TIMBERS KAUAI – OCEAN CLUB & RESIDENCES aka TK Resort Vacation Ownership Project ESCROW AGREEMENT (Club Interest) THIS AGREEMENT made this 11th day of January, 2017, by and between TITLE GUARANTY ESCROW SERVICES, INC., a Hawaii corporation, with its principal place of business at 235 Queen Street, Honolulu, Hawaii 96813 (hereinafter called “Escrow”), and TOWER KAUAI LAGOONS 9B, LLC, a Delaware limited liability company, with its principal place of business at 3351 Ho’olaulea Way, Lihue, Hawaii 96766 (hereinafter called “Seller”); WITNESSETH: WHEREAS, Seller has developed a timeshare interest ownership program, known as Timbers Kauai – Ocean Club & Residences (“Timeshare Project”), in the condominium project known as Timbers Kauai – Ocean Club & Residences located at Lihue, Kauai, Hawaii, and will be soliciting and accepting purchase agreements (the “Purchase Agreements” or, individually, “Purchase Agreement”) to purchase Timeshare Interests in the Timeshare Project (the “Timeshare Interests”); and WHEREAS, the Hawaii Time Share Law, Hawaii Revised Statutes (“HRS”), Chapter 514E, as amended, and the rules and regulations promulgated thereunder (hereinafter together called the “Time Share Act”), require that all funds, negotiable instruments and purchase money contracts (collectively, “Purchasers' Funds”) paid or made by purchasers and prospective purchasers prior to the closing of a purchase of a Timeshare Interest shall be placed in an escrow account under an escrow agreement; and WHEREAS, Escrow agrees to hold and disburse all Purchasers' Funds, negotiable instruments, and purchase money contracts, and, to the extent required by Seller, to hold all instruments, including Purchase Agreements, executed by purchasers or prospective purchasers, in accordance with the provisions of the Time Share Act and Condominium Act. NOW, THEREFORE, IT IS MUTUALLY AGREED AS FOLLOWS: 1. PAYMENT OF FUNDS TO ESCROW. All Purchasers’ Funds and other funds called for under the Purchase Agreement for the sale of a Timeshare Interest between Purchaser and Seller shall bedeposited into the escrow account established by Escrow. Escrow shall deliver evidence of deposit to Purchaser and Seller upon request. Notwithstanding the foregoing, Seller or Seller's sales agent may hold, until the expiration of the seven-day cancellation period provided by HRS Section 514E-8 and Hawaii Administrative Rules (“HAR”) Section 16-106-20, or any longer cancellation period provided in the Purchase Agreement, any negotiable instrument or purchase money contract made by a purchaser: (1) for which subsequent holders cannot claim holder-in-due course status within the meaning of Article 3 of HRS Chapter 490; or (2) where
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the payee is Escrow or the trustee of a lien payment trust established pursuant to the Time Share Act. 2. RECEIPT OF FUNDS BY ESCROW. Escrow shall receive Purchasers Funds and hold the same in a separate escrow account. . Escrow shall not at any time commingle or permit the commingling of the Purchasers' Funds with other funds belonging to or held for the benefit of Seller. All Purchasers' Funds and instruments received from purchasers or prospective purchasers shall be held by Escrow in accordance with the provisions contained in the Time Share Act and the Condominium Act. 3. DEPOSIT OF FUNDS BY SELLER. All monies received by Seller pursuant to Purchase Agreements prior to closing and transferred to Escrow shall be deposited in accordance with the Time Share Act with a bank or savings and loan authorized to do business in the State of Hawaii under an escrow arrangement, and shall be held in immediately available funds in accordance with the terms hereof. Said funds shall be deposited by Escrow into an account in a federally-insured bank or savings and loan in Hawaii, and all income therefrom and interest paid thereon shall be credited to the account of Purchaser provided that Purchaser complies with Escrow’s standard requirements for establishing an interest bearing account for the benefit of Purchaser. 4. RECEIPT OF PURCHASER'S FINANCING DOCUMENTS. Escrow will receive funds from Purchaser sufficient to close the sale. If a Purchaser is utilizing financing, Escrow shall receive a mortgage and other applicable loan documents executed or for execution by Purchaser that shall thereafter result in the deposit of sufficient funds to Close. Such funds to be held for disbursement in accordance with the Purchase Agreement and this Agreement. 5. REQUIREMENTS PRIOR TO DISBURSEMENT OF PURCHASERS' FUNDS TO SELLER AT CLOSING. Notwithstanding anything contained herein to the contrary, Escrow shall make no disbursements of Purchasers' Funds to or for the benefit of the Seller or a sales agent or for construction until Closing, except by way of refunds thereof as provided hereinbelow, until: a. The seven-day cancellation period under HRS Section 514E-8 expires as to the purchaser whose funds are being disbursed with no cancellation notice having been received by Escrow within the five-day period following expiration of the seven-day cancellation period; and b. Escrow receives a sworn statement from the Seller dated five days or more after expiration of the seven-day cancellation period that: (i) no cancellation notice postmarked on a date within the seven-day cancellation period was received from the purchaser whose funds are being disbursed; and (ii) no cancellation notice was otherwise received during the seven-day cancellation period from the purchaser whose funds are being disbursed; and c.
Escrow has not received a notice of cancellation from the purchaser.
6. RELEASE OF PURCHASERS' FUNDS WITHOUT A CLOSING. Purchasers' Funds may be released from Escrow without a closing under the following circumstances: 2
a. If a purchaser or the Seller delivers to Escrow a valid notice of cancellation of the Purchase Agreement pursuant to HRS Section 514E-8, all of the Purchasers' Funds made by such purchaser shall be returned to the purchaser within fifteen (15) days after the notice of cancellation is received. b. If a purchaser or the Seller otherwise properly terminates the Purchase Agreement pursuant to its terms, all of the Purchasers' Funds made by the purchaser or prospective purchaser shall be delivered in accordance with the Purchase Agreement. c. If the purchaser defaults in the performance of the purchaser's obligations under the Purchase Agreement, all of the Purchasers' Funds made by such purchaser under the Purchase Agreement shall be delivered in accordance with the Purchase Agreement. d.
upon written joint instructions from Purchaser and Seller.
Upon the return of Purchasers' Funds to the purchaser as aforesaid, Escrow shall take no further action with regard to the Purchase Agreement and any contract or conveyancing documents theretofore delivered to Escrow pursuant to such Purchase Agreement. 7. RELEASE OF PURCHASERS' FUNDS UPON CLOSING. Upon the closing of the escrow for the sale of a Timeshare Interest, the Purchasers' Funds paid or made by the purchaser shall be wire transferred on the day of closing by Escrow to the Seller after the requirements of HRS Section 514E-19 for protecting purchasers from blanket liens have been satisfied. The parties hereto acknowledge and agree that it is the Seller's intention to convey each Timeshare Interest in the Program to each respective purchaser free and clear of any blanket liens. Accordingly, the provisions of HRS Section 514E-19(a)(1) are the provisions which will be followed to protect purchasers from blanket liens, and Purchasers' Funds shall be delivered by Escrow to Seller at closing upon the satisfaction of those provisions. 8. CLOSING. Escrow shall promptly and diligently close and record the transactions and perform such services as are necessary or proper therefor. The parties hereto acknowledge and agree that Seller shall convey each Timeshare Interest in the Project to each respective purchaser free and clear of any blanket liens. Accordingly, the provisions of HRS, Section 514E-19(a)(1)are the provisions which will be followed to protect purchasers from blanket liens, and Purchaser’s Funds shall be delivered by Escrow to Seller at closing upon the satisfaction of those provisions. Upon receipt by Escrow of (i) the deed (conveying Timeshare Interest(s) in the Program to a purchaser) in recordable form executed by Seller and the purchaser or purchaser's designee, (ii) the full amount of the purchase price stated in the Purchase Agreement, (iii) any mortgage securing repayment by the purchaser of all or part of the purchase price of the Timeshare Interest and the purchaser's share of the closing costs, (iv) any additional sums to be paid by the purchaser under the Purchase Agreement and (v) releases or partial releases of any mortgage, financing statement or other encumbrances on the Timeshare Interest that may have been approved by the Department of Commerce and Consumer Affairs, State of Hawaii, Escrow will act with due diligence and dispatch to “close” the sale by performing the following: a. Escrow shall commit or receive a written commitment from a title company licensed in Hawaii to issue a title insurance policy to purchaser after closing showing 3
title to the Timeshare Interest vested in the purchaser and insuring that there are no blanket liens affecting the Timeshare Interest conveyed or to be conveyed, and that there are no other liens affecting the Timeshare Interest aside from those set forth in the current copy of the Disclosure Statement filed with the Director of the Department of Commerce and Consumer Affairs and covering the Program (as used above, the term “blanket lien” shall mean and include those liens identified as such under the defined term “blanket lien” in HRS Section 514E-1). b. Escrow shall cause the recording of (i) any and all applicable releases or partial releases, (ii) the deed and (iii) any and all mortgages; c. After recordation, Escrow shall cause a recorded copy of the deed to be delivered via email or US regular mail to the purchaser and Seller, and recorded copies of all releases or partial releases or other evidence of releases, if requested in writing, to be delivered to Seller. In the event Escrow issues a purchaser's title insurance policy, Escrow shall mail to purchaser the Certificate of Owner’s Policy of Title Insurance. A copy of the purchaser’s Owner’s Policy of Title Insurance is available and will be mailed to the insured purchaser upon request. All taxes and prorations shall be disbursed to the appropriate recipients, and all sums respecting the purchase of the Timeshare Interest shall be disbursed to Seller after deduction by Escrow of Seller's share, if any, of closing costs. If for any reason it is determined that any document necessary to close the transaction is defective or cannot be recorded, Escrow shall promptly notify Seller of such fact and Escrow shall use reasonable efforts to obtain the necessary corrections. If, for any cause beyond Escrow’s control, the necessary documents cannot be recorded within seven (7) day period after the scheduled closing date, Escrow shall return such documents to the interested parties. Escrow shall close the transaction as set forth hereinabove, provided that it is legally permissible to record all closing documents and the necessary documents and the collected available funds have been received by Escrow. Escrow shall provide daily courier service to Seller's business locations, as identified by Seller, to pick up Purchase Agreement(s) and other related closing documents. 9. UNCLAIMED FUNDS. Escrow shall give each purchaser entitled to a return of his funds notice thereof by certified or registered or regular mail, addressed to such purchaser at his address shown on the Purchase Agreement or any address later made known to Escrow by such purchaser. If such purchaser shall not have claimed such refund, Escrow shall escheat such unclaimed funds pursuant to HRS § 523A. Escrow shall thereupon be released from any further duties or liabilities hereunder with respect to such funds and such purchaser. 10. PURCHASER'S DEFAULT. If the purchaser fails to make any payment on or before the due date thereof or if the purchaser does, or fails to do any act, which would constitute an event of default under the Purchase Agreement, Seller shall promptly give to such purchaser and to Escrow written notice of default. If purchaser has failed to cure the default after the delivery of notice by Seller and such default continues after the expiration of any grace period, Seller shall so advise Escrow of such default in writing. Escrow will thereupon notify purchaser that Seller has declared purchaser in default under the Purchase Agreement. If Seller has elected to 4
terminate the Purchase Agreement and certifies in writing to Escrow that Seller has terminated the Purchase Agreement in accordance with the terms thereof and provides to Escrow copies of all such notices of termination and proof of receipt sent to the purchaser, then, Escrow, subject to the provisions relating to dispute and conflicting demands hereinafter set forth in paragraph 13, shall thereafter treat all funds of the purchaser paid under such Purchase Agreement, as funds of Seller and not of the purchaser. Thereafter, such funds shall be held free of the escrow established by this Agreement and shall be held by Escrow for the account of Seller. Upon written request by Seller, Escrow shall pay such funds to Seller, less an escrow cancellation fee of $25.00 and document preparation fee. Escrow shall thereupon be released from any further duties or liability hereunder with respect to such funds and such purchaser. 11. PERIODIC REPORTS. To the extent required by Seller, during the term of this Agreement, Escrow shall report via Seller’s escrow internet account to Seller, the status of receipts, any deposits (whether interest-bearing or not) and disbursements. 12. PHASED CLOSINGS. It is understood that “phased closings”, i.e., closings for some, but not all, of the Timeshare Interests, might be desired by Seller. If Seller desires to “close” any or all sales at different times, Escrow agrees to cooperate with Seller and to vary its performance of the directions contained herein in such a manner as will facilitate its performance of partial closings. 13. EXEMPTIONS OF ESCROW. The following releases are given by Seller only: In consideration of Escrow acting as escrow holder hereunder, it is agreed that Escrow is relieved from all liability for acting in accordance with the terms hereof, notwithstanding a notice to the contrary by Seller or by any purchaser or third person; provided, however, that Escrow shall not be relieved from any liability arising out of or in connection with its own acts or omissions which are not generally accepted in the Honolulu business community as a reasonable business practice. Escrow shall not be responsible for the validity or sufficiency of any Purchase Agreements received by it and shall be entitled for all purposes to assume that (a) all Purchase Agreements and other documents have been signed by the person or persons whose signature or signatures purport to be thereon, (b) the persons executing such documents are of legal age and competent, (c) any person signing in a representative capacity has the authority to do so, and (d) any written certification or instruction from Seller or the Purchaser's Lender is true and accurate. If any dispute or difference arises between Seller and any third person or if any conflicting demand shall be made upon Escrow, Escrow shall not be required to determine the same or take any action thereon; but Escrow may await settlement of the controversy by final appropriate legal proceedings, or Escrow, at its sole discretion, may file a suit in interpleader in the appropriate Circuit Court of the State of Hawaii for the purpose of having the respective rights of the parties adjudicated and may deposit with the Court any and all monies held hereunder with deductions for Escrow Attorney’s fees and costs, as permitted by the Court. Upon instituting such interpleader suit, depositing such money with the Court and giving notice thereof to the parties thereto by personal service or in accordance with the order of the Court, Escrow shall be fully released and discharged from all further obligations hereunder with respect to the monies so deposited. Each purchaser and Seller agree jointly and severally to pay to Escrow on demand and to indemnify and hold Escrow harmless from and against all costs, damages, judgments, attorneys' fees, expenses, obligations and liabilities of every kind and nature reasonably suffered or incurred in connection with or arising out of this escrow (except those arising from the gross 5
negligence or reckless acts or omissions of Escrow), including, but not limited to, all costs and expenses incurred by the interpretation of these instructions, or with respect to any interpleader proceeding. 14. COMPENSATION OF ESCROW; TITLE POLICIES; PURCHASER'S EXPENSE. The compensation of Escrow for performance of its obligations under this Escrow Agreement shall include any applicable general excise tax, for each Purchase Agreement closed, and is set forth in Exhibit “A” attached hereto and incorporated herein by reference. The fees set forth on Exhibit A will remain fixed for three (3) years from the date of this Agreement. The compensation of Escrow for acting hereunder shall become due and shall be payable with respect to each Purchase Agreement upon the occurrence of the following events: (1) the transfer to the purchaser of legal title to such Timeshare Interest(s); and (2) final disbursement of the funds held in connection with such Timeshare Interest(s) to Seller. If so requested by Seller or purchaser, Escrow shall also arrange with a title insurance company designated by Purchaser to provide title insurance policies; provided, however, that in the event that Purchaser designates Title Guaranty of Hawaii, Inc. as the title company to provide such title insurance policy, the premium for such policy shall be as set forth in the attached Exhibit “A,” which shall include any applicable general excise tax, for each Purchase Agreement closed. 15. APPLICATION AND SUCCESSION. This Agreement shall be binding upon, shall apply to and shall inure to the benefit of, the parties hereto and their respective successors and assigns, and shall, upon its acceptance by a given purchaser (which shall automatically occur upon Seller's execution of the Purchase Agreement), also be binding upon and inure to the benefit of such purchaser, his heirs, personal representatives, devisees, successors and permitted assigns. 16. TERMINATION. This Agreement may be terminated by either party hereto upon thirty (30) days written notice to the other or sooner by mutual agreement of the parties; provided, however, that all transactions in progress hereunder at the time of such termination shall be completed under the terms of this Agreement. Upon such termination, Escrow shall make no disbursements of funds held hereunder (except with respect to transactions completed after the termination hereof, as provided in the proviso in the preceding sentence) except disbursements to another escrow depository approved by Seller, which has entered into an escrow agreement which has been approved by Seller, and which complies with the requirements of the Time Share Act and the Condominium Act with respect to escrow arrangements for the deposit and disbursement of purchaser's funds. In any event, this Agreement shall terminate upon the recording and delivery of all pertinent documents relating to the last Timeshare Interest to be sold in the Program and final disbursement of all funds deposited with Escrow hereunder. 17. SUBORDINATION. This Agreement is, in all of its provisions, to be deemed and interpreted as supplementary and subject to the provisions of the Time Share Act and Condominium Act, as now or hereafter amended, and if any conflict should arise between the provisions of this Agreement and the provisions of said Time Share and Condominium Acts, the provisions of the latter shall control. 18. NOTICES. All notices, consents, approvals and requests required or permitted hereunder shall be given in writing and shall be effective for all purposes if hand delivered to the 6
designated person or sent by (a) registered United States mail, postage prepaid, return receipt requested, (b) expedited overnight prepaid delivery service, either commercial (Federal Express or United Parcel Service) or United States Postal Service, with proof of attempted delivery, addressed as follows (or at such other address and person as shall be designated from time to time by any party hereto, as the case may be, in a written notice to the other parties hereto in the manner provided in this Section), (c) pdf. letter via electronic email to an email set forth below. If to Seller:
Tower Kauai Lagoons 9B, LLC 3351 Ho`olaulea Way Lihue, Hawaii 96766 Attention: _________________ Email: ____________________
If to Escrow Company: Title Guaranty Escrow Services, Inc. 235 Queen Street Honolulu, Hawaii 96813 Attention: Christopher Aguilera Email:caguilera@tghawaii.com A notice shall be deemed to have been given: in the case of hand delivery, at the time of delivery; in the case of registered mail, when delivered or the first attempted delivery on a business day; in the case of expedited overnight prepaid delivery, upon the first attempted delivery on a business day; in the case of electronic email at the time of transmission (if a business day) or the first business day following transmission. 19. ASSIGNMENT. Escrow may not assign its rights or delegate its duties under this Agreement without the prior written consent of Seller. 20. MODIFICATIONS AND ADDITIONS. Escrow shall make such modifications and accept such additions as counsel for any mortgagee of Seller may reasonably require or as may be required by law so long as modifications or additions do not materially adversely affect the interests of any purchaser in any transaction hereunder, and Escrow further undertakes and agrees to execute any further documentation of such modifications or additions if so required by counsel for any such mortgagee. 21. ENFORCEMENT COSTS. If any legal action or other proceeding, including arbitration, is brought for the enforcement of this Agreement, or because of an alleged dispute, breach, default or misrepresentation in connection with any provisions of this Agreement, the successful or prevailing party or parties shall be entitled to recover reasonable attorneys' fees, court costs and all expenses even if not taxable as court costs, incurred in that action or proceeding, in addition to any other relief to which such party or parties may be entitled. 22. DEFINITIONS. The term “recording” and similar references as used herein means recording at the Office of the Registrar of the Land Court of the State of Hawaii, as may be
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necessary or appropriate to effectuate the conveyance of title to the Timeshare Interest to the purchaser. 23. PRONOUNS. The term “purchaser”, or any pronouns used in its place and any other masculine or feminine pronouns shall be substituted for the neuter form and vice versa, and the plural shall be substituted for the singular form and vice versa, in any place or places herein in which the context requires such substitution or substitutions. 24. TIME OF THE ESSENCE. The parties acknowledge and agree that time shall be of the essence in all respects under this Agreement. 25. AMENDMENT. This Agreement may be amended only by an instrument in writing signed by all of parties hereto. 26. APPLICABLE LAW. The terms of this instrument shall be interpreted in accordance with the law of the State of Hawaii as that law is construed and amended from time to time. 27. CAPTIONS. The captions of the several articles contained herein are for convenience only and do not define, limit, describe or construe the contents of such articles. 28. NO PARTY DEEMED DRAFTER. No party shall be deemed the drafter of this Agreement. If this Agreement is ever construed by a court of law, such court shall not construe this Agreement or any provision hereof against any party as drafter. 29. COUNTERPARTS. The parties hereto agree that this instrument may be executed in counterparts, each of which shall be deemed an original, and said counterparts shall together constitute one and the same instrument, binding all of the parties hereto, notwithstanding that all of the parties are not signatories to the original or the same counterparts. For all purposes, including, without limitation, recordation, filing and delivery of this instrument, duplicate, unexecuted and unacknowledged pages of the counterparts may be discarded and the remaining pages assembled as one document. 30. FACSIMILE OR PDF SIGNATURES. To the extent not required for recordability or insurability, the parties agree that Escrow may accept facsimile or portable document format (“PDF”) executed documents as if they were originally signed documents. Any party submitting facsimile or PDF signatures shall provide Escrow with originally signed replacement documents within five (5) business days from the date of receipt by Escrow of the facsimile or PDF executed documents.
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EXHIBIT “A” TITLE GUARANTY SCHEDULE OF ESCROW & TITLE FEES TIMBERS KAUAI – OCEAN CLUB & RESIDENCES (Timeshare Interest)
Sales Price Range $200,000 - $500,000 $500,001 - $1,000,000 $1,000,001 - $2,000,000 $2,000,001 - $3,000,000 $3,000,001 - $4,000,000 $4,000,001 - $5,000,000 $5,000,001 - $6,000,000 $6,000,001 - $7,000,000 $7,000,001 - $8,000,000
Escrow Fee $700 + tax $1,200 + tax $1,700 + tax $2,400 + tax $3,100 + tax $3,800 + tax $4,500 + tax $4,500 + tax $4,500 + tax
Title Fee $1,000 $1,500 $2,400 $3,200 $4,000 $4,800 $5,600 $6,400 $7,200
If more than one timeshare interest is purchased under the same purchase agreement, the escrow and title fees will be based on the aggregate purchase price set forth in the purchase agreement. At the time of closing, a separate escrow fee and title insurance fee may be charged for a parking unit, storage locker or storage unit, as applicable. If a parking unit or storage unit is sold following the closing, escrow and title fees for such unit will be determined prior to such closing. If additional escrow or title work is required that does not pertain to the sales contract, we reserve the right to charge additional fees. This special escrow and title fee will remain in effect for two years from date of this agreement.
609912.5
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