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HomeMy WebLinkAboutCOM 0439.002 1996-1998 ) M<Y o• p~ Ste hen K. Yamashiro I~ p av Diane S. Quifiquit Mayor ' • Director ~ Oi M• l J O o c C~: c:- ~u~tzt#~r of ?~~tivtttt DEPARTMENT OF RESEARCH AND DEVELOPMENT 25 Aupuni Street, Room 219 • Hilo, Hawaii 967244252 • (808) 961-8366 • Fax (808) 935-1205 KONA: (808) 329-5226 • Faz (808) 326-5663 E-mail: chresdev~interpacne[ August 25, 1997 To: Council Chairman James Arakaki and Members of the County Council From: Margarita L. Hopkins Re: Papaya Quarantine Project Info During last week's Finance Committee hearing, a request was made to provide the Council members with copies of the documents relating to the proposed papaya quarantine project. Herewith enclosed are drafts to the documents. 1. Lease agreement between KSBE and Hawaii County 2. Permit agreement between Hawaii County and Farmer 3. Memorandum of Agreement between Hawaii County, Department of Agriculture, Research Corporation of UH and UH-CTAHR (College of Tropical Agriculture and Human Resources) 4. KSBE's comments to the Memorandum of Agreement. Please let me know if you need additional information. cc: Mayor Stephen Yamashiro Diane S. Quitiquit Note: Attachment is on file in the Clerk's Office. tiuuan. Ha. • O n?. rs. Ceahul . gat. ~t® AUG z 6.1~~7_- . "1 - , LAND COURT REGULAR SYSTEM After recordation, return by mail ( ) pickup ( ) to: KAMEHAMEHA SCHOOLS BISHOP ESTATE Legal Group 567 South King Street Kawaiahao Plaza, Suite 310 Honolulu, Hawaii 96813 LEASE NO. KAHUWAI PAPAYA LEASE Lessor: TRUSTEES OF THE ESTATE OF BERNICE PAUAHI BISHOP Lessee: COUNTY OF HAWAII Property: See Exhibit A GLS 081997 12548.6 GLS 2002 064 ATTACH. C-439.02 K TABLE OF CONTENTS I. DEMISE 1.01 Demise 3 1.02 Term 5 1.03 Quiet Enjoyment 5 II. DEFINITIONS 2.01 Defined Terms in this Lease 5 2.02 Accounting Terms 9 III. BASE RENT 3.01 Base Rent 9 3.02 Payment of Base Rent 9 3.03 Lessor's Expenses; Interest 9 3.04 Determination of Net Area 9 3.05 RCUH Special Account 10 IV. USE 4.01 Use of the Premises 10 4.02 Quarantine Program 10 4.03 Memorandum of Agreement 10 4.04 Crop Development Plan 10 4.05 Cultivation of the Premises 11 4.06 Good Husbandry 11 4.07 Buildings and Improvements 12 V. LESSEE'S REPRESENTATIONS AND COVENANTS 5.01 Lessee's Acceptance and Possession of the Premises 12 5.02 Payment of Rent 14 5.03 Taxes and Assessments 15 5.04 Improvements Required By Law 17 5.05 Observance of Laws 17 GLS 081997 12548.6 GLS 2002 064 5.06 Restoration, Repair and Maintenance 18 5.07 Waste, Nuisance or Unlawful Ac~ivity 18 5.08 Inspection and Repair 18 5.09 Reports and Audits 19 5.10 Liens 19 5.11 Payment of Claims 19 5.12 Overhanging Trees 19 5.13 Land Adjoining Road 20 5.14 No Livestock 20 5.15 Subletting and Permits 20 5.16 Assignment 20 5.17 Expenses of Lessor 21 5.18 No Dedication of the Premises 21 5.19 Hazardous Materials 21 5.20 Surrender 25 5.21 Holdover 27 5.22 Historic Sites and Burial Sites 28 5.23 Endangered Species 29 5.24 Wetlands 30 5.25 Withdrawal 30 5.26 Illegal Activity and Forfeiture 32 5.27 Payment of Claims 32 5.28 Disease Control 33 5.29 Attorney's Fees 33 5.30 Security and Management 34 5.31 Landfills 34 5.32 Early Termination 34 GLS 081997 12548.6 GLS 2002 064 VI. INSURANCE 6.01 General Requite=ments 35 6.02 Liability Insurance ?5 6.03 Fire and Other Property Insurance 36 6.04 Payment of Insurance Proceeds 36 6.05 Workers' Compensation and Employer's Liability Insurance 3 7 6.06 Waiver of Subrogation 37 VII. CONDEMNATION 7.01 Condemnation ?7 7.02 Compensation and Damages 37 7.03 Condemnation of Leasehold Interest 38 7.04 Condemnation of Lessor's Reversionary Interest 38 VIII. MEDIATION AND ARBITRATION 8.01 Mediation 39 8.02 Arbitration 39 IX. NONAPPLICABILITY OF PROVISIONS TO COUNTY OF HAWAII 9.01 Section 3.01 40 9.02 Section 5.03 40 9.03 Section 5.19 40 9.04 Section 5.20 41 9.05 Section 5.27 41 9.06 Section 11.13 41 X. EVENTS OF DEFAULT 10.01 Events of Default 41 10.02 Remedies 43 10.03 Lessor's Costs and Expenses 43 GLS 081997 12548.6 GLS 2002 064 XI. MISCELLANEOUS 11.01 Nonwaiver 43 11.02 Notices 43 11.03 Paragraph Headings 44 11.04 Lessor's Attorney's Fees 44 11.05 Governing Law; Venue 44 11.06 Entire Agreement 45 11.07 Inurement 45 11.08 Trustees Not Personally Liable 45 11.09 Time of Essence 45 11.10 Severability 45 11.11 Neither Party Deemed Drafter 45 11.12 Maximum Rate of Interest 45 11.13 Recordation of Lease 45 GLS 081997 12548.6 GLS 2002 064 LEASE NO. (KAHUWAI PAPAYA LEASE) THIS INDENTURE OF LEASE, dated as of September 1, 1997 (the "Commencement Date"), by and between HENRY HAALILIO PETERS, OSWALD KOFOAD STENDER, RICHARD SUNG HONG WONG, MARION MAE LOKELANI LINDSEY and GERARD AULAMA JERVIS, as Trustees of the Estate of Bernice Pauahi Bishop, whose principal place of business and post office address is Suite 200, Kawaiahao Plaza, 567 South King Street, Honolulu, Hawaii 96813 ("Lessor"), and COUNTY OF HAWAII, a political subdivision of the State of Hawaii, whose principal place of business and post office address is 25 Aupuni Street, Hilo, Hawaii 96720 ("Lessee"). RECITALS A. Papaya ring spot virus infestation has decimated the papaya industry in major papaya growing areas in Puna, Hawaii and the island of Oahu. Hawaii's papaya farmers and papaya fruit handlers have suffered irretrievable production and financial losses and Hawaii has experienced decreased shares of the mainland United States and international papaya markets. B. Papaya farmers have attempted to plant papaya in areas not previously cultivated. These lands previously free of papaya ring spot virus have become infested with the disease after a short period of time. C. To date the only means of controlling papaya ring spot virus infestation is to remove physically all papaya plants infested with the disease, a measure which results in further loss of papaya production and income. Aggressive and innovative methods to control papaya ring spot virus infestation must be implemented immediately if Hawaii's papaya industry is to be saved. D. Research scientists at the Department of Agriculture of the State of Hawaii ("DOA") and the University of Hawaii ("UH"), acting through its College of Tropical Agriculture and Human Resources ("CTAHR") and other institutions have attempted to develop measures and technology which could moderate the impact of papaya ring spot virus on papaya crops, and to educate papaya growers in the use of these measures and technologies. Successful implementation of these measures could lead to a stabilization and restoration of the papaya industry and its contribution to the State's economy. E. DOA, CTAHR and Lessee propose to implement a demonstration quarantine program (the "Quarantine Program") in Puna, Hawaii, to demonstrate that papaya can be grown successfully under severe papaya ring spot virus pressure by following strict management protocols. GLS 081997 12548.6 GLS 2002 064 F. The Quarantine Program will provide DOA and CTAHR researchers a unique opportunity to study the epidemiology of papaya ring spot vi~~us, to evaluate each others' management measures, and implement technology developed and being developed by CTAHR and DOA to control papaya ring spot virus infestation. G. Lessee proposes to lease land from Lessor to implement the Quarantine Program. The Quarantine Program will establish a quarantine area of at least 1,000 acres within which area Lessee will license Portions of the Premises (defined below) to be planted by Permittees (defined below) selected by DOA with the assistance of the Papaya Administrative Committee ("PAC"). H. Lessee will require Permittees to plant papaya pursuant to the crop development plans and implement disease control measure to be promulgated by DOA. These measures include surrounding plantings of traditional varieties of papaya with planting of biologically engineered virus resistant (transgenic) papaya plants, the fruit from which trees may not be sold until final approval is granted by the U.S. Food & Drug Administration, the U.S. Environmental Protection Agency, and license agreements are reached with the holders of patents to market transgenic fruit. CTAHR will make available to Permittees seed for virus resistant transgenic papaya plants necessary to implement the Quarantine Program. I. Lessee and DOA do not have sufficient funds to initiate the leasing of land to implement the Quarantine Program and have requested a three year rent deferral from Lessor. Lessor desires to encourage Lessee's and DOA's efforts to prepare the land for planting by Permitees and to encourage the experimental Quarantine Program to control papaya ring spot virus infestation. Lessor is willing to defer rent payment for the first three Lease Years (defined below) of the Term in order to encourage implementation of the Quarantine Program, provided that upon termination or sooner expiration of the Lease, Lessee will, at Lessor's election, pay deferred rent to Lessor or expend deferred rent payments to implement further quarantine measures on Lessor's other lands on the island of Hawaii. J. Lessee, DOA, UH and the Research Corporation of the University of Hawaii ("RCUH") will enter into a memorandum of agreement (the "Memorandum of Agreement") to describe the respective responsibilities each party will assume and perform in order to implement the Quarantine Program. As a part of their cooperative effort, Lessee will designate RCUH as its fiscal agent ("Fiscal Agent") to serve as the collecting and disbursing agent for all funds, including permit fees and received by and provided by Lessee for the purposes of implementing the Quarantine Program. Acting as Fiscal Agent, RCUH will establish a special account (the "Special Account") into which account all such funds shall be deposited and from which account all such expenses, including rent, shall be paid. RCUH shall employ a leasing manager and all other property management employees. GLS 081997 12548.6 GLS 2002 064 2 r K. CTAHR shall designate a principal investigator to be responsible for conducting the research and scientific management of the Quarantine Program in accordance with University of Hawaii policies and procedures. Lessee shall designate a project co-investigator to be responsible for supervising the administrative management of the Quarantine Program. The DOA shall designate a project co-investigator to be responsible for working with CTAHR's principal investigator and the County's co-investigator to implement the Quarantine Program. The CTAHR investigator, Lessee's co-investigator and the DOA co-investigator shall cooperate with RCUH on administrative aspects of the Quarantine Program. I. DEMISE 1.01 Demise. Lessor, in consideration of the rent reserved in this Lease and of the covenants contained in this Lease and on the part of Lessee to be observed and performed, hereby demises and leases unto Lessee, and Lessee hereby accepts and rents from Lessor: All of the real property described in Exhibit A attached to this Lease (the "Premises"). SUBJECT, HOWEVER, to the encumbrances described in Exhibit A, and to the following reserved rights: (a) Water Rights. The right unto Lessor, Lessor's agents and any permittees or grantees of Lessor, from time to time to enter the Premises with any necessary equipment and to prospect, dig, bore, drill and tunnel for water thereon, to drill and develop wells, to divert, collect and impound any water so developed and to construct, maintain, repair and replace thereon any dams and reservoirs to collect and impound such water and any ditches, flumes and pipelines necessary to conduct such water from the Premises; provided, however, that this right shall be exercised in such manner as to occasion the least practicable interference with the use of the Premises by Lessee. Lessee shall have no right to drill or develop wells on the Premises without the prior written consent of Lessor, for which consent Lessor may charge consideration. (b) Access. The right unto Lessor, Lessor's other tenants of adjoining lands and such other persons who now have or are hereafter granted rights of access to adjoining lands, to use in common with Lessee all roads and trails from time to time existing and maintained on the Premises. Lessor's reservation of any such access should be considered only recognition that a claim of access or right to use a particular route may be made by a third party, but not an admission by Lessor that any third party has any right to use such access. The right to grant access in the future shall be exercised in such manner as to occasion the least practicable interference with the use of the Premises by Lessee. GLS 081997 12548.6 GLS 2002 064 3 (c) Util_ties. All land and rights-of-way which Lessor in Lessor's sole discretion may from time to time require for Lessor, Lessor's other tenants, other grantees or permittees of Lessor, for roads, roadways, trails, ditches, flumes, pipelines, irrigation facilities, pole and wire lines or telecommunication facilities and the right to enter the Premises and construct, maintain, repair and replace any such facilities; provided, however, that this right shall be exercised in such manner as to occasion the least practicable interference with the use of the Premises by Lessee, and the Base Rent (defined below) reserved in this Lease for the remaining part of the Premises not used for such additional roads, roadways, trails, ditches or flumes shall be reduced for and during the unexpired Term (defined below), effective as of the date of commencement of such use to an amount determined by multiplying the current Base Rent by the ratio that the Net Area (defined below) of such remaining portion of the Premises in cultivation not so taken bears to the total Net Area of the Premises formerly in cultivation prior to the taking, it being intended that there shall be no reduction in Base Rent following a taking of any portion of the Premises not comprising the Net Area. (d) Historic Sites and Burial Sites. All Historic Sites and Burial Sites, including without limitation places, objects or specimens, if any, as defined in Section 2.01 of this Lease, which may be on the Premises, together with the right at all times to enter the Premises for the purpose of searching, exploring for and conducting research on objects, antiquities and specimens of Hawaiian or other ancient art or handicraft of prehistoric, historic or archeological interest, and removing the same for preservation. (e) Mineral Rights. All mineral and metallic mines of every description. (f) Withdrawal Rights. The right unto Lessor at any time or times during the Term to withdraw certain portions of the Premises, or to terminate and cancel this Lease, all as more particularly set forth in Section 5.25 of this Lease. (g) Native Hawaiian Rights. The right of native Hawaiians to exercise traditional rights, customs practices, prerogatives, privileges and usufructs on the Premises in accordance with law. TO HAVE AND TO HOLD the same, together with all improvements, rights, easements, privileges and appurtenances thereunto belonging or appertaining, unto Lessee for the Term as defined below, unless the Term shall be sooner terminated as provided in this Lease, Lessee YIELDING AND PAYING therefor unto Lessor net over and above all taxes, rates, assessments and other charges hereunder payable by Lessee, in advance during the Term, without any deduction, all Base Rent as provided in this Lease. GLS 081997 12548.6 GLS 2002 064 4 r 1.02 Term. The term (the "Term") of this Lease shall be approximately fig>e (5) years, commencing on the Commencement Date of this Lease and ending on December 31, 2002, unless extended by mutual agreement of Lessor and Lessee. 1.03 Ouie*_ Enioyment. Upon observance and performance of the terms, covenants and conditions contained in this Lease and to be observed and performed by Lessee, Lessee shall peaceably hold and enjoy the Premises for the Term and any extensions thereof without hinderance or interruption by Lessor or any other person lawfully or equitable claiming by, through or under Lessor, except as otherwise expressly provided in this Lease. II. DEFINITIONS 2.01 Defined Terms in this Lease. For the purpose of this Lease, the following terms shall have the following meaning (such meanings to be equally applicable to both the singular and plural forms of the terms defined in this Lease): Adiusted Gross Income: For each calendar year during the Term of this Lease, Lessee's gross income derived from or attributable to the Premises, including without limitation the gross proceeds from the sale of Papaya Product and other crops, regardless of whether such sales are made by Lessee or any Permittee of Lessee, if any, or otherwise, as shown on the annual federal or state income tax return or Hawaii general excise tax return of Lessee and any Permittee, less all Hawaii general excise tax paid on such gross proceeds, and less real property taxes and assessments paid with respect to the Premises in the calendar year. Burial Site: A site other than a known, maintained, actively used cemetery, on which site human skeletal remains are discovered or are known to be buried and appear to be over fifty (50) years old. Business Dav: Any day other than a Saturday, a Sunday or a day on which commercial banks in Honolulu, Hawaii are required or authorized to be closed. Calendar Quarter: A period of three (3) months beginning on January 1, April 1, July 1 or October 1 of any year. Conservation Laws: All federal, state or local laws, ordinances or regulations, now or hereafter in effect, relating to the conservation, preservation, management or protection of an Endangered Species and the Critical Habitat upon which any Endangered Species depends, including without limitation, the Endangered Species Act, as amended, 16 U.S.C. §1531 et. sea•, and Hawaii laws regarding Conservation of Aquatic Life, Wildlife, and Land Plants, H.R.S. Chapter 195D, and any similar state or local laws or ordinances and the regulations now or hereafter adopted, publiskled and promulgated pursuant thereto. GLS 081997 12548.6 GLS 2002 064 5 Critical Habitat: Any area, range, or ecosystem essential to the survival or conservation of an Endangered Species. CTAHR: The University of Hawaii, acting through its College of Tropical Agriculture and Human Resources. DOA: The Department of Agriculture of the State of Hawaii. Endangered Species: Any: (i) aquatic life, wildlife and plant that is in danger of extinction throughout all or a significant portion of its range, including, without limitation, any aquatic life, wildlife and plant defined as or included in the definition of "endangered species" under, or for the purposes of, Conservation Laws; (ii) aquatic life, wildlife and plants likely to become an Endangered Species within the foreseeable future throughout all or a significant portion of its range, including, without limitation, any aquatic life, wildlife and plants defined as or included in the definition of "threatened species" under, or for the purposes of, Conservation Laws; (iii) aquatic life, wildlife and plants growing or living naturally in the State of Hawaii without having been brought to the State of Hawaii by man, and, including, without limitation, all other aquatic life, wildlife and plants defined as or included in the definition of "indigenous species" under, or for the purposes of, Conservation Laws; and (iv) unique forest communities and ecosystems defined in any of the above categories. Event of Default: The meanings assigned to that term in Section 10.01 of this Lease. Hazardous Discharge: Any event involving the use, deposit, disposal, spill, release or discharge of any Hazardous Material on, within or under the Premises. Hazardous Materials: Any and all radioactive materials, asbestos, organic compounds known as polychlorinated biphenyls ("PCB") or substances or compounds containing PCB, chemicals known to cause cancer or reproductive toxicity, pollutants, contaminants, hazardous wastes, toxic substances, crude oil or any fraction thereof which is liquid at standard conditions of temperature and pressure (60 degrees Fahrenheit and 14.7 pounds per square inch absolute) and any and all other substances or materials defined as or included in the definition of "hazardous substances," "hazardous wastes," "hazardous materials," or "toxic substances" under, or for the purposes of, Hazardous Materials Laws. Hazardous Materials Claim: (a) Any and all enforcement, clean-up, removal, mitigation or other governmental or regulatory actions instituted, or to the best of Lessee's knowledge contemplated or GLS 081997 12548.6 GLS 2002 064 6 M threatened, in respect of the Premises pursuant to any Hazardous Materials Laws; and (b) Any and all claims made or to the best of Lessee's knowledge contemplated or threatened, by any third party against Lessee seeking damages, contribution, cost recovery, compensation, injunctive relief or similar relief resulting from any Hazardous Discharge or from the existence of any Hazardous Material on, within or under the Premises. Hazardous Materials Laws: All federal, state and local laws, ordinances or regulations, now or hereafter in effect, relating to environmental conditions, industrial hygiene or Hazardous Materials on, within, under or about the Premises or any improvements thereon, including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. §9601 et sea., the Solid Waste Disposal Act, as amended by the Resource Conversation and Recovery Act of 1976, and Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. §6901 et sea., the Hazardous Materials Transportation Act, 49 U.S.C.App. §1801 et sea., the Federal Water Pollution Control Act, as amended by the Clean water Act of 1977, 33 U.S.C. §1251 et sea., the Clean Air Act of 1966, as amended, 42 U.S.C. §7401 et sea., the Toxic Substances Control Act of 1976, 15 U.S.C. §§2601 through 2629, the Safe Drinking Water Act of 1974, as amended, 42 U.S.C. §§300f through 300j, the Occupational Safety and Health Act of 1970, as amended, 29 U.S.C. §651 et sea., the Oil Pollution Act of 1990, §§33 U.S.C. §2701 et seg., the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. §11001 et sea., the National Environmental Policy Act of 1969, 42 U.S.C. §4321 et sec., the Federal Insecticide, Fungicide and Rodenticide Act of 1947, as amended, 15 U.S.C. §136 et sea., the Medical Waste Tracking Act of 1988, 42 U.S.C. §6992, and Hawaii laws regarding Management and Disposal of Infectious Waste, H.R.S. §321-21, Solid Waste, H.R.S. Chapter 340A, Safe Drinking Water, H.R.S. Chapter 340E, Air Pollution, H.R.S. Chapter 342B, Ozone Layer Protection, H.R.S. Chapter 342C, Water Pollution, H.R.S. Chapter 342D, Noise Pollution, H.R.S. Chapter 342F, Solid Waste Pollution, H.R.S. Chapter 342H, Lead Battery Recycling, H.R.S. Chapter 342I, Hazardous Waste, H.R.S. Chapter 342J, Underground Storage Tanks, H.R.S. Chapter 342L, Used Oil Transport, Recycling and Disposal, H.R.S. Chapter 342N, Asbestos, H.R.S. Chapter 342P, and the Hawaii Environmental Response Law, H.R.S. Chapter 128D, and any similar federal, state or local laws or ordinances and the regulations promulgated pursuant thereto. Historic Site: Any portion of the Premises which may qualify as "historic property" as defined under H.R.S. §6E-2, including, without limitation, any building, structure, object, district, area or site of prehistoric, historic or archeological interest, any site eligible for listing on the Hawaii State Register of Historic Places or the National Register of Historic Places, any heiau, pond, altar, agricultural terrace, lo`i, wall, auwai, house platform, imu, petroglyph site and all objects, GLS 081997 12548.6 GLS 2002 064 7 antiquities and specimens of Hawaiian or other ancient art or handicraft or of prehistoric, historic or archeological interest found on the Premises. Lease Year: The 12-month period (except for the first Lease Year which may be of shorter or longer duration) in which the amount of Base Rent to be paid will be fixed for the entire period. The first Lease Year will commence on the Commencement Date and end on December 31, 1998. Each subsequent Lease Year will begin on January 1 and end on December 31 of the same calendar year. Net Area: The portion of the Premises planted or capable of being planted in papaya or other crops, including land planted in transgenic papaya plants and other trees as buffer zones, and land used for roads and for administrative, operations, storage and processing buildings and facilities by Lessee, but excluding gulches, streams, other lands with slopes exceeding 35 degrees and lands used for a buffer or not otherwise plantable or planted papaya. The Net Area of the Premises shall be determined pursuant to Section 3.04. PdAdVa Product: All papaya product harvested from the Premises weighed prior to processing, regardless of the form in which the product is sold and whether the papaya product is intended for sale within the State of Hawaii, the mainland United States, or foreign countries. Papaya Product is intended to include the weight of all fruit harvested, prior to culling and processing, regardless of the use or sale of such Papaya Product. Percentage Rent: The percentage rent of ONE CENT ($.O1) per pound of Papaya Product sold and delivered to a handler as defined in 7 CFR X928.9, or a packing house to be paid by Permittees to Lessee pursuant to Section 2.03 of the Permit. Permit: A permit to be issued by Lessee to a farmer to grow papaya on the Premises in the form attached to this Lease as Exhibit B. Permittee: A farmer who has contracted with Lessee under a Permit to grow papaya on the Premises. Premium: The premium of THREE HUNDRED AND NO/100 DOLLARS ($300.00) per acre based on the Net Area to be paid by Permittees to Lessee pursuant to Section 2.01 of the Permit. RCUH: The Research Corporation of the University of Hawaii, a public instrumentality and body corporate organized pursuant to HRS Chapter 307. UH: The University of Hawaii, a body corporate organized pursuant to HRS Chapter 304. Underground Storage Tank: Any one or combination of tanks (including pipes connected thereto) used to contain an GLS 081997 12548.6 GLS 2002 064 8 accumulation of regulated substances, and the volume of which (including the volume of the underground pipes connected thereto) is ten percent (10%) or more beneath the surface of the ground, as defined in H.R.S. §342L-1. Waste Land: The portion of the Premises not planted or capable of being planted in papaya trees, but excluding lava land. Waste Land shall be determined pursuant to Section 3.05. The historic delineation between Net Area and Waste Land is described in Exhibit C attached to this Lease. 2.02 Accountino Terms. All accounting terms not specifically defined in this Lease shall be construed in accordance with generally accepted accounting principles, applied on a consistent basis. III. BASE RENT 3.01 Base Rent. Lessee will pay to Lessor Base Rent ("Base Rent") of ONE HUNDRED AND NO/100 DOLLARS ($100.00) per acre per Lease Year based on the Net Area, net over and above al taxes, rates, assessments and other charges payable by Lessee. 3.02 Payment of Base Rent. Lessee's payment of Base Rent will be deferred during the first through third Lease Years, until the earlier of termination of this Lease or December 31, 2000. Lessee will pay Base Rent quarterly in advance in equal installments on the first day of each Calendar Quarter during the fourth and fifth Lease Years of the Term of this Lease, commencing January 1, 2001. 3.03 Lessor's Expenses: Interest. Lessee will also pay to Lessor, as additional rent within thirty (30) days after the date of mailing or delivery of notice and a statement therefor all costs and expenses paid or incurred by Lessor as a result of Lessee's act or omission, including a failure to pay, or otherwise required to be paid by Lessee under any provision of this Lease. If Lessee shall become delinquent in the payment of any Base Rent, additional rent other than interest, or other payments required to be made by Lessee to Lessor under this Lease, Lessee will also pay to Lessor as additional rent interest on such rent and other payments at a rate of twelve percent (12%) per annum, but not to exceed the maximum rate permitted by law from the due date of such payment until fully paid. 3.04 Determination of Net Area. Lessor will calculate Net Area for the Premises by reference to invoices paid by Lessee to third parties for clearing and preparing the Premises for planting or other process to be agreed upon by Lessor and Lessee following completion of clearing, preparation and planting of the Premises; provided that the minimum Net Area shall be at least five hundred seventy-five (575) acres. Until clearing, preparation and planting is completed, Lessor and Lessee will use the historic area of the Premises planted in papaya as the GLS 081997 12548.6 GLS 2002 064 9 estimate of Net Area, with a reconciliation of Base Rent to be made following final determination of Net Area. 3.05 RCUH Special Account. Lessee shall cause ail payments of Premium, Base Rent, Percentage Rent, real property taxes and other charges collected from Permittees to be deposited to the Special Account maintained by RCUH, as Fiscal Agent, for the benefit of Lessor and Lessee, and shall cause all Base Rent, real property taxes and other expenses of operating the Quarantine Program to be paid from the Special Account. Lessee and RCUH shall periodically account to Lessor, Lessee, DOA and CTAHR for the revenues from the Premises and expenses of the Quarantine Program. Upon the first to occur of termination of this Lease or January 1, 2003, Lessee and RCUH shall at Lessor's request, either: (a) pay the deferred Base Rent to Lessor pursuant to a payment schedule to be determined by Lessor and Lessee, or (b) cooperate with Lessor in causing Lessee and RCUH to expend the deferred Base Rent, but not to exceed any excess of revenues over expenses accrued over the Term of this Lease, to assist Lessee, DOA and CTAHR in implementing further quarantine measures on Lessor's other lands on the island of Hawaii at Lessor's sole discretion. IV. USE 4.01 Use of the Premises. Lessee will use the Premises exclusively for the cultivation of papayas by Permittees, and for related purposes, including, without limitation, planting transgenic papaya trees and establishing buffer zones. Lessee shall not conduct or allow any Permittee to conduct any other business activity on the Premises or permit or suffer the use of the Premises for any other use or purpose or cultivate any other crop on the Premises without the prior written consent of Lessor, which consent may be withheld by Lessor in Lessor's sole discretion. 4.02 Quarantine Program. Lessee will comply with the Quarantine Program described in Exhibit D attached to this Lease, and will require all Permittees to comply with the Quarantine Program. 4.03 Memorandum of Agreement. Lessee, DOA, UH and RCUH will enter into the Memorandum of Agreement and will implement all procedures provided for in the Memorandum of Agreement. 4.04 Crop Development Plan. Lessee shall, on or before December 31, 1997, prepare or cause DOA to prepare, in consultation with the U.S. Department of Agriculture, Natural Resources Conservation Service or other appropriate agency with comparable expertise (the "NRCS") and submit to Lessor for approval a crop development plan (the "Crop Development Plan"). The Crop Development Plan must provide for: (a) designation of the Net Area and portions of the Net Area to be planted in traditional varieties of papaya and GLS 081997 12548.6 GLS 2002 064 10 r. other portions to be planted in transgenic plants for buffer zones, with provisions for the size and configuration of buffer zones; (b) reasonable control of noxious weeds, trees and other plants from the Premises; (c) erosion control measures to be maintained on the Premises; (d) location and type of buildings (if any) and improvements constructed or to be constructed on the Premises; and (e) a time schedule for completion of clearing preparation and planting of the Premises. 4.05 Cultivation of the Premises. (a) Implementation of the Quarantine Program and the Crop Development Plans. On or before March 31, 1997, Lessee will cause Permittees to complete clearing, preparation and planting of the Premises in accordance with the Quarantine Program and approved Crop Development Plan. (b) Continued Cultivation. Following completion of clearing, preparation and planting, Lessee will at Lessee's own expense, at all times during the Term (except for fallow periods) cause Permittees to cultivate and keep all of the Net Area planted in papaya pursuant to the Quarantine Program and the Crcp Development Plan. If Lessee shall at any time during the Term fail to cultivate and use the Premises in the condition and for the purposes set forth in this Lease, or to correct any Event of Default thereof by Lessee during such period as may be permitted by Lessor in writing, but in no event less than the period specified in Section 10.01 of this Lease, Lessor may at Lessor's option terminate this Lease pursuant to Section 10.02 of this Lease. 4.06 Good Husbandry. Lessee will cause Permittees to prepare, plant, cultivate, maintain, harvest and replant the Premises in accordance with the Quarantine Program and the Crop Development Plans using methods and practices of good husbandry generally recognized as appropriate for the species selected and planted, the climatic, soil and other environmental conditions of the Premises as compared to lands similarly situated or subject to similar conditions. Lessee will keep the Premises in a good cultivated condition reasonably free from weeds and other noxious growth. Lessee will comply with county grading codes and ordinances, Lessee will consult with the NRCS and will by proper construction and use of drainage ditches and cultivation practices take all reasonable precautions to prevent or arrest loss of soil by erosion. Lessee shall provide any buffer strip required by Lessor for the protection of any agricultural crops on the Premises at Lessee's own expense within the Premises, and GLS 081997 12548.6 GLS 2002 064 11 Lessee will not demand any contribution whatsoever for the cost of providing or maincalning any such strip f_om Lessor or any other tenant of any land adjoining the Premises. Lessee understands and agrees that neither Lessor nor Lessor's other tenants shall be required to perform any crop or weed control cn any land adjoining the Premises. 4.07 Buildings and Improvements. (a) Maximum Building Area. In order to maximize the area of the Premises to be cultivated, Lessor may limit the portion of the Premises on which Lessee may allow each Permittee to construct buildings and improvements to a portion of the Premises not to excee3 an aggregate area of one-half (0.5) acre, notwithstanding any minimum or maximum building site area requirements of the County of Hawaii Zoning Code. (b) Use of Buildings and Improvements. Lessee and Permittees may use such buildings and improvements only for the purpose of equipment storage and crop processing and storage. Lessee acknowledges that no building or improvements may be used for residential purposes. V. LESSEE'S REPRESENTATIONS AND COVENANTS Lessee hereby represents and covenants with Lessor as follows: 5.01 Lessee's Acceptance and Possession of the Premises. (a) Acceptance and Condition of the Premises. Lessee acknowledges that Lessor has made no representation or warranty, express or implied, concerning the physical condition of the Premises or its suitability fcr Lessee's intended use or for any other purpose, and Lessor expressly disclaims any liability for any representation or warranty. Lessee acknowledges that Lessee has examined and shall accept the Premises in its then "as is" existing condition, Lessee having made such determinations and examinations as Lessee deems necessary regarding the suitability of the Premises for agricultural purposes. Lessee accepts and assumes all risks with respect to Lessee's entry upon the Premises and the condition of the Premises, including, without limitation: (i) any Hazardous Materials on the Premises; and (ii) all easements and any dangerous conditions (latent or patent) on the Premises. (b) Lessee's Release. Lessee hereby releases and discharges Lessor and Lessor's trustees, employees, agents, attorneys and assigns, from and against any and all suits, administrative proceedings, claims, demands, causes of action, damages, consequential damages, losses, costs and expenses of any GLS 081997 12548.6 GLS 2002 064 12 z. kind, whether known or unknown, which Lessee had, has or at ar..~ time may have, based on: (i) the presence or release of any Hazardous Materials from, on, in, under or affecting ail or any port_on of the Premises (including any groundwater under the Premises) occurring prior to or during the Term of this Lease; (ii) any violation or claim of violation by Lessee of any Hazardous Materials Law; or (iii) the imposition of any claim for the recovery of any costs for environmental cleanup or other response costs relating to any Hazardous Discharge or to any release or threatened release of Hazardous Materials .-"rom, on, in or under the Premises during the Term of this Lease. This release does not include any Hazardous Discharge or release of Hazardous Materials occurring prior to the Term of this Lease. (c) Lessee's Obligation to Obtain Approvals. Lessee shall be solely responsible for obtaining: (i) all necessary consents, approvals and permits required to be obtained from any governmental agency in order to cultivate the Premises for papaya cultivation; and (ii) all roads, paths, water, sewer and other utility services and facilities required for or in connection with cultivation of the Premises. (d) Lessor's Obligation To Cooperate. Lessor will cooperate with Lessee in obtaining necessary governmental consents, approvals and permits required to be obtained from any governmental agency in order to develop the Premises for agricultural purposes, including the joinder in any application as may from time to time be required by any governmental agency as a condition to the development of the Premises for such permitted use; provided, however, that Lessee shall bear all costs of obtaining such consents, approvals and permits, including costs for any joinder by Lessor. (e) Environmental Screening Survey. Within thirty (30) days of the Commencement Date of this Lease, Lessor shall cause R. M. Towill Corp., an environmental engineer and consultant, to investigate the Premises and other lands to determine the environmental condition of the Premises by performing an environmental compliance screening survey of available public and private databases conducted in accordance with the then current standards and protocols of the American Society for Testing and Materials (the "Baseline Assessment"). Lessee shall acknowledge in writing any conditions cited in the Baseline Assessment of the Premises and will indemnify Lessor against any claims for damages which may arise from any such conditions. GLS 081997 12548.6 GLS 2002 064 13 L. (f) Addii.ional Environments Assessment. Lessee may at Lessee's sole cost and expense cause ar. environmental engineer or consultant selec_ed by Lessee to perform further document at:d data base reviews, examinations and tests to determine the environmental condition of the Premises and all buildings, improvements, structures, and equipment located on the Premises and the presence of Hazardous Materials on the Premises in addition to Baseline Assessment. Any supplement to the Baseline Assessment shall include, but not be limited to: (A) an environmental site assessment conducted in accordance with the then current standards of the American Society for Testing and Materials; and (B) sampling and testir_g of the Premises based upon conditions revealed by the environmental site assessment, including, without limitation: (1) an asbestos survey conducted according to the standards of the Asbestos Hazard Emergency Response Act protocol; (2) testing for polychlorinated biphenyls of any transformer on the Premises; and (3) soil and groundwater sampling to measure the effect of any Hazardous Discharge on the Premises revealed by the environmental site assessment, and such other sampling and testing reasonably necessary to determine the environmental condition of the Premises on the date of this Lease. (ii) The environmental consultant shall prepare such written reports as necessary to document the environmental consultant's findings and conclusions therefrom. Lessee shall cause the environmental consultant to repair any damage caused by the investigation to the Premises. Lessee shall acknowledge in writing any conditions cited in the supplement to the Baseline Assessment of the Premises. (g) Lessor's Obligation to Remove Hazardous Materials. Lessor shall conduct any remediation required by any Hazardous Materials Laws as a result of the presence of Hazardous Materials on the Premises prior to the Commencement Date and will indemnify and hold Lessee harmless for such remediation. Lessee shall not be responsible for remediation or removal of any condition cited in the Baseline Assessment. Lessor shall not be required to remove any Hazardous Materials present on the Premises prior to the Commencement Date unless such Hazardous Materials are required to be removed by law or applicable governmental agency. 5.02 Payment of Rent. (a) Payment. Lessee will pay rent in lawful money of the United States of America at the times and in the manner GLS 081997 12548.6 GLS 2002 064 14 r stated above, without any deduction and without notice or demand, at the office of Lesscr in Hilo, Hawaii. If any date for paymen~ shall not be a Business Day, then Lessee shall make such payment on the next following Business Day. (b) Electronic Funds Transfer. Lessor may, upon ninety (90) days prior written notice, require Lessee to pay Base Rent and real property tax and assessments through electronic funds transfer using an automated bank debiting system, whereby such payments shall be debited from Lessee's bank account and credited to a bank account Lessor shall designate in such notice. Lessee shall upon receipt of such notice promptly execute and deliver to Lessor and Lessor's designated bank, any documents, instruments, or authorizations required to implement such debiting system. Lessee shall pay all service fees and other charges in connection with electronic funds transfer, including charges resulting from insufficient funds in Lessee's bank account. Lessee shall remain liable for all payments of Base Rent and real property tax and assessments, notwithstanding Lessee's bank's failure to correctly debit the amount of such payments or transfer such payments to Lessor's account. 5.03 Taxes and Assessments. (a) Real Property Tax. Lessee will at least ten (10) days before the same become delinquent pay as additional rent to Lessor all real property taxes and assessments of every description to which the Premises or any part thereof or any building or improvement thereon, or Lessor or Lessee in respect thereof, are now or may during the Term be assessed or become liable, whether assessed to or payable by Lessor or Lessee. (i) Payment of Assessments. With respect to any assessment made under any betterment or improvement law which may be payable in installments, Lessee shall be required to pay only such installments of principal together with interest on unpaid balances thereof as shall become due and payable during the Term. All such taxes and assessments shall be prorated as of the Commencement Date and expiration date, respectively, of the Term. (ii) Payment by Lessor. If Lessee fails to pay such real property taxes and assessments, Lessor may, without notice of demand to Lessee, pay the same, and any advances made by Lessor in discharge of the assessments and other charges shall be a lien on Lessee's interest in the Premises, payable on demand with interest at the rate of interest provided in Section 5.03 (d) . (iii) Appeal of Real Property Tax and Assessments. Lessor or Lessee may contest in good faith, by appropriate proceedings commenced before the same become delinquent, the validity or amount of any such real property tax or assessment, in the name of Lessor or in the name of Lessee, or both of them as Lessor or Lessee may deem advisable. GLS 081997 12548.6 GLS 2002 064 15 (.A) Lessor may bring such appeal or proceeding at Lessor's own cost and expense, only after payment of such taxes, assessments or other charges or impositions if required by law or regulation for bringing such appeal or proceeding. (B) Lessee may bring such appeal or proceeding at Lessee's own cost and expense, only after payment of such taxes, assessments or other charges or impositions if required by law or regulation for bringing such appeal or proceeding, and Lessee shall indemnify and hold Lessor harmless against any and all loss, costs or expenses of any kind that may be incurred by or imposed upon Lessor in connection with such appeal or proceeding. In addition, Lessee shall comply with the following procedures: (1) Lessee shall promptly notify Lesscr of the institution of any such proceedings to appeal or challenge any such tax or assessment and shall notify Lessor of the progress of such proceedings; (2) Lessee shall in good faith, by appropriate action diligently pursued contest or cause to be contested the amount, applicability or validity thereof; (3) Lessee shall set aside on its books, reserves (segregated to the extent required by sound accounting principles) deemed by Lessor to be adequate with respect thereto; (4) Lessee shall provide to any government authority imposing such tax or assessment and to Lessor a bond or other security to stay enforcement or collection of such tax or assessment during the pendency of any such proceedings; and (5) nonpayment of such tax or assessment during the pendency of any such proceedings will not subject the Premises or any part thereof to forfeiture or loss (or the reasonable probability of forfeiture or loss). (iv) No Dedication. Due to the experimental nature of the Quarantine Program and length of the Term of this Lease, Lessee may not dedicate any portion of the Premises to agricultural use for real property tax purposes. (b) Conveyance Tax. Lessee will pay all conveyance taxes imposed by the State of Hawaii with respect to this Lease, a memorandum of this Lease, or any amendment to, extension of or assignment of this Lease, unless an exemption from such taxes is available to Lessee. (c) General Excise Tax and Privilege Tax. Any law or regulation to the contrary notwithstanding, Lessee will pay to Lessor as additional rent, at the time and together with each GLS 081997 12548.6 GLS 2002 064 16 f• payment of Base Rent, real property taxes and assessments and other charges, required to be paid by Lessee to Lessor which is subject to the Hawaii general excise tax on gross income, privilege tax on leasing of real property or any successor or similar tax, an amount which, when added to the rent or other charges (whether actually or constructively received by Lessor;, shall yield to Lessor, after deduction of all such taxes payable by Lessor with respect thereto, a net amount equal to that which Lessor would have realized therefrom had no such taxes been imposed, which amount of additional rent is presently four and one hundred sixty-six one thousandths percent (4.166%) of each amount, and which amount of additional rent is subject to change with increases or decreases to the Hawaii general excise tax on gross income, privilege tax on leasing of real property or any successor or similar tax. (d) Rates and Other Charges. Lessee will pay direct~y before the same become delinquent all utility charges, water anti sewer rates, garbage rates and other charges of every descript_cn to which the Premises or any part thereof or any buildings or improvements thereon, or Lessor or Lessee in respect thereof, may during the Term be assessed or become liable, whether assessed to or payable by Lessor or Lessee. If Lessee should fail to pay within thirty (30) days any such rates or charges as provided in this Lease, Lessor may at any time thereafter pay the same, together with interest, penalties, fines and costs accrued thereon or imposed in connection therewith and Lessee will also pay to Lessor on demand interest on all such amounts paid or advanced by Lessor, at a rate of twelve percent (12"s) per annum, but not to exceed the maximum rate permitted by law, from the date of payment or advance by Lessor until fully paid. (e) New Taxes. If at any time during the Term there shall be assessed against the Premises or any part thereof or any building or improvement thereon or any rents payable to Lessor therefor or against Lessor in respect thereof any new taxes (other than federal or state taxes on net income) or any other taxes existing at the dates of commencement of the Term, which are in substitution for real property taxes or are in lieu of increases thereof, Lessee will also pay to Lessor as additional rent, at least thirty (30) days before the same become delinquent, all such new taxes. 5.04 Improvements Required By Law. Lessee will, at its own expense during the whole of the Term, make, build, maintain and repair all fences, sewers, drains, roads, bridges, culverts and parking areas which may be required by law to be made, built, maintained and repaired upon or adjoining or in connection with or for the use of the Premises or any part thereof or any improvements on the Premises. 5.05 Observance of Laws. Lessee will at all times during the Term keep the Premises in a strictly safe, clean, orderly and sanitary condition and observe and perform all laws, including without limitation, Hazardous Materials Laws, GLS 081997 12548.6 GLS 2002 064 17 ordinances, rules and regulations now or hereafter made by any governmental authority for the time being applicable to the Premises and any adjacent land or any improvement thereon or use and cultivation thereof. Lessee shall not use the Premises for any illegal purpose or conduct any illegal activity on the Premises, and will indemnify, defend and hold Lessor and Lessor's trustees, officers, employees, agents, attorneys and assigns harmless against all actions, suits, damages and claims by whomsoever brought or made by reason of the nonobservance or nonperformance of such laws, ordinances, rules and regulations or of this covenant. 5.06 Restoration, Repair and Maintenance. Lessee will at its own expense at all times during the Term, substantially restore, repair, maintain, and keep all buildings and other improvements now and hereafter built on the Premises in good and safe repair, order and condition with all necessary repairs and amendments whatsoever, reasonable wear and tear and destruction by unavoidable casualty not required in this Lease to be insured against excepted. If any private roadway shall be damaged by Lessee or any person claiming by, through or under Lessee, Lessee shall immediately upon written notice by Lessor repair such roadway to the condition that existed prior to such damage, and if Lessee shall fail to repair such damage within a reasonable period (in Lessor's reasonable discretion), Lessor may accomplish such repair at Lessee's expense. 5.07 Waste. Nuisance or Unlawful Activity. Lessee agrees that Lessee will not make or allow any waste or stripping of the Premises, or maintain or permit to be maintained a nuisance or allow or make any unlawful, improper, offensive, noisy or disorderly use of the Premises. For purposes of this Section 5.07, any non-compliance with Hazardous Materials Laws or the requirements of prudent Hazardous Materials management practices shall constitute "waste." 5.08 Inspection and Repair. Lessee will permit Lessor and Lessor's agents at all reasonable times during the Term to enter the Premises and examine the state of repair, cultivation and condition of the Premises, and will repair and cure all defects required by the terms of this Lease to be repaired by Lessee, of which notice shall be given within thirty (30) days after the giving of any notice of defects and request to cure by Lessor or Lessor's agents; provided, however, that if the nature of such defect is such that the cure cannot reasonably be completed within thirty (30) days, Lessee may have such additional time as may be reasonably necessary to cure such defect so long as such cure is commenced within such thirty (30) day period and diligently and continuously pursued to completion. If Lessee shall refuse or neglect to commence and complete such cure within the time period provided in this Section, Lessor may make such repairs or cure such defect and shall not be responsible to Lessee or any person claiming by or through Lessee for any loss or damage that may be caused to Lessee or such person claiming by or through Lessee by reason of such repair or GLS 081997 12548.6 GLS 2002 064 18 cure. If Lessor shall make such repair or cure, Lessee shall pay forthwith on demand to Lessor the cost of such repair or cure with interest thereon computed at the rate of interest provided in Section 5.03 (d) from the date of advance by Lessor until fully paid. 5.09 Reports and Audits. Lessee will submit to Lessor within one hundred twenty (120) days after the end of each Lease Year during the Term (and following the final Lease Year of the Term) a signed statement of the quantity of Papaya Product produced on the Premises and all Premium, Base Rent and Percentage Rent received by Lessee for use of the Premises during such fiscal year. Lessee shall keep, for a period of three (3) full calendar years following the end of each such Lease Year, all books and records of Lessee and all Permittees pertaining to operations on the Premises during such Lease Year. All such books, records and tax returns shall be open to inspection and audit by Lessor and Lessor's agents at all reasonable times during ordinary business hours. 5.10 Liens. Lessee will not commit or suffer any act or neglect whereby the Premises or any improvements thereon or the estate of Lessee or Lessor therein shall at any time during the Term become subject to any attachment, judgment, lien, charge or encumbrance whatsoever, except as expressly provided in this Lease, and will indemnify and hold Lessor harmless from and against all loss, cost and expense, including reasonable attorneys' fees with respect thereto. If any lien for work, labor, services or materials performed for or supplied regardless of who contracted therefor is filed against the Premises or any improvements thereon, Lessee shall have thirty (30) days from the date of filing of such lien in which to cause such lien to be discharged of record, released or satisfied by payment, deposit or bond. 5.11 Pavment of Claims. Lessee will pay all claims and demands for loss or damage, including property damage, personal injury and wrongful death, arising out of or in connection with the use or occupancy of the Premises, or the use of any roadways of Lessor by Lessee or any person claiming by, through or under Lessee, or any accident or fire on the Premises, or any nuisance made or suffered thereon, or any failure by Lessee to keep the Premises or any adjoining land as set forth in Section 5.13 of this Lease in a safe condition, or to perform any of the covenants contained in this Lease, and will reimburse Lessor for all costs and expenses including reasonable attorneys' fees incurred by them in connection with the defense of any such claims. This Section 5.11 shall survive termination of this Lease. 5.12 OverhanQina Trees. Lessee will not during the Term plant, cultivate or maintain on the Premises any trees whatsoever so close to any boundary of the Premises as to overhang an adjoining lot, road or trail, and if necessary to comply with this covenant will remove any trees or branches GLS 081997 12548.6 GLS 2002 064 19 thereof which at any time shall overhang an adjoining lot or public road. 5.13 Land Adjoining Road. Lessee will at all times during the Term maintain and keep any adjoining land lying between any established public road and the exterior boundary of the Premises along such public road in a safe, neat and orderly condition reasonably free from all brush, weeds and debris of every kind, and will also maintain and keep any ditch now or hereafter existing within such adjoining land free from all boulders and other obstructions to flood waters. 5.14 No Livestock. Lessee may not keep cattle or horses on any part of the Premises. 5.15 Subletting and Permits. (a) No Subletting. Lessee will not rent, sublet or part with possession of the Premises or any part of the Premises without the prior written consent of Lessor. Any sublease made without such consent shall be void. (b) Permits. Lessor shall not consider farming by Permittees pursuant to Permits issued by Lessee in the form of Exhibit B as subletting. Any Permit issued for farming which satisfies all of the following conditions will be considered a contract for farming and not a sublease; any agreement that does not satisfy all of the following conditions will be considered a sublease: (i) The Permit does not include any right to live on the Premises or transfer any of Lessee's interest in the Lease other than granting a right of entry for purposes of cultivating, maintaining and harvesting papayas. (ii) The hiring of a farm employee shall not be considered subletting. (iii) A Permittee may not mortgage the Premises or pledge papayas. 5.16 Assignment. Lessee will not assign, mortgage, sell, transfer, convey, pledge, exchange or encumber this Lease, the Premises or any portion of the Premises or any interest conferred under this Lease or in the Premises. Lessee acknowledges that Lessor has entered into this Lease in reliance on the undertaking by Lessee to issue Permits in order to implement the Quarantine Program in cooperation with DOA and CTAHR and that Lessor is willing to forego rents and revenues that may otherwise be generated from the Premises in view of Lessee's, DOA's and CTAHR's public purposes and lack of working capital to implement the Quarantine Program. Lessee acknowledges that the restriction against assignment is reasonable and necessary to protect Lessor's interest. Any such assignment, mortgage, sale, transfer, conveyance, pledge, exchange or GLS 081997 12548.6 GLS 2002 064 20 encumbrance of this Lease, the Premises or ary portion of the Premises or interest under this Lease shall be void. 5.17 Expenses of Lessor. Lessee will pay to Lessor, within ten (10) days after notice therefor: (a) General. All costs and expenses including reasonable attorneys' fees paid or incurred by Lessor but required to be paid by Lessee under any covenant contained in this Lease or paid or incurred by Lessor in enforcing any of Lessee's covenants contained in this Lease, in protecting Lessor against any breach thereof, in remedying any breach by Lessee of Lessee's covenants, in recovering possession of the Premises, in collecting or causing to be paid any delinquent rent, taxes or other charges hereunder payable by Lessee, or in connection with any litigation (other than condemnation proceedings) commenced by or against Lessee to which Lessor shall without fault be made parties; and (b) Consent Fee. A reasonable fee for reviewing and processing any request by Lessee for Lessor's consent or approval, which fee shall be the greater of: (i) a flat-rate service charge as established by the policy of Lessor then in effect; or (ii) a sum equal to all costs and expenses paid or incurred by Lessor, including without limitation, reasonable fees of attorneys and other consultants retained by Lessor and the costs of Lessor's regular salaried staff in connection with reviewing the request for consent, whichever is greater. 5.18 No Dedication of the Premises. Lessee may not dedicate all or any portion of the Premises for agricultural use for real property tax purposes. 5.19 Hazardous Materials. At all times during the Term of this Lease: (a) Compliance with Hazardous Materials Laws. Lessee shall comply with all Hazardous Materials Laws which are now in force or may hereafter be in force. (b) Notice to Lessor. Lessee shall immediately advise Lessor, in writing, if Lessee at any time: (i) becomes aware of any Hazardous Discharge or of any Hazardous Materials Claims in respect of the Premises; (ii) receives notice from any governmental authority having jurisdiction thereof of any infraction or violation of any Hazardous Materials Law; or (iii) desires to install or remove any Underground Storage Tank. GLS 081997 12548.6 GLS 2002 064 21 Lessee shall provide to Lessor such detailed reports thereof as Lessor reasonably requests. Lessor may join and participate, as a party if it so elects, in any settlement, remedial action, legal proceeding or action initiated in respect of any Hazardous Materials Claims. Lessee shall pay Lessor's reasonable costs for making such repairs or taking any other action upon receipt of a bill therefor from Lessor. Lessee will promptly cure and have dismissed with prejudice any such action and proceeding to the satisfaction of Lessor. Lessee will keep the Premises free of any lien imposed pursuant to any Hazardous Materials Law. (c) Payment of Assessments. Lessee shall pay and discharge all amounts assessed to remove Hazardous Materials and any Underground Storage Tank from the Premises pursuant to the Hazardous Materials Laws; provided, however, that nothing contained in this Section 5.19 shall be deemed to require Lessee to pay any assessment or charge so long as: (i) Lessee shall promptly notify Lessor of the institution of any such proceedings and shall notify Lessor of the progress of such proceedings; (ii) Lessee shall, in good faith, by appropriate action diligently pursued contest or cause to be contested the amount, applicability or validity thereof; (iii) Lessee shall set aside on its books, reserves (segregated to the extent required by sound accounting principles) deemed by Lessor to be adequate with respect thereto; (iv) Lessee shall provide to any governmental authority imposing such assessment and to Lessor a bond or other security to stay enforcement or collection of such assessment during the pendency of any such proceedings; and (v) nonpayment of any assessment during the pendency of any such proceedings will not subject the Premises or any part thereof to forfeiture or loss (or the reasonable probability of forfeiture or loss). If Lessee fails to pay such amounts, Lessor may, without notice or demand to Lessee, pay the same, and any advances made by Lessor in discharge of the assessments and other charges shall be a lien on Lessee's interest in the Premises, payable on demand with interest at the rate of interest provided in Section 5.03(d). (d) Environmental Liens. Lessee shall keep the Premises free of all environmental liens under the Hazardous Materials Laws; provided, however, that Lessee may contest any environmental lien in good faith so long as: (i) Lessee shall promptly notify Lessor of the institution of any proceedings to challenge an environmental lien and shall notify Lessor of the progress of such proceedings; GLS 081997 12548.6 GLS 2002 064 22 r, (ii) Lessee shall, in good faith, by appropriate action diligently pursued contest or cause to be contested the amount, applicability or validity thereof; (iii) Lessee shall set aside on its books, reserves (segregated to the extent required by sound accounting principles) deemed by Lessor to be adequate with respect thereto; (iv) Lessee shall provide to any governmental authority imposing such environmental lien and to Lessor a bond or other security to stay enforcement or collection of such environmental lien during the pendency of any such proceedings; and (v) nonpayment of any such environmental lien during the pendency of any such proceedings will not subject the Premises or any part thereof to forfeiture or loss (or the reasonable probability of forfeiture or loss). If Lessee fails to pay such amounts, Lessor may, without notice or demand to Lessee, pay the same, and any advances made by Lessor in discharge of the assessments and other charges shall be a lien on Lessee's interest in the Premises, payable on demand with interest at the rate of interest provided in subsection 5.03 (d) . (e) No Use of Hazardous Materials. Lessee shall not without prior written consent of Lessor, use, generate, manufacture, treat, handle, refine, produce, process, store, discharge, release, or allow to exist, any Hazardous Material on, within, under or about the Premises or install or remove any Underground Storage Tank on, within, under or about the Premises, except in full compliance with all applicable Hazardous Materials Laws. Only Hazardous Materials to be used on the Premises shall be generated, manufactured, handled, refined, produced, processed or stored on the Premises. Any discharge or release of Hazardous Materials shall be an application in accordance with the instructions of the manufacturer and for the purposes described in such instructions. Lessee shall not, without the prior written consent of Lessor, treat or dispose of Hazardous Materials on, within, under or about the Premises. Lessee shall not accept Hazardous Materials generated off the Premises for treatment, storage or disposal. (f) Indemnity. Lessee will pay all costs and expenses (including reasonable attorney's fees), losses, damages (including foreseeable or unforeseeable consequential damages) and liabilities incurred by Lessor, DOA, UH and RCUH which may arise out of or may directly or indirectly be attributable to: (i) any Hazardous Discharge on, within, under or about the Premises; (ii) the use, generation, manufacture, treatment, handling, refining, production, processing, storage, release, GLS G81997 12548.6 GLS 2002 064 23 t. discharge, dispossi or presence ~f .,n-;~ [:azardous Marer'_a1. ~~x_ Underground Storr:ge Tank on, wi*_ hi: ar.~i r or about t_.e : rem,_ses; (ii' r Lessor's ir.•.,es; ~g.~~:_.c n and handl'::g (including the defense) of any I:az.:rcc~.l.; Materials ^l~:ims, whether or not a~:y lawsuit cr othe_- fcr:a:,.l legal proc edi~.g shall have been commenced in respect thereof; (i•r) any misreprese.aat~.s;i, inaccuracy orc.-each of any warranty, covenant or agreement ..ontained or refer_ed to in this Section x.19; (v) any violation or claim of violation ~y i;essee of any Hazardous Materials Law; (vi) any amounts assessed against Lessor pursuant to Hazardous Materials Laws; or the imposition of any lien f;r the recovery of any costs for environmental cleanup or ocher response costs relating to any Hazardous Discharge; (vii) Lessor's enforcement of this Section 5._9, whether or not suit is brought therefor. (g) Environmental Site Assessment. Lessor will have the right at all reasonable times and from time to time to conduct an environmental site assessment of the Premises, and Lessee will cooperate in granting entry for the conduct of each such environmental site assessment. The environmental site assessment shall be conducted by an environmental engineer or consultant of Lessor's choosing in accordance with the then current standards and protocols of the American Society for Testing and Materials. If: (i) the presence of any Hazardous Materials is detected in excess of State of Hawaii Department of Health guidelines; (ii) the environmental site assessment reveals that the environmental quality of the Premises has declined from the condition revealed under the Baseline Assessment (if conducted); or (iii) if a violation of any warranty, representation, or covenant contained in this Section 5.19 is discovered, the fees and expenses of such environmental engineer or consultant will be borne by Lessee and Lessee will pay the fees and expenses as additional rent under this Lease on demand by Lessor. Lessee shall remove or cause to be removed to Lessor's satisfaction all Hazardous Materials from the Premises using the most effective methods and the best available technology. Lessor shall bear the cost of such fees and expenses if no such violation has occurred. (.h) Lessor's Rictht to Cure and to Recover Expenses. If Lessee =ails to comply with any of the foregoing warranties, GLS 081397 1~Sd8.6 GLS 2002 064 24 representations, _d covenan=~, Le:=;: gay cause the removal ~r other cleanup acs :able to :~~ssor sny Hazardous Disc:ar-;.~ or of any Hazardous aserials f~r_;m thr. ~~mises. Without waiv:r.s_ any claim Lessor -,y have against ~ ss~_e for recovery, Le_,so_ nay recover the costs. f Hazardous Mat:_: 1-.~-..; removal and arv orbs r. cleanup (includir. transportation c~;i storage costs) as additional rent _;_der this Lease, ~_er or not a court or governmental age*: v has ordered the rl,ranup, and Lessee will :y such costs as ad-: -tional rer_t on c:;m~..r by Lessor. Lessee wi give Lessor, Les=-:r's agents, and _ ...vees access to the Premises to remo.•e or otherwise c_=,.;n .:o any Hazardous Mater',~s. Lessor, however, tas no affirmative ..,w.;-i.gation to remove c otherwise clean .u any Hazardous b7ar~r.:als, and this Lease wi_._ not be construed as creating any suss obligation. (i) Ccafidentiality of 3e^orts. Lessee shall kee-_ lil information, data, findings, concius~~~n~, communications and reports regarding the presence of iiaz=,rdous Materials on, ur..= or in the Premises strictly confiden;.:ai and shall not disc_c~e this information to any person or er_t~.ty without the prior written consent of Lessor, including ;ny governmental agency ~r body; provided, however that Lessee :nay disclose this informs c on to: (i) any governmental agency, if Lessee is required under any Hazardous Materials Law to disclose such material; (ii) any adverse party in litigation, if Lessee is compelled to disclose such material in discovery proceedings or at trial; or (iii) any person or entity necessary for Lessee to meet Lessee's obligations under this Section 5.19. Lessee's obligation to maintain this confidentiality shall survive the termination of this Lease. (j) Survival. This indemnity is the personal obligation of Lessee and will survive termination of this Lease. Lessee, its successors and assigns, waive, release, and agree not to make any claim or bring any cost recovery action against Lessor under CERCLA, RCRA or H.R.S. Chapter 128D, or any other equivalent Hazardous Materials Law now in effect or enacted after this date. To the extent that Lessor is strictly liable under any such Hazardous Materials Law, Lessee's obligation to Lessor under this indemnity will likewise be without regard to fault on the part of Lessee with respect to the violation or condition that results in the liability of Lessor. 5.20 Surrender. (a) Possession. At the end of the Term or other sooner termination of this Lease, Lessee will remove all buildings and improvements and papaya trees which have borne fruit through two (2) or more crop rotations, and will peaceably GLS 081997 1538.6 GLS 2002 064 25 F deliver up to Lessor possession of the Premises, together with all fences, roads, bridges, irrigation facilities and underground sewers and drains and, except as provided below, all papaya trees which have not borne fruit through at least two (2) crop rotations and all other trees upon or belonging to the Premises, all in tidy condition (in as good or better condition than at the commencement of this Lease, reasonable wear and tear accepted). (b) Surrender by Permittees. Lessee shall cause all Permittees to surrender possession of the Premises and observe the requirements of this Section 5.20, unless Lessor shall waive compliance with any provision in writing. (c) Compliance with Hazardous Materials Laws. (i) Upon such surrender or sooner termination of this Lease, Lessor and Lessee shall conduct a Phase I environmental site assessment of the Premises and any buildings and improvements remaining on the Premises. The Phase I environmental site assessment shall be conducted by an environmental engineer or consultant selected by Lessor and performed pursuant to the standards set forth in subsection 5.01 (e) of this Lease. The written report resulting from the Phase I environmental site assessment shall state whether any buildings and improvements remaining on the Premises are free of Hazardous Materials discharged by or under the control of Lessee and whether Lessee has fully complied with all Hazardous Materials Laws. Lessee shall pay the sole cost of the Phase I environmental site assessment. If the Phase I environmental site assessment reveals: (A) a recommendation in the Phase I environmental site assessment; (B) the environmental quality of the Premises has declined in comparison to the Baseline Assessment; or (C) Lessee has violated any warranty, representation, or covenant of Section 5.19, Lessee shall provide Lessor with and perform a Phase II environmental testing and develop and implement a Phase III Hazardous Materials removal plan at Lessee's sole cost and expense. Lessee shall remove or cause to be removed to Lessor's satisfaction all Hazardous Materials from the Premises using the most effective methods and the best available technology, prior to surrender or termination and shall fully comply with all Hazardous Materials Laws and requirements of any governmental authority having jurisdiction therefor, including, without limitation, fully comply with any requirement to file such environmental site assessment, mitigation plan, risk assessment certificate or other information with any such governmental authority prior to surrender or termination. Following termination of this Lease, as between Lessor and Lessee only but not for purposes of limiting liability under any federal or state law, Lessee would be liable to Lessor to remove or remediate any Hazardous Materials discovered at any time following termination of this Lease. (ii) If the Phase I environmental assessment recommends a Phase II testing plan but does not determine that the Hazardous Materials were discharged on the Premises after the GLS 081997 12548.6 GLS 2002 064 26 4 Commencement Date, Lessor and Lessee shall perform a Phase II testing plan at Lessee's sole cost. Although not recommended by the Phase I environmental assessment, Lessor may perform, at Lessor's sole cost, a Phase II environmental testing. If the Phase II environmental testing reveals that: (A) the environmental quality of the Premises has declined in comparison to the Baseline Assessment, or (B) Lessee has violated any of the warranties, representations or covenants of Section 5.19, Lessee shall reimburse Lessor for Lessor's reasonable costs of performing the Phase II environmental testing and implement a Phase III Hazardous Materials removal plan at Lessee's sole cost and expense. (iii) Lessor shall bear the cost of such environmental testing and removal if such testing reveals that any such Hazardous Materials is found in the same location at the same or a lower level than in the Baseline Assessment. (iv) Any dispute regarding compliance with Hazardous Materials Laws shall be resolved by arbitration pursuant to Section 8.01 of this Lease. (d) Cost of Removal. All costs incurred by Lessor in effecting such removal of buildings and other improvements shall be at Lessee's expense, and Lessee will, within thirty (30) days from Lessee's receipt of demand by Lessor, reimburse Lessor for such costs advanced by Lessor, together with interest at the rate of interest provided in Section 5.03(d), but not to exceed the maximum rate permitted by law, from the date of advance by Lessor until fully paid. Until such full compliance or removal is completed, either by Lessee or Lessor, and all coats therefor have been paid by Lessee or reimbursed by Lessee to Lessor, together with interest thereon, if any, the Premises and this Lease shall not be deemed surrendered even though Lessee has vacated the Premises, and Lessee shall continue to pay rent on the Premises or portion thereof being surrendered in an amount equal to the total of all rent paid by Lessee during the calendar year preceding termination, prorated for the period of time from termination to surrender and for the area being surrendered. (e) Survival. Lessee shall not be relieved of its obligations under this Lease until surrender is completed in accordance with the provisions of this Section 5.20. Final inspection and release of the Premises by applicable governmental authorities, if any, and by Lessor shall be a condition precedent to completion of surrender and termination of Lessee's obligations under this Agreement. Nothing in this Lease shall be deemed to relieve Lessee of an obligation which by its specific terms survives termination of this Lease. 5.21 Holdover. If Lessee or any Permittee remains in possession of the Premises or any buildings or improvements thereon after the expiration of the Term, Lessee shall be deemed to occupy the Premises as a tenant from month-to-month at one- twelfth (1/12th) of the Base Rent then charged under this Lease GLS 081997 12548.6 GLS 2002 064 27 r and on all the covenants, conditions and provisions contained i;~ this Lease which are not inconsistent with a month-to-month tenancy. 5.22 Historic Sites and Burial Sites. Lessee shall take every reasonable precaution to preserve and leave unaltered all Historic Sites and Burial Sites on, under or within the Premises. Lessee shall have the following responsibilities with respect to Historic Sites and Burial Sites: (a) Actions to be Taken. In the event any objects or artifacts which may qualify any portion of the Premises as a Historic Site or any human skeletal remains are discovered on, under or within the Premises, Lessee shall: (i) Cease all excavation or construction in the immediate area of any Historic Site or Burial Site; (ii) Cause the Historic Site or the Burial Site to be stabilized and secured and protected against damage or theft; (iii) Leave the Historic Site or the Burial Site untouched until the archeological context of the Historic Site or the Burial Site has been accurately documented unless the Historic Site does not contain human skeletal remains and removal of artifacts is necessary to avoid a substantial risk of loss or damage, in which event Lessor shall cause such removal; and (iv) Report the discovery immediately to Lessor and the State of Hawaii Department of Land and Natural Resources. (b) Compliance with Laws. Lessee shall comply with all laws regarding removal of artifacts or human skeletal remains including, without limitation, all requirements of H.R.S. Chapter 6E. (c) Human Skeletal Remains. In the event human skeletal remains are discovered on, under or within the Premises, Lessee shall, at Lessee's sole expense and in consultation with Lessor, cause to be prepared and executed an appropriate preservation or mitigation plan in compliance with all applicable laws and regulations. (d) Notice to Lessor. Lessee shall give Lessor prior written notice of any archeological studies or historic preservation studies to be conducted on, under or within the Premises by Lessee or anyone acting by, through or on behalf of Lessee and shall provide Lessor with a complete copy of each such archeological study or historic preservation study upon completion. (e) Right of Entrv. Lessor reserves a right of entry onto the Premises for the purpose of participating in any archeological study or historic or preservation plan or preservation or mitigation plan. GLS 081997 12548.6 GLS 2002 064 28 H (f) Conflict with Other Covenants. The covenants contained in this Section 5.22 shall take priority over and relieve Lessee from performance of any covenant requiring development and cultivation of any portion of the Premises, to the extent development and cultivation are precluded by the presence of any Historic Site or Burial Site. Lessee may, b•ut shall not be required, to withdraw any portion of the Premises for the presence of an Historic Site pursuant to Section 5.25. (g) Lessor's Property. All objects, antiquities and specimens of Hawaiian or other ancient art or handicraft or of prehistoric, historic or archaeological interest found on the Premises belong to and shall remain the property of Lessor. 5.23 Endangered Species. At all times during the Term of this Lease, Lessee shall: (a) Compliance with Conservation Laws. Comply with all Conservation Laws which are now in force or may hereafter be in force. (b) Notice to Lessor. Immediately advise Lessor, in writing, if Lessee at any time: (i) becomes aware of the presence of any Endangered Species on the Premises; (ii) receives notice from any governmental authority having authority or control of the conservation, preservation, management or protection of any Endangered Species, of the investigation of any aquatic life, wildlife or plants located on the Premises for the purpose of designating such aquatic life, wildlife or plant as an Endangered Species under any Conservation Law; (iii) receives notice from any governmental authority having authority or control of the conservation, preservation, management or protection of any Endangered Species, of the possible presence of any Endangered Species on the Premises; (iv) receives notice of the institution of any proceeding regarding the possible presence, conservation, preservation, management or protection of any Endangered Species on the Premises; or (v) receives notice of any proceeding instituted to determine whether all of a portion of the Premises should be designated as a Critical Habitat and should be subject to any program for the conservation, preservation, management or protection of any Endangered Species. (c) Conduct of Proceedings. Lessee shall keep Lessor apprised as to the progress of all such proceedings. Lessee shall provide Lessor with copies of all correspondence received GLS 081997 12548.6 GLS 2002 064 29 from any governmental authority having authority or control of the conservation, preservation, management or protection of any Endangered Species on the Premises and such detailed reports thereof as Lessor reasonably requests. Lessor shall, to the extent permitted by law, direct and contrcl all correspondence sent to any such governmental authority regarding the conservation, preservation, management or protection of any Endangered Species on the Premises. (d) Payment. Lessee shall pay all costs and expenses (including reasonable attorney's fees), losses, damages (including foreseeable or unforeseeable consequential damages) and liabilities incurred by Lessor which arise out of or may directly or indirectly be attributable to Lessee for Lessee's taking, possession, transportation, importation, exportation, processing, selling, offering for sale or shipment of any Endangered Species in violation of any Conservation Law or any other act prohibited under any Conservation Law. (e) Consent. Lessor and Lessee must both consent to any agreement requested or required by any governmental authority regarding the conservation, preservation, management or protection of any Endangered Species on the Premises. Any consent given by Lessee without the prior written consent of Lessor to any such governmental authority regarding the conservation, preservation, management or protection of any Endangered Species on the Premises shall be null and void and shall not encumber the Premises or bind Lessor. (f) Conflict with Other Covenants. The covenants contained in this Section 5.23 shall take priority over and relieve Lessee from performance of any covenant requiring development and cultivation of any portion of the Premises, to the extent development and cultivation are precluded by the presence of any Endangered Species. 5.24 Wetlands. Lessee shall not create any wetland on the Premises or use the Premises in such a manner as to subject the Premises to wetlands regulations or the jurisdiction of the U.S. Army Corps of Engineers, the U.S. Environmental Protection Agency, the U.S. Fish and Wildlife Service or any other federal, state or county agency regulating and controlling wetlands. 5.25 Withdrawal. (a) Purpose of Withdrawal. Lessor shall have the right at any time during the Term of this Lease to withdraw all or any portion of the Premises from this Lease, and to terminate and cancel this Lease if Lessor, following consultation with Lessee, determines that the remaining portion of the Premises not so withdrawn is subsequently rendered unsuitable for agricultural purposes, such withdrawal to be for any of the following purposes or exercised pursuant to any rights reserved to Lessor in Section 1.01 of this Lease: GLS 081997 12548.6 GLS 2002 064 3 0 v (i) for public uses or purposes; (ii) for exploration and development of water resources; (iii) for constructing new roads or changes in t~:e line or grade of existing roads; (iv) for rights of way and easements of all kinds; (v) for preservation of Historic Sites or Burial Sites; (vi) for conservation of Endangered Species; or (vii) for higher or better use. (b) Notice of Withdrawal. Lessor shall give Lessee one hundred eighty (180) days prior written notice of withdrawal. In selecting the portion of the Premises to be withdrawn, Lessor shall give consideration of Lessee's overall agricultural operations and shall exercise the right of withdrawal in such manner as to occasion the least practicable interference with agricultural operations. (c) Conditions of Withdrawal. Withdrawal shall be without compensation, except that: (i) the Base Rent reserved in this Lease for the Premises shall be reduced for and during the unexpired balance of the Term, effective as of the date of such withdrawal, to a sum which shall bear the same ratio to the Base Rent payable under this Lease immediately prior to the withdrawal as the area of the remaining portion of the Net Area immediately after the withdrawal bears to the total area of the Net Area demised by this Lease, and Lessor shall credit to the account of Lessee any unearned portion of Base Rent paid in advance prior to such effective date; (ii) if any building or improvement constructed by Lessee is destroyed or made unusable by the withdrawal, Lessor shall reimburse Lessee for the cost to construct such building, less accumulated depreciation (or amortization if Lessee does not depreciate buildings to the date of calculation) on a straight- line basis without interest over the period from the first day of the month following completion of construction to the end of the thirtieth (30th) calendar year following completion of construction, as of the date of withdrawal; (iii) if the portion of the Premises to be withdrawn shall contain growing crops, Lessor shall not withdraw that portion of the Premises until the crops are harvested at maturity, unless Lessor shall at Lessor's option either: extend the one hundred eighty (180) day period prior to withdrawal for a period until the end of the recognized growing season for such GLS 081997 12548.6 GLS 2002 064 31 v growing crops but not to exceed a total of twelve (12) full calendar months from the date of notice to permit Lessee to complete the next harvest at maturity of such growing crops on the portion of the Premises so withdrawn pursuant to Section 5.25, or Lessor shall reimburse Lessee for the reasonable value of any growing crops contained on the portion of the Premises to be withdrawn; (iv) Following notice of withdrawal but prior to the effective date of withdrawal, Lessor shall, at Lessor's sole cost and expense, comply with the subdivision requirements of the Hawaii County Code by obtaining final subdivision approval or obtaining an exemption from such requirements in order to complete the withdrawal. Lessor may withdraw portions of the Premises marked by boundaries of existing grants in order to minimize survey and subdivision expenses. If it is impracticable to subdivide along existing grant lines, Lessor shall prepare or cause to be prepared a current boundary survey of the portion to be withdrawn and the remaining portion of the Premises and calculate the remaining area of the Premises to the nearest one hundredths of an acre; (v) In effectuating a withdrawal, Lessor shall not leave the remaining portion of the Premises without access to a public highway; and (vi) Upon effectuating the withdrawal of any portion of the Premises, Lessor and Lessee shall execute an amendment of this Lease to reflect the withdrawal. (vii) Lessee shall be responsible for the termination of, or withdrawal of the applicable area from, any subsisting Permittee from the withdrawn portion of the Premises and for all costs in respect to withdrawal, including any reimbursement to Permittee for any unamortized costs from payment by Lessor to Lessee. 5.26 Illecral Activity and Forfeiture. Use of the Premises for any illegal purpose or activity whatsoever is strictly prohibited and may result in the termination of this Lease. Any provision contained in this Lease to the contrary notwithstanding, upon receiving notice or if Lessor shall have formed a reasonable belief that: (a) illegal acts are or may be taking place on the Premises which could result in criminal or civil forfeiture to the United States or State of Hawaii under federal or state law; or (b) the Premises is being used for an illegal purpose, and Lessee shall have failed to stop such illegal acts, Lessor may: (i) conduct an investigation, including enter onto the Premises with or without Lessee's consent to inspect the Premises; (ii) immediately terminate this Lease; and (iii) take such other action as may be necessary to stop such illegal acts at Lessee's reasonable expense. 5.27 Payment of Claims. Lessee hereby assumes all risks of personal injury or wrongful death and of loss of or GLS 081997 12548.6 GLS 2002 064 32 damage to property by whomsoever owned, on or in the Premises, arising from or in connection with the use and occupancy of t:~e Premises by Lessee, any Permittee, farm employee, guest, invite and licensee, or caused by any accident or fire on the Premises, or occasioned by any nuisance made or suffered thereon, or resulting from any failure on the part of Lessee to conform or observe laws pursuant to Section 5.05 or to maintain the Premises in a good or safe condition. Lessee will pay any and all claims for personal injury or wrongful death by third persons (including, without limiting the generality of the foregoing, officers, employees, or agents of Lessor or Lessee) and any ar.3 all claims for loss or damage to property so caused, occasionedi or resulting and will reimburse Lessor for all Lessor's costs and expenses (including reasonable attorneys' fees) incurred in connection with the defense of any such claims. Lessee shall be responsible for injury caused by Lessee's officers and employees in the course and scope of their employment to the extent that Lessee's liability for such damage or injury has been determined by a court or otherwise agreed to by Lessee. Lessee shall pay for such damage and injury to the extent permitted by law provided that an appropriation is enacted for that purpose. 5.28 Disease Control. (a) Participation in Ouarantine Program. Lessee will observe and perform all federal and State of Hawaii laws and regulations regarding plant disease control and in the Quarantine Program, and shall cooperate in any policy or regulation required by DOA, the Board of Land and Natural Resources of the State of Hawaii or the Board of Health of the State of Hawaii to eradicate blight or other plant disease on an area-wide basis at Lessee's sole cost and expense, including, without limitation, destruction of trees or crops. If Lessee fails to implement such required regulation within the time imposed by Lessee, the DOA, the Board of Land and Natural Resources of the State of Hawaii or the Board of Health of the State of Hawaii, Lessor may, without notice or demand to Lessee, enter the Premises and effect compliance. (b) No Compensation. Lessee acknowledges that Lessee's implementation of and participation in the Quarantine Program is an essential inducement to Lessor to grant this Lease. Lessee, on behalf of itself and the Permittees, expressly waives and releases Lessor, Lessee, the DOA, the Board of Health of the State of Hawaii or any other applicable government agency from any claim for compensation for damages for the roguing or mandatory destruction of non-infested papaya trees as a part of the Quarantine Program. 5.29 Attornev's Fees. In case Lessor shall without any fault be made party to any litigation commenced by or against Lessee or for any other reason shall incur expense because of litigation arising out of Lessee's occupancy of the Premises or interest therein (other than condemnation proceedings), then GLS 081997 12548.6 GLS 2002 064 33 Lessee shall and will pay all costs and reasonable attorneys' fees incurred by or imposed on Lessor by or in connection wit: such litigation, and Lessee will also pay all coats and reasonable attorneys' fees which may be incurred or paid by Lessor in enforcing the covenants and agreements contained in this Lease, including costs for collection of delinquent taxes and other charges. 5.30 Security and Management. Lessee will assume responsibility for security and management of the Premises from and after the Commencement Date. Lessee shall also control access to the Premises from and after the Commencement Date. 5.31 Landfills. Lessee shall not, without the prior written consent of Lessor, which consent Lessor may grant or deny in Lessor's sole discretion, create any dump or landfill or dispose of infested papaya on the Premises or use the Premises in such a manner as to subject the Premises to federal, state or local laws regulating dumps, landfills and other solid waste disposal facilities. Lessee shall dispose of all garbage, refuse, Hazardous Materials, industrial solid wastes, household wastes, inert material, and any other waste generated on the Premises in an appropriate permitted disposal facility, except that composting and spreading vegetative by-product of non- infested papaya trees throughout the Premises pursuant to the Quarantine Program and the Crop Development Program shall not be considered disposal of solid waste on the Premises. 5.32 Early Termination, (a) Purpose of Termination. Lessee shall have the right during the Term of this Lease to terminate this Lease for any of the following reasons (which reason shall be specified to Lessor): (i) in Lessee's determination, following consultation with DOA and CTAHR, papaya ring spot virus infestation in Puna, Hawaii is uncontrollable, or (ii) in Lessee's determination, following consultation with DOA and CTAHR, operation of the Quarantine Program is no longer economically feasible, or (iii) if the County of Hawaii does not budget or appropriate sufficient funds, or following appropriation, authorize expenditure of or allocate sufficient funds to pay Base Rent, taxes and other charges to Lessor or operate the permitting program on the Premises, or (iv) if the State of Hawaii does not budget or appropriate sufficient funds, or following appropriation, authorize expenditure of or allocate sufficient funds to continue operation of the Quarantine Program. GLS 081997 12548.6 GLS 2002 064 34 (b) Notice of Termination. :,essee shall give Lessor one hundred eighty (180) days prior written notice of termination. Lessee shall state the reason for the termination and submit evidence of any such non-appropriation or non- authorization of funds at the time Lessee notifies Lessor of cancellation. (c) Best Efforts to Obtain AoDropriations. Lessee shall use best efforts to raise sufficient revenues to defer the cost of operating the permitting program on the Premises. If revenues are insufficient for this purpose, Lessee shall cause the necessary funds to be appropriated, authorized and expended. Prior to each annual fiscal year during the Term, the Mayor of Lessee shall request from the County Council of Lessee, funds which, together with anticipated revenues from rents paid by Permittees, will be sufficient funds to pay Base Rent, taxes and other charges to Lessor or operate the permitting program during the ensuing fiscal year of Lessee. (d) Termination of the Permits. Prior to terminating the Lease Lessee must, at lessor's direction, terminate all Permits issued to the Permittees and cause all Permittees to surrender possession of the Premises. Prior to surrendering the Premises, Lessee shall comply with all requirements of Section 5.20. (e) Non-substitution. If Lessee terminates this Lease for non-appropriation pursuant to this Section 5.32, Lessee may not attempt to assist DOA in offering permits to implement the Quarantine Program on other lands or offer alternative lands for lease to Permittees in order to implement the Quarantine Program. VI. INSURANCE 6.01 General Requirements. Lessee will, at Lessee's own expense, or will cause all Permittees with respect to any portions of the Premises cultivated, at all times during the Term of this Lease, keep in force policies of insurance and bonds as required in this Lease. All policies shall be issued by and in insurance or surety companies acceptable to Lessor, or by self- insurance, provided Lessor is satisfied with Lessee's financial condition. All insurance policies shall name Lessor as an Additional Insured, and shall be primary to any other insurance that may be available to Lessor. All insurance policies shall contain a clause stating that the insurer will not cancel or reduce coverages without first giving Lessor thirty (30) days prior written notice. Lessee will provide Lessor with current certificates of such insurance within thirty (30) days after execution of this Lease, and no less frequently than annually thereafter, and will provide copies of such insurance policies together with endorsements upon Lessor's request. 6.02 Liability Insurance. GLS 081997 12548.6 GLS 2002 064 35 (a) Policy Requirements. Lessee will or will cause commercial general liability insurance with respect to the Premises and any business operations conducted by Lessee and ary sublessee. This insurance shall provide coverage for bodi~y injury and property damage liability; personal injury liability; blanket contractual liability; independent contractor's liability; and fire damage liability for buildings and improvements only. If Lessee, or any independent contractor, engages in any construction, demolition or excavation operations, any policy or policies covering these operations shall be endorsed to provide coverages for explosion, collapse and underground hazards. Lessor shall be named as an Additional Insured under Lessee's commercial liability insurance policy as provided under the standard ISO endorsement CG 20 24 entitled: "Additional Insured--Owners or Other Interests From Whom Land Has Been Leased", or its equivalent. The policy or policies of insurance shall provide coverages on an "occurrence" basis (not on a "claims made" form) and shall provide limits of no less than the following: General Aggregate Limit: $1,000,000.00 Personal Injury Limit: $1,000,000.00 Each Occurrence Limit: $1,000,000.00 Fire Damage Limit: Replacement coat of any improvements (b) Primary Coverage. These limits of insurance may be satisfied by the use of a combination of primary and excess liability insurance policies. Lessor may from time to time require, with due regard to prevailing prudent business practices, that these limits be increased, or that additional liability coverage be provided, as may be reasonably adequate for Lessor's protection. 6.03 Fire and Other Property Insurance. Lessee will or will cause all of Lessee's buildings, improvements, alterations, additions, repairs and personal property having a replacement cost in excess of $25,000.00 on the Premises insured against loss or damage by fire and all other causes of loss as provided in the standard "Causes of Loss - Special Form", in an amount as near as practicable to the full replacement cost thereof, which amount Lessee will review as to sufficiency at least annually and, if insufficient, will increase. Lessee shall insure any owned boilers or other pressurized vessels against rupture or explosion. 6.04 Payment of Insurance Proceeds. In every case of loss or damage to any buildings or improvements on the Premises, Lessee shall with all reasonable speed, rebuild, repair or otherwise reinstate the buildings and improvements in accordance with the original plans or such modified plans conforming to laws and regulations then in effect as approved in writing by Lessor and any mortgagee. All proceeds of such insurance shall be used for such purpose, and Lessee will make up any deficiency in the insurance proceeds from Lessee's own funds. GLS 081997 12548.6 GLS 2002 064 36 6.05 Workers' Compensation and Employer's Liability Insurance. Lessee will maintain workers' compensation insurance= with minimum limits as required by HRS Chapter 386 and regulations thereunder for all employees of Lessee. 6.06 Waiver of Subrogation. For the purpose of waiv~_ of subrogation, Lessor and Lessee mutually release and waive unto the other, all rights to claim damages, costs or expenses for ary damage or destruction of property caused by a casualty of any type whatsoever in, on or about the Premises if the amount of such damage, cost or expense has been paid to such damaged party under the terms of any policy of insurance. To the extent that such damages are in fact covered by insurance, each party sham. cause its insurance carrier to consent to such waiver. VII. CONDEMNATION 7.01 Condemnation. In the event during the Term of this Lease or any extension of the Term, this Lease, the Premises or any part thereof shall be required, taken or condemned by any authority having the power of eminent domain, then and in such event, the estate and interest of Lessee in any part of the Premises so taken or condemned shall cease and terminate as of the date Lessee is required to vacate the Premises, and the Base Rent in this Lease reserved for the Net Area shall be reduced for and during the unexpired balance of any period and the Term, effective as of the date of taking, to an amount determined by multiplying the current Base Rent by the ratio that the area of such remaining portion of the Net Area not so taken bears to the total area of the Net Area prior to the taking, and Lessor shall credit to the account of Lessee any unearned portion of Base Rent paid in advance prior to such date of taking. 7.02 Compensation and Damages. In every such case of taking or condemnation of the Premises or any part thereof or any improvements thereon, all compensation and damages payable for or on account of the Premises hereby demised and any buildings and other improvements, sheds, water tanks, surface pipelines, irrigation facilities, or trees and growing crops existing on the Premises at the commencement of the Term shall be payable to and be the sole property of Lessor, and Lessee shall have no interest or claim to such compensation or damages or any part thereof whatsoever; and all compensation and damages payable for or on account of any buildings, improvements, sheds, water tanks, irrigation facilities and surface pipelines erected on the Premises during the Term and any plans and other preparations therefor and trees and growing crops planted on the Premises during the Term shall be divided between Lessor and Lessee as of the date of taking of such buildings, improvements, sheds, water tanks, irrigation facilities, surface pipelines and trees, according to the ratio that the then expired and unexpired portions respectively of the Term, as extended, bear to the sum of such portions, except that Lessee's share shall be applied first to the satisfaction of any other obligation of Lessee to Lessor under the terms of this Lease, to rebuild, replace, repair GLS 081997 12548.6 GLS 2002 064 37 v or reinstate any building or other improvements taken or condemned upon Lessor's or Lessee's election as provided in Section 7.03 below and any remaining amounts shall be paid to Lessee. 7.03 Condemnation of Leasehold Interest. Condemnation of any leasehold interest in the Premises or any part thereof shall not terminate this Lease nor excuse Lessee from full performance of its covenants for the payment of rent or any other obligations under this Lease capable of performance by Lessee, but in such case Lessee may claim and recover from the condemning authority all compensation and damages payable on account of its leasehold interest, including such compensation and damages as may be separately awarded or recoverable by Lessee in its own right on account of any damage by reason of any condemnation to its property not subject to this Lease or for the cost of relocation. Any compensation and damages for any buildings or other improvements constructed on the condemned Premises during the Term of this Lease shall be divided between Lessor and Lessee as of the date of taking of such buildings and other improvements, according to the ratio that the then expired and unexpired portions respectively of the Term, as extended, bear to the sum of such portions. Lessee shall have the right to claim and recover from the condemning authority, but not from Lessor, such compensation as may be separately awarded to or recoverable by Lessee in its own right on account of the cost or the value of any crops planted by Lessee and not harvested prior to the taking. 7.04 Condemnation of Lessor's Reversionary Interest. (a) Fair Market Value of the Premises. Any provision contained in this Lease to the contrary notwithstanding, in the event there shall be initiated by or before the State of Hawaii, the County of Hawaii or any department or agency of the State of Hawaii or County of Hawaii, including, without limitation, Lessee, eminent domain proceedings to acquire the Premises or any interest in the Premises, including, without limitation, Lessor's reversionary interest in the Premises, for the benefit of or for reconveyance to Lessee under any statute which may now or hereafter be applicable to the Premises, Lessor and Lessee agree that for purposes of valuing Lessor's interest in the Premises the fair market value of the Premises as of the Commencement Date is TEN THOUSAND AND NO/100 DOLLARS ($10,000.00) per acre on the entire Premises, exclusive of all encumbrances, including this Lease, all buildings and improvements constructed by Lessee during the Term and trees planted by Lessee during the Term. This valuation shall increase at the rate of five percent (5%) per year for each full or partial year elapsed from the Commencement Date to the date of taking. (b) Partial Takinct. Lessor and Lessee also agree that the value of the Net Area is benefited from and derived in part by the buffer provided by land not otherwise planted or plantable in papaya. In order to assure that Lessor is fully compensated GLS 081997 12548.6 GLS 2002 064 38 in the event of a partial taking of the Net Area without a taking of a proportionate amount of non plantable area, Lessee acknowledges that the area of the Premises taken, for purposes of determining compensation, shall be the Net Area taken multiplied by a fraction, the numerator of which is the total area of the Premises as of the Commencement Date and the denominator of which is the Net Area for the first Lease Year. (c) Not Highest and Best Return. Lessor and Lessee agree that the Base Rent reserved and the rate of return reserved for determining Base Rent formula contained in this Lease is intended to encourage the use of the Premises for a demonstration Quarantine Program and for public purposes and does not represent the highest and best rent and rate of return on the Premises to Lessor if other uses were permitted on the Premises by Lessor. The Base Rent reserved shall not be an appropriate basis for determining the compensation to be payable to Lessor. VIII. MEDIATION AND ARBITRATION 8.01 Mediation. Any disagreement, dispute or claim arising under this Lease provided to be resolved by agreement of the parties or by arbitration pursuant to this Lease which cannot be resolved to the mutual satisfaction of Lessor and Lessee, any and all claims, controversies or disputes arising out of or relating to this Lease, or the breach thereof, which remain unresolved after direct negotiations between the parties, shall first be submitted to confidential mediation in accordance with the Rules, Procedures, and Protocols for Mediation of Disputes of Dispute Prevention & Resolution, Inc. of Honolulu, Hawaii „ before resorting to arbitration, litigation, or some other dispute resolution procedure. 8.02 Arbitration. Except with respect to any claim for payment of rent and other charges, for performance of any covenant or condition on the part of Lessee to be performed, or to the extent otherwise provided for in this Lease, If any issues, claims or disputes remain unresolved after mediation concludes, the parties agree to submit any such issues to binding arbitration before three Arbitrators in accordance with the Rules, Procedures, and Protocols for Mediation of Disputes of Dispute Prevention & Resolution, Inc. then in effect, or if none is in effect, in accordance with the Commercial Arbitration Rules of the American Arbitration Association The parties further agree that the award of the Arbitrator(s) is binding upon the parties and that judgment upon the award rendered may be entered in any court of competent jurisdiction. Any provisions contained in this Section 8.01 to the contrary notwithstanding, the Arbitrators shall not have the authority to determine: (a) the occurrence of any Event of Default under Article X, or (b) any claim for an award of exemplary or punitive damages. Lessor and Lessee each shall pay their one-half (1/2) of all proper costs and expenses of such arbitration. Lessor and Lessee shall each bear its own expenses of arbitration, including their own witness and attorneys' fees. GLS 081997 12548.6 GLS 2002 064 3 9 v IX. LIMITA"'IONS ON LIABILITY OF COUNTY OF HAWAII Any provision contained in this Lease to the contrary notwithstanding, so long as Lessee is the County of Hawaii, Lessee's liability for payment or performance of the following covenants is intended to be limited, or that such liability for payment or performance of such covenants shall be assumed by Permittees as follows: 9.01 Section 3.01. Lessee's obligation to pay Base Rent, real property taxes and assessments and other expenses of Lessor shall be limited to payments of Premium, Base Rent, Percentage Rent, real property taxes and other charges collected from Permittees and deposited to the Special Account pursuant to Section 3.05. 9.02 Section 5.03. (a) No County Tax Liability. Subsection 5.03 (a) to the contrary notwithstanding, Lessor acknowledges that Lessee may not be subject to any real property taxation pursuant to HRS §246-36 for portions of the Premises. (b) No Liens. Subsection 5.03(a)(ii) to the contrary notwithstanding, Lessor may not impose a lien on Lessee's interest in the Premises for failure to pay real property taxes. Lessor may impose a lien on a Permittee's interest for failure to pay real property taxes pursuant to subsection 5.03(a). (c) Real Property Tax Appeal. Lessee shall not be liable for any of Lessor's losses from any real property tax appeal taken by Lessee pursuant to subsection 5.03(a)(iii)(B). If any Permittee desires to appeal real property taxes, Lessor may require such Permittee to indemnify Lessor, and to post a bond or other security pursuant to subsection 5.03 (a)(iii)(B)(4). (d) Fines. Lessee will reimburse Lessor for any fines paid pursuant to subsection 5.03(d). 9.03 Section 5.19. (a) Limitation on Liability. Lessee's liability to Lessor to pay any of: (i) Lessor's costs of Hazardous Materials remediation pursuant to subsection 5.19(b), subsection 5.19(c), subsection 5.19 (d) or subsection 5.19(h); (ii) Lessee's liability for violations of Hazardous Materials Laws pursuant to subsection 5.19(f); or (iii) Lessor's expenses of any environmental engineer pursuant to subsection 5.19(8) or subsection 5.19 (h) shall be limited to the monies collected and held in an environmental remediation fund (the "Environmental Remediation Fund"), maintained in the Special Account. (b) Expenditures from Environmental Remediation Fund. Of the Percentage Rent paid by Permittees to Lessor pursuant to GLS 081997 12548.6 GLS 2002 064 40 r Section 2.03 of the Permit, Lessor shall deposit the amount of one-half cent ($0.005) per pound of Papaya Product sold and delivered to a handler to the Environmental Remediation Fund. Lessor may comingle deposits to the Environmental Remediation Fund made by all Permittees on the Premises. Lessee and Lesso± may expend the proceeds of the Environmental Remediation Fund-o pay: (i) the cost of Phase I environmental site assessment, Phase II environmental testing, and Phase II Hazardous Materials removal incurred pursuant to Section 5.20(c) of the Permit and Section 4.06 and Section 4.10 of the Permit; (ii) the cost of removing or remediating any Hazardous Discharge, Hazardous Materials or Underground Storage Tank found anywhere on the Premises during the Term or following expiration or sooner termination of the Permit. 9.04 Section 5.20. Lessee's obligation to surrender the Premises in tidy condition pursuant to Section 5.20(a) shall be performed by Permittees. To the extent Permittees have not surrendered possession of the Premises in a satisfactory manner, Lessee's liability to Lessor shall be limited to the monies collected and held in the Permit Area cleanup fund (the "Permit Area Cleanup Fund") maintained in the Special Account for cleanup, environmental remediation, clearing and restoration of the Permit Area pursuant to Section 2.04 of the Permit. 9.05 Section 5.27. Lessee's liability to pay claims pursuant to Section 5.27 shall be limited pursuant to state law and ordinances of the County of Hawaii. Permittees shall be required to indemnify Lessor for all such payments pursuant to Section 5.27. 9.06 Section 11.13. Section 11.13 to the contrary notwithstanding Lessor acknowledges that Lessee may not be subject to any conveyance tax or recording fees pursuant to HRS Section 247-4, Permittees shall be required to pay all such conveyance tax or recording fees pursuant to Section 11.13. X. EVENTS OF DEFAULT 10.01 Events of Default. The occurrence of any one or more of the following events shall be an Event of Default under this Lease: (a) Nonpayment of Rent. If Lessee shall fail to pay any amount of Base Rent payable under this Lease and if such payment is not made within thirty (30) days after the due date of such payment; or (b) Nonperformance of Monetary Covenant. If Lessee shall fail to observe or perform any covenant, condition or agreement contained in this Lease performable by the payment of money (other than the payment of rent) and such failure shall continue for thirty (30) days after written notice of such failure shall have been given to Lessee by Lessor; or GLS 081997 12548.6 GLS 2002 064 41 • (c) Nonperformance of Nonmonetary Covenant. If Lessee shall fail to observe or perform any covenant, condition or agreement contained in this Lease (other than a covenant, condition or agreement performable by the payment of money), including, without limitation, the covenant to cultivate the Premises continuously pursuant to the Crop Development Plan, and such failure shall continue for a period of thirty (30) days after written notice shall have been given to Lessee by Lessor specifying such failure and requiring that the same be remedied without cure; provided, however, that if the nature of such default is such that the cure cannot reasonably be completed within thirty (30) days, Lessee may have such additional time as may be reasonably necessary to cure such default, so long as Lessee shall have commenced such cure within such thirty (30) day period and shall diligently complete such cure; or (d) Nonproductive Lessee. If Lessee shall fail to adopt and implement the Quarantine Program, or fail to clear, prepare and plant the Premises to papaya in accordance with the approved Crop Development Plan on or before March 31, 1998, or following completion of the initial preparation and planting Lessee shall fail to maintain cultivation of the Premises in crops pursuant to Section 4.05 of this Lease in accordance with the Crop Development Plan approved pursuant to Section 4.04 of this Lease; or if Lessee shall abandon the Premises or discontinue the permitted agricultural use of the Premises; or (e) Nonperformance of Ouarantine Program. If Lessee shall fail to observe or perform any covenant, condition or provision contained in the Quarantine Program, including, without limitation, the failure to rogue infested papaya plants when requested to do so by Lessor or the DOA. (f) Forfeiture. If the Premises or any buildings or improvements thereon shall be seized, attached, executed, confiscated, levied upon under any legal process or under claim of legal right, or subject of forfeiture proceedings under state or federal laws; or (g) Illegal Activity. If Lessee or any contract farmer shall use the Premises for any illegal purpose or conduct any illegal activity which could result in criminal or civil forfeiture of the Premises to the United States of America or the State of Hawaii under federal or state law; or (h) Breach of Hazardous Materials Laws. If Lessee shall materially breach Lessee's covenant regarding compliance with any Hazardous Materials Laws, or any Hazardous Materials or any Hazardous Discharge shall be discovered on the Premises, and Lessee shall fail to conduct all activities necessary to remedy or remove such Hazardous Materials from the Premises, within thirty (30) days of discovery, or if such remediation or removal cannot reasonably be completed within thirty (30) days, Lessee shall have such additional time as may be reasonably necessary to complete such remediation, so long as Lessee shall have commenced GLS 081997 12548.6 GLS 2002 064 42 such remediation within such 30-day period and shall diligently complete such remediation. Lessee shall then be in default under this Lease and Lessor, without prejudice to any other remedy or right of action, shall have the remedies provided in Section 9.02 below. 10.02 Remedies. If any Event of Default shall occur, Lessor may in any such case at once re-enter the Premises or any part thereof or any improvements thereon in the name of the whole, and upon or without such entry, at its option, terminate this Lease without service of notice of legal process, and may expel and remove Lessee and all persons claiming under Lessee and their effects from the Premises or any buildings and improvemen~s thereon which has not been previously surrendered under this Lease without being deemed guilty of any trespass or becoming liable for any loss or damage occasioned thereby, and may bring an action for summary possession of the Premises or any improvements thereon, all without prejudice to any other remedy or right of action which Lessor may have for arrears of rent or for any preceding or other breach of contract. Such termination may but need not necessarily be made effective by recording an affidavit thereof by Lessor or a judgment thereof by a court of competent jurisdiction, in the Bureau of Conveyances of the State of Hawaii and the Office of the Assistant Registrar of the State of Hawaii in which this Lease is recorded. 10.03 Lessor's Costs and Expenses. In addition to the foregoing remedies for breach of this Lease, Lessor shall have the right to recover from Lessee all damages, loss, costs, expenses and fees that may be suffered by Lessor as a result of Lessee's breach of this Lease, including reasonable attorney's fees. XI. MISCELLANEOUS 11.01 Nonwaiver. Acceptance of rent by Lessor or its agent shall not be deemed to be a waiver by Lessor of any breach by Lessee of any covenant contained in this Lease or of Lessor's right to re-enter for breach of condition. The delay or failure of Lessor or Lessee in exercising any right, power or privilege under this Lease or any single or partial exercise of any such right, power or privilege or any abandonment or discontinuance of steps to enforce such a right, power or privilege shall not affect such right, power or privilege. Any waiver, permit, consent or approval of any kind by Lessor or Lessee of any breach or Event of Default under this Lease, or any waiver of any provisions or conditions of this Lease must be in writing and shall be effective only to the extent set forth in writing. 11.02 Notices. All notices, demands or documents which are required or permitted to be given or served under this Lease shall be in writing and sent by first class, registered or certified mail, prepaid postage, or by hand delivery or by GLS 081997 12548.6 GLS 2002 064 43 facsimile telecopier with a copy sent by first class mail, addressed as follows: To Lessor at: Kamehameha Schools Bishop Estate 78-6631 Alii Drive, Suite 232 Kaili;a-Kona, Hawaii 96740 Attention: Director, Hawaii Island Region Facsimile: (808) 322-9446 With a copy to: Kamehameha Schools Bishop Estate 567 South King Street Kawaiahao Plaza, Suite 310 Honolulu, Hawaii 96813 Attention: Legal Group Facsimile: (808) 537-1229 To Lessee at: COUNTY OF HAWAII 25 Aupuni Street Hilo, Hawaii 96720 Attention: Department of Research and Development Facsimile: (808) 935-1205 Any such address may be changed from time to time by serving notice to all other parties as above provided. Service of such notice or demand shall be deemed complete on the day of actual delivery or at the expiration of the second day after the date of mailing, whichever is earlier, or by hand or facsimile telecopier. 11.03 Paragraph Headings. The headings of paragraphs and subparagraphs in this Lease are inserted only for convenience and reference and shall in no way define, expand or limit the scope or intent of any provisions of this Lease. The singular shall include the plural and the use of a pronoun of one gender shall refer to all genders. 11.04 Lessor's Attornev's Fees. In the event of a dispute or Event of Default, Lessor may recover from Lessee all reasonable costs and reasonable attorney's fees expended or incurred by Lessor in enforcing this Lease, in actions for declaratory relief in any way related to this Lease, and on any and every account, or during the existence of any Event of Default in the enforcement of the provisions of this Lease, and the investigation and policing of the Event of Default in question, and in actions to recover damages under this Lease. 11.05 Governing Law; Venue. (a) Governing Law. This Lease shall be governed by and construed in accordance with the laws of the State of Hawaii. (b) Venue. Venue for any mediation, arbitration or litigation with respect to this Lease shall be Hilo, Hawaii. GLS 081997 12548.6 GLS 2002 064 44 U Lessor and Lessee shall submit to tkle jurisdiction of the State and Federal Courts of the State of Hawaii for all purposes relating to this Lease, subject to the terms of the mediation and arbitration clauses in Article VIII. Lessor and Lessee agree to subject themselves to the power and authority of such courts for the enforcement of any arbitration award under this Lease and nor all other matters relating to this Lease and the Premises. 11.06 Entire Agreement. This Lease, together with the attached exhibits, is a complete integration of every agreement and representation made by or on behalf of Lessor and Lessee with respect to the Premises, and supersedes all prior leases, discussions and agreements between the parties. No implied covenant or prior oral or written agreement shall be held to vary the provisions of this Lease, any law or custom to the contrary notwithstanding. The provisions of this Lease shall only be amended by a written amendment executed by Lessor and Lessee which refers to the specific provisions of this Lease to be amended. 11.07 Inurement. The provisions of this Lease shall be binding upon and inure to the benefit cf Lessor and Lessee, and their respective successors, successors in trust, heirs and permitted assigns as the context of this Lease may require. 11.08 Trustees Not Personally Liable. This Lease has been approved and executed by the Trustees of the Estate of Bernice Pauahi Bishop in their fiduciary capacities as such Trustees, and not in their individual capacities. No personal liability or obligation under this instrument shall be imposed or assessed against such Trustees in their individual capacities. 11.09 Time of Essence. Time is of the essence in the performance of any obligations under this Lease. 11.10 Severability. If any provision of this Lease is held to be invalid or unenforceable, the validity and enforceability of the other provisions of this Lease will remain unaffected. 11.11 Neither Party Deemed Drafter. All provisions of this Lease have been negotiated at arm's length and with full representation of legal counsel and neither Lessor nor Lessee shall be deemed to be the drafter of this Lease. If this Lease is ever construed by a court of law or by a board of arbitrators, such court or board shall not construe this Lease or any provision of this Lease against either Lessor or Lessee as the drafter of this Lease. 11.12 Maximum Rate of Interest. Any interest payable under the terms of this Lease shall not exceed the maximum rate permitted by law. 11.13 Recordation of Lease. This Lease shall not be recorded in the Bureau of Conveyances of the State of Hawaii or GLS 081997 12548.6 GLS 2002 064 4.5 filed in the Office of the Assistant Registrar of the Land Court of the State of Hawaii without the written consent of Lessor and Lessee. At the recuest of Lessor or Lessee, Lessor and Lessee will execute a memorandum of this Lease to be recorded and filed. Lessee shall pay all conveyance tax assessed on any recordation of this Lease and she recordation of any subsequent conveyance, amendment or extension of this Lease. GLS 081997 12548.6 GLS 2002 064 4 6 IN WITNESS WHEREOF, Lessor and Lessee have executed this Lease as of the day and year set forth above. TRUSTEES OF THE ESTATE OF BERNICE PAUAHI BISHOP LESSOR COUNTY OF HAWAII By Its Mayor LESSEE APPROVED AS TO FORM: Deputy Corporation Counsel County of Hawaii Dated: GLS 081997 12548.6 GLS 2002 064 47 STATE OF HAWAII ) SS. CITY AND COUNTY OF :HONOLULU ) On this day of 19 , before me personally appeared and , three of the TRUSTEES OF THE ESTATE OF BERNICE PAUAHI BISHOP, to me known to be the persons described in and who severally executed the foregoing instrument, and severally acknowledged that they executed the same as their free act and deed as said Trustees. Notary Public, State of Hawaii My commission expires: GLS 081997 12548.6 GLS 2002 064 4 8 EXHIBIT A GLS 081997 12548.6 GLS 2002 064 4 9 EXHIBIT B (Permit) GLS 081997 12548.6 GLS 2002 064 50 EXHIBIT C (Map - to follow) GLS 081997 12548.6 GLS 2002 064 51 EXHIBIT D (Quarantine Program) (furnished by Department of Agriculture) GLS 081997 12548.6 GLS 2002 064 52 EXHIBIT B PERMIT NO. - THIS PERMIT (this "Permit"), effective as of September 1, 1997 (the "Commencement Date"), by and between COUNTY OF HAWAII, whose principal place of business and post office address is 25 Aupuni Street, Hilo, Hawaii 96720 ("Permittor"), and whose residence and post office address is Hawaii 967_ ("Permittee"). I. PERMIT Permittor desires, as a public purpose, to implement a demonstration quarantine program (the "Quarantine Program") in Puna, Hawaii to control papaya ring spot virus infestation. Permittee desires to participate in the Quarantine Program. In consideration of the rent reserved and of the covenants in this Permit, Permittor hereby permits Permittee to cultivate the land described in this Permit, and Permittee does hereby accept and rent: All that certain portion of land situate in Kahuwai, Puna, Hawaii, containing a total area of approximately acres and a Net Area of approximately acres as illustrated on Exhibit A, attached to this Permit (the "Permit Area"), being a portion of Hawaii Tax Map Key Nos. 1-4-03:11, 12, 25, 26, 28, 30, 31, 32, 33, 34, 35 or 36. The Permit Area is a portion of a larger tract of land referred to as the "Premises" in this Permit. EXCEPTING and RESERVING therefrom the rights reserved in Article I of the Kahuwai Papaya Lease dated , 1997, between Kamehameha Schools Bishop Estate, as lessor ("Lessor"), and Permittor, as lessee (the "Lease"), a copy of which Lease is attached to this Permit as Exhibit B. Capitalized terms used without definition in this Permit are defined in the Lease. TO HAVE AND TO HOLD the same, together with the rights, easements, privileges and appurtenances thereunto belonging or appertaining, unto Permittee from the Commencement Date, for approximately five (5) years and ending on December 31, 2002, Permittee YIELDING AND PAYING therefor unto Permittor, net over and above all taxes, assessments and other charges payable by Permittee the premium and rent reserved in the Lease, SUBJECT, HOWEVER, to the terms, covenants and conditions of the Lease. WLY 081997 12795.4 CJS 2002 064 _ II. RENT 2.01 Premium. Permittee will pay to Permittor a premium ("Premium") of THREE HUNDRED AND NO/100 DOLLARS ($300.00) per acre based on the Net Area, net over and above all taxes, rates, assessments and other charges payable by Permittee. Permittee will pay Premium in four (4) equal quarterly installments, the first payable upon execution of this Permit, and the succeeding installments payable on the first day of each succeeding Calendar Quarter. 2.02 Base Rent. Permittee will pay to Permittor Base Rent ("Base Rent") of ONE HUNDRED DOLLARS AND NO/100 ($100.00) per acre per year based on the Net Area, net over and above all taxes, rates, assessments and other charges payable by Permittee. Permittee will pay Base Rent quarterly in advance in equal installments on the first day of each Calendar Quarter during the Term of this Permit. 2.03 Percentage Rent. (a) Rate and Payment. In addition to Base Rent, Permittee shall pay to Permittor percentage rent ("Percentage Rent") for each Calendar Quarter during the Term net over and above all taxes, rates, assessments and other charges payable by Permittee, of ONE CENT ($0.01) per pound of Papaya Product sold and delivered to a handler (as defined in 7CFR X928.9) or a packinghouse. Permittee shall pay the Percentage Rent, if any, on account of the preceding Calendar Quarter within thirty (30) days after the end of such Calendar Quarter upon submission of Permittee's report on Percentage Rent. (b) Reports and Audits. Permittee will submit to Permittor within thirty (30) days after the end of each Calendar Quarter during the Term a signed statement of Permittee's production of Papaya Product harvested from the Permit Area and sold and delivered to a packinghouse and Permittee's gross income from the Permit Area received by Permittee during such Calendar Quarter and calendar year, and the amount of Percentage Rent due to Permittor under this Permit for such Calendar Quarter. Permittee shall submit to Permittor with such statement a copy of Permittee's Hawaii general excise tax return submitted to the State of Hawaii for such Calendar Quarter. Permittee shall keep for a period of three (3) full calendar years following the end of each Lease Year, all books and records regarding production and Hawaii general excise tax returns of Permittee for each such Calendar Quarter and Lease Year pertaining to operations on the Permit Area. Permittee shall produce all such books, records and tax returns and shall make such books, records and tax returns open to inspection and audit by Permittor and Permittor's agents in Hilo, Hawaii on at least five (5) Business Days prior notice, -2- WLY 081997 12795.4 CJS 2002 064 at all reasonable times and during ordinary business hours. If any audit of Permittee's statement, made within two (2) years after the end of the Calendar Quarter covered by such statement by a certified public accountant or accounting firm employed by Permittor shall disclose an error prejudicial to Permittor in an amount equal to three percent (3%) or more in the amount of Percentage Rent payable to Permittor, then Permittee will pay to Permittor the expense of such audit. Any deficiency or excess in the payment of Percentage Rent for such Calendar Quarter as determined by such audit shall thereupon be adjusted between Permittor and Permittee. 2.04 Application of Premium and Percentage Rent. (a) Permit Area Cleanup Fund. Permittor shall deposit all Premium paid by Permittee to a Permit Area cleanup fund (the "Permit Area Cleanup Fund") for the purpose of cleaning and restoring the Permit Area following expiration or sooner termination of this Permit. Permittee authorizes Permittor to expend the Premium in the cleanup or environmental remediation of the Permit Area and clearing and restoration of the Permit Area following expiration or sooner termination of this Permit. If following expiration or sooner termination of this Permit, Permittee shall clear and restore the Permit Area pursuant to Section 5.20 of the Lease, Permittor shall pay to Permittee the amount of Premium paid by Permittee not expended in cleanup or environmental mitigation activities. (b) Environmental Remediation Fund. Of the Percentage Rent paid by Permittee to Permittor pursuant to Section 2.03 of this Permit, Permittor shall deposit the amount of one-half cent ($0.005) per pound of Papaya Product sold and delivered to a handler to an environmental remediation fund (the "Environmental Remediation Fund"). Permittor may comingle deposits to the Environmental Remediation Fund made by Permittee and all other permittees on the Premises. Permittee authorizes Permittor to expend the .proceeds of the Environmental Remediation Fund to pay: (i) the cost of Phase I environmental site assessment, Phase II environmental testing, and Phase II Hazardous Materials removal incurred pursuant to Section 5.20(c) of the Lease and Section 4.06 and Section 4.10 of this Permit; (ii) the cost of removing or remediating any Hazardous Discharge, Hazardous Materials or Underground Storage Tank found anywhere on the Premises during or following expiration or sooner termination of this Permit. One (1) year following the later of the termination of the Lease or completion of all remediation on the Premises, Permittor shall pay to Permittee or Permittee's designee, Permittee's pro rata share ("Pro Rata Share") of all sums remaining in the environmental remediation fund. Permittee's Pro Rata Share will be determined as a fraction, the -3- WLY 081997 12795.4 CJS 2002 064 numerator being the Net Area of the Permit Area and the denominator being the Net Area of the Premises. 2.05 Fiscal Agent. Permittor has appointed the Research Corporation of the University of Hawaii ("RCUH") as Permittor's Fiscal Agent to collect Premium, Base Rent and Percentage Rent and to enforce the observance and performance by Permittee of all covenants under this Permit. III. PERMITTOR'S COVENANTS 3.01 Ouiet En~ovment. Permittor hereby covenants with Permittee that upon payment by Permittee of all Base Rent and Percentage Rent and upon observance and performance of the covenants by Permittee contained in this Permit, Permittee shall peaceably hold and enjoy the Permit Area for the Term hereby demised without hinderance or interruption by Permittor or any other person or persons lawfully claiming by, through or under them except as expressly provided in this Permit. IV. PERMITTEE'S COVENANTS Permittee hereby covenants with Permittor as follows: 4.01 Payment of Rent. Permittee will pay all Premium, Base Rent and Percentage Rent in lawful money of the United States of America during the Term at the time and in the manner aforesaid, without any deduction and without notice or demand, in advance on the first day of the month at the office of RCUH or RCUH's agent in Hilo, Hawaii. 4.02 Taxes and Other Charges. Permittee will also pay before the same become delinquent Permittee's Pro Rata Share of all real property taxes, assessments, rates, charges and other outgoings of every description to which the Permit Area or any part thereof or any improvement thereon, or Permittor or Permittee in respect thereof, are now or may during the continuance of this Permit be assessed or become liable, whether assessed to or payable by Permittor or Permittee. Permittee will also pay to Permittor with each installment of Base Rent and Percentage Rent, one-fourth (1/4th) of Permittee's annual Pro Rata Share of real property taxes and assessments and other charges assessed to Permittor and the amount of all Hawaii general excise or similar taxes payable on rent, common area maintenance charges, real property tax and other charges, presently at the rate of 4.166%; provided, however, that with respect to any assessment made under any betterment or improvement law which may be payable in installments, Permittee shall be required to pay only such installments together with interest as shall become due and payable during the Term of this Permit, and real property taxes shall be prorated between -4- WLY 081997 12795.4 C.7S 2002 064 Permittor and Permittee as of the Commencement Date and the date of expiration, respectively, of the Term. 4.03 Lessor's and Permittor's Expenses: Interest. Permittee will also pay to Lessor and Permittor, as additional rent within thirty (30) days after the date of mailing or delivery of notice and a statement therefor all costs and expenses paid or incurred by Lessor or Permittor as a result of Permittee's act or omission, including a failure to pay, or otherwise required to be paid by Permittee under any provision of this Permit. If Permittee shall become delinquent in the payment of any Base Rent, Percentage Rent, additional rent other than interest, or other payments required to be made by Permittee to Lessor or Permittor under this Permit, Permittee will also pay to Lessor or Permittor as additional rent interest on such rent and other payments at a rate of twelve percent (12%) per annum, but not to exceed the maximum rate permitted by law from the due date of such payment until fully paid. 4.04 Use of the Permit Area. Permittee assumes and agrees to observe and perform the obligations of Permittor as lessee with respect to compliance with the Quarantine Program and preparation of a Crop Development Program and cultivation of the Permit Area in accordance with Article IV of the Lease. 4.05 Permittee's Covenants. Permittee assumes and agrees to observe and perform all covenants of Permittor as lessee contained in Article V of the Lease with respect to the Permit Area. 4.06 Hazardous Materials Laws. Permittee expressly agrees to observe and perform all covenants of Permittor as lessee contained in Section 5.19 and Section 5.20 of the Lease with respect to Hazardous Materials Laws and surrender, including, without limitation, the obligation to indemnify and hold Lessor, the Department of Agriculture of the State of Hawaii, the University of Hawaii, RCUH, and Permittor harmless for Permittee's noncompliance with Hazardous Materials Laws and to pay all costs and expenses and liabilities incurred by Lessor or Permittor which may arise out of or be attributable to: (a) any Hazardous Discharge on, within, under or about the Permit Area; (b) the use, generation, manufacture, treatment, handling, refining, production, processing, storage, release, discharge, disposal or presence of any Hazardous Material or Underground Storage Tank on, within, under or about the Permit Area, or (c) any other circumstance described in either Section 5.19 or Section 5.20 on, within, under or about the Permit Area. 4.07 No Compensation. Permittee acknowledges that Permittee's implementation of and participation in the Quarantine Program is an essential inducement to Permittor to grant this -5- WLY 081997 12795.4 CJS 2002 064 Permit. Permittee assumes and agrees to observe and perform all provisions of the Quarantine Program, as described in Exhibit C to the Lease. Permittee expressly waives and releases Lessor Permittor, the DOA, the Board of Health of the State of Hawaii or any other applicable government acency from any claim for compensation for damages for the roguing or mandatory destruction of non-infested papaya trees as a part of the Quarantine Program. 4.08 Insurance. Permittee assumes and agrees to keep the Permit Area insured pursuant to the requirements of Article VI of the Lease. 4.09 Condemnation. (a) Condemnation. In the event during the Term of this Permit or any extension of the Term, this Permit, the Permit Area or any part thereof shall be required, taken or condemned by any authority having the power of eminent domain, then and in such event, the estate and interest of Lessee in any part of the Permit Area so taken or condemned shall cease and terminate as of the date Permittee is required to vacate the Permit Area, and the Base Rent in this Permit reserved for the Net Area of the Permit Area shall be reduced for and during the unexpired balance of any period and the Term, effective as of the date of taking, to an amount determined by multiplying the current Base Rent by the ratio that the area of such remaining portion of the Net Area of the Permit Area not so taken bears to the total area of the Net Area of the Permit Area prior to the taking, and Permittor shall credit to the account of Permittee any unearned portion of Base Rent paid in advance prior to such date of taking. (b) Compensation and Damages. In every such case of taking or condemnation of the Permit Area or any part thereof or any improvements thereon, all compensation and damages payable for or on account of the Permit Area hereby demised and any buildings and other improvements, sheds, water tanks, surface pipelines, irrigation facilities, or trees and growing crops existing on the Permit Area at the commencement of the Term shall be payable to and be the sole property of Permittor and Lessor, and Permittee shall have no interest or claim to such compensation or damages or any part thereof whatsoever; and all compensation and damages payable for or on account of any buildings, improvements, sheds, water tanks, irrigation facilities and surface pipelines erected on the Permit Area during the Term and any plans and other preparations therefor and trees and growing crops planted on the Permit Area during the Term shall be divided between Permittor and Permittee as of the date of taking of such buildings, improvements, sheds, water tanks, irrigation facilities, surface pipelines and trees, according to the ratio that the then expired and unexpired portions respectively of the Term, as extended, bear to the sum -6- WLY 081997 12795.4 CJS 2002 064 of such portions, except that Permittee's share shall be applied first to the satisfaction of any other cbiigation of Permittee ~o Permittor under the terms of this Permit, to rebuild, replace, repair or reinstate any building or other improvements taken or condemned upon Permittor's election, and any remaining amount= shall be paid to Permittee. 4.10 Surrender. (a) Possession. At the end of the Term or other sooner termination of this Permit, Permittee will remove all buildings and improvements and papaya trees which have borne fruit through two (2) or more harvests of a harvest cycle, and will peaceably deliver up to Permittor possession of the Premises, together with all fences, roads, bridges, irrigation facilities and underground sewers and drains and, except as provided below, all papaya trees which have not borne fruit through at least two (2) harvests of a harvest cycle and all other trees upon or belonging to the Permit Area, all in tidy condition (in as good or better condition than at the commencement of this Permit, reasonable wear and tear accepted). (b) Permittee's Liability for Rent and Expenses. Permittee shall be liable for Base Rent and real property taxes, assessments and other charges payable under this Permit through the stated expiration of this Permit of December 31, 2002. Permittee may not surrender possession of the Permit Area prior to the stated expiration date unless Permittee has paid Permittor in advance an amount sufficient to cover Base Rent and real property taxes, assessments and other charges payable under this Permit through the stated expiration of this Permit. (c) Compliance with Hazardous Materials Laws. (i) Upon such surrender or sooner termination of the Lease, Permittor and Permittee shall conduct a Phase I environmental site assessment of the Permit Area and any buildings and improvements remaining on the Permit Area. The Phase I environmental site assessment shall be conducted by an environmental engineer or consultant selected by Permittor and performed pursuant to the standards set forth in subsection 5.01 (e) of the Lease. The written report resulting from the Phase I environmental site assessment shall state whether any buildings and improvements remaining on the Permit Area are free of Hazardous Materials discharged by or under the control of Permittee and whether Permittee has fully complied with all Hazardous Materials Laws. Permittee shall pay the sole cost of the Phase I environmental site assessment using the proceeds of the Environmental Remediation Fund. If the Phase I environmental site assessment reveals: (A) a recommendation in the Phase I environmental site assessment; (B) the environmental quality of -7- WLY 081997 12795.4 CJS 2002 064 J the Permit Area has declined in comparison to the Baseline Assessment; or (C) Permittee has violated any warranty, representation, or covenant of Sect~cn 5.19 of the Lease, Permittee shall provide Permittor with and perform a Phase II environmental testing and develop and implement a Phase III Hazardous Materials removal plan at Permittee's sole cost and expense using the proceeds of the Environmental Remediation Fund. Permittee shall remove or cause to be removed to Permittor's satisfaction all Hazardous Materials from the Permit Area using the most effective methods and the best available technology, prior to surrender or termination and shall fully comply with all Hazardous Materials Laws and requirements of any governmental authority having jurisdiction therefor, including, without limitation, fully comply with any requirement to file such environmental site assessment, mitigation plan, risk assessment certificate or other information with any such governmental authority prior to surrender or termination. Following termination of this Lease, as between Permittor and Permittee only but not for purposes of limiting liability under any federal or state law, Permittee would be liable to Permitter to remove or remediate any Hazardous Materials discovered at any time following termination of this Lease. (ii) If the Phase I environmental assessment recommends a Phase II testing plan but does not determine that the Hazardous Materials were discharged on the Permit Area after the Commencement Date, Permittor and Permittee shall perform a Phase II testing plan at Permittee's sole cost. Although not recommended by the Phase I environmental assessment, Lessor may perform, at Permittor's sole cost, a Phase II environmental testing. If the Phase II environmental testing reveals that: (A) the environmental quality of the Permit Area has declined in comparison to the Baseline Assessment, or (B) Permittee has violated any of the warranties, representations or covenants of Section 5.19, Permittee shall reimburse Permittor for Permittor's reasonable costs of performing the Phase II environmental testing and implement a Phase III Hazardous Materials removal plan at Permittee's sole cost and expense. (d) Survival. Permittee shall not be relieved of its obligations under this Permit until surrender is completed in accordance with the provisions of Section 4.06 and Section 4.10. Final inspection and release of the Premises by applicable governmental authorities, if any, and by Permittor shall be a condition precedent to completion of surrender and termination of Permittee's obligations under this Permit. Nothing in this Permit shall be deemed to relieve Permittee of an obligation which by its specific. terms survives termination of this Permit. -a- WLY 081997 12795.4 CJS 2002 064 J 4.11 Mediation and Arbitration. Permittee assumes and agrees to the mediation and arbitration provisions contained in Article VIII of the Permit. V. EVENTS OF DEFAULT 5.01 Events of Default. Permittee acknowledges that the occurrence of any one or more of the following events shall be an Event of Default under this Permit: (a) Non~avment of Premium or Rent. If Permittee shall fail to pay any amount of Premium, Base Rent or Percentage Rent payable under this Permit and if such payment is not made within thirty (30) days after the due date of such payment; or (b) Nonpayment or UnderDavment of Percentage Rent. If Permittee shall fail to report and pay Percentage Rent pursuant to Section 2.03 of this Permit and if such report is not made and any payment due under the report is not made within ten (10) days after the due date of such payment or report, or if the Percentage Rent for any calendar year after audit shall exceed five percent (5~) or more of the Percentage Rent initially reported and paid by Permittee to Permitter; or (c) Nonperformance of Monetary Covenant. If Permittee shall fail to observe or perform any covenant, condition or agreement contained in this Permit performable by the payment of money (other than the payment of rent) and such failure shall continue for thirty (30) days after written notice of such failure shall have been given to Permittee by Permitter; or (d) Nonperformance of Nonmonetary Covenant. If Permittee shall fail to observe or perform any covenant, condition or agreement contained in this Permit (other than a covenant, condition or agreement performable by the payment of money), including, without limitation, the covenant to cultivate the Permit Area continuously pursuant to the Crop Development Plan, and such failure shall continue for a period of thirty (30) days after written notice shall have been given to Permittee by Permitter specifying such failure and requiring that the same be remedied without cure; provided, however, that if the nature of such default is such that the cure cannot reasonably be completed within thirty (30) days, Permittee may have such additional time as may be reasonably necessary to cure such default, so long as Permittee shall have commenced such cure within such thirty (30) day period and shall diligently complete such cure; or (e) Nonproductive Permittee. If Permittee shall fail to clear, prepare and plant the Permit Area to papaya in accordance with the approved Crop Development Plan on or before March 31, 1998, or following completion of the initial -9- WLY 081997 12795.4 CJS 2002 064 preparation and planting Permittee shall fail to maintain cultivation of the Permit Area in crops pursuant to Article IV of the Lease in accordance with the Crop Development Plan approved pursuant to Article IV of the Lease; or if Permittee shall fail to observe or comply with the Quarantine Program; or if Permittee shall abandon the Permit Area or discontinue the permitted agricultural use of the Permit Area; or (f) Nonperformance of Ouarantine Procrram. If Permittee shall fail to observe or perform any covenant, condition or provision contained in the Quarantine Program, including, without limitation, the failure to rogue infested papaya plants when requested to do so by Permittor or the DOA. (g) Forfeiture. If the Permit Area or any buildings or improvements thereon shall be seized, attached, executed, confiscated, levied upon under any legal process or under claim of legal right, or subject of forfeiture proceedings under state or federal laws; or (h) Illegal Activity. If Permittee or any contract farmer shall use the Permit Area for any illegal purpose or conduct any illegal activity which could result in criminal or civil forfeiture of the Permit Area to the United States of America or the State of Hawaii under federal or state law; or (i) Breach of Hazardous Materials Laws. If Permittee shall materially breach Permittee's covenant regarding compliance with any Hazardous Materials Lawa, or any Hazardous Materials or any Hazardous Discharge shall be discovered on the Permit Area, and Permittee shall fail to conduct all activities necessary to remedy or remove such Hazardous Materials from the Permit Area, within thirty (30) days of discovery, or if such remediation or removal cannot reasonably be completed within thirty (30) days, Permittee shall have such additional time as may be reasonably necessary to complete such remediation, so long as Permittee shall have commenced such remediation within such 30-day period and shall diligently complete such remediation. Permittee shall then be in default under this Permit and Permittor, without prejudice to any other remedy or right of action, shall have the remedies provided in Section 5.02 below. 5.02 Remedies. If any Event of Default shall occur, Permittor may in any such case at once re-enter the Permit Area or any part thereof or any improvements thereon in the name of the whole, and upon or without such entry, at its option, terminate this Permit without service of notice of legal process, and may expel and remove Permittee and all persons claiming under Permittee and their effects from the Permit Area or any buildings and improvements thereon which has not been previously -10- WLY 081997 12795.4 CJS 2002 064 surrendered under this Permit without being deemed guilty of any trespass or becoming liable for any loss or damage occasioned thereby, and may bring an action for summary possession of the Permit Area or any improvements thereon, all without prejudice to any other remedy or right of action which Permittor may have for arrears of rent or for any preceding or other breach of contract. Such termination may but need not necessarily be made effective by recording an affidavit thereof by Permittor or a judgment thereof by a court of competent jurisdiction, in the Bureau of Conveyances of the State of Hawaii and the Office of the Assistant Registrar of the State of Hawaii in which this Permit is recorded. 5.03 Permittor's Costs and Expenses. In addition to the foregoing remedies for breach of this Permit, Permittor shall have the right to recover from Permittee all damages, loss, costs, expenses and fees that may be suffered by Permittor as a result of Permittee's breach of this Permit, including reasonable attorney's fees. VI. MISCELLANEOUS 6.01 Nonwaiver. Acceptance of rent by Permittor or its agent shall not be deemed to be a waiver by Permittor of any breach by Permittee of any covenant contained in this Permit or of Permittor's right to re-enter for breach of condition. The delay or failure of Permittor or Permittee in exercising any right, power or privilege under this Permit or any single or partial exercise of any such right, power or privilege or any abandonment or discontinuance of steps to enforce such a right, power or privilege shall not affect such right, power or privilege. Any waiver, permit, consent or approval of any kind by Permittor or Permittee of any breach or Event of Default under this Permit, or any waiver of any provisions or conditions of this Permit must be in writing and shall be effective only to the extent set forth in writing. 6.02 Notices. All notices, demands or documents which are required or permitted to be given or served under this Permit shall be in writing and sent by first class, registered or certified mail, prepaid postage, or by hand delivery or by facsimile telecopier with a copy sent by first class mail, addressed as follows: To Permittor at: COUNTY OF HAWAII 25 Aupuni Street Hilo, Hawaii 96720 Attention: Department of Research and Development Facsimile: (808) 935-1205 -11- WLY 081997 12795.4 CJS 2002 064 To RCUH at: RESEARCH CORPORATION OF THE UNIVERSITY OF HAWAII c/o Attention: Facsimile: (808) To Permittee at: Attention: Facsimile: (808) Any such address may be changed from time to time by serving notice to all other parties as above provided. Service of such notice or demand shall be deemed complete on the day of actual delivery or at the expiration of the second day after the date of mailing, whichever is earlier, or by hand or facsimile telecopier. 6.03 Paragraph Headings. The headings of paragraphs and subparagraphs in this Permit are inserted only for convenience and reference and shall in no way define, expand or limit the scope or intent of any provisions of this Permit. The singular shall include the plural and the use of a pronoun of one gender shall refer to all genders. 6.04 Permittor's Attornev's Feea. In the event of a dispute or Event of Default, Permittor may recover from Permittee all reasonable costs and reasonable attorney's fees expended or incurred by Permittor in enforcing this Permit, in actions for declaratory relief in any way related to this Permit, and on any and every account, or during the existence of any Event of Default in the enforcement of the provisions of this Permit, and the investigation and policing of the Event of Default in question, and in actions to recover damages under this Permit. 6.05 Governing Law; Venue. (a) Governing Law. This Permit shall be governed by and construed in accordance with the laws of the State of Hawaii. (b) Venue. Venue for any mediation, arbitration or litigation with respect to this Permit shall be Hilo, Hawaii. Permittor and Permittee shall submit to the jurisdiction of the State and Federal Courts of the State of Hawaii for all purposes relating to this Permit, subject to the terms of the mediation and arbitration clauses in Section 4.10. Permittor and Permittee agree to subject themselves to the power and authority of such courts for the enforcement of any arbitration award under this -12- WLY 081997 12795.4 CJS 2002 064 Permit and for all other matters relating to this Permit and the Permit Area. 6.06 Entire Agreement. This Permit, together with the attached exhibits, is a complete integration of every agreement and representation made by or on behalf of Permittor and Permittee with respect to the Permit Area, and supersedes all prior leases, discussions and agreements between the parties. No implied covenant or prior oral or written agreement shall be held to vary the provisions of this Permit, any law or custom to the contrary notwithstanding. The provisions of this Permit shall only be amended by a written amendment executed by Permittor and Permittee which refers to the specific provisions of this Permit to be amended. 6.07 Inurement. The provisions of this Permit shall be binding upon and inure to the benefit of Permittor and Permittee, and their respective successors, successors in trust, heirs and permitted assigns as the context of this Permit may require. 6.08 Time of Essence. Time is of the essence in the performance of any obligations under this Permit. 6.09 Severability. If any provision of this Permit is held to be invalid or unenforceable, the validity and enforceability of the other provisions of this Permit will remain unaffected. 6.10 Neither Party Deemed Drafter. All provisions of this Permit have been negotiated at arm's length and with full representation of legal counsel and neither Permittor nor Permittee shall be deemed to be the drafter of this Permit. If this Permit is ever construed by a court of law or by a board of arbitrators, such court or board shall not construe this Permit or any provision of this Permit against either Permittor or Permittee as the drafter of this Permit. 6.11 Maximum Rate of Interest. Any interest payable under the terms of this Permit shall not exceed the maximum rate permitted by law. 6.12 No Recordation of Permit. This Permit shall not be recorded in the Bureau of Conveyances of the State of Hawaii or filed in the Office of the Assistant Registrar of the Land Court of the State of Hawaii. -13- WLY 081997 12795.4 CJS 2002 064 IN WITNESS WHEREOF the parties hereto have executed these presents effective the day and year first above written. COUNTY OF HAWAII By: Its Permittor Permittee -14- WLY 081997 12795.4 CJS 2002 064 SEMI 'dY:Hl UEi'T OF AGRIGUL~UkE; n-'4-97 ~ 5:40AM ~ Div. Plant,lndustry~ 809 935 1205~ii 2 ~+.YI~?u ~RaFT MEMORANDUM OF AGREEMENT - ; AMONG . , COUNTY OF HAWAII, STATE OF HAWAII DEPARTMENT OF AGRICULTURE, RESEARCH CORPORATION OF THE UNIVERSITY OF HAWAII AND UNIVERSITY OF HAWAII COLLEGE OF TROPICAL AGRICULTURE AND HUMAN RESOURCEB THIS MEMORANDUM OF AGREEMENT is made and entered Into by and among the County of Hawaii, hereinafter called the COUNTY; the State of Hawaii, Department of Agriculture, hereinafter called the DOA; the Research Corporation of the University of Hawaii, hereinafter called RCUH; and the University of Hawaii, on behalf of its College of Tropical Agriculture and Human Resources, hereinafter called CTAHR. WHEREAS, this Agreement is being executed to memorialize the parties' understanding regarding the administration of the demonstration quarantine project described herein. WHEREAS, the papaya ringspot virus (PRV) has decimated major papaya growing areas on the islands of Hawaii and Oahu resulting in irretrievable production and financial losses to the state's papaya growers and papaya fruit processors and fruit handlers. WHEREAS, the losses in production have resulted in decreased shares of the mainland United States and foreign markets. WHEREAS, the papaya growers have attempted to plant papaya fields in non-traditional areas to take advantage of available lands which are free of PRV, but such areas have become infected with PRv after a short period of time. WHEREAS, the only current means of managing PRV infestations is to physically remove all papaya plants infected with the disease, which removal also results in a loss of production and income. WHEREAS, researchers at CTAHR and other institutions have attempted to develop measures and technologies Which could moderate the impact of PRV on papaya crops and lead to the stabilization and restoration oP the papaya industry and its contributions to the economies of the island of Hawaii and elsewhere in the States. WHEREAS, the DOA and CTAHR are cooperating with each other and with other institutions to develop and implement measures and technologies, and to educate the papaya growers in the use of these measures and technologies, to mitigate the impacts of PRV on papaya crops grown in the Island of Hawaii and elsewhere in the State. ~ENi dY~HI DEPT OF AGRIGU~TURE; 8-'~4-97 ~ 9:4GAM Div, Plant Intlustry~ aGB 935 1205; 3 WHEREAS, CTAHR researchers have been working closely with the DOA to develop disease management protocols which can be used by the papaya growers to alleviate the impact oP PRV an their farms. WHEREAS, recognizing the devastating impact of PRV and the need for assistance to the state's papaya industry, the COUNTY is proposing to establish a demonstration quarantine project in Kahuwai, Puna, island of Hawaii, to demonstrate that papaya can be grown successfully under severe PRV pressure by following strict disease management protocols. WHEREAS, the demonstration quarantine project provides CTAHR researchers and the DOA a unique opportunity to study the epidemiology oP PRV and to evaluate other disease management measures and technologies developed or being developed to control PRV. WHEREAS, DOA and CTAHR wish to continue their cooperative efforts to restore the state's papaya industry so that it can again be a positive asset to growers, fruit processors, and the island of Hawaii's and the State's diversified agricultural communities. WHEREAS, the COUNTY is authorized by Chapter 46, Hawaii Revised Statutes (HRS), specifically Sections 46-1.5(4) and 46-1.5(16), HRS, and by Section 13-13 of the Hawaii County Charter to make contracts and do all things necessary and proper to carry into execution all powers vested in the COUNTY or any county officer and to lease real property within the defined boundaries of the COUNTY Por public purposes and to dispose of the real property as the inhabitant6 of the COUNTY may require. WHEREAS, the DOA is authorized by Chapter 141, HRS, specifically Sections 141-1(3) end 141-1(8), HRS, to enter into contracts or cooperative agreements as may be necessary to conduct the DOA's business and on such terms as the DOA may deem appropriate, and to assist in research, evaluation, development, enhancement, and expansion of local agricultural industries, and serve as liaison with other public agencies and private organizations Por such purpose. WHEREAS, RCUH is authorized by Chapter 307, HRS, to conduct scientific investigations and research in the physical, biological and social sciences and in furtherance of such purpose to enter into contracts, leases, cooperative agreements and other transactions and to lease, rent, hold, maintain, use and operate real and personal property, and establish a special account for the funds of research and training projects of the University oP Hawaii, other state agencies and political subdivisions of the State. 2 3ENi BY~Hi DEPT of AGRIGULiURE~ 8-14-~7 8;41AM ~ Div. Plant industry 808 935 1205;# 4 V WHEREAS, CTAHR is authorized by Chapter 304, HRS, specifically, Sections 304-2 and 30a-8, HRS, to enter into and perform contracts and cooperative agreements ae may be necessary in the conduct of its business and on such terms as it may deem appropriate, and to conduct research and training. NOW, THEREFORE, the parties hereto mutually agree as follows: The COUNTY shall lease certain lands at Kahuwai, Puna, Hawaii Prom Kamehameha Schools Bishop Estate (KSBE) for purposes oP implementing a demonstration quarantine project. The COUNTY will issue permits to papaya growers (permlttees) to plant papaya pursuant to crop development plane, will implement disease control measures management protocols, and will enter into this Agreement with the DOA, RCUH and UH to operate and manage the demonstration quarantine project. The COUNTY, after entering into a lease agreement (.Lease) with KSBE for certain lands at Kahuwai, Puna, Hawaii, agrees to have the DOA, RCUH and CTAHR assist with the implementation of the demonstration quarantine project. The COUNTY shall designate a Project Co-Investigator. The COUNTY's Project Co-Investigator shall be responsible Por transmitting to RCUH all funds to be utilized for the demonstration quarantine project and shall work cooperatively with RCUH on other administrative aspects of the demonstration quarantine project. The COUNTY appoints RCUH as the COUNTY~s fiscal agent with Pull power to ask, demand, sus for, recover, collect, receive and hold all monies, debts, rents, accounts, taxes, cost recoveries and reimbursements and other payments, to accept possession of such lands on behalf of the COUNTY, to observe and perform all eavenants of the COUNTY as lessee under the Lease, to enforce the observance and performance of permlttees of all covenants to be observed and performed under COUNTY growing permits and to expand Funds for lease rent, real property taxes and other expenses incurred or to be incurred in possessing the land and observing and performing all such covenants under the Leases and enforcing the observance and performance by permlttees oP covenants in the permits, including, but not limited to, the employment of a project manager and other personnel necessary to administer the demonstration quaranCltie project. The DOA shall designate a Project Co-Investigator. The DOA's Project Co-Investigator shall be responsible for working with CTAHR's Principal Investigator, the COUNTY'S Project Co- Investigator and RCUH on the administrative aspects and research components of the demonstration quarantine project as more specifically described below. 3 SENT BY:HI DEPT OF AGRIGULTURE~ B-'4-97 ~ B:41AM ~ Uiv. Plant Industry-+ d09 935 1205 # 5 ~11 `.J The DOA shall prepare disease management protocols for the demonstration quarantine project; select, with the assistance of the Papaya Administrative Committee, permittees on behalf of the COUNTY and assist with the awarding of lands to qualifying permittees to grow papaya crops; work with the project manager and personnel in the performance of their duties; and provide supplemental assistance when required for the detection and mitigation of PRV when found in the quarantine Zone; The DOA shall, under Chapter 149A, HRS, enforce applicable federal and state laws, rules and regulations which regulate the use of pesticides in papaya farming. Notwithstanding the Foregoing, enforcement of hazardous materials laws, rules and regulations is the responsibility of the appropriate regulatory agencies. CTAHR shall designate a Principal Investigator to be responsible for conducting research in the demonstration quarantine project in accordance with University of Hawaii policies and procedures. RCUH shall serve as the receiving and expending agency for all funds provided by the COUNTY for the purposes oP implementing this Agreement and the Leases. RCUH may contract, as necessary, with CTAHR to conduct research. Thie Agreement shall be effective from , 1997 to unless sooner term Hated as herein provided. This Agreement may be terminated by any party (a) for cause if any of the other parties are in breach of any material obligation or undertaking under this Agreement and if such breach is not reconciled within thirty (30) days after receipt of written notice of such breach given by one or more of the other parties, or (b) without cause by any party by giving written notice to the other parties oP such termination at least sixty (60) days prior to the effective date of termination, provided that no party shall request termination so long as the COUNTY is lessee under the Lease. Modifications to this Agreement ahali be made by mutual agreement of all parties in writing. In witness whereof, the COUNTY, the DOA, RCUH and CTAHR have agreed to and executed this Agreement by their signatures below. COUNTX OF HAWAII STEVEN K. YAMASHIRO Date Mayor 4 SEM MY~~=' :EPl 7P AGRICULTURE. -ianc ~scry~ .ii5 boy ..'_,ti 8 STATE OF HAWAII DEPARTMENT OF AGRIs:`_'e..'L'~r JAMES J. NAKATANI `,.i:c ~ y Chairperson, Boarr _ Aariculturer RESEARCH CORPORAT'GPa OF THE UNIVERSS^Y OF HAWATi HAROLD S. MASUMOT^. ate Executive Director UNIVERSITY OF HAWAli COLLEGE OF TROPICAL AGRICULTURE AND HUMAN RrSOL:2CES CHARLES W. LAUGHLIN Date Dean UNIVER6ITY OF HAY7AII MARVIN S. ENOKAWA Date Director - Research Services APPROVED AS TO FORM: Corporation Counsel MARJORIE ;,AU Deputy Attorney General 5 P CHING, YUE1V 8r MORII{AWA A Law Pa[urersAip Includmg Law Corporoennx Pacific Tower, Suite 2700 1001 Bishop Street Honolulu, Hawaii 96813 Telephone: (808) 57A-8880 Telecopier: (808) 524-7664 MEMORANDUM DATE: August 19, 1997 TO: State of Hawaii Department of Agriculture James Nakatani Via Fax: 973-9613 Myron Isherwood Via Fax: 973-9533 Marjorie Lau Via Fax: 587-3077 County of Hawaii Department of Research and Development Margarita Hopkins Via Fax: 1-808-935-1205 Department of Corporation Counsel Qei-BEZz Frederick Giannini, Esq. via Fax• 1-8D8-~--'~~ Research Corporation of the University of Hawaii Harold Masumoto /J Via Fax: S FROM: William W.L. Yuen, Esq. SUBJECT: Papaya Quarantine Program Attached are pages 3 and 4 only of the draft Memorandum of Agreement that Myron Isherwood sent on August 18, 1997, with my comments attached. Kamehameha Schools Bishop Estate ("KSBE") objects to the deletion of the County of Hawaii's obligation to observe and perform Covenants under the Lease. My suggested revision is to refer to these as the limited covenants of the County as Lessee under the Lease. You will note from the revised Lease that I am sending under separate cover that KSBE is considering a limitation of the County's liability for the Lessee's obligations under the Lease. We also are requesting the following be attached to the second paragraph on page 4 to conform to our discussions of August 1, 1997: To the extent funds collected by RCUH on behalf of the County from permittees for remediation of hazardous discharge or the presence of hazardous materials laws or underground storage tanks on, within, under or about the land are insufficient for any such remediation or violation of covenants contained in Section 5.19 and WLY 081997 12578.1 JEL 2002 064 ~ , b- T'd ~JM~Ji1I tlOlJ 3 FJ3N: 9NIH~~ 6F_:~T SE, hT ~~~IH V James Nakatani Myron Isherwood Marjorie Lau Margarita Hopkins Frederick Giannini, Esq. Harold Masumoto August 19, 1997 Page 2 5.20 of the Lease with respect to hazardous materials laws to be observed and performed by permitteea under the permits, DOA will seek sufficient appropriations from the legislature to pay remediation costa. This provision does not obligate the Department of Agriculture or RCUH to pay any such remediation coats. Please feel free to contact me if you have any questions regarding this matter_ WLY:jel Enclosures (2) SOLY 081997 12578.1 JEL 2002 064 hMF1?1I?J06J '8 N3fl.l 9NIHJ 6E:Ei d6. 5i 9flH ANT BY~HI DEPT OF AGRICULTURE: B-~B-97 : 1~01PM : Div, P18nC InGUSCr~r~ 8D8 52d 7664 .7i 5 wHEREA6, CTAHR is authorized by Chapter 306, HRS, specifically, Sections 30a-2 and 304-6, HRS, LO enter into and perform contracts and coopexativa agreements as may ba necessary in the conduct of its bctAihaas and an such terms as it may deem appropriate, and to aonduet research and training. NOW, THEREFORE, the parties hereto mutually agree ae follows: The COUNTY shall loess certain lands at Kahuwai, suns, Hawaii from Kamehamaha Schools Siahop Estate (KSBE) !Or purposes of implementing a demonstration quarantine project. The COUNTY will issue permits LO papaya growers (permittees) to plant papaya pursuant to crop deVelopmnnt Plana, will implement fliasase _ _ control measures management protocols, anfl will enter into the AgrnamenL with the DOA, RCVH and UH to op®rate and manage the demonstration quarantine project. The COUNTY, after entering into a lease agreement (Lease) with KBSE for certain lands at Kahuvai, Puna, Hawaii, agrees to have Lhe DOA, RCUFI and CTAHR assist with the lmglementation of the demonstration quarantine project. The COUNTY shall designate a Project Co-Investigator. The COUNTY~a Project Co-Investigator shall be responsible for transmitting to RCUH all funds to be utilised for the demonstration quarantine project and shall work nooperatively with RCVH on other administrative aspeots of the 8emonstrstionY~~~ quarantine project. -Fo o b$erve 5~.~ C~+~e~~~ ° 7 ~ ~J?sry an (es~eQ The COUNTY appoints CUH as the UNTY s fiscal agent With full power to ask, 8ema d. sue Por, r Cover, coilact, receive and hold all maniea, dEbt rants, accou ts, taxaa, cost recoveries and reimbursements d other payme s, to accept pceeession of such lands on beha of the COUNTY, to enforce the observance and pc3rformance permittees oP a 1 covenants. to be observed and performed u er COUNTY growing permits and to expand funds for 1¢ase rant, real property taxes and other expenses incurred or to be incurred in possessing the land and enforcing the observance and per£armance by permittees of versants in the permits, including, but »ot limited to, t employment p£ a project manager and other personnel ne Beery to administer the demonstration quarantine pro' ct. The DOA shall designate Project Co-Investigator. The DOA~s Project Co-Tnvestigato shall be responsible for working with CTAHR's Principal Inv tigator, the COUNTY'S Project Ce- investlgator and RC on the administzative aspects and research components of the emonstration quarantine project as more specifically de ribed below. -G~,~~~ L~~ U U AU6 ? 8 1997 „w~~Q,tr- ~ I-~.ce~, ~w1 W. L YUEN r-•~•,~ ~ Hr1c~~zao~d s r-~~n.~, ~NIH~ ~r:,_i ht ~_~nH SrN7 9Y~MI DEPT OF AGRICULTURE: o- ~-97 1~01PM D,iv, Plant .adustr'~~ 808 524 7664 ~ 8 The DOA shall prepare disease management protocols for the demonstration quarantine project; select, with the assistance of the Papaya Administrative Committee, permittees an behalf of the COUNTY and as9tiet with the awarding of lands to qualifying permittess to~grow papaya crops; work with the projaot manager and personnel in Lhs performanea o! their fluties; and provide supplemental ~sslstanee when required for the detection and mitigation ofjPRV when found in the quarantine zone; The DOA shall unfler Chapter 149A, HRS, anforo® applicable federal and agate law©, rules and regulations which regulate the use of pestlc~dea in papaya farming. NOtwithatanding tho foregoing, an4orcament of ria8ardous materials laws, rules and regulations 1~ the responsibility of the appropriate regulatory agoncies. ^ ~ i cTAHR shall designate a Principal Investigator to b¢ responsible for aonauatind~ research in the demonstration quarantine project in aceordnnce with 27niverFity of Hawaii policies and prooedurea. RCVH shall setve as the rsaeivinq and expending agency for all Funds provided by'the COUNTY tox the purpose® of implementing this Agreement and the Leas@• I RRUEi may aonti`act, as necessary, with CTAFIR to conduct research. T112.s A ieemsnt shall be effective Pram 1997 to ~ 'LOD~L. unless sooner term Hated as herein prOV ed. i This Agreement may be terminated by any party (a) for cause if any of the other parties are in breach of any material obligation or undertaking under this Agreement and iP such breach is not___________.. reoonciled within thirty (30) days after raeaipt of written notice of aua>ft braaoh given by ens or more of the other parties, oz (b) without cause by any party by giving written notice to the other partiies of such termination at least sixty (60) days prior to the hffactive dates of termination, grovided that no party shall request termination so long as the COUNTY is lessee under the Len~e. Modificationsto this Agreement shall be made by mutual agreement of all partiab in writing. i In witness whbreof, the COUNTY, the DoA, RCVH and CTAHR have agressd to andexecuted this Agreement by their signatures below. COUNTY OF HAH II STEVEN K. Y SHIRO Data f~ Mayor ~ 4 Dj ~S ~ l~ V I, ~j AUG 1 8 -t`L----------- W. 4. YUEN b.~b ~JMti~1I2iOW '8 N3fl.l ~NIH~ Bb:E.L Lb. 5I ~~iH