BUYER 2: Street Address. City, State & Zip. Home Phone Federal Tax ID (for entities) Home Phone Federal Tax ID (for entities) BUYER 4: Street Address

Transcription

1 Kauai Kailani Purchase Agreement I. Definitions. In this Kauai Kailani Purchase Agreement (this Agreement ): A. Seller means GCT Properties, LLC, a Hawaii limited liability company. Its address is 1717 Akahi Street, 2nd Floor, Honolulu, Hawaii and phone number is (808) and fax no is (866) B. Escrow means Old Republic Title & Escrow of Hawaii, Ltd., a Hawaii corporation. Its address is 4-356G Kuhio Highway, Kapaa, Hawaii 96746, and phone number is (808) and fax (808) C. Project Broker means Kauai.com Real Estate, LLC. Its address is P.O. Box , Princeville, Hawaii 96722, and phone number is (808) D. You, your and Buyer mean each of these persons, individually and together: BUYER 1: BUYER 2: Full legal name please - no initials. If you have no middle name put NMN. Full legal name please - no initials. If you have no middle name put NMN. Name of spouse, if married. For an entity, place of formation. For a trust, date of Trust. Name of spouse, if married. For an entity, place of formation. For a trust, date of Trust. Street Address Street Address City, State & Zip City, State & Zip Business Phone Cell Phone Business Phone Cell Phone Home Phone Federal Tax ID (for entities) Home Phone Federal Tax ID (for entities) address Fax No. address Fax No. BUYER 3: BUYER 4: Full legal name please - no initials. If you have no middle name put NMN. Full legal name please - no initials. If you have no middle name put NMN. Name of spouse, if married. For an entity, place of formation. For a trust, date of Trust. Name of spouse, if married. For an entity, place of formation. For a trust, date of Trust. Street Address Street Address City, State & Zip City, State & Zip Business Phone Cell Phone Business Phone Cell Phone Home Phone Federal Tax ID (for entities) Home Phone Federal Tax ID (for entities) address Fax No. address Fax No. If the first letter of a word or phrase is capitalized in this Agreement, that word will have the meaning given to it in this Agreement or, if no definition is given in this Agreement, in the Declaration of Condominium Property Regime of Kauai Kailani (With Covenants, Conditions and Restrictions, and Grants and Reservations of Easements and Special Powers of Attorney), recorded in the Bureau of Conveyances of the State of Hawaii (the Bureau ) as Document No. A , as it has been or may be revised from time to time (the Declaration ). Copyright 2013 Charles E. Pear, Jr. 1

2 II. III. Purchase and Sale. By signing this Agreement, Buyer agrees to buy and Seller agrees to sell the following property (the Property ) for the Purchase Price and on the terms and conditions stated in this Agreement: A. Unit (the Unit ), which is a bedroom unit in the Kauai Kailani Condominium (the Project ), as the Unit and the Project are described in the Declaration and shown on the plans of the Project recorded in the Bureau as Condominium Map No. 5242, as they have been or may be amended from time to time (the Condominium Map ); B. The Limited Common Elements appurtenant to the Unit as provided in the Declaration; C. The Common Interest assigned to the Unit in the Declaration; and D. The appliances and any furnishings in the Unit listed in Exhibit A (the Furnishings ). In this Agreement, Condominium Unit means the Unit identified in Section II.A. above and its Common Interest, Limited Common Elements, and all other rights and easements appurtenant to the Unit. The Property: does not include a parking stall includes parking stall no.. Reason for purchase: Primary Home Second Home Investment Purchase Price. Buyer agrees to pay the Purchase Price for the Property, calculated as follows: Price of The Property: Other (Describe): Equals the Purchase Price U.S. $ U.S. $ U.S. $ IV. Additional Charges. In addition to the Purchase Price, Buyer also agrees to pay the Additional Charges, as follows: One Month s maintenance fees to be paid to the Association. Plus a non-refundable start up fee to be paid to the Association* U.S. $ U.S. $ Plus your Closing Costs and Prorations as provided in Section 9 of the General Terms and Conditions of Kauai Kailani Purchase Agreement (the General Terms and Conditions ). [The amount will appear on your closing statement.] Plus any interest and all other fees, costs, expenses and other sums required to be paid by Buyer in this Agreement. These and other costs that cannot be computed at this time are explained in more detail in Section 9. of the General Terms and Conditions. *Note that the Seller agrees to pay a non-refundable start up fee to the Association in the same amount that you pay. V. Payment Terms and Due Dates. Buyer agrees to pay the Purchase Price and Additional Charges as follows: Initial Deposit (due when you sign this Agreement): Additional Deposit (due ): U.S. $ U.S. $ Mortgage Loan Proceeds (due 2 business days before the Scheduled Closing Date): U.S. $ Balance : U.S. $ Both the Balance and the Additional Charges are due: four (4) business days prior to the Scheduled Closing Date. on the date to be set in Seller s Pre-Closing Notice (See Section 8(e) of the General Terms and Conditions). The Scheduled Closing Date is, 20 will be set by Seller pursuant to Section 9(a) of the General Terms and Conditions. Seller has the right to extend the Scheduled Closing Date for any reason or no reason, and only Seller may extend it. All sums must be paid in immediately available US Funds. The Initial Deposit may be paid by check or wire transfer payable to Escrow. All other sums must be paid by cashiers check or wire transfer to Escrow. Copyright 2013 Charles E. Pear, Jr. 2

3 VI. Your Deed. If you pay the Purchase Price and Additional Charges, and perform all of your other obligations under this Agreement, then on the Scheduled Closing Date (as extended by Seller from time to time), Seller will deposit with Escrow a duly executed Kauai Kailani Unit Deed (your Deed ) transferring the Condominium Unit to you. The Deed will convey the Condominium Unit to you in fee simple but subject to all covenants, conditions, easements, restrictions and other encumbrances of record except for (i) any encumbrances that make title unmarketable, and (ii) any encumbrances required to be released by 514B-45, Hawaii Revised Statutes, as amended ("HRS"). Escrow will record your Deed in the Bureau. The date that your Deed is recorded is called the Date of Closing. VII. Buyer s Tenancy. Buyer has elected to take title as follows: Severalty (only one person) Tenants in Common (two or more persons; no rights of survivorship), as follows: percent to percent to percent to percent to Joint Tenants (two or more persons with rights of survivorship) Tenants by the Entirety (husband and wife or reciprocal beneficiaries with rights of survivorship) To be determined VIII. Binding Agreement. This Agreement will become a legally binding contract when: A. Seller delivers to you: (1) A true copy of the Amended Developer's Public Report, including all amendments to it, with an effective date issued by the Hawai`i Real Estate Commission (the Commission ); (2) A copy of the following documents and all amendments to them: (a) the recorded Declaration showing the Bureau Document No.; (b) the recorded Bylaws (herein, with all amendments, the Bylaws ) of the Association of Unit Owners of Kauai Kailani (the Association ) showing the Bureau Document No.; (c) the Rules and Regulations of the Association; and (d) a letter-sized Condominium Map; and (3) A notice of your cancellation right under 514B-86, HRS (your Cancellation Right ) on a form prescribed by the Commission (the Notice of Right to Cancel ); and B. Seller signs this Agreement and delivers it to you, and C. Either you waive your Cancellation Right or you are deemed to have waived it as provided in 514B-86, HRS. IX. Cancellation; Waiver. 514B-86, HRS gives you the right to cancel this Agreement at any time up to midnight of the thirtieth day after: (i) The date that you sign this Agreement; and (ii) All of the items specified in Section VIII.A. have been delivered to you. You may waive your Cancellation Right, or shall be deemed to have waived your Cancellation Right by: (1) Checking the waiver box on the Notice of Right to Cancel and delivering it to the Seller; (2) Letting the thirty-day cancellation period expire without taking any action to cancel; or (3) Closing the purchase of the Unit before the cancellation period expires. At any time before this Agreement becomes a binding contract, either party may terminate it, with or without cause, by delivering written notice of the termination to the other party. In such event, Seller will instruct Escrow to refund all payments previously made by you, and neither party shall have any other or further liability under this Agreement or with respect to the Project. If you terminate this Agreement, then Escrow will deduct from your refund the escrow cancellation fee and all costs, up to a maximum of $250.00, incurred by Seller, Escrow, or any lending institution in processing this Agreement or the loan application (collectively, the "Termination Costs"). If Seller terminates this Agreement, then Seller must pay the escrow cancellation fee and Termination Costs. Copyright 2013 Charles E. Pear, Jr. 3

4 X. Additional Terms and Conditions. The following documents are incorporated into and constitute part of this Agreement: General Terms and Conditions of Kauai Kailani Purchase Agreement. Exhibit A Appliances and Furnishings Exhibit B Disclosure of Information on Lead-Based Paint and/or Lead-Based Paint Hazards Other (describe): XI. Receipt for Key Legal Documents. Please initial to show that you received each of the documents listed below: General Terms and Conditions of Kauai Kailani Purchase Agreement Exhibit A Appliances and Furnishings Exhibit B Disclosure of Information on Lead-Based Paint and/or Lead-Based Paint Hazards All other documents (if any) listed in Section X, above. The Public Report(s), which means the following: Amended Developer s Public Report For a Condominium (Registration No (Conversion)) having an Effective Date of July 24, 2015, 2015 The Project Documents which means the following: Escrow Agreement between the Seller and Escrow, dated October 1, 2013; Form of Kauai Kailani Unit Deed; and Each of the following documents (herein, with any future amendments, called the Condominium Documents ): Declaration of Condominium Property Regime of Kauai Kailani (With Covenants, Conditions and Restrictions, and Grants and Reservations of Easements and Special Powers of Attorney), recorded in the Bureau as Document No. A First Amendment to Declaration of Condominium Property Regime of Kauai Kailani (With Covenants, Conditions and Restrictions, and Grants and Reservations of Easements and Special Powers of Attorney), recorded in the Bureau as Document No. A Articles of Incorporation of the Association of Unit Owners of Kauai Kailani. Bylaws of the Association of Unit Owners of Kauai Kailani, recorded in the Bureau as Document No. A Rules and Regulations of the Association of Unit Owners of Kauai Kailani, Inc., Amended and Restated Condominium Map No (letter sized) XII. Review and Approval of Key Legal Documents. Seller recommends that you read this Agreement, including the General Terms and Conditions all exhibits and any addenda, and that you also read all of the documents listed in Section XI, above. You agree to read the General Terms and Conditions, all exhibits and any addenda, the Public Report(s) and the Project Documents before your Cancellation Right ends and this Agreement becomes a legally binding contract in accordance with Section VIII, above. You agree that the Project Documents are incorporated in and are a part of this Agreement, and you approve and accept the terms of all of those documents and the Public Report(s). You accept and agree that Seller will rely on your approval of all of those documents should Seller decide to accept this Agreement, and that Seller has the right to amend the Public Report(s) from time to time without your Copyright 2013 Charles E. Pear, Jr. 4

5 consent or approval. You acknowledge that you must consult your own real estate consultants and attorneys with respect to the legal meaning and interpretation of any of the obligations, undertakings, covenants, and agreements contained in any of the Public Report(s) and/or Project Documents. You also acknowledge that Seller and/or the Project Broker cannot, did not and will not provide any legal interpretation of those documents or other legal advice. You also understand and accept that when you waive or are deemed to have waived your Cancellation Right, you will be deemed to have approved and accepted the terms of all of the Project Documents. XIII. Acceptance by Seller. The signature of the Project Broker or salesperson on this Agreement only acknowledges receipt of the payment(s) paid with this Agreement and does not constitute acceptance by Seller. Receipt and deposit of your funds do not constitute Seller's acceptance of this offer to purchase. Seller may hold your deposit check uncashed until Seller accepts this Agreement. This Agreement shall not be deemed accepted and shall not be of any force or effect until it has been accepted and executed by Seller (which Seller may do or not do in its discretion) and delivered to you. Seller's sales agents are not authorized to accept this offer. If Seller does not accept this Agreement within thirty (30) days after you sign it (or, if there is more than one Buyer, after the last of them signs it), then this Agreement will be revoked automatically and all funds that you have deposited with Seller or Escrow will be refunded to you promptly. When accepted by Seller, this Agreement constitutes the sole contract between Buyer and Seller regarding the purchase of the Property. The date upon which Seller signs this Agreement is the Effective Date. There are no collateral understandings, representations or agreements, oral or written, between Seller and Buyer, other than those contained in this Agreement. Neither the Project Broker nor any salesperson, employee or agent of Seller or Project Broker has the authority to modify the terms of this Agreement or to make any agreements, representations or promises on behalf of Seller. Therefore, although you have had, and in the future may have conversations with the Project Broker, sales representatives or other agents of Seller, none of the information contained in those conversations, including representations, promises or statements of any kind, or any marketing materials provided by them shall be binding upon Seller unless they are stated in a written addendum that is signed by you and the Seller and attached to this Agreement. XIV. AGENCY DISCLOSURE(S): You acknowledge and confirm that in connection with the sale of the Property by Seller to you, the Project Broker and all of its sales persons and brokers have acted and will continue to act as agent for and solely on behalf of Seller, and that they do not represent you. By signing below, you confirm that written and oral disclosure of such representation was provided to you before you signed this Agreement. If you are represented by a real estate broker ( Buyer s Broker ), you acknowledge and confirm that Buyer s Broker and all of its sales persons and brokers have acted and will continue to act as agent for and solely on your behalf, and such representation shall be evidenced by the separate Cooperating Broker Agreement attached hereto and executed by and between Project Broker and Buyer's Broker. Cooperating Broker Addendum is attached: Yes No Buyer s Initials: By signing below: (1) you offer to buy the Property from Seller on the terms and conditions contained in this Agreement; and (2) you agree that this Agreement will be binding on you if the Seller also signs it and if you waive or are deemed to have waived your Cancellation Right. SELLER: BUYER: GCT PROPERTIES, LLC, a Hawaii limited liability company Buyer No. 1: By: Date signed: Print Name: Its Authorized Agent Buyer No. 2: Date accepted and signed by Seller: Date signed: Buyer(s) Initial Deposit was received on: Kauai.com Real Estate, LLC Buyer No. 3: Date signed: By: Buyer No. 4: Print Name: Date signed: Copyright 2013 Charles E. Pear, Jr. 5

6 GENERAL TERMS AND CONDITIONS OF KAUAI KAILANI PURCHASE AGREEMENT 1. PAYMENT OF PURCHASE PRICE; FINANCING. (a) Application for Qualification Letter Confirming Buyer s Ability to Pay Purchase Price. Within ten (10) calendar days after the Effective Date, you must submit to one of the financial institutions designated by Seller from time to time ( Qualification Agent ) an application for a qualification letter, together with such additional information and documents as Qualification Agent requires or deems necessary or appropriate to confirm (i) your ability to obtain a mortgage loan in the amount, if any, shown in Section V, and (ii) your ability to pay all other sums due under this Agreement from your own funds ( Qualification Letter ). Such information and documents may include your financial statement(s), tax returns, deposit and income verifications, and such other information and documents as the Qualification Agent may reasonably require. You must pay any and all processing and other fees and charges associated with the issuance of the Qualification Letter. (b) Qualification Letter. Within thirty (30) calendar days after the Effective Date, you must submit to Seller a Qualification Letter, in form and content acceptable to Seller (in Seller s discretion), issued by a Qualification Agent. Only a Qualification Letter issued by a Qualification Agent designated or otherwise approved by Seller will satisfy this obligation. (c) Failure to Obtain Qualification Letter; Option to Terminate; No Financing Contingency. 1) If you apply for a Qualification Letter and diligently pursue your application as required by this Agreement, but you cannot obtain a Qualification Letter in form and content acceptable to Seller (in Seller s discretion) within thirty (30) calendar days after the Effective Date, then both Seller and you have the right to terminate this Agreement, in which case Escrow will refund all money previously paid by you less Escrow s cancellation fee and any other expenses actually incurred by reason of your having signed this Agreement. 2) If (a) you obtain a Qualification Letter acceptable to Seller, and (b) you waive your Cancellation Right or are deemed to have waived it, then you will be responsible to pay the Purchase Price of the Property. EXCEPT AS PROVIDED IN SECTION 1.(c)1), YOUR OBLIGATIONS UNDER THIS AGREEMENT ARE NOT CONTINGENT OR CONDITIONED ON YOUR ABILITY TO SECURE FINANCING FROM A MORTGAGE LENDER OR ON YOUR ABILITY TO SELL YOUR CURRENT RESIDENCE OR ANY OTHER PROPERTY OR ASSETS OR ON OBTAINING THE INTEREST RATE THAT YOU DESIRE. The sale and purchase of the Property is not contingent upon your ability to retain the interest rate quoted at the time of approval of the Qualification Letter or your Permanent Loan, and you must pay the interest charged by your Permanent Lender at the Close of Escrow. Seller has no responsibility to provide or arrange financing for all or any part of the Purchase Price. (d) Mortgage Financing. If you indicate in Section V that you will be using mortgage financing to pay some of the Purchase Price, then these provisions apply to you: 1) You will be solely responsible for taking all necessary and appropriate steps as requested from time to time by (A) the Qualification Agent, (B) a lender arranged for, by or through the Qualification Agent, or (C) any other lender that you choose (the applicable one of (A), (B), or (C) being your "Permanent Lender") to complete the process of applying for and obtaining a mortgage loan to pay the portion of the Purchase Price designated in Section V (your Permanent Loan ) from your Permanent Lender. No representation has been made nor assurance provided by Seller or its agents or sales representatives that you will either qualify for financing offered by or through the Qualification Agent or your Permanent Lender, or that you will be able to obtain any other loan or financing. All financing and the terms and conditions of it, including impound payments and interest rate, are a matter of concern solely between you and your Permanent Lender, and will not affect your or Seller s rights or obligations under this Agreement. You are solely responsible to pay any loan fees or other charges payable to your Permanent Lender for processing, issuing and/or canceling your Permanent Loan. 2) You agree that you will promptly submit to your Permanent Lender, as and when required, all verifications, authorizations, certifications, tax returns and other documents necessary or appropriate for your Permanent Lender to issue and/or reconfirm the written commitment for your Permanent Loan, and to satisfy any conditions to closing your Permanent Loan in time for the Scheduled Closing Date. If your Qualification Letter is issued more than one hundred twenty (120) calendar days before the Scheduled Closing Date, then your Permanent Lender will likely require that you reconfirm and re-verify certain information approximately ninety (90) calendar days prior to the Scheduled Closing Date. Copyright 2013 Charles E. Pear, Jr. 1

7 3) You covenant and agree that you will not knowingly change or allow any changes to your financial creditworthiness following issuance of the Qualification Letter if the change may adversely affect your ability to obtain and close your Permanent Loan or to close your purchase of the Condominium Unit. You acknowledge and confirm that you are solely responsible to remain qualified for your Permanent Loan and that you must not take or fail to take any action for the purpose or intent of subsequently obtaining a loan denial from your Permanent Lender. If you do not act in good faith hereunder or otherwise comply with any of the requirements of Section 1(d) strictly within the time frames stated above, you will be in default and Seller may proceed in accordance with Section 14(b). (e) Reconfirmation of Cash Purchase; Seller's Option to Terminate. If your are paying the entire Purchase Price in cash and Seller so requires, then no later than sixty (60) calendar days and no earlier than ninety (90) calendar days before the Scheduled Closing Date, you must submit to Seller such written evidence as Seller may reasonably require from your bankers or accountants or other persons to reconfirm that you have readily available all cash funds necessary to pay the Purchase Price and Additional Charges on the Scheduled Closing Date. You understand and accept that you are obligated to assure that the cash funds that were available at the time of the issuance of the Qualification Letter remain available for purposes of consummating the purchase of the Condominium Unit on the Date of Closing. If Seller, in its discretion, after reviewing the written evidence that you submit, is not satisfied as to your continued ability to make such cash payments and/or Seller determines that you have not acted in good faith hereunder or otherwise complied with the requirements of this Section 1, then, and in such event, you will be in default and Seller may proceed in accordance with Section 14(b). 2. ESCROW ARRANGEMENTS. (a) Deposit All Funds with Escrow. All funds to be paid under this Agreement must be deposited with Escrow under the terms of the Escrow Agreement dated October 1, 2013, between Seller and Escrow (the "Escrow Agreement"). You hereby (i) approve and accept the Escrow Agreement, (ii) accept the benefits and burdens provided in it, and (iii) authorize and instruct Escrow to comply with and to disburse all funds deposited with Escrow in accordance with the terms of the Escrow Agreement. Seller may change escrow agents (as long as the new escrow agent is authorized to be an escrow agent under applicable Hawai`i law), in which case your deposits (and any interest actually earned on them) may be transferred to the new escrow agent at Seller s direction. In such event, the new escrow agent will become Escrow and the new escrow agreement will become the Escrow Agreement for purposes of this Agreement. (b) Receipt of Funds. If you make any payment by check, it will not be deemed paid and received until the check has cleared through the financial institution in which the account against which the check is written is held. If you make any payment by wire transfer, it will not be deemed paid and received until the wire transfer has cleared and been deposited into the project escrow account established by Escrow. If your Initial Deposit does not clear within five (5) business days after it is submitted for payment by Escrow, Seller will have the right to terminate this Agreement immediately and without having to give you notice and an opportunity to cure your default pursuant to Section 14(b). (c) Interest on Funds In Escrow. You agree that all funds received by Escrow may be held together with any other money received by Escrow. If Seller so elects, all such funds received by Escrow may be deposited into an interest bearing account or accounts in a federally insured bank or savings and loan institution selected by Seller, in its discretion, with its principal place of business in Honolulu, Hawai`i. Except as otherwise expressly provided in this Agreement or the Hawai`i Condominium Property Act, Chapter 514B, HRS (the Act ), all interest earned from such account(s) shall be paid to Seller. It will not be credited against the Purchase Price or Additional Charges. You and Seller hereby jointly instruct Escrow pursuant to the provisions of , HRS, to credit the interest earned on all funds received by Escrow in accordance with this paragraph. 3. THE PROJECT. (a) The Project. The Project is a fee simple beachfront condominium project. As is the case throughout Hawai`i, the beach is public property and is not part of the Project. The Project currently consists of two (2) buildings constructed in the late 1960s or 1970s by someone other than the Seller. The Orchid Building fronts on the beach; the Plumeria Building does not. (b) Prior Use. Seller has rented or plans to rent the units in the Project, including your Unit, for transient vacation rental purposes until they are sold and the sale has closed. As a result, on the Date of Closing, the Property may be delivered to you subject to the rights of any guest then occupying the Unit (and you agree to accept title to the Property subject to such rights), which occupancy shall not extend more than ten (10) days beyond the Date of Closing. In order to avoid any violation of securities laws, you agree that Seller may keep all amounts paid by guests who are occupying the Unit as of the Date of Closing. You acknowledge and accept that, as of the Date of Closing, the Unit may have been previously occupied, and its Furnishings and lanai(s) used by the occupants of your Unit, such that the Property will no longer be in new and unused condition. Copyright 2013 Charles E. Pear, Jr. 2

8 (c) Plans Approval. Seller is remodeling the Project in accordance with plans and specifications prepared by Agor Architecture (the Architect ), subject to such changes or modifications as the Architect and/or Seller deem necessary or appropriate. Seller or the Architect may make such changes in the plans and specifications as it deems appropriate at any time, to accommodate any in the field construction needs as more fully discussed in this Section 3(c) and in response to recommendations or requirements of local, state or federal governmental or quasi-governmental agencies or applicable utility and/or insurance providers. Such plans and specifications, as they are so amended, are referred to in this Agreement as Seller s Plans and Specifications. Without limiting Seller s and its Architect s general right to make changes, you accept and agree that the changes described above and changes in the dimensions of rooms, lanai(s), in the location of windows, doors, walls, partitions, utility (including, but not limited to, television, internet, intranet, antennae and other technologies equipment and wiring and telephone, if any) lead-ins and outlets, air-conditioning equipment, ducts and components (if any), lighting fixtures and electric panel boxes, and in the general layout of your Unit and its lanai(s), other units, and Project, may be made by Seller or its Architect in their respective discretion. In furtherance of the understanding and agreement stated above, you acknowledge and agree that it is a widely observed construction industry practice for pre-construction plans and specifications for any unit or project to be changed and adjusted from time to time in order to accommodate on-going, in the field construction needs and/or value engineering or budgetary needs. These changes and adjustments are essential in order to permit all components of the units and the rest of the Project to be integrated into a well-functioning, aesthetically pleasing and economically viable product in an expeditious and cost effective manner. Because of the foregoing, you acknowledge, accept and agree that it is to your benefit to allow Seller the flexibility to make such changes in your Unit, its lanai(s), and elsewhere in the Project. You also acknowledge and agree that (i) the plans and specifications for your Unit, its lanai(s), other units and the Project on file with the applicable governmental authorities may not, initially, be identical in detail to Seller s Plans and Specifications, and (ii) because of the day-to-day nature of the changes described in this Section 3(c), the plans and specifications on file with applicable governmental authorities may not include some or any of these changes (there being no legal requirement to file all changes with such authorities). As a result of the foregoing, you and Seller both acknowledge and agree: The Unit, its lanai(s), and the Project may not be constructed in accordance with the plans and specifications on file with applicable governmental authorities. Without limiting the generality of Section 7(e), Seller disclaims and you waive any and all express or implied warranties that construction will be accomplished in compliance with such plans and specifications. Seller has not given and you have not relied on or bargained for any such warranties. In furtherance of the foregoing, in the event of any conflict between the actual construction of your Unit, its lanai(s), and/or any other part of the Project, and that which is set forth in the plans and specifications, you agree that the actual construction shall prevail and to accept your Condominium Unit and the rest of the Project as actually constructed (in lieu of what is set forth in the plans and specifications). 1) Without limiting the generality of the foregoing, because of Seller s need to coordinate the appearance and design of the overall development of the Project, both in connection with the nature and layout of the land on which construction is to take place and of the common areas and other features of the Project, you understand and agree: The Unit and/or its lanai(s) may be constructed as a reverse ( mirror image ) of that illustrated in the floor and building plan of the applicable model and building (as shown in the Condominium Documents or in any illustrations of the models and/or the Project); and may be sited in a position different from that of the applicable models and floor and building plan (or any such illustrations). You agree to accept your Unit, its lanai(s) and the Project as sited by Seller and as constructed, even if it is constructed according to a reverse floor and/or building plan. This Section 3(c) does not limit the generality of Seller s rights, set out elsewhere in this Agreement, to make other changes in your Unit, its lanai(s), the Project and/or the Condominium Documents. (d) Future Phases. The Declaration reserves to the Seller extensive rights to remodel and expand the Project (see the description of Phases 3 7 in the Declaration). Seller is not currently planning to proceed with the development of Phases 4 7. Nevertheless, you acknowledge and accept that Seller has the right (but no obligation) to exercise these rights in the future. (e) Seller's Right to Modify Documents. Seller reserves the right to modify the Condominium Documents, the form of Deed and other documents as may be required by law, any title insurance company, any institutional mortgagee or any governmental agency, or as otherwise may be deemed appropriate by Seller. You authorize Seller to make and you specifically approve all changes to those documents and the Project, provided that no such modification shall: 1) Materially increase your share of common expenses without your consent. This does not apply, however, to changes resulting from (A) increases by the Association of its annual budget of common expenses, or (B) Seller s exercise of its reserved rights under the Condominium Documents, including the right to reallocate the Common Interests of the units in the manner proved in the Declaration. 2) Reduce the obligations of Seller for common expenses on unsold Units. This does not apply, however, to changes resulting from Seller s exercise of its reserved rights under the Condominium Documents, including the right to reallocate the Common Interests of the units in the manner proved in the Declaration. Copyright 2013 Charles E. Pear, Jr. 3

9 3) Require a substantial physical change of your Unit or of the building in which your Unit is located. This does not apply, however, to changes resulting from Seller s exercise of its reserved rights under the Condominium Documents, including the right to proceed with Phase 3 of the Project if the necessary permits and approvals are obtained. For example, this would not prohibit Seller from constructing privacy walls on the lanais of the ground floor units of the Orchid Building. Buyer acknowledges and agrees that a decision by the Seller to proceed or not to proceed with any portion of the remodeling for which an SMA Permit is required (for example, a decision not to remodel the pool or pool deck of the Orchid Building) shall not constitute a substantial physical change. Buyer also acknowledges and agrees that the Architect in its sole discretion may increase or decrease the thickness of any wall within your Unit or its lanai(s), resulting in the room dimensions becoming smaller or larger than those shown on the Condominium Map, and Buyer hereby authorizes and specifically approves any such changes and accepts and agrees that any such changes may increase or decrease the size or square footage of the Unit and/or its lanai(s). Seller further reserves the right to require alterations to the Project (and to modify any of the Condominium Documents accordingly) to change the configuration of, to alter the number of rooms of, to decrease or increase the size of, or to change the location of any other unit and/or parking area, and to make other minor changes in your Unit, its lanai(s), any of the other units or the common elements of the Project (the Common Elements ). Seller may increase or decrease the number of parking stalls in the Project. (f) Encumbrances on Title. The Public Report(s) list the encumbrances on title to the Project as of the date stated in it. You should carefully review these encumbrances since some of them may affect your rights and interests in the Project. When you receive a title report in connection with the Closing, you should also read any additional encumbrances shown in it. You understand and agree that this sale is in all respects subject to the Project Documents and such other encumbrances. (g) Conditions Acknowledged by Buyer. You specifically acknowledge and accept that: 1) Seller s Reserved Rights. Seller has reserved numerous rights in the Declaration and other Condominium Documents (defined in the Declaration as the Developer s Reserved Rights ), and additional rights in the Deed. For example: Seller has the exclusive right and an easement to conduct marketing and sales activities on the Common Elements and from any unit (or lanai of a unit) owned by the Seller or any Limited Common Elements of such a unit. This includes the right to allow purchasers and prospective purchasers to park in unassigned parking stalls, if any. Sell has the right to develop the Project in phases and to decide not to develop all phases. Seller can add certain neighboring properties to or remove some of the existing property from the Project. Seller can construct or install new improvements and/or remodel the existing improvements of the Project. Seller can create New Units and assign Limited Common Elements to them. Seller has the exclusive right and an easement to establish, operate, maintain, repair and replace four concession stands in the General Common Elements, and has the right to keep all revenues generated by any business that it conducts using the concession stands. Seller has the right to use the General Common Elements (including but not limited to the pool decks, lawns, grounds and accessways to the beach and Pacific Ocean) for the purpose of conducting educational, cultural, entertainment or sporting events, other activities of general community interest, and/or other resort activities. Seller has the right and an easement to make noise, dust, soot, smoke, odors, surface water runoff, vibrations, and other nuisances or hazards when using the Developer s Reserved Rights. Seller has the right to change the units, the General Common Elements, the Limited Common Elements, and/or to amend the Condominium Documents as required to comply with any laws. Seller has the right to do all things to satisfy the requirements of any zoning or other land use laws, licenses, permits and/or requirements that apply to the Condominium or any Adjacent Parcel from time to time. Seller may create or authorize a Vacation Plan or Fractional Plan, and has the exclusive right to authorize the use of the units in a Vacation Plan or Fractional Plan. Seller has the right to appoint and remove the officers and members of the Board during the Developer Control Period. Copyright 2013 Charles E. Pear, Jr. 4

10 Many of these rights include the right to amend the Condominium Documents and to change the common interest appurtenant to each condominium unit, including your Condominium Unit, in connection with the Seller s exercise of its rights. A summary of some of the Seller s reserved rights appears in the Public Report(s) for the Project. You acknowledge and accept that it is not possible or practical to include in this Agreement or the Public Report(s) all points that you may consider important, or a summary of all the documents involved. It is also not possible for the Seller to predict which points may turn out to be important to you. So you accept and agree that it is your responsibility to read, or have your legal counsel read, carefully the Declaration and other Condominium Documents, the form of the Deed, the Public Report(s), the Escrow Agreement, and this Agreement, to be sure that your purchase will satisfy your own personal requirements and expectations. You are also cautioned that by signing this Agreement, you approve and accept these documents, including the Developer s Reserved Rights under them. 2) Changes in Price, Size and Design. Seller has made no promises, representations or assurances to you regarding the pricing, size, design or configuration of any units in the Project other than your Condominium Unit. You acknowledge that as market conditions or other facts change, these matters may be subject to change, including reduction in prices of such other units in the Project or sales incentives offered in connection therewith, and changes in size, design or product type of such other units in the Project. You recognize that neither Seller nor the contractor is obligated to agree to provide extras or options for your Unit, its lanai(s), or its Furnishings, including any extras or options shown in any model unit. 3) View Impairment. Neither Seller nor any of its authorized agents, representatives or employees has made any representations, warranties or promises concerning any views, present or future, that may be enjoyed from all or any part of your Unit, its lanai(s) or the Project or concerning any natural light that may be available with respect to your Unit or its lanai(s). The natural light in and views from your Unit, its lanai(s) or Project may change, be affected or obstructed by (i) construction or installation of buildings, improvements, structures, walls and/or landscaping by Seller, the Association or owners of other properties outside the Project lands and/or (ii) the growth of trees, landscaping and/or other vegetation within or outside the Project. The Declaration does not contain any provisions intended to protect the view from any unit, lanai or any other part of the Project in any direction or to protect natural lighting with respect to your Unit, its lanai(s), or any other any unit or lanai. No real estate brokers or salespersons, or officer, agents or employee of Seller have the authority to make any representations that contradict the foregoing statements. You acknowledge that you have not relied on any such representations made by any real estate brokers or real estate salespersons, or officer, agent or employee of Seller in the purchase of the Condominium Unit. Further, Seller has not made and does not make any oral or written statement, representation or warranty as to any future use of the Project or any adjacent properties. Should you desire any further information regarding the use or development of adjacent properties, you will have to conduct your own independent investigation. 4) Tax and Insurance Estimates. Any sum estimated for taxes or insurance affecting your Condominium Unit or the Project may increase or decrease depending upon fluctuation of real property taxes or insurance rates. You should be aware that the government recently increased federal flood insurance rates significantly and is likely to continue to do so in the future. 5) Noise; Traffic. Each Commercial Unit has the right and an easement to create, cause or permit noise, dust, soot, smoke, odors, surface water runoff, vibrations, and other nuisances for the purposes of the business conducted in the Commercial Unit or its Limited Common Elements. However, the Rules and Regulations may restrict the use of this easement between 10:00 p.m. and 8:00 a.m. to avoid disturbing the occupants of other units. 6) Environmental Issue Mold. Mold and mold spores are present throughout the environment and residential condominium construction cannot practicably be designed to exclude the introduction of mold spores. All mold is not necessarily harmful, but certain strains of mold have been found to have adverse health effects on susceptible persons. Moisture is the primary mold growth factor that can be controlled in a condominium setting. Affirmative steps taken by owners of units in the Project (each an Owner ) to minimize or control moisture in their respective units can minimize or eliminate mold growth in a resort condominium. Seller cannot ensure that mold and mold spores will not be present in the Project, particular given its oceanfront setting. Seller shall not be liable for any actual, special, incidental or consequential damages based on any legal theory whatsoever, including, but not limited to, strict liability, breach of express or implied warranty, negligence or any other legal theory, with respect to the presence and/or existence of molds, mildew and/or microscopic spores at the Project unless caused by the sole negligence or willful misconduct of Seller. 7) Elevators. The Seller s plans for remodeling the Project provides for installation of one (1) passenger elevator for the Orchid Building, but no elevator for the Plumeria Building. Units located in the immediate vicinity of the elevator doors, shafts or equipment rooms on each level of the Orchid Building may be prone to greater noise, vibrations, and other nuisances associated with the normal operation of the elevators than units located further away from the elevator doors, shafts or equipment rooms. Also the during certain hours of the day there may be delays in the elevator servicing each floor as a result of high traffic loads and/or in the event of servicing and/or repairs to the elevator. Seller has no obligation to install an elevator in the Orchid Building and will not be able to do so unless the County of Kauai grants an SMA Permit and other permits authorizing the installation of an elevator. Copyright 2013 Charles E. Pear, Jr. 5

11 8) Location of Units Near Recreational Facilities. Some units may be located near certain recreational facilities of the Project, including the pools and private BBQ areas, which may expose these units to greater noise and other nuisances than other units in the Project. 9) Project in a Flood Zone and Tsunami Inundation Area. The Project is located in a flood zone and as such federal flood insurance may be required for the Project and/or the individual units. Location in a flood zone exposes the Project to a greater risk of flood damage than if the Project were located outside of a designated flood zone. The Project is located on a public beach and the Pacific Ocean, and so it is located in a tsunami inundation area. 10) Neighboring Developments. Land outside, abutting and/or near the Project (the Neighboring Developments ) may be subject to redevelopment, and in the future may or will be developed by third parties over whom Seller has no control. The Seller makes no representations as to the nature, use or architecture of any future development or improvements of Neighboring Developments. Any such use, development and/or construction of Neighboring Developments may result in noise, dust, or other nuisances affecting the Project and the Owners. Also, the uses of Neighboring Developments are subject to change and so there s no way to be sure that the current use of the Neighboring Developments will stay the same. 11) Condominium Living. Living in a multi-story, mixed-use resort condominium project entails living in very close proximity to other persons and businesses, with attendant limitations on solitude and privacy. Owners may hear noise from adjacent units within the Project or from the hallways including, but not limited to, noise from showers, bathtubs, sinks, toilets or other sources of running water and/or plumbing fixtures. Occupants of units on the lower floors are likely to hear noise from the units above them, especially since the Project is constructed partly with wood. Also, owners may hear noise from things like the beach, the pools, BBQ areas, vacuum cleaners, stereos or televisions, or from people running, walking, exercising or socializing. The levels of sound, music, noise, odors and other nuisances may be greater for units used for time sharing, fractional ownership or transient vacation rental purposes. Seller has no control over the neighboring properties, the beach, or persons using the beach or the ocean. Changes in neighboring properties or Kuhio Highway also may change noise levels and the amount of pedestrian and vehicular traffic and attendant noise and fumes may increase. Owners may also have light entering the units from lighting in the vicinity and from street lights located in close proximity to the window and doors of the units. 12) Vog. The long term volcanic activity/eruptions from Kilauea volcano on the Island of Hawai`i has resulted in emissions into the air which are commonly called vog. Vog refers to a type of air pollution or volcanic smog created by the gases emitted into the air from the ongoing volcanic eruption mixing with water vapor and very small particles which are primarily sulfur compounds and sulfur dioxide. Vog is the haze you sometimes see in the air in Hawai`i. Vog becomes thicker or lighter depending upon the amount of emissions from Kilauea volcano, the direction and amount of wind, and other weather conditions. People with pre-existing respiratory conditions are more prone to adverse effects from vog which may include: headaches, breathing difficulties, increased susceptibility to respiratory ailments, watery eyes, and sore throat, but the long-term health effects of vog are currently unknown, at least to Seller. Since the weather, wind direction and amount of volcanic activity vary from day to day it is not possible to provide specific guidance regarding when the vog will be heavy or light. Upon request, Seller will give you a copy of the publication from the County of Hawai`i entitled Emissions from Kilauea Volcano (March 2008) which contains a brief summary of the health hazards and protective measures relating to vog. Having been apprised of the foregoing condition and risk, by acquiring the Condominium Unit, you agree to accept this condition and to assume all risks associated with it, and to give up (in legal terms, waive, release and discharge ) any rights, claims or actions that you may have, now or in the future, against Seller and the Seller s representatives, successors and assigns, and arising directly or indirectly out of or from the presence of vog on or in the vicinity of the Project. 13) Lead-Based or Lead-Containing Paint. The Unit, its lanai(s), and the Project may present exposure to lead from lead-based or lead-containing paint that may place young children at risk of developing lead poisoning. Lead poisoning in young children may produce permanent neurological damage, including learning disabilities, reduced intelligence quotient, behavioral problems, and impaired memory. Lead poisoning also poses a particular risk to pregnant women. Seller is required by law to provide Buyer with any information on lead-based or lead-containing paint hazards from risk assessments or inspections in Seller's possession and notify Buyer of any known lead-based or lead-containing paint hazards. Seller's disclosure of information on lead-based paint and/or lead-based paint hazards is attached hereto as Exhibit B and made a part hereof. A risk assessment or inspection, at Buyer's option and expense, for possible lead-based or lead-containing paint hazards may be conducted prior to purchase. 14) Asbestos. Attached as an exhibit to the Public Report(s) is a portion of a Limited Asbestos Inspection Report, dated March 29, 2013 (the Asbestos Report ) prepared at the request of the Developer by Owen Environmental, Inc. (the Asbestos Inspector ). The Asbestos Report concluded that [l]aboratory analytical results indicate that the only asbestos-containing materials present at Kauai Kailani and identified during certain limited inspections were the boiler insulation and joint compound and/or texture associated with interior drywall systems. The carpet mastic sample collected on the ground floor of the Plumeria Building was found to contain less than 1% asbestos. The Asbestos Report also stated that [d]rywall characterization results indicate a clear pattern in which many units have Copyright 2013 Charles E. Pear, Jr. 6