MLP
which pertain to the ownership or operation of the Business and the Acquired
Assets, including the following (collectively, the “Available Due Diligence
Materials”):

 

(1)     site plans, plans and specifications, “as-built” plans and drawings
regarding the Assets;

 

(2)     existing water purchase agreements;

 

(3)     the Sewer Agreement dated April 23, 1987, by and between the County of
Maui, Seller and KWTC, as supplemented by the Lahaina Wastewater Reclamation
Facility Expansion Agreement dated January 20, 1994, for the treatment of
wastewater at its Lahaina Wastewater Treatment Plant (collectively, the
“Wastewater Treatment Agreement”);

 

(4)     copies of all existing and proposed leases, easements, rights-of-way,
rights of entry, licenses, and other agreements affecting the Easements and Real
Property;

 

(5)     existing contracts pertaining to the Business, excluding the Aqua O&M
Agreements;

 

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(6)     copies of all existing water and wastewater customer agreements
(“Customer Agreements”) and all written notice of adequate capacity to provide
potable or non-potable water or wastewater services to new customers in the
Service Areas (“Will Serve Letters”);

 

(7)     existing surveys and maps, including but not limited to the makai
easement map prepared by Warren S. Unemori Engineering, Inc. (“WSUE”), attached
as Exhibit F-1, and mauka easement map, also prepared by WSUE, attached as
Exhibit F-2, both reflecting, in reasonable detail, the location of the
Easements in proximity to the Assets (collectively, the “Easement Map”);

 

(8)     listing of misaligned and missing Easements;

 

(9)     existing financial statements of Seller including balance sheets income
statements and retained earnings statements for the previous three fiscal years,
and year-to-date financial statement by month;

 

(10)     Commission Annual Reports for the three previous years;

 

(11)     Consumer Confidence Reports, water quality laboratory analysis, and any
notices of violation and inspection reports from Hawaii Department of Health for
the three previous years; and

 

(12)     Title reports, for the Real Property and the Easements (if any for the
Easements) from Title Guaranty of Hawaii, Inc.

 

(b)     Additional Documents. Within thirty (30) days of the Effective Date,
Seller shall provide Purchaser with the following (“Additional Due Diligence
Documents”):

 

(1)     a complete list of all Easements that have been granted and recorded to
date;

 

(2)     an updated list that identifies those areas over which, to the best of
Seller’s or MLP’s knowledge, recorded easements are necessary to build,
construct, reconstruct, rebuild, repair, maintain and operate the Systems, but
have not yet been obtained;

 

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(3)     Real Property related documents including but not limited to deeds, and
existing title reports and title policies for all Real Properties and Easements,
encumbrances, leases, land use permits, certificates of occupancy;

 

(4)     Commission approved tariffs, rules of service, and orders and all files
and filings relating to Commission matters.

 

3.3     Inspection; Inspection Indemnity. During the Due Diligence Period,
Purchaser and Purchaser’s employees, agents, consultants, advisors, or other
representatives (collectively “Purchaser’s Representatives”) shall have the
right, upon reasonable notice to Seller and at times reasonably convenient to
Seller and Purchaser, to perform reasonable non-destructive inspections and
tests of the Acquired Assets. Prior to any such entry Purchaser shall provide
Seller with a certificate of liability insurance in form acceptable to Seller
naming Seller and MLP as additional insureds. Purchaser agrees that it will
engage such consultants as it deems necessary to complete such inspections and
testing. Without limiting the generality of the foregoing, at any time prior to
the expiration of the Due Diligence Period, Purchaser may engage a reputable
third-party environmental consulting company to perform a Phase I and Phase 2
environmental assessment and/or any non-destructive testing of the soil,
groundwater, building components, tanks, containers and equipment on the Real
Property or Easements, as Purchaser deems necessary or appropriate to confirm
the condition of such properties. Any investigation or examination of the
Acquired Assets is performed at the sole risk and expense of Purchaser, and
Purchaser shall be solely responsible for the negligent acts or omissions of any
of Purchaser’s Representatives while performing such testing and inspection.
Purchaser shall defend, indemnify and hold Seller harmless from and against all
claims for personal injury, wrongful death or property damage against Seller, or
the Acquired Assets arising from or as a result of, any negligent act or
omission of Purchaser or Purchaser’s Representatives, in connection with any
inspection or examination of the Acquired Assets or the books and records of the
Business by Purchaser or Purchaser’s Representatives, except to the extent
arising from or as a result of the negligent or willful misconduct of Seller,
MLP or their respective officers, directors, employees, consultants or any other
representatives. This obligation to indemnify shall survive closing or
termination of this Agreement.

 

3.4     Purchaser’s Right to Waive or Terminate. During the Due Diligence
Period, Purchaser will review the Acquired Assets and various aspects of
Purchaser's potential acquisition of the Acquired Assets. Purchaser may accept
the condition of the Acquired Assets and waive the time remaining in the Due
Diligence Period by issuing to Seller a written notification of acceptance of
the Acquired Assets prior to the expiration of the Due Diligence Period. In
addition, the Parties agree that Purchaser, in Purchaser’s sole and unreviewable
discretion, may terminate this Agreement for any reason by written notice
received by Seller on or before 4:00 p.m., Hawaii time, on the last day of the
Due Diligence Period. If the last day of the Due Diligence Period falls on a
Saturday, Sunday or holiday, the Due Diligence Period shall end on the next
following business day. If Purchaser exercises such right of termination, the
Parties agree that the Parties shall have no further obligations to each other
under this Agreement except with respect to the obligations set forth in Section
3.3 (Inspection; Inspection Indemnity) above.

 

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3.5     Non-Potable Water Delivery Agreement. A draft Agreement for Water
Delivery (Non-Potable Water) is attached as Exhibit D. The Parties agree to act
in good faith and diligently pursue completion of negotiations of a final form
of non-potable water delivery agreement, in form and substance acceptable to the
Parties for execution and delivery at Closing, at least five (5) business days
prior to the end of the Due Diligence Period. If the Parties are unable to reach
agreement on the Agreement for Water Delivery (Non-Potable Water), either Party
may prior to the end of the Due Diligence Period terminate this Agreement.

 

3.6     Potable Water Delivery Agreement. A draft Agreement for Water Delivery
(Well Water) is attached as Exhibit E. The Parties agree to act in good faith
and diligently pursue completion of negotiations of a final form of potable
water delivery agreement, in form and substance acceptable to the Parties for
execution and delivery at Closing, at least five (5) business days prior to the
end of the Due Diligence Period. If the Parties are unable to reach agreement on
the Agreement for Water Delivery (Well Water), either Party may prior to the end
of the Due Diligence Period terminate this Agreement.

 

3.7     Negotiation of Assignment of Existing Wastewater Treatment Agreement
with County of Maui. The Parties have agreed to execute the Assignment and
Assumption of Wastewater Treatment Agreement attached hereto as Exhibit H and
incorporated herein by reference, to be effective as of the Closing Date if the
Contemplated Transactions close. Seller shall use commercially reasonable
efforts to assist Purchaser in obtaining the acknowledgement of the County of
Maui, that no consent is required from the County of Maui, and of the Assignment
and Assumption of Wastewater Treatment Agreement.

 

3.8     Negotiation of Operation and Maintenance Service Agreement for Wells and
Reservoirs. The Parties agree to use commercially reasonable efforts to
negotiate in good faith the definitive terms and form of an Operations and
Maintenance Service Agreement for Purchaser to operate and maintain the Kapalua
Potable Well 1 & 2 and related infrastructure (the “O&M Agreement for Wells and
Reservoirs”), in form and substance acceptable to the Parties for execution and
delivery at Closing, at least five (5) business days prior to the end of the Due
Diligence Period. If the Parties are unable to reach agreement on the O&M
Agreement for Wells and Reservoirs, either Party may prior to the end of the Due
Diligence Period terminate this Agreement.

 

3.9    Negotiation of Operation and Maintenance Service Agreement for Ditch
System. The Parties agree to use commercially reasonable efforts to negotiate in
good faith the definitive terms and form of an Operations and Maintenance
Service Agreement for Purchaser to operate and maintain the West Maui Honokohau
Ditch system, the Reservoirs and related infrastructure (the “O&M Agreement for
Ditch System”), in form and substance acceptable to the Parties for execution
and delivery at Closing, at least five (5) business days prior to the end of the
Due Diligence Period. If the Parties are unable to reach agreement on the O&M
Agreement for Ditch System, either Party may prior to the end of the Due
Diligence Period terminate this Agreement.

 

4.        PARTIES’ PRE-CLOSING COVENANTS AND ACTIVITIES.

 

4.1     Continued Operation and Management of the Business.

 

(a)     Seller shall, and MLP shall cause Seller , without making any
commitments or agreements on behalf of Purchaser, to keep its business
organization intact, to preserve its present relationships with suppliers,
customers and others having business relationships with it and to operate the
Business in the ordinary course of business consistent with its prior practices
and to maintain the Acquired Assets in good condition and repair. Without
limiting the generality of the foregoing, Seller shall not and MLP shall cause
Seller not to do, or agree to do, any of the following acts without the prior
written consent of Purchaser:

 

(1)     enter into any contract or agreement with, make any commitment on behalf
of or for the benefit of, or make any distribution of money or property to, in
each case MLP or any person or entity related to or affiliated with MLP;

 

(2)     Enter into any contract or transaction not in the ordinary course of
business, except, however, Purchaser shall not unreasonably withhold written
consent in the event that a contract or transaction is necessary to correct an
interruption in service to any customer(s);

 

(3)     Enter into any contract or transaction in the ordinary course of
business involving an amount exceeding ten thousand dollars ($10,000)
individually or twenty thousand dollars ($20,000) in the aggregate, except,
however, Purchaser shall not unreasonably withhold written consent in the event
that a contract or transaction is necessary to correct an interruption in
service to any customer(s);

 

(4)     Sell or dispose of any capital assets with a net book value in excess of
one thousand dollars ($1,000) individually or two thousand dollars ($2,000) in
the aggregate; or

 

(5)     Make a distribution of money or property to MLP or any person or entity
affiliated with MLP (whether as a dividend or otherwise) or incur any
indebtedness to MLP or any person or entity affiliated with MLP.

 

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(b)     Seller shall continue to carry its existing insurance, subject to
variations in amounts required by the ordinary operations of its business.

 

(c)     No later than January 31, 2020, Seller shall provide Purchaser true and
correct copies of all Will Serve letters and customer agreements executed by
Seller up to and including the date such copies are provided to Purchaser (the
“Will Serve Disclosure Date”) and, further, Seller shall obtain the prior
written approval of Purchaser for any new Will Serve Letters and customer
agreements that Seller wishes to enter into during the period from the Will
Serve Disclosure Date to the Closing Date.

 

(d)     Provided that Purchaser shall elect to proceed with the Contemplated
Transaction, the Parties agree that they will use commercially reasonable
efforts to jointly secure Commission authorization for the Contemplated
Transaction (which shall include any Commission authorization necessary) for:
(1) the expansion of such services to Kapalua Mauka (as defined in Section 4.4
below); (2) the relocation of the site office and storage area (as provided in
Section 4.5 below); (3) the Agreement for Water Delivery (Non-Potable Water)
described in Section 3.5 above; (4) the Agreement for Water Delivery (Well
Water) described in Section 3.6 above; and (5) the assignment of the Wastewater
Treatment Agreement to Purchaser. Additionally, the Parties agree to use their
best efforts to amend the tariff for KWC to limit the liability of Purchaser for
inadequate flow surface water resulting from events beyond Purchaser’s
reasonable control. To this end, the Parties agree to file an Application for
Commission authorization with 15 business days of Seller’s receipt of
Purchaser’s decision to proceed with the Contemplated Transaction and to
diligently prosecute such Commission authorization. The legal and other costs of
seeking Commission authorization shall be shared equally between Seller and
Purchaser.

 

(e)     As of the Closing, there will be no action, suit, proceeding, claim
arbitration, or investigation, audit, or inquiry, at law or in equity, before or
by any court or federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, pending or, to the
knowledge of Seller or MLP, threatened, against the Business which materially
affects the Business or relates to the Acquired Assets, other than the pending
Hawaii Commission on Water Resources proceedings regarding the Honolua Ditch and
West Maui streams from which it draws.

 

(f)     Except as may otherwise be provided herein, the Business shall be in
compliance with any and all county, state or federal health, environmental, or
similar laws, rules and regulations applicable to the operation of the Systems.

 

4.2     [RESERVED].

 

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4.3.     Pre-closing and Post-closing Easements. Provided Purchaser shall elect
to proceed with the Contemplated Transaction, Seller and MLP jointly and
severally agree as follows:

 

(a)     Existing Easements. During the Due Diligence Period, Purchaser may
conduct such investigations as it desires with respect to all easements held by
Seller for the System that will be assigned to Purchaser at Closing (“Existing
Easements”), including securing such commitments from Title Guaranty of Hawaii,
LLC, to insure Purchaser’s interest in the Existing Easements at Closing.

 

(b)      Agreed Easement Actions. Seller and Purchaser acknowledge that Seller
holds certain recorded perpetual easements covering various areas of the Systems
located on lands not owned by Seller, but does not currently have easements
necessary for all aspects of the Systems located on lands held by Seller, MLP or
third-parties, as the case may be or to allow Purchaser physical access to the
Systems (“Missing Easements”), or that there may be existing easements that are
not correctly aligned with the KWC or KWTC lines or facilities that they are
intended to cover (“Misaligned Easements”). No later than five (5) days before
the end of the Due Diligence Period, Seller and Purchaser shall mutually agree
on (a) a list of the Missing Easements that Seller and MLP will pursue pursuant
to this Section, and (b) a list of the Misaligned Easements and the specific
amendments necessary to address them that Seller and MLP will pursue pursuant to
this Section (collectively, the “Agreed Easement Actions”). If the Parties are
unable to reach agreement on the Agreed Easement Actions, either Party may prior
to the end of the Due Diligence Period terminate this Agreement.

 

(c)     Seller’s and MLP’s Obligation to Diligently Pursue. Provided Purchaser
shall elect to proceed with the Contemplated Transaction at the end of the Due
Diligence Period, Seller and MLP will exercise commercially reasonable efforts
to complete the Agreed Easement Actions prior to Closing and after Closing for a
period of two (2) years. Agreed Easement Actions with respect to Missing
Easements shall be deemed complete when Seller or MLP have secured recorded
grants of easement in form reasonably acceptable to Purchaser and for which
Title Guaranty of Hawaii is willing to insure (“Insurable Easements”). Agreed
Easement Actions with respect to Misaligned Easements shall be deemed complete
when Seller or MLP have completed the specific agreed actions on the list of
Agreed Easement Actions. All Easements granted by MLP over its own lands after
the end of the Due Diligence Period shall be made on Purchaser’s standard Grant
of Easement form, attached hereto as Exhibit 4.3(a).

 

(d)     Seller’s List of Easements Obtained Prior to Closing. At least thirty
(30) days prior to Closing, Seller shall provide an updated true, complete and
correct list of all Agreed Easement Actions that have been completed
(“Pre-closing Easements”), and a list of all Agreed Easement Actions that have
not been completed (“Post-closing Easements”).

 

(e)     Seller’s Obligation at Closing. At Closing, Seller and MLP shall assign
to Purchaser all of its right, title and interest in the Existing Easements and
the Pre-closing Easements. Post-closing, Purchaser agrees to cooperate with
Seller to secure the Post-closing Easements, and to execute such related and
necessary documentation as is usual and customary. For the avoidance of doubt,
Post-closing Easements includes amendments to existing easements and new grants
to address misaligned easements as well as new grants for Systems in locations
nor covered by any grant.

 

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(f)     Optional Post-closing Easement Deposit. In consideration of the
commitments in this Section 4.3, at Closing Purchaser may elect to instruct
Escrow to retain from the Purchase Price, a sum equal to the estimated sum
necessary to pursue, process, grant and record any Post-closing Easements
(“Post-closing Easement Deposit”). For purposes of establishing the Post-closing
Easement Deposit, Seller and Purchaser agree that $100,000 will be retained by
Escrow for each Post-closing Easement. When Seller or MLP complete each
Post-Closing Easement (as such completion is defined in Section 4.3(c)), Escrow
shall promptly disburse to Seller or MLP from the Easement Deposit the amount of
$100,000, less reasonable expenses of escrow, conveyance and recordation paid by
Escrow with respect to the Post-Closing Easement in question. Seller and MLP
agree that Seller and MLP shall exercise commercially reasonably efforts to
obtain and record all Post-closing Easements or Assignments to Purchaser of the
Post-closing Easements within twenty four (24) months of the Closing Date.
Seller, MLP and Purchaser agree that if, despite such efforts on the part of
Seller and MLP, Seller and MLP are still unable to obtain all of the
Post-closing Easements twenty four (24) months following Closing, Purchaser
shall have the right, following notice to Seller, to have Escrow disburse to
Purchaser all or any portion of the Post-closing Easement Deposit remaining for
the Post-closing Easements which Seller or MLP have not then yet completed and
Purchaser elects to pursue on its own. Following Escrow’s release of the
Post-closing Easement Deposit to Purchaser, Purchaser shall thereafter be
responsible for obtaining the applicable Post-closing Easements represented by
the Post-closing Easement Deposit retained by Purchaser. Seller and MLP shall
thereafter be released from any further obligation to pursue the applicable
Post-closing Easement(s) and Seller and MLP shall have no further obligation or
liability with respect to the Post-closing Easements except that Seller and MLP
shall not be released with respect to their lands or lands of Seller, MLP or any
of their respective owners, affiliates or related parties, and as to unrelated
third-parties, Seller and MLP shall cooperate and assist Purchaser, including
without limitation by exercise of any rights held by Seller or MLP to obtain or
grant easements, unless commercially unreasonable.

 

(g)     Good Faith Efforts to Provide all Easements. Notwithstanding the
foregoing provisions of Sections 4.3, so as to minimize the need to pursue
Post-closing Easements, Seller and MLP, jointly and severally, shall use good
faith efforts to assign and provide to Purchaser at Closing all easements
necessary to operate the Systems.

 

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4.4.     Agreement to Expand Service Areas to Include Future Kapalua
Developments and the Construction of All Related Water and Wastewater
Infrastructures in Future Kapalua Developments. As part of the Application that
KWC and KWTC will jointly file with the Commission for approval of the sale of
the Acquired Assets to Purchaser, transfer of the CPCNs to Purchaser, and any
other transfer that is part of the Contemplated Transaction, the Parties further
agree to expand the Service Areas to include the provision of water and
wastewater services to Seller’s future developments in Kapalua, including
Kapalua Mauka (Maui Tax Map Key Parcels 4-2-001:042 and 4-3-001:006). After
Closing, MLP shall have the option to have Purchaser construct or have
constructed all water and wastewater utility infrastructure serving the Service
Areas, including infrastructure reasonably designated by Seller to serve future
Kapalua developments, including but not limited to Kapalua Mauka (Maui Tax Map
Key Parcels 4-2-001:042 and 4-3-001:006) Central Resort (Maui Tax Map Key Parcel
4-2-004:049) and Lot 1D (Maui Tax Map Key Parcel 4-2-004:037) (“New System
Infrastructure”). Any such construction that MLP requests Purchaser to undertake
shall be subject to applicable Commission approved financing requirements,
rules, and tariffs, which may require that MLP or other landowners and
developers bear all or some of such expense of construction through
contributions in aid of construction or otherwise in accordance with Commission
approved rules and tariffs. Seller and MLP shall provide Purchaser with
necessary land and easements to provide utility service to the Service Areas at
no additional cost to Purchaser. MLP reserves the right to construct or cause
others to construct New System Infrastructure, in which case (i) the design
shall be pursuant to plans and specifications approved by Purchaser and all
construction in conformance with such Purchaser approved plans and
specifications and (ii) upon completion, Purchaser shall have the right to
inspect and approve, in its sole discretion, all New System Infrastructure prior
to any dedication thereof to Purchaser.

 

4.5      Identification and Agreement for Purchaser’s Acquisition of New Office
and Storage Area. Exhibit J (Purchaser’s Proposed Location for New Office and
Storage Area) attached hereto and incorporated herein reflects the location
acceptable to Purchaser for a new office and storage area within the Service
Areas. The Parties shall diligently pursue to completion, negotiations for the
lease or conveyance of the fee simple interest in a subdivided lot of the
property identified in Exhibit J and proper zoning for construction and use as
Purchaser’s office and storage area, in form and substance acceptable to the
Parties for execution and delivery at Closing, at least five (5) business days
prior to the end of the Due Diligence Period.. Seller agrees that Purchaser
shall be permitted to occupy the current operator’s onsite office and storage
area until such time as Purchaser has completed the acquisition and construction
of the new office and storage area.

 

4.6      Notifications. Between the date of this Agreement and the Closing,
Seller shall promptly notify Purchaser in writing if Seller or MLP become aware
of (i) any fact or condition that causes or constitutes a breach of any of
Seller’s or MLP’s representations and warranties made as of the date of this
Agreement or (ii) the occurrence after the date of this Agreement of any fact or
condition that would or be reasonably likely to (except as expressly
contemplated by this Agreement) cause or constitute a breach of any such
representation or warranty had that representation or warranty been made as of
the time of the occurrence of, or Seller’s or MLP’s discovery of, such fact or
condition. Such delivery shall not affect any rights of either party under
Section 10 under this Agreement.

 

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4.7     Filing of HI DOTAX Form D-37. Seller agrees Purchaser may file Hawaii
State Tax Department Form D-37 at any time prior to Closing but after the
receipt of a non-appealable Commission order approving the Contemplated
Transactions.

 

5.          CAPITAL EXPENDITURES.

 

5.1     Expenditures by the Business. All capital expenditures funded by Seller
on behalf of the Business between the Effective Date and the Closing Date shall
be subject to Purchaser’s pre-approval and shall result an increase in the
Purchase Price as set forth in Section 2 above.

 

6.          CLOSING. Closing shall occur at Title Guaranty of Hawaii, located at
the Main Office, Honolulu, Hawaii or at some other mutually agreeable location,
on the date agreeable to both Seller and Purchaser, within thirty (30) business
days after the receipt of all final non-appealable orders issued by the
Commission approving the Contemplated Transaction, which date must allow for
reasonable coordination of billing cycles, (the “Closing Date”). Time is of the
essence with respect to closing this Agreement.

 

6.1.     Closing Costs. Subject to the prorations described in Section 6.3, all
closing costs related to the purchase of the Acquired Assets will be divided
evenly between Purchaser and Seller and include, but are not limited to, escrow
fees, recording fees, conveyance taxes and any other related fees related to
Closing. Taxes related to Seller’s compliance with the Bulk Sales laws as
described in Section 6.2(a)(6) shall be the responsibility of Seller.

 

6.2.     Deliveries at Closing. Unless the parties agree to handle specific
matters outside of Escrow, the following shall be done through Escrow to effect
the Closing:

 

(a)     Seller's Deliveries. Not later than two (2) business days prior to
Closing, Seller shall deposit or cause to be deposited with Escrow, the
following funds, items and documents, in each case duly executed by Seller, MLP
or the appropriate person, and if applicable, acknowledged and in recordable
form:

 

(1)     [intentionally deleted];

 

(2)     Limited Warranty deeds for Real Property in forms mutually agreed to
during the Due Diligence Period;

 

(3)     An original and two (2) copies of a Bill of Sale in forms mutually
agreed to during the Due Diligence Period;

 

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(4)     Any required assignment/assumption agreements, including but not limited
to those related to Customer Agreements and Will Serve Letters (in forms
mutually agreed to during the Due Diligence Period), the Pre-closing Easements,
and the Assignment and Assumption of the Wastewater Treatment Agreement attached
as Exhibit H) and all third-party consents as may be necessary for the
assignment of the same;

 

(5)     Possession of the Acquired Assets not already in Purchaser’s possession;

 

(6)     a Tax Clearance Certificate for Seller issued by the Department of
Taxation of the State of Hawaii not more than fifteen (15) days prior to the
Closing Date and a Report of Bulk Sale or Transfer (Form G-8A) from the State of
Hawaii Department of Taxation dated not more than ten (10) days prior to the
Closing Date and containing the certification of the Director of Taxation that
all taxes, penalties and interest by Seller on the date of the certificate have
been paid; provided that if the certificate of the Director of Taxation has not
been received by the scheduled Closing Date the Parties agree to extend the
Closing Date until the earliest practical date after the Director’s certificate
is received; provided in no event shall the Closing Date be extended beyond
thirty (30) days beyond the 24 month period described in Section 10.1(e);

 

(7)     The Agreement for Purchaser’s Acquisition of New Office and Storage
Location described in Section 4.5 above;

 

(8)     The mutually acceptable non-potable water delivery agreement as
described in Section 3.5 above;

 

(9)     The mutually acceptable potable water delivery agreement as described in
Section 3.6 above;

 

(10)     The Assignment and Assumption of the Waste Water Treatment Agreement
described in Section 3.7 and attached hereto as Exhibit H;

 

(11)     The mutually acceptable O&M Agreement for Wells and Reservoirs
described in Section 3.8 above;

 

(12)     The mutually acceptable O&M Agreement for Ditch System described in
Section 3.9 above;

 

(11)     Estimated funds to pay for its share of the costs of Closing;

 

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(12)      A certificate of non-foreign status in form and content required by
law certifying that Seller is not a “foreign person” as such term is used under
Section 1445 of the Internal Revenue Code;

 

(13)     A certificate of resident status in form and content required by law
certifying Seller is a “resident person” as such term is used in H.R.S.
Section 235-68;

 

(14)     A search conducted by the Title Company confirming that no financing
statements or liens have been recorded against the Acquired Assets except for
such financing statements and liens that will be released at Closing;

 

(15)     a Good Standing Certificate for Seller issued by the Director of the
Department of Commerce and Consumer Affairs for the State of Hawaii, dated not
more than five (5) calendar days prior to the Closing Date; and

 

(16)     Such other documents as Purchaser may reasonably request for the
purpose of: (i) evidencing the accuracy of any of Seller’s and MLP’s
representations and warranties; (ii) evidencing the performance by Seller or MLP
or the compliance by Seller or MLP with any covenant or obligation required to
be performed or complied with by Seller or MLP; (iii) evidencing the
satisfaction of any condition referred to in Article 9; (iv) otherwise
facilitating the consummation or performance of any of the Contemplated
Transactions, including without limitation a Certificate of an offer of Seller
in the form mutually agreed to during the Due Diligence Period, or (v) such
other documents and instruments as shall be reasonably necessary to effect the
transactions contemplated hereby, or as may be reasonably requested by Purchaser
or its counsel.

 

 

(b)     Purchaser's Deliveries. Not later than two (2) business days prior to
Closing, Purchaser will deposit with Escrow, the following funds and documents,
in each case duly executed by Purchaser or the appropriate person, and if
applicable, acknowledged and in recordable form:

 

(1)     The total Purchase Price pursuant to Section 2 above;

 

(2)     Any required assignment/assumption agreements, including but not limited
to those related to the Pre-closing Easements, and Assignment and Assumption of
the Wastewater Treatment Agreement;

 

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(3)     Agreement for Purchaser’s Acquisition of New Office and Storage Location
described in Section 4.5 above;

 

(4)     The non-potable water delivery agreement described in Section 3.5 above;

 

(5)     The potable water delivery agreement described in Section 3.6 above;

 

(6)     The Assignment and Assumption of the Waste Water Treatment Agreement
described in Section 3.7 and attached hereto as Exhibit H;

 

(7)     The mutually acceptable O&M Agreement for Wells and Reservoirs described
in Section 3.8 above;

 

(8)     The mutually acceptable O&M Agreement for Ditch System described in
Section 3.9 above;

 

(7)     Estimated funds to pay for its share of the costs of Closing;

 

(8)     a Good Standing Certificate for Purchaser issued by the Director of the
Department of Commerce and Consumer Affairs for the State of Hawaii, dated not
more than five (5) calendar days prior to the Closing Date; and

 

(9)     such other documents as Seller may reasonably request for the purpose
of: (i) evidencing the accuracy of any of Purchaser’s representations and
warranties; (ii) evidencing the performance by Purchaser of, or the compliance
by Purchaser of or with, any covenant or obligation required to be performed or
complied with by Purchaser; (iii) evidencing the satisfaction of any condition
referred to in Article 9; or (iv) otherwise facilitating the consummation or
performance of any of the Contemplated Transactions, including without
limitation a Certificate of an officer of Purchaser in a form mutually agreed to
during the Due Diligence Period, or (v) such other documents and instruments as
shall be reasonably necessary to effect the transactions contemplated hereby, or
as may be reasonably requested by Seller or its counsel

 

6.3      Closing Prorations.

 

(a)     Insurance. Purchaser shall pay to Seller the unexpired premium of any
insurance policies assigned by Seller to Purchaser; provided, however, Purchaser
shall have the option to decline to have the insurance assigned, in which event
no adjustment shall be made for insurance.

 

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(b)    Revenues. The Parties acknowledge that billing for residential customers’
sewer charges are billed in advance. However, for commercial customers, a
monthly minimum service charge is billed in advance and the sewer treatment
charge, which is based on the customer’s billed water usage, will be billed in a
subsequent billing period. The Parties agree to cooperate with each other to
allow the proper sewer charges to be assessed to customers in accordance with
the Closing, the intent being that Purchaser and Seller shall each be entitled
to sewer revenues including the sewer treatment charge properly allocated for
pre-closing and post–closing periods of ownership.

 

(c)     Prepaid Real Property Taxes. Purchaser shall pay to Seller the prorated
amount of any real property taxes paid by Seller in connection with any Real
Property.

 

(d)     Other Expenses. Except as may otherwise set forth in this Agreement,
Closing expenses will be prorated and apportioned as is customary at the
Closing.

 

(e)     Time of Prorations. Prorations shall be made as of 12:01 a.m. on the
date of the Closing, with Purchaser to be entitled to all revenues (except as
set forth above) and to be charged for all expenses for such day. All prorations
shall be final. If the amount of any prorated item is not known at Closing, the
parties agree that such items shall be prorated at Closing upon the basis of the
best information available, and shall be adjusted when the actual amount (s) of
such items are known, with appropriate charges and credits to be made. If
subsequent to the Closing, any adjustment pursuant to this Section 6.3 shall be
necessitated, then either party hereto who is entitled to additional monies
shall give written notice to the other party of such additional amounts as may
be owing, and such amount shall be paid within five (5) days from receipt of the
invoice. The provisions of this Section 6.3(e) shall survive the closing of the
Contemplated Transaction.

 

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7.     REPRESENTATIONS AND WARRANTIES OF SELLER. Seller and MLP jointly and
severally represent and warrant to Purchaser as follows:

 

7.1.     Organization, Standing and Qualifications.

 

KWC and KWTC are corporations, duly organized, validly existing and in good
standing under the laws of the State of Hawaii; and have all requisite corporate
power and authority and is entitled to carry on the Business as now being
conducted and to own, lease or operate its properties as and in the places where
the Business is now conducted. Seller is engaged in the business of a water and
wastewater utility serving areas in Kapalua, Maui, Hawaii, and with respect to
which, it holds valid permits issued by the State of Hawaii and Maui County.
There are no dissolution, disassociation, winding-up, liquidation or bankruptcy
proceedings pending or threatened against Seller or MLP. There are no events
which could result in a dissolution of Seller or MLP. Seller is not doing
business in any state other than Hawaii. Seller does not own, directly or
indirectly, any interest or investment (whether equity or debt) in or control
any corporation, partnership, business, trust, joint venture or other entity.
Complete and accurate copies of the governing documents of Seller, as currently
in effect, are attached as Exhibit 7.1. There are no contracts relating to the
issuance, sale or transfer of any equity securities or other securities of
Seller. MLP is the sole shareholder of KWC and KWTC.

 

7.2.     Authorization of Agreement. Upon receipt of the approval of Seller’s
Board of Directors and of MLP, no approvals or consents of any person other than
the Commission are necessary for or in connection with the performance of
Seller’s and MLP’s obligations hereunder. No other corporate proceeding on the
part of KWC, KWTC or MLP is necessary to authorize this Agreement and the
Contemplated Transaction. This Agreement has been duly and validly executed by
an authorized officer of KWC, KWTC and MLP and along with any and all documents
and agreements to be executed and delivered by KWC, KWTC and MLP, as the case
may be, are valid and binding on KWC, KWTC and MLP in accordance with their
respective terms.

 

7.3.     Assets of Business.

 

(a)     All of the assets required to operate the Business are included with the
Acquired Assets and Seller has sole, exclusive, good and marketable title to all
of the Acquired Assets, which shall be conveyed free and clear of all liens,
mortgages, pledges, encumbrances, and any other restrictions or defects in title
excepting only those liabilities and obligations, if any, which are expressly to
be assumed by Purchaser hereunder.     

 

(b)     Except for such covenants, representations and warranties that are
expressly set forth in this Agreement or in the documents to be delivered at the
Closing the Easements and Acquired Assets are being sold “as is, where is.”

 

7.4    Licenses. To Seller’s actual knowledge and to MLP’s actual knowledge,
Seller possesses and holds in its name all licenses, permits, consents,
franchises, approvals, authorization, qualifications, and orders of all
Governmental Bodies required to enable Seller to conduct its business as
presently conducted and to own, lease and operate its assets as presently owned,
leased and operated. To Seller’s or MLP’s knowledge, all of the Licenses held by
Seller are in full force and effect and there is no default of any provision
thereof which would affect the ability of Seller to engage in its business. No
action is pending or, to Seller’s or MLP’s knowledge, threatened, seeking the
suspension, modification, cancellation, revocation or limitation of any License
and, to Seller’s or MLP’s knowledge, there is no basis for such actions.

 

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7.5     Financial Statements. The Seller financial statements delivered to
Purchaser pursuant to this Agreement are true and correct in all material
respects, fairly present the financial position of Seller as of the respective
dates of the balance sheets included in the Seller financial statements, and the
results of its operations for the respective periods indicated.

 

7.6     Liabilities. Except as set forth in the Seller’s financial statements
there are to neither Seller’s actual knowledge or MLP’s actual knowledge, any
liabilities, fixed or contingent, known or unknown, to which Seller, its
business or assets are subject, other than those incurred in the ordinary course
of business consistent with past practices. Seller is not a party to, nor are
its Assets bound by, any agreement not entered into in the ordinary course of
business, or any indenture, mortgage, deed of trust, lease or any agreement that
is unusual in nature, duration or amount (including, without limitation, any
agreement requiring the performance by Seller of any obligation for a period of
time extending beyond one year from the Closing Date, calling for consideration
of more than $5,000, or requiring purchase at prices in excess of prevailing
market prices). Seller is not a party to, nor is Seller or any of its assets
bound by, any agreement that is materially adverse to the business, assets,
prospects or financial condition of Seller. Except as disclosed to Purchaser,
there are no royalty obligations, warranty and guarantee obligations, product
liability obligations, or easement maintenance obligations with respect to the
Acquired Assets.

 

7.7    Leases, Liens and Encumbrances; Real Property. Seller is not a party to
any agreement for the lease of real property, and Seller owns all tangible
personal property and other assets necessary to conduct the Business as now
conducted not subject to any lien or encumbrance. Schedule 7.7 contains a
correct legal description, street address (if any) and tax parcel identification
number of all Real Property including tracts, parcels and subdivided lots and
easements which Seller is using in the Business. Seller has good title to such
Real Property. The Real Property may have the following encumbrances: (i) liens
for taxes for the current tax year which are not yet due and payable; and (ii)
those Encumbrances deemed acceptable to Purchaser during the Due Diligence
Period. True and complete copies of (A) all deeds, existing title insurance
policies and surveys of or pertaining to the Real Property, and (B) all
instruments, agreements and other documents evidencing, creating or constituting
any encumbrances on the Real Property have been delivered to Purchaser.

 

7.8.   Customer Agreements and Will Serve Letters. The customer agreements and
will serve letters identified in Exhibit N attached hereto and incorporated
herein by reference represent all existing customer agreements and will serve
letters issued by Seller. True, correct and complete copies of these customer
agreements and will serve letters have been provided to Purchaser.

 

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7.9     Payment of Taxes. Seller has filed all federal, state and local tax
returns required to be filed, and has paid all taxes owed by Seller including
all taxes shown by those returns to be due and payable with respect to the
Business. Seller have made (or will make as of the Closing) timely payment of
all applicable taxes. There are no Encumbrances on any of the Acquired Assets
that arose in connection with any failure (or alleged failure) to pay any Tax.
Seller has withheld and paid all taxes required to have been withheld and paid
in connection with any amounts paid or owing to any employee, independent
contractor, creditor, member, stockholder, or other third party. Forms W-2 and
1099 required with respect thereto have been properly completed and timely
filed. There are no audits or examinations of any tax returns pending or
threatened that relate to Seller's operation of the Utility Systems or the
Acquired Assets. Seller is not a party to any action or proceeding by any
governmental body for the assessment or collection of taxes relating to the
operation of the Utility Systems or Acquired Assets, nor has such event been
asserted or threatened.

 

7.10.  No Adverse Conditions. Except as disclosed by Seller to Purchaser in
writing, to neither Seller’s actual knowledge or MLP’s actual knowledge, there
is no legal action, suit, claim, investigation, or other proceeding, whether
civil, criminal, or administrative, is pending or threatened against or
affecting KWC, KWTC, MLP or the Acquired Assets.

 

7.11.   Adequate Advice. Seller and MLP have had the opportunity to receive
independent tax and legal advice, at Seller's cost, with respect to the
advisability of executing this Agreement.

 

7.12.   No Broker's Fees. Seller will not have any liability or obligation to
pay any fees or commission to any broker, finder, or agent with respect to the
Contemplated Transaction for which Purchaser could become liable or obligated.

 

7.13.  Compliance with Laws. To the best of actual Seller’s or MLP’s knowledge,
Seller is in compliance with, and not in violation of, all applicable laws,
rules, regulations, and ordinances affecting the Business and the Acquired
Assets.

 

7.14   No Hazardous Waste. Neither Seller or MLP have received written notice
from any government agency alleging that Acquired Assets (a) contain, or have
been contaminated by or used for the storage, disposal or release of “Hazardous
Materials” or (b) contain any underground storage tanks. To Seller’s or MLP’s
actual knowledge there are no Hazardous Materials on any of the Acquired Assets
or used in connection with the Business or Acquired Assets, other than Hazardous
Materials that are used in the ordinary course of business, and which are not
required under current law to be remediated or disposed of in their current
state. For purposes of this Agreement, the term “Hazardous Materials” includes,
without limitation, asbestos, any substance containing more than 0.1 percent
asbestos, the group of compounds known as polychlorinated biphenyls, flammable
explosives, radioactive materials, petroleum and petroleum by-products,
pollutants, effluents, contaminants, hazardous materials, hazardous wastes,
hazardous or toxic substances, and any materials included in the definitions of
hazardous or toxic waste, materials or substances (regardless of concentration)
in the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended (42 U.S.C. Sections 9601, et seq.), the Hazardous Materials
Transportation act, as amended (49 U.S.C. Sections 1801, et seq.), the Resource
Conservation and Recovery act of 1976, as amended (42 U.S.C. Sections 6901, et
seq.), and in the regulations adopted and publications promulgated pursuant
thereto, or any other federal, state or local environmental laws, ordinances,
rules, or regulations.

 

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7.15   Compliance with Water Quality Requirements. Neither Seller or MLP have
received written notice from a governmental agency alleging current or pending
violations of applicable federal, state and local water quality regulations and
requirements.

 

7.16    Environmental Matters. Neither Seller or MLP have received written
notice from a governmental agency alleging that Seller is not in compliance with
all Environmental Laws. To Seller’s knowledge and to MLP’s knowledge there are
no pending or threatened claims arising pursuant to any Environmental Law which
relate to any of the Acquired Assets or the Business. For purposes of this
Agreement, “Environmental Law” means any federal, state, local, municipal,
foreign, international, multinational or other constitution, law, ordinance,
principle of common law, code, regulation, statute or treaty that requires or
relates to: (a) advising appropriate authorities, employees or the public of
intended or actual releases of pollutants or hazardous substances or materials,
violations of discharge limits or other prohibitions and the commencement of
activities, such as resource extraction or construction, that could have
significant impact on the Environment; (b) preventing or reducing to acceptable
levels the release of pollutants or hazardous substances or materials into the
environment; (c) reducing the quantities, preventing the release or minimizing
the hazardous characteristics of wastes that are generated; (d) assuring that
products are designed, formulated, packaged and used so that they do not present
unreasonable risks to human health or the environment when used or disposed of;
protecting resources, species or ecological amenities; (e) reducing to
acceptable levels the risks inherent in the transportation of hazardous
substances, pollutants, oil or other potentially harmful substances; and (f)
cleaning up pollutants that have been released, preventing the threat of release
or paying the costs of such clean up or prevention; or making responsible
parties pay private parties, or groups of them, for damages done to their health
or the environment or permitting self-appointed representatives of the public
interest to recover for injuries done to public assets.

 

7.17    Conduct of Business in Ordinary Course. From the Effective Date until
the Closing Date, there has not been nor will there be any:

 

(a)     Transaction by KWC, KWTC or MLP (on behalf of the Business), except in
the ordinary course of business as conducted on that date consistent with past
practices;

 

(b)     Capital expenditure by KWC, KWTC or MLP except as otherwise provided in
this Agreement;

 

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(c)     Obligation incurred by KWTC, KWC or MLP (on behalf of the Business),
except trade or business obligations incurred in the ordinary course of business
consistent with past practices and the payment of Purchaser’s invoices described
in Section 4.2 above;

 

(d)     Cancellation or compromise by KWC, KWTC or MLP (on behalf of the
Business), of any debt or claim, except in the ordinary course of business
consistent with past practices;

 

(e)     Material Adverse Change in the financial condition, liabilities, assets,
business, or results of operations of Seller. For purposes of this Agreement,
Material Adverse Change means with respect to KWC or KWTC any event, change,
development, or occurrence that, individually or together with any other event,
change, development, or occurrence, is materially adverse to their respective
Business, condition (financial or otherwise), assets, results of operations, or
prospects.

 

(f)     Destruction, damage to or loss of any assets of Seller (if used by
Seller in providing utility service), whether or not covered by insurance, that
materially and adversely affects the financial condition, business or operations
of the Business;

 

(g)     Sale or transfer of any asset of Seller (if used by Seller in providing
utility services), except in the ordinary course of business consistent with
past practices;

 

(h)     Execution, creation, amendment or termination of any material contract,
agreement or license to which KWC, KWTC or MLP on behalf of the Business is a
party, except in the ordinary course of business consistent with past practices;

 

(i)     Waiver or release of any right or claim of KWC, KWTC or MLP (on behalf
of the Business), material to the Business or the Systems, except in the
ordinary course of business;

 

(j)     Mortgage, pledge or other encumbrance of any asset of KWTC, KWC or MLP
(if used by KWC or KWTC in providing utility services);

 

(k)     Cancellation or the giving of notice of cancellation of any insurance
policy insuring KWC or KWTC, its Business or assets;

 

(l)     Other event or condition within Seller’s or MLP’s control of any
character that has or might reasonably have a material and adverse effect on the
financial condition, assets, business or results of operations of KWC or KWTC;
or

 

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(m)     Agreement by KWC, KWTC or MLP (on behalf of the Business), to do any of
the things described in the preceding clauses (a) through (l) except as agreed
to in writing by Purchaser.

 

7.18     Tax Returns. Within the times and in the manner prescribed by law, KWC,
KWTC or MLP (on behalf of the Business), has filed or caused to be filed all
federal, state and local tax returns required by law, on a consolidated or
individual basis, as appropriate, and has paid all taxes, assessments and
penalties due and payable. These tax returns reflect KWC’s, KWTC’s and Seller’s
liability for taxes applicable to KWC and KWTC operations for the periods
covered thereby.

 

7.19    Agreement Will Not Cause Breach or Violation. Neither the entering into
this Agreement nor the consummation of the Contemplated Transaction will
directly or indirectly (with or without notice or lapse of time) result in or
constitute any of the following: (a) a default or any event that would be a
default, breach or violation of (i) the Articles of Incorporation or By-Laws of
Seller or MLP or (ii) any material lease, franchise, license, promissory note,
conditional sales contract, commitment, indenture, mortgage, deed of trust, or
other agreement, instrument, or arrangement to which Seller or MLP is a party or
by which Seller, MLP, the Business or its assets are bound, (b) an event that
would permit any party to terminate any material agreement or policy of
insurance of Seller, (c) the creation of imposition of any lien, charge or
encumbrance on any of the Acquired Assets, or (d) the violation of any permit,
license, law, regulation, ordinance, judgment, order or decree applicable to or
affecting Seller, MLP, or the Business, its assets or financial condition which
would have an adverse effect on the Systems or give any governmental body the
right to revoke, withdraw, suspend, cancel, terminate or modify, any
governmental authorization that is held by Seller or that otherwise relates to
the Acquired Assets or to the Business. Other than the approval of the
Commission and, potentially, the County with respect to the Assignment and
Assumption of Wastewater Agreement, neither Seller nor MLP is required to give
any notice to or obtain any consent from any person, entity or governmental body
in connection with the execution and delivery of this Agreement or the
consummation or performance of any of the Contemplated Transactions.

 

7.20     Duration of Representation and Warranties. The representation and
warranties made hereinabove will be correct and accurate in all material
respects as of the Closing and shall survive the Closing for a period of three
(3) years.

 

7.21     Disclosure. To Seller’s actual knowledge and to MLP’s actual knowledge,
no representation or warranty or other statement made by Seller or MLP in this
Agreement, any Schedule to this Agreement or supplement hereto or any document
delivered in connection with this Agreement or otherwise in connection with the
Contemplated Transactions contains any untrue statement or omits to state a
material fact necessary to make any of them, in light of the circumstances in
which it was made, not misleading.

 

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7.23     Insurance. During the Due Diligence Period Seller shall provide
Purchaser with a list of all policies or binders of fire, liability, product
liability, worker’s compensation, vehicular and other insurance held by or on
behalf of the Seller. Such policies and binders are valid and binding in
accordance with their terms, are in full force and effect, and insure against
risks and liabilities to an extent and in a manner customary in the industries
in which the Seller operates. Seller is not in default with respect to any
provision contained in any such policy or binder and has not failed to give any
notice or present any claim under any such policy or binder in due and timely
fashion. Except as disclosed by Seller in writing, there are no outstanding
unpaid claims under any such policy or binder, and the Seller has not received
any notice of cancellation or non-renewal of any such policy or binder. Except
as disclosed by Seller in writing, the Seller has not received any notice from
any of its insurance carriers that any insurance premiums will or may be
materially increased in the future or that any listed insurance coverage will or
may not be available in the future on substantially the same terms as now in
effect, and to Seller’s actual knowledge and to MLP’s actual knowledge, there is
no basis for the issuance of any such notice or for any such action.

 

7.24     Solvency. Seller is not now insolvent and will not be rendered
insolvent by any of the Contemplated Transactions by this Agreement. As used
herein, “insolvent” means that the sum of the debts and other probable
liabilities of Seller exceeds the present fair saleable value of the Seller’s
assets.

 

8.         REPRESENTATIONS AND WARRANTIES OF PURCHASER.

Purchaser represents and warrants to Seller as follows:

 

8.1.     Organization, Standing and Qualifications. Purchaser is a corporation,
duly organized, validly existing and in good standing under the laws of the
State of Hawaii; it has all requisite corporate power and authority and is
entitled to carry on its business as now being conducted and to own, lease or
operate its properties as and in the places where such business is now
conducted.

 

8.2.     No Adverse Conditions. No legal action, suit, claim, investigation, or
other proceeding, whether civil, criminal, or administrative, is pending or
threatened against Purchaser that would adversely affect its ability to
consummate the Contemplated Transaction.

 

8.3.     Adequate Advice. Purchaser has had the opportunity to receive
independent tax and legal advice, at Purchaser's cost, with respect to the
advisability of executing this Agreement.

 

8.4.     No Broker's Fees. Purchaser has no liability or obligation to pay any
fees or commission to any broker, finder, or agent with respect to the
Contemplated Transaction for which Seller could become liable or obligated. If
Purchaser has retained a broker, any fees or commissions owing to said broker
are solely the obligation of Purchaser.

 

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8.5.     Agreement Will Not Cause Breach or Violation. Neither the entry into
this Agreement nor the consummation of the Contemplated Transaction will result
in or constitute any of the following: (a) a default or any event that, with
notice or lapse of time, or both, would be a default, breach or violation of the
Articles of Incorporation or By-Laws of Purchaser or of any material lease,
franchise, license, promissory note, conditional sales contract, commitment,
indenture, mortgage, deed of trust, or other agreement, instrument, or
arrangement to which Purchaser or is a party or by which Purchaser or its assets
are bound, or (b) the violation of any permit, license, law, regulation,
ordinance, judgment, order or decree applicable to or affecting Purchaser or its
business, assets or financial condition which would have a material adverse
effect on its business.

 

8.6     Duration of Representation and Warranties. The representation and
warranties made hereinabove will be correct and accurate in all material
respects as of the Closing Date and shall survive the Closing Date for a period
of three (3) years.

 

9.          CONDITIONS PRECEDENT TO OBLIGATIONS TO CLOSE.

 

9.1.        Conditions to Purchaser's Obligation. All obligations of Purchaser
hereunder are subject at the option of Purchaser, to the fulfillment of each of
the following conditions at or prior to the Closing, and Seller and MLP shall
exert their best efforts to cause such condition to be so fulfilled:

 

(a)     All representations and warranties of Seller and MLP contained herein
shall be true and correct in all material respects at and as of the date of the
Closing (said representations and warranties to survive Closing), except for
changes in ordinary course of business after the date hereof;

 

(b)     All covenants, agreements and obligations required by the terms of this
Agreement to be performed by Seller or MLP at or before the Closing shall have
been duly and properly performed in all material respects and all deliverables
to be provided by Seller and MLP at Closing as described in Section 6.2(a) shall
have been duly executed and delivered;

 

(c)     No action, suit or proceeding shall be pending or threatened before any
court, governmental agency or authority to enjoin, restrain or prohibit this
Agreement or the consummation of the Contemplated Transaction or threaten the
Acquired Assets in a material manner;

 

(d)     No Material Adverse Change shall have occurred with respect to the
operation, condition, finances or prospects of the Business or the Acquired
Assets since the Effective Date;

 

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(e)     That approval for the transfer of the Acquired Assets and the
Contemplated Transaction, including (i) the existing water wheeling agreement
with the golf course, and (ii) the ability of Purchaser to serve the Kapalua
future expansion area, have been duly and properly obtained from the Commission
in form and content acceptable to Purchaser in its sole and absolute discretion;

 

(f)     That DOH authorization for Purchaser to operate the Systems shall be in
full force and effect on the Closing;

 

(g)     That the transfers of the Acquired Assets, except for Post-closing
Easements, concurrently close;

 

(h)     That all material agreements, consents, and approvals of any persons
necessary to the consummation of the Contemplated Transaction, or otherwise
pertaining to the matters covered by it, shall have been obtained by Seller or
Purchaser as the case may be, and delivered to the Parties; including without
limitation, approval of the Commission and the consent of the County of Maui to
the Assignment and Assumption of Wastewater Agreement (or in lieu thereof
evidence to Purchaser’s sole satisfaction that the County of Maui’s consent is
not required) ;

 

(i)     that Purchaser has been satisfied with the conclusions and results of
its due diligence;

 

(j)     that Purchaser has received approval of its Board of Directors no later
than the end of the Due Diligence Period;

 

(k)     Purchaser shall be satisfied with all inspections and investigations
concerning title to and surveys of the Real Property, Easements, Water Rights
and other Acquired Assets. Failure of Purchaser to be satisfied under this
section is not a breach of this Agreement by Seller.

 

(l)     that Purchaser shall have received an irrevocable commitment from a
title company of its choice for an ALTA Extended Owner’s policy of title
insurance for the Real Property and Easements to be issued to and acceptable to
Purchaser, including such endorsements and in such amounts as Purchaser may
reasonably require, effective as of the Closing Date.

 

9.2.        Conditions to Seller's Obligation. All obligations of Seller
hereunder are subject at the option of Seller, to the fulfillment of each of the
following conditions at or prior to the Closing, and Purchaser shall exert its
best efforts to cause such condition to be so fulfilled:

 

(a)     All representations and warranties of Purchaser contained herein shall
be true and correct in all material respects at and as of the date of the
Closing (said representations and warranties to survive Closing);

 

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(b)     All covenants, agreements and obligations required by the terms of this
Agreement to be performed by Purchaser at or before the Closing shall have been
duly and properly performed in all material respects and all deliverables to be
provided by Purchaser at Closing as described in Section 6.2(b) shall have been
duly executed and delivered;

 

(c)     No action, suit or proceeding shall be pending or threatened before any
court, governmental agency or authority to enjoin, restrain or prohibit this
Agreement or the consummation of the Contemplated Transaction; and

 

(d)     [intentionally omitted].

 

(e)     That all material agreements, consents, and approvals of any persons
necessary to the consummation of the Contemplated Transaction, or otherwise
pertaining to the matters covered by it, shall have been obtained by Seller, and
delivered to Purchaser.

 

(f)     That approval for the transfer of the Acquired Assets and the
Contemplated Transaction, including the ability of Purchaser to serve the
Kapalua future expansion area, have been duly and properly obtained from the
Commission in form and content acceptable to Seller in its discretion.

 

(g)     That Seller has received approval of its Board of Directors no later
than the end of the Due Diligence Period.

 

10.        TERMINATION.

 

10.1.     This Agreement may be terminated in the manner provided below, by
written notice given by the party desiring to terminate to the other party:

 

(a)       by mutual agreement of Purchaser and Seller at any time prior to the
Closing;

 

(b)       By Purchaser prior to the completion of its Due Diligence Period;

 

(c)     by either Seller or Purchaser at any time prior to the Closing if a
material default or breach shall be made by the other party hereto with respect
to the due and timely performance of any of its covenants and agreements
contained herein, or with respect to the due compliance with any of its
representations, warranties or covenants, and such default cannot be cured and
has not been waived;

 

(d)     by either Seller or Purchaser if the conditions to such party's
obligation to close have not all occurred in all material respects on or before
the date established under this Agreement or, in the absence thereof, by
scheduled Closing date, unless the failure results primarily from such party
itself breaching any representation, warranty, agreement, obligation, or
covenant contained in this Agreement; and

 

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(e)     by either party if approval for the transfer of the Acquired Assets and
the Contemplated Transaction have not been duly and properly obtained from the
Commission in form and content acceptable to Purchaser and Seller within 24
months of the date of this Agreement;

 

10.2.     Effect of Termination. In the event this Agreement is terminated as
provided in the foregoing section, all obligations of the parties hereunder
shall terminate, except for Sections 3.3 (Inspection; Inspection Indemnity), 4.2
(Capital Project Expenditures) and 12.9 (Specific Performance) shall survive;
and provided further that if this Agreement is so terminated by a party because
one or more of the conditions to such party's obligations hereunder is not
satisfied as a result of another party's failure to comply with its obligations
under this Agreement, the terminating party's right to pursue all legal remedies
for breach of contract or otherwise, including, without limitation, damages
relating thereto, shall also survive such termination unimpaired.

 

11.     POST-CLOSING OBLIGATIONS AND COVENANTS. Seller, MLP and Purchaser agree
as follows with respect to the period following the Closing (“Post-closing”):

 

11.1.     Prepaid Assets. All prepaid rent, utilities, taxes and other prepaid
expenses and security deposits given (“Prepaid Assets”) as of Closing shall be
transferred to Purchaser. If Seller or MLP receives any payments which include
amounts attributable to sales, deliveries or services made or performed by
Purchaser after the Closing, Seller or MLP, as the case may be, shall promptly
pay such amounts to Purchaser.

 

11.2.     Transfer of Telephone Number. Purchaser shall be responsible for
transferring the telephone number of the Business to Purchaser. Seller shall
have no liability for any telephone charges from and after the Closing.

 

11.3.     Obligations Related to Post-closing Easements. Seller’s and MLP’s
obligations as set forth in Section 4.3 shall survive Closing.

 

11.4.    Preservation of Records. The Parties agree that they shall preserve and
keep the records of the Systems acquired pursuant to this Agreement for a period
of four (4) years from the Closing, or for any longer period as may be required
by any government agency or ongoing audit, administrative proceeding or
litigation, and shall make such records available to the other as may be
reasonably required by the other in connection with, among other things, the
filing of any tax return or report by, or any insurance claims by, legal
proceedings against or governmental investigations (including tax audits) of
Purchaser or Seller. In the event that a party wishes to destroy such records
after that time, it shall first give 90 days prior written notice to the other
party and the other party shall have the right, at its option and expense, upon
prior written notice given within that 90-day period, to take possession of the
records within 180 days after the date of such notice.

 

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11.5     Litigation Support. From and after the Closing, Purchaser shall provide
Seller, at Purchaser’s cost, with such cooperation and access to records and
personnel as Seller may reasonably request in connection with Seller’s defense
of any litigation or other judicial or quasi-judicial proceeding or
investigation, whether commenced or threatened, involving Seller’s prior
ownership or operation of the Acquired Assets or the Systems.

 

11.6     Accounts Payable. From and after the Closing, Seller agrees to pay all
accounts payable which were incurred by Seller in the ordinary course up to the
Closing as well as all Retained Liabilities.

 

11.7     Rate Case Application. After Closing, Seller and MLP shall cooperate
with Purchaser to develop support for filing a rate case application within two
(2) years after the Closing Date.

 

11.8     Survival and Indemnification.

 

 (a)     Subject to Section 7.20 and Section 8.6, all representations,
warranties, covenants and obligations of the Parties in this Agreement and any
other certificate or document delivered pursuant to this Agreement shall survive
the Closing and the consummation of the Contemplated Transactions, subject to
Section 11.8(c)-(d).

 

 (b)     Seller and MLP jointly and severally agree to indemnify, defend and
hold harmless Purchaser and Purchaser’s representatives, officers, directors,
employees and agents (“Purchaser Indemnitees”) against any and all losses,
claims, liabilities, damages, actions, costs or expenses, including attorney’s
fees and costs (the “Seller Indemnified Losses”) arising from, in connection
with, or with respect to the following items:

 

1.     Any breach of any representation, warranty, covenant or agreement of
Seller or MLP contained in this Agreement, or any agreement, certificate or
document executed and delivered by them, or their affiliates pursuant hereto or
in connection with any of the transactions contemplated in this Agreement;

 

2.      Any failure by Seller to satisfy, perform or pay the Retained
Liabilities;

 

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3.     Any and all actions, suits, proceedings, claims or demands by third
parties (“Third Party Claims”) and losses, liabilities, expenses or judgments
relating thereto, directly resulting from or arising from matters relating to
Seller, its Business or the Acquired Assets which occurred or are alleged to
have occurred prior to the Closing other than those specifically assumed by
Purchaser as set forth in this Agreement.

 

(c)     If the Closing occurs, Seller and MLP will have liability (for
indemnification or otherwise) with respect to any breach of (i) a covenant or
obligation to be performed or complied with or (ii) a representation or warranty
only if on or before 5 P.M. Hawaii Standard Time on the third anniversary of the
Closing Date, Purchaser notifies Seller or Seller’s designee (such designee to
be provided by Seller as appropriate) of a claim specifying the factual basis of
the claim in reasonable detail to the extent then known by Purchaser.

 

(d)     If the Closing occurs, Purchaser will have liability with respect to any
breach of (i) a covenant or obligation to be performed or complied with, or (ii)
a representation or warranty, only if on or before 5 P.M. Hawaii Standard Time
on the third anniversary of the Closing Date, Seller or Seller’s designee
notifies Purchaser of a claim specifying the factual basis of the claim in
reasonable detail to the extent then known by Seller or Seller’s designee.

 

(e)     Subject to subsections (c) and (d) above, the provisions of this Section
11.8 shall survive the Closing and be enforceable regardless of whether the
liability is based upon past, present or future acts, claims, liabilities or
legal requirements and regardless of whether any person or entity (including the
person or entity from whom relief is sought) alleges or proves the sole,
concurrent, contributory, or comparative negligence of the person or entity
seeking relief, the sole or concurrent strict liability imposed upon the person
or entity seeking relief.

 

12.       MISCELLANEOUS.

 

12.1.     Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given (a) when delivered if sent
by overnight courier to, or served personally upon, the party for whom it is
intended, or (b) on the fourth business day after mailing, if mailed by
registered or certified mail (return receipt requested, postage prepaid), to
such party at its address as hereinafter shown. Between the Effective Date and
the last day of the Due Diligence Period, or if Purchaser shall elect to proceed
with the Contemplated Transaction, the Closing Date, notices and communications,
except for notices of the other party’s default under this Agreement, may be
provided by email to the addressee’s email address below, and is deemed to have
been received by the addressee within thirty (30) minutes after the time sent
(as recorded on the sender’s email) unless the sender receives an automated
message that the email has not been delivered. If the email is sent after 5
p.m., Hawaii Standard Time, or on a day which is not a business day, the email
shall be deemed to have been received at 9 a.m. on the next business day. For
purposes hereof, the effectiveness of any notice or other communication shall
not be defeated by the failure of the recipient to accept delivery of such
notice.

 

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To Seller and MLP:

Maui Land & Pineapple Company, Inc.

Attention: Paulus Subrata

200 Village Road

Lahaina, Hawaii 96761

Email: psubrata@kapalua.com

Telephone: (808) 757-2666

   

To Purchaser:

 

 

 

With a CC:

Hawaii Water Service Company, Inc.

Attention: General Manager

P.O. Box 384809

Waikoloa, HI 96738

 

Hawaii Water Service Company, Inc.

Attention: General Counsel

1720 N. First Street

San Jose, CA 95112

 

Any party may change the address to which notices or other communications
hereunder are to be delivered by giving the other party notice in the manner
herein set forth.

 

12.2.     Non-assignability of Agreement. Except for Purchaser’s assignment of
this agreement to an affiliate of Purchaser, this Agreement shall not be
assignable by either party without the prior written consent of the other party,
which consent shall not be unreasonably withheld. Notwithstanding the foregoing,
Purchaser in its sole and absolute discretion may assign its interest in this
Agreement to an affiliate or subsidiary; provided, however, that all obligations
of Purchaser under this Agreement shall be assumed by such assignee.

 

12.3.     No Third Party Beneficiaries. The representations, warranties,
covenants and agreements contained in this Agreement are for the sole benefit of
the Parties hereto and their permitted successors and assigns, and they shall
not be construed as conferring any rights on any other persons.

 

12.4.     Entire Agreement. This Agreement and the instruments to be delivered
by the parties pursuant to the provisions hereof constitute the entire agreement
between the parties, other than (i) that certain Confidentiality Agreement
between MLP and Purchaser dated October 29, 2019 (the “Confidentiality
Agreement”) and (ii) that certain Indemnity Agreement between MLP and Purchaser
dated November 15, 2019 (the “Indemnity Agreement”). This Agreement supersedes
all prior agreements and understandings between the parties with respect to the
subject matter other than the Confidentiality Agreement and the Indemnity
Agreement. Any amendments, alternative or supplementary provisions to this
Agreement, or waiver of any term or provision hereof must be made in writing and
duly executed by an authorized representative or agent of each of the parties
hereto.

 

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12.5.     Counterparts, Telefacsimile/Electronic Signatures. This Agreement may
be executed in multiple counterparts, each of which shall be deemed to be an
original, and all such counterparts shall constitute one instrument.
Telefacsimile signatures or signatures affixed to the Agreement which are
transmitted electronically via e-mail to the other party shall be fully binding
and effective for all purposes (subject to the execution of this Agreement by
all parties), whether or not the originally executed Agreement is delivered to
the other party. Each party, however, agrees to promptly forward the executed
Agreement bearing its original signature to the other party.

 

12.6.     Counsel, Legal and Closing Fees. Each party shall be responsible for
its own counsel and legal fees provided, as stated in Section 4.1(d) costs of
legal counsel in seeking Commission authorization of the Contemplated
Transaction shall be shared equally, including in the event of the use of joint
legal counsel in such case. Notwithstanding the foregoing, at closing, Purchaser
shall reimburse Seller its actual out of pocket attorney fees incurred over a
threshold amount of $75,000. Purchaser’s reimbursement to Seller shall not
exceed a cap of $75,000. All other closing costs shall be borne by Purchaser and
Seller on 50%-50% basis except as otherwise provided herein.

 

12.7.     Governing Law. The internal laws of the State of Hawaii shall govern
the interpretation and construction of this Agreement.

 

12.8.     Further Assurances. The parties hereto shall execute such further
documents and perform such further acts as may be necessary to transfer and
convey the Acquired Assets to Purchaser, on the terms herein contained, and to
otherwise comply with the terms of this Agreement and consummate the
Contemplated Transaction.

 

12.9.     Specific Performance. Seller and MLP each acknowledge and agree that
Purchaser will be irreparably harmed and that there will be no adequate remedy
at law in the event of a violation by Seller or MLP of any of its covenants or
agreements which are contained in this Agreement It is accordingly agreed that,
in addition to any other remedies which may be available upon the breach of such
covenants and agreements, Purchaser shall have the right to obtain injunctive
relief to restrain any breach or threatened breach of or otherwise to obtain
specific performance of Seller or MLP’s covenants or agreements contained in
this Agreement.

 

12.10.   Mediation. Any and all matters in dispute arising from or relating to
this Agreement, or the breach thereof, which remain unresolved after direct
negotiation between the Parties, shall first be submitted to confidential
mediation in accordance with the Rules, Procedures and Protocols for Mediation
of Dispute Prevention & Resolution, Inc., then in effect. The parties agree that
a good faith attempt to resolve all issues in mediation for a minimum of 30
days, but not more than 90 days, is a precondition to further adversarial
proceedings of any kind. Each Party shall bear their own respective costs of
such mediation, including attorneys’ fees.

 

34

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12.11.   Severability. If any provision of this Agreement or the application
thereof to any person or circumstance shall be invalid or unenforceable to any
extent, the remainder of this Agreement and the application of such provisions
to other persons or circumstances shall not be affected thereby and shall be
enforced to the greatest extent permitted by law.

 

12.12.   Board Approval. Seller’s and Purchaser’s obligations under this
Agreement are subject to the approvals of Seller’s and Purchaser’s Board of
Directors. Seller and Purchaser shall obtain approvals of this Agreement by
their respective Board of Directors prior to end of the Due Diligence Period.

 

12.13.   Public Announcements. Any public announcement press release or similar
publicity with respect to this Agreement or the Contemplated Transactions will
be issued as the Parties may mutually agree upon, however Seller and MLP
acknowledge that Purchaser is a subsidiary of a U. S. publicly traded
corporation and that U. S. Securities and Exchange Commission (“SEC”) rules
require that announcements be made in a manner that meets SEC Regulatory Fair
Disclosure requirements. In the event of any conflict between the previous
sentence and similar provisions in the Confidentiality Agreement, the preceding
sentence shall control. Seller and Purchaser will consult with each other
concerning the means by which Seller’s employees, customers, suppliers and
others having dealings with Seller will be informed of the Contemplated
Transactions, and Purchaser will have the right to be present for any such
communication.

 

12.14    Time is of the Essence. With regard to all dates and time periods set
forth or referred to in this Agreement, time is of the essence.

 

12.15    Severability. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.

 

12.16    Amendment. This Agreement may be amended, modified or supplemented only
by written agreement of the Parties.

 

12.17   Further Assurances. The Parties shall cooperate reasonably with each
other and with their respective representatives in connection with any steps
required to be taken as part of their respective obligations under this
Agreement, and shall (a) furnish upon request to each other such further
information; (b) execute and deliver to each other such other documents; and (c)
do such other acts and things, all as the other party may reasonably request for
the purpose of carrying out the intent of this Agreement and the Contemplated
Transactions.

 

35

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12.18   Recovery of Litigation Costs. If any legal action or other proceeding is
brought by Seller, MLP or Purchaser for the enforcement of this Agreement, or
because of an alleged dispute, breach, default or misrepresentation in
connection with any of the provisions of this Agreement, the successful or
prevailing party or parties shall be entitled to recover reasonable attorney’s
fees and other costs incurred in that action or proceeding, in addition to any
other relief to which it or they may be entitled.

 

12.19    MLP Guaranty. In consideration of the benefits to be provided pursuant
to this Agreement to Seller, MLP does hereby guarantee the full, faithful and
timely payment and performance by Seller of all the agreements, covenants and
other obligations of Seller under this Agreement. If Seller shall default at any
time in the payment of any amount due or perform any obligation required to be
performed by either under this Agreement, then MLP, at its expense, shall on
demand of Purchaser, fully and promptly, and well and truly, pay and or perform
all such obligations of Seller under or pursuant this Agreement, and all damages
and expenses (including attorneys’ fees and costs) that may arise in consequence
of Seller’s non-performance under this Agreement. MLP hereby waives all
requirements of notice of the acceptance of these obligations and all
requirements of notice of breach or nonperformance by Seller.

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.

 

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK]

 

36

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MLP:   Purchaser:   MAUI LAND & PINEAPPLE COMPANY, INC., a Hawaii corporation  
HAWAII WATER SERVICE COMPANY, INC., a Hawaii corporation                        
          By /s/ Warren H. Haruki   By /s/ Thomas Smegal     Name: Warren H.
Haruki     Name: Thomas Smegal     Title: Chairman & CEO     Title: Vice
President, CFO                                   By /s/ Paulus Subrata   By /s/
Martin Kropelnicki     Name: Paulus Subrata     Name: Martin Kropelnicki    
Title: Vice President     Title: President and CEO                              
    KWC:     KWTC:   KAPALUA WATER COMPANY, LTD., a Hawaii corporation   KAPALUA
WATER TREATMENT COMPANY, LTD., a Hawaii corporation                            
      By /s/ Paulus Subrata   By /s/ Paulus Subrata     Name: Paulus Subrata    
Name: Paulus Subrata     Title: Vice President     Title: Vice President  

 

37

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EXHIBIT A-1

 

SERVICE AREAS OF KWC

 

[g1.jpg]

 

38

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EXHIBIT A-2

 

SERVICE AREAS OF KWTC

 

[g2.jpg]

 

39

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EXHIBIT B-1

ASSET LISTING OF KAPALUA WATER COMPANY, LTD

 

       

ACTIVITY AND BALANCES TO CLOSING (6-30-19)

     

 

 

PLANT

   

ADDITIONAL

   

ACCUM

   

NET

 

Description

 

Year

Acquired

 

AMOUNT
12-31-18

   

DEPRE EXP
To 06-30-19

   

DEPRE
06-30-19

   

PLANT
06-30-19

 

Included in the 2008 Rate Case - Plant with Balances & Fully Depreciated

                                   

Generator & Tank Building

 

1993

    65,259       1,088       56,241       9,018  

Control Tank

 

1993

    56,538       942       49,000       7,538  

Dual Water System

 

1994

    69,932       874       43,416       26,516  

Hydrant

 

1986

    21,043       -       21,043       -  

Controls Replacement

 

2006

    26,631       666       17,088       9,543  

4" Trash Pump

 

2007

    60,847       -       60,847       -  

Mains, Hydrants & Valves

 

F/D

    5,494       -       5,494       -  

Clay Valve

 

1996

    11,969       -       11,969       -  

Mains, Hydrants & Valves

 

1979

    19,130       -       19,130       -  

Transfer From Ridge A

 

1979

    23,026       -       23,026       -  

Transfer From Ridge B

 

1979

    196,393       -       196,393       -  

--Honolua Phase 1 - Submersible Booster Pump (P)

                                   

--Honolua Phase 1 - Submersible Booster Pump (P)

                                   

--Honolua Phase 2 - Submersible Booster Pump (P)

                                   

--Honolua Phase 2 - Submersible Booster Pump (P)

                                   

--1.0 MG Tank - Concrete Reservoir (P)

                                   

--0.1 MG Tank - Plantation Estates II (P)

                                   

--0.04 MG Tank - Honolua Ridge Phase I (P)

                                   

--0.03 MG Tank - Honolua Ridge Phase I (P)

                                   

--0.03 MG Tank - Honolua Ridge Phase II (P)

                                   

--Plantation Estates ! Offsite Submersible Pump (NP)

                                   

--Plantation Estates!I Offsite Submersible Pump (NP)

                                   

--Honolua Phase 1 - Submersible Booster Pump (NP)

                                   

--Honolua Phase 1 - Submersible Booster Pump (NP)

                                   

--Honolua Phase 2 - Submersible Booster Pump (NP)

                                   

--Honolua Phase 2 - Submersible Booster Pump (NP)

                                   

--Tank 0.04 MG Glass/Steel - Plantation Estates II (NP)

                                   

--Tank 0.01 MG Glass/Steel - Plantation Estates II (NP)

                                   

--Tank 0.01 MG Glass/Steel - Honolua Ridge I (NP)

                                   

--Tank 0.57 MG Glass/Steel - Honolua Ridge 1 (NP)

                                   

--Tank 0.15 MG Glass/Steel - Honolua Ridge II (NP)

                                   

Transfer from Golf Villas A

 

1979

    20,387       -       20,387       -  

Transfer From Golf Villas

 

1979

    232,924       -       232,924       -  

Transfer From IronWoods

 

1979

    347,614       4,345       343,993       3,621  

Transfer From IronWoods

 

1979

    7,328       -       7,328       -  

Villa Links 8" Line

 

1982

    40,459       506       37,003       3,456  

Pipelines

 

1993

    395,909       4,949       256,277       139,632  

Dual Water System

 

1994

    1,345,422       16,818       824,071       521,351  

--Water meters (Total 591)

                                   

--Village Reservoir 4.5 MG Kapalua Village (NP)

                                   

--Plantation Reservoir 8 MG - Irrigation (NP)

                                   

Pump - Pipeline Addl cost

 

1994

    24,078       241       12,079       11,999  

12 Dual Irrigation Line/Loop/Valve

 

1998

    41,855       -       41,855       -  

Water Tank Exterior

 

2008

    155,773       5,192       116,829       38,944                              
         

Sub Total Page 1

    3,168,011       35,621       2,396,394       771,617                        
               

After 2008 Rate Case - Additions

                                   

Meter Replacements

 

2009

    32,090       -       32,090       -  

Meter Replacements

 

2008

    63,757       2,125       44,630       19,127  

CH2MILL GIS Program

 

2007

    97,794       -       97,794       -  

Relocate 12" Waterline from Kap

 

2009

    199,493       6,650       134,103       65,390  

SCADA System Controls at KWC

 

2016

    192,679       4,817       27,296       165,383  

Mahana Potable & Non-Potable

 

2017

    3,998,800       49,985       199,940       3,798,860  

-- Mahana Potable

                                   

-----Transmission line

                                   

-----Distribution Lines

                                   

-----Service Connections

                                   

-----Meters

                                   

-----Pumping Equipment

                                   

-----Mahana Estates - Booster Pump

                                   

-----Mahana Estates - Booster Pump

                                   

-----0.1 MG Tank - Mahana Estates

                                   

-----1.0 MG Tank - Concrete Reservoir

                                   

--Mahana Non-Potable

                                   

-----Transmission line

                                   

-----Distribution Lines

                                   

-----Service Connections

                                   

-----Meters

                                   

-----Pumping Equipment

                                   

-----Mahana Estates - Booster Pump

                                   

-----Mahana Estates - Booster Pump

                                   

-----Tank 0.13 MG Mahana Estates

                                   

-----Tank 0.03 MG Mahana Estates

                                                                         

CWIP at 12/31/18:

    -       -       -       -  

--Water meter service lateral replacement

 

2019

    106,336       -       -       106,336  

--Potable & Non-potable water highway bypass

    69,932       -       -       69,932                                        

Sub Total Page 2

    4,760,881       63,577       535,853       4,225,029                        
               

TOTAL PLANT

  $ 7,928,892     $ 99,198     $ 2,932,247     $ 4,996,646                      
                 

Less: CIAC - Mahana Potable & Non-Potable

 

2017

    (3,998,800 )     (49,985 )     (199,940 )     (3,798,860 )                  
                   

RATE BASE

  $ 3,930,092     $ 49,213     $ 2,732,307     $ 1,197,786  

 

40

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EXHIBIT B-2

 

ASSET LISTING OF

KAPALUA WASTE TREATMENT COMPANY, LTD

 

         

Plant

   

Accumulated Depreciation

   

Net

 

Description

 

Year

Acquired

 

Balance as of

12/31/17

   

At

12/31/17

   

2018

Depreciation

   

Depreciation

to 6/30/19

   

At

6/30/2019

   

Plant

6/30/2019

                                                                               
                                 

Included in the 2008 Rate Case - Plant with Balances & Fully Depreciated

                         

75HP Motor

 

2003

    7,180       7,180       -       -       7,180       -  

Emergency Generatof - Lift Station

 

1980

    6,386       6,386       -       -       6,386       -  

Lift Station - Electrical System

 

1978

    76,880       76,880       -       -       76,880       -  

Villiage Sewer Extension

 

1982

    36,675       32,167       917       458       33,542       3,133  

Transfer Switch for Lift Station

 

1986

    5,980       5,980       -       -       5,980       -  

Force Main Conversion

 

1986

    31,458       31,458       -       -       31,458       -  

Renovation SPS 2

 

1989

    29,272       29,272       -       -       29,272       -  

Backup Pump Motor SPS 3

 

1994

    7,684       7,684       -       -       7,684       -  

Pump Station 3 Generator

 

1999

    33,969       15,711       849       425       16,985       16,984  

Rebuild 75HP Pump Motor

 

2003

    5,101       5,101       -       -       5,101       -  

Submersible Sewage Pump

 

2001

    5,150       5,150       -       -       5,150       -  

Kohler Diesel Generator

 

2002

    28,746       28,746       -       -       28,746       -  

Motor Control Unit - Lift Station

 

2005

    8,101       8,101       -       -       8,101       -  

Emergency Generator - Lift Station

 

2006

    23,491       13,605       1,175       587       15,367       8,124  

Transfer from Ironwoods

 

1979

    119,691       113,956       2,992       1,496       118,444       1,247  

Transfer from Ridge

 

1979

    80,648       76,784       2,016       1,008       79,808       840  

--SPS #2 - Pump Station

                                                     

--SPS #2 - Pump #1

                                                     

--SPS #2 - Pump #2

                                                     

--SPS #3 - Pump Station

                                                     

--SPS #3 - Pump #1

                                                     

--SPS #3 - Pump #2

                                                     

--SPS #5 - Pump Station

                                                     

--SPS #5 - Pump #1

                                                     

--SPS #5 - Pump #2

                                                     

--Collection System Flush

                                                                               
                                                                               
     

Sub Total Page 1

    506,412       464,160       7,949       3,975       476,084       30,327    
                                                     

After 2008 Rate Case - Additions

                                                     

Mahana Wastewater System

 

2017

    2,682,200       33,528       67,055       33,528       134,110      
2,548,090  

Station 5 Pump Replace

 

2018

    14,975       -       1,123       749       1,872       13,103  

Smith & Loveless Pump Motor

 

2018

    6,196       -       258       310       568       5,628  

Pump Station 2 Generator Replacement

 

2018

    91,243       -       507       3,041       3,548       87,695              
                                                                               
                   

Sub Total Page 2

    2,794,614       33,528       68,943       37,628       140,098      
2,654,516                                                          

TOTAL PLANT

    3,301,026       497,687       76,892       41,602       616,182      
2,684,843                                                          

Less: CIAC - Mahana Wastewater System

    (2,682,200 )     (33,528 )     (67,055 )     (33,528 )     (134,110 )    
(2,548,090 )                                                                    
                                           

RATE BASE

  $ 618,826     $ 464,160     $ 9,837     $ 8,075     $ 482,072     $ 136,753  

 

41

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EXHIBIT C

 

CAPITAL EXPENDITURE PROJECTS FOR

KWC AND KWTC

 

Kapalua Water Company, Ltd.

Kapalua Waste Treatment Company, Ltd.

Capital Projects

To be Completed in 2019 to 2021

                       

(1)

 

(2)

         

Line #

 

Name

 

Description

         

KAPALUA WATER COMPANY

   

1

 

Water Meters

 

Replace approximately 500 meters and boxes ranging in size from 5/8" to 4" in
Kapalua Makai

         

2

 

Potable and Non-potable Service Lines

 

Replace aging service lines in Pineapple Hill with new copper lines

         

3

 

Potable and Non-potable Service Lines

 

Replace aging service lines in Kapalua Pl. with new copper lines

         

4

 

Potable and Non-potable Bypass

 

Connect the potable waterline from the wall to the non-potable line before the
chlorination station and create a bypass

         

5

 

Complete Potable Well #3

 

Refresh the Well #3 capacity study and install pump/housing

         

6

                 

7

                 

8

                 

9

                 

KAPALUA WASTE TREATMENT COMPANY

   

10

 

Collection System Flush

 

Wastewater collection line flush is recommended to eliminate blockages before
they occur

         

11

 

Pump stations

 

Replace pump/motors at three KWT pump stations

         

12

                 

13

                 

Term Sheet Attachments 10-2-18

             

 

42

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EXHIBIT D

 

AGREEMENT FOR WATER DELIVERY
(NON-POTABLE WATER)

 

THIS AGREEMENT (“Agreement”) is made and entered into on this ____ day of
________________________, 2019 (“Effective Date”), by and between MAUI LAND &
PINEAPPLE COMPANY, INC., a Hawaii corporation, whose address is P. O. Box 187,
Kahului, Hawaii 96733, hereinafter called “MLP”, and [_________WATER COMPANY, a
__________ corporation], whose address is __________________________________,
hereinafter called “Water Company”.

R E C I T A L S:

 

A.     MLP is the owner and operator of a water collection and transmission
system (the “Ditch System”) that collects untreated surface and transports it
via the Honokohau Ditch and related infrastructure.

B.     Water Company is a regulated public utility company.

C.     Concurrently herewith, Water Company has acquired from MLP a non-potable
water distribution system (the “Non-Potable System”) that Water Company will use
to serve consumers within its designated service area at the Kapalua Resort at
Kapalua, Maui, Hawaii (the “Service Area”).

D.     The parties desire to enter into this Agreement to formalize and set
forth the terms and conditions upon which MLP will provide water from its Ditch
System for Water Company’s use and distribution via the Non-Potable System.

NOW, THEREFORE, in consideration of the above and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows:

 

1.     Delivery of Water; Delivery Points. Subject to the terms and conditions
herein, MLP does hereby undertake and agree to deliver from the Ditch System to
Water Company, for the term of this Agreement, non-potable water in such
quantities as Water Company may require to meet its service obligations in the
Service Area. MLP shall deliver water to the Water Company at the delivery
points shown on the map attached as Exhibit A, or such other locations as the
parties may mutually agree to from time to time (each a “Delivery Point”).

 

2.     Water Delivery Charges. Water Company will pay to MLP for all water
delivered to Water Company at the initial rate of $260.00 per million gallons
(i.e., $0.26 per thousand gallons) plus the Hawaii general excise tax thereon,
payable monthly in arrears (or such other time periods as may be mutually agreed
upon by the parties in writing). Payments for each calendar month, or portion
thereof, shall be due and payable no later than the 10th calendar day of the
following month. On the third anniversary of the date of this Agreement, and
each subsequent third anniversary, the rate then in effect shall be increased by
a percentage equal to the percentage increase over the preceding twelve months
in the Consumer Price Index for All Urban Consumers (CPI-U) for Honolulu
published by the U.S. Department of Labor – Bureau of Labor Statistics
(1982-84=100) (“CPI”); provided that if such index is discontinued MLP shall
have the right to reasonably designate an alternative index of inflation,
provided that the adjusted rate shall never be less than the rate payable for
the immediately preceding period. Water Company shall pay to MLP together with
each payment required hereunder which is subject to the State of Hawaii general
excise tax on gross income, as it may be amended from time to time, or any
successor or similar tax, an amount which, when added to such payment (currently
4.166% of each such payment), shall yield to MLP, after deduction of all such
tax payable by MLP with respect to all such payments, a net amount equal to that
which MLP would have realized from such payments had no such tax been imposed.

 

43

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3.     Water Meters. Water Company shall, at its own expense, install and
maintain suitable meters or gauges at accessible locations at each Delivery
Point to assure an accurate and documented measurement of all water delivered to
the Water Company. Together with each monthly payment under this Agreement,
Water Company shall provide to MLP an accurate and complete written report of
all water delivered at each Delivery Point. Representatives of MLP shall have
access to such meters and all records of meter readings at all reasonable times
for the purpose of checking the same and verifying Water Company’s reports.

 

4.     Term. The term of this Agreement commences on the date of this Agreement
and terminates on the 20th anniversary of such date, whereupon this Agreement
shall automatically renew for successive 10-year terms unless terminated by
mutual agreement of the parties. Notwithstanding the foregoing, MLP’s obligation
to deliver irrigation water pursuant to this Agreement shall terminate if Water
Company permanently ceases operation of the Non-Potable System or develops wells
or other alternative sources of water adequate to meet Water Company’s service
obligations.

 

5.     Limits on Use. Water delivered pursuant to this Agreement shall be used
only for irrigation and other non-potable uses within the Service Area and may
not be transmitted to or used at any lands outside of the Service Area. Water
Company acknowledges that water delivered pursuant to this Agreement is not
treated or suitable for human consumption and Water Company shall at all times
take reasonable precautions to prevent any such use.

 

6.     Seller’s Warranties, Representations & Covenants. MLP warrants and
represents to Water Company (a) that MLP is the owner in fee simple or holds
recorded easements for all of the lands underlying the portions of the Ditch
System necessary to deliver water to the Delivery Point, and(b) that MLP
currently holds, and will use commercially reasonable efforts to at all times
maintain, all permits and approvals required by law for the operation of the
Ditch System, including those required by the Commission on Water Resource
Management of the State of Hawaii and the County of Maui. Notwithstanding the
foregoing, Water Company acknowledges that the Commission on Water Resource
Management is currently working on amended Interim Instream Flow Standards for
surface water sources that feed the Ditch System and that the outcome of that
process, or subsequent similar processes, may affect the amount of water
available to Water Company from the Ditch System, and Water Company assumes all
risk of the same. Except as set forth throughout this Agreement, MLP makes no
warranties, express or implied, as to the Ditch System, the quantity or quality
of Ditch System water available to Water Company, or any other matters. Water
Company expressly acknowledges and agrees that water in the Ditch System may
contain soil, sediments, vegetation, debris and other contaminants and Water
Company assumes all risk of the same.

 

7.     Ditch System Maintenance. MLP will exercise commercially reasonable
efforts to manage, repair and maintain the Ditch System in condition adequate
for the reliable delivery of water to the Non-Potable System in accordance with
this Agreement. Notwithstanding the foregoing, Water Company acknowledges that
the Ditch System includes stream diversions, tunnels, ditches, siphons and other
improvements that are very old and that in case of major casualty to or other
failure of such components repair or replacement may not be possible at a
commercially reasonable cost, so MLP makes no assurances as to its ability to
continually maintain the Ditch System in case of such events.

 

44

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8.     Force Majeure. Water Company and MLP agree and understand that the
ability of MLP and Water Company to perform their respective obligations under
this Agreement are made expressly subject to earthquake, hurricanes, drought,
landslides, tunnel or ditch collapse, casualty to the Ditch System, or other
natural disasters or events which render MLP’s Ditch System temporarily or
permanently inoperable, actions of the federal, state and county governments or
agencies thereof, including without limitation enactment or enforcement of laws
or governmental regulations, strikes, lock-outs, unavailability of labor or
materials, wars, insurrections, rebellions, civil disorder, declaration of
national emergencies, acts of God, or other causes beyond MLP’s and/or Water
Company’s respective control. Neither party shall have any liability for failure
or inability to perform its obligations hereunder to the extent such failure or
inability is caused by any such cause or event.

 

9.     Use Priorities. MLP has existing commitments to the County of Maui
Department of Water Supply (“County”) to provide a maximum of 2.5 MGD of water
from the Ditch System that DWS uses at its Mahinahina Weir treatment plant to
produce potable water for the DWS municipal system, and that MLP may from time
to time upon the County’s request commit additional Ditch System water to such
use. Water Company acknowledges and agrees that the County’s potable needs take
priority in case drought or other conditions or events reduce the total flows in
the Ditch System below levels necessary to meet the demands of all users. Water
Company further acknowledges that MLP has existing commitments for irrigation
water delivery to the owner of the golf courses and related facilities at the
Kapalua Resort and other third-party irrigation water users, and in case of
drought or other shortage Water Company and such other users shall have equal
priority for the Ditch System’s available capacity (after satisfaction of the
County’s potable needs).

 

10.    Pipe Fee. In consideration of, and an essential inducement to MLP’s entry
into this Agreement, Water Company agrees that MLP may continue to use the
Non-Potable System to deliver Ditch System water to the Kapalua Resort golf
courses, golf academy and related golf facilities. MLP shall pay Water Company a
“pipe fee” for such use, calculated as follows: [To be negotiated].

 

11.    Condemnation. If the Ditch System or any part thereof shall be taken or
condemned by any authority having the power of eminent domain, MLP shall be
solely entitled to all compensation and damages payable with respect to the
taking of the Ditch System, but Water Company shall be entitled to seek
compensation and damages from the condemning authority for the loss of Water
Company’s rights and interests under this Agreement, including inverse
condemnation damages arising from the diminution in value of the Non-Potable
System from the loss of rights to obtain water from the Ditch System.

 

12.    Defaults and Remedies. If a party fails to perform any of the terms,
covenants and agreements contained herein, if such failure continues for a
period of thirty (30) days after written notice, then the non-defaulting party
shall be entitled to all remedies available to it at law or equity, including by
way of example and not in limitation thereof, the right to sue such person for
specific performance, injunctive relief and/or monetary damages, including
without limitation, reasonable attorneys’ fees, costs and expenses. Amounts due
hereunder shall bear interest from the date due until the date paid at the rate
of 1% per month.

 

45

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13.   Indemnity. Water Company agrees to indemnify, defend and hold MLP and its
officers, directors, agents and employees harmless from and against any and all
claims, losses, liabilities, damages attorneys’ fees and costs arising from or
related to the delivery of water under this Agreement, except to the extent
caused by MLP’s proven (not merely alleged) gross negligence or willful
misconduct.

 

14.   Attorney’s Fees. Should any party hereto employ an attorney for the
purpose of enforcing or construing this Agreement, or any judgment based on this
Agreement, in any legal proceeding whatsoever, including insolvency, bankruptcy,
arbitration, declaratory relief or other litigation, the prevailing party shall
be entitled to receive from the other party or parties thereto reimbursement for
all reasonable attorneys’ fees and all costs, whether incurred at the trial or
appellate level, including but not limited to service of process, filing fees,
court and court reporter costs, investigative costs, expert witness fees and the
cost of any bonds, whether taxable or not, and such reimbursement shall be
included in any judgment, decree or final order issued in that proceeding.

 

15.   Notices. All communications hereunder will be in writing and shall be
deemed duly communicated when delivered in person, or four (4) days after being
sent by certified or registered mail, postage prepaid, addressed to:

 

if to MLP, to:

 

Maui Land & Pineapple Company, Inc.
200 Village Road
Lahaina, Hawaii 96761
Attention: President

 

if to Water Company, to:

 

____________________________

____________________________

 

16.     Assignment. Except for an assignment made by Water Company in connection
with the transfer by Water Company of the Non-Potable System, Water Company may
not assign any rights hereunder without the prior written consent of MLP, which
consent may be withheld in MLP’s sole discretion. Except for an assignment made
by MLP in connection with the transfer of the Ditch System subject to the terms
and conditions of this Agreement, or to an affiliate or subsidiary of MLP that
operates the Ditch System, MLP may not assign any rights hereunder without the
prior written consent of Water Company, which consent may be withheld by Water
Company in its sole discretion.

 

17.     Binding Effect. This Agreement shall be binding on, and shall inure to
the benefit of, the parties and their successors and permitted assigns.

 

18.     Entire Agreement. This Agreement is the entire agreement between the
parties with respect to the delivery of non-potable water to Water Company and
supersedes all prior agreements, correspondence and negotiations.

 

46

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19.     Counterparts. This Agreement may be executed in any number of
counterparts, each of which so executed shall be deemed an original; such
counterparts shall together constitute but one agreement. A facsimile copy of a
signature shall constitute an original signature for purposes of the execution
of this Agreement.

 

20.     Amendment. No modification, waiver, amendment, discharge or change of
this Agreement shall be valid unless the same is in writing and signed by the
party against which the enforcement of such modification, waiver, amendment,
discharge or change is or may be sought.

 

DATED: __________________________, 2019.

 

 

MAUI LAND & PINEAPPLE COMPANY, INC.

 

 

By                                                                            
  

Name:
Its:

MLP

     

__________________________

 

 

By                                                                            
  

Name:

Its:

 

Water Company

 

 

 

 

EXHIBIT A - Map of Delivery Points to the Water Company’s Non-Potable System [To
BE ATTACHED]

 

47

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EXHIBIT E

 

AGREEMENT FOR WATER DELIVERY
(WELL WATER)

 

THIS AGREEMENT (“Agreement”) is made and entered into on this ____ day of
________________________, 2019 (“Effective Date”), by and between MAUI LAND &
PINEAPPLE COMPANY, INC., a Hawaii corporation, whose address is P. O. Box 187,
Kahului, Hawaii 96733, hereinafter called “MLP”, and [_________WATER COMPANY, a
__________ corporation], whose address is __________________________________,
hereinafter called “Water Company”.

R E C I T A L S:

 

A.     MLP is the owner of the Kapalua No. 1, 2 & 3 wells shown on the map
attached hereto as Exhibit A (“Wells”).

B.     Water Company is a regulated public utility company.

C.     Concurrently herewith, Water Company has acquired from MLP a potable
water distribution system (the “Potable System”) that Water Company will use to
serve consumers within its designated service area at the Kapalua Resort at
Kapalua, Maui, Hawaii (the “Service Area”).

D.     The parties desire to enter into this Agreement to formalize and set
forth the terms and conditions upon which MLP will provide water from its Wells
for Water Company’s use and distribution via the Potable System.

NOW, THEREFORE, in consideration of the above and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows:

 

1.     Delivery of Water; Delivery Points. Subject to the terms and conditions
herein, MLP does hereby undertake and agree to deliver water from the Wells to
Water Company. MLP shall deliver water to the Water Company at the delivery
points shown on the map attached as Exhibit A, or such other locations as the
parties may mutually agree to from time to time (each a “Delivery Point”). Water
Company shall not without MLP’s prior approval draw more than 1.0 million
gallons per day (“MGD”) of water from the Wells in the aggregate.

 

2.     Water Delivery Charges. Water Company will pay to MLP for all water
delivered to Water Company at the following initial rates: (a) for total draws
of water from the Wells in any calendar month between zero and 45 million
gallons, $2.59 per thousand gallons; (b) for total draws of water from the Wells
in any calendar month between 45 million gallons and 60 million gallons (if
permitted), $3.12 per thousand gallons; and (c) for total draws of water from
the Wells in any calendar month in excess of 60 million gallons (if permitted),
$3.63 per thousand gallons; all plus the Hawaii general excise thereon, payable
monthly in arrears (or such other time periods as may be mutually agreed upon by
the parties in writing). Payments for each calendar month, or portion thereof,
shall be due and payable no later than the 10th calendar day of the following
month. On the third anniversary of the date of this Agreement, and each
subsequent third anniversary, the rates then in effect shall be increased by a
percentage equal to the percentage increase over the preceding twelve months in
the Consumer Price Index for All Urban Consumers (CPI-U) for Honolulu published
by the U.S. Department of Labor – Bureau of Labor Statistics (1982-84=100)
(“CPI”); provided that if such index is discontinued MLP shall have the right to
reasonably designate an alternative index of inflation, provided that the
adjusted rate shall never be less than the rate payable for the immediately
preceding period. Water Company shall pay to MLP together with each payment
required hereunder which is subject to the State of Hawaii general excise tax on
gross income, as it may be amended from time to time, or any successor or
similar tax, an amount which, when added to such payment (currently 4.166% of
each such payment), shall yield to MLP, after deduction of all such tax payable
by MLP with respect to all such payments, a net amount equal to that which MLP
would have realized from such payments had no such tax been imposed.

 

48

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3.     Water Meters. Water Company shall, at its own expense, install and
maintain suitable meters or gauges at accessible locations at each Delivery
Point to assure an accurate and documented measurement of all water delivered to
the Water Company. Together with each monthly payment under this Agreement,
Water Company shall provide to MLP an accurate and complete written report of
all water delivered at each Delivery Point. Representatives of MLP shall have
access to such meters and all records of meter readings at all reasonable times
for the purpose of checking the same and verifying Water Company’s reports.

 

4.     Term. The term of this Agreement commences on the date of this Agreement
and terminates on the 20th anniversary of such date, whereupon this Agreement
shall automatically renew for successive 10-year terms unless terminated by
mutual agreement of the parties. Notwithstanding the foregoing, MLP’s obligation
to deliver water pursuant to this Agreement shall terminate if Water Company
permanently ceases operation of the Potable System, proposes to dedicate the
Potable System to the County of Maui or other governmental entity, or develops
new wells adequate to meet Water Company’s service obligations.

 

5.     Limits on Use. Water delivered pursuant to this Agreement shall be used
only within the Service Area and may not be transmitted to or used at any lands
outside of the Service Area.

 

6.     Seller’s Warranties, Representations & Covenants. MLP warrants and
represents to Water Company (a) that MLP is the owner in fee simple of the
Wells, and (b) that MLP currently holds, and will use commercially reasonable
efforts to at all times maintain, all permits and approvals required by law for
the operation of the Wells, including those required by the Commission on Water
Resource Management of the State of Hawaii and the County of Maui. Except as set
forth throughout this Agreement, MLP makes no warranties, express or implied, as
to the Wells, the quantity or quality of Wells water available to Water Company,
or any other matters. Water Company accepts the water delivered under this
agreement “as is” and Water Company shall be solely responsible for any
treatment necessary to render such water useable for Water Company’s intended
uses.

 

7.     Wells Maintenance. MLP will exercise commercially reasonable efforts to
manage, repair and maintain the Wells, their pumps, and the transmission lines
from the Wells to the Delivery Points in condition adequate for the reliable
delivery of water to the Potable System in accordance with this Agreement.

 

8.     Force Majeure. Water Company and MLP agree and understand that the
ability of MLP and Water Company to perform their respective obligations under
this Agreement are made expressly subject to earthquake, hurricanes, drought,
landslides, casualty to the Wells, or other natural disasters or events which
render the Wells temporarily or permanently inoperable, actions of the federal,
state and county governments or agencies thereof, including without limitation
enactment or enforcement of laws or governmental regulations, strikes,
lock-outs, unavailability of labor or materials, wars, insurrections,
rebellions, civil disorder, declaration of national emergencies, acts of God, or
other causes beyond MLP’s and/or Water Company’s respective control. Neither
party shall have any liability for failure or inability to perform its
obligations hereunder to the extent such failure or inability is caused by any
such cause or event.

 

49

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9.     Condemnation. If the Wells or any part thereof shall be taken or
condemned by any authority having the power of eminent domain, MLP shall be
solely entitled to all compensation and damages payable with respect to the
taking of the Wells, but Water Company shall be entitled to seek compensation
and damages from the condemning authority for the loss of Water Company’s rights
and interests under this Agreement, including inverse condemnation damages
arising from the diminution in value of the Potable System from the loss of
rights to obtain water from the Wells.

 

10.     Defaults and Remedies. If a party fails to perform any of the terms,
covenants and agreements contained herein, if such failure continues for a
period of thirty (30) days after written notice, then the non-defaulting party
shall be entitled to all remedies available to it at law or equity, including by
way of example and not in limitation thereof, the right to sue such person for
specific performance, injunctive relief and/or monetary damages, including
without limitation, reasonable attorneys’ fees, costs and expenses. Amounts due
hereunder shall bear interest from the date due until the date paid at the rate
of 1% per month.

 

11.     Indemnity. Water Company agrees to indemnify, defend and hold MLP and
its officers, directors, agents and employees harmless from and against any and
all claims, losses, liabilities, damages attorneys’ fees and costs arising from
or related to the delivery of water under this Agreement, except to the extent
caused by MLP’s proven (not merely alleged) gross negligence or willful
misconduct.

 

12.     Attorney’s Fees. Should any party hereto employ an attorney for the
purpose of enforcing or construing this Agreement, or any judgment based on this
Agreement, in any legal proceeding whatsoever, including insolvency, bankruptcy,
arbitration, declaratory relief or other litigation, the prevailing party shall
be entitled to receive from the other party or parties thereto reimbursement for
all reasonable attorneys’ fees and all costs, whether incurred at the trial or
appellate level, including but not limited to service of process, filing fees,
court and court reporter costs, investigative costs, expert witness fees and the
cost of any bonds, whether taxable or not, and such reimbursement shall be
included in any judgment, decree or final order issued in that proceeding.

 

13.     Notices. All communications hereunder will be in writing and shall be
deemed duly communicated when delivered in person, or four (4) days after being
sent by certified or registered mail, postage prepaid, addressed to:

 

if to MLP, to:

 

Maui Land & Pineapple Company, Inc.
200 Village Road
Lahaina, Hawaii 96761
Attention: President

 

50

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if to Water Company, to:

 

____________________________

____________________________

 

14.     Assignment. Except for an assignment made by Water Company in connection
with the transfer by Water Company of the Potable System to a transferee other
than the County of Maui or another governmental entity, Water Company may not
assign any rights hereunder without the prior written consent of MLP, which
consent may be withheld in MLP’s sole discretion. Except for an assignment made
by MLP in connection with the transfer of the Wells subject to the terms and
conditions of this Agreement, or to an affiliate or subsidiary of MLP that
operates the Wells, MLP may not assign any rights hereunder without the prior
written consent of Water Company, which consent may be withheld by Water Company
in its sole discretion.

 

15.     Binding Effect. This Agreement shall be binding on, and shall inure to
the benefit of, the parties and their successors and permitted assigns.

 

16.     Entire Agreement. This Agreement is the entire agreement between the
parties with respect to the delivery of Well water to Water Company and
supersedes all prior agreements, correspondence and negotiations.

 

17.     Counterparts. This Agreement may be executed in any number of
counterparts, each of which so executed shall be deemed an original; such
counterparts shall together constitute but one agreement. A facsimile copy of a
signature shall constitute an original signature for purposes of the execution
of this Agreement.

 

18.     Amendment. No modification, waiver, amendment, discharge or change of
this Agreement shall be valid unless the same is in writing and signed by the
party against which the enforcement of such modification, waiver, amendment,
discharge or change is or may be sought.

 

DATED: __________________________, 2019.

 

MAUI LAND & PINEAPPLE COMPANY,

INC.

 

By                                                                            
  

Name:
Its:

MLP

     

__________________________

 

By                                                                            
  

Name:

Its:

 

Water Company

 

EXHIBIT A - Map of the Wells and Delivery Points to the Water Company’s Potable
System [To Be attached]

 

51

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EXHIBIT F-1

 

MAKAI EASEMENT MAP

PREPARED BY WARREN S. UNEMORI ENGINEERING, INC.

 

[image7.jpg]

 

52

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EXHIBIT F-2

 

MAUKA EASEMENT MAP

PREPARED BY WARREN S. UNEMORI ENGINEERING, INC.

 

[image8.jpg]

 

53

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EXHIBIT G

 

[RESERVED]

 

54

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EXHIBIT H

 

ASSIGNMENT AND ASSUMPTION

OF WASTEWATER TREATMENT AGREEMENT

 

ASSIGNMENT AND ASSUMPTION

OF SEWER AGREEMENT AND EXPANSION AGREEMENT

 

This Assignment and Assumption of Sewer Agreement and Expansion Agreement (this
“Assignment”) is made as of ______________________, 2019 (the "Effective Date"),
by and between MAUI LAND & PINEAPPLE COMPANY, INC. (“ML&P”), a Hawaii
corporation and KAPALUA WASTE TREATMENT COMPANY, LTD. (“KWTC”), a Hawaii
corporation (ML&P and KWTC shall collectively be referred to herein as the
“Assignor”), and HAWAII WATER SERVICE COMPANY, INC. a Hawaii limited liability
company, doing business as “Kapalua Waste Treatment Company” (“Assignee”).

 

Recitals:

 

(a)     Assignor and the County of Maui, a political subdivision of the State of
Hawaii (the "County"), are parties to that certain Sewer Agreement dated April
23, 1987 (the "Sewer Agreement"), which sets forth the terms and conditions upon
which the County will accept wastewater from Assignor for treatment at the
County’s Lahaina Wastewater Treatment Plant (“Lahaina Facility”). A copy of the
Sewer Agreement is attached hereto as Exhibit A and incorporated herein by
reference.

 

(b)     Assignor and the County also entered into that certain Lahaina
Wastewater Reclamation Facility Expansion Agreement dated January 20, 1994 (the
“Expansion Agreement”) which, among other things, increased the amount of
wastewater that KWTC could dispose at the County’s Lahaina Facility from 300,000
gallons per day (average daily flow) to 680,000 gallons per day (average daily
flow). A copy of the Expansion Agreement is attached hereto as Exhibit B and
incorporated herein by reference.

 

(c)     Pursuant to that certain Asset Purchase Agreement having an effective
date of December 20, 2019, by and between Assignor and Assignee (the "Purchase
Agreement"), Assignor has agreed to assign to Assignee the Sewer Agreement and
the Expansion Agreement pursuant to the terms and conditions as set forth below.

 

Assignments:

 

NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants contained herein, and for other good and valuable consideration, the
receipt, adequacy and legal sufficiency of which are hereby acknowledged, the
parties do hereby agree as follows:

 

1.     Assignment. Effective as of the Effective Date, Assignor hereby assigns,
sells, transfers and sets over to Assignee all of Assignor’s right, title, and
interest in and to the Sewer Agreement and Expansion Agreement, to have and to
hold the same unto Assignee and its successors and assigns.

 

55

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2.     Assumption. Effective as of the Effective Date, Assignee hereby accepts
the above assignment of the Sewer Agreement and Expansion Agreement, and hereby
assumes and agrees to perform the duties and obligations of Assignor under the
Sewer Agreement and Expansion Agreement, but only to the extent first arising on
or after the Effective Date. Any, liability or obligation arising out of any
breach of the Sewer Agreement or Expansion Agreement by Assignor or any act or
omission of Assignor that occurred prior to the Effective Date shall remain the
sole responsibility of Assignor. Any claim, liability or obligation arising out
of any breach of the Sewer Agreement or Expansion Agreement by Assignee or any
act or omission of Assignee, to the extent occurring on or after the Effective
Date, shall be the sole responsibility of Assignee.

 

3.     Further Actions. Each of the parties hereto covenants and agrees, at its
own expense, to execute and deliver, at the request of the other party hereto,
such further instruments of transfer and assignment and to take such other
action as such other party may reasonably request to more effectively consummate
the assignments and assumptions contemplated by this Assignment.

 

4.     Successors and Assigns. This Assignment shall inure to the benefit of and
be binding upon the parties hereto and their respective successors and assigns.

 

5.     Counterparts. This Assignment may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same instrument. The submission of a signature page
transmitted by facsimile or similar electronic transmission facility (e.g.,
e-mail) shall be considered as an "original" signature page for purposes of this
Assignment so long as the original signature page is thereafter transmitted by
mail or by other delivery service and the original signature page is substituted
for the facsimile signature page in the original and duplicate originals of this
Assignment.

 

[Signatures are on following page.]

 

56

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IN WITNESS WHEREOF, the parties have executed this Assignment as of the
Effective Date.

 

 

MAUI LAND & PINEAPPLE COMPANY, INC,

a Hawaii corporation

 

 

 

 

 

 

 

 

 

 

By

 

 

 

 

Name:

 

 

 

Its:

 

       

KAPALUA WASTE TREATMENT

COMPANY, LTD., a Hawaii corporation

                    By         Name:       Its:               Assignor         
         

HAWAII WATER SERVICE COMPANY, INC,,

a Hawaii limited liability company

                    By         Name:       Its:               Assignee         

 

 

ACKNOWLEDGED ON THIS _____ DAY OF

____________, 20___.

 

COUNTY OF MAUI, through its Department

Of Environmental Management

 

 

By __________________________________

 

     Name: ____________________________

 

     Title: _____________________________

 

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EXHIBIT I

 

[RESERVED]

 

58

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EXHIBIT J

 

PURCHASER’S PROPOSED LOCATION FOR NEW OFFICE AND STORAGE AREA

 

[j1.jpg]

 

59

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EXHIBIT K

 

RESERVED

 

60

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EXHIBIT L

 

[RESERVED]

 

61

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EXHIBIT M

 

FORM OF ASSIGNMENT AND ASSUMPTION OF

CUSTOMER AGREEMENTS AND

WILL SERVE LETTERS

 

 

 

Seller to prepare form within 15 days for Purchaser’s review and approval.

 

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EXHIBIT N

 

LIST OF

CUSTOMER AGREEMENTS AND

WILL SERVE LETTERS

 

AGREEMENT

CUSTOMER

SERVICE

Agreement for Water Delivery (Kapalua Bay Golf Course) dated September 30, 2010

TY Management Corporation

Non-potable water

Water Service Connection Agreement effective January 31, 2012, amended by First
Amendment of Water Service Agreement (Engel) dated April 22, 2014

William E. Engel and Marla A. Engel

Potable water

KWC Water Transmission Agreement dated September 30, 2010

TY Management Corporation

Backup non-potable water storage and transmission system

Agreement for Water Delivery (Kapalua Plantation Golf Course) dated March 27,
2009

TY Management Corporation

Non-potable water

Agreement for Water Delivery Between Maui Pineapple Company, Ltd. And Kapalua
Land Company, Ltd., dated June 21, 2006, amended by Amendment to Agreement for
Water Delivery Between Maui Pineapple Company, Ltd., and Kapalua Land Company,
Ltd., dated November 7, 2007, (assigned by Maui Pineapple Company, Ltd. To Maui
Land & Pineapple Company, Inc. by Assignment of Agreement for Water Delivery
dated December 30, 2007), and Second Amendment to Agreement for Water Delivery
Between Maui Land & Pineapple Company, Inc. and Kapalua Land Company, Ltd.,
dated March 27, 2009.

Kapalua Land Company, Ltd.

Non-potable water

Will Serve Commitment for Kapalua Bay Golf Course, Lahaina, Maui, TMK (2)
4-2-004-24, 43 & 36 dated September 30, 2010

TY Management Corporation

Wastewater disposal services

Memorandum of KWC Water Transmission Agreement Kapalua Bay Golf Course and Golf
Academy dated September 30, 2010

TY Management Corporation

Non-potable water lines, infrastructure and easements

Will Serve Commitment KWC for Kapalua Bay Golf Course and Golf Academy, Lahaina,
Maui, TMK (2) 4-2-004-24, 43, 36 & 48 dated September 30, 2010

TY Management Corporation

Potable and Non-potable water

Will Serve Commitment KWT for Kapalua Bay Golf Course and Golf Academy, Lahaina,
Maui, TMK (2) 4-2-004-24, 43 & 36 dated September 30, 2010

TY Management Corporation

Wastewater

Will Serve Commitment KWC for Lot 1C-1-A, Kapalua Central Resort Subdivision,
Lahaina, Maui, dated 2019

TY Management Corporation

Potable and Non-potable water

Will Serve Commitment KWT for Lot 1C-1-A, Kapalua Central Resort Subdivision,
Lahaina, Maui, dated 2019

TY Management Corporation

Wastewater

Kapalua Wastewater Allocation for Kapalua Bay Residences, Lahaina, Maui, TMK
(2)4-2-004-027

KWT

Wastewater allocation

Will Serve Commitment KWC for Kapalua Site 6.0, Lahaina, Maui, TMK
(2)4-2-004-048 dated 2019

Ensign Peak Investment LLC

Potable and Non-potable water

Will Serve Commitment for Kapalua Plantation Golf Course, Lahaina, Maui, TMK (2)
4-2-005-37, 38, 39, 43, 44, 45, 47 &49 dated March 27, 2009freser

TY Management Corporation

Potable and Non-potable water

 

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EXHIBIT 4.3(a)

 

PURCHASER’S STANDARD GRANT OF EASEMENT FORM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LAND COURT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REGULAR SYSTEM

(AREA ABOVE RESERVED FOR RECORDING INFORMATION)

 

After Recordation, Return by     ☑ Mail or      ☐ Pick-up (Phone
#:_____________) to:

 

 

Hawaii Water Service Company, Inc.

P. O. Box 384809

Waikoloa, Hawaii 96738

 DOCUMENT CONTAINS __ PAGES

 

TITLE OF DOCUMENT:    GRANT OF EASEMENT

 

PARTIES TO DOCUMENT:

 

GRANTOR:

 

 

 

GRANTEE:

 

 

 

 

 

 

 

HAWAII WATER SERVICE COMPANY, INC.

P.O. Box 384809

Waikoloa, Hawai‘i 96738

AFFECTS TAX MAP KEY:

 

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GRANT OF EASEMENT

([INSERT HAWAII ENTITY NAME])

 

THIS GRANT OF EASEMENT is made on ___________________, by and between
______________________ whose mailing address is
_____________________________________ (“Grantor”) and HAWAI‘I WATER COMPANY,
INC., whose principal place of business is 68-1845 Waikoloa Road, Waikoloa,
Hawai‘i 96738 and mailing address is P.O. Box 384809, Waikoloa, Hawai‘i 96738
(“Grantee”).

 

W I T N E S S E T H:

 

THAT Grantor, in consideration of the sum of Ten Dollars ($10.00) to it paid by
Grantee, the receipt of which is hereby acknowledged, and the covenants and
agreements herein contained and on the part of Grantee, its successors and
assigns, to be observed and performed, does hereby grant unto Grantee, its
successors and assigns, a right in the nature of a perpetual, non-exclusive
easement for the construction, installation, reinstallation, operation, use,
maintenance, replacement, improvement, repair and removal of water pipelines,
meters, valves, hydrants, pumps and other appurtenances and related equipment
necessary or convenient to Grantee’s business as a public water utility (said
water pipelines, meters, valves, hydrants, pumps and other appurtenances and
related equipment hereinafter referred to as the “Facilities”) over, under,
upon, across, and through that certain Easement ____, more particularly
described on Exhibit A attached hereto and shown on Exhibit A (the “Easement
Area”). The Easement Area is located on those certain premises situate at
_____________, District of _________, Island and County of ________, State of
Hawai‘i, described in Exhibit B attached hereto (the “Property”);

 

TOGETHER, ALSO, with the right of ingress and egress to and from the Easement
Area over the land of Grantor for all purposes in connection with the exercise
of the rights hereby granted;

 

TO HAVE AND TO HOLD the same unto Grantee, its successors and assigns, forever.

 

AND in consideration of the rights hereby granted and the covenants and
agreements herein contained, Grantee hereby agrees to keep all Facilities of
Grantee in the Easement Area in good condition and repair, subject to ordinary
wear and tear. In the event Grantee damages the surface of the Easement Area or
improvements thereon, permitted by this Grant of Easement and installed by or
for Grantor, Grantee shall, at Grantee’s cost, repair the damage caused by
Grantee and restore the surface of the Easement Area as nearly as is reasonably
possible to the condition in which such surface area and improvements existed
immediately prior to such damage by Grantee. In no event shall Grantee be
obligated to repair damage caused by activities or causes other than the
activities of Grantee.

 

IT IS HEREBY MUTUALLY UNDERSTOOD AND AGREED by and between the parties hereto:

 

(A)     That any Facilities constructed, installed, reinstalled, maintained,
repaired or removed by Grantee within the Easement Area shall be and remain the
property of Grantee.

 

 

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(B)     That Grantee shall have no obligation to relocate any of the Facilities
constructed, maintained or installed within the Easement Area. In the event that
development plans of Grantor or Grantor’s heirs, personal representatives,
successors and assigns require the relocation of any portion of the Facilities,
Grantor may relocate the Facilities provided that (a) Grantor obtains Grantee’s
prior written approval of Grantor’s plans and specifications for such relocation
which consent may be withheld in Grantee’s sole discretion; (b) Grantee shall
have the right to inspect and approve the relocated Facilities; (c) Grantor
shall bear all costs and expenses of such relocation, including, without
limitation, all attorneys’ fees and other costs associated with amending this
Grant of Easement and/or any necessary governmental approvals; and (d) Grantor
shall perform all such relocation work without causing any material interruption
of or interference with Grantee’s services and operations. Alternatively, upon
prior written agreement of Grantee and Grantor, Grantee may be permitted to
relocate the Facilities to the location specified by Grantor, and Grantor shall
reimburse Grantee for all costs and expenses of such relocation. In the event of
any such relocation, Grantor and Grantee shall execute such documents as are
reasonably necessary to dedicate the relocated Facilities to Grantee and to
amend this Grant of Easement to cover the relocated Facilities.

 

(C)     That Grantor shall not engage in activities that damage or are
reasonably likely to damage, Grantee’s Facilities. Without limiting the
foregoing, Grantor shall not perform or permit any digging, tunneling or other
forms of construction activity within or on the Easement Area which may disturb
the compaction of the soil or unearth Grantee’s Facilities located within the
Easement Area or endanger the lateral support to such Facilities.

 

(D)     That Grantor shall not at any time during the continuance of this Grant
of Easement erect any building foundation of any kind below the surface of the
land within the Easement Area or at any time erect any building or structure of
any kind, other than roads, walks, curbs, driveways, fences (but not walls with
footings or foundations) or appurtenances thereof, on the surface of the
Easement Area. The owner of a fence in the Easement Area shall be solely
responsible for the removal and replacement of such fence if removal is required
in order for Grantee to exercise any of its rights under this Grant of Easement.
If the owner of a fence fails to remove the fence at the request of Grantee,
Grantee shall have the right to remove the fence and recover the cost of such
removal from the owner. Only lawn grass shall be planted within the Easement
Area and no tree shall be planted within twenty (20) feet of the Facilities.
Grantee shall have the right to require Grantor and its successor and assigns to
remove any tree that is planted on property owned by Grantor and within twenty
(20) feet of the Facilities, and Grantor shall pay for repairs to the Facilities
if such tree damages the Facilities.

 

(E)     That if at any time the Easement Area, or any part thereof, shall be
condemned or taken by any authority exercising the power of eminent domain,
Grantee shall have the right to claim and recover from the condemning authority,
but not from Grantor, such compensation as is payable for the easement and right
of way for the Facilities of Grantee used in connection with the water system,
which shall be payable to Grantee. All other compensation and damages payable
for or on account of the Easement Area so taken or condemned shall be paid to
and be the property of Grantor.

 

(F)     Grantee shall have the right to assign its rights herein to any
corporation or other entity which controls, is controlled by, or is under common
control with Grantee, or to any corporation or other entity resulting from a
merger, sale, reorganization or consolidation with Grantee, or to any person or
entity which acquires a controlling interest in Grantee’s stock, either by
private sale or as the result of a public stock offering, or substantially all
of the assets of Grantee as a going concern without obtaining Grantor’s written
consent.

 

 

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(G)     That Grantor covenants with Grantee that Grantor is the fee simple owner
of the Property and that Grantor has good right and title to grant the Easement
Area, and that Grantor will and its successors and assigns shall warrant and
defend the same unto Grantee, its successors and assigns, forever, against the
lawful claims and demands of all persons.

 

(H)     The term “Grantor,” or any pronouns used in place thereof, shall mean
and include Grantor and its successors and assigns, and the term “Grantee,” or
any pronouns used in place thereof, shall mean and include Grantee and its
successors and assigns. When referring to the parties hereto, reference herein
to the singular shall include the plural, the plural the singular, and reference
to any gender shall include either or both of the other genders.

 

(I)     The parties agree that this instrument may be executed in counterparts,
each of which shall be deemed an original, and the counterparts shall together
constitute one and the same instrument, binding all parties notwithstanding that
all of the parties are not signatory to the same counterparts. For all purposes,
including, without limitation, recordation, filing and delivery of this
instrument, duplicate, unexecuted and unacknowledged pages of the counterparts
may be discarded and the remaining pages assembled as one document.

 

 

[SIGNATURES ON FOLLOWING PAGE]

 

 

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IN WITNESS WHEREOF, the parties hereto have duly executed this instrument the
day and year first above written.

 

 

[INSERT NAME OF GRANTOR]

 

 

 

By_____________________________________

     Name:

     Its __________________________________

 

 

 

[INSERT HAWAII ENTITY NAME],

a Hawai‘i corporation

 

 

 

By_______________________________________

     Name:

     Its General Manager

 

 

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STATE OF HAWAI‘I  )     ) SS.   COUNTY OF HAWAI‘I )  

 

On this _____ day of ________________, 20_____, before me personally appeared
___________________________, to me known to be the person described in and who
executed the foregoing instrument and acknowledged that
______________________executed the same as ____________________’s free act and
deed, and if applicable, in the capacity shown, having been duly authorized to
execute such instrument in such capacity.

 

 

_____________________________________

Notary Public, State of Hawai‘i

 

_____________________________________

Print name

 

My commission expires: _________________

 

 

NOTARY CERTIFICATION

 

Doc.

Date:

 

 

No. of Pages: _______

 

 

Notary

Name:

  ____________ Circuit  

Doc.

Description:

                             

Notary Signature                                                               
                             Date

   

 

 

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STATE OF HAWAI‘I  )     ) SS.   COUNTY OF HAWAI‘I )  

 

On this _____ day of ________________, 20_____, before me personally appeared
___________________________, to me known to be the person described in and who
executed the foregoing instrument and acknowledged that
______________________executed the same as ____________________’s free act and
deed, and if applicable, in the capacity shown, having been duly authorized to
execute such instrument in such capacity.

 

 

_____________________________________

Notary Public, State of Hawai‘i

 

_____________________________________

Print name

 

My commission expires: _________________

 

 

 

NOTARY CERTIFICATION

 

Doc.

Date:

 

 

No. of Pages: _______

 

 

Notary

Name:

  ____________ Circuit  

Doc.

Description:

                             

Notary Signature                                                               
                             Date

   

 

 

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EXHIBIT A

 

DESCRIPTION OF THE EASEMENT AREA AND MAP OF THE EASEMENT AREA

 

 

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EXHIBIT B

 

DESCRIPTION OF THE PROPERTY

 

 

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EXHIBIT 7.1

 

SELLER’S CURRENT ORGANIZATIONAL DOCUMENTS

 

To be delivered within five days.