Exhibit 10.1

PURCHASE AND SALE AGREEMENT

AND ESCROW INSTRUCTIONS

THIS PURCHASE AND SALE AGREEMENT AND ESCROW INSTRUCTIONS (this “Agreement”) is
made as of December 17, 2018 (the “Effective Date”), by ALEXANDER & BALDWIN,
LLC, SERIES R, a Series of a Delaware limited liability company (“ABLR”),
ALEXANDER & BALDWIN, LLC, SERIES T, a Series of a Delaware limited liability
company (“ABLT”), and A & B PROPERTIES HAWAII, LLC, SERIES R, a Series of a
Delaware limited liability company (“ABPHR”, and collectively with ABLR and
ABLT, “Seller”), and MAHI PONO HOLDINGS, LLC, a Delaware limited liability
company (“Buyer”), with reference to the following facts:

A.    ABLR and ABPHR own certain lands located on the Island of Maui, State of
Hawaii, that are identified on the parcel list attached as Schedule 1.1 as being
owned by “ABL” or “ABPH”, respectively (the “A&B Land”). Portions of the A&B
Land totaling approximately 4,076.809 acres that are identified on Schedule 1.1
as “Restricted” are hereinafter referred to as the “Restricted Land”.

B.    ABLT is the owner of one hundred percent of the membership interests (the
“EMI Membership Interests”) in East Maui Irrigation Company, LLC, a Hawaii
limited liability company (“EMI”), which owns certain lands located on the
Island of Maui, State of Hawaii, that are identified on the parcel list attached
as Schedule 1.1 as being owned by “EMI” together with all Improvements thereon
(the “EMI Land”).

C.    ABLT is the owner of one hundred percent of the membership interests (the
“CMF Membership Interests”) in Central Maui Feedstocks, LLC, a Hawaii limited
liability company (“CMF”).

D.    ABLT is the owner of one hundred percent of the membership interests (the
“Kulolio Membership Interests”) in Kulolio Ranch, LLC, a Hawaii limited
liability company (“Kulolio”). EMI, CMF and Kulolio are sometimes collectively
referred to as the “Operating Companies” and each an “Operating Company”, and
the EMI Membership Interests, CMF Membership Interests and the Kulolio
Membership Interests are sometimes collectively referred to as the “Membership
Interests.”

E.    Seller desires to sell to Buyer and Buyer desires to purchase from Seller
the A&B Land, the Membership Interests and certain related rights, property and
interests more particularly described below, all on the terms and conditions set
forth herein.

NOW, THEREFORE, in consideration of the mutual agreements herein set forth,
Seller and Buyer agree as follows:

ARTICLE 1

PROPERTY

Seller hereby agrees to sell and convey to Buyer, and Buyer hereby agrees to
purchase from Seller, subject to the terms and conditions set forth herein, the
following:

1.1    A&B Land.

(a)    All of ABLR and ABPHR’s respective right, title and interest in and to
the A&B Land described on Schedule 1.1;

 

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(b)    All rights, privileges, easements, rights-of-way and other interests of
any kind that are appurtenant to the A&B Land, to the extent owned by Seller
(all of which are collectively referred to as the “Appurtenances”);

(c)    All buildings, improvements and fixtures located on the A&B Land,
including, without limitation, all fixtures used in connection with the
operation, use or occupancy thereof, such as irrigation systems, ditches,
tunnels, siphons, pumps, aqueducts, wells and water systems (all of which are
collectively referred to as the “Improvements”);

1.2    EMI Membership Interests. One hundred percent (100%) of the EMI
Membership Interests (which shall be conveyed in two installments as more fully
described in Section 1.16) and, by virtue of the transfer of the EMI Membership
Interests, the business and personal property of EMI listed on Schedule 1.2 (the
“EMI Assets”) and the EMI Land listed on Schedule 1.1;

1.3    CMF Membership Interests. One hundred percent (100%) of the CMF
Membership Interests and, by virtue of the transfer of the CMF Membership
Interests, the business and personal property of CMF listed on Schedule 1.3 (the
“CMF Assets”);

1.4    Kulolio Membership Interests. One hundred percent (100%) of the Kulolio
Membership Interests and, by virtue of the transfer of the Kulolio Membership
Interests, the business and personal property of Kulolio listed on Schedule 1.4
(the “Kulolio Assets”);

1.5    Personal Property. The tangible personal property owned by ABLR or ABPHR
or their affiliates which is (i) located on or in the A&B Land or (ii) used in
connection with their operations at the A&B Land in accordance past practice,
including, without limitation, the machinery, vehicles, water collection,
transmission and storage equipment, pumps and irrigation equipment, farming or
office equipment, electrical power generation and transmission equipment,
communications assets, furniture, furnishings, trailers, tools, plans and other
tangible personal property listed on Schedule 1.5(a) and any property records
pertaining thereto (including surveys, plans and specifications, engineering
reports, documents and tenant records) (the “Personal Property”). The Personal
Property shall also include the records in the possession of ABLR and ABPHR that
fall within the categories of “Transferred Records” listed on Schedule 1.5(b),
but specifically excluding all records that fall within the categories of
“Retained Records” listed on Schedule 1.5(b). The Personal Property shall be
conveyed to Buyer pursuant to a Bill of Sale in the form of Exhibit A attached
hereto (the “Bill of Sale”);

1.6    Intangible Property. All of the right, title and interest of ABLR or
ABPHR in any intangible personal property now or through the Closing Date (as
defined in Section 9.2) owned by Seller and used in the use and operation of the
Real Property including, without limitation, rights under certificates of
occupancy and permits and all warranties or guarantees received by Seller from
any contractors, subcontractors, suppliers or materialmen in connection with any
construction, repairs or alteration of the Improvements or any reports or
investigations, licenses,

 

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franchises, permits, tenant lists, advertising materials and other similar
rights relating to the use and operation of the Real Property (all of which are
collectively referred to as the “Intangible Property”), all of which shall be
assigned to Buyer pursuant to a General Assignment in the form of Exhibit B
attached hereto (the “General Assignment”);

1.7    Leases & Licenses. The interest of ABLR or ABPHR as landlord or licensor
under all leases, licenses and other occupancy agreements regarding the Real
Property in effect on the Closing Date, including each of those existing and
pending leases and licenses listed on Schedule 1.7 (the “Leases”), and all their
respective rights to security deposits or prepaid rent related thereto, all of
which shall be assigned to Buyer by an Assignment of Leases and Security
Deposits in the form of Exhibit C attached hereto (the “Assignment of Leases”);

1.8    Contracts. The interest of ABLR or ABPHR under the design contracts,
farming contracts, construction contracts, subcontracts, utility contracts,
water and sewer contracts of any nature, maintenance contracts, management
contracts, and other contracts or agreements of any nature relating to the Real
Property that are listed on Schedule 1.8 (the “Contracts”), which are assignable
by Seller and which shall be assigned to Buyer pursuant to the General
Assignment;

1.9    Governmental Authorizations.    To the extent assignable to Buyer, all of
ABLR or ABPHR’s rights in and to any approval, consent, license, permit, waiver,
vested rights, entitlements, benefits, privileges, exemptions, variances or
other authorization issued, granted, given or otherwise made available to them
by any governmental agency or other body with respect the ownership, use,
development or operation of the A&B Land and the Improvements, including the
permits, licenses, use permits, certificates of occupancy, and zoning and land
use entitlements listed on Schedule 1.9 (“Governmental Authorizations”);

1.10    Intellectual Property. All of ABLR or ABPHR’s interest in the trade
names, marks, patents and other intellectual property relating to the A&B Land
or Seller’s operations thereon that are listed on Schedule 1.10 (the
“Intellectual Property”);

1.11    West Maui Water Interests. All of Alexander & Baldwin, LLC, a Hawaii
limited liability company (“ABL”), ABLR or ABPHR’s interests in the agreements,
easements, permits, approvals and other interests, including but not limited to
those listed in Schedule 1.11 that pertain to certain sources of irrigation
water that are located in the West Maui Mountains (the “West Maui Water
Interests”); and

1.12    East Maui Water Interests. All of ABL, ABLR and ABPHR interests in the
agreements, permits, approvals and other interests, including, but not limited
to, those listed in Schedule 1.12 that pertain to certain sources of irrigation
water located on lands in East Maui (the “East Maui Water Interests”).

1.13    “Property” and “Real Property” Defined. All of the items described in
Sections 1.1 to 1.12 above, inclusive, are hereinafter collectively referred to
as the “Property”. The items described in Section 1.1 are herein referred to
collectively as the “Real Property”.

1.14    Exclusions. Notwithstanding anything to the contrary in this Article 1,
the term “Property” expressly excludes:

(a)     The parcels of land listed on Schedule 1.14(a) that are referred as the
“Excluded Land”;

 

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(b)    Revocable Permit Nos. S-7263, S-7264 and S-7265 held by ABL or ABLT, as
the case may be, which are not transferrable but shall be held by ABL or ABLT
after Closing for the benefit of EMI as provided in the EMI Operating Agreement
described below;

(c)    All personal property or improvements owned by tenants or other users or
occupants of the A&B Land;

(d)    All rights with respect to any refund of taxes applicable to any period
prior to the Closing Date;

(e)    All rights to any insurance proceeds or settlements for events occurring
prior to Closing (subject to Section 12.3 below);

(f)    All of Seller’s and the Operating Companies’ respective interests in
cash, securities, lender deposits and reserves and accounts receivable (except
to the extent Seller receives proration therefor);

(g)    All promissory notes relating to any Lease or Contract for accounts
receivable arising solely prior to the Effective Date;

(h)    All tradenames, marks, logos or other intellectual property not
specifically listed on Schedule 1.10; and

(i)    the Excluded Documents (as hereinafter defined).

ARTICLE 2

PURCHASE PRICE

2.1    Purchase Price. The purchase price (the “Purchase Price”) for the
Property is TWO HUNDRED SIXTY SEVEN MILLION, FIFTY FIVE THOUSAND, THREE HUNDRED
FIFTY ONE AND 39/100 U.S. DOLLARS ($267,055,351.39). The Purchase Price is
allocated as follows:

(a)    A total of $261,531,517.92 is allocated to the A&B Land (including all
Improvements thereon), with the price allocations to each portion of such land
being identified on Schedule 1.1;

(b)    $5,442,333.47 is allocated to the EMI Membership Interests (which shall
be paid in two payments as described in Section 2.6 below);

(c)    $81,500.00 is allocated to the Kulolio Membership Interests;

(d)    $0.00 is allocated to the CMF Membership Interests; and

 

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(e)    $0.00 is allocated to the West Maui Water Interests.

2.2    Payment of Closing Price. No later than two (2) business days prior to
the Closing Date, Buyer will deliver to Title Guaranty Escrow Services, Inc.,
Attn: Jeremy Trueblood, Escrow No. 18120092, as escrow holder (“Escrow Holder”),
the Purchase Price less the Deferred EMI Price (the “Closing Price”), to be held
in escrow pursuant to the terms of this Agreement.

2.3    Investment of Closing Price. Escrow Holder shall hold the Closing Price
in accordance with the terms and conditions of this Agreement. Until it is
released to Seller or returned to Buyer as provided herein, Escrow Holder shall
invest the Closing Price in an interest-bearing account selected by Buyer.
Except as provided in Section 2.5, all interest earned on the Closing Price
shall be for the benefit of Buyer and shall be paid or credited to Buyer unless
the Closing does not occur as a result of a default by Buyer.

2.4    Return of Closing Price. The Closing Price shall be non-refundable to
Buyer, except in the event (i) this transaction fails to close because of
Seller’s breach of this Agreement and Buyer elects to terminate this Agreement,
or (ii) any other failure of a Buyer condition to closing set forth herein that
is not waived by Buyer.

2.5     Seller’s Remedies. If the Closing (defined below) does not occur due to
a Buyer default following satisfaction of all of the Closing Conditions in favor
of Buyer, then Seller may terminate this Agreement by written notice to Buyer,
Escrow Holder and Title Company given at any time after Buyer shall have failed,
for a period of five (5) days after written notice from Seller, to cure such
default and, upon receipt of such notice of termination, Seller shall have all
of its remedies at law or equity against Buyer.

2.6    Payment of the EMI Interests Price. On the Initial EMI Transfer Date
(defined below), ABLT will convey fifty percent (50%) of the EMI Membership
Interests (the “Initial EMI Interests”) to Buyer by an assignment in the form
attached hereto as Exhibit 2.6.1, Escrow shall release to Seller from the
Closing Price fifty percent (50%) of the total purchase price for the EMI
Membership Interests, i.e. $2,721,166.74 (the “Initial EMI Price”), and ABLT and
Buyer will enter into an operating agreement governing the operation and
management of EMI in the form attached hereto as Exhibit D (the “EMI Operating
Agreement”). ABLT will transfer the remaining fifty percent (50%) of the EMI
Membership Interests (the “Remaining EMI Interests”) to Buyer by an assignment
in the form attached hereto as Exhibit 2.6.2 and Buyer will pay to Seller the
remaining fifty percent (50%) of the total purchase price for the EMI Membership
Interests, i.e. $2,721,166.73 (the “Deferred EMI Price”), concurrently with the
first to occur of: (1) EMI’s execution of the State Leases as described in
Section 2.7(d); (2) Seller’s payment of the Continuing Productivity Loss Rebate
as provided in Section 2.7(b); (3) Seller’s payment of the Lease Failure Rebate
as provided in Section 2.7(d); (4) a Buyer-Caused Lease Failure as described in
Section 2.7(f); (5) a sale or transfer after Closing of the Initial EMI
Interests to an entity that is not owned and controlled by Buyer (a “Buyer
Subsidiary”); or (6) a sale or transfer after Closing of all or substantially
all of the EMI Land and EMI Assets to an entity that is not a Buyer Subsidiary;
provided, however, in each case that Buyer shall be entitled to deduct from the
Deferred EMI Price any amounts paid in connection with claims made by third
parties regarding the ownership or use of the EMI Land or the East Maui water
collection

 

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and transmission systems operated by Seller or EMI, except that Buyer may not
deduct costs of quiet title actions or claims initiated by Buyer, other than in
response to claims or challenges initiated by others. Buyer may, at its option,
purchase the Remaining EMI Interests for the Deferred EMI Price at any time
prior to the execution of the State Leases, including in the event that (and
prior to any closing where) all or substantially all of the assets of EMI are
sold. ABLT will convey the Remaining EMI Interests to Buyer free and clear of
any liens or charges. When the Remaining EMI Interests are transferred to Buyer,
Seller shall be removed as a member of EMI and released from any further
obligations under the EMI Operating Agreement or Section 2.7 below. This section
will survive the Closing.

2.7    Rebates. In order to reflect the diminished value of the Property due to
lost farm revenue and the reduced productivity potential of the Property
expected to result if EMI or Seller is unable to legally deliver irrigation
water sufficient for Buyer to fully implement its farming plan, Seller will
rebate portions of the Purchase Price (collectively, the “Rebates”) as follows:

(a)    Seller will make a one-time rebate to Buyer of Thirty-One Million Dollars
($31,000,000) of the Purchase Price, and the Purchase Price shall be deemed to
be reduced by $31,000,000 (the “Initial Productivity Loss Rebate”), if at any
time prior to the earlier of (i) the date State Leases are obtained as provided
in Section 2.7(d) below or (ii) eight (8) years after the Closing Date: (x) EMI
or Seller is legally prohibited from delivering the Minimum Water Amount
(defined below) to Buyer, and (y) the amount of water that EMI is then not
legally prohibited from delivering to Buyer is less than Buyer’s actual surface
water need at that time, as determined by Buyer in its sole discretion,
exercised in good faith, to meet the irrigation requirement of its then existing
crops or crops planned for the upcoming 24 months in the area served by East
Maui surface water (a “Productivity Loss Event”). EMI’s inability to deliver
water in the Minimum Water Amount solely due to a major casualty or events
beyond human control such as earthquakes, droughts or natural disasters that
impair EMI’s operations shall not be considered a Productivity Loss Event.

(b)    On the date one year after the initial Productivity Loss Event described
in subsection (a) (the “Initial Productivity Loss Event”), Seller will rebate to
Buyer an additional Thirty-One Million Dollars ($31,000,000) of the Purchase
Price, and the Purchase Price shall be deemed to be reduced by $31,000,000 (the
“Continuing Productivity Loss Rebate”), for a total reduction in the Purchase
Price of $62,000,000, unless by that date the Initial Productivity Loss Event is
cured. If a Continuing Productivity Loss Rebate is paid pursuant to this
subsection (b) or the following subsection (c), the payment obligations set
forth in this Section 2.7 shall be deemed satisfied and Seller shall have no
further obligation to pay any further Rebate or seek the State Leases; provided,
however, that Seller shall take any and all action reasonably necessary at that
time in order for Buyer and EMI to continue to seek and obtain the State Leases
without further involvement by Seller.

(c)    If the Initial Productivity Loss Event is cured within one (1) year as
provided in subsection (b) but at any time after such cure a Productivity Loss
Event occurs again, Seller will immediately pay Buyer the Continuing
Productivity Loss Rebate, for a total reduction in the Purchase Price of
$62,000,000. Such Continuing Productivity Loss Rebate will not be refunded to
Seller even if such second Productivity Loss Event is thereafter cured.

 

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(d)     As set forth in the EMI Operating Agreement, ABLT and Buyer, through
EMI, will jointly continue the existing process to secure long-term leases from
the State for EMI for collection and transmission of surface water from
State-owned lands in East Maui for use in and through EMI’s water system to
deliver water to Buyer for irrigation use in Central Maui and Upcountry Maui
(collectively, the “State Leases”). Seller will rebate to Buyer Thirty-One
Million Dollars ($31,000,000) of the Purchase Price, and the Purchase Price
shall be deemed to be reduced by $31,000,000 (the “Lease Failure Rebate”), if
within five (5) years of the Closing Date (the “State Lease Deadline”) State
Leases are not executed between EMI or a related entity controlled by Buyer or
EMI and the State which would authorize the delivery of at least the Minimum
Water Amount to Buyer provided that the State Lease Deadline shall be extended
at Seller’s request from time to time for up to a maximum of an additional three
(3) years in the aggregate to the extent the process for obtaining the State
Leases (including the State’s acceptance of the required Environmental Impact
Statement) or execution is delayed by reasons not in the control of the parties,
so long as Seller continues to use commercially reasonable efforts to obtain the
State Leases.

(e)    The Lease Failure Rebate shall be in addition to any Initial Productivity
Loss Rebate paid pursuant to Section 2.7(a), i.e., a total Purchase Price
reduction of $62,000,000.

(f)    Lease rent and other terms of the State Leases will be established by the
State and via the lease auction. If Buyer reasonably determines that the
noneconomic terms of the State Leases render the State Leases commercially
unviable for purposes of implementing its farming plan, and if for that reason
Buyer refuses to authorize EMI to sign the State Leases and permanently
terminates pursuit of the State Leases, Buyer shall be entitled to the Lease
Failure Rebate. However, no Lease Failure Rebate will be payable if the failure
to obtain qualifying State Leases was solely caused by a material uncured breach
by Buyer of its obligations under the EMI Operating Agreement to cooperate in
seeking the State Leases or to pay its 50% share of the expenses related to
obtaining the State Leases (a “Buyer-Caused Lease Failure”).

(g)    Once EMI and the State sign the State Leases and ABLT sells the Remaining
EMI Interests to Buyer, all Rebate obligations under Section this 2.7 will end
and Seller shall be removed as a member of EMI and released from any further
obligations under the EMI Operating Agreement.

(h)    Seller’s total obligation to pay Rebates to Buyer shall not under any
circumstance exceed the total amount of $62,000,000.00. Buyer acknowledges that,
except as specifically provided in this Section 2.7 (or in accordance with
Section 7.2, with respect to the breach of any representation, warranty or
covenant herein), it has freely and voluntarily accepted and assumes all risk of
the availability of irrigation water for the A&B Land. Accordingly, except as
specifically provided in this Section 2.7, Buyer waives any and all claims
against Seller for losses, damages, expenses, liabilities, diminution in value
of the Property or other losses, costs and expenses of any kind that Buyer may
suffer or incur if its access to irrigation water is impaired, diminished or
blocked for any reason whatsoever.

(i)    This Section 2.7 will survive Closing and Seller’s obligation to pay
Rebates shall be covered by the Parent Guaranty.

 

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2.8    Guaranty of Rebates. Seller’s obligation to pay the Rebates and certain
other obligations of Seller provided herein will be guaranteed by Seller’s
ultimate parent entity, Alexander & Baldwin, Inc., a Hawaii corporation (“ABI”),
pursuant to a guaranty in the form attached hereto as Exhibit E (the “Parent
Guaranty”). The Parent Guaranty shall require ABI to provide notice to Buyer if
the Consolidated Total Net Assets as of the last day of any fiscal quarter for
which financial statements are available fall below $1,000,000,000. If the
Consolidated Total Net Assets as of the last day of any fiscal quarter for which
financial statements are available fall below $900,000,000, ABI shall
immediately provide to Buyer a “clean” and irrevocable and unconditional standby
letter of credit (the “Letter of Credit”) in the amount of $62,000,000 (or
$31,000,000 if the Initial Productivity Loss Rebate has been paid) drawn on a
national bank which is a member of the New York Clearinghouse and which is
acceptable to Buyer in its reasonable discretion (the banks listed on Schedule
2.8 being deemed acceptable), or such other collateral acceptable to Buyer in
its reasonable discretion, such as first deeds of trust on real property
acceptable to Buyer in its reasonable discretion, with a value equal to at least
the required amount of the Letter of Credit, which deeds of trust shall be in
form and substance acceptable to Buyer in its reasonable discretion. If Seller
pays the Initial Productivity Loss Rebate after the Letter of Credit has been
issued, upon such payment the required amount of the Letter of Credit shall be
reduced to $31,000,000. Any Letter of Credit shall have an initial term of at
least one (1) year and shall secure the Parent Guaranty of Seller’s obligation
to pay Rebates in accordance with the terms of this Agreement and the terms of
the Parent Guaranty. If ABI shall fail to pay Buyer in full any amount due under
the Parent Guaranty that is secured by the Letter of Credit, Buyer shall be
entitled to draw the unpaid amount due on the Letter of Credit, without notice
to ABI. Further, if thirty (30) days prior to the expiration of the term of the
Letter of Credit ABI has not provided Buyer with a replacement Letter of Credit
or with alternate security reasonably acceptable to Buyer, Buyer may draw the
full amount of the Letter of Credit and hold such funds as security for ABI’s
performance of its obligations under the Parent Guaranty that are secured by the
Letter of Credit. If ABI provides deeds of trust as security for the Parent
Guaranty, Seller shall provide an ALTA title insurance policy or policies in
favor of Buyer insuring Buyer’s interest as beneficiary under such deeds of
trust which shall be issued by a title insurance company and which shall
otherwise be in form and substance reasonably satisfactory to Buyer. Seller
shall pay all costs in connection with the delivery and maintenance of such
security, including all title insurance premiums and recording costs in
connection with such deeds of trust. ABI’s obligations to provide the Letter of
Credit or other collateral shall terminate when Seller’s obligation to pay the
Rebates terminates, whereupon any Letter of Credit or other security for the
Parent Guaranty shall be automatically released and returned to ABI. As used in
this Section, “Consolidated Total Net Assets” means the consolidated total
assets of ABI and its subsidiaries net of current liabilities and long-term
liabilities, in each case, determined in accordance with GAAP as reported on
ABI’s Form 10-Q or Form 10-K, as the case may be, filed with the Securities and
Exchange Commission.

 

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ARTICLE 3

TITLE TO PROPERTY

3.1    Title to Real Property. Prior to the Effective Date, Buyer has secured
from Title Guaranty of Hawaii, LLC (the “Title Company”) commitments
(collectively, the “Title Commitment”) to issue to Buyer at Closing ALTA Owner’s
Policies of Title Insurance insuring title to portions of the Real Property, in
form and content and including endorsements satisfactory to Buyer (collectively,
the “Title Policy”). Seller shall provide customary affidavits regarding
unrecorded leases, construction liens, subdivisions and covenant violations and
other customary matters that are required by the Title Company to issue the
Title Commitment and Title Policy and to omit standard exceptions relating to
real estate taxes (excluding rollback taxes), unrecorded mechanics liens and
“gap” liability, but Seller shall not otherwise be required to issue any
indemnities, assurances, warranties or guaranties to induce issuance of the
Title Policy. For all portions of the A&B Land that the Title Company commits to
insure under the Title Commitment, ABLR and ABPHR shall convey to Buyer fee
simple title by limited warranty deeds in the form attached hereto as Exhibit F
(the “Deed”), subject only to the Permitted Exceptions, as further defined
below, and the Leases and any and all recorded easements, covenants, agreements
and other documents provided for in this Agreement. At the Closing, ABLR and
ABPHR shall convey to Buyer all of their right, title and interest in all other
portions of the A&B Land by quitclaim deeds, and Seller shall cause any
affiliated entities holding title to any of the Property to convey to Buyer all
of their right, title and interest in all other portions of the Property by
quitclaim deeds, bills of sale or assignments, as applicable. Land shall be
described in the Deeds or quitclaim deeds by the best property descriptions
available without having to survey the land or otherwise incur material expense,
which may include describing some such properties in the quitclaim deeds by
their Tax Map Key Numbers. After Closing Seller shall upon request provide Buyer
any and all records and documents of any kind or nature in Seller’s possession
or control to assist Buyer in obtaining clear title to the Real Property.

3.2    A&B Land Carve-Outs. Seller shall retain fee simple title to portions of
certain parcels within the A&B Land that are identified on Schedule 3.2 (the
“Carve-Out Parcels”). Prior to or at Closing Seller shall subject each of the
Carve-Out Parcels to a condominium declaration (each, a “CPR Declaration”)
pursuant to which a condominium property regime is established (each, a
“Condominium”). Each Condominium shall contain one or more condominium units
containing the land area identified on Schedule 3.2 that is to be retained by
Seller, with the remaining land area to be transferred to Buyer. Prior to the
Effective Date, Seller and Buyer have approved the forms of CPR Declarations and
associated condominium map for each of the Carve-Out Parcels. At Closing, Buyer
shall be conveyed only the unit(s) within each such Condominium that contain the
land area that is not designated for Seller’s retention on Schedule 3.2. Each
CPR Declaration and condominium map may not be modified without Buyer’s consent.
Seller shall pay all expenses relating to the condominium process, excluding
Buyer’s legal fees. Promptly after Closing Seller shall at its expense commence
and exercise commercially reasonable efforts to complete the subdivision of each
parcel subject to a CPR Declaration, and Buyer shall cooperate in each such
subdivision, all in accordance with Section 18 of each CPR Declaration.
Notwithstanding the foregoing, the parties acknowledge that it is not feasible
at this time to subdivide the portion of the Property identified by Tax Map Key
No.

 

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(2) 2-5-3-31 that is subject to a CPR Declaration and therefore, in accordance
with Section 18 of its CPR Declaration, that property shall not be subdivided
until such time as subdivision become feasible. Buyer and Seller shall each pay
fifty percent (50%) of the reasonable fees and costs of outside surveyors Seller
retained to prepare Condominium maps necessary to form the Condominiums.

3.3    A&B Exclusive Easement Reservations. Seller shall retain exclusive
easements over portions of certain parcels within the A&B Land that are
identified on Schedule 3.3 (the “A&B Exclusive Easements”) which Seller shall
record prior to Closing. Prior to the Effective Date, Seller and Buyer have
approved the forms of A&B Exclusive Easements.

3.4    Easements for the Benefit of the Excluded Land. Prior to the Effective
Date, Buyer and Seller have approved the easements for the benefit of the
Excluded Land over the A&B Land identified on Schedule 3.4 that shall be
recorded prior to Closing for utilities, drainage, access, view planes, building
setbacks and other purposes (the “Excluded Land Easements”).

3.5    Easements Over the Excluded Land. Prior to the Effective Date, Buyer and
Seller have approved the easements for the benefit of the Real Property and the
EMI Land over the Excluded Land identified on Schedule 3.5 that shall be
recorded prior to Closing for utilities, drainage, access, building setbacks and
other purposes (the “New Appurtenant Easements”).

3.6    Post-Closing Easements. If after Closing Buyer identifies any additional
New Appurtenant Easements or comparable rights that it reasonably requires over
the Excluded Land in order to own and operate the Real Property or the EMI Land,
or if after Closing Seller identifies any additional Excluded Land Easements or
comparable rights that it reasonably requires over the Real Property or the EMI
Land in order to own and operate the Excluded Land, then the parties and their
affiliates shall cooperate reasonably and in good faith to create, review,
approve and record such easements or comparable rights without charge to the
other as reasonably required for the future use, development and operation of
the Real Property, the EMI Land or the Excluded Land, respectively, provided
that neither party shall be required to impose such easements or other rights on
its lands if doing so would materially impair its use of its lands or require it
to incur material expense or liability. Seller shall pay all reasonable expenses
relating to the easement creation process, excluding Buyer’s legal fees. This
Section 3.6 shall survive Closing and remain in effect with respect to the Real
Property, the EMI Land and the Excluded Land so long as they are owned by Buyer
and Seller, respectively, or their respective affiliates and subsidiaries.

3.7    Restriction on Restricted Land. The Restricted Land will be conveyed to
Buyer subject to a recorded grant of agricultural conservation easement in the
form attached hereto as Exhibit I (the “Restricted Land Easement”), which will
prohibit the development of the Restricted Land for non-agricultural uses
without Seller’s consent for a period of twelve (12) years after the Closing
Date.

3.8    USFWS Indemnity. Seller shall indemnify and defend Buyer for any claim
made by the US Fish and Wild Life Service (“USFWS”) for breach of title
warranties in the conservation easement given by Seller to USFWS with respect to
TMK (2)-8-005-002. This indemnity shall survive Closing and shall be included in
the Parent Guaranty.

 

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3.9    Title to Other Property. At the Closing, Seller shall transfer title to
all of the Personal Property, Intangible Property, Membership Interests and
Intellectual Property free and clear of all liens and encumbrances made or
suffered by Seller or its predecessors in interest.

ARTICLE 4

DUE DILIGENCE REVIEW

4.1    Due Diligence Materials; Confidentiality. Prior to the Effective Date,
Seller has delivered or made available to Buyer through an electronic data room
copies of any and all documents, maps, reports and agreements material to
Buyer’s investigation of the Property, the EMI Land, the EMI Assets, the CMF
Assets, and the Kulolio Assets, including without limitation documents listed on
Schedule 4.1, to the extent in Seller’s possession or control (the “Due
Diligence Materials”); provided, however, that the Due Diligence Materials shall
not include, and Seller shall have no obligation to make available to Buyer,
Seller’s company records (other than company records of EMI, CMF and Kulolio),
business plans, internal memoranda (including any internal evaluations of
third-party reports concerning the Property), financial projections, budgets,
appraisals, valuations, opinions of value, any agreements and documents which
Seller is required to keep confidential pursuant to any agreement unless the
same will bind Buyer, accounting and tax records (exclusive of real property tax
records), communications between Seller and its attorneys, the work product of
Seller’s attorneys, and similar proprietary, confidential or privileged
information (collectively, the “Excluded Documents”). Buyer acknowledges that
Seller owned and operated the Property as a sugar cane plantation for over 100
years and that Seller also has owned and operated and currently owns and
operates many other properties, businesses and developments. As a result, Seller
has an enormous volume of documents and files in its possession with respect to
the Property and many other properties and businesses that Seller has owned and
operated over that period, and that Seller cannot practicably search all of
those documents and files for all Due Diligence Materials that may be responsive
to Buyer’s due diligence requests. Nevertheless, Seller will use commercially
reasonable efforts to deliver all Due Diligence Materials in Seller’s possession
or control which are relevant to Buyer’s due diligence regarding its acquisition
of the Property. Accordingly, the Due Diligence Materials that are provided by
Seller to Buyer are being furnished without representation or warranty as to the
accuracy or completeness of such Due Diligence Materials, except as provided in
this Agreement. Prior to Closing, if Seller obtains additional items that fall
within the definition of Due Diligence Materials or Buyer identifies any other
documents in Seller’s possession or control or reasonably available to Seller
which it deems relevant to its analysis of its investment in the Property,
Seller shall promptly deliver such items to Buyer.

4.2    Due Diligence Review; Physical Inspection. Buyer acknowledges that prior
to the Effective Date Buyer has had the opportunity to review the Due Diligence
Materials and investigate and review the soil, water, environmental, regulatory,
legal, economic, financial, mechanical, utilities, permitting, regulatory,
utility, hazardous substances and other characteristics of the Property. At all
times up to the Closing Date, provided this Agreement has not been terminated,
Buyer shall continue to have the right to physically inspect the Real

 

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Property and the EMI Land pursuant to the terms and conditions of this
paragraph. Buyer’s inspections shall be conducted in a manner to minimize
interference with operations and disturbance of tenants. Any of Buyer’s
investigations, tests and acts will be at Buyer’s sole cost and expense, and
Buyer will indemnify, defend and hold Seller and the Real Property and the EMI
Land free and harmless from and against any liens, claims, losses, liabilities,
damages, legal fees and costs, including without limitation claims for personal
injury, death or property damage, arising out of or in connection with the entry
by Buyer and its agents and consultants onto the Real Property and the EMI Land
and any such tests and acts. This Section will survive the Closing or the
termination of this Agreement.

4.3    Leases & Contracts. After the Effective Date and until Closing, Seller
may not, and may not permit the Operating Companies to, enter into new Leases
and Contracts or modify, renew or terminate any of the existing Leases and
Contracts without the prior written consent of Buyer, which shall not be
unreasonably withheld, conditioned or delayed.

4.4    “AS IS” SALE. BUYER AGREES THAT BUYER SHALL TAKE THE PROPERTY “AS-IS,”
“WHERE-IS,” AND WITH ALL FAULTS AND CONDITIONS THEREON, SUBJECT ONLY TO THE
EXPRESS REPRESENTATIONS, WARRANTIES, INDEMNITIES AND GUARANTIES SET FORTH HEREIN
OR IN ANY OF THE TRANSACTION DOCUMENTS (DEFINED BELOW). ANY DUE DILIGENCE
MATERIALS OR OTHER WRITTEN INFORMATION OR DISCLOSURES (COLLECTIVELY, THE
“DISCLOSURES”) PROVIDED OR MADE TO BUYER OR ITS CONSTITUENTS BY SELLER OR ANY OF
SELLER’S EMPLOYEES OR REPRESENTATIVES CONCERNING THE CONDITION OF THE PROPERTY,
ITS SUITABILITY FOR BUYER’S INTENDED USES, THE AVAILABILITY OF WATER, THE
PRESENCE OR REMEDIATION OF HAZARDOUS MATERIALS OR COMPLIANCE WITH HAZARDOUS
MATERIALS LAWS (EACH AS DEFINED IN SECTION 12.14 BELOW), OR ANY OTHER MATTER
PERTAINING TO THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT OR BUYER’S FUTURE
USE OF THE PROPERTY SHALL NOT BE REPRESENTATIONS OR WARRANTIES, EXCEPT TO THE
EXTENT EXPRESSLY SET FORTH HEREIN OR IN ANY OF THE TRANSACTION DOCUMENTS. BUYER
SHALL NOT RELY ON SUCH DISCLOSURES, BUT RATHER, BUYER SHALL RELY ONLY ON ITS OWN
INSPECTION OF THE PROPERTY AND THE REPRESENTATIONS, WARRANTIES, INDEMNITIES AND
GUARANTIES SET FORTH HEREIN AND IN ANY OF THE TRANSACTION DOCUMENTS. BUYER
ACKNOWLEDGES AND AGREES THAT, SUBJECT TO THE REPRESENTATIONS, WARRANTIES,
INDEMNITIES AND GUARANTIES SET FORTH HEREIN OR IN ANY OF THE TRANSACTION
DOCUMENTS, SELLER HAS NOT MADE, DOES NOT MAKE AND SPECIFICALLY DISCLAIMS ANY
REPRESENTATIONS, WARRANTIES, PROMISES, COVENANTS, AGREEMENTS OR GUARANTIES OF
ANY KIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS OR IMPLIED, ORAL OR WRITTEN,
PAST, PRESENT OR FUTURE, OF, AS TO, CONCERNING OR WITH RESPECT TO (A) THE
NATURE, QUALITY OR CONDITION OF THE PROPERTY, INCLUDING, WITHOUT LIMITATION, ITS
SOIL AND GEOLOGY, (B) THE AVAILABILITY OF WATER FOR PURPOSES OF IRRIGATING THE
PROPERTY OR FOR ANY OTHER USE, INCLUDING WITHOUT LIMITATION THE PERMITS,
APPROVALS AND OTHER MATTERS WHICH BUYER MAY NEED TO SECURE OR UNDERTAKE IN ORDER
TO PRESERVE, SECURE

 

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OR DEVELOP EXISTING OR NEW SOURCES OF WATER, (C) THE SUITABILITY OF THE PROPERTY
FOR ANY AND ALL ACTIVITIES AND USES WHICH BUYER MAY CONDUCT THEREON, (D) THE
COMPLIANCE OF OR BY THE PROPERTY OR ITS OPERATION WITH ANY LAWS, RULES,
ORDINANCES OR REGULATIONS OF ANY APPLICABLE GOVERNMENTAL AUTHORITY OR BODY
INCLUDING WITHOUT LIMITATION ZONING AND SUBDIVISION, (E) THE HABITABILITY,
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF THE PROPERTY, OR (F) ANY
OTHER MATTER WITH RESPECT TO THE PROPERTY, AND SPECIFICALLY DISCLAIMS ANY
REPRESENTATIONS EXCEPT TO THE EXTENT EXPRESSLY SET FORTH HEREIN OR IN ANY OF THE
TRANSACTION DOCUMENTS REGARDING HAZARDOUS MATERIALS OR COMPLIANCE WITH HAZARDOUS
MATERIALS LAWS.

EXCEPT AS OTHERWISE PROVIDED HEREIN OR IN ANY OF THE TRANSACTION DOCUMENTS, TO
THE FULLEST EXTENT PERMITTED BY LAW, BUYER (FOR ITSELF AND ON BEHALF OF ANY
ENTITY AFFILIATED WITH OR CLAIMING BY, THROUGH OR UNDER BUYER (INCLUDING ANY
BUYER AFFILIATE OR SUBSIDIARY TAKING TITLE TO ANY PORTION OF THE PROPERTY (A
“BUYER AFFILIATE” AT CLOSING)) HEREBY WAIVES, RELEASES AND AGREES NOT TO MAKE
ANY CLAIM OR BRING ANY COST RECOVERY ACTION OR CLAIM FOR CONTRIBUTION,
INDEMNIFICATION, ABATEMENT OR REMEDIAL ACTION OR OTHER ACTION OR CLAIM AGAINST
SELLER OR SELLER’S AFFILIATES BASED ON (A) THE PRESENCE OR ANY DISCHARGE,
DISPOSAL, RELEASE, OR ESCAPE OF ANY HAZARDOUS MATERIALS, CHEMICAL, OR ANY OTHER
MATERIAL WHATSOEVER, ON, AT OR TO THE PROPERTY OR ANY AQUIFERS OR OTHER
GROUNDWATER RESOURCES LOCATED ON THE PROPERTY, AND, EXCEPT AS EXPRESSLY PROVIDED
IN THE EMI OPERATING AGREEMENT, THE EMI LAND OR ANY AQUIFERS OR OTHER
GROUNDWATER RESOURCES LOCATED ON THE EMI LAND (COLLECTIVELY, “ENVIRONMENTAL
CONDITIONS”), OR (B) ANY ENVIRONMENTAL CONDITIONS WHATSOEVER ON OR UNDER THE
PROPERTY, EXCEPT FOR CLAIMS BASED UPON (1) A BREACH OF ANY EXPRESS
REPRESENTATIONS AND WARRANTIES CONTAINED HEREIN OR IN ANY OF THE TRANSACTION
DOCUMENTS EXPRESSLY ADDRESSING HAZARDOUS MATERIALS AND/OR HAZARDOUS MATERIALS
LAWS, (2) EXPRESS INDEMNITIES UNDER THE CPR DECLARATIONS OR UNDER THE A&B
EXCLUSIVE EASEMENTS, (3) A BREACH OF SELLER’S REPRESENTATION AND COVENANTS IN
SECTION 12.14 (ENVIRONMENTAL MATTERS), OR (4) EXPRESS INDEMNITIES AND GUARANTIES
CONTAINED HEREIN OR IN ANY OF THE TRANSACTION DOCUMENTS.

WITHOUT LIMITATION UPON BUYER’S RIGHT TO RELY ON THE EXPRESS REPRESENTATIONS,
WARRANTIES, INDEMNITIES AND GUARANTIES CONTAINED HEREIN OR IN ANY OF THE
TRANSACTION DOCUMENTS, AND EXCEPT AS OTHERWISE PROVIDED HEREIN, BUYER REPRESENTS
TO SELLER THAT BUYER HAS CONDUCTED, OR WILL CONDUCT PRIOR TO CLOSING, SUCH
INVESTIGATIONS OF THE PROPERTY, INCLUDING, BUT NOT LIMITED TO, THE PHYSICAL AND
ENVIRONMENTAL CONDITIONS THEREOF, AS BUYER DEEMS NECESSARY OR DESIRABLE TO
SATISFY ITSELF AS TO THE CONDITION OF THE

 

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PROPERTY AND THE EXISTENCE OR NONEXISTENCE OF CURATIVE ACTION TO BE TAKEN WITH
RESPECT TO ANY HAZARDOUS MATERIALS ON THE PROPERTY OR, EXCEPT AS PROVIDED IN THE
EMI OPERATING AGREEMENT, THE EMI LAND, AND WILL RELY SOLELY UPON SAME AND NOT
UPON ANY INFORMATION PROVIDED BY OR ON BEHALF OF SELLER OR ITS AGENTS,
REPRESENTATIVES OR EMPLOYEES WITH RESPECT THERETO. EXCEPT AS OTHERWISE PROVIDED
HEREIN AND IN ANY OF THE TRANSACTION DOCUMENTS, UPON CLOSING, BUYER (AND ANY
ENTITY AFFILIATED WITH OR CLAIMING BY, THROUGH OR UNDER BUYER) SHALL ASSUME THE
RISK THAT ADVERSE MATTERS, INCLUDING BUT NOT LIMITED TO, CONSTRUCTION DEFECTS
AND ADVERSE PHYSICAL AND ENVIRONMENTAL CONDITIONS, MAY NOT HAVE BEEN REVEALED BY
BUYER’S INVESTIGATIONS, AND BUYER (AND ANY ENTITY AFFILIATED WITH OR CLAIMING
BY, THROUGH OR UNDER BUYER), UPON CLOSING, SHALL BE DEEMED TO HAVE WAIVED,
RELINQUISHED AND RELEASED SELLER (AND SELLER’S AFFILIATES) FROM AND AGAINST ANY
AND ALL CLAIMS, DEMANDS, CAUSES OF ACTION (INCLUDING CAUSES OF ACTION IN TORT),
LOSSES, DAMAGES, LIABILITIES, COSTS AND EXPENSES (INCLUDING ATTORNEYS’ FEES) OF
ANY AND EVERY KIND OR CHARACTER, KNOWN OR UNKNOWN, FORESEEN OR UNFORESEEN, WHICH
BUYER MIGHT HAVE ASSERTED OR ALLEGED AGAINST SELLER (AND SELLER’S AFFILIATES) AT
ANY TIME BY REASON OF OR ARISING OUT OF ANY LATENT OR PATENT CONSTRUCTION
DEFECTS, ERRORS OR OMISSIONS IN DESIGN OR CONSTRUCTION, OR PHYSICAL CONDITIONS,
VIOLATIONS OF ANY APPLICABLE LAWS AND ANY AND ALL OTHER ACTS, OMISSIONS,
LIABILITIES EVENTS, CIRCUMSTANCES OR MATTERS REGARDING THE PROPERTY, EXCEPT FOR
BREACHES BY SELLER OF THE EXPRESS PROVISIONS OF THIS AGREEMENT OR ANY OF THE
TRANSACTION DOCUMENTS.

THE PROVISIONS OF THIS SECTION SHALL SURVIVE THE CLOSING AND ANY TERMINATION OF
THIS AGREEMENT.

Buyer’s Initials: /s/ RRP

4.5    Confidentiality. All Due Diligence Materials and other information
provided to or obtained by Buyer with respect to the Property and this
transaction is subject to the Nondisclosure Agreement dated February 26, 2018,
between ABLR and Trinitas Partners, LLC (the “Nondisclosure Agreement”), which
is incorporated herein by reference and which Buyer accepts and agrees to be
bound by as if Buyer had originally been a party to it.

4.6    Inapplicability and Waiver of Certain Statutory Provisions. Seller and
Buyer acknowledge and agree that the transaction contemplated by this Agreement
is not subject to the provisions of Hawaii Revised Statutes Chapters 484, 508D
or 514B Parts IV and V or of 15 U.S. Code Chapter 42 (collectively, the “Real
Estate Registration and Sales Laws”). Buyer hereby freely and voluntarily waives
any claim that this transaction is subject to the Real Estate Registration and
Sales Laws or that Buyer is entitled to any remedies thereunder, and Buyer
hereby agrees to indemnify, defend and hold Seller harmless from any expenses,
costs, liabilities, attorneys’ fees or damages that Seller incurs if Buyer
asserts any claims to the contrary. This Section shall survive Closing.

 

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ARTICLE 5

TITLE AND SURVEY

5.1     Title Exceptions. Seller has provided Buyer with certain existing title
reports in Seller’s possession regarding portions of the Real Property. Prior to
the Effective Date, Buyer by letter dated October 8, 2018, requested that Seller
take certain actions with respect to matters shown in those title reports (the
“Initial Title Objections”). Seller responded by letter dated October 31, 2018
(the “Seller Title Objection Response”) and the Title Commitment was thereafter
issued by the Title Company. If the Title Company adds or Buyer discovers, prior
to Closing, any new title exceptions or requirements (a) that are Mandatory Cure
Exceptions (as defined below), (b) that are caused or consented to by Seller or
any of its agents or affiliates after the date of the Title Commitment, or
(c) that in Buyer’s reasonable opinion are reasonably certain to materially
impair Buyer’s ownership and use of the Property as a whole for Buyer’s intended
use, then Buyer shall notify Seller of any such exceptions or requirements to
which Buyer objects (the “Additional Title Objections”) within three (3) days of
Title Company’s notification or Buyer’s discovery of such exception or
requirement, and in any event no later than three (3) days prior to the Closing.
All such exceptions or requirements to which Buyer does not so object shall be
deemed “Permitted Exceptions”. In addition, and notwithstanding anything
contained herein to the contrary, and except for exceptions that Seller
expressly agreed to remove in the Seller Title Objection Response, the following
shall be Permitted Exceptions: (a) the reservation to the State of Hawaii of
mineral and water rights of any nature; (b) the lien of all ad valorem real
property taxes and assessments, general, special and/or rollback, not yet due
and payable as of the Closing Date; (c) applicable zoning and building
ordinances and land use regulations, now or hereafter in effect relative to the
Real Property; (d) discrepancies, conflicts in boundary lines, shortage in area,
encroachments or any other matters which a correct survey, archaeological study
or physical inspection of the Real Property would disclose; (e) any and all
existing roadways, trails, easements, rights of way, flumes and irrigation
ditches; (f) claims arising out of customary and traditional rights and
practices, including without limitation those exercised for subsistence,
cultural, religious, access or gathering purposes, as provided for in the Hawaii
Constitution or the Hawaii Revised Statutes; (g) any exceptions caused by Buyer,
its agents, representatives or employees; and (h) all exceptions contained in
the Title Commitment. Buyer acknowledges that title reports or commitments are
not available for every parcel included within the Real Property, and the
absence of such reports or commitments alone is not grounds for Buyer to assert
any title objections. Further, Buyer acknowledges that certain portions of the
Real Property are known to have broken or otherwise uninsurable title, and that
notwithstanding any objections Buyer may have or anything to the contrary herein
Seller will not be undertaking any efforts to make title to such portions
insurable, and all such portions shall be conveyed at Closing by quitclaim deed
without warranties of title.

5.2    Curing of Title Exceptions. If Buyer notifies Seller of any Additional
Title Objections, Seller shall have the following options:

(a)    Mandatory Cure Exceptions. If the Initial Title Objections or Additional
Title Objections pertain to portions of the Real Property that the Title Company
commits to insure under the Title Commitment and are (i) money judgments, taxes
(other than taxes which are subject to proration pursuant to this Agreement), or
inchoate or perfected mechanics or

 

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materialman’s liens, (ii) mortgages or other monetary liens, including third
party financing liens, or (iii) matters Seller is otherwise obligated to cure or
deliver pursuant to this Agreement, then Seller shall be required to remove such
exceptions (the “Mandatory Cure Exceptions”) from the Title Commitment by taking
the actions necessary to have the Mandatory Cure Exceptions satisfied, deleted
or insured over by the Title Company, or transferred to bond so that the
Mandatory Cure Exceptions are removed from the Title Commitment and Buyer’s
Title Policy at or before Closing.

(b)    Optional Cure Exceptions. With regard to all Additional Title Objections
which are not Mandatory Cure Exceptions (the “Optional Cure Exceptions”), Seller
shall have the option, but not the obligation, to take the actions necessary to
have the Optional Cure Exceptions deleted or insured over by the Title Company,
or transferred to bond so that the Optional Cure Exceptions are removed from the
Title Commitment and Buyer’s Title Policy at or before Closing. If Buyer
notifies Seller of any Additional Title Objections which are Optional Cure
Exceptions, Seller shall provide Buyer with written notice of its election as to
whether or not it will cure the Optional Cure Exceptions within three (3) days
after Seller’s receipt of Buyer’s notice of any Optional Cure Exceptions, and in
any event no later than three (3) days prior to Closing. If Seller notifies
Buyer that it will not attempt to cure the Optional Cure Exceptions, Buyer shall
have the option to either proceed to Closing and accept title in its existing
condition without adjustment to the Purchase Price (in which case such accepted
Optional Cure Exceptions will be deemed Permitted Exceptions), or to terminate
this Agreement. In the event Buyer elects to terminate this Agreement, the
Closing Price shall be returned to Buyer and neither Buyer nor Seller shall have
any further rights or obligations hereunder.

5.3    Survey. No ALTA survey or ALTA survey update of the Property (the
“Survey”) has been done in connection with this transaction. Any matter which
would be shown by such a Survey shall be a Permitted Exception.

ARTICLE 6

Approvals

6.1    Seller’s Approvals. Seller represents to Buyer that, prior to the
Effective Date, Seller received all of Seller’s internal approvals necessary to
consummate and close this transaction in accordance with the terms of this
Agreement.

6.2    Buyer’s Approvals. Buyer represents to Seller that, prior to the
Effective Date, Buyer received all of Buyer’s internal approvals and any other
approvals necessary for Buyer to fund, consummate and close this transaction in
accordance with the terms of this Agreement.

6.3    No Other Approvals. Closing is not subject to or contingent on any third
party or governmental approvals.

 

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ARTICLE 7

Buyer’s Remedies

7.1     Buyer’s Remedies for Seller’s Failure to Close. Notwithstanding anything
to the contrary contained in this Agreement, if Closing does not occur due to a
Seller default, then Buyer may, as Buyer’s sole and exclusive remedy hereunder
and at Buyer’s option, either (a) terminate this Agreement by written notice to
Seller, Escrow Holder and Title Company given at any time after Seller shall
have failed, for a period of five (5) days after written notice from Buyer, to
cure such default and, upon receipt of such notice of termination, Escrow Holder
shall refund the Closing Price to Buyer and, if Seller’s default was the result
of Seller’s intentional and willful act or failure to act, Seller shall
reimburse Buyer for all of its actual, documented, out-of-pocket costs paid to
non-affiliated third parties in connection with this Agreement, up to a maximum
aggregate amount of $1,000,000.00, whereupon neither party shall have any rights
or obligations under this Agreement, except for those obligations which
expressly survive Closing, or (b) upon notice to Seller not more than thirty
(30) days after the originally scheduled Closing Date, and provided an action is
filed within thirty (30) days thereafter, Buyer may seek specific performance of
Seller’s obligation to convey the Property, but not damages; provided, however,
solely in the event that Buyer elects to proceed under this clause (b) and,
despite Buyer’s commercially reasonable efforts related thereto, specific
performance is not available, Buyer may terminate this Agreement, whereupon
(i) Escrow Holder shall refund the Closing Price to Buyer, (ii) if Seller’s
default and/or the unavailability of specific performance was the result of
Seller’s intentional and willful act or failure to act, Seller shall be
obligated to pay to Buyer an amount equal to Buyer’s actual, documented,
out-of-pocket costs paid to non-affiliated third parties in connection with this
Agreement, and (iii) neither party shall have any rights or obligations under
this Agreement, except for those obligations which expressly survive Closing.
Buyer’s failure to seek specific performance as aforesaid shall constitute its
election to proceed under clause (a) above.

7.2     Buyer’s Remedies After Closing.

(a)    Subsequent Transfer Default. If Seller fails to effectuate the Subsequent
Transfers pursuant to Section 9.2(b) following the Closing (defined below) and
Seller fails, for a period of five (5) days after written notice from Buyer, to
cure such failure (“Subsequent Transfer Default”), Buyer shall have all of its
remedies at law or equity against Seller. This Section 7.2(a) shall survive the
Closing.

(b)    Escrow Holdback; Appointment of Escrow Holder; Term. At Closing, Seller
shall deposit with Escrow Holder the sum of $7,500,000.00 (the “Holdback
Amount”) to pay any debts, obligations or liabilities Seller may have to Buyer
after Closing, excluding the obligation to pay the Rebates (the “Post-Closing
Obligations”), that arise pursuant to or in connection with Seller’s breach of
the representations, warranties, indemnifications, covenants or other
obligations of Seller under this Agreement or any document signed and delivered
by Seller to Buyer at Closing (collectively, the “Transaction Documents”).
Seller and Buyer hereby appoint and designate Escrow Holder to hold, administer,
and disburse the Holdback Amount from the Closing Date until the first
anniversary of the Closing Date (the “Holdback Period”), and Escrow Holder
accepts such appointment. The Holdback Amount shall be placed in one or

 

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more interest-bearing FDIC insured accounts (the “Holdback Account”). If Buyer
incurs any cost, expense, damage or liability with respect to any of Seller’s
Post-Closing Obligations that individually or in the aggregate exceed the Floor
Amount defined in Section 7.2(c), Buyer shall have the right, but not the
obligation, to require payment from Escrow Holder out of the Holdback Account
for the amount of any such costs, expense, damage or liabilities that exceed the
Floor Amount. To draw on the Holdback Account, Buyer must send written request
for payment to Escrow Holder and Seller detailing the amount payable and
including supporting documentation of the amount requested in reasonable detail.
Seller hereby irrevocably instructs Escrow Holder to pay Buyer any undisputed
amounts that Buyer requests in accordance with the preceding sentence out of the
Holdback Account no more than five (5) Business Days of receipt of a Buyer’s
written request, provided that unless Seller approves such payment in writing
within such 5-Business Day period Escrow Holder shall only pay the portion (if
any) to which Seller approves in writing, and shall continue to hold the balance
of the requested payment until its disposition is resolved by mutual written
instructions of the parties or final, non-appealable court judgment. If Seller
fails to instruct Escrow Holder within such five (5) Business Day period, Escrow
Agent shall disburse the full amount requested by Buyer. Any fees of Escrow
Holder for establishing and administering the Holdback Account shall be paid by
Buyer. The Holdback Amount, or any remaining portion thereof, shall be remitted
to Seller upon expiration of the Holdback Period, provided however that if any
Buyer claims for reimbursement are pending or unresolved at such time, Escrow
Holder shall withhold 120% of the amount of any such claims pursuant to the
terms of this Section 7.2(b) until such claims are paid in full or resolved by
mutual agreement of the parties or final court judgment. Escrow Holder at its
sole discretion may file a suit in interpleader in any court having jurisdiction
in the matter for the purpose of having the respective rights of the disputing
parties adjudicated and may deposit with the court any or all monies held
hereunder with deductions for Escrow Holder’s attorney’s fees and costs. Upon
institution of such interpleader suit or other action, depositing such money
with the court, and giving notice thereof to the parties thereto by personal
service or in accordance with the order of the court, Escrow Holder shall be
fully released and discharged from all further obligations hereunder with
respect to the monies so deposited. This Section 7.2(b) shall survive the
Closing and Seller’s obligations under this Section 7.2(b) shall be covered by
the Parent Guaranty.

(c)    Limitations of Seller’s Liability. The representations and warranties of
Seller in Section 10 or elsewhere in this Agreement are intended to and shall
remain true and correct as of the Closing Date (and with respect to the
representations and warranties related to EMI until the Initial EMI Transfer
Date), and shall survive the Closing and transfer of title to the Property until
the fifth anniversary of the Closing Date with respect to any and all
environmental representations and warranties and the representations set forth
in Sections 10.1(a), (b), (k), (l) and (t), and until the second anniversary of
the Closing Date with respect to all other representations and warranties (as
applicable, the “Survival Period”), unless a longer period of time is otherwise
expressly provided for herein. Any action for breach of a representation or
warranty must be commenced, if at all, within said Survival Period.
Notwithstanding anything to the contrary contained herein, if the Closing shall
have occurred, (a) except as provided in the following sentence, the aggregate
liability of Seller arising pursuant to or in connection with Seller’s breach of
its representations, warranties, indemnifications, covenants or other
obligations (whether express or implied) of Seller under this Agreement or any
of the Transaction Documents shall not exceed $7,500,000.00 (the “Liability
Limitation”) and (b)

 

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Seller shall not be liable for any judgment in any action based upon any claim
by Buyer alleging a breach by Seller of any representations, warranties,
indemnifications, covenants or other obligations (whether express or implied) of
Seller under this Agreement or any of the Transaction Documents, unless and
until such claim, either alone or together with any other claims by Buyer
against Seller alleging a breach by Seller of any representations, warranties,
indemnifications, covenants or other obligations (whether express or implied) of
Seller contained in this Agreement or in any of the Transaction Documents, is
for an aggregate amount in excess of $250,000.00 (the “Floor Amount”), in which
event Seller’s liability respecting any final judgment concerning such claim or
claims shall be for the amount thereof that exceeds the Floor Amount, subject to
the Liability Limitation. Notwithstanding the foregoing sentence, the Floor
Amount and Liability Limitation shall not apply to (1) Seller’s obligation to
pay Rebates as provided in Section 2.7, (2) Seller’s funding obligations under
the EMI Operating Agreement, (3) Seller’s obligation to pay water delivery
charges under the Water Delivery Agreement, (4) Seller’s obligations under
Sections 12.14(c) and 12.14(e), (5) Seller’s obligation to indemnify Buyer
against claims or losses relating to Hazardous Materials in connection with the
land subject to the CPR Declarations and the A&B Exclusive Easements,
(6) Seller’s obligation to pay rollback taxes pursuant to Section 12.8(b), (7)
Seller’s post-closing obligation to repair wells as provided in Section 12.16,
(8) Seller’s Retained Liabilities pursuant to Section 12.2, (9) Seller’s
obligations in connection with the MECO Subdivision pursuant to Section 12.15,
(10) Seller’s obligation to effectuate the Subsequent Transfers, and
(11) Seller’s obligation to indemnify Buyer for any claims made in connection
with the USFWS warranties pursuant to Section 3.8 (collectively, the “Uncapped
Seller Obligations”). The Uncapped Seller Obligations and other obligations
under this Section 7.2(c) shall survive the Closing and shall be covered by the
Parent Guaranty, but ABI’s liability under the Parent Guaranty solely for the
Uncapped Seller Obligations shall not exceed $7,500,000.00 (other than ABI’s
liability for the Rebates which shall not be capped under the Parent Guaranty)..
Seller shall at all times maintain net worth sufficient to satisfy any Uncapped
Seller Obligations and shall not dissolve or windup without making reasonable
provision for the payment of any unsatisfied Uncapped Seller Obligations and
such obligations of Seller shall be included in the Parent Guaranty and ABI’s
liability shall not be capped under the Parent Guaranty. The Liability
Limitation shall be reduced by the amount of any payments to Buyer from the
Holdback Account established pursuant to Section 7.2(b). The Liability
Limitation shall not be reduced by any payments to Buyer with respect to the
Uncapped Seller Obligations, whether from the Holdback Account, pursuant to the
Parent Guaranty or otherwise. No director, officer, manager, member, partner,
employee, beneficiary, shareholder, participant, representative or agent of
Seller or any entity that is or becomes a constituent partner or member in
Seller or an agent of Seller (“Seller’s Affiliates”) shall have any personal
liability, directly or indirectly, under or in connection with this Agreement or
any of the Transaction Documents, or any amendment or amendments to any of the
foregoing made at any time or times, heretofore or hereafter, and Buyer and its
successors and assigns and, without limitation, all other persons and entities,
shall look solely to the Holdback Account and Seller’s assets for the payment of
any claim or for any performance, and Buyer, on behalf of itself and its
successors and assigns, hereby waives any and all such personal liability.
Notwithstanding anything to the contrary contained in this Agreement, neither
the negative capital account of any constituent partner or member in Seller or
any entity owning an interest (directly or indirectly) in Seller, nor any
obligation of any constituent partner or member in Seller or any entity owning
an interest (directly or indirectly) in Seller to restore a negative

 

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capital account or to contribute capital to Seller (or any entity owning an
interest, directly or indirectly, in any other constituent partner or member of
Seller), shall at any time be deemed to be the property or an asset of Seller or
any such other entity (and neither Buyer nor any of its successors or assigns
shall have any right to collect, enforce or proceed against or with respect to
any such negative capital account or obligation to restore or contribute).
EXCEPT FOR THE UNCAPPED SELLER OBLIGATIONS, THE TOTAL LIABILITIES OR OBLIGATIONS
OF SELLER TO BUYER AFTER CLOSING SHALL NOT UNDER ANY CIRCUMSTANCES EXCEED THE
LIABILITY LIMITATION. TO THE FULLEST EXTENT PERMITTED BY LAW, BUYER (FOR ITSELF
AND ON BEHALF OF ANY ENTITY AFFILIATED WITH BUYER) HEREBY WAIVES, RELEASES AND
AGREES NOT TO MAKE ANY CLAIM OR BRING ANY ACTION TO RECOVER FROM SELLER OR ANY
OF SELLER’S AFFILIATES ANY AMOUNT IN EXCESS OF THE LIABILITY LIMITATION, OTHER
THAN AMOUNTS DUE WITH RESPECT TO THE UNCAPPED SELLER OBLIGATIONS AND UNDER THE
PARENT GUARANTY.

Buyer’s Initials: /s/ RRP

7.3    Incorporation of Waiver Agreement. In connection with the negotiation of
this Agreement certain of the Sellers, Pomona Farming, LLC, and Public Sector
Pension Investment Board entered into that certain Waiver Agreement dated
July 18, 2018 (the “Waiver Agreement”). The terms of the Waiver Agreement are
incorporated herein by reference and the waivers, obligations, covenants and
commitments of the “Buyer” under such agreement are hereby made binding on Buyer
as if Buyer were originally a party to such agreement, but such incorporation
shall not waive or limit any of the specific rights or obligations of the
parties to this Agreement under this Agreement or any of the Transaction
Documents.

7.4    Buyer’s Voluntary Acceptance of Limitations on Its Remedies; Survival.
Buyer acknowledges and agrees that the waivers, releases and other provisions
contained in this Article 7 as well as elsewhere in this Agreement, were a
material factor in Seller’s acceptance of the Purchase Price and agreement to
the terms of this Agreement, and that Seller is unwilling to sell the Property
to Buyer unless Seller is released and indemnified as expressly set forth
herein. Except as otherwise set forth herein, the releases by Buyer set forth in
this Agreement include claims of which Buyer is presently unaware or which Buyer
does not presently suspect to exist which, if known by Buyer, would materially
affect Buyer’s release of Seller. Buyer acknowledges and agrees that Buyer,
together with Buyer’s counsel, has fully reviewed the disclaimers, waivers,
releases, indemnities, etc., set forth in this Agreement and understands the
significance and effect thereof. The terms and conditions of this Article 7 will
expressly survive the Closing or termination of this Agreement.

Buyer’s Initials: /s/ RRP

ARTICLE 8

CONDITIONS TO CLOSING

8.1    Buyer Closing Conditions. The following (the “Closing Conditions”) shall
be conditions precedent to Buyer’s obligation to close the transaction:

(a)    This Agreement shall not have terminated pursuant to its terms;

 

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(b)    Any Title Objections which Seller is obligated to cure have been cured as
of the Closing Date and the Title Company is irrevocably committed to issue the
Title Policy;

(c)    Seller’s representations and warranties set forth in Article 10 shall be
true and correct in all material respects as if made on the Closing Date,
provided that there shall be no failure of this condition where any matters that
cause Seller’s representation to be incorrect were disclosed in writing to Buyer
prior to the Effective Date, or arose after the Effective Date and are not
material to the transaction as a whole. For purposes of this section, such
matters shall not be deemed material to the transaction as a whole where they
are, in the aggregate, reasonably estimated to result in a loss, liability or
expense to Buyer of $1,000,000 or less; and

(d)    Seller has materially performed all its obligations and covenants, and
made all required deliveries, under this Agreement.

If any of the Closing Conditions listed in (a) through (d) shall not have been
satisfied on or before the Closing Date, then Buyer shall have the right to
either (i) waive such Closing Condition(s) and proceed with Closing, or
(ii) elect to not proceed with Closing by giving written notice to Seller of
such election prior to the Closing Date, in which case the Closing Price shall
be immediately returned to Buyer and this Agreement shall terminate. In
addition, if such Closing Condition has not been satisfied due to a default on
the part of Seller, Buyer shall also have its rights under Article 7.

ARTICLE 9

CLOSING AND ESCROW

9.1    Deposit with Escrow Holder and Escrow Instructions. Upon execution of
this Agreement, the parties hereto shall deposit an executed counterpart of this
Agreement, together with the Closing Price provided for above, with Escrow
Holder and this instrument shall serve as the instructions to Escrow Holder for
consummation of the purchase and sale contemplated by this Agreement. Seller and
Buyer agree to execute such additional and supplementary escrow instructions as
may be appropriate to enable Escrow Holder to comply with the terms of this
Agreement; provided, however, that in the event of any conflict between the
provisions of this Agreement and any supplementary escrow instructions, the
terms of this Agreement shall control.

9.2    Closing. The closing of the purchase and sale of the Property and the
execution and exchange of documents (the “Closing”) shall be held at the offices
of Escrow Holder or its designee. The Closing shall occur as follows:

(a)    Closing Date. On December 20, 2018 (the “Closing Date”), the following
Property shall be transferred to Buyer and the corresponding Closing Price shall
be released to Seller in accordance with the terms of this Agreement:

(i)    The A&B Land, excluding any portion of the A&B Land for which any
required CPR Declaration has not yet been recorded as of the Closing Date (such
land, the “Delayed CPR Lands”);

 

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(ii)    The Kulolio Membership Interests; and

(iii)    The CMF Membership Interests.

(b)    Subsequent Transfers. The following transfers (the “Subsequent
Transfers”) shall occur following the Closing:

(i)    At any time after the Closing Date, on a date mutually agreed-upon by the
parties, but no later than February 1, 2019 (the “Initial EMI Transfer Date”),
the Initial EMI Interests will be transferred to Buyer and the Initial EMI Price
shall be released to Seller in accordance with the terms of this Agreement and
the EMI Operating Agreement shall become effective; and

(ii)    At any time after the Closing Date, on multiple days if necessary as
determined by the parties, on a date or dates mutually agreed on by the parties,
but no later than the Initial EMI Transfer Date, any Delayed CPR Lands will be
transferred to Buyer and the corresponding portion of the Purchase Price
attributable to such Delayed CPR Lands shall be released to Seller in accordance
with the terms of this Agreement.

The Subsequent Transfers are an integral part of this transaction. Accordingly,
once the Closing has occurred, the parties’ obligations to consummate and
complete the Subsequent Transfers as set forth in this paragraph are
unconditional.

(c)    Gap Closing. Because the total number of Transaction Documents to be
recorded at Closing exceeds the number that the Hawaii Bureau of Conveyances
will accept from Escrow for regular recording on a single day, Buyer and Seller
have agreed that certain documents required to be recorded on the Closing Date
under this Agreement shall instead be recorded after the Closing Date as set
forth in the Escrow Instructions attached hereto as Exhibit J (“Gap Closing
Escrow Instructions”). The Transaction Documents to be recorded on the Closing
Date will be listed under the Tranche One heading on Exhibit A to the Gap
Closing Escrow Instructions, and the Transaction Documents to be recorded after
the Closing Date will be listed under the Tranche Two, Tranche Three, etc.
heading on Exhibit A to the Gap Closing Escrow Instructions (the “Late-Recording
Documents”). Seller and Buyer acknowledge and agree that notwithstanding the
date of recording the Late-Recording Documents, those documents shall be dated
and deemed effective as of the Closing Date as if they had been recorded
concurrently with the rest of the Transaction Documents, and the delay in their
recording shall not be deemed to impair the effectiveness of the Closing in any
respect, including without limitation, with respect to transfer of possession
and risk with respect to the Property or prorations. Seller agrees that between
the Closing Date and the date of recording of the Late-Recording Documents (or
with respect to the Delayed CPR Lands, the dated of recording the documents
effectuating such Subsequent Transfer (the “Delayed CPR Recording Documents”))
it shall not encumber, impair, exercise, modify or terminate any of the
agreements, rights or interests that are conveyed by the Late-Recording
Documents or the Delayed CPR Recording Documents and shall indemnify, defend and
hold Buyer harmless from and against any claims or losses arising from Seller’s
breach of this covenant. This Section shall survive Closing.

 

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9.3    Failure of Closing. In the event the Closing does not occur on or before
the Closing Date for a reason other than Buyer’s default under this Agreement,
Escrow Holder shall, unless it is notified by Seller to the contrary within five
(5) days after the Closing Date, return to the depositor thereof items which may
have been deposited hereunder, including the return of the Closing Price to
Buyer.

9.4    Notices to Tenants and Other Counterparties. At the Closing, Seller shall
provide Buyer a signed notice (the “Tenant Notice”) to be copied and given to
each tenant of the Real Property, which notice shall disclose that (i) the Real
Property has been sold to Buyer, (ii) after the Closing, all rents should be
paid to Buyer, and (iii) Buyer shall be responsible for all tenant security
deposits to the extent paid or credited to Buyer. Seller and Buyer shall also
cooperate to notify counterparties under the Contracts. The form of the notices
shall be reasonably acceptable to both Buyer and Seller. Buyer covenants to
deliver such notice to each tenant or other counterparty as soon as reasonably
possible after Closing. This provision shall survive Closing.

9.5    Delivery by Seller to Escrow Holder. Seller shall deliver to Escrow
Holder, no later than two (2) Business Days prior to the Closing Date, the
following documents duly executed and, where required, acknowledged by Seller
(collectively, the “Closing Documents”), provided that by mutual agreement Buyer
and Seller may elect to exchange and/or record certain of the Closing Documents
outside of Escrow:

(a)    Deeds for the portions of the Real Property that the Title Company
commits to insure under the Title Policy;

(b)    Quitclaims for all other portions of the Real Property and for Land
Commission Awards within the boundaries of the Real Property but excluded under
the Title Policy;

(c)    The Bill of Sale;

(d)    The General Assignment;

(e)    An Assignment of Leases;

(f)    Assignments of the Membership Interests;

(g)    The EMI Operating Agreement;

(h)    The Parent Guaranty;

(i)    One or more of an Assignment and Assumption in the form attached hereto
as Exhibit K to assign the West Maui Water Interests held by ABL, ABLR or ABPHR;

 

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(j)    One or more of an Assignment and Assumption in the form attached hereto
as Exhibit L to assign the East Maui Water Interests held by ABL, ABLR or ABPHR;

(k)    The CPR Declarations to be recorded at Closing, if any;

(l)    The A&B Exclusive Easements to be recorded at Closing, if any;

(m)    The Excluded Land Easements to be recorded at Closing, if any;

(n)    The New Appurtenant Easements to be recorded at Closing, if any;

(o)    The Restricted Land Easement;

(p)    The Gap Closing Escrow Instructions;

(q)    A Water Delivery Agreement in the form attached hereto as Exhibit M
providing for the delivery by Buyer and EMI of nonpotable water to the Excluded
Land and certain other services after Closing;

(r)    One or more Assignment and Assumption of In Gross Easements in the form
attached hereto as Exhibit N;

(s)    An Employee Transition Agreement in the form attached hereto as Exhibit
O;

(t)    Such transfer and/or conveyance tax forms for each Deed and quitclaim as
are required by law;

(u)    An affidavit, certification or notice required by Section 1445 of the
Internal Revenue Code of 1986, as amended (the “Code”), and the Regulations
pursuant thereto, and Section 235-68, Hawaii Revised Statutes, to relieve Buyer
of any potential withholding liability under such Section;

(v)    Resolutions, certificates of good standing, owner’s affidavits and such
other documents as the Title Company may require to issue the Title Policy;

(w)    A State of Hawaii tax clearance certificate for the entity(ies) holding
the Hawaii taxpayer identification number(s) that covers each of the Seller
entities; and

(x)    Such other instruments as are reasonably necessary to close the
transaction contemplated by this Agreement.

9.6    Delivery by Seller to Buyer. Seller shall deliver to Buyer upon the
Closing Date, to the extent each item below is in Seller’s possession but not
located at the Property:

(a)    The Tenant Notice and notices to any other counterparties required under
Section 9.4, executed by Seller;

 

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(b)    Originals of the Leases (and amendments thereto, if any) and all records
and correspondence relating to the Leases;

(c)    Originals of all Contracts and any warranties or guaranties in Seller’s
possession received by Seller from any contractors, subcontractors, suppliers or
materialmen in connection with any construction, repair or alteration of the
Improvements or any tenant improvements;

(d)    As-built plans and specifications for the Improvements (if any) in
Seller’s possession;

(e)    All instruction manuals, procedure manuals, manufacturer’s warranties and
similar materials in Seller’s possession which relate to the Property;

(f)    All books and records in Seller’s possession (or copies thereof) relating
to the operation and maintenance of the Property and the Operating Companies
prior to the Closing Date, but excluding the Excluded Documents and Retained
Records;

(g)    Resignations of the officers, directors and managers, if any, of CMF and
Kulolio; and

(h)    Originals of all building permits and certificates of occupancy for the
Improvements (if any) in Seller’s possession.

9.7    Delivery by Buyer to Escrow Holder. No later than two (2) Business Days
before the Closing Date, Buyer shall deliver to Escrow Holder (i) the balance of
the Closing Price; (ii) its share of costs, prorations and expenses pursuant to
Section 9.10; and (iii) Buyer’s countersignatures to all Transaction Documents
and deliverables to which Buyer is a signatory.

9.8    Other Instruments. Seller and Buyer shall each deliver to Escrow Holder
such other instruments as are reasonably required by Escrow Holder or otherwise
required to close the escrow and consummate the purchase of the Property in
accordance with the terms hereof.

9.9    Close of Escrow. Provided that (i) Escrow Holder has received the
documents, instruments and funds described in Sections 9.5, 9.7 and 9.8 hereof,
(ii) Escrow Holder has received notice from Buyer that all of the conditions to
Closing set forth in Section 8.1 have been satisfied or waived, (iii) Escrow
Holder has not received notice from Buyer or Seller that any of the
representations and warranties made by either Buyer or Seller herein are untrue
either as of the date of this Agreement or as of the Closing Date, and (iv) the
Title Company is irrevocably committed to deliver to Buyer the Title Policy,
Escrow Holder is authorized and instructed on the Closing Date to:

(i)    Record the Deeds, quitclaims and any other recordable Transaction
Documents in the Bureau of Conveyances of the State of Hawaii and/or the Office
of the Assistant Registrar of the Land Court of the State of Hawaii, as
applicable, in accordance with the Gap Closing Escrow Instructions; and

 

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(ii)    Deliver to Seller the portion of the Purchase Price allocated to all
portions of the Property conveyed to Buyer on the Closing Date (as set forth
herein or on Schedule 1.1), less Seller’s share of prorations and costs of
escrow.

9.10    Prorations and Apportionments. Escrow Holder shall generate a closing
statement setting forth the prorations and apportionments required by this
Section, which closing statement shall not be effective until approved by Buyer
and Seller prior to the Closing Date. Where possible, Buyer and Seller shall
determine the amounts to be prorated and provide Escrow Holder with a
spreadsheet containing that information at least two (2) Business Days before
the Closing. The following items are to be prorated on a per diem basis as of as
of 12:01 a.m. on the Closing Date:

(a)    real estate and personal property taxes, governmental fees and special
assessments;

(b)    all collected rents (excluding Prepaid Rents, as defined below), income
and revenues of the Property, provided that all uncollected rents for the months
prior to the month in which the Closing occurs, and a prorated portion of all
uncollected rents for the month of the Closing (“Delinquent Rents”) shall remain
Seller’s property and shall not be prorated, further provided that all rents
received by Seller relating to any period subsequent to the Closing Date
(“Prepaid Rents”), shall be delivered to Buyer at the Closing without proration.
Buyer agrees to promptly deliver any Delinquent Rents received after Closing to
Seller if obtained, provided that (i) all amounts received by Buyer from each
tenant under a Lease after the Closing Date shall be applied first to current
rent due and thereafter shall be applied to Delinquent Rents, and (ii) Buyer
shall not be obligated to evict a tenant, institute a lawsuit or other legal
process to recover Delinquent Rents;

(c)    all metered utilities, such as water, gas and electricity, to the extent
the same are not the responsibility of and paid directly by tenants, shall be
read and all telephone charges shall be determined and Seller shall execute all
forms required to transfer all utilities to Buyer. At Closing, all charges for
utilities shall be prorated based upon the meter readings and Seller shall pay
the full amount of all utilities supplied to the Real Property and the EMI Land
up to the Closing Date. All charges for utilities thereafter furnished to the
Real Property and the EMI Land shall be paid by the Buyer, with the exception of
past due amounts owed by Seller. Seller shall receive a credit at Closing for
any utility deposits transferred to Buyer. All other utility deposits shall
remain the property of and will be immediately released to Seller;

(d)    all expenses under Contracts shall be prorated at Closing. All expenses
for Contracts not assumed by Buyer shall not be prorated and shall remain the
sole responsibility of Seller. Any advance lump-sum or “up front” payments or
other revenue in connection with any Contracts shall be credited to Buyer on a
pro-rata basis over the term of such contract, including extension options; and

(e)     all annual, monthly or other periodic fees, charges or assessments
payable with respect to the Governmental Authorizations shall be prorated at
Closing.

 

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9.11    Costs and Expenses. Fees of Escrow Holder, recording fees, conveyance
tax and all other customary Closing costs shall be shared equally by Buyer and
Seller except as otherwise specifically provided herein. The base premium for
Buyer’s Title Policy shall be shared equally by Buyer and Seller and Buyer shall
pay the premiums for any extended coverage or endorsements that Buyer elects to
purchase. Buyer and Seller shall each bear their own legal and consultant fees
and costs.

9.12    Code Section 1031 Exchange. Seller may convey the Real Property to Buyer
as part of a tax-deferred exchange under Section 1031 of the Code. Seller may
assign this Agreement to a qualified intermediary in order to facilitate a Code
Section 1031 exchange transaction; provided that Seller shall remain liable for
all obligations hereunder. Seller and Buyer agree to cooperate with each other
in effecting such transaction, including, without limitation, consenting to the
assignment of this Agreement to a qualified intermediary, provided that any such
exchange transaction, and the related documentation, shall: (i) not require the
other party to execute any contract (other than as set forth herein), make any
commitment, or incur any obligations, contingent or otherwise, to third parties
which would expand the obligations beyond this Agreement, (ii) not delay the
Closing or the transaction contemplated by this Agreement, or (iii) not include
acquiring title to any other property. Seller shall pay all of Buyer’s legal
fees in excess of $10,000 incurred in connection with the documentation and
effecting the exchange transaction. In connection with and without limiting the
foregoing, Seller agrees to execute and deliver to Buyer no later than five
(5) days prior to Closing, the Section 1031 Exchange Agreement attached hereto
as Exhibit P. This Section 9.12 shall survive Closing.

9.13    Post-Closing Substitutions Regarding West Maui Water Use Permits. As
soon as practicable after Closing, Buyer and Seller shall jointly (a) apply to
substitute Buyer for Seller in State Water Use Permit Application No. 2206, and
(b) notify the State Commission on Water Resource Management (“CWRM”) of the
transfer of Water Use Permit No. 691 to Buyer.

9.14    Post-Closing File & Records Transfers. As soon as reasonably practicable
after Closing, Seller and Buyer shall cooperate to transfer to Buyer any of
Seller’s active and inactive files regarding the Property that Seller is able to
locate via commercially reasonable efforts and that Buyer has not previously
been provided, excluding any Excluded Documents and Retained Records. If at any
time within three (3) years after Closing Buyer requests a specific record or
document that was not delivered prior to, at or after Closing, Seller shall use
commercially reasonable efforts to locate and provide the same to Buyer within
thirty (30) days of Buyer’s request, provided that this obligation shall not
include Excluded Documents and Retained Records. Seller shall not destroy any
active or inactive files or documents regarding the Property with the three
(3) year period. This provision shall survive the Closing.

 

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ARTICLE 10

REPRESENTATIONS AND WARRANTIES OF SELLER

10.1    As an inducement to Buyer to enter into this Agreement, Seller hereby
represents and warrants to and agrees with Buyer as follows:

(a)    Organization & Good Standing.

(i)    ABLR and ABLT are each a duly constituted series of Alexander & Baldwin,
LLC, which is a limited liability company organized and in good standing under
the laws of the State of Delaware and authorized to transact business in the
State of Hawaii. ABLT has the requisite limited liability power and authority to
own the Membership Interests.

(ii)    ABPHR is a duly constituted series of A & B Properties Hawaii, LLC,
which is a limited liability company organized and in good standing under the
laws of the State of Delaware and authorized to transact business in the State
of Hawaii.

(iii)    EMI is a limited liability company organized and in good standing under
the laws of the State of Hawaii and authorized to transact business in the State
of Hawaii. Seller has delivered to Buyer a true and complete copy of EMI’s
articles of organization and operating agreement.

(iv)    CMF is a limited liability company organized and in good standing under
the laws of the State of Hawaii and authorized to transact business in the State
of Hawaii. Seller has delivered to Buyer a true and complete copy of CMF’s
articles of organization and operating agreement.

(v)    Kulolio is a limited liability company organized and in good standing
under the laws of the State of Hawaii and authorized to transact business in the
State of Hawaii. Seller has delivered to Buyer a true and complete copy of
Kulolio’s articles of organization and operating agreement.

(b)    Authority and Power of Seller; Enforceability. All documents executed by
Seller which are to be delivered to Buyer at the Closing are or at the time of
Closing will be duly executed and delivered by Seller and do not and at the time
of Closing will not violate any provisions of any agreement or judicial order to
which Seller is a party or to which Seller or the Property is subject. Seller
has all requisite authority and power to execute and deliver the documents to
which it is a party and, subject to the terms, conditions and limitations set
forth in this Agreement, to consummate the transactions contemplated hereby and
this Agreement constitutes the valid and binding agreement of Seller enforceable
against Seller in accordance with its terms, except as enforcement of the terms
hereof and thereof may be limited by applicable bankruptcy, insolvency,
reorganization, liquidation, moratorium or similar laws affecting enforcement of
creditors’ rights generally, and general principles of equity.

(c)    Use and Operation. Except as disclosed on Schedule 10.1(c), Seller has
not received written notice from any governmental authority of alleged failures
of the Real Property or the EMI Land to comply with applicable building codes,
safety and fire, environmental, zoning and land use laws, and other applicable
local, state and federal laws, ordinances, regulations and requirements which
have not been cured.

(d)    Land Use Regulation. Seller has not received written notice from any
governmental authority of any proposed or pending condemnation or change in
zoning or land use designations affecting the Real Property or the EMI Land and
to Seller’s knowledge none are contemplated, nor has Seller received notice of
any special tax assessment proceedings affecting the Real Property or the EMI
Land.

 

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(e)    Contracts. To Seller’s knowledge, and except as otherwise disclosed in
writing by Seller to Buyer:

(1)    the copies of the Contracts listed on Schedule 1.8 and the contracts of
the Operating Companies listed on Schedules 1.2, 1.3, and 1.4, respectively,
that Seller delivered to Buyer pursuant to this Agreement are true, correct and
complete;

(2)    such Contracts and Operating Company contracts are in full force and
effect and unmodified;

(3)    except as set forth in Schedule 1.8, there are no other Contracts
currently in effect and binding on the Property;

(4)    except as set forth in Schedules 1.2, 1.3, and 1.4, there are no other
contracts currently in effect and binding on the Operating Companies; and

(5)    there are no material, uncured defaults under any of the Contracts or
Operating Company contracts.

(f)    Leases. To Seller’s knowledge, and except as otherwise disclosed in
writing by Seller to Buyer:

(i)    the copies of the Leases listed on Schedule 1.7 and the leases of EMI
listed on Schedule 1.2 (the “EMI Leases”) delivered to Buyer are true, correct
and complete and there are no amendments or modifications of the Leases or the
EMI Leases or other agreements, written or oral, with respect to the Leases or
the EMI Leases except as listed on Schedule 1.7 and Schedule 1.2, respectively;

(ii)    the information set forth in the rent rolls prepared by Seller with
respect to the Leases and the EMI Leases and made available to Buyer (the “Rent
Rolls”) was true and complete as of the date such rent rolls were made available
to Buyer;

(iii)    except for the Leases, there are no leases of the Real Property;

(iv)    except for the EMI Leases, there are no leases of the EMI Land;

(v)    there are no material, uncured defaults under any of the Leases or the
EMI Leases;

(vi)    except to the extent described in the Rent Rolls, no tenant under any of
the Leases or the EMI Leases has prepaid any rent or other charges for more than
the current month;

(vii)    no tenant under any of the Leases or the EMI Leases has any right or
option to purchase the Real Property or the EMI Land or any portion thereof or
interest therein;

 

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(viii)    except as provided in the Rent Rolls, no tenant under any of the
Leases or the EMI Leases has the right to renew or extend any of the Leases or
the EMI Leases or has any options or rights of first refusal with respect to
leasing of other land or space, and no tenant under any of the Leases or the EMI
Leases has the right to free rent, rebate, allowance, concession, security or
other deposit; and

(ix)    Seller and EMI hold no security or other tenant deposits under the
Leases or the EMI Leases except as shown on the Rent Rolls.

(g)    Labor Contracts. Neither Seller nor any Operating Company nor any
affiliate is a party to, or otherwise bound by, any collective bargaining
agreement or multi-employer pension fund covering employees who service the
Property, the EMI Land, the EMI Assets, the CMF Assets, or the Kulolio Assets.
As of the Initial EMI Transfer Date, EMI and EMI employees will no longer be
participants in the cash balance defined benefit pension plan covering other
Seller employees.

(h)    Labor Disputes. There is no current labor dispute with any maintenance or
other personnel or employees of Seller nor any Operating Company with respect to
the Property, the EMI Land, the EMI Assets, the CMF Assets, or the Kulolio
Assets, which could adversely affect the use, operation or value of the
Property, the EMI Land, the EMI Assets, the CMF Assets, or the Kulolio Assets.

(i)    Litigation. Except as listed on Schedule 10.1(i), there is no litigation
or claim pending or, to Seller’s knowledge, threatened in writing against Seller
or any Operating Company.

(j)    Other Contracts to Convey Property. Seller has not committed nor
obligated itself in any manner whatsoever to sell the Property, the EMI Land,
the EMI Assets, the CMF Assets, or the Kulolio Assets, or any portion thereof or
interest therein to any party other than Buyer. Seller has not pledged or
assigned any rents or income from the Leases, the EMI Leases, the EMI Land or
the Property.

(k)    Capitalization; Title to Membership Interests. ABLT is the record and
beneficial owner of one hundred percent (100%) of the Membership Interests, free
and clear of any liens. The Membership Interests have been duly authorized and
validly issued, are not issued in violation of any Person’s preemptive rights,
and are fully paid and nonassessable (in each case to the extent such terms are
applicable to limited liability companies under Hawaii law). The EMI Membership
Interests constitute one hundred percent (100%) of the ownership interests in
EMI. The CMF Membership Interests constitute one hundred percent (100%) of the
ownership interests in CMF. The Kulolio Membership Interests constitute one
hundred percent (100%) of the ownership interests in Kulolio. Except for this
Agreement, there are no (i) outstanding subscriptions, warrants, options,
purchase rights, calls or commitments of any character relating to or entitling
any person to purchase or otherwise acquire (a) the EMI Membership Interests or
other securities or equity or voting interests of EMI, (b) the CMF Membership
Interests or other securities or equity or voting interests of CMF, or (c) the
Kulolio Membership Interests or other securities or equity or voting interests
of Kulolio, (ii) outstanding securities, instruments or obligations that are or
may be convertible into or exercisable or

 

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exchangeable for any membership interests in the Operating Companies, or
(iii) contracts under which an Operating Company may become obligated to sell or
otherwise issue any membership interests. At the Closing, as provided herein,
Seller shall transfer to Buyer record and beneficial ownership of the Membership
Interests, free and clear of any liens, except those created by Buyer. The
Operating Companies do not own any capital stock, securities, partnership
interests or other equity interests of any kind in any corporation, partnership,
limited liability company, joint venture, association or other entity.

(l)    Financial Statements. Seller has made available to Buyer true, correct
and complete copies of EMI’s current financial statements (the “EMI Financial
Statements”) dated as of September 30, 2018 covering a portion of 2018, and
dated December 31, 2017 covering 2017. The EMI Financial Statements have been
prepared from, and are in accordance with, the books and records of EMI. The EMI
Financial Statements prepared by Seller and delivered to Buyer are true, correct
and complete and, except as disclosed by Seller in writing, contain no material
inaccuracies or misstatements of fact. The Operating Companies have, to Seller’s
knowledge, no liabilities of a nature that would be required to be set forth on
the face of a balance sheet, or the notes thereto, prepared in accordance with
generally accepted accounting principles (GAAP) other than liabilities incurred
in the ordinary course of business.

(m)    Absence of Certain Changes. From the Effective Date until the Closing
Date, the Operating Companies’ business shall be conducted consistent with past
practices, except in connection with any process relating to the sale of the
Operating Companies, including entering into this Agreement. Except as disclosed
in writing by Seller, since the date of the EMI Financial Statements, there has
not to Seller’s knowledge been any change, event or effect that, individually or
in the aggregate with other changes, events or effects, has resulted in, or
would reasonably be expected to result in, a Material Adverse Effect. For
purposes of this Agreement, “Material Adverse Effect” means the result of one or
more facts, events, occurrences, changes or effects which, individually or in
the aggregate, has had or could reasonably be expected to have a material
adverse effect on (i) the business, properties, assets, liabilities, results of
operations or condition (financial or otherwise) of the Operating Companies,
each taken as a whole, or (ii) the ability of Seller to consummate this
Agreement or perform any of its obligations hereunder or under any of the
Transaction Documents; provided, however, that in no event shall any of the
following facts, events, occurrences, changes or effects constitute,
individually or in the aggregate, or be taken into account in determining the
occurrence of, a Material Adverse Effect to the extent such fact, event,
occurrence, change or effect relates to, arises out of or results from (A) the
announcement of the execution of this Agreement, the identity of Buyer or any of
its Affiliates, or Buyer’s announced or otherwise public plans with respect to
the Property following the Closing, (B) the United States or world economy or
United States or global financial market conditions (including changes in
interest rates or prices of securities generally), (C) general political
conditions in the United States or worldwide, (D) changes in legal or regulatory
conditions, (E) any action or omission of Seller taken in accordance with the
terms of this Agreement or with the consent of Buyer, (F) in and of itself, any
failure by an Operating Company to meet forecasts or projections,
(G) earthquakes, tornadoes, tsunamis, floods, or other acts of God, hostilities,
acts of war, sabotage or terrorism or military actions or any escalation or
material worsening of any such hostilities, acts of war, sabotage or terrorism
or military actions, or (H) matters that are cured or no longer exist by the
earlier of Closing and the termination of this Agreement.

 

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(n)    Books and Records. Copies of the books of account, ownership record
books, minute books, and other corporate records, if any, of each Operating
Company have been made available to the Buyer and such books and records have
been maintained in accordance with Seller’s normal business practices. At the
Closing, all of those books and records will be in the possession of the
Operating Companies other than privileged materials retained by Seller and/or
its counsel.

(o)    Bank Accounts. Seller will close out prior to or at Closing all bank
accounts of the Operating Companies that hold any balances, investment accounts
and/or safe deposit boxes.

(p)    Tax Filings.

(i)    all Tax Returns required to be filed by or with respect to the Operating
Companies have been duly and timely filed (taking into account applicable
extensions of time to file) with the appropriate governmental authority, and all
such Tax Returns are complete and accurate in all material respects;

(ii)    all Taxes required to have been paid by or with respect to the Operating
Companies that are due and payable have been paid in full;

(iii)    the Operating Companies and Seller and any of its Affiliates, do not
have in force any extension or waiver of any statute of limitations in respect
of Taxes (other than extensions that arise as a result of filing Tax Returns by
the extended due date therefor); and

(iv)    there are no audits, examinations or other administrative or judicial
proceedings currently ongoing or pending with respect to any Taxes of or with
respect to the Operating Companies, or, to Seller’s knowledge, threatened audits
or proposed deficiencies or other claims for unpaid Taxes of or with respect to
the Operating Companies.

For purposes of this Agreement, “Tax” or “Taxes” means any federal, state, local
or foreign income, gross receipts, franchise, estimated, alternative, minimum,
add-on minimum, sales, use, transfer, registration, value added, excise, natural
resources, severance, stamp, occupation, premium, windfall profit,
environmental, customs, duties, real property, personal property, capital stock,
intangibles, social security, unemployment, disability, payroll, license,
escheat, unclaimed property, energy, withholding, employee or other similar tax
or levy, together with any interest, fine, penalties, or additions to tax in
respect of the foregoing; and “Tax Returns” means any return, declaration,
report, claim for refund, information return or other document (including any
related or supporting estimates, elections, schedules, statements or
information) filed or required to be filed with a Governmental Entity
responsible for the administration of Taxes, or any amendment thereof.

(q)    Affiliate Transactions. Except as set forth in Schedule 10.1(r), there
are no existing contracts between an Operating Company, on the one hand, and
Seller or any Affiliate of Seller, on the other hand.

(r)    Insurance. Except for customary levels of Commercial General Liability,
Property/casualty insurance, and mandatory Workers’ Compensation and similar
employment

 

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related policies insuring the Operating Companies against risks in accordance
with normal trade practices in businesses similar to the Operating Companies,
the Operating Companies do not maintain other insurance coverages. The Operating
Companies have not been refused any insurance coverage sought or applied for;
all such insurance is outstanding and was duly in force on the Effective Date;
and Seller does not have any reason to believe that the Operating Companies will
not be able to renew the Operating Companies’ existing insurance coverage as and
when such coverage expires or to obtain similar coverage from similar insurers
on similar terms as may be necessary to continue to insure the Operating
Companies’ business following the Closing. Seller shall not without Buyer’s
consent cancel any existing insurance insuring the Operating Companies.

(s)    Assets. The Property, the EMI Land, the CMF Assets, the EMI Assets and
the Kulolio Assets include all of the property and assets used in connection
with the business of Seller and the Operating Companies conducted on the
Property and the EMI Land, and there is no property or assets used in such
business which is owned by any affiliate of Seller or the Operating Companies or
by any third party, except for the Retained Records.

(t)    OFAC Compliance. Seller is in compliance with the requirements of
Executive Order No. 13224, 66 Fed Reg. 49079 (the “Order”) and other similar
requirements contained in the rules and regulations of the Office of Foreign
Asset Control of the Department of the Treasury (“OFAC”) and in any enabling
legislation or other Executive Orders in respect thereof (the Order and such
other rules, regulations, legislation, or orders are collectively called the
“Orders”). Seller represents and warrants to Buyer that Seller: (i) is not
listed on the Specially Designated Nationals and Blocked Persons List maintained
by OFAC pursuant to the Orders and/or on any other list of terrorists or
terrorist organizations maintained pursuant to any of the rules and regulations
of OFAC or pursuant to any other applicable Orders (such lists are collectively
referred to as the “Lists”); and (ii) has not been determined by competent
authority to be subject to the prohibitions contained in the Orders.

(u)    Real Property Taxes. Except as set forth in Schedule 1.9 (Governmental
Authorizations), none of the Real Property or the EMI Land: (i) is subject to an
agricultural use dedication or agricultural use valuation for real property tax
assessment purposes; (ii) is to Seller’s knowledge being used in a manner
inconsistent with the use on which its real property tax assessment is based;
(iii) must be placed into actual agricultural use before January 1, 2020, under
the terms of an existing Change in Use Petition to avoid reassessment or the
imposition of rollback taxes or otherwise is subject to the imposition rollback
taxes; or (iv) is subject to a pending real property tax appeal.

(v)    Bulk Sales. Seller is not selling or transferring in bulk of the whole,
as defined in HRS 237-43, assets or property of any Seller entity. Each of the
Seller entities will continue as going-concerns with significant business
assets, activities and income in Hawaii. Seller represents it is not required to
report this sale under HRS 237-43. Notwithstanding the foregoing, Buyer may
after Closing file a Report of Bulk Sale or Transfer under HRS 237-43, provided
that such report shall be subject to Seller’s prior review and reasonable
approval.

 

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(w)    EMI Employees. Seller has provided to Buyer a complete and accurate list
of the following information for each EMI employee, including each EMI employee
on leave of absence or layoff status: full name, job title, current compensation
paid or payable, accrued vacation, any other accrued benefits, information
concerning participation in employee retirement and welfare benefit plans, and
any employee non-compete/non-solicitation agreements.

(x)    Title Claims. To Seller’s knowledge, no claims have been made or
threatened against Seller or EMI in connection with the title to, ownership of,
or use of the Real Property, the EMI Land, or the East Maui water collection and
transmission systems operated by Seller or EMI, except as disclosed on Schedule
10.1(i).

10.2    Seller’s Knowledge Defined. As used in this Agreement, phrases such as
“to Seller’s knowledge” and similar phrases, as the context may require, shall
mean the conscious actual knowledge (as opposed to constructive, deemed or
imputed knowledge) of or receipt of written notice by Jerrod Schreck, Charles W.
Loomis and, with respect to EMI and the EMI Land only, Mark Vaught, except with
respect to the representations contained in Section 10.1(k) (Environmental
Compliance), for which such phrases mean the conscious actual knowledge (as
opposed to constructive, deemed or imputed knowledge) of or receipt of written
notice by Sean O’Keefe (individually and collectively, the “Knowledge Party”),
which Knowledge Parties are the persons affiliated with Seller best able to
knowledgeably make the relevant representations. Such phrases shall not be
construed, by imputation or otherwise, to refer to the knowledge of any other
officer, agent, manager, representative or employee of Seller, any property
manager or any of their respective affiliates. There shall be no duty imposed or
implied to investigate, inspect or audit any such matters, and there shall be no
personal liability on the part of the Knowledge Party, other than a duty to make
due and reasonable inquiry of those employees of Seller or its affiliates who
have direct knowledge of the substance of the representations.

ARTICLE 11

REPRESENTATIONS AND WARRANTIES OF BUYER

11.1    Buyer’s Representations & Warranties. As an essential inducement to
Seller to enter into this Agreement, Buyer hereby represents and warrants to
Seller as follows:

(a)    Authority of Buyer. Buyer is a limited liability company duly organized
and validly existing under the laws of the State of Delaware, and is in good
standing under the laws of the State of Delaware; Buyer has duly authorized and
executed this Agreement. All documents executed by Buyer which are to be
delivered to Seller at the Closing are or at the time of Closing will be duly
authorized, executed, and delivered by Buyer, and are or at the Closing will be
legal, valid, and binding obligations of Buyer, and do not and at the time of
Closing will not violate any provisions of Buyer’s organizational documents or
any agreement or judicial order to which Buyer is a party or to which it is
subject.

(b)    Litigation. There is no litigation pending or, to Buyer’s knowledge,
threatened, against Buyer or any direct or indirect owner of Buyer or any basis
for such litigation before any court or administrative agency which might result
in any material adverse change in the business or financial condition of the
Buyer.

 

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(c)    ERISA. Buyer’s rights under this Agreement, the assets it shall use to
acquire the Property and, upon its acquisition by Buyer, the Property itself, do
not and shall not constitute plan assets within the meaning of 29 C.F.R.
§2510.3-101, and Buyer is not a “governmental plan” within the meaning of
section 3(32) of the Employee Retirement Income Security Act of 1974, as
amended, and the execution of this Agreement and the purchase of the Property by
Buyer is not subject to state statutes regulating investments of and fiduciary
obligations with respect to governmental plans.

(d)    No Bankruptcy. Buyer has not (i) made a general assignment for the
benefit of creditors, (ii) filed any voluntary petition in bankruptcy or
suffered the filing of any involuntary petition by Buyer’s creditors,
(iii) suffered the appointment of a receiver to take possession of all, or
substantially all, of Buyer’s assets, (iv) suffered the attachment or other
judicial seizure of all, or substantially all, of Buyer’s assets, (v) admitted
in writing its inability to pay its debts as they come due, or (vi) made an
offer of settlement, extension or composition to its creditors generally.

(e)    OFAC Compliance. Buyer is in compliance with the requirements of the
Orders. Buyer represents and warrants to Seller that neither Buyer nor any
beneficial owner of it: (i) is listed on the Specially Designated Nationals and
Blocked Persons List maintained by OFAC pursuant to the Orders and/or on the
Lists; (ii) has been determined by competent authority to be subject to the
prohibitions contained in the Orders; (iii) is owned or controlled by, nor acts
for or on behalf of, any person or entity on the Lists or any other person or
entity who has been determined by competent authority to be subject to the
prohibitions contained in the Orders; or (iv) shall, prior to closing, transfer
or permit the transfer of any interest in such party or any beneficial owner in
such party to any person who is or whose beneficial owners are listed on the
Lists.

(f)    CFIUS Compliance. This is not a covered transaction subject to
prohibition, suspension or mitigation under 50 U.S.C. § 4565 and its
implementing regulations.

(g)    Sources of Funds. Buyer is not engaging in this transaction, directly or
indirectly, in violation of any laws relating to drug trafficking, money
laundering or predicate crimes to money laundering. None of the funds of Buyer
have been or will be derived from any unlawful activity with the result that the
investment of direct or indirect equity owners in Buyer is prohibited by law or
that the transaction or this Agreement is or will be in violation of law.

(h)    Investment Matters. Buyer understands and acknowledges that the
Membership Interests have not been registered under the Securities Act of 1933
and the rules and regulations promulgated thereunder (“Securities Act”), or the
securities laws of any state or foreign jurisdiction, and, unless so registered,
may not be offered, sold, transferred or otherwise disposed of except pursuant
to an exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act and any applicable securities laws of any
state or foreign jurisdiction. Buyer is an “accredited investor” within the
meaning of Rule 501 of Regulation D promulgated pursuant to the Securities Act,
and is acquiring the Membership Interests for investment for its own account,
and not with a view to, or for sale in connection with, any distribution
thereof. Buyer has knowledge and experience in financial and business matters
such that it is capable of evaluating the merits and risks of purchasing the
Membership

 

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Interests and Buyer will exercise independent judgment in evaluating its
purchase. In addition, Buyer is able to bear the economic risk of an investment
in the Membership Interests for an indefinite period, including the risk of a
complete loss of any such investment. Buyer acknowledges that Seller is not
acting as a financial advisor, agent, underwriter or broker to Buyer in
connection with its acquisition of the Membership Interests. Buyer is not, and
upon close of this transaction no Operating Company will as a result of Buyer
directly or indirectly holding a membership interest in such Operating Company
be, an “investment company” as defined in the Investment Company Act of 1940.

11.2    Ongoing Compliance. Buyer has and will continue to implement procedures,
and has consistently and will continue to consistently apply those procedures,
to ensure the foregoing representations and warranties remain true and correct
at all times prior to Closing. Buyer shall promptly notify Seller of any facts
or circumstances that would cause any of Buyer’s representations in this Article
or elsewhere in this Agreement to become inaccurate in any material respect.

ARTICLE 12

COVENANTS

Seller and Buyer covenant and agree with one another as follows:

12.1    Assumed Liabilities. As of the Closing Date, Buyer shall assume and
agree to discharge the following liabilities of Seller (the “Assumed
Liabilities”), without contribution from Seller or deduction from or other
adjustment of the Purchase Price:

(a)    all liabilities and obligations arising on and after the Closing Date
under the Leases, Contracts, Permitted Exceptions, Governmental Authorizations,
Intellectual Property, West Maui Water Interests and East Maui Water Interests
(other than any liability arising under, out of or relating to a breach that
occurred prior to but not including the Closing Date);

(b)    all liabilities and obligations arising on or after the Closing Date with
respect to the ownership, condition, use or operation of the Property or any
portion thereof; and

(c)    all liabilities and obligations of the Operating Companies arising from
and after Closing, other than with respect to any liabilities in connection with
the cash balance defined benefit pension plan covering EMI employees or any
liabilities in connection with any existing workers compensation insurance
claims.

 

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12.2    Retained Liabilities. Notwithstanding the Closing, Seller shall from and
after the Closing Date retain responsibility for and discharge the following
liabilities (the “Retained Liabilities”), without contribution from Buyer:

(a)    all liabilities and obligations arising prior to the Closing Date under
the Leases, Contracts, Permitted Exceptions, Governmental Authorizations,
Intellectual Property, West Maui Water Interests and East Maui Water Interests;

(b)    all liabilities to EMI employees and the employees of Seller that are
hired by Buyer at Closing with respect to the period prior to the Closing Date,
including with respect to any liabilities in connection with the cash balance
defined benefit pension plan covering EMI employees and any liabilities in
connection with any existing workers compensation insurance claims;

(c)    all costs, liabilities, judgments or damages arising from any third-party
claims made or litigation filed with respect to actions of Seller or occurrences
at the Real Property or the EMI Land prior to the Closing Date;

(d)    all liabilities and obligations of the Operating Companies arising prior
to Closing; and

(e)    any other liability or obligation described in Schedule 12.2(e).

12.3    Indemnification by Seller. Subject to the waivers and limitations
contained herein, including without limitation Section 4.5 and Article 7, Seller
hereby agrees to indemnify Buyer and hold Buyer harmless from and against any
and all claims, demands, liabilities, liens, costs, expenses, penalties and
interest, damages and losses, including, without limitation, reasonable
attorneys’ fees and costs suffered by Buyer as a direct or indirect result of
any breach of Seller’s representations, warranties and covenants in this
Agreement or the Transaction Documents, or with respect to the Retained
Liabilities. This Section shall survive the Closing and shall be covered by the
Parent Guaranty.

12.4    Indemnification by Buyer. Buyer hereby agrees to indemnify Seller and
hold Seller harmless from and against any and all claims, demands, liabilities,
liens, costs, expenses, penalties, damages and losses, including, without
limitation, reasonable attorneys’ fees and costs suffered by Seller as a direct
or indirect result of any breach of Buyer’s representations, warranties and
covenants in this Agreement or in any of the Transaction Documents, or with
respect to the Assumed Liabilities.

12.5    Maintenance. Between the Effective Date and the Closing Date, Seller
shall at Seller’s sole cost and expense, maintain the Property consistent with
Seller’s past practice, casualty and reasonable wear and tear excepted, and
otherwise operate the Property in the same manner as before the making of this
Agreement, the same as though Seller were retaining the Property. Seller shall
also cause the Operating Companies to comply with the foregoing sentence, with
respect to the EMI Land, the EMI Assets, the CMF Assets and the Kulolio Assets,
respectively (and continuing until the Initial EMI Transfer Date with respect to
the EMI Land and the EMI Assets and the operation of EMI’s business).

12.6    Damage or Destruction.

(a)    Given the size, nature and extent of the Real Property, casualty
affecting the Real Property and/or the Personal Property prior to Closing shall
not be grounds for termination

 

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of this Agreement. In the event that any of the Improvements are damaged or
destroyed by fire or other casualty prior to the Closing Date, then Buyer shall
proceed with the transaction and the Purchase Price shall be reduced by the
applicable deductible under Seller’s insurance policy, and Seller shall
diligently pursue such proceeds with Buyer’s cooperation and deliver such
proceeds to Buyer when received.

(b)    In the event that material portions of the East Maui or West Maui water
collection and transmission systems operated by Seller or EMI are substantially
damaged or destroyed by casualty prior to the Closing Date, then Buyer shall
have the option to (i) terminate this Agreement by written notice to Seller
within five (5) days after the occurrence of the damage or destruction (in which
case the Closing Price shall be returned to Buyer) or (ii) proceed with the
transaction, in which case the Closing Price shall be reduced by the amount of
the applicable deductible under Seller’s insurance policies (if any) that
provide coverage for such damage or destruction, and Seller and Buyer shall
cooperate to secure any available insurance proceeds, which shall be paid to
Buyer when received. As used herein, “substantially damaged or destroyed” means
damage or destruction that renders the water collection and transmission system
as a whole unable to deliver irrigation water adequate for Buyer’s intended
farming use of the Real Property for a period of at least 6 months and that is
reasonably estimated to cost at least $5,000,000 in excess of available
insurance proceeds to repair.

12.7    Condemnation. Given the size and extent of the Real Property and the EMI
Land, the commencement of any eminent domain proceeding to take a portion of the
Real Property or the EMI Land shall not be grounds for termination of this
Agreement. In case of any such proceedings, Buyer shall proceed with the
transaction in which case the Purchase Price shall not be reduced and Buyer
shall be entitled to the net award paid to Seller for such taking, if any, and
Seller shall assign and transfer to Buyer all right, title and interest in and
to any awards, it being expressly agreed that in such event Seller shall have no
obligation to repair or restore the Real Property, the EMI Land, or any portion
thereof.

12.8    Real Property Tax Assessments.

(a)    Notwithstanding any other provision of this Agreement to the contrary, if
Buyer shall become liable after the Closing for payment of any property taxes
assessed against the Real Property or the EMI Land for any period of time prior
to the Closing Date, Seller shall immediately pay to Buyer on demand an amount
equal to such tax assessment prorated in accordance with Section 9.10, provided
however that this obligation shall not apply to any “rollback taxes” assessed
after Closing, which are addressed in the following paragraph.

(b)    Certain parcels within the Real Property and the EMI Land are subject to
the County of Maui Real Property Tax agricultural use dedications or
agricultural use valuations as listed in Schedule 1.9 (Governmental
Authorizations) (the “Agricultural Use Parcels”), pursuant to which such parcels
are assessed for real property tax purposes at agricultural use values rather
than fair market value. Buyer shall use commercially reasonable efforts after
Closing to put the Agricultural Use Parcels into agricultural or ranching uses
by December 31, 2019, that are sufficient to satisfy the agricultural use
requirements necessary to avoid the assessment of County “rollback taxes” on
those parcels under Maui County Code Section 3.48.350. Buyer and Seller shall
cooperate and jointly participate in all discussions and

 

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negotiations with the County regarding the County’s enforcement of the
agricultural use requirements with respect to the Agricultural Use Parcels,
determinations as to whether the agricultural use requirements have been
satisfied, Buyer appeals of such determinations, and negotiations over
settlement of any rollback taxes proposed or imposed with respect to the
Agricultural Use Parcels. If, notwithstanding the foregoing efforts, the County
assesses “rollback” taxes under Maui County Code Section 3.48.350 with respect
to any of the Agricultural Use Parcels, Buyer and Seller agree that any such
assessments shall be prorated as of the Closing Date, and Buyer shall be
responsible for and shall promptly pay to Seller (or directly to the County) the
portion of such assessments (including related penalties and accrued interest)
determined with respect to periods on or after the Closing Date, and Seller
shall be responsible for the portion of such assessments, including related
penalties and accrued interest, determined with respect to periods before the
Closing Date, regardless of when such rollback taxes are actually assessed.

12.9    Agreements and Commitments Affecting the Property. At the Closing Date,
there will be no agreements affecting the Property, the EMI Land, the EMI
Assets, the CMF Assets, and the Kulolio Assets except as shown in the Title
Commitment, this Agreement, or as otherwise disclosed to Buyer by Seller in
writing and approved by Buyer pursuant to this Agreement.

12.10    Employees.

(a)    EMI Employees.

(i)    Seller shall cause EMI to effectuate payment to EMI Employees of final
payroll, accrued wages, accrued vacation benefits, bonus and incentive payments,
severance payments, separation payments, pensions, profit sharing or retirement
benefits, and all other employment related liabilities, if any, for the period
prior to the Initial EMI Transfer Date. From and after the Initial EMI Transfer
Date, Buyer shall cause EMI to provide, or to continue to provide, EMI employees
with salary, wages, bonuses and benefits, including vacation, sick leave and
contributions under employee benefit plans, except for Seller’s cash balance
defined benefit pension plan (“Wages and Benefits”) that are generally
comparable to the Wages and Benefits EMI employees received just prior to the
Initial EMI Transfer Date. From and after the Initial EMI Transfer Date, Buyer
shall assume and agree to pay all Wages and Benefits as and when payable to EMI
employees, provided that Seller and Buyer agree that EMI will not offer any
defined benefit plan to any EMI employees as of the Initial EMI Transfer Date.
Buyer shall have no obligation or liability for the payment of any Wages and
Benefits for the period prior to the Initial EMI Transfer Date, except to the
extent otherwise credited to Buyer at Closing. Buyer agrees that if EMI
terminates the employment of any such EMI employees for other than cause within
one (1) year after the Initial EMI Transfer Date, then EMI shall provide a
severance payment to such terminated employee in an amount equal to such
employee’s remaining base salary for the one-year period following the Initial
EMI Transfer Date.

(ii)    On the Initial EMI Transfer Date, Seller shall effectuate the cessation
of EMI’s and any EMI employee’s participation in Seller’s cash balance defined
benefit pension plan. As of the Initial EMI Transfer Date, EMI employees will no
longer be eligible to participate in Seller’s cash balance defined benefit
pension plan. Seller shall be responsible for

 

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all liabilities arising from EMI’s or any EMI employees’ participation in
Seller’s cash balance defined benefit pension plan for the period before and
after the Initial EMI Transfer Date. Seller shall also be responsible for all
other Wages and Benefits accrued or owed to EMI employees for the period prior
to the Initial EMI Transfer Date, including accrued vacation pay, accrued
severance pay, and accrued sick pay.

(b)    Non-EMI Employees.

(i)    On the Closing Date, ABLT and a Buyer-related operator will enter into an
Employee Transition Agreement in the form attached hereto as Exhibit O, pursuant
to which certain identified employees will assist the operator for a limited
period of time with the management and operation of the farming business. After
that limited period of time, and no later than the termination of the Employee
Transition Agreement, the operator may offer at-will employment to certain
employees, subject to I-9 verification (“Eligible Employees”). Eligible
Employees will be offered Wages and Benefits generally comparable to those
offered to such employees by Seller. Buyer agrees that if the Buyer-related
operator terminates the employment of any of the Eligible Employees who accepted
employment, then the Buyer-related operator shall provide a severance payment to
such terminated Eligible Employee in an amount equal to the Eligible Employee’s
remaining base salary for the one-year period following the date on which the
Eligible Employee’s employment commenced.

(ii)    Seller shall, at its sole cost and expense, bear all responsibility and
liability for the termination of the employment of the Eligible Employees prior
to the Closing Date, which shall include, but not be limited to, payment of
final payroll, accrued wages, accrued vacation benefits, bonus and incentive
payments, severance payments, separation payments, pensions, profit sharing or
retirement benefits, dislocated workers’ allowance and all other employment
related liabilities, if any.

(iii)    Seller and Buyer shall cooperate reasonably with each other to provide
an orderly administrative transition to Buyer of the employees hired by the
operator pursuant to this section, including the provision by Seller to Buyer of
all necessary or appropriate documents, records, materials, accounting files and
tax information with respect to each employee hired by the operator. Seller
shall timely give notices, if any, that are required under any and all State of
Hawaii and federal plant closing laws relating to the employees affected by this
transaction. Seller shall indemnify, defend and hold Buyer harmless from and
against all losses and claims related to any violation by Seller of such notice
requirements.

12.11    Operating Companies Purchase Price Allocation. Buyer and Seller intend
that, for U.S. federal income tax purposes, the sale of the Membership Interests
to Buyer pursuant to this Agreement be treated as a sale by Seller of the
Operating Companies’ assets to, and an assumption from Seller of the Operating
Companies’ liabilities by, Buyer. Buyer and Seller shall prepare and file, and
cause its respective Affiliates to prepare and file, its Tax Returns in a manner
consistent with such treatment. As soon as reasonably practicable following the
Closing Date, and in any event within one hundred twenty (120) days thereof,
Seller shall prepare, and deliver to Buyer for its review, the proposed
allocation of the Purchase Price (as determined for U.S. federal income tax
purposes) among the each Operating Company’s assets (the “Operating Companies
Purchase Price Allocation”). Seller shall incorporate any reasonable comments

 

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provided by Buyer within fifteen (15) days of such delivery into the final
Operating Companies Purchase Price Allocation. Buyer and Seller agree (i) to
report the federal, state and local income and other Tax consequences of the
transactions contemplated herein in a manner consistent with the Operating
Companies Purchase Price Allocation, and (ii) not to take any position
inconsistent therewith upon examination of any Tax Returns, in any refund claim,
in any litigation, investigation or otherwise; provided, however, that nothing
contained herein shall prevent Buyer or Seller from settling any proposed
deficiency or adjustment by any taxing authority based upon or arising out of
the final allocation and neither Buyer nor Seller shall be requested to litigate
before any court any proposed deficiency or adjustment by any taxing authority
challenging the allocation.

12.12    Further Assurances & Post-Closing Cooperation. Buyer and Seller agree
to, after Closing, take such actions as may be reasonably requested or required
to implement this Agreement. Further, given the proximity of the Real Property
and the Excluded Land, Buyer and Seller agree to cooperate reasonably and
without charge, except as otherwise provided herein, after Closing in connection
with the ownership, operation, use and development of their respective lands.
However, nothing in this section shall require either party to incur material
expense or liability or to materially impair its lands, business or other
property. If any requested action or cooperation involves material out-of-pocket
expense to the non-requesting party the non-requesting party’s obligation under
this section shall be subject to the agreement by the requesting party to
reimburse it for such expense.

12.13    Retention of and Access to Records. For a period of three (3) years
after the Closing Date, Seller shall retain the Retained Records and Buyer shall
retain the Transferred Records. Buyer shall make the Transferred Records
available to Seller or Seller’s agents and representatives for inspection or
copying, during normal business hours and upon at least three Business Days’
prior written notice by Seller. Seller shall make the Retained Records (other
than the Excluded Documents) available to Buyer or Buyer’s agents and
representatives, for inspection or copying, during normal business hours and
upon at least three (3) Business Days’ prior written notice by Buyer. If Seller
discovers any further records relating to the Property, the EMI Land, the EMI
Assets, the CMF Assets, and the Kulolio Assets, Seller shall deliver them to
Buyer.

12.14    Environmental Matters.

(a)    Definitions. As used in this Agreement, “Hazardous Materials Laws” means
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, 42 U.S.C. Section 9601, et seq.; the Hazardous Materials
Transportation Act, 49 U.S.C. Section 1801, et seq.; the Resource Conservation
and Recovery Act, 42 U.S.C. Section 6901 et seq.; and similar Hawaii state laws
(including without limitation Hawaii Revised Statutes Chapters 128D, 340E and
342B through 342P, inclusive, including 342H regarding solid waste); Clean Water
Act, 33 U.S.C. §§ 1251, et seq.; Safe Drinking Water Act, 42 U.S.C. §§ 300f, et
seq.; and in the regulations adopted pursuant to said laws, and “Hazardous
Materials” means substances defined as “hazardous substances,” “hazardous
materials,” or “toxic substances” in the Hazardous Materials Laws.

 

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(b)    Seller’s Representations. Seller represents to Buyer that (i) except as
disclosed in writing to Buyer in connection with the Property identified on
Schedule 12.14, Seller has not received written notice from any governmental
authority claiming or asserting that the Real Property or the EMI Land, or
Seller or EMI in connection with the Real Property or the EMI Land, are
currently in violation of Hazardous Materials Laws, (ii) Seller has not
intentionally withheld from Buyer any material documentation in custody of
Seller’s environmental manager, Sean O’Keefe, regarding the presence of
Hazardous Materials at the Property or the EMI Land or the compliance of the
Property and the EMI Land, or Seller or EMI in connection with the Real Property
or the EMI Land, with Hazardous Materials Laws, except for documents that are
the work product of Seller’s legal counsel or subject to attorney-client
privilege, and (iii) to Seller’s knowledge, Sean O’Keefe has custody of all of
Seller’s records and documents that Seller has, after commercially reasonable
efforts, been able to locate regarding the presence of Hazardous Materials at
the Property and the EMI Land or the compliance of the Property and the EMI
Land, or Seller or EMI in connection with the Real Property or the EMI Land,
with Hazardous Materials Laws.

(c)    Post-Closing Remedial Actions. Schedule 12.14 lists certain specific
portions of the Real Property and the EMI Land known or suspected to contain
Hazardous Materials that may not be in compliance with Hazardous Materials Laws
(each, a “Potential Environmental Site”) and the investigation and/or remedial
actions with respect to each site that Buyer and Seller have mutually agreed
will be implemented (each an “Agreed Corrective Action”). Promptly after
Closing, Seller shall diligently and at its own expense pursue to completion the
Agreed Corrective Actions that are designated on Schedule 12.14. Seller shall
provide Buyer with semi-annual, written reports in reasonable detail regarding
the status of its work on each Agreed Corrective Action. As used herein,
“completion” means substantial completion of an Agreed Corrective Action as
agreed upon by the Buyer and the Seller (each acting reasonably) and, for any
Potential Environmental Site where Hazardous Materials are found to be above
applicable action levels, receipt of written confirmation from the applicable
governmental agency with authority for enforcement of any of the Hazardous
Materials Laws (each an “Agency”) that no additional remedial action is required
(other than land use restrictions, ongoing site monitoring, inspection,
maintenance and reporting requirements, and such other requirements as may be
imposed by a “Conditional No Further Action” determination issued by the
Agency). All communications with any Agency with respect to a Potential
Environmental Site, an Agreed Corrective Action or a condition described in the
following subsection (d) shall be coordinated jointly by Buyer and Seller. Where
Section 12.14 provides that an Agreed Corrective Action shall be developed
following initial site assessments and Agency consultations, the Agreed
Corrective Action shall be mutually-agreed to at the time in consultation with
the applicable Agency, and shall be (i) designed to achieve standards applicable
to agricultural and commercial properties (but need not achieve standards
applicable to residential or other higher uses, unless otherwise required by the
Agency), (ii) the most cost-effective, unless otherwise required by the Agency,
and (iii) otherwise, to the extent similar, be reasonably consistent with the
other Agreed Corrective Actions, unless otherwise required by the Agency.

(d)    Other Seller Actions Required. If, at any time after Closing for a period
of five (5) years, any Hazardous Materials in violation of Hazardous Materials
Laws not addressed under Section 12.14(c) are identified in, on or at the Real
Property, the EMI Land or any

 

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groundwater resources located at the Real Property or the EMI Land, Buyer shall
notify Seller of such Hazardous Materials and they shall jointly report it to
the applicable Agency, and Seller and Buyer shall consult with the Agency about
it. If after Seller’s and Buyer’s consultations the Agency determines that
remedial action is necessary, then Buyer, at Seller’s sole expense subject to
the Liability Limitation, shall diligently commence and pursue to completion any
remedial action the Agency may require, which shall be deemed an Agreed
Corrective Action, to obtain written confirmation from such Agency that no
additional remedial action is required (other than as may be imposed by a
“Conditional No Further Action” determination). In determining the appropriate
action, the standards set forth in subsection (c) above shall apply.
Additionally, Seller shall protect, indemnify, defend and hold harmless Buyer
from and against any and all liens, claims, losses, liabilities, damages, legal
fees and costs asserted against Buyer by an Agency or an unrelated third party
in connection with such Hazardous Materials in violation of Hazardous Materials
Laws identified under this Section 12.14(d), subject to the Liability
Limitation. Notwithstanding the foregoing, Seller shall have no obligation under
this Section 12.14(d) with respect to any Hazardous Materials released or
discharged after Closing by Buyer, any Buyer Affiliate or any tenant or other
person occupying the Property by, through or under Buyer or any Buyer Affiliate.

(e)    Indemnification. Seller shall protect, indemnify, defend and hold
harmless Buyer from and against any and all liens, claims, losses, liabilities,
damages, legal fees and costs asserted against Buyer by an Agency or an
unrelated third party that arise out of or are attributable to the use,
generation, manufacture, treatment, handling, refining, production, processing,
storage, discharge, disposal, release or presence prior to the Closing Date of
Hazardous Materials within the CPR Carve-Outs, the A&B Exclusive Easements or
the groundwater sources located on such land, or the existence of Hazardous
Materials prior to or as of the Closing Date or an alleged or actual violation
of Hazardous Materials Laws arising from any condition existing prior to or as
of the Closing Date, including, without limitation, from and against any and all
liens, claims, losses, liabilities, damages, legal fees and costs asserted
against or incurred by Buyer that arise out of or are attributable to any Agency
requiring the cleanup or remediation of such CPR Carve-Outs or A&B Exclusive
Easements. This section will survive the Closing and will not be subject to the
Liability Limitation.

(f)    No Other Liability. Buyer and Seller have negotiated a defined, limited
scope of potential post-Closing Seller responsibility for Hazardous Materials or
potential Hazardous Materials Law violations arising from or relating to
Seller’s ownership of the Real Property and the EMI Land as set forth in this
Section 12.14, the A&B Exclusive Easements and the CPR Declarations, and Buyer
has waived claims against Seller for other potential Environmental Conditions as
and to the extent set forth in Section 4.4. These provisions are an essential
inducement to Seller to enter into this Agreement and consummate the sale of the
Property to Buyer. The purpose of these provisions would be frustrated if
Buyer’s Affiliates nevertheless made claims against Seller for Environmental
Conditions that exist at the Property prior to or at Closing for which Seller is
not liable to Buyer under this Section 12.14, the A&B Exclusive Easement or the
CPR Declarations. Accordingly, Buyer agrees to hold Seller harmless from any
claims asserted against Seller by Buyer’s Affiliates for any loss or liability
relating to any Environmental Condition existing at the Property prior to or at
Closing for which Seller is not liable to Buyer by virtue of Section 4.4, except
pursuant to this Section 12.14, the A&B Exclusive Easements or the CPR
Declarations. Further, Buyer agrees that Buyer and Buyer’s

 

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Affiliates will include in all new leases or licenses of portions of Property
agreements by the tenants or licensees thereunder not to assert claims against
Seller for Environmental Conditions at the Property.

12.15    MECO Subdivision. With Seller’s permission, Maui Electric Company
(“MECO”) is seeking final approval of the “Kuihelani Subdivision” of the portion
of the Real Property bearing Tax Map Key No. (2) 3-8-6-3 into Lot 1 containing
approximately 1,196 acres “Lot 1”), and Lot 2 containing approximately 3 acres
(the “MECO Lot”), all as shown on the proposed plat filed in County Subdivision
File No. 3.2377 (the “MECO Subdivision”). If the County grants final approval of
the MECO subdivision, the MECO Lot shall be excluded from the Real Property and
Seller shall at Closing convey to Buyer only Lot 1 of the MECO Subdivision. If
the County does not grant final approval of the MECO Subdivision by Closing then
Buyer agrees to permit MECO to complete the MECO subdivision after Closing and,
upon final approval and Seller’s request, Buyer shall at no charge convey the
MECO Lot to MECO by quitclaim deed free and clear of any monetary liens made by
Buyer but otherwise subject to all encumbrances of record. Buyer shall not be
required to bear any expense or liability in connection with the MECO
Subdivision or the conveyance of the MECO Lot to MECO. Any County subdivision
agreements required to be recorded as a condition of final approval of the MECO
Subdivision will be Permitted Exceptions as to Lot 1.

12.16    Post-Closing Well Pump Repairs. Promptly after Closing Seller shall at
its expense make commercially reasonable efforts to restore the pumps in Well
Nos. 4, 6, 11, 17 and 18 at the A&B Land to working order substantially
consistent with the condition of the wells when last operated for irrigation
purposes and sufficient to perform a pump test on each well comparable in scope
and duration to those Seller performed before the Effective Date with respect to
other wells located at the A&B Land. Seller does not guaranty any particular
results of such tests, only that they shall be done, and upon completion of such
pump tests Seller shall have no further obligations with respect to these wells.

12.17    Interim Water & Power.

(a)    From the Closing until the Initial EMI Transfer Date, Seller shall cause
EMI to continue to provide surface water to the A&B Land on an as-needed basis
consistent with past practice, without charge to Buyer.

(b)    The Puunene Mill property contains certain electrical transmission,
switching and associated equipment used in connection with the hydroelectric
power and 12KV distribution system located at the Real Property and the EMI
Land. After Closing the parties shall cooperate reasonably to develop a plan and
timeline for Buyer’s removal and relocation of such equipment from the Puunene
Mill property. Such relocation shall be completed when reasonably practicable
after Closing, taking into account both Seller’s redevelopment plans and, where
applicable, any work by MECO that is a necessary precondition to Buyer’s
relocation of such equipment. Until Buyer completes the disconnection of such
equipment from the Puunene Mill property, Buyer shall continue to deliver
hydroelectric power to the Puunene Mill property, as available after all of
Buyer’s power needs are met and on an as-needed basis consistent with past
practice, without charge to Seller to the extent Buyer produces excess
hydroelectric power.

 

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12.18    Ohanui Water System. [Seller] is the sole shareholder of Ohanui
Corporation, a Hawaii corporation (“Ohanui”), which is the owner of the Kailua
Public Water System (PWS No. 203), the Ohanui Kailua Well (State Well Number
6-5313-02) and a 5,400-gallon storage tank, all of which are located on the EMI
Land (collectively, the “Water System”). EMI currently maintains and operates
the Water System for Ohanui pursuant to the Agreement dated July 1, 2007, by and
between EMI and Ohanui (the “Existing Ohanui Agreement”). On the Initial EMI
Transfer Date, (i) Ohanui and EMI shall terminate the Existing Ohanui Agreement,
and (ii) Ohanui and EMI shall enter into a new service agreement regarding the
Water System. Buyer and Seller agree to work together in good faith to prepare a
new service agreement reasonably acceptable to both parties, which agreement
shall provide the following: the fees to be paid by Ohanui to EMI shall be
sufficient to cover any and all costs incurred by EMI in providing the services
to Ohanui, Ohanui shall be responsible for paying for any and all maintenance,
repairs and replacements needed for the full functioning and operation of the
Water System, and Ohanui and Seller as guarantor will indemnify and hold
harmless EMI from any liability or cost that arises from the existing condition
of the Water System and for any future liability or cost related to the Water
System or Ohanui’s failure to pay EMI for the services performed under the new
service agreement.

12.19    Survival. The provisions of this Article 12 shall survive Closing.

ARTICLE 13

POSSESSION

Possession of the Property shall be delivered to Buyer on the Closing Date,
subject to the rights of any tenants; provided, however, that without limiting
any other provisions of this Agreement, Seller shall provide authorized
representatives of Buyer reasonable access to the Property, the EMI Land, the
EMI Assets, the CMF Assets, and the Kulolio Assets for the purposes of
satisfying Buyer with respect to the representations, warranties and covenants
of Seller contained herein and with respect to satisfaction of any conditions
precedent to the Closing contained herein.

ARTICLE 14

MISCELLANEOUS

14.1    Notices. Any notice required or permitted to be given under this
Agreement shall be in writing and sent by United States mail, registered or
certified mail, postage prepaid, return

 

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receipt requested, and addressed as follows, and shall be deemed to have been
given upon the date of delivery (or refusal to accept delivery) as indicated on
the return receipt:

 

If to Seller:    Alexander & Baldwin, LLC    822 Bishop Street    Honolulu,
Hawaii 96813    Attention: Jerrod Schreck    Email: jschreck@abhi.com    And to:
   Alexander & Baldwin, LLC    822 Bishop Street    Honolulu, Hawaii 96813   
Attention: Nelson Chun    Email: nchun@abhi.com with a copy to:    Cades Schutte
LLP    1000 Bishop Street, 12th Floor    Honolulu, Hawaii 96813    Attention:
Rick Kiefer    Email: rkiefer@cades.com If to Buyer:    Mahi Pono Holdings, LLC
   2055 Woodside Road, Suite 195    Redwood City, CA 94061    Attention: Ryon
Paton    Email: ryon.paton@trinitaspartners.com    With an email copy to:
kirk.hoiberg@trinitaspartners.com    And c/o:    Public Sector Pension
Investment Board    1250 René-Lévesque Boulevard West, Suite 1400    Montréal,
Québec    Canada H3B 5E9    Attention: Christian Bonneau    Email:
cbonneau@investpsp.ca    With an email copy to: legalnotices@investpsp.ca   
With an additional email copy to: NROperations@investpsp.ca with a copy to:   
Arent Fox, LLP    55 Second Street, 21st Floor    San Francisco, CA 94105   
Attention: M.J. Pritchett    Email: MJ.Pritchett@arentfox.com

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

 

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14.2    Brokers and Finders. Buyer and Seller are not represented by any
brokers, and no broker or finder has been engaged and no brokerage fee is
payable in connection with this transaction. In the event of a claim for
broker’s fee, finder’s fee, commission or other similar compensation in
connection with this transaction, (i) if such claim is based upon any agreement
alleged to have been made by Buyer, Buyer will indemnify and hold Seller
harmless against any and all liability, loss, cost, damage or expense (including
reasonable attorneys’ fees and costs) which Seller may sustain or incur by
reason of such claim, and (ii) if such claim is based upon any agreement alleged
to have been made by Seller, Seller will indemnify and hold Buyer harmless
against any and all liability, loss, cost, damage or expense (including
reasonable attorneys’ fees and costs) which Buyer may sustain or incur by reason
of such claim. Buyer shall be responsible for any commissions or other
compensation, if any, due to Trinitas Partners, LLC in connection with the
transaction contemplated by this Agreement. Seller discloses that A&B Properties
Hawaii, LLC, is a licensed real estate broker in the State of Hawaii. The
provisions of this Section shall survive the Closing and shall not be subject to
the Liability Limitation.

14.3    Assignment; Successors and Assigns. This Agreement shall be binding
upon, and inure to the benefit of, the parties hereto and their respective
successors, heirs, administrators and assigns. Buyer’s interest under this
Agreement may not be assigned, encumbered or otherwise transferred whether
voluntarily, involuntarily, by operation of law or otherwise, without the prior
written consent of Seller, provided that Buyer may assign its interest under
this Agreement in its sole discretion and without Seller’s consent to any one or
more assignees which are entities managed or otherwise controlled, directly or
indirectly, by Buyer or its principals, and Buyer may take title to the Property
through one or more wholly-owned subsidiaries of Buyer.

14.4    Amendments. This Agreement may be amended or modified only by a written
instrument executed by the party asserted to be bound thereby.

14.5    Interpretation & Certain Definitions. Words used in the singular number
shall include the plural, and vice-versa, and any gender shall be deemed to
include each other gender. The captions and headings of the Articles and
Sections of this Agreement are for convenience of reference only, and shall not
be deemed to define or limit the provisions hereof. As used herein “Business
Day” means any day except Saturday, Sunday or a federal or state holiday on
which the Hawaii Bureau of Conveyance is not open for recording of documents. As
used herein “Minimum Water Amount” shall be 30 million gallons per day (“MGD”)
of surface water for use by Buyer (exclusive of any water EMI is obligated to
deliver to any third parties or to the Excluded Lands). As used herein, any
amount of water expressed in million gallons per day or MGD means the average
aggregate daily volume of water measured at Diversion Gage ID Nos. 6-55, 6-56,
6-57 and 6-58 over the immediately preceding twelve-month period, as reported in
EMI’s monthly surface water use report to the CWRM.

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

14.7    Merger of Prior Agreements. Except for the Nondisclosure Agreement and
the Waiver Agreement, this Agreement constitutes the entire agreement between
the parties with respect to the purchase and sale of the Property and supersedes
all prior and contemporaneous agreements and understandings between the parties
hereto relating to the subject matter hereof, including the letter of intent
dated June 17, 2018.

 

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14.8    Attorneys’ Fees. In the event either Buyer or Seller brings any suit or
other proceeding with respect to the subject matter or enforcement of this
Agreement or any of the Transaction Documents, the prevailing party (as
determined by the court, agency or other authority before which such suit or
proceeding is commenced) shall, in addition to such other relief as may be
awarded, be entitled to recover reasonable attorneys’ fees and costs as actually
incurred (including, without limitation, attorneys’ fees incurred in appellate
proceedings, attorneys’ fees incurred in establishing the right to
indemnification, or in any action or participation in, or in connection with,
any case or proceeding under Chapter 7, 11 or 13 of the Bankruptcy Code, 11
United States Code Section 101 et seq., or any successor statutes). This
provision shall survive Closing and the termination of this Agreement.

14.9    Counting of Days. If any time period determined under this agreement
shall end on a day that is not a Business Day, such time period shall be
extended until the next following Business Day.

14.10    Time of the Essence. Time is of the essence of this Agreement.

14.11    Execution. This Agreement may be executed in counterparts and
signatures delivered by electronic means or fax transmission shall be valid and
binding for all purposes.

14.12    No Third Party Beneficiaries. The provisions of this Agreement shall
not benefit any third party.

[Signature Pages Follow]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Purchase and Sale
Agreement and Escrow Instructions as of the date first above written.

 

SELLER:

ALEXANDER & BALDWIN, LLC, SERIES R

By:  

/s/ Christopher J. Benjamin

Name:   Christopher J. Benjamin Title:   President & Chief Executive Officer By:
 

/s/ Alyson J. Nakamura

Name:   Alyson J. Nakamura Title:   Secretary

A & B PROPERTIES HAWAII, LLC, SERIES R

By:  

/s/ Nelson N.S. Chun

Name:   Nelson N.S. Chun Title:   Vice President By:  

/s/ Alyson J. Nakamura

Name:   Alyson J. Nakamura Title:   Secretary

ALEXANDER & BALDWIN, LLC, SERIES T

By:  

/s/ Christopher J. Benjamin

Name:   Christopher J. Benjamin Title:   President & Chief Executive Officer By:
 

/s/ Alyson J. Nakamura

Name:   Alyson J. Nakamura Title:   Secretary

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BUYER:

MAHI PONO HOLDINGS, LLC,

a Delaware limited liability company By:  

/s/ R. Ryon Paton

  R. Ryon Paton   Authorized Signatory

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The undersigned acknowledges receipt of this Agreement and agrees to act as
Escrow Holder hereunder.

 

TITLE GUARANTY ESCROW SERVICES, INC. By:  

/s/ Jeremy R. Trueblood

 

Jeremy R. Trueblood

Its:  

Vice President