EXHIBIT 10.43
AMENDED AND RESTATED JUNE 1986 FARMING CONTRACT
This June 1986 Farming Contract, amended and restated as of January 1,
1998, is entered into on the date set forth below by and between Mauna Loa
Macadamia Partners, L.P., a Delaware limited partnership ("Owner") and Ka'u
Agribusiness Co., Inc., a Hawaii corporation ("Ka'u") ("Manager").
R E C I T A L S:
WHEREAS, Owner is the legal and beneficial owner of macadamia orchards
commonly known as Keaau Lot VIII, By Dickes and Ka'u Sisal (the "Original June
1986 Orchards");
WHEREAS, the Manager is experienced and capable in all aspects of the
business of farming and harvesting macadamia nuts;
WHEREAS, Owner desires to engage the expert services of the Manager to
farm, harvest, and husk macadamia nuts at the Original June 1986 Orchards, and
the Manager desires to perform such services for Owner as provided herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements set forth herein, the parties agree as follows:
1. TERM. This Contract shall be deemed to have commenced for all
purposes as of June 12, 1986 and shall continue in full force and effect until
December 31, 2006, unless terminated earlier as provided herein. At the end of
the stated term of this Contract, the parties agree to negotiate in good faith
with a view toward extending this Contract on terms and conditions that are
agreeable to such parties at that time. The Manager may terminate this Contract
upon the replacement of Mauna Loa Resources Inc. ("MLR") as the managing general
partner of Owner with a person or entity not affiliated with MLR, by delivering
at least 30 days' advance written notice of such termination to Owner. It is
expressly agreed, however, that this Contract will remain in full force and
effect after and notwithstanding the voluntary withdrawal of MLR as managing
general partner of Owner, and whether a substitute general partner succeeds to
its obligations or not. This Contract may also be terminated as provided in
Section 7.
2. FARMING SERVICES.
a. Manager will perform all farming services that shall be
necessary or desirable from time to time in order to provide for the economical
growth and yield of the Original June 1986 Orchards assigned to Manager in
accordance with proven and sound agricultural practices. The Manager will
perform such services to the best of its skill and ability, and in a manner
consistent with the practices employed by it in the planting, cultivation and
harvesting of other macadamia orchards under its management and control. Owner
acknowledges that Manager makes no guarantee as to the future yields from the
Original June 1986 Orchards, and Owner recognizes and assumes the agricultural
risks associated with the cultivation and harvesting of macadamia nuts, and the
natural risks in the area, including but not limited to wind, rain, hurricane
and volcanic risks.
b. Without limiting the generality of the foregoing description
of its services, Manager will, as to the Original June 1986 Orchards, perform
the following services: Manager will provide and maintain all necessary or
desirable windbreak trees and replacement macadamia trees; Manager will perform
all necessary or desirable cultivation, weed and pest control, irrigation,
fertilization, pruning and hedging, replanting, disposal, and related services;
Manager will harvest, transport and husk the nuts from the Original June 1986
Orchards in accordance with proven and sound harvesting practices; and Manager
will deliver the harvested nuts to the processing plant designated by Owner.
All of these services will be performed at Owner's expense as set forth herein.
c. The Manager will provide such centralized office and other
support services and facilities as may be necessary or appropriate in order to
provide adequate support for all field operations hereunder, including but not
limited to staff management, accounting, purchasing, industrial relations, and
engineering, agricultural, garage and warehouse services and facilities.
d. Manager will keep the Original June 1986 Orchards planted
with macadamia and appropriate windbreak trees during the entire term of this
Contract, and will provide such replacement trees as may be necessary from time
to time due to tree damage, illness or mortality. Owner recognizes that, due to
unpredictable climatic conditions and agricultural and natural risks, the amount
of future tree damage, illness and mortality is uncertain and Manager gives no
warranties or guaranties whatsoever concerning the future rates thereof.
Replacement trees will be grafted trees or recommended commercial varieties and
will be ready for field planting. The costs of replacement trees will be
charged to Owner as a direct cost pursuant to Section 5(a) without ▇▇▇▇-up over
the respective Manager's internal cost; no charge will be made for replacement
trees if replanting is required because of a Manager's negligence.
2.
3. PERSONNEL AND EQUIPMENT.
a. Manager shall employ, train and supervise all such personnel
as shall be necessary or desirable for the efficient farming, harvesting and
husking of macadamia nuts in the Original June 1986 Orchards as described
herein. Manager may subcontract to others any portion of the work required
hereunder, if such work would normally be subcontracted on similar terms. Owner
shall have no obligation to any party under any subcontract but shall expressly
be made a third-party beneficiary of each and every subcontract. Manager shall
at all times remain primarily responsible for the satisfactory performance of
all work and services described herein and may not transfer or assign such
responsibility without the prior written consent of Owner.
b. Manager shall comply with all requirements of federal and
state law with respect to the employment of personnel, including but not limited
to all insurance coverages required under workers' compensation laws. Manager
hereby indemnifies and agrees to hold Owner harmless from and against any and
all claims, obligations, liabilities or demands with respect to and arising out
of the performance of Manager's obligations under this Contract and the
employment of Manager's personnel and agents at the Original June 1986 Orchards.
4. ACCOUNTING AND REPORTS.
a. Manager shall keep full and accurate records and accounts in
accordance with generally accepted accounting principles showing all costs,
advances, payments, expenditures and liabilities, and all other information and
data which shall be necessary for the computation of the fees to be paid by
Owner hereunder. Manager will provide Owner with any and all financial or other
information relating to this Contract that Owner shall reasonably request from
time to time. To the extent that information is provided to Owner hereunder and
is not otherwise in the public domain, Owner agrees to keep such information
confidential and not to disclose the same to any person, except as may be
required by law or in connection with any litigation between any Manager and
Owner. Owner agrees to return to Manager any copies of trade secrets,
proprietary market share information or test marketing results, within a
reasonable time after such information is provided to Owner, Owner will have the
right to inspect the books, and records of Manager, insofar as they relate to
any dealings with or interest of Owner, at any time during normal business
hours.
b. In order to assist Owner in its financial planning, Manager
will provide Owner with an estimated operating cost budget for each calendar
year. As soon as
3.
practicable after the end of each calendar month, Manager will provide a cost
statement to Owner describing all costs incurred under this Contract during such
month.
c. As soon as practicable after the end of each calendar year,
Manager will provide a written report to Owner describing in reasonable detail
its conduct of operations at the Original June 1986 Orchards during such year
and any material plans or developments with respect to the next year. Each
annual report shall also include a statement, certified by Manager's regular
independent auditors, which shall fairly reflect Manager's method of determining
Owner's costs for such preceding calendar year and shall report the actual
Manager's Costs (as defined below) which were incurred for the preceding
calendar year by Manager. The report shall also include a statement of all
monthly adjustments made to reimbursement payments pursuant to Section 5(b) and
the balance outstanding at the end of the year.
d. The statement referred to in (c) above with respect to a
Manager's Costs (as defined below) for any calendar year shall be conclusive and
binding unless the conflicts committee of the Board of Directors of MLR
("Conflicts Committee") or any successor managing general partner shall object
thereto within 120 days after receiving a Manager's annual report containing
such statement. Owner shall have the right to engage a certified public
accounting firm of its selection to review Manager's Costs, and the right to
assert claims based on such review at any time during such 120-day period. If
any such review and assertion shall result in a downward adjustment of the
Manager's Costs by an amount in excess of 5% of the initial computation thereof,
Manager shall promptly reimburse Owner for all of its expenses incurred in
connection with the engagement of such accounting firm and the assertion of such
claim.
5. REIMBURSEMENT OF MANAGER'S COSTS.
a. (i) Owner will reimburse Manager on a quarterly basis
consistent with Manager's quarterly accounting periods for Manager's Costs (as
defined below). Payment with respect to each quarter will be made within 30
days after the billing date. In the event that any payment hereunder is not
made within 30 days after it becomes due, the unpaid amount shall thereafter
bear interest at the Bank of Hawaii prime rate (but not to exceed the highest
rate permitted by the usury laws of the State of Hawaii).
(ii) The term "Manager's Costs" shall not include any
capital expenditures or any other costs or expenses which are stated in this
Contract to be payable by a Manager, nor shall it include any costs which
Manager may incur in order to repair any damage caused by its own negligence.
The term "Manager's Costs" shall include, to the extent that they are actually
incurred by Manager during the relevant year in connection with specific
services or work necessary or desirable under this Contract, direct costs of the
4.
Manager for labor, equipment use, materials and contract services received. The
term "Manager's Costs" shall also include overhead costs allocated to operations
at the Original June 1986 Orchards including, but not limited to, employee
fringe benefits, Manager's administrative overhead and general field costs such
as salaries, expendable tools and supplies, agricultural research, building and
equipment depreciation and repair, and insurance. The term "Manager's Costs"
shall also include the cost of husking Owner's macadamia nuts and a capital
utilization charge of 9% of Manager's net book value of farming, harvesting and
husking equipment used in the operations, prorated to adjust for any use of such
equipment otherwise than for Owner. The Manager's net book value of farming,
harvesting and husking equipment is the historical cost of such equipment less
accumulated depreciation and amortization exclusive of any effect of "push down"
accounting resulting from changes in the ownership of Manager, its parent
company or any other affiliate. Further, the "Manager's Cost" shall be based on
the Manager's historical cost exclusive of the effects of such push down
accounting. Manager's administrative overhead costs consist of all costs
related to services provided to the macadamia farming operations by Manager's
corporate staff including, but not limited to, managerial and administrative
personnel, industrial relations department, accounting department, industrial
engineering department, warehouse personnel, draftsman, production
superintendent, electrical superintendent, factory superintendent and
maintenance superintendent. Manager's overhead costs shall also include a
proportionate share of service charges allocated to Manager by ▇. ▇▇▇▇▇▇ and
Company, Limited ("▇. ▇▇▇▇▇▇"), computed on a basis consistent with prior years
and consistent with the service charges levied on all other subsidiaries of ▇.
▇▇▇▇▇▇. Schedule A sets forth a list of direct and overhead cost centers which
comprise the "Manager's Costs," and procedures for allocating overhead costs and
computing equipment capital recovery costs.
(iii) In addition to the reimbursement of Manager's Costs,
Owner shall pay to Manager on February 15 of each calendar year a farming fee
("Farming Fee") of two and one-half percent (2.5%) of Owner's Gross Profit from
Farming Operations (as defined below) attributable to the Original June 1986
Orchards for the immediately preceding calendar year. For purposes of this
Contract, "Gross Profit from Farming Operations" shall have the meaning set
forth for that term in the Schedule B attached hereto.
(iv) For purposes of this Contract, all payments made by
Owner to Manager, including but not limited to the reimbursement of Manager's
Costs, the Management Fee and other fees, shall be increased by the amount of
any applicable Hawaii general excise tax that Manager is obligated to pay by
reason of such payments.
b. Unless otherwise provided to the contrary herein, in the
event that any adjustment is made in any amount paid hereunder, whether as a
result of revised estimates, audited figures or otherwise, an appropriate credit
or charge shall be included in the
5.
next succeeding reimbursement payment, but no additional current payments need
be made by either party.
6. OWNERSHIP OF LAND.
a. Except as specifically provided herein, Manager will not be
obligated or liable for matters that are customarily the responsibility of a
landowner including, but not limited to, payment of taxes and assessments,
insurance against liabilities, and compliance with laws, ordinances and
governmental regulations relating to ownership of land. When requested by
Owner, Manager shall cooperate with Owner in the making of any surveys, the
processing of any tax appeals, and the procurement of any permits, licenses,
insurance coverages and other items which are necessary or desirable for Owner's
proper and lawful ownership and use of the Original June 1986 Orchards.
b. Owner, with the assistance of Manager but at Owner's
expense, will procure and maintain insurance with respect to the trees in the
Original June 1986 Orchards, so long as such insurance is available at
commercially reasonable rates against the following named perils: fire,
lightning, windstorm and volcanic eruption.
7. TERMINATION.
a. The parties may terminate this Contract at any time by
mutual agreement in writing. In the event that any party shall be in default
(as defined below), the non-defaulting party may terminate this Contract at any
time by delivering written notice of such termination to the defaulting party.
Unless terminated earlier, this Contract shall terminate at the close of
business on December 31, 2006.
b. A party shall be in "default" under this Contract in the
event that (i) it is in default under the Nut Purchase Contract; (ii) files any
voluntary proceeding for dissolution or under any federal or state bankruptcy,
insolvency, receivership or similar law; (iii) any such proceeding is commenced
against it involuntarily and is not dismissed within 60 days; (iv) it makes any
composition with or assignment for the benefit of its creditors; (v) it enters
into any corporate reorganization or acquisition without making adequate
provision for the performance of its obligations under this Contract; (vi) it
fails to perform any of its obligations when due under this Contract and it
fails to correct such non-performance within 30 days after written demand for
performance is made by the other party; or (vii) it repeatedly fails to perform
its obligations under this Contract except upon receipt of written demand for
performance.
c. In the event of the destruction of any, part or all of, the
Original June 1986 Orchards, Owner shall restore the destroyed property to its
initial condition, if such
6.
restoration can be performed from the proceeds of property insurance payments
received by Owner. If such restoration is not performed, this Contract shall
terminate as to the destroyed property only. In the event any part or all of
the Original June 1986 Orchards is condemned, this Contract shall terminate as
to the condemned property only.
8. NOTICE.
a. For convenience of operation hereunder, each of Owner and
Manager shall designate one representative to serve as the channel of
communication for delivering information to and securing necessary action by its
principals. Any party may change its representative from time to time by
delivering written notice of such change to the other party. Until further
notice is given, each party's representative shall be the person listed in the
notice address below.
b. Any and all notices, demands or other communications
(collectively, "notice") required or desired to be given hereunder by either
party shall be in writing and shall be validly given or made to the other party
or its authorized representative at the addresses set forth below, if served
either personally or if deposited in the United States mail, certified or
registered, postage prepaid, or if sent by telex.
Owner: Mauna Loa Macadamia Partners, L.P.
c/o Mauna Loa Resources Inc.
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Manager: Ka'u Agribusiness Co., Inc.
c/o ▇. ▇▇▇▇▇▇ and Company, Limited
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Office of the General Counsel
c. If such notice is delivered personally, service shall
conclusively be deemed to have been made at the time of such delivery. If such
notice is given by mail, service shall conclusively be deemed to have been made
72 hours after deposit thereof in the mail as provided for above. If such
notice is given by telex, service shall conclusively be deemed to have been made
24 hours after the transmission thereof and receipt of the proper response code.
Any party may change its address for the purpose of receiving notices as herein
provided by a written notice given to the other party.
7.
9. FORCE MAJEURE. Neither of the parties hereto shall be liable or
accountable to the other party for any delay in complying or any failure to
comply with any of the terms, provisions or conditions of this Contract in the
event that such failure shall have been caused by an act of God, strike,
lockout, public enemy, war, civil commotion, riot, condemnation, judicial or
governmental order or other requirements of law which directly prohibit the
performance by either party of its obligations hereunder (such as, but not
limited to, governmental regulations concerning the hazards of marketing or
consumption of macadamia nuts) or the refusal or failure of any governmental
office or officer to grant any permit or order necessary for compliance herewith
by either party hereto, nor shall either of the parties hereto be liable or
accountable to the other party for any damages arising from any such delay or
failure.
10. WAIVER. The failure of either party to enforce its rights upon
any default on the part of the other party shall not be construed as a waiver
thereof, nor shall any custom or practice which may grow up between the parties
in the course of administering this Contract be construed to waive or to lessen
the right of either party to demand performance by the other party or exercise
its rights in the event of default. No provision of or default under this
Contract may be waived except by a notice in writing signed by the party making
the waiver. A waiver by either party of a particular default shall not be
deemed to be a waiver of any other subsequent default.
11. ASSIGNMENT. Neither of the parties hereto may assign any of its
rights or obligations under this Contract without the prior written consent of
the other party, except that Manager may assign this Contract to an affiliate of
▇. ▇▇▇▇▇▇ without such prior written consent and except that Owner may, in
connection with any dissolution of Owner resulting from the withdrawal of MLR
(or any successor general partner that is an affiliate of ▇. ▇▇▇▇▇▇) as general
partner of Owner, assign this Contract without such prior written consent. No
consent or approval required under this Contract shall be unreasonably withheld.
12. ARBITRATION. All claims, demands, disputes, differences,
controversies, disagreements and misunderstandings (hereinafter called
"disputes") arising out of, or in connection with, or in relation to this
Contract shall be submitted to and determined only by an arbitrator selected in
the following manner: Either party shall serve upon the other a written notice
stating that such party desires to have the dispute reviewed by a board of three
(3) arbitrators and naming the person whom such party has designated to act as
an arbitrator. Within 15 days after receipt of such notice, the other party
shall designate a person to act as arbitrator and shall notify the party
requesting arbitration of such designation and the name of the person so
designated. The two (2) arbitrators designated as aforesaid shall promptly
select a third arbitrator, and if they are not able to agree upon said third
arbitrator, then either arbitrator on 5 days' written notice to the other, shall
apply to any Judge of the First Circuit Court of the State of Hawaii to
designate and appoint said third arbitrator. If the party upon
8.
whom said request for arbitration is served shall fail to designate its
arbitrator with 15 days after receipt of such notice, then the arbitrator
designated by the party requesting arbitration shall act as the sole arbitrator
and shall be deemed to be the single mutually approved arbitrator to resolve the
dispute. The decision and award of a majority of the arbitrators, or of such
sole arbitrator, shall be final and binding upon the parties and enforceable in
accordance with the provisions of Chapter 658, Hawaii Revised Statutes, as it
may from time to time be amended. Each party shall pay one-half (1/2) of the
arbitrator's fees and expenses and its own fees and expenses.
13. AFFILIATES. As used herein, affiliates of Manager shall mean ▇.
▇▇▇▇▇▇ and subsidiaries of ▇. ▇▇▇▇▇▇.
14. ENTIRE AGREEMENT. This Contract represents the entire agreement
and understanding of the parties with respect to the subject matter hereof. The
parties specifically acknowledge and agree that no joint venture or lease is
created hereby and that neither party is hereby appointed as the agent of the
other party.
15. GOVERNING LAW. This Contract will primarily be performed in and
shall be governed and construed in accordance with the laws of the State of
Hawaii. Each of the parties consents to the jurisdiction of the courts of the
State of Hawaii or any federal court sitting in Hawaii and agrees that Hawaii is
an appropriate venue for any action that may be brought under this Contract.
IN WITNESS WHEREOF, Owner and Manager have caused this Farming
Contract to be executed on this 1st day of January, 1998.
MAUNA LOA MACADAMIA PARTNERS, L.P.
By: MAUNA LOA RESOURCES INC.,
Managing General Partner
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Owner
KA'U AGRIBUSINESS CO., INC.
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇
----------------------------------
Manager
9.
SCHEDULE A
COST CENTERS AND OVERHEAD ALLOCATIONS
(1) DIRECT COST CENTERS
Manager has established the following cost centers with respect to
direct costs of labor, equipment use, materials and contract services. Other
direct cost centers may be established for future direct operations.
Pest Control
Pruning
Bracing and Replanting
Field Repair and Maintenance
Weed Control
Fertilizing
Other Field Operations
Irrigation
Water Delivery
Preparation for Harvesting
Manual Harvesting
Shake Harvesting
Shovel Harvesting
Mechanical Harvesting
Storm Damage Repair
Husking
Transportation
(2) OVERHEAD COST CENTERS
Manager has established the following cost centers with respect to
overhead costs related to labor, equipment, materials, contract services and
fixed charges. Other overhead cost centers may be established for future
operations. The costs applicable to these cost centers will be determined prior
to recovery from any third party.
(a) Agricultural Employee Benefits
(b) General Field Overhead
Agricultural Research
Agricultural Warehousing
Unabsorbed Garage Overhead
Nursery
(c) Administrative Overhead
(3) ALLOCATION OF OVERHEAD COSTS
(a) Overhead costs for agricultural employee benefits of a Manager in
(2)(a) above will be allocated on the basis of the labor dollars charged to the
direct cost centers for all of Manager's macadamia operations.
(b) Overhead costs for the items in (2)(b) above, with the exception
of tree insurance, property tax costs and orchard amortization which are
identifiable with specific orchards, will be allocated on the basis of the total
dollars charged to the direct cost centers, including allocated charges for
employee benefits (as computed per (3)(a) above) for all of Manager's macadamia
operations.
(c) Administrative overhead costs in (2)(c) above will be allocated
on the basis of the total dollars charged to the direct cost centers, including
allocated charges for employee benefits (as computed per (3)(a) above) and
overhead costs (as computed per (3)(b) above) for all of Manager's macadamia
operations.
(d) For (3)(a), (3)(b), (3)(c) above, Manager will charge Owner the
proportionate share applicable to the Original June 1986 Orchards, which will be
made on the basis of the dollars charged to its direct cost centers, as defined
separately in (3)(a), (3)(b), (3)(c) above, in relation to the total dollars
charged to such direct cost centers for all macadamia orchards Manager is
farming during Manager's fiscal year. An example, which is not based on actual
figures, is shown below to illustrate the described allocation procedure.
All Other
Macadamia
Owner's Orchards
Total Orchard Farmed by
----- ------- Manager
-------
Direct Costs Per (2)(a) $5,000 $1,300 $3,700
Including labor $ 3,000 600 2,400
Allocation % Per (2)(a) 100% 20% 80%
Allocation of Fringe Benefits 1,000 200 800
----- ----- -----
Direct Costs & Fringe Benefits 6,000 1,500 4,500
Allocation % Per (3)(b) 100% 25% 75%
Allocation of Overhead Costs 1,200 300 900
----- ----- -----
Direct Costs & Fringe Benefits & Overhead Costs 7,200 1,800 5,400
Allocation % Per (3)(c) 100% 25% 75%
Allocation of Administrative Overhead Costs 300 75 225
----- ----- -----
Total Costs Per (3)(a), (b) & (c) Allocation $7,500 $1,875 $5,625
----- ----- -----
(4) COMPUTATION OF EQUIPMENT CAPITAL RECOVERY COSTS
The equipment capital recovery cost, which is determined monthly by
multiplying the total net book value of a Manager's farming, harvesting, and
husking equipment at the end of each of Manager's monthly accounting periods by
9% per annum, will be allocated to the Original June 1986 Orchards on the basis
of the equipment dollars charged each month to the direct cost centers (see (1)
above) for the Original June 1986 Orchards in relation to the total equipment
dollars charged each month to such direct cost centers for all macadamia
orchards Manager is farming for the monthly accounting period then ended. An
example, which is not based on actual figures, is shown below to illustrate the
described allocation procedure.
Net Book Value of Manager's Farming
Equipment at Accounting 9% Per Equipment Capital Recovery
Month End Annum Cost for the Accounting Month
--------- ----- -----------------------------
$2,000 x .75% $15
3.
All Other
Macadamia
Orchards
Owner's Farmed
Total Orchard by Manager
----- ------- ---------
Equipment $ in (1) for the Month $140 $35 $105
Allocation % Per (4) 100% 25% 75%
Allocation of Equipment Capital Recovery Costs 15 $3.75 $11.25
==== ===== ======
4.
SCHEDULE B
CALCULATION OF GROSS PROFIT FROM FARMING OPERATIONS
The Farming Fee is two and one-half percent (2.5%) of the gross profit from
the farming operations of the Partnership ("Gross Profit from Farming
Operations"), attributable to the Original June 1986 Orchards. The formula for
calculating Gross Profit from Farming Operations is:
Gross Revenues from Farming Operations
- Gross Expenses from Farming Operations
--------------------------------------
= Gross Profit from Farming Operations
Set forth below are the terms and definitions related to that calculation.
Agribusiness Companies AGRIBUSINESS COMPANIES includes Ka'u Agribusiness Co.,
Inc. and Mauna Kea Agribusiness Co., Inc.
Capital Transaction CAPITAL TRANSACTION means a sale, condemnation,
exchange, or other disposition (or series of related
dispositions) of assets, other than in the ordinary
course of business, with a fair market value in excess
of 10% of the fair market value of all assets of the
Partnership, as determined by the Managing Partner
utilizing such reasonable valuation methods as it deems
appropriate. In the event the proceeds of any Capital
Transaction are to be paid in more than one
installment, then each such installment shall be
treated as a separate Capital Transaction for purposes
of this Contract and this Schedule, except for the
purpose of determining whether more than 10% of the
Partnership assets have been disposed of.
1.
"Capital Transaction" shall not include a deemed
transfer of the Partnership's assets and liabilities to
the Partnership, as a new partnership, upon a
termination of the Partnership pursuant to Section
708(b)(1)(B) of the Code and Section 1.708-1(b)(1)(ii)
and (iv) of the Treasury Regulations, as in effect for
terminations occurring on or after May 9, 1997.
Farming Contracts FARMING CONTRACTS includes Original June 1986 Farming
Contract, Original December ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇ Contract, and Lot X Farming Contract.
Farming Fees FARMING FEES means fees payable to the Agribusiness
Companies pursuant to the Farming Contracts.
Farming Operations FARMING OPERATIONS includes the (i) acquisition,
ownership, management, operation, development, leasing,
sale, and disposition of macadamia ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
and the sale or other disposition of macadamia nuts
grown on such properties; and (ii) anything incidental
to the foregoing.
Gross Expenses from
Farming Operations GROSS EXPENSES FROM FARMING OPERATIONS means all
expenditures of the Partnership, computed by the
accrual method of accounting, whether incurred directly
or indirectly, with respect
2.
to the Partnership's Farming Operations during the
relevant period, including: (i) farming and husking
costs (including costs and equipment utilization
charges payable to the Agribusiness Companies under the
Farming Contracts), (ii) lease rents, real property
tax, and insurance (including without limitation
orchard insurance), (iii) gross excise tax on Gross
Revenues from Farming Operations, and (iv) reserves
established for potential expenditures attributable to
Farming Operations. Gross Expenses from Farming
Operations does not include (i) payments of principal
and interest on indebtedness of the Partnership, (ii)
general and administrative expenses (including without
limitation a Management Fee), (iii) capital
expenditures of the Partnership, (iv) depreciation or
amortization, (v) expenditures in connection with a
Capital Transaction, or (vi) Farming Fees.
Gross Revenues from
Farming Operations GROSS REVENUES FROM FARMING OPERATIONS means all
receipts of the Partnership attributable to Farming
Operations, computed by the accrual method of
accounting, including; (i) revenues payable by Mauna
Loa under Nut Purchase Contracts and (ii) cash amounts
released from reserves established for Gross Expenses
from Farming
3.
Operations. Gross Revenues from Farming Operations
does not include (i) interest income, (ii) loan
proceeds, (iii) net recoveries under insurance
policies, (iv) other net receipts representing a
recovery for the loss or destruction of Partnership
assets, (v) proceeds of a Capital Transaction, or (vi)
capital contributions to the Partnership.
Lot X Orchard LOT X ORCHARD means that macadamia nut orchard,
commonly known as Lot X, consisting of 78.44 tree
acres of mature trees in Keaau, Hawaii County,
Hawaii.
Lot X Farming Contract LOT X FARMING CONTRACT means that farming contract
originally dated September 15, 1983, between Keaau
Macadamia X Corporation (assigned by indenture dated
August 31, 1991 to the Partnership) and Mauna Loa
(assigned to Ka'u Agribusiness Co., Inc. on December
5, 1997), under which the Lot X Orchard will be
farmed, the term of which was extended until
December 31, 2006 by that Assignment and Extension
of Farming Contract by and among the Partnership,
Mauna Loa, and Ka'u Agribusiness Co., Inc.
Lot X Nut Purchase
Contract LOT X NUT PURCHASE CONTRACT is that contract under
which the Partnership will sell all of the
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macadamia nuts produced from the Lot X Orchard to
Mauna Loa.
Management Fee MANAGEMENT FEE means the fee paid to the Managing
Partner pursuant to Section 4.1 of the Amended and
Restated Agreement of Limited Partnership of Mauna Loa
Macadamia Partners, L.P.
Managing Partner MANAGING PARTNER means the managing general partner
of the Partnership, Mauna Loa Resources Inc., a
Hawaii corporation, or its successor as managing
general partner of the Partnership.
Mauna Loa MAUNA LOA means Mauna Loa Macadamia Nut Corporation, a
Hawaii corporation.
New Farming Contract NEW FARMING CONTRACT means that 30-year contract,
under which the Agribusiness Companies farm the New
Orchards, which contract commenced on October 1,
1989 and will continue until June 30, 2019.
New Ka'u Orchards NEW KA'U ORCHARDS is defined in the New Farming
Contract and described in Schedule A attached to the
New Farming Contract.
New Keaau Orchards NEW KEAAU ORCHARDS is defined in the New Farming
Contract, described in Schedule A-1 attached to the
New Farming Contract.
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▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇ ORCHARDS is defined in the New Farming
Contract and described in Schedule A attached to the
New Farming Contract.
New Orchards NEW ORCHARDS is defined in this Contract. New
Orchards include New Ka'u Orchards, New Mauna Kea
Orchards, and New Keaau Orchards.
New Nut Purchase
Contract NEW NUT PURCHASE CONTRACT means that contract under
which the Partnership will sell all of the macadamia
nuts produced from the New Orchards to Mauna Loa
under a 30-year nut purchase contract that commenced
in 1989.
Nut Purchase Contracts NUT PURCHASE CONTRACTS includes the Original Nut
Purchase Contracts, the New Nut Purchase Contract,
and the Lot X Nut Purchase Contract.
Original December 1986
Farming Contract ORIGINAL DECEMBER 1986 FARMING CONTRACT means that
20-year contract (as amended and restated) under
which Ka'u Agribusiness Co., Inc. farms the Original
December 1986 Orchards, which contract commenced in
December 1986 and will continue until
December 31, 2006.
6.
Original June 1986
Farming Contract ORIGINAL JUNE 1986 FARMING CONTRACT means that
20-year contract (as amended and restated) under
which Ka'u Agribusiness Co., Inc. farms the
Original June 1986 Orchards, which contract
commenced in June 1986 and will continue until
December 31, 2006.
Original Nut
Purchase
Contracts ORIGINAL NUT PURCHASE CONTRACTS means those
contracts under which the Partnership will sell all
of the macadamia nuts produced from the Original
Orchards to Mauna Loa under two 20-year nut purchase
contracts that commenced in 1986.
Original Orchards ORIGINAL ORCHARDS includes Original June 1986
Orchards and Original December 1986 Orchards.
Original June 1986
Orchards ORIGINAL JUNE 1986 ORCHARDS means the approximately
2,423 tree acres of macadamia orchards commonly
known as Keaau Lot VIII, By Dickes and Ka'u Sisal,
which the Partnership acquired in June 1986 from
Mauna Loa and one of its affiliates. Those orchards
are described in and covered by the June 12, 1986
Farming Contract between the Partnership, Mauna Loa,
and Ka'u Agribusiness Co., Inc.
7.
Original December
1986 Orchards ORIGINAL DECEMBER 1986 ORCHARDS means the
approximately 266 tree acres of macadamia orchards
in which the Partnership acquired certain interests
(ownership interests in the macadamia trees and
leasehold interests in the underlying land) in
December 1986 from Ka'u Agribusiness Co., Inc. Those
orchards are described and covered by in the
December 22, 1986 Farming Contract between the
Partnership and Ka'u Agribusiness Co., Inc.
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