**Exhibit 10.1**

 

**KAPALUA BAY GOLF COURSESALE, PURCHASE AND ESCROW AGREEMENT**

 

This Sale, Purchase and EscrowAgreement (this “**Agreement**”), dated as ofSeptember 16, 2010 (the “**Effective Date**”),is made by and among MAUI LAND & PINEAPPLE COMPANY, INC., a Hawaiicorporation (“**MLP**” or “**Seller**”),and TY MANAGEMENT CORPORATION, a Hawaii corporation (“**Purchaser**”),and constitutes (i) a contract of sale and purchase between the partiesand (ii) an escrow agreement among Seller, Purchaser and TITLE GUARANTYESCROW SERVICES, INC. (“**Escrow Agent**”),the consent of which appears at the end hereof.

 

R E C I T A L S:

 

A.                                   MLP is the owner of the Land and Improvements (as defined below)comprising the Kapalua Bay Golf Course and Tennis Garden defined inSection 1.3 below (the “**Golf Course**”)and the land and improvements comprising the Kapalua Golf Academy (the “**Golf Academy**”) more particularly described in the GolfAcademy Lease and the Grant of Golf Academy Easement referred to inSection 4.1.3 below.

 

B.                                     Subject to the terms and conditions set forth in this Agreement, Sellerdesires to sell to Purchaser, and Purchaser desires to purchase from Seller,the Kapalua Bay Golf Course and Seller desires to lease to Purchaser, andPurchaser desires to lease from Seller, the Golf Academy to Purchaser.

 

C.                                     MLP is also the owner of the land underlying the maintenance building andrelated facilities for the Golf Course (the “**Bay CourseMaintenance Facility**”) that is located on Lot 1 of the Kapalua MakaiSubdivision No. 1 (“**Lot 1**”) sometimesreferred to as “**Site 6-0**” and being a portion ofTMK:  (2) 4-2-004:48 which MLP hasagreed to sell to Purchaser and Purchaser has agreed to purchase from Seller onthe terms and conditions set forth in that certain Kapalua Site 6-0Maintenance Facility Agreement of Sale and Escrow Agreement executedconcurrently with this Agreement.  TheBay Course Maintenance Facility will be conveyed to Purchaser following theconsolidation of Lot 1 with adjacent portions of the Golf Course.  Pending the completion of that consolidation,Purchaser’s use of the Bay Course Maintenance Facility will be governed, amongother things, by the Golf Facilities Easement described in Section 4.1.8below.

 

NOW, THEREFORE, inconsideration of the premises and of the mutual covenants of the partieshereinafter expressed, it is hereby agreed as follows.

 

ARTICLE 1

 

PURCHASE AND SALE; LEASE

 

1.1                                 Agreement ofPurchase and Sale.  Inconsideration of the covenants herein contained, Seller hereby agrees to selland Purchaser hereby agrees to purchase the following:

 

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1.1.1                        Those certainparcels containing approximately 184.331 acres of land located in the County ofMaui, State of Hawaii as more particularly described on **Exhibit A**attached hereto and made a part hereof (“**Land**”) commonlyreferred to as the “Kapalua Bay Golf Course” and all improvements, structuresand fixtures thereon (collectively, the “**Improvements**”)thereon together with certain easements appurtenant to the Land as providedherein (the Land, including its appurtenant easements and Improvements arecollectively the “**Real Property**”);

 

1.1.2                        All of Seller’sright, title and interest in and to all tangible personal property upon theLand or within the Improvements, (excluding the Excluded Assets as definedbelow and all equipment leased under expired equipment leases) and those otheritems of personal property used exclusively in connection with the operation ofthe Land and the Improvements as set forth on **Exhibit B**attached hereto (collectively, the “**Personal Property**”);

 

1.1.3                        All of Seller’sright, title and interest in and to all intangible personal property relatingsolely to ownership and operation of the Land and Improvements, excluding theExcluded Assets, but including approvals and permits belonging and appertainingto the Real Property, plans and specifications pertaining to the Improvements,all “Bay Course” trademarks and any other words, names, devices, symbols,logos, slogans, designs, brands, service marks, trade names, other distinctivefeatures, or any combination of the foregoing, whether registered orunregistered, used by Seller in connection with the ownership and operation ofthe Land and Improvements, including the goodwill pertaining thereto.

 

1.1.4                        All of Seller’sright, title and interest in and to (i) all assignable equipment leases,service contracts, management agreements and other contracts and agreementslisted and described on **Exhibit C**relating to the upkeep, repair, maintenance or operation of the Land, Improvementsor Personal Property which will extend beyond the Closing Date (as defined inSection 6.1) and (ii) all assignable existing warranties andguaranties issued to Seller in connection with the Improvements or the PersonalProperty (collectively, the “**Contracts**”);and

 

1.1.5                        All of Seller’sright, title and interest in and to (a) that certain restaurant lease,between KLC, as landlord, and Calmaui, Inc., a Hawaii corporation, astenant, (the “**Restaurant Lessee**”), datedNovember 8, 2004 as amended by First Amendment to Lease datedSeptember 15, 2009 (as amended, the “**Restaurant Lease**”)and (b) that certain Personal Guaranty of the Restaurant Lease datedJune 30, 2005 made by David Cohn (the “**RestaurantLease Guaranty**”).

 

1.2                                 Excluded Assets.  The following items (collectively, the “**Excluded Assets**”) shall not be included in the definition of“Golf Course,” shall be specifically excluded from the transfer contemplatedherein and shall not be conveyed to Purchaser pursuant to the terms hereof:

 

1.2.1                        All propertyowned by Seller or any of its affiliates, not normally located at the GolfCourse and used, but not exclusively, in connection with the operation of theGolf Course;

 

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1.2.2                        All(a) computer software and accompanying documentation (including all futureupgrades, enhancements, additions, substitutions and modifications thereof),other than that which is commercially available, which are used by Seller orany affiliate thereof in connection with the property management system, thereservation system, and all future electronic systems developed by Seller orany affiliate thereof for use with respect to the Golf Course, (b) allmanuals, brochures, directives, policies, programs and other information issuedby Seller, or any of its affiliates, or otherwise used in the operation of theGolf Course, (c) employee records which must remain confidential eitherunder applicable legal requirements or under reasonable corporate policies ofSeller or any affiliate thereof, (d) any right, title or interest in orany goodwill associated with any name containing the name “Kapalua” or anycombination or variation thereof and any related trademarks and any otherrelated words, names, devices, symbols, logos, slogans, designs, brands,service marks, trade names, other distinctive features, or any combination ofthe foregoing, whether registered or unregistered, used by Seller or any of itsaffiliates, (e) all trade secrets, confidential information and all otherinformation, materials, and copyrightable or patentable subject matterdeveloped, acquired, licensed or used by Seller or any affiliate thereof,including, without limitation, materials relating to sales and marketingprograms, revenue and inventory management programs, processes or systems,brand and pricing strategies, business and technology plans, and research anddevelopment reports, and (f) any information or agreements consideredconfidential or proprietary in nature under an agreement between Seller or anyof its affiliates and any other parties, including, but not limited to,lenders, vendors, suppliers or prior owners. The foregoing shall apply regardless of the form or medium involved (*e.g.*, paper, electronic, tape, tangible or intangible);

 

1.2.3                        All inventoryfor retail sale, all rental clubs, driving range balls, and any other inventoryor items owned by Seller and sold from the golf pro shop located on the Land;

 

1.2.4                        All personalproperty owned by the Restaurant Lessee under the Restaurant Lease, including,without limitation, the furnishings and moveable equipment situated in theRestaurant Lease premises, all glassware, china, utensils, inventories and theliquor license;

 

1.2.5                        Any capitalreserve, personal property reserve and/or tax and insurance escrow for the GolfCourse, whether held for the benefit of the holder of a mortgage, loan, deed oftrust or other security instrument with respect to the Golf Course; and

 

1.2.6                        Working capitalassociated with or set aside with respect to the Golf Course.

 

1.3                                 Golf CourseDefined.  The property described inSection 1.1 is referred to collectively as the “**Golf Course**”.

 

1.4                                 Golf AcademyLease and Easement.  Sellerhereby agrees to lease to Purchaser and Purchaser hereby agrees to lease fromSeller, the Golf Academy on the terms and conditions set forth in the GolfAcademy Lease and the Grant of Golf Academy Easement (defined below).

 

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ARTICLE 2

 

PURCHASE PRICE

 

2.1                                 Price.  Seller shall sell and Purchaser shallpurchase the Golf Course for a total net purchase price of Twenty Three MillionSix Hundred Eighteen Thousand Nine Hundred Sixty and No/100 Dollars($23,618,960.00) (the “**Purchase Price**”),as allocated, pursuant to the agreement of Seller and Purchaser, between realand personal property in accordance with **Schedule 1**attached hereto and made a part hereof. The Purchase Price was determined by deducting from the gross purchaseprice of $24,400,000.00 (a) the amount of $481,040.00 being paid byPurchaser to Seller under that certain Kapalua Site 6-0 Maintenance FacilityAgreement of Sale and Escrow Agreement of even date herewith (the “**Maintenance Facility Agreement of Sale**”) and (b) theamount of $300,000.00, being the estimated cost of repairs to the Golf Courseas set forth on **Exhibit JJ**to this agreement which Purchaser will reimburse to Lessee pursuant to theprovisions of Section 11 of the Bay Golf Course Lease of even dateherewith.  Purchaser shall, at leasttwo (2) business days prior to Closing (as defined below), deliver toEscrow Agent, by bank wire transfer of immediately available funds, a sum equalto the Purchase Price.

 

ARTICLE 3

 

CONDITIONS TO THE PARTIES’OBLIGATIONS

 

3.1                                 Conditions toPurchaser’s Obligation to Purchase.  Purchaser’s obligation to purchase isexpressly conditioned upon the satisfaction, or waiver in writing by Purchaser,of each of the following:

 

3.1.1                        Performance bySeller.  Performance in all materialrespects of the obligations and covenants of, and deliveries required of,Seller hereunder.

 

3.1.2                        Delivery ofTitle and Possession.  Executionand delivery by Seller at the Closing of (i) the Deed (as defined inSection 4.1.1), and (ii) possession as provided in Section 15.1.

 

3.1.3                        Title Insurance.  Delivery at the Closing of the current formof American Land Title Association extended coverage owner’s policies of titleinsurance in the amount of the Purchase Price (the “**Title Policy**”),or an irrevocable commitment to issue the same issued by First American TitleInsurance Company (the “**Title Company**”),consistent in all material respects with a commitment for title insuranceissued by Title Company, together with copies of all documents referred to asexceptions therein, containing as encumbrances only those certain encumbrancesdescribed in the Deed (as defined below) as “**PermittedEncumbrances**” (collectively, the “**TitleCommitment**”), insuring marketable title to the Real Property inPurchaser.

 

3.1.4                        Seller’sRepresentations.  Therepresentations and warranties by Seller set forth in Section 11.1 beingtrue and correct in all material respects as of the Closing.

 

3.1.5                        ClosingDocuments.  Theexecution and/or delivery by Seller, as applicable, of the documents listed inSection 4.1 below.

 

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3.1.6                        MaintenanceFacility.  Theconcurrent execution and delivery by the parties of (a) the Site 6-0Maintenance Facility Agreement of Sale and Escrow Agreement and the memorandumthereof, (b) the Site 6-0 Permitting Conditions Compliance Agreement andthe memorandum thereof, and (c) the Golf Facilities Easement; therecordation of said memoranda and the Golf Facilities Easement in the Bureau ofConveyances of the State of Hawaii; and the delivery to Purchaser at Closing ofthe title insurance policy required to be delivered to Purchaser pursuant tothe terms of the Site 6-0 Maintenance Facility Agreement of Sale andEscrow Agreement.

 

3.1.7                        Site 6-0Extensions.  The writtenapprovals of the County of Maui with respect to those certain SpecialManagement Use Permit and Project District Phase I and Phase II Approvals (SM12006/0022; PD1 2006/0002; and PH2 2006/0002) to (a) the extension of thedeadline for initiation of construction of the project described therein from August 31,2010 to no earlier than August 31, 2012 and (b) to the extension ofthe deadline for completion of construction of the project described therein tono earlier than August 31, 2017.

 

3.2                                 Conditions toSeller’s Obligation to Sell and Lease.  Seller’s obligation to sell is expresslyconditioned upon satisfaction or waiver by Seller in writing of each of thefollowing:

 

3.2.1                        Performance byPurchaser.  Performancein all material respects of the obligations and covenants of, and deliveriesrequired of, Purchaser hereunder.

 

3.2.2                        Receipt ofPurchase Price.  Receipt ofthe Purchase Price and any adjustments due Seller under Article 7 at theClosing in the manner herein provided.

 

3.2.3                        Purchaser’sRepresentations.  Therepresentations and warranties by Purchaser as set forth in Section 11.2being true and correct in all material respects as of the Closing.

 

3.2.4                        ClosingDocuments.  Theexecution and/or delivery, as applicable, by Purchaser of those certainagreements listed in Section 4.2 below.

 

ARTICLE 4

 

SELLER’S DELIVERIES ANDPURCHASER’S DELIVERIES TO ESCROW AGENT

 

4.1                                 Seller’sDeliveries.  MLP, at orbefore the Closing, shall deliver to Escrow Agent each of the following:

 

4.1.1                        Deed.  Three (3) executed copies of theWarranty Deed (the “**Deed**”) withrespect to the Real Property in substantially the form of **Exhibit D**,pursuant to which Seller shall convey title to the Real Property subject onlyto the following (collectively, the “**Permitted Encumbrances**”):  (i) non-delinquent real property taxesand all assessments and unpaid installments thereof which are not delinquent;(ii) the Restaurant Lease, and the rights of possession of the RestaurantLessee thereunder; (iii) all exceptions to title contained or disclosed inthe Title Commitment; and (iv) any other lien, encumbrance, easement orother exception or matter voluntarily imposed or consented to in writing byPurchaser prior to or as of the Closing.

 

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4.1.2                        Bill of Sale.  Two (2) executed copies of a bill ofsale (the “**Bill of Sale**”) with respect to thePersonal Property in substantially the form of **Exhibit E**attached hereto.

 

4.1.3                        Golf AcademyLease and Easement.  Two (2) executedcounterparts of the Golf Academy Lease Agreement (“**Golf AcademyLease**”), in substantially the form attached hereto as **Exhibit F-1** and three (3) ofthe memorandum thereof and three (3) executed counterparts of a Grant ofGolf Academy Easement (“**Golf Academy Easement**”),in substantially the form attached hereto as **Exhibit F-2**.  Unless the context clearly indicatesotherwise, references herein to the “Golf Academy” include both the premisesdemised by the Golf Academy Lease and the easement area covered by the GolfAcademy Easement.

 

4.1.4                        Bay Golf CourseLease.  Two (2) executedcounterparts of a lease agreement (the “**Bay Golf Course****Lease**”), wherein Kapalua PlantationGolf LLC (“**KPGLLC**”) will lease the GolfCourse after the Closing Date, substantially in the form attached hereto as **Exhibit G** and the Guaranty ofLease Agreement in the form attached as Exhibit B to the Lease Agreement.

 

4.1.5                        LicenseAgreements.  Two (2) executedcounterparts each of (a) a license agreement (the “**Seller’sLicense Agreement**”), wherein certain intellectual property rightsassociated with the “Kapalua” name will be licensed to Purchaser, substantiallyin the form attached hereto as **Exhibit H**,and (b) a license agreement (the **“Purchaser’sLicense Agreement**”), wherein certain intellectual property rightsassociated with “The Bay Course” name will be licensed to MLP (or KPGLLC),substantially in the form of **Exhibit I**.

 

4.1.6                        PartialAssignment and Assumption of Second Amended and Restated Golf Course UseAgreement.  Three (3) executedcounterparts of a Partial Assignment and Assumption of Second Amended andRestated Golf Course Use Agreement (the “**Partial Assignment andAssumption of Second Amended and Restated Golf Course Use Agreement**”),substantially in the form attached hereto as **Exhibit J**.

 

4.1.7                        Water DeliveryAgreement.  Two (2) executedcounterparts of an Agreement for the Delivery of Water (Kapalua Bay Golf Courseand Golf Academy) (the “**Water Delivery Agreement**”)pursuant to which water for use in the operation of the Golf Course and theGolf Academy will be provided by MLP, substantially in the form attached heretoas **Exhibit K**.

 

4.1.8                        Golf FacilitiesEasement.  Three (3) executedcounterparts of a Grant of Golf Course Facilities Easement regarding the use ofthe maintenance building and related facilities (the “**GolfFacilities Easement**”) on Lot 1 (being a portion of TMK: (2) 4-2-004:48)pending the consolidation of approximately         acres of Lot 1 intoLot 3-A (the “**Golf Facilities Easement**”),substantially in the form attached hereto as **Exhibit L**.

 

4.1.9                        Assignment ofEasements.  Three (3) executedcounterparts of an Assignment of Easements and Agreements regarding certaingolf cart path encroachment agreements and other easements (the “**Assignment of Easements”**), substantially in the formattached hereto as **Exhibit M**.

 

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4.1.10                  CC&Rs.  Three (3) executed originals ofcovenants, conditions and restrictions regarding restrictions on the use anddevelopment of the Golf Course (the “**CC&Rs**”), insubstantially the form attached hereto as **Exhibit N-1**and three (3) executed originals of the Notice of Golf Impacts and Waiverin the form attached hereto as **Exhibit N-2**.

 

4.1.11                  Lots 5, 6 and 7 ROFOAgreement.  Three (3) executedcounterparts of a right of first offer agreement (the “**Lots 5, 6and 7 ROFO Agreement**”) with respect to Lots 5, 6, and 7 and allimprovements, structures and fixtures thereon in substantially the formattached hereto as **Exhibit O**and of the memorandum thereof.

 

4.1.12                  Bay Course ROFR Agreement.  Two (2) executed counterparts of a rightof first refusal agreement (the “**Bay Course ROFR Agreement**”)with respect to the Golf Course and all improvements, structures and fixturesthereon in substantially the form attached hereto as **Exhibit P**and three (3) of the memorandum thereof.

 

4.1.13                  Future Golf CourseDevelopment ROFO.  Two (2) executedcounterparts of the right of first offer agreement (the “**Future GolfCourse Development ROFO**”) in the form attached hereto as **Exhibit Q** and three (3) ofthe memorandum hereof.

 

4.1.14                  Assignment of RestaurantLease and Guaranty.  Two (2) executedcounterparts of an Assignment of Landlord’s Interest in Restaurant Lease andRestaurant Lease Guaranty (the “**Assignment of RestaurantLease and Guaranty**”) in substantially the form attached hereto as **Exhibit R**.

 

4.1.15                  Notice to Tenant.  A notice signed by Seller addressed to theRestaurant Lessee in the form of **Exhibit S**.

 

4.1.16                  Restaurant Lease EstoppelCertificate.  An estoppelcertificate executed by the Restaurant Lessee in the Form of **Exhibit T**.

 

4.1.17                  Ritz-Carlton EstoppelCertificate.  Estoppelcertificates for the Second Amended and Restated Golf Course Use Agreement (the“**Ritz-Carlton Estoppel Certificate**”)executed by W2005 Kapalua/Gengate Hotel Realty, L.L.C. and The Ritz-CarltonHotel Company, L.L.C., respectively, in substantially the forms attached heretoas **Exhibit U-1** and **Exhibit U-2**, respectively****(collectively, the “**Ritz-Carlton EstoppelCertificates**”).

 

4.1.18                  Association EstoppelCertificate.  An estoppelcertificate executed by the Kapalua Resort Association (the “**Kapalua Resort Association Estoppel Certificate**”),substantially in the form of **Exhibit V**attached hereto.

 

4.1.19                  Nondisturbance Agreement. SubordinationAgreement; Estoppel, Attornment and Non-Disturbance Agreement(s) executedby Wells Fargo Bank, N.A. with respect to (a) the Grant of Bay CoursePrivate Water System Easement and the KWC Water Transmission Agreement,(b) the Golf Academy Lease and the Grant of Golf Academy Easement, and(c) the Mauka Maintenance Facility ROFR (the “**NondisturbanceAgreement**”), substantially in the form attached hereto as **Exhibit W**.

 

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4.1.20                  Wells Fargo Mortgage Release.  An executed and a recordable partial releaseof that certain mortgage in favor of Wells Fargo Bank, N.A. affecting the RealProperty and Lot 1.

 

4.1.21                  UCC-1 Termination.  A UCC amendment terminating that certainWells Fargo UCC-1 Financing Statement in favor of Wells Fargo Bank, N.A. as tothe Real Property and Lot 1.

 

4.1.22                  Reliance Letters.  Signed copies of reliance letters signed by(a) Bureau Veritas North America, Inc. (the “Bureau Veritas **Reliance Letter**”), substantially in the form attached heretoas **Exhibit X-1**, and (b) byMEV, LLC, successor in interest to Vuich Environmental Consultants, Inc.(the “**MEV Reliance Letter**”), substantially inthe form attached hereto as **Exhibit X-2**.

 

4.1.23                  Will Serve Letter (Water).  A “will serve” letter signed by Kapalua WaterCompany, Ltd. (the “**KWC****Will Serve Letter**”) in the form attached hereto as **Exhibit Y**.

 

4.1.24                  Will Serve Letter (Sewer).  A “will serve” letter signed by Kapalua WasteTreatment Company, Ltd. (the “**KWT****Will Serve Letter**”) in the form attached hereto as of **Exhibit Z**.

 

4.1.25                  County Sewage TreatmentLetter.  A letter from the County ofMaui (the “**County Sewage Treatment Letter**”)confirming that the County of Maui has agreed to accept for treatment thesewage transmitted by Kapalua Waste Treatment Company, Ltd., including thesewage covered by the KWT Will Serve Letter, substantially in the form attachedhereto as of **Exhibit AA**.

 

4.1.26                  Agreement Regarding KapaluaClub.  Two (2) executedcounterparts of a Golf Course Use Agreement (Kapalua Club) (the “**Agreement Regarding Kapalua Club**”), substantially in theform attached hereto as **Exhibit BB**.

 

4.1.27                  Private Water SystemEasement.  Three (3) executedcounterparts of a Grant of Bay Course Private Water System Easement (the “**Private Water System Easement**”) in the form attached heretoas **Exhibit CC-1,** two (2) executedcounterparts of a KWC Water Transmission Agreement in the form attached heretoas **Exhibit CC-2** and three (3) executedcounterparts of the memorandum thereof.

 

4.1.28                  Lots 5 and 6 ROFR.  Two (2) executed counterparts of a rightof first refusal agreement (the “**Lots 5 and 6 ROFR**”)with respect to Lots 5 and 6 and all improvements, structures and fixturesthereon, in the form attached hereto as **Exhibit DD**and thre (3) of the memorandum thereof.

 

4.1.29                  Mauka Maintenance FacilityROFR.  Two (2) executedcounterparts of a right of first refusal agreement (the “**MaukaMaintenance Facility ROFR**”) with respect to the Mauka MaintenanceFacility (Lot 9) and all improvements, structures and fixtures thereon inthe form attached hereto as **Exhibit EE**and three (3) of the memorandum thereof.

 

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4.1.30                  Assignment of Trade Names(Hawaii DCCA Form T-4).  One (1) executed Hawaii DCCA Form T-4for “The Bay Course” trade name and one (1) executed Hawaii DCCA Form T-4for “The Pineapple Grill at Kapalua” trade name.

 

4.1.31                  LPGA Agreement.  Two (2) executed counterparts of anagreement regarding the possible use of the Golf Course and the Golf Academyfor up to four (4) future LPGA Tournament events (the “**LPGA Agreement**”), substantially in the form attached heretoas **Exhibit FF**.

 

4.1.32                  Post-Closing Agreement.  Two (2) executed counterparts of apost-closing agreement (the “**Post-Closing Agreement**”),substantially in the form attached hereto as **Exhibit GG**.

 

4.1.33                  Release of 2009 Bay CourseROFO.  Three (3) executedcounterparts of a recordable cancellation and release of the Right of FirstOffer Agreement dated March 27, 2009, in favor of Purchaser regarding theGolf Course (the “**Release of 2009 Bay CourseROFO**”).

 

4.1.34                  Conveyance Tax Certificate(Hawaii Tax Form P-64A) for the Deed.  One (1) executed Hawaii Tax Form P-64Afor the Deed.

 

4.1.35                  FIRPTA/HARPTA Affidavits.  One (1) executed copy of an affidavit inthe form of **Exhibit HH** with respectto the Foreign Investment in Real Property Tax Act and one (1) executedcopy of an affidavit in the form of **Exhibit II**.

 

4.1.36                  Notice of Mortgage, Pledgeor Purchase (Hawaii Tax Form D-37).  One (1) executed Hawaii Tax Form D-37unless previously filed by Purchaser with the Hawaii Department of Taxation.

 

4.1.37                  Closing Statement.  An executed settlement statement reflectingthe prorations and adjustments required under Article 7.

 

4.1.38                  Authorization DocumentsRequired by the Title Company.  Such documents or instruments reasonablyrequired by the Title Company concerning Seller’s due authorization andexecution of the closing documents required to convey the Golf Course pursuantto this Agreement, including Form B and Form D or reasonablyrequested by Escrow Agent required to close the transactions contemplatedhereby.

 

4.2                                 Purchaser’sDeliveries.  Purchasershall, at or before the Closing, deliver to Escrow Agent each of the following:

 

4.2.1                        Purchase Price.  The Purchase Price as set forth inArticle 2.

 

4.2.2                        Deed.  Three (3) executed counterparts of theDeed.

 

4.2.3                        Golf AcademyLease and Easement.  Two (2) executedcounterparts of the Golf Academy Lease and of three (3) the memorandumthereof and two (2) executed counterparts of the Golf Academy Easement.

 

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4.2.4                        Bay Golf CourseLease.  Two (2) executedcounterparts of the Bay Golf Course Lease and three (3) of the memorandumthereof.

 

4.2.5                        LicenseAgreements.  Two (2) executedcounterparts each of (a) the Purchaser’s License Agreement and(b) the Seller’s License Agreement.

 

4.2.6                        PartialAssignment and Assumption of Second Amended and Restated Golf Course UseAgreement.  Three (3) executedcounterparts of the Partial Assignment and Assumption of Second Amended andRestated Golf Course Use Agreement.

 

4.2.7                        Water DeliveryAgreement.  Two (2) executedcounterparts of the Water Delivery Agreement.

 

4.2.8                        Golf FacilitiesEasement.  Three (3) executedcounterparts of the Golf Facilities Easement.

 

4.2.9                        Assignment ofEasements.  Three (3) executedcounterparts of the Assignment of Easements.

 

4.2.10                  Lots 5, 6 and 7 ROFOAgreement.  Two (2))executed counterparts of the ROFO Agreement and three (3) of thememorandum thereof.

 

4.2.11                  Bay Course ROFR Agreement.  Two (2) executed counterparts of theROFR Agreement and three (3) of the memorandum thereof.

 

4.2.12                  Future Golf CourseDevelopment ROFO.  Two (2) executedcounterparts of the Future Golf Course Development ROFO and three (3) ofthe memorandum thereof.

 

4.2.13                  Assignment of RestaurantLease and Guaranty.  Two (2) executedcounterparts of the Assignment of Restaurant Lease and Guaranty.

 

4.2.14                  Agreement Regarding KapaluaClub.  Two (2) executedcounterparts of the Agreement Regarding Kapalua Club.

 

4.2.15                  Private Water SystemEasement.  Three (3))executed counterparts of the Private Water System Agreement, two (2) executedcounterparts of the KWC Water Transmission Agreement and three (3) of thememorandum thereof.

 

4.2.16                  Lots 5 and 6 ROFR.  Two (2) executed counterparts of the Lots5 and 6 ROFR and three (3) of the memorandum thereof.

 

4.2.17                  Mauka Maintenance FacilityROFR.  Two (2) executedcounterparts of the Mauka maintenance Facility ROFR and three (3) of thememorandum thereof.

 

4.2.18                  LPGA Agreement.  Two (2) executed counterparts of theLPGA Agreement.

 

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4.2.19                  Post-Closing Agreement.  Two (2) executed counterparts of thePost-Closing Agreement.

 

4.2.20                  Release of 2009 Bay CourseROFO.  Three (3) executedcounterparts of the Release of 2009 Bay Course ROFO.

 

4.2.21                  Closing Statement.  An executed settlement statement reflectingthe prorations and adjustments required under Article 7.

 

4.2.22                  Authorization DocumentsRequired by the Title Company.  Such documents or instruments reasonablyrequired by the Title Company concerning Purchaser’s due authorization andexecution of the closing documents required to convey the Golf Course pursuantto this Agreement or reasonably requested by Escrow Agent required to close thetransactions contemplated hereby.

 

4.3                                 Failure toDeliver.  The failure of Purchaser orSeller to make any delivery required in accordance with this Article 4,which is not waived by the other party, shall constitute a default hereunder byPurchaser or Seller, as applicable, provided, however, that if Seller is unableto deliver any of those items described in Sections 4.1.19, 4.1.20, or 4.1.21by the Closing Date, the Closing Date shall be extended until such date asSeller is able to deliver such items, provided that if Seller does not deliversuch items by the 30th day after the initially-scheduled Closing Date,Purchaser may at any time thereafter elect to terminate this Agreement.  Upon termination pursuant to this Section 4.3,Seller shall pay to Purchaser an amount, not to exceed $1,000,000, equal toPurchaser’s total actual legal fees and due diligence expenses incurred inconnection with this purchase, and thereafter neither Seller nor Purchasershall have any further liability or obligations in connection with thisAgreement or such termination.  Sellerand Purchaser acknowledge and agree that they have freely agreed to such apayment as liquidated damages which are fair and reasonable under theparticular circumstances of this transaction, and not as a penalty.

 

ARTICLE 5

 

INVESTIGATION OF REALPROPERTY

 

5.1                                 Delivery ofDocuments.  Seller hasdelivered to Purchaser, the following:

 

5.1.1                        TitleCommitment.  A copy ofthe Title Commitment.

 

5.1.2                        Leases andContracts.  Copies ofthe Restaurant Lease and any service contracts, equipment leases, maintenanceagreements and other contracts, if any, listed in the Assignment of Contracts.

 

5.1.3                        Plans andSpecifications.  To theextent in Seller’s possession, copies of all plans and specifications for theImprovements.

 

5.1.4                        Reports.  To the extent in Seller’s possession, copiesof all environmental reports, geological reports, engineering reports andarcheological reports (if any) prepared by third parties.

 

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5.1.5                        Permits.  To the extent in Seller’s possession, copiesof all governmental permits, certificates of occupancy, site plan approvals, zoningapprovals and other approvals, including, without limitation, all developmentpermits, approvals, agreements and entitlements, in each case regarding theReal Property.

 

5.1.6                        OperatingStatements.  To theextent in Seller’s possession, copies of operating statements with respect tothe Golf Course generated by Seller in its ordinary course of business withrespect to the previous three (3) calendar years.

 

5.1.7                        Property TaxBills.  To the extent in Seller’spossession, a copy of the current property tax bill and any assessment noticesfor the current tax fiscal year.

 

5.1.8                        Notices ofViolation, Litigation.  Tothe extent in Seller’s possession, copies of any notices of uncured violationsissued by any governmental authority as well as copies of any pleadingsrelating to litigation regarding the Golf Course to the extent any of theforegoing could be binding upon the Golf Course or Purchaser following Closing.

 

Ifrequested by Seller, Purchaser shall provide written verification of itsreceipt of those items listed in this Section 5.1.

 

5.2                                 PhysicalInspection of the Real Property.

 

5.2.1                        Seller shallallow Purchaser and Purchaser’s engineers, architects or other employees,consultants and agents reasonable access to the Real Property during normal businesshours for the limited purposes provided herein.

 

5.2.2                        Purchaser andits engineers, architects and other employees, consultants and agents mayexercise such access solely for the purposes of (i) reviewing contracts,tenant files, books and records relating to the Real Property (other than anyprivileged, proprietary or confidential records), soil reports, environmentalstudies and reports, surveys, and building and systems plans;(ii) reviewing soils records relating to operating and capital expenses andother instruments and correspondence relating to the Real Property; and(iii) inspecting the physical condition of the Real Property andconducting non-intrusive physical and environmental tests and inspectionsthereof.  PURCHASER SHALL NOT CONDUCT OR ALLOWANY PHYSICALLY INTRUSIVE TESTING OF, ON OR UNDER THE REAL PROPERTY WITHOUTFIRST OBTAINING SELLER’S WRITTEN CONSENT (WHICH SELLER MAY GIVE ORWITHHOLD IN ITS SOLE DISCRETION) AS TO THE TIMING AND SCOPE OF THE WORK TO BEPERFORMED AND THE PARTIES ENTERING INTO AN AMENDMENT HERETO MEMORIALIZING SUCHSCOPE OF WORK AND ANY ADDITIONAL AGREEMENTS OF THE PARTIES WITH RESPECT TO SUCHTESTING.

 

5.2.3                        Purchaseragrees that, in the exercise of the right of access granted hereby, it will notunreasonably interfere with or permit unreasonable interference with any personoccupying or providing service at the Golf Course.  Purchaser agrees that it or its agents willnot communicate with any tenants without the consent of Seller.

 

5.2.4                        Purchaseragrees to indemnify, defend and hold harmless Seller and its affiliates,subsidiaries, shareholders, officers, directors and agents from any loss,injury, damage, 

 

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claim, lien, cost or expense, including reasonableattorneys’ fees and costs (collectively, “**Claims**”), arisingout of or relating to the exercise by Purchaser or its employees, consultants,agents or representatives of the right of access under this Agreement,including, without limitation, any entry on the Golf Course in the course ofperforming the inspections, testings, or inquiries provided for in thisAgreement, excluding, however, any Claim arising out of (i) the acts oromissions of Seller or its affiliates, agents or employees or (ii) themere discovery of an existing condition at or affecting the Golf Course.  The indemnity in this Section 5.2.4shall survive the Closing or any earlier termination of this Agreement.

 

5.2.5                        Purchaseragrees to give Seller prior notice, not less than forty-eight (48) hours priorto the date of any requested inspection or test (or earlier if required by lawor pursuant to the provision of any leases), of its intent to conduct anyinspections or tests so that Seller will have the opportunity to have arepresentative present during any such inspection or test, the right to do sowhich Seller expressly reserves. Purchaser agrees to cooperate with any reasonable request by Seller inconnection with the timing of any such inspection or test.  Subject to the provisions ofSection 5.2, Seller agrees to use commercially reasonable efforts tofacilitate and cooperate with Purchaser’s conduct of its investigations of orat the Real Property at no material cost to Seller.

 

5.2.6                        Purchaseragrees that any inspection, test or other study or analysis of the RealProperty shall be performed at Purchaser’s expense and in strict accordancewith applicable law.

 

5.2.7                        Purchaseragrees at its own expense to promptly repair or restore the Real Property, or,at Seller’s option, to reimburse Seller for any reasonable repair orrestoration costs, if any inspection or test requires or results in any damageto or alteration of its condition.  Theobligations set forth in this Section 5.2.7 shall survive the Closing orearlier termination of this Agreement.

 

5.3                                 No Obligationto Cure.  Nothing contained in thisAgreement or otherwise shall require Seller to remove or correct any exceptionor matter disapproved by Purchaser or to spend any money or incur any expensein order to do so; provided, however, that Seller agrees to remove any lien ormortgage the amount of which is liquidated and which has been placed on theReal Property with the approval or consent of Seller and any mechanics lienplaced on the Real Property pursuant to works of improvement duly authorized bySeller, provided that Seller may remove any such mechanics lien by causing orenabling the Title Company to irrevocably commit to issuing the Title Policy toPurchaser and its lender, if any, without taking exception for any such lien.

 

ARTICLE 6

 

THE CLOSING

 

6.1                                 Date and Mannerof Closing.  EscrowAgent shall close the escrow (the “**Closing**”) assoon as all conditions to closing contained in this Agreement have beensatisfied, which shall in any event be not later than 10:00 a.m. Hawaiitime on September 30, 2010 (the “**Closing Date**”),time being of the essence, subject only to Seller’s express rights provided in 

 

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Section 4.3 and Section 13.4, by recordingand delivering all documents and funds as set forth in Article 8.

 

ARTICLE 7

 

PRORATION, FEES, COSTS ANDADJUSTMENTS

 

7.1                                 Revenue and ExpenseAllocations.

 

7.1.1                        The followingitems shall be allocated or prorated at Closing as follows:

 

(a)                        Real propertytaxes for the then current tax fiscal year based upon the agreed allocations ofcurrent assessments as set forth in Schedule 7.1.1(a) hereto.  Such proration shall be calculated based uponthe actual number of days in the tax year, with Seller being responsible forthat portion of such tax year occurring on and prior to the Closing Date andPurchaser being responsible for that portion of such tax year occurring afterthe Closing Date.

 

(b)                       Special taxes,assessments or water and sewer capacity charges, if any, upon the Golf Courseshall be paid by Seller at Closing.

 

(c)                        Fuel,electricity, water, sewer, gas, electric, telephone and other utility chargesand assigned deposits.  Such prorationshall be calculated based upon the actual number of days in the current billingperiod, with Seller being responsible for that portion of such billing periodoccurring on and prior to the Closing Date and Purchaser being responsible forthat portion of such billing period occurring after the Closing Date.

 

(d)                       Purchaser shallreceive credit at the Closing for the following:  (i) security deposit received by Sellerfor the Restaurant Lease in the amount of Twenty-Four Thousand Dollars($24,000); (ii) the prorated portion of any advance rents allocable to theperiod after the Closing Date and received by Seller from the RestaurantLessee; and (iii) any unpaid utility charges (including, but not limitedto, telephone, electric power, steam, heat, gas, cable TV, water and sewer andany other utility charges) prorated for the period prior to the Closing Date.

 

(e)                        Seller shall beresponsible for and pay for all other taxes attributable to the ownership andoperation of the Golf Course for the period of time prior to the Closing Date.

 

7.1.2                        Following theClosing, all employees of Seller shall remain employees of Seller and Purchasershall have no responsibility with respect to such employees.  Without limiting the generality of theforegoing:

 

(a)                        Seller shall beresponsible for all wages and other amounts owed to employees of Sellerproviding services for the Golf Course, the Golf Academy and the Bay CourseMaintenance Facility.

 

(b)                       With respect to hourly employees, Seller shall beresponsible for (a) wages of hourly employees;(b) employment and withholding taxes for such employees; and 

 

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(c) accrued vacation and required contributionsto health, pension and other benefit plans for such employees.

 

(c)                        With respect tosalaried employees, Seller shall be responsible for salaries, employment andwithholding taxes, accrued vacation and other employment benefits for salariedemployees.

 

(d)                       Seller shall beresponsible for the pension expenses for eligible employees.

 

(e)                        Seller shall be responsible for (a) severance orseparation payments, (b) sick pay, and (c) “hospitalization pay,” ifany.

 

(f)                          Purchaser shall not be obligated to hire any employees ofthe Seller, Kapalua Land Company, Ltd. or Kapalua Plantation Golf LLC, orto recognize the International Longshore and Harbor Workers Union, Local 142,as the bargaining representative of any such employees of the Golf Course, theMaintenance Facility, the Golf Academy or the Kapalua Plantation Golf Coursethat Purchaser may hire following the Closing, all rights of Purchaser withrespect to the hiring of employees, the institution of terms and conditions ofemployment and the operations of its businesses at the Golf Course, theMaintenance Facility, the Golf Academy and or the Kapalua Plantation GolfCourse being reserved to Purchaser in its sole discretion.

 

7.2                                 Reconciliationand Post-Closing Adjustments.  Except as otherwise provided herein, any itemto be allocated or prorated that cannot be ascertained with certainty as of theClosing Date shall be prorated on the basis of the parties’ reasonable estimateof such amount, and shall be the subject of a final proration withinninety (90) days after Closing, or as soon thereafter as a precise amountcan be ascertained.  Purchaser shallpromptly notify Seller when it becomes aware that any such actual amount hasbeen ascertained.  Once all such itemshave been ascertained, Purchaser shall prepare a final proration statementwhich shall be subject to Seller’s approval. Upon Seller’s acceptance and approval of any such final prorationstatement, such statement shall be conclusively deemed to be accurate and finaland Seller and Purchaser shall each make any further adjustments required bysuch final proration statement.

 

7.3                                 Seller’sClosing Costs.  Sellershall pay (i) any conveyance or transfer taxes, (ii) any costsincurred in recording releases of any Seller financing encumbering the RealProperty, (iii) one-half (1⁄2) of Escrow Agent’s escrow fee or escrowtermination charge, (iv) one-half (1⁄2) the cost of the basic premium forthe ALTA portion of the Title Policy, (v) any brokers commissions payableto Seller’s broker, if any, and Purchaser’s broker pursuant to Seller’sagreements with such brokers, and (vi) Seller’s own attorneys’ fees.

 

7.4                                 Purchaser’sClosing Costs.  Purchasershall pay (i) one-half (1⁄2) of Escrow Agent’s escrow fee or escrowtermination charge, (ii) one-half (1⁄2) the cost of the basic premium forthe ALTA portion of the Title Policy and the entire cost of ALTA extendedcoverage to the Title Policy in excess of the cost of the ALTA portion of theTitle Policy and any title insurance endorsements ordered by Purchaser orsimultaneously issued to Purchaser’s lender, (iii) any costs incurred byPurchaser in connection with Purchaser’s investigation of the Golf Course or 

 

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the Golf Academy pursuant to Article 5,(iv) any recording costs including the cost to record the Deed, and(v) Purchaser’s own attorneys’ fees.

 

7.5                                 Other ClosingCosts.  All other closing costs shallbe borne by the parties according to custom and practice in Maui, Hawaii.

 

ARTICLE 8

 

DISTRIBUTION OF FUNDS ANDDOCUMENTS

 

8.1                                 Delivery of thePurchase Price.  At theClosing, Escrow Agent shall deliver the Purchase Price to Seller, and the transactionshall not be considered closed until such delivery occurs and the Deed is dulyrecorded.

 

8.2                                 Other MonetaryDisbursements.  EscrowAgent shall, at the Closing, hold for personal pickup or arrange for wiretransfer, (i) to Seller, or order, as instructed by Seller, all sums andany proration or other credits to which Seller is entitled and less anyappropriate proration or other charges and (ii) to Purchaser, or order,any excess funds theretofore delivered to Escrow Agent by Purchaser and all sumsand any proration or other credits to which Purchaser is entitled and less anyappropriate proration or other charges.

 

8.3                                 RecordedDocuments.  EscrowAgent shall cause the Deed and any other documents described in this Agreementthat Seller or Purchaser desires to record to be recorded with the Bureau ofConveyances of the State of Hawaii and, after recording, returned to thegrantee, beneficiary or person acquiring rights under said document or forwhose benefit said document was required.

 

8.4                                 All OtherDocuments.  EscrowAgent shall, at the Closing, deliver, by overnight express delivery, each otherdocument received hereunder by Escrow Agent to the person acquiring rightsunder said document or for whose benefit said document was required.

 

ARTICLE 9

 

RETURN OF DOCUMENTS ANDFUNDS UPON TERMINATION

 

9.1                                 Return ofSeller’s Documents.  If escrowor this Agreement is terminated for any reason, Purchaser shall, withinfive (5) days following such termination, deliver to Seller alldocuments and materials relating to the Golf Course previously delivered toPurchaser by Seller or by third parties at Seller’s direction.  Escrow Agent shall deliver all documents andmaterials deposited by Seller and then in Escrow Agent’s possession to Sellerand shall destroy any documents executed by both Purchaser and Seller.  Upon delivery by Escrow Agent to Seller (orsuch destruction, as applicable) of such documents and materials, Escrow Agent’sobligations with regard to such documents and materials under this Agreementshall be deemed fulfilled and Escrow Agent shall have no further liability withregard to such documents and materials to either Seller or Purchaser.

 

9.2                                 Return ofPurchaser’s Documents.  Ifescrow or this Agreement is terminated for any reason, Escrow Agent shalldeliver all documents and materials deposited by Purchaser and 

 

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then in Escrow Agent’s possession to Purchaser andshall destroy any documents executed by both Purchaser and Seller.  Upon delivery by Escrow Agent to Purchaser(or such destruction, as applicable) of such documents and materials, EscrowAgent’s obligations with regard to such documents and materials under thisAgreement shall be deemed fulfilled and Escrow Agent shall have no furtherliability with regard to such documents and materials to either Seller orPurchaser.

 

9.3                                 No Effect onRights of Parties; Survival.  The return of documents and monies as setforth above shall not affect the right of either party to seek such legal orequitable remedies as such party may have under Article 10 with respect tothe enforcement of this Agreement.  Theobligations under this Article 9 shall survive the termination of thisAgreement.

 

ARTICLE 10

 

DEFAULT

 

10.1                           Seller’sRemedies.  If the saleis not completed as herein provided by reason of any default of Purchaser,Seller shall be entitled to all remedies and rights available to it at law orequity.  In addition to any other rightsand remedies available to Seller, Seller shall have the right to bring anaction against Purchaser seeking expungement or relief from any improperlyfiled *lis pendens*, injunction or otherrestraint for bringing an action for damages as part of a slander of titleclaim, and/or recovering fees, costs and expenses (including reasonableattorneys’ fees) which Seller may suffer or incur as a result of any Purchaseraction but only to the extent that Seller is the prevailing party.  Nothing in this Agreement shall be deemed tolimit Purchaser’s liability to Seller for damages or injunctive relief forbreach of Purchaser’s indemnity obligations for attorneys’ fees and costs asprovided in Section 16.6 below.  Theforegoing is not intended to limit Purchaser’s obligations underSection 11.2 and 13.3.

 

10.2                           Purchaser’sRemedies.  If the saleis not completed as herein provided by reason of any material default ofSeller, Purchaser shall be entitled, as its sole and exclusive remedy, toeither (i) terminate this Agreement (by delivering notice to Seller whichincludes a waiver of any right, title or interest of Purchaser in the GolfCourse) and, subject to Purchaser’s obligations under Sections 5.2.4 and5.2.7, obtain actual out-of-pocket third party expenses or (ii) treat thisAgreement as being in full force and effect and pursue only the specificperformance of this Agreement; provided, however, Purchaser must, if at all,file its specific performance action within one hundred twenty (120) days ofthe scheduled Closing Date.  If Selleracts in a manner that precludes Purchaser from pursuing specific performance(e.g., sells the Real Property to a bona-fide third party purchaser withoutknowledge of this Agreement) then Purchaser shall have the right (without theapplication of any cap on liability) to pursue against Seller any and allrights and remedies at law or in equity. Except as provided in the preceding sentence, Purchaser waives any rightto pursue any other remedy at law or equity for such default of Seller,including, without limitation, except as provided in the preceding sentence,any right to seek, claim or obtain damages, punitive damages or consequentialdamages.  Nothing in this Agreementshall, however, be deemed to limit Seller’s liability to Purchaser for damagesor for attorney’s fees and costs as provided in Section 16.6 below exceptas set forth in Section 16.6.

 

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ARTICLE 11

 

REPRESENTATIONS ANDWARRANTIES

 

11.1                           Seller’sWarranties and Representations.  The matters set forth in thisSection 11.1 constitute representations and warranties by Seller which arenow and (subject to matters contained in any notice given pursuant to the nextsucceeding sentence) shall, in all material respects, at the Closing be trueand correct.  If Seller learns of, or hasa reason to believe that any of the representations and warranties contained inthis Article 11 may cease to be true and correct, Seller shall give promptnotice to Purchaser (which notice shall include copies of the instrument,correspondence, or document, if any, upon which Seller’s notice is based) and,in such event, Purchaser may terminate this Agreement, upon written notice toSeller, without recourse against Seller; provided, however; Seller cannot actvoluntary in a manner which would cause a representation and warranty to becomematerially incorrect or inaccurate.  Asused in this Section 11.1, the phrase “to the extent of Seller’s actualknowledge” shall mean the actual current knowledge of Jeff Pearson, withrespect to water and sewage issues only, Ryan Churchill, Mike Jones, withrespect to golf course operations issues only, Yarrow Flower, Adele Sumida,Matthew Hofrichter, with respect to financial information only, and DerrickWatts, with respect to golf course grounds maintenance issues only, whom Sellerrepresents to be the representatives of Seller having the responsibility forthe management and sale of the Golf Course and accordingly the individualsresponsible for being informed of matters relevant to this Agreement, subject,if applicable, to the foregoing qualifications. There shall be no duty imposed or implied to investigate, inspect, or auditany such matters, and there shall be no imputed or personal liability on thepart of such individuals.  To the extentPurchaser has or acquires actual knowledge prior to the Closing Date that theserepresentations and warranties are inaccurate, untrue or incorrect in any way,Purchaser may proceed to Closing without reduction in the Purchase Price andwithout recourse against Seller for such misrepresentation, in which even suchrepresentation or warranties shall be deemed modified to reflect Purchaser’sactual knowledge.

 

11.1.1                  Organization.  Seller has been duly formed, validly existsand is in good standing in the jurisdiction of its formation and in the statein which the Real Property is located.

 

11.1.2                  Power and Authority.  Seller has the legal power, right andauthority to enter into this Agreement and to consummate the transactionscontemplated hereby.  Except with respectto that certain mortgage in favor of Wells Fargo Bank, N.A. regarding the RealProperty, which Seller shall have released in connection with the Closing,neither the execution or delivery of this Agreement nor the performance ofSeller’s obligations under this Agreement violate, or will violate, anycontract, agreement or instrument to which Seller is a party or by which Seller,the Golf Course, the Golf Academy or the Bay Course Maintenance Facility isbound, or result in or constitute a violation or breach of any judgment, writ,order, injunction or decree applicable to Seller, the Golf Course, the GolfAcademy or the Bay Course Maintenance Facility. No consent of any third party, governmental agency or governmentalauthority is required for the execution of this Agreement by Seller or theconsummation by Seller of the transactions contemplated hereby.  The person executing any instruments for oron behalf of the Seller is fully authorized to act on behalf of Seller and thisAgreement is valid and enforceable against Seller in accordance with its terms,and each instrument to be executed by Seller pursuant hereto or in connection 

 

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therewith will, when executed, be valid andenforceable against Seller in accordance with its terms.

 

11.1.3                  Proceedings.  To the extent of Seller’s actual knowledge,Seller has not received any written notice of any pending or threatenedcondemnation or similar proceeding affecting any part of the Golf Course, theGolf Academy or the Bay Course Maintenance Facility.

 

11.1.4                  Service Contracts.  To the extent of Seller’s actual knowledge,the Contracts comprise all of the material contracts which will affect the GolfCourse, the Golf Academy or the Bay Course Maintenance Facility on and afterthe Closing except for those agreements set forth in the Title Policy.  The list of Contracts attached as **Exhibit C** is true and correctin all material respects.

 

11.1.5                  Leases.  Except for (a) the July 23, 2007,LPGA Tournament Co-Sponsor Agreement (“**LPGA Sponsorship Agreement**”)which will not be binding upon Purchaser following the Closing, and(b) the Restaurant Lease, Seller has not entered into and has no actualknowledge of any other leases or other agreements (whether oral or written)affecting or relating to the right of any party with respect to the right tooccupancy of the Golf Course, the Golf Academy, the Bay Course MaintenanceFacility or any portion thereof.

 

11.1.6                  Compliance.  To the extent of Seller’s actual knowledge,Seller has not received written notice from any governmental authority that theGolf Course, the Golf Academy or the Bay Course Maintenance Facility is not inmaterial compliance with all applicable laws, except for such failures tocomply, if any, which have been remedied. To the extent of Seller’s actual knowledge, the Golf Course, the GolfAcademy and the Bay Course Maintenance Facility are in material compliance withall applicable permits, approvals, licenses, certificates, covenants,conditions, restrictions, leases, easements and agreements of any kind ornature affecting the Golf Course, the Golf Academy or the Bay CourseMaintenance Facility.  Seller hasdisclosed to Purchaser a potential conservation district infraction withrespect to the cutting of certain trees at Makaluapuna Point, Seller’sresponsibility for which is addressed in the Post-Closing Agreement.

 

11.1.7                  Litigation.  To the extent of Seller’s actual knowledge,except for certain unresolved claims Seller has disclosed arising from the LPGASponsorship Agreement Seller’s responsibility for which is addressed in thePost-Closing Agreement, Seller has received no written notice of materiallitigation pending with respect to the Golf Course, the Golf Academy or the BayCourse Maintenance Facility which will affect Seller’s ability to comply withits obligations under this Agreement or could materially affect the use, value,marketability, operation or development of the Golf Course.

 

11.1.8                  Bankruptcy.  There has not occurred the making by Sellerof any general assignment for the benefit of creditors, or the filing againstSeller of a petition to have Seller adjudged a bankrupt or a petition forreorganization or arrangement under any law relating to bankruptcy, or theappointment of a trustee or receiver to take possession of substantially all ofthe interest of Seller in the Golf Course, the Golf Academy or the Bay CourseMaintenance Facility, or the attachment, execution or judicial seizure ofsubstantially all the assets of Seller or 

 

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the interests of Seller in the Golf Course, the GolfAcademy or the Bay Course Maintenance Facility or any legal proceeding in whichSeller is adjudicated as being, or stipulates to being, insolvent or unable topay its debts as they come due.

 

11.1.9                  OFAC.  Seller is in compliance with, and, to extentof Seller’s actual knowledge, all beneficial owners of Seller are in compliancewith the requirements of Executive Order No. 13224, 66 Fed Reg. 49079(September 25, 2001) (the “**Order**”) andother similar requirements contained in the rules and regulations of theOffice of Foreign Asset Control, Department of the Treasury (“**OFAC**”) and in any enabling legislation or other executiveorders in respect thereof (the Order and such other rules, regulations,legislation, or orders are collectively called the “**Orders**”).  Neither Seller nor, to the extent of Seller’sactual knowledge, any beneficial owner of Seller:

 

(a)                        is listed onthe Specially Designated Nationals and Blocked Persons List maintained by OFACpursuant to the Order and/or on any other list of terrorists or terroristorganizations maintained pursuant to any of the rules and regulations ofOFAC or pursuant to any other applicable Orders (such lists are collectivelyreferred to as the “**Lists**”);

 

(b)                       has beendetermined by competent authority to be subject to the prohibitions containedin the Orders; or

 

(c)                        is owned orcontrolled by, nor acts for or on behalf of, any person or entity on the Listsor any other person or entity who has been determined by competent authority tobe subject to the prohibitions contained in the Orders.

 

11.1.10            Foreign Person.  Seller is not a “foreign person” as that termis defined in Section 1445 of the Internal Revenue Code of 1986, asamended from time to time, and any regulations, rulings and guidance issued bythe Internal Revenue Service (collectively, the “**Code**”),and applicable regulations, and is not a “nonresident person”, as that term isused in Section 235-68 of the Hawaii Revised Statutes, as amended.

 

11.1.11            No Use or Zoning Changes.  Seller has not received written notice of anyplan, study or effort by any governmental agency or authority that wouldmaterially adversely affect the present use or zoning of any portion of theGolf Course, the Golf Academy or the Bay Course Maintenance Facility or thatwould modify or realign any street or highway adjacent to the Golf Course, theGolf Academy or the Bay Course Maintenance Facility.

 

11.1.12            No Assessments or DeferredTaxes.  To Seller’s actual knowledge,except as shown on the Title Policy, there are no outstanding, pending orproposed special assessments or special real property related taxes, includingany deferred money payments or performances on account of any subdivision orchange in zoning or land use classification, affecting the Golf Course, theGolf Academy or the Bay Course Maintenance Facility or any acts or omissions ofSeller that would result in the imposition of any deferred or “roll back” taxeswith respect to the Golf Course, the Golf Academy or the Bay Course MaintenanceFacility.

 

11.1.13            Environmental Matters.  To the extent of Seller’s actual knowledge,and except as provided in the due diligence materials Seller has provided toPurchaser, the Golf Course, the Golf Academy and the Bay Course MaintenanceFacility are free from any 

 

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flammable explosives, radioactive materials,asbestos, lead based paint, organic compounds known as polychlorinatedbiphenyls, chemicals known to cause cancer or reproductive toxicity,pollutants, contaminants, hazardous wastes, toxic substances or relatedmaterials, including, without limitation, any substances defined as or includedin the definition of “hazardous substances,” “hazardous wastes,” “hazardousmaterials,” or “toxic substances” (collectively, “**HazardousMaterials**”) under any federal, state or local laws, ordinances orregulations, now or hereafter in effect, relating to environmental conditions,industrial hygiene or Hazardous Materials on, under or about the Real Property,including, without limitation, the Comprehensive Environmental Response,Compensation and Liability Act of 1980, as amended, 42 U.S.C.Section 9601, et seq., the Resource Conservation and Recovery Act, 42 U.S.C.Section 6901, et seq., the Hazardous Materials Transportation Act, 49U.S.C. Section 1801, et seq., the Clean Water Act, 33 U.S.C.Section 1251, et seq., the Clean Air Act, 42 U.S.C. Section 704, etseq., the Toxic Substances Control Act, 15 U.S.C. Sections 2601 through2629, the Safe Drinking Water Act, 42 U.S.C. Sections 300f through 300j,and any similar state and local laws and ordinances and regulations now orhereafter adopted, published and/or promulgated pursuant thereto (collectively,the “**Hazardous Materials Laws**”), except incompliance with the Hazardous Materials Laws or for normal amounts ofpesticides, herbicides or cleaning and maintenance supplies in customaryamounts used in the operation of a golf course and at all times used, storedand maintained in accordance with Hazardous Materials Laws.  To the extent of Seller’s actual knowledge,the Golf Course, the Golf Academy and the Bay Course Maintenance Facility arenot currently used in a manner, and no prior use has occurred, which violatesany Hazardous Materials Laws.  To theextent of Seller’s actual knowledge, Seller has not received any notice from agovernmental agency for violation of Hazardous Materials Laws.

 

11.1.14            Wetlands.  To the extent of Seller’s actual knowledge,there are no areas of the Golf Course, the Golf Academy or the Bay CourseMaintenance Facility subject to wetlands regulation or the jurisdiction of anyfederal, state or county agency regulating and controlling wetlands, and nosuch agency has made a determination that any wetland exists on the Land.

 

11.1.15            Historic Sites.  To the extent of Seller’s actual knowledge,other than the historical site at Makalapuna Point disclosed to Purchaser whichSeller has property preserved, the Golf Course, the Golf Academy and the BayCourse Maintenance Facility do not contain any buildings, structures, objects,districts, areas or sites of prehistoric, historic or archeological interest orsignificance or any site eligible for listing on the National Register ofHistoric Places.

 

11.1.16            Endangered Species.  To the extent of Seller’s actual knowledge,the Golf Course, the Golf Academy and the Bay Course Maintenance Facility donot contain any aquatic life, wildlife or plant defined as or included in thedefinition of “endangered species” under any federal, state, or local laws,ordinances or regulations relating to the conservation, preservation,management or protection of any endangered species or critical habitat uponwhich any endangered species depends.

 

11.1.17            Disability Access.  To the extent of Seller’s actual knowledge,MLP has received no written notice that any of the improvements within the GolfCourse, the Golf Academy and the Bay Course Maintenance Facility do not complywith all governmental requirements regarding access of disabled personsincluding, without limitation, Titles III and V 

 

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of the Americans With Disabilities Act of 1990, 42U.S.C. §§ 12101, et seq. or any other similar federal, state or local lawsor ordinances and regulations promulgated there under.

 

11.1.18            County Agreements.  To the extent of Seller’s actual knowledge,Seller has performed each and every material obligation contained in theagreements with the County of Maui and the Department of Water Supply of theCounty of Maui affecting the Golf Course, the Golf Academy and the Bay CourseMaintenance Facility capable of being performed by Seller prior to the ClosingDate and, to the extent of Seller’s actual knowledge, has taken no action as ofthe Closing Date that will impose any obligation on the Golf Course, the GolfAcademy and the Bay Course Maintenance Facility or the Purchaser under suchagreement following the Closing Date.

 

11.1.19            Full Disclosure.  To the extent of Seller’s actual knowledge,the due diligence information provided by Seller to Purchaser, including allfinancial statements, is true and complete in all material respects and to thebest of Seller’s actual knowledge, Seller has not failed to disclose toPurchaser any facts or information known to Seller material to the title, condition,use or operation of the Golf Course, the Golf Academy or the Bay CourseMaintenance Facility or any portion thereof.

 

11.1.20            Plant and Equipment.  To the best of Seller’s actual knowledge, andexcept as previously disclosed to Purchaser or otherwise described on the **Exhibit JJ** repair scheduleattached hereto and made a part hereof, the electrical, plumbing, heating andcooling systems and appliances, if any, in the improvements on the Golf Course,the Golf Academy or the Bay Course Maintenance Facility are in good workingorder; the roofs, structural components and foundations of the improvements onthe Golf Course, the Golf Academy and the Bay Course Maintenance Facility areperforming the function for which they were intended and are not in need ofrepair; there are no unusual drainage conditions or evidence of termites, mold,mildew, or excessive moisture adversely affecting the Golf Course, the GolfAcademy or the Bay Course Maintenance Facility and improvements thereon; andthe electrical, telephone, gas, water, and waste disposal systems serving theGolf Course, the Golf Academy and the Bay Court Maintenance Facility areadequate, not in need of repair and are performing the functions for which theywere intended.  Seller warrants andrepresents to Purchaser that the cost for each repair set forth on **Exhibit JJ** is true and correctand that Seller shall indemnify and hold Purchaser harmless for the cost ofcompleting such repairs that exceeds the amount set forth on **Exhibit JJ**.

 

11.2                           Purchaser’sWarranties and Representations.  The matters set forth in thisSection 11.2 constitute representations and warranties by Purchaser whichare now and shall, at the Closing, be true and correct.

 

11.2.1                  Power and Authority.  Purchaser has the legal power, right andauthority to enter into this Agreement and to consummate the transactionscontemplated hereby.  Neither theexecution or delivery of this Agreement nor the performance of Purchaser’sobligations under this Agreement violate, or will violate, any contract,agreement or instrument to which Purchaser is a party or by which Purchaser isbound, or will result in or constitute a violation or breach of any judgment,writ, order, injunction or decree applicable to Purchaser.  No consent of any third party, governmentalagency or governmental authority is required for the execution of 

 

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this Agreement by Purchaser or the consummation byPurchaser of the transactions contemplated hereby.  The person executing any instruments for oron behalf of Purchaser is fully authorized to act on behalf of Purchaser andthis Agreement is valid and enforceable against Purchaser in accordance withits terms and each instrument to be executed by Purchaser pursuant hereto or inconnection therewith will, when executed, be valid and enforceable againstPurchaser in accordance with its terms.

 

11.2.2                  Independent Investigation.  The consummation of this transaction shallconstitute Purchaser’s acknowledgment that it has independently inspected andinvestigated the Golf Course, the Golf Academy and the Bay Course MaintenanceFacility and has made and entered into this Agreement based upon therepresentations and warranties of Seller contained in this Agreement and thedocuments and agreements to be delivered by Seller at Closing and inspectionand investigation and its own examination of all aspects of the Golf Course,the Golf Academy and the Bay Course Maintenance Facility, including, withoutlimitation, its economic and functional viability, physical condition andsurroundings, title matters and compliance with all laws.

 

11.2.3                  Bankruptcy.  There has not occurred the making byPurchaser of any general assignment for the benefit of creditors, or the filingagainst Purchaser of a petition to have Purchaser adjudged a bankrupt or apetition for reorganization or arrangement under any law relating tobankruptcy, or the appointment of a trustee or receiver to take possession ofsubstantially all of the interest of Purchaser’s assets, or the attachment,execution or judicial seizure of substantially all the assets of Purchaser orany legal proceeding in which Purchaser is adjudicated as being, or stipulatesto being, insolvent or unable to pay its debts as they come due.

 

11.2.4                  OFAC.  Purchaser is in compliance with, and, toPurchaser’s knowledge, all beneficial owners of Purchaser are, in compliancewith the requirements of the Orders. Neither Purchaser nor, to the best of Purchaser’s knowledge, anybeneficial owner of Purchaser:

 

(a)                        is listed onthe Specially Designated Nationals and Blocked Persons List maintained by OFACpursuant to the Order and/or on any other Lists;

 

(b)                       has beendetermined by competent authority to be subject to the prohibitions containedin the Orders; or

 

(c)                        is owned orcontrolled by, nor acts for or on behalf of, any person or entity on the Listsor any other person or entity who has been determined by competent authority tobe subject to the prohibitions contained in the Orders.

 

11.2.5                  No Other Warranties andRepresentations.  EXCEPT ASSPECIFICALLY SET FORTH IN THIS AGREEMENT OR IN ANY OF THE OTHER CLOSINGDOCUMENTS OR INSTRUMENTS DELIVERED BY SELLER AT CLOSING, SELLER HAS NOT MADE,MAKES OR HAS AUTHORIZED ANYONE TO MAKE, ANY WARRANTY OR REPRESENTATION AS TOTHE LEASES, THE CONTRACTS, ANY WRITTEN MATERIALS DELIVERED TO PURCHASER, THEPERSONS PREPARING SUCH MATERIALS, THE PRESENT OR FUTURE PHYSICAL CONDITION,DEVELOPMENT POTENTIAL, ZONING, BUILDING OR LAND USE LAW OR 

 

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COMPLIANCE THEREWITH, THE OPERATION, INCOMEGENERATED BY, OR ANY OTHER MATTER OR THING AFFECTING OR RELATING TO THE GOLFCOURSE, THE GOLF ACADEMY OR THE BAY COURSE MAINTENANCE FACILITY OR ANY MATTEROR THING PERTAINING TO THIS AGREEMENT. PURCHASER EXPRESSLY ACKNOWLEDGES THAT NO SUCH WARRANTY OR REPRESENTATIONHAS BEEN MADE BY SELLER OR ITS AGENTS, BROKERS OR REPRESENTATIVES, OR BY ANYOTHER PERSON ACTING OR PURPORTING TO ACT ON BEHALF OF SELLER, AND THATPURCHASER IS NOT RELYING ON ANY WARRANTY OR REPRESENTATION WHATSOEVER OTHERTHAN AS IS EXPRESSLY SET FORTH IN THIS ARTICLE 11 OR IN ANY OF THE CLOSINGDOCUMENTS ATTACHED AS EXHIBITS HERETO. PURCHASER EXPRESSLY UNDERSTANDS, ACKNOWLEDGES AND AGREES THAT IT ISACQUIRING AND ACCEPTING THE GOLF COURSE AND THE BAY COURSE MAINTENANCE FACILITYAND LEASING THE GOLF ACADEMY “AS IS WITH ALL FAULTS” AND IN ITS CONDITION ONTHE DATE OF CLOSING SUBJECT ONLY TO THE EXPRESS PROVISIONS OF THIS AGREEMENTAND THE OTHER CLOSING DOCUMENTS AND INSTRUMENTS.

 

11.2.6                  No EnvironmentalRepresentations.  Except asset forth in Section 11.1.13, Seller makes no representations orwarranties as to whether the Golf Course, the Golf Academy or the Bay CourseMaintenance Facility contains asbestos, lead based paint, radon or any otherHazardous Materials or harmful or toxic substances, or pertaining to theextent, location or nature of same, if any. Further, to the extent that Seller has provided to Purchaser informationfrom any inspection, engineering or environmental reports concerning asbestos,lead based paint, radon or any Hazardous Materials or harmful or toxic substancesor any compliance by Seller with respect thereto, Seller makes norepresentations or warranties with respect to the accuracy or completeness,methodology of preparation or otherwise concerning the contents of suchreports.

 

11.2.7                  Release of Claims.  Subject to the express provisions hereof,Purchaser acknowledges and agrees that Seller makes no representation orwarranty as to, and Purchaser waives and releases Seller from any present orfuture claims, whether known or unknown, foreseeable or otherwise, arising fromor relating to, the Golf Course, the Golf Academy or the Bay Course MaintenanceFacility this Agreement or the transactions contemplated hereby, including,without limitation, the physical condition of the Golf Course, the Golf Academyor the Bay Course Maintenance Facility and the presence or alleged presence ofasbestos, radon or any Hazardous Materials or harmful or toxic substances in,on, under or about the Golf Course, the Golf Academy or the Bay CourseMaintenance Facility, including, without limitation, any claims under or onaccount of (i) the Comprehensive Environmental Response, Compensation andLiability Act of 1980, as the same may have been or may be amended from time totime, and similar state statutes, and any regulations promulgated thereunder,(ii) any other federal, state or local law, ordinance, rule orregulation, now or hereafter in effect, that deals with or otherwise in anymanner relates to, environmental matters of any kind, (iii) thisAgreement, or (iv) the common law. Nothing contained in this Section 11.2.7 shall release Seller from(i) Seller’s fraud or Seller’s breach of this Agreement (ii) claimsby the Environmental Protection Agency and State of Hawaii Department of Healthagainst Seller for events that occurred prior to Closing and (iii) thirdparty claims against Seller for actions of Seller first occurring or arisingprior to Closing.

 

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Purchaserhereby specifically acknowledges that Purchaser has carefully reviewed thissubsection and discussed its import with legal counsel and that the provisionsof this subsection are a material part of this Agreement.

 
|   | TY Management Corporation |              |
|--------|---------------------------|-------------------|
|   |                      |              |   |
|   |                      |              |   |
|   | By                        | /s/ TADASHI YANAI |   |
|   |                      | Tadashi  Yanai    |   |
|   |                      | President         |   |

 

Purchaser

 

ThisSection 11.2.7 shall survive the Closing.

 

ARTICLE 12

 

CASUALTY AND CONDEMNATION

 

Promptlyupon learning thereof, Seller shall give Purchaser written notice of anycondemnation, damage or destruction of the Golf Course or the Golf Academyoccurring prior to the Closing together with, in the case of a casualty, areasonably detailed estimate of the cost to repair the damage or destroyed GolfCourse or the Golf Academy prepared by a third party engineer or contractorretained by Seller.  If prior to theClosing all or a material portion of the Golf Course or the Golf Academy iscondemned, damaged or destroyed, Purchaser shall have the option of either(i) applying the proceeds of any condemnation award or payment under anyinsurance policies (other than business interruption or rental loss insuranceapplicable to the period prior to Closing) toward the payment of the PurchasePrice to the extent such condemnation awards or insurance payments have beenreceived by Seller, receiving from Seller an amount equal to any applicabledeductible under any such insurance policy or the amount of any uninsured loss,provided Seller has not terminated this Agreement in accordance with this Article 12,and receiving an assignment from Seller of Seller’s right, title and interestin any such awards or payments not theretofore received by Seller, or(ii) terminating this Agreement by delivering written notice of suchtermination to Seller and Escrow Agent within twenty (20) days after Purchaserhas received written notice from Seller of such material condemnation, damageor destruction and, if necessary, the Closing date shall be extended to givePurchaser the full twenty (20) day period to make such election.  If, prior to the Closing, a portion of theGolf Course or the Golf Academy is condemned, damaged or destroyed and suchportion is not a material portion of the Golf Course or the Golf Academy, theproceeds of any condemnation award or payment and any applicable deductibleunder any insurance policies or the amount of any uninsured loss, providedSeller has not terminated this Agreement in accordance with this Article 12,shall be applied toward the payment of the Purchase Price to the extent suchcondemnation awards or insurance payments have been received by Seller andSeller shall assign to Purchaser all of Seller’s right, title and interest inany unpaid awards or payments.  Sellershall not settle any insurance or condemnation claim with respect to the GolfCourse or the Golf Academy following the Effective Date without first receivingPurchaser’s prior written consent thereto, which shall not be unreasonablywithheld.  For purposes of thisArticle 12, the term 

 

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“materialportion” shall mean (A) damage that will cost in excess of Two MillionFive Hundred Thousand Dollars ($2,500,000), or will take longer than six monthsto repair, or (B) condemnation that results in a taking of any of theImprovements, any parking spaces, any ingress or egress or any other portion ofthe Golf Course or the Golf Academy which, in each case, in Seller’s reasonablejudgment, would materially affect the use, value, operation or legal complianceof the Real Property.  If the damage ordestruction arises out of an uninsured risk and the reasonable cost forrepairing such damage or destruction not covered by insurance exceeds TwoMillion Five Hundred Thousand Dollars ($2,500,000), Seller shall elect, bywritten notice within ten (10) days of the occurrence of such damageor destruction either to terminate this Agreement or to close the transactioncontemplated hereby with a reduction of the Purchase Price equal to the costsof repairing the Golf Course or the Golf Academy, as reasonably estimated by anengineer engaged by Seller and reasonably acceptable to Purchaser.

 

ARTICLE 13

 

CONDUCT PRIOR TO CLOSING

 

13.1         Conduct.  Fromand after the date hereof, Seller shall operate and maintain the Golf Course,the Golf Academy and the Bay Course Maintenance Facility in accordance with itsstandard business procedures; provided, however, that Seller shall have noobligation to make any capital expenditures.

 

13.2         Actions Prohibited. Seller shall not, without the prior written approval of Purchaser, whichapproval shall not be unreasonably withheld or delayed:  (i) make any material structuralalterations or additions to the Golf Course, the Golf Academy or the Bay CourseMaintenance Facility except as (a) in the ordinary course of operating theGolf Course, the Golf Academy or the Bay Course Maintenance Facility,(b) required for maintenance and repair or (c) required by any of theleases or the Contracts; (ii) sell, transfer, encumber or change thestatus of title of all or any portion of the Golf Course; (iii) change orattempt to change, directly or indirectly, the current zoning of the GolfCourse, the Golf Academy or the Bay Course Maintenance Facility in a mannermaterially adverse to it; or (iv) cancel, amend or modify, in a mannermaterially adverse to the Golf Course, the Golf Academy or the Bay CourseMaintenance Facility, any license or permit held by Seller with respect to theGolf Course, the Golf Academy or the Bay Course Maintenance Facility or anypart thereof which would be binding upon Purchaser after the Closing.

 

13.3         Confidentiality. Seller and Purchaser shall, prior to the Closing, maintain theconfidentiality of this sale and purchase and shall not, except as required bylaw or governmental regulation applicable to Seller or Purchaser, disclose theterms of this Agreement or of such sale and purchase to any third partieswhomsoever other than investors or prospective investors in Seller orPurchaser, Purchaser’s lender, or the principals of the Broker, Escrow Agent,Title Company, Purchaser’s advisors or consultants and such other persons whoseassistance is required in carrying out the terms of this Agreement, or togovernmental agencies if and to the extent required to verify the zoning andentitlements of the Real Property. Neither Seller nor Purchaser shall at any time issue a press release orotherwise communicate with media representatives regarding this sale andpurchase unless such release or communication has received the prior approvalof the other party.  Purchaser agreesthat all documents and 

 

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information regarding the Golf Course, the GolfAcademy or the Bay Course Maintenance Facility of whatsoever nature madeavailable to it by Seller or Seller’s agents and the results of all tests andstudies of the Golf Course, the Golf Academy or the Bay Course MaintenanceFacility (collectively, the “**Proprietary Information**”)are confidential and Purchaser shall not disclose any Proprietary Informationto any other person except those assisting it with the analysis of the GolfCourse, the Golf Academy or the Bay Course Maintenance Facility, and only afterprocuring such person’s agreement to abide by these confidentialityrestrictions.  This Section 13.3shall survive the Closing or termination of this Agreement.

 

13.4         Right to Cure. If any title defect or other matter which would entitle Purchaser toterminate this Agreement shall arise prior to the Closing or if Seller shallhave breached any representation or warranty hereunder, Seller may elect, bywritten notice to Purchaser, to cure such title defect or other matter bycausing it to be removed, insured over or bonded to cure such breach or curesuch breach of any representation or warranty hereunder, and Seller may adjournthe Closing for up to twenty (20) days to do so in which event Seller will givePurchaser not less than five (5) business days notice of the date ofClosing.  Nothing contained in thisSection 13.4 shall require Seller to cure any such title defect or othermatter or to incur any liability or expense to do so except as otherwise expresslyprovided herein.

 

13.5         Additional Information.  Promptly after receipt thereof, Seller shallprovide copies to Purchaser of any written notices received by Seller from anygovernmental agency, which notices relate to the Golf Course, the Golf Academyor the Bay Course Maintenance Facility or the ownership, management, leasing,maintenance, repair or operation thereof. Within ten (10) days of generating or receiving, asapplicable, any new Golf Course, the Golf Academy or the Bay Course MaintenanceFacility operating statements or updates of existing Golf Course, the GolfAcademy or the Bay Course Maintenance Facility operating statements, Sellershall deliver copies thereof to Purchaser.

 

ARTICLE 14

 

NOTICES

 

14.1         Generally.  Anyand all notices, demands, consents, approvals, offers, elections and othercommunications required or permitted under this Agreement shall be deemedadequately given if in writing addressed to the recipient of the notice at theaddresses set forth below (or to such other addresses as the parties mayspecify by due notice to the others) and the same shall be delivered either(i) by hand, (ii) by mail, postage prepaid and registered orcertified with return receipt requested, (iii) by Federal Express orsimilar expedited commercial carrier, with all freight charges prepaid, or(iv) by facsimile transmission or email with a hard copy to follow byFederal Express or similar expedited commercial carrier.

 

14.2         Receipt of Notices. All notices required or permitted to be sent hereunder shall be deemedto have been given for all purposes of this Agreement upon the date ofacknowledged receipt or upon the date of receipt of refusal.  Notices or other communications(i) given by mail will be presumed received on the fifth business day afterthey are mailed, (ii) given by Federal Express or similar expeditedcommercial carrier will be presumed received on the next business day afterthey are sent, (iii) given by facsimile transmission will be presumedreceived at the 

 

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time indicated in the recipient’s automaticacknowledgment, and (iv) given by email will be presumed received on theday the email is sent.  Whenever underthis Agreement a notice is either received on a day which is not a business dayor is required to be delivered on or before a specific day which is not abusiness day, the day of receipt or required delivery shall automatically beextended to the next business day.

 

14.3         Addresses.  Allsuch notices shall be addressed,

 

if to Seller, to:Maui Land & Pineapple Company, Inc.PO Box 187Kahului, Hawaii  96733-6687Attention:  Ryan ChurchillEmail:  rchurchill@mlpmaui.comTelephone:  (808) 669-5625Facsimile:  (808) 669-5454

 

with a copy to:Kiefer & Garneau, LLC444 Hana Highway, Suite 204Kahului, Hawaii 96732Attention:  Richard J. Kiefer, Esq.Email:  RickKiefer@hawaii.rr.comTelephone:  (808) 871-9700Facsimile:  (808) 871-6017

 

if to Purchaser, to:TY Management Corporation

c/oFast Retailing Co., Ltd.

MidtownTowerAkasaka 9-7-1, Minato-Ku

Tokyo,107-6231 Japan

Attention:  Hiroyuki Uchida

Email:  hiroyuki.uchida@fastretailing.com

Telephone:  (81-3) 6865-0040

Facsimile:  (81-3) 6865-0061

 

with a copy to:Carlsmith Ball LLPOne Main Plaza, Suite 4002200 Main Street, P.O. Box 1086Wailuku, Maui, HI  96793-1086Attention:  B. Martin Luna, Esq.Email:  bml@carlsmith.comTelephone:  (808) 242-4535Facsimile:  (808) 244-4974

 

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with a copy to:Carlsmith Ball LLPASB Tower, Suite 22001001 Bishop StreetHonolulu, HI  96813Attention:  Robert E. Strand, Esq.Email:  rstrand@carlsmith.comTelephone:  (808) 523-2525Facsimile:  (808) 523-0842

 

if to Escrow Agent, to:Title Guaranty Escrow Services, Inc.235 Queen StreetHonolulu, Hawaii  96813Attn:  Ms. Ann OshiroEmail:  aoshiro@tghawaii.comTelephone:  (808) 521-0213Facsimile:  (808) 521-0280

 

14.4         Address Changes. By notice given as herein provided, the parties hereto and theirrespective successors and assigns shall have the right, from time to time andat any time during the term of this Agreement, to change their respective addresseseffective upon receipt by the other parties of such notice.

 

ARTICLE 15

 

TRANSFER OF TITLE ANDPOSSESSION

 

15.1         Transfer of Possession.  Possession of the Golf Course, the GolfAcademy and the Bay Course Maintenance Facility shall be transferred toPurchaser at the time of the recordation of the Deed subject only to thePermitted Encumbrances and the Bay Course Lease.

 

15.2         Delivery of Documents at Closing.  At the time of Closing, Seller shall deliverto Purchaser originals or copies of any additional documents, instruments,records, keys and other Personal Property to be conveyed hereunder in thepossession of Seller or its agents which are necessary for the ownership andoperation of the Golf Course and the Bay Course Maintenance Facility and thelease and operation of the Golf Academy.

 

ARTICLE 16

 

GENERAL PROVISIONS

 

16.1         Section and Other Headings.  The headings contained in this Agreement arefor reference purposes only and shall not in any way affect the meaning orinterpretation of this Agreement.

 

16.2         Exhibits.  Allexhibits referred to herein and attached hereto are a part hereof.

 

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16.3         Entire Agreement. This Agreement contains the entire agreement between the partiesrelating to the transaction contemplated hereby and all prior or contemporaneousagreements, understandings, representations and statements, oral or written,are merged herein.

 

16.4         Broker.  Selleracknowledges that Purchaser has procured the services of Roy Sakamoto (“**Broker**”), and Seller shall be responsible for any fee orcommission payable to Broker as a result of the sale of the Golf Coursepursuant to this Agreement.  Each partyagrees that should any claim be made for brokerage commissions or finder’s feesby any broker or finder other than Broker by, through or on account of any actor alleged act of said party or its representatives, said party will indemnify,defend, protect and hold the other party free and harmless from and against anyand all loss, liability, cost, damage and expense in connection therewith.  The provisions of this Section 16.4shall survive Closing or earlier termination of this Agreement.

 

16.5         Modification. No modification, waiver, amendment, discharge or change of thisAgreement shall be valid unless the same is in writing and signed by the partyagainst which the enforcement of such modification, waiver, amendment,discharge or change is or may be sought.

 

16.6         Attorneys’ Fees. Should any party hereto employ an attorney for the purpose of enforcingor construing this Agreement, or any judgment based on this Agreement, in anylegal proceeding whatsoever, including insolvency, bankruptcy, arbitration,declaratory relief or other litigation, the prevailing party shall be entitledto receive from the other party or parties thereto reimbursement for allreasonable attorneys’ fees and all costs, whether incurred at the trial orappellate level, including, but not limited to, service of process, filingfees, court and court reporter costs, investigative costs, expert witness feesand the cost of any bonds, whether taxable or not, and such reimbursement shallbe included in any judgment, decree or final order issued in thatproceeding.  The “prevailing party” meansthe party in whose favor a judgment, decree, or final order is rendered.

 

16.7         Governing Law.

 

16.7.1         This Agreement shall be construed andenforced in accordance with the laws of the State of Hawaii.

 

16.7.2         For the purposes of any suit, action orproceeding involving this Agreement, Seller and Purchaser hereby expresslysubmit to the jurisdiction of all federal and state courts sitting in the Stateof Hawaii and consent that any order, process, notice of motion or otherapplication to or by any such court or a judge thereof may be served within orwithout such court’s jurisdiction by registered mail or by personal service;provided that a reasonable time for appearance is allowed, and Purchaser agreesthat such courts shall have the exclusive jurisdiction over any such suit,action or proceeding commenced by any party. In furtherance of such agreement, Purchaser agrees upon the request ofany party to discontinue (or agree to the discontinuance of) any such suit,action or proceeding pending in any other jurisdiction.

 

16.7.3         Purchaser hereby irrevocably waives anyobjection that Purchaser may now or hereafter have to the laying of venue ofany suit, action or proceeding arising out of or relating to this Agreementbrought in any federal or state court sitting in the State of Hawaii and 

 

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hereby further irrevocably waives any claim that anysuch suit, action or proceeding brought in any such court has been brought inan inconvenient forum.

 

16.7.4         EACH PARTY HEREBY WAIVES, IRREVOCABLYAND UNCONDITIONALLY, TRIAL BY JURY IN ANY ACTION BROUGHT ON, UNDER OR BY VIRTUEOF OR RELATING IN ANY WAY TO THIS AGREEMENT OR ANY OF THE DOCUMENTS EXECUTED INCONNECTION HEREWITH, THE GOLF COURSE, OR ANY CLAIMS, DEFENSES, RIGHTS OFSET-OFF OR OTHER ACTIONS PERTAINING HERETO OR TO ANY OF THE FOREGOING.

 

16.8         Time of Essence. Time is of the essence to this Agreement and to all dates and timeperiods set forth herein.

 

16.9         Survival of Warranties; Limitation on Liability.  Only the warranties and representationscontained in Sections 11.1. and 11.2 shall survive the Closing, thedelivery of the Deed and the payment of the Purchase Price, providedthat(i) such representations and warranties (but not such provisions) shallcease and terminate twenty-four (24) months after the date of Closing,except in respect of any representation or warranty as to which Purchaser orSeller, as the case may be, shall have commenced, on or before suchtwenty-four (24) month anniversary, a legal proceeding based on the breachthereof as of the date of Closing, and then only for so long as such proceedingshall continue and limited to the breach therein claimed and (ii) themaximum total liability for which Seller shall be responsible with respect toall representations and warranties shall not exceed Seven Million Five HundredThousand Dollars ($7,500,000) in the aggregate for claims made under thisAgreement and under the Maintenance Facility Agreement of Sale (the “**Cap**”).  Norepresentation and warranty contained in any of the documents delivered bySeller at Closing pursuant to Section 4.1 shall be subject to the timelimitation or Cap described in this Section 16.9.  Seller shall have no liability to Purchaserafter Closing for any matter disclosed in writing by Seller or actually knownby Purchaser prior to Closing, including, without limitation, any matter thatPurchaser is deemed to have knowledge of pursuant to Section 11.2 above.

 

16.10       Assignment by Purchaser.  Purchaser may not assign its rights underthis Agreement without the prior written approval of Seller in its sole andabsolute discretion.  Notwithstanding theforegoing, Purchaser shall have the right to assign its right, title andinterest in and to this Agreement to a Permitted Assignee (defined below) bywritten notice to Seller no later than five (5) days prior to theClosing Date, without approval of Seller. For purposes of this Paragraph, a “Permitted Assignee” shall mean(i) any entity that directly, or indirectly through one or moreintermediaries, controls, is controlled by or is under common control withPurchaser, as the case may be, (ii) to the extent not covered by clause(i) above, any entity in which Purchaser or any entity controlling,controlled by, or under common control with Purchaser is the managing member,general partner or manager of such assignee or of such assignee’s managingmember, general partner or manager and (iii) any fund owned, managed oradvised by Purchaser.  For the purposesof this definition, “control” means the possession, directly or indirectly, ofthe power to direct or cause the direction of the management and policies of anentity, whether through the ownership of voting securities, by contract orotherwise.  Purchaser shall in no eventbe released from any of its obligations or liabilities hereunder in connectionwith any assignment.

 

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16.11       Severability.  Ifany term, covenant, condition, provision or agreement herein contained is heldto be invalid, void or otherwise unenforceable by any court of competentjurisdiction, the fact that such term, covenant, condition, provision oragreement is invalid, void or otherwise unenforceable shall in no way affectthe validity or enforceability of any other term, covenant, condition,provision or agreement herein contained.

 

16.12       Assignment; Successors and Assigns.  Except as otherwise provided herein, thisAgreement and all rights and obligations hereunder shall not be assignable byany party without the written consent of the other party.  This Agreement shall be binding upon andshall inure to the benefit of the parties hereto and their respectivesuccessors and permitted assigns.  ThisAgreement is not intended and shall not be construed to create any rights in orto be enforceable in any part by any other persons.

 

16.13       Interpretation. Seller and Purchaser each acknowledge to the other that both they andtheir counsel have reviewed and revised this Agreement and that the normal rule ofconstruction to the effect that any ambiguities are to be resolved against thedrafting party shall not be employed in the interpretation of this Agreement orany amendments or exhibits hereto.

 

16.14       Counterparts. This Agreement may be executed in any number of counterparts, each ofwhich so executed shall be deemed an original; such counterparts shall togetherconstitute but one agreement.  Afacsimile copy of a signature shall constitute an original signature forpurposes of the execution of this Agreement.

 

16.15       Recordation. This Agreement may not be recorded and any attempt to do so shall be ofno effect whatsoever.

 

16.16       Limitation on Liability.  No shareholder, partner, officer, employee oragent of or consultant to or of Seller shall be held to any personal liabilityhereunder.

 

16.17       Business Day.  Asused in this Agreement, “business day” shall be deemed to be any day other thana day on which banks in the State of Hawaii shall be permitted or required toclose.  If the final date of any periodwhich is set out in any provision of this Agreement falls on a Saturday, Sundayor legal holiday under the laws of the United States or the State of Hawaii, thenthe time of such period shall be extended to the next date which is not aSaturday, Sunday or legal holiday.

 

16.18       Waivers, Etc. Any waiver of any term or condition of this Agreement, or of the breachof any covenant, representation or warranty contained herein, in any oneinstance, shall not operate as or be deemed to be or construed as a further orcontinuing waiver of any other breach of such term, condition, covenant,representation or warranty or any other term, condition, covenant,representation or warranty, nor shall any failure at any time or times toenforce or require performance of any provision hereof operate as a waiver ofor affect in any manner such party’s right at a later time to enforce orrequire performance of such provision or any other provision hereof.  This Agreement may not be amended nor shallany waiver, change, modification, consent or discharge be effected, except byan instrument in writing executed by or on behalf of the party against whomenforcement of any amendment, waiver, change, modification, consent or dischargeis sought.

 

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16.19       Relationship. Nothing herein contained shall be deemed or construed by the partieshereto, nor by any third party, as creating the relationship of principal andagent or of partnership or joint venture between the parties hereto, it beingunderstood and agreed that (except as and to the extent specifically providedfor herein) no provision contained herein, nor any acts of the parties heretoshall be deemed to create the relationship between the parties hereto otherthan the relationship of seller and purchaser and landlord and prospectivetenant, as the case may be.

 

ARTICLE 17

 

ESCROW AGENT DUTIES ANDDISPUTES

 

17.1         Other Duties of Escrow Agent.  Escrow Agent shall not be bound in any way byany other agreement or contract between Seller and Purchaser, whether or notEscrow Agent has knowledge thereof. Escrow Agent’s only duties and responsibilities with respect to anyfunds deposited with Escrow Agent pursuant to the terms hereof (the “**Deposit**”) shall be to hold the Deposit and other documentsdelivered to it as agent and to dispose of the Deposit and such documents inaccordance with the terms of this Agreement. Without limiting the generality of the foregoing, Escrow Agent shallhave no responsibility to protect the Deposit and shall not be responsible forany failure to demand, collect or enforce any obligation with respect to theDeposit or for any diminution in value of the Deposit from any cause, otherthan Escrow Agent’s gross negligence or willful misconduct.  Escrow Agent may, at the expense of Sellerand Purchaser, consult with counsel and accountants in connection with itsduties under this Agreement.  EscrowAgent shall not be liable to the parties hereto for any act taken, suffered orpermitted by it in good faith in accordance with the advice of counsel andaccountants.  Escrow Agent shall not beobligated to take any action hereunder that may, in its reasonable judgment,result in any liability to it unless Escrow Agent shall have been furnishedwith reasonable indemnity satisfactory in amount, form and substance to EscrowAgent.

 

17.2         Disputes. Escrow Agent is acting as a stakeholder only with respect to theDeposit.  If there is any dispute as towhether Escrow Agent is obligated to deliver the Deposit or as to whom theDeposit is to be delivered, Escrow Agent shall not make any delivery, but shallhold the Deposit until receipt by Escrow Agent of an authorization in writing,signed by all the parties having an interest in the dispute, directing thedisposition of the Deposit, or, in the absence of authorization, Escrow Agentshall hold the Deposit until the final determination of the rights of theparties in an appropriate proceeding. Escrow Agent shall have no responsibility to determine the authenticityor validity of any notice, instruction, instrument, document or other itemdelivered to it, and it shall be fully protected in acting in accordance withany written notice, direction or instruction given to it under this Agreementand reasonably believed by it to be authentic. If written authorization is not given, or proceedings for adetermination are not begun, within thirty (30) days after the datescheduled for the closing of title and diligently continued, Escrow Agent may,but is not required to, bring an appropriate action or proceeding for leave todeposit the Deposit with a court of the State of Hawaii pending adetermination.  Escrow Agent shall bereimbursed for all costs and expenses of any action or proceeding, including,without limitation, attorneys’ fees and disbursements incurred in its capacityas Escrow Agent by the party determined not to be entitled to the Deposit.  Upon making delivery of the Deposit in themanner provided in this Agreement, Escrow Agent shall have no further 

 

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liability hereunder. In no event shall Escrow Agent be under any duty to institute, defend orparticipate in any proceeding that may arise between Seller and Purchaser inconnection with the Deposit.

 

17.3         Reports. Escrow Agent shall be responsible for the timely filing of any reportsor returns required pursuant to the provisions of Section 6045(e) ofthe Code (and any similar reports or returns required under any state or locallaws) in connection with the closing of the transaction contemplated by thisAgreement.

 

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IN WITNESS WHEREOF, this Agreement has been executed asof the date first set forth above.

 
| SELLER:                                                 |                     |   |
|---------------------------------------------------------|--------------------------|--------|
|                                                    |                     |   |
| **MAUI LAND & PINEAPPLE  COMPANY, INC.**, |                     |   |
| a Hawaii corporation                                    |                     |   |
|                                                    |                     |   |
|                                                    |                     |   |   |   |
| By:                                                     | /s/  WARREN H. HARUKI    |   | By: | /s/  RYAN L. CHURCHILL |
|                                                    |                     |   |   |   |
| Name:                                                   | Warren  Haruki           |   | Name: | Ryan  L. Churchill |
|                                                    |                     |   |   |   |
| Title:                                                  | Chairman &  CEO |   | Title: | President &  COO |
|                                                    |                     |   |
|                                                    |                     |   |
| PURCHASER:                                              |                     |   |
|                                                    |                     |   |
| **TY MANAGEMENT CORPORATION**,                          |                     |   |
| a Hawaii corporation                                    |                     |   |
|                                                    |                     |   |
|                                                    |                     |   |
| By:                                                     | /s/  TADASHI YANAI       |   |   |
|                                                    |                     |   |   |
| Name:                                                   | Tadashi  Yanai           |   |   |
|                                                    |                     |   |   |
| Title:                                                  | President                |   |   |

 

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