Securities and Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, D.C. 20549
Re: AMFAC/JMB FINANCE, INC.
Commission File No. 36-3611183
Form 10-Q
Gentlemen:
Enclosed, for the above-mentioned registrant, are eight copies
one of which is manually executed of registrant's current
report on Form 10-Q for the quarter ended March 31, 1996.
Please acknowledge receipt of the Form 10-Q filing, by signing
and
returning the self-addressed stamped postcard.
Thank You.
Very truly yours,
AMFAC/JMB FINANCE, INC.
By: Northbrook Corporation
Parent Company
By: _____________________
Gary Smith
Vice President
and Principal Accounting Officer
Securities and Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, D.C. 20549
Re: AMFAC/JMB HAWAII, INC.
Commission File No. 33-24180
Form 10-Q
Gentlemen:
Enclosed, for the above-mentioned registrant, are eight copies
one of which is manually executed of registrant's current
report on Form 10-Q for the quarter ended March 31, 1996.
Please acknowledge receipt of the Form 10-Q filing, by signing
and returning the self-addressed stamped postcard.
Thank You.
Very truly yours,
AMFAC/JMB HAWAII, INC.
By: Northbrook Corporation
Parent Company
By: _____________________
Gary Smith
Vice President
and Principal Accounting Officer
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Act of 1934
For the quarter ended March 31, 1996 Commission File Number 33-24180
AMFAC/JMB HAWAII, INC.
(Exact name of registrant as specified in its charter)
Hawaii 99-0217738
(State of organization) (I.R.S. Employer Identification No.)
AMFAC/JMB FINANCE, INC.
(Exact name of registrant as specified in its charter)
Illinois 36-3611183
(State of organization) (I.R.S. Employer Identification No.)
900 N. Michigan Ave., Chicago, Illinois 60611
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code 312-440-4800
See Table of Additional Registrants Below.
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
As of May 13, 1996, each of Amfac/JMB Hawaii, Inc. and
Amfac/JMB Finance, Inc. had 1,000 shares of Common Stock
outstanding. All such Common Stock is owned by its respective
parent and not traded on a public market.
ADDITIONAL REGISTRANTS (1)
Address, including,
zip code,
Exact name of State or other IRS and telephone number,
registrant as jurisdiction of Employer including area code of
specified in its incorporation or Identification registrant's principal
Charter organization Number executive offices
Amfac Property Hawaii 99-0150751 900 North Michigan Avenue
Development Corp. Chicago, Illinois 60611
312/440-4800
Amfac Property Hawaii 99-0202331 900 North Michigan Avenue
Investment Chicago, Illinois 60611
Corp. 312/440-4800
Amfac Sugar and Hawaii 99-0185633 900 North Michigan Avenue
Agribusiness, Chicago, Illinois 60611
Inc. 312/440-4800
Kaanapali Water Hawaii 99-0185634 900 North Michigan Avenue
Corporation Chicago, Illinois 60611
312/440-4800
Amfac Agri- Hawaii 99-0176334 900 North Michigan Avenue
business, Inc. Chicago, Illinois 60611
312/440-4800
Kekaha Sugar Hawaii 99-0044650 900 North Michigan Avenue
Company, Chicago, Illinois 60611
Limited 312/440-4800
The Lihue Hawaii 99-0046535 900 North Michigan Avenue
Plantation Chicago, Illinois 60611
Company, 312/440-4800
Limited
Oahu Sugar Hawaii 99-0105277 900 North Michigan Avenue
Company, Chicago, Illinois 60611
Limited 312/440-4800
Pioneer Mill Hawaii 99-0105278 900 North Michigan Avenue
Company, Chicago, Illinois 60611
Limited 312/440-4800
Puna Sugar Hawaii 99-0051215 900 North Michigan Avenue
Company, Chicago, Illinois 60611
Limited 312/440-4800
H. Hackfeld Hawaii 99-0037425 900 North Michigan Avenue
& Co., Ltd. Chicago, Illinois 60611
312/440-4800
Waiahole Hawaii 99-0144307 900 North Michigan Avenue
Irrigation Chicago, Illinois 60611
Company, 312/440-4800
Limited
Waikele Golf Hawaii 99-0304744 900 North Michigan Avenue
Club, Inc. Chicago, Illinois 60611
312/440-4800
1) The Additional Registrants listed are wholly-owned
subsidiaries of the registrant and are guarantors of the
registrant's Certificate of Land Appreciation Notes due
2008.
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
Item 1. Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 21
PART II OTHER INFORMATION
Item 1. Legal Proceedings 31
Item 6. Exhibits and Reports on Form 8-K 31
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
AMFAC/JMB HAWAII, INC.
Consolidated Balance Sheets
March 31, 1996 and December 31, 1995
(Dollars in Thousands)
(Unaudited)
A S S E T S
<CAPTION>
March 31, December 31,
1996 1995
-------------- --------------
<S> <C> <C>
A S S E T S
Current assets:
Cash and cash equivalents $10,561 11,745
Receivables-net 5,960 8,720
Inventories 56,558 49,641
Prepaid expenses 2,888 3,102
-------- --------
Total current assets 75,967 73,208
-------- --------
Investments 45,192 45,080
-------- --------
Property, plant and equipment:
Land and land improvements 335,578 336,069
Machinery and equipment 56,882 56,882
Construction in progress 1,941 1,428
-------- --------
394,401 394,379
Less accumulated dep.
and amortization 29,358 27,762
-------- --------
365,043 366,617
-------- --------
Deferred expenses 13,901 14,225
Other assets 28,369 28,468
-------- --------
$ 528,472 527,598
========== ==========
L I A B I L I T I E S
Current liabilities:
Accounts payable $ 7,345 8,562
Accrued expenses 11,474 13,268
Current portion of
long-term debt 1,730 67,730
Current portion of
deferred inc. taxes 13,333 10,902
Other amounts due
affiliates 24,931 22,862
-------- --------
Total current liabilities 58,813 123,324
-------- --------
Amounts due to affiliates 84,348 76,911
Acc.postretirement benefit
obligation 60,122 61,037
Long-term debt 92,279 26,765
Other long-term liabilities 36,419 34,366
Deferred income taxes 97,614 98,691
Certificate of Land
Appreciation Notes 220,692 220,692
-------- --------
Commitments and contingencies
(notes 2, 3, 4, 6, 7, 8 and 9)
Total liabilities 650,287 641,786
-------- --------
S T O C K H O L D E R S' E Q U I T Y (D E F I C I T )
Common stock, no par value
Authorized, issued and
outstanding 1,000 shares 1 1
Additional paid-in capital 7,808 11,495
Retained earnings (deficit) (129,624) (125,684)
--------- ---------
Total stockholders' equity
(deficit) (121,815) (114,188)
--------- ---------
$ 528,472 527,598
============ ===========
<FN>
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
<TABLE>
AMFAC/JMB HAWAII, INC.
Consolidated Statements of Operations
Three Months Ended March 31, 1996 and 1995
(Dollars in Thousands)
(Unaudited)
<CAPTION>
Three Months Ended
March 31
--------------------
1996 1995
------- -------
<S> <C> <C>
Revenue:
Agriculture $ 5,688 1,299
Property 9,368 12,846
------- -------
15,056 14,145
------- -------
Cost of sales:
Agriculture 4,113 569
Property 5,339 8,057
------- -------
9,452 8,626
Selling, general
and administrative 3,149 4,075
Depreciation and
amortization 1,596 1,714
------- -------
Total costs and expenses 14,197 14,415
Operating income(loss) 859 (270)
------- -------
Non-operating income
(expenses):
Amortization of
financing costs (316) (511)
Interest expense (6,908) (6,006)
Interest income 92 351
------- -------
(7,132) (6,166)
------- -------
Loss before taxes (6,273) (6,436)
------- -------
Income tax benefit (2,333) (2,409)
------- -------
Net loss $(3,940) (4,027)
======== ========
<FN>
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
<TABLE>
AMFAC/JMB HAWAII, INC.
Consolidated Statements of Cash Flows
Three Months Ended March 31, 1996 and 1995
(Dollars in Thousands)
(Unaudited)
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(3,940) (4,027)
Items not requiring (providing) cash:
Depreciation and amortization 1,596 1,714
Amortization of deferred expenses 316 511
Equity in earnings of investments 23 39
Income tax benefit (2,333) (2,409)
Changes in:
Receivables - net 2,760 525
Inventories (6,407) (6,472)
Prepaid expenses 214 58
Accounts payable (1,217) 5,183
Accrued expenses (933) (2,933)
Other amounts due affiliates 1,208 799
Other long-term liabilities 1,344 241
-------- --------
Net cash used in
operating activities (7,369) (6,771)
-------- --------
Cash flows from investing activities:
Property additions (514) (243)
Property disposals and retirements
- net -- 7
Investments in joint ventures
and partnerships (135) (7)
Short-term investments -- 23,013
Other assets 99 (923)
Other long-term liabilities (224) (245)
-------- --------
Net cash provided by (used in)
investing activities (774) 21,602
-------- --------
AMFAC/JMB HAWAII, INC.
Consolidated Statement of Cash Flows - Continued
Three Months Ended March 31, 1996 and 1995
(Dollars in Thousands)
(Unaudited)
1996 1995
-------- --------
Cash flows from financing activities:
Deferred expenses 8 --
Net repayments of long-term debt (486) (948)
Amounts due to affiliates 7,437 7,696
--------- --------
Net cash provided by financing activities 6,959 6,748
--------- --------
Net increase (decrease) in cash and cash
equivalents (1,184) 21,579
Cash and cash equivalents,
beginning of year 11,745 31,702
--------- --------
Cash and cash equivalents,
end of period $10,561 53,281
========= ========
Supplemental disclosure of cash flow
information:
Cash paid for interest
(net of amounts capitalized) $ 5,250 10,032
========= ========
Schedule of non-cash investing and
financing activities:
Transfer of property actively held
for sale to real estate inventories
and accrued costs relating to real
estate sales $ 510 3,911
========= ========
<FN>
Accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
AMFAC/JMB HAWAII, INC.
Notes to Consolidated Financial Statements
March 31, 1996 and 1995
(Dollars in Thousands)
Readers of this quarterly report should refer to the Company's
audited financial statements for the fiscal year ended
December 31, 1995, which are included in the Company's 1995
Annual Report, as certain footnote disclosures which would
substantially duplicate those contained in such audited
financial statements have been omitted from this report.
(1) BASIS OF ACCOUNTING
On November 17, 1988, the stockholders of Amfac, Inc.
("Amfac") agreed to the merger ("Merger") of Amfac with an
affiliate of JMB Realty Corporation ("JMB"). The Merger was
consummated on November 18, 1988. Amfac/JMB Hawaii (the
"Company") was a wholly-owned subsidiary of Amfac, a
subsidiary of Northbrook Corporation ("Northbrook"). In May
1995, Amfac was merged into Northbrook, with Northbrook being
the surviving corporation.
The Company has two primary business segments. The
agriculture segment ("Agriculture") is responsible for the
Company's activities related to the cultivation and processing
of sugar cane and other agricultural products. The real
estate segment ("Property") is responsible for land
development activities related to the Company's owned land in
the State of Hawaii, and the management and operation of the
Company's golf course facilities.
The consolidated financial statements as of December 31,
1995 and for the three months ended March 31, 1996 include the
accounts of the Company and its wholly-owned subsidiaries.
All significant intercompany balances and transactions have
been eliminated in consolidation.
The Company's policy is to consider all amounts held with
original maturities of three months or less in U.S. Government
obligations, certificates of deposit and money market funds
(approximately $1,700 and $3,700 at March 31, 1996 and
December 31, 1995, respectively) as cash equivalents, which
approximates market. These amounts include $1,724 and $1,623
at March 31, 1996 and December 31, 1995, respectively, which
were restricted primarily to fund debt service on certain long-
term debt (see note 4).
As part of the Company's agriculture operations, the
Company enters into commodities futures contracts and options
in sugar as deemed appropriate to reduce the risk of future
price fluctuations in sugar. These futures contracts and
options are accounted for as hedges and, accordingly, gains
and losses are deferred and recognized in cost of sales as
part of the production cost.
Investments in certain partnerships and joint ventures,
if any, over which the Company exercises significant influence
are accounted for by the equity method. Revenues include the
Company's equity in net income or loss from such investments.
To the extent the Company engages in such activities as a
general partner, the Company is contingently liable for the
obligations of its partnership and joint venture investments.
AMFAC/JMB HAWAII, INC.
Notes to Consolidated Financial Statements - Continued
(Dollars in Thousands)
Project costs associated with the acquisition,
development and construction of real estate projects are
capitalized and classified as construction in progress. Such
capitalized costs are not in excess of the project's estimated
net realizable value.
Land actively held for sale and any related development
costs transferred from construction in progress are reported
as inventories in the accompanying consolidated balance sheets
and are stated at the lower of cost or fair value less costs
to sell.
For financial reporting purposes, the Company uses the
effective interest rate method and accrues interest on the
Certificate of Land Appreciation Notes due 2008 ("COLAS") at
4% per annum, which is the "Mandatory Base Interest" (see note
3).
Interest is capitalized to qualifying assets (principally
real estate under development) during the period that such
assets are undergoing activities necessary to prepare them for
their intended uses. Such capitalized interest is charged to
cost of sales as revenue from the real estate development is
recognized. No material amounts have been capitalized for the
three months ended March 31, 1996 and 1995.
The Company and its subsidiaries report their taxes as
part of the consolidated tax return of the Company's parent,
Northbrook. The Company and its subsidiaries have entered
into a tax indemnification agreement with Northbrook which
indemnifies the Company and its subsidiaries for
responsibility for all past, present and future federal and
state income tax liabilities (other than income taxes which
are directly attributable to cancellation of indebtedness
income caused by the repurchase or redemption of securities as
provided for in or contemplated by the Repurchase Agreement)
(see note 3).
Current and deferred taxes have been allocated to the
Company as if the Company were a separate taxpayer in
accordance with the provisions of SFAS No. 109-Accounting for
Income Taxes. However, to the extent the tax indemnification
agreement does not require the Company to actually pay income
taxes, current taxes payable or receivable have been reflected
as deemed contributions or distributions, respectively, to
additional paid-in capital in the accompanying consolidated
financial statements.
The preparation of financial statements in conformity
with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.
AMFAC/JMB HAWAII, INC.
Notes to Consolidated Financial Statements - Continued
(Dollars in Thousands)
(2) AMOUNTS DUE TO AFFILIATES - FINANCING
The maturity date of the approximately $15,097 of
remaining acquisition-related financing owed to affiliates has
been extended to June 1, 1997 and bears interest at a rate per
annum based upon the prime interest rate (8.25% at March 31,
1996), plus one percent. Affiliates also provided financing
of approximately $7,700 during March 1995 with a maturing date
of June 1, 1997; such borrowing was repaid in May 1995.
On June 1, 1995, the Company borrowed $52,000 from
Northbrook to redeem Class A COLAS pursuant to the Redemption
Offer (see note 3). The Company has also borrowed
approximately $7,385 and $9,814 at March 31, 1996 and December
31, 1995, respectively, to fund COLA Base Interest payments
and working capital needs. The loans from Northbrook are
payable interest only, mature on June 1, 1997 and carry an
interest rate per annum equal to the prime interest rate plus
two percent. Pursuant to the Indenture relating to the COLAS,
the amounts borrowed from Northbrook are considered "Senior
Indebtedness" to the COLAS.
(3) CERTIFICATE OF LAND APPRECIATION NOTES
The COLAS are unsecured debt obligations of the Company.
Interest on the COLAS is payable semi-annually on February 28
and August 31 of each year. The COLAS mature on December 31,
2008, and bear interest after the Final Issuance Date (August
31, 1989) at a rate of 10% per annum ("Base Interest") of the
outstanding principal balance of the COLAS on a cumulative,
non-compounded basis, of which 6% per annum is contingent
("Contingent Base Interest") and payable only to the extent of
Net Cash Flow (Net Cash Flow for any period is generally an
amount equal to 90% of the Company's net cash revenues and
receipts after payment of cash expenditures, including the
Qualified Allowance (as defined) other than federal and state
income taxes and after the establishment by the Company of
reserves).
In each calendar year, principal reductions may be made
from remaining Net Cash Flow, if any, in excess of all current
and unpaid deferred Contingent Base Interest and will be made
at the election of the Company (subject to certain
restrictions). The COLAS will bear additional contingent
interest in any year, after any principal reduction, equal to
55% of remaining Net Cash Flow. Upon maturity, holders of
COLAS will be entitled to receive the remaining outstanding
principal balance of the COLAS plus unpaid mandatory Base
Interest plus additional interest equal to the unpaid
Contingent Base Interest, to the extent of the Maturity Market
Value (Maturity Market Value generally means 90% of the excess
of the Fair Market Value (as defined) of the Company's assets
at Maturity over its liabilities incurred in connection with
its operations), plus 55% of the remaining Maturity Market
Value.
AMFAC/JMB HAWAII, INC.
Notes to Consolidated Financial Statements - Continued
(Dollars in Thousands)
On March 14, 1989, Amfac/JMB Finance ("Finance"), a
wholly-owned subsidiary of Northbrook and the Company entered
into an agreement (the "Repurchase Agreement") concerning
Finance's obligations to repurchase, on June 1, 1995 and 1999,
the COLAS upon request of the holders thereof. The COLAS were
issued in two units consisting of one Class A and one Class B
COLA. As specified in the Repurchase Agreement, the
repurchase of the Class A COLAS may have been requested by the
holders of such COLAS on June 1, 1995 at a price equal to the
original principal amount of such COLAS ($.5) minus all
payments of principal and interest allocated to such COLAS.
The cumulative interest paid per Class A COLA through June 1,
1995 was $.135. The repurchase of the Class B COLAS may be
requested of Finance by the holders of such COLAS on June 1,
1999 at a price equal to 125% of the original principal amount
of such COLAS ($.5) minus all payments of principal and
interest allocated to such COLAS. Through the date of this
report, the cumulative interest paid per Class A and Class B
COLA is approximately $.155 and $.155, respectively.
On March 14, 1989, Northbrook entered into a keep-well
agreement with Finance, whereby it agreed to contribute
sufficient capital or make loans to Finance to enable Finance
to meet its COLA repurchase obligations described above.
Notwithstanding Finance's repurchase obligations, the Company
may elect to redeem any COLAS requested to be repurchased at
the specified price.
On March 15, 1995, pursuant to the indenture that governs
the terms of the COLAS (the "Indenture"), the Company elected
to offer to redeem (the "Redemption Offer") all Class A COLAS
from the registered holders, thereby eliminating Finance's
obligation to satisfy the Class A COLA repurchase options
requested by such holders as of June 1, 1995. Pursuant to the
Redemption Offer, and in accordance with the terms of the
Indenture, the Company was therefore obligated to purchase any
and all Class A COLAS submitted pursuant to the Redemption
Offer at a price of $.365 per Class A COLA. In conjunction
with the Company's Redemption Offer, the Company made a tender
offer (the "Tender Offer") to purchase up to approximately
$68,000 principal value of the Class B COLAS at a price of
$.220 per Class B COLA from COLA holders electing to have
their Class A COLAS repurchased.
The two offers to repurchase the COLAS terminated on
April 17, 1995 in accordance with their terms and with the
Indenture. Approximately 229,000 Class A COLAS were submitted
for repurchase pursuant to the Redemption Offer and
approximately 99,000 Class B COLAS were submitted for
repurchase pursuant to the Tender Offer, requiring an
aggregate payment by the Company of approximately $105,450 on
June 1, 1995. The Company used its available cash to purchase
Class B COLAS pursuant to the Tender Offer and borrowed
$52,000 from Northbrook to purchase Class A COLAS pursuant to
the Redemption Offer.
AMFAC/JMB HAWAII, INC.
Notes to Consolidated Financial Statements - Continued
(Dollars in Thousands)
As a result of the repurchases, the Company retired
approximately $164,045 in face value of COLA debt and
recognized a financial statement gain in the second quarter of
1995 of approximately $32,544 (net of income taxes of $20,807,
the write-off of deferred financing costs of $10,015, the
write-off of accrued contingent base interest of $5,667 and
expenses of $894). Such gain is treated as cancellation of
indebtedness income for tax purposes and, accordingly, the
income taxes related to the Class A Redemption Offer
(approximately $9,106) will not be indemnified by the tax
agreement with Northbrook (see note 1).
The terms of the Indenture relating to the COLAS place
certain restrictions on the Company's declaration and payment
of dividends. Such restrictions generally relate to the
source, timing and amounts which may be declared and/or paid.
The COLAS also impose certain restrictions on, among other
things, the creation of additional indebtedness for certain
purposes, the Company's ability to consolidate or merge with
or into other entities, and the Company's transactions with
affiliates.
(4) LONG-TERM DEBT
In June 1991, the Company obtained a five-year $66,000
loan from the Employees' Retirement System of the State of
Hawaii ("ERS"). An initial funding of $60,000 was received in
June 1991. The remaining balance of $6,000 was added to the
principal balance on July 1, 1992 in payment of the first year
of accrued interest on the loan. The nonrecourse loan is
secured by a first mortgage on the Kaanapali Golf Courses, and
is considered "Senior Indebtedness" (as defined in the
Indenture relating to the COLAS). The loan bore interest at a
rate per annum equal to the greater of (i) the base interest
rate announced by the Bank of Hawaii on the first of July for
each subsequent year or (ii) ten percent per annum through
June 30, 1993 and nine percent per annum thereafter. The loan
is payable interest only on a quarterly basis. The annual
interest payments are in excess of the cash flow generated by
the Kaanapali Golf Courses and the Company ceased making
required debt service payments in April 1995. The Company has
been working with the ERS to renegotiate the terms of the loan
including an extension of the June 1996 maturity date. The
principal balance was included in the current portion of long-
term debt as of December 31, 1995 in the accompanying
consolidated financial statements. In conjunction with the
Company's renegotiations, the Company made an interest payment
of $1,650 in August 1995.
In April 1996, the Company reached an agreement to amend
the loan with the ERS, extending the maturity date for five
years. In exchange for the loan extension, the ERS received
the right to participate in the "Net Disposition Proceeds" (as
defined) related to the sale of the golf courses or the
refinancing or maturity of the loan. The ERS share of the Net
Disposition Proceeds increases from 30% through June 30, 1997,
to 40% for the period from July 1, 1997 to June 30, 1999 and
to 50% thereafter. The loan amendment effectively adjusts the
interest rate as of January 1, 1995 to 9.5% until June 30,
1996. After June 30, 1996, the loan bears interest at a rate
per annum equal to the five-year treasury rate on July 1, 1996
(5.97% at March 31, 1996) plus 2 1/4%. The loan amendment
requires the Company to pay interest at the rate of 7% for the
period from January 1, 1995 to June 30, 1996, 7.5% from July
1, 1996 to June 30, 1997, 7.75% from July 1, 1997 to June 30,
1998 and 8.5% thereafter ("Minimum Pay Rates"). The Company
made a payment in April 1996 for $4,119, representing the
minimum interest payment due for the period April 1995 to
April 1996. The
AMFAC/JMB HAWAII, INC.
Notes to Consolidated Financial Statements - Continued
(Dollars in Thousands)
scheduled minimum interest payments are paid quarterly on the
principal balance of the $66,000 loan. The difference between
the interest expense accrued and the minimum interest payment
accrues interest and is payable on an annual basis from excess
cash flow, if any, generated from the Kaanapali Golf Courses.
Although the outstanding loan balance remains nonrecourse, the
amendment makes the minimum interest payments and the ERS's
share of appreciation, if any, recourse to the Company. Such
payments would become nonrecourse if the Company were to elect
to tender an executed deed to the property to the ERS.
In January 1993, The Lihue Plantation Company, Limited
("Lihue") obtained a ten-year $13,250 loan used to fund the
acquisition of Lihue's power generation equipment. The
$13,250 loan, constituting "Senior Indebtedness" under the
COLAS' Indenture, consists of two ten-year amortizing term
loans of $10,000 and $3,250, respectively, payable in
quarterly installments commencing July 1, 1993 in the
principal amount of $250, and $81 (plus interest),
respectively. The $10,000 and $3,250 loans have outstanding
balances of $7,250 and $945, respectively, as of March 31,
1996 and bear interest at a rate equal to the prime rate
(8.25% at March 31, 1996) plus three and one half percent and
the prime rate plus four and one-half percent, respectively.
Lihue has purchased an interest rate agreement which
effectively caps the prime rate for the first five years of
the loan agreement at eight percent. The loan is secured by
the Lihue power generation equipment, sugar inventories and
receivables, certain other assets and real property of the
Company and has limited recourse to the Company and certain
other subsidiaries.
In October 1993, Waikele Golf Club, Inc. ("WGCI"), a
wholly-owned subsidiary of the Company which owns and operates
the Waikele Golf Course, obtained a five-year $20,000 loan
facility from two lenders. The loan consists of two $10,000
amortizing loans. Each loan bears interest only for the first
two years and interest and principal payments based upon an
assumed 20-year amortization period for the remaining three
years. The loans bear interest at prime plus 1/2% and LIBOR
(5.5% at March 31, 1996) plus 3%, respectively. The loan is
secured by WGCI's assets (the golf course and related
improvements and equipment), is guaranteed by the Company, and
is considered "Senior Indebtedness" (as defined in the
Indenture relating to the COLAS). As of March 31, 1996
scheduled annual principal maturities are $303 in 1996, $405
in 1997, and the balance of $19,106 in 1998.
AMFAC/JMB HAWAII, INC.
Notes to Consolidated Financial Statements - Continued
(Dollars in Thousands)
(5) SEGMENT INFORMATION
Agriculture and Property comprise separate industry
segments of the Company. "Operating Income-Other" consists
primarily of unallocated overhead expenses and "Total Assets-
Other" consists primarily of cash and deferred expenses.
Total assets at the balance sheet dates, capital expenditures,
operating income (loss) and depreciation and amortization
during the three months ended March 31, 1996 and 1995 are set
forth below by each industry segment:
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
--------- ---------
<S> <C> <C>
Total Assets:
Property $200,491 199,999
Agriculture 307,143 304,170
Other 20,838 23,429
--------- ---------
$528,472 527,598
========= =========
Three Months Three Months
Ended Ended
March 31, March 31,
1996 1995
----------- -----------
Capital Expenditures:
Agriculture $ 341 72
Property 173 171
--------- ---------
$ 514 243
========= =========
Three Months Three Months
Ended Ended
March 31, March 31,
1996 1995
------------ ------------
Operating income (loss):
Agriculture $ 395 (624)
Property 1,412 1,781
Other (948) (1,427)
--------- ---------
$ 859 (270)
========== =========
Depreciation and amortization:
Agriculture $1,029 1,203
Property 518 464
Other 49 47
--------- ---------
$1,596 1,714
========= =========
</TABLE>
AMFAC/JMB HAWAII, INC.
Notes to Consolidated Financial Statements - Continued
(Dollars in Thousands)
(6) TRANSACTIONS WITH AFFILIATES
The Company incurred interest expense of approximately
$2,024 for the three months ended March 31, 1996 and
approximately $418 for the three months ended March 31, 1995
in connection with the acquisition and additional financing,
obtained from an affiliate, approximately $6,889 of such
interest was unpaid as of March 31, 1996.
With respect to any calendar year, JMB or its affiliates
are entitled to a Qualified Allowance in an amount equal to:
(i) approximately $6,200 during each of the calendar years
1989 through 1993, and (ii) thereafter, 1-1/2% per annum of
the Fair Market Value (as defined) of the gross assets of the
Company and its subsidiaries (other than cash and cash
equivalents and Excluded Assets (as defined)). However, such
amount shall be paid for each year only following the payment
of a specified level of Base Interest to the holders of the
COLAS. Any portion of the Qualified Allowance not paid for
any year shall accumulate without interest. Any Qualified
Allowance subsequent to 1989 has been deferred and is payable
only to the extent future Net Cash Flows are sufficient to pay
the holders of the COLAS a specified level of return and,
accordingly, no such amounts have been reflected in the
accompanying consolidated financial statements.
The Company, its subsidiaries, and their joint ventures
reimburse Northbrook, JMB and their affiliates for direct
expenses incurred on their behalves, including salaries and
salary-related expenses incurred in connection with the
management of the Company's (or subsidiaries' or joint
ventures') operations. The total of such costs was
approximately $125 during the three months ended March 31,
1995 and approximately $154 for the three months ended March
31, 1996, $742 of which was unpaid as of March 31, 1996. In
addition, as of March 31, 1996, the other amounts due to
affiliates includes $9,106 of income taxes payable related to
the Class A COLA Redemption Offer (see note 3). Also, the
Company pays a non-accountable reimbursement of approximately
$30 per month to JMB and its affiliates for general overhead
expenses, all of which was paid as of March 31, 1996.
JMB Insurance Agency, Inc. earns insurance brokerage
commissions in connection with providing the placement of
insurance coverage for certain of the properties and
operations of the Company. Such commissions are comparable to
those available to the Company in similar dealings with
unaffiliated third parties. The total of such commissions for
the three months ended March 31, 1995 was approximately $242
and approximately $235 for the three months ended March 31,
1996 all of which was paid as of March 31, 1996.
Northbrook and its affiliates allocate certain charges
for services to the Company based upon the estimated level of
services, of which $8,194 was unpaid as of March 31, 1996.
These services and costs are intended to reflect the Company's
separate costs of doing business and are principally related
to the inclusion of the Company's employees in the Northbrook
pension plan, payment of severance and termination benefits
and reimbursement for insurance claims paid on behalf of the
Company.
AMFAC/JMB HAWAII, INC.
Notes to Consolidated Financial Statements - Continued
(Dollars in Thousands)
All amounts described above, deferred or currently payable, do
not bear interest and are expected to be paid in future
periods.
(7) EMPLOYEE BENEFIT PLANS
The Company participates in benefit plans covering
substantially all its employees, which provide benefits based
primarily on length of service and compensation levels. These
plans are administered by Northbrook in conjunction with other
plans providing benefits to employees of Northbrook and its
affiliates.
One of the Company's defined benefit plans, the
Retirement Plan for the Employees of Amfac, Inc. (the "Plan"),
terminated effective December 31, 1994. The settlement of the
Plan occurred in May 9, 1995. The Company replaced this plan
with the "Core Retirement Award Program", a defined
contribution plan that commenced on January 1, 1995. In the
new plan an Eligible Employee (as defined) is credited with an
annual contribution equal to 3% of the employee's qualified
compensation. The new plan's cost to the Company and the
benefits provided to the participants are comparable to the
former Plan.
(8) COMMITMENTS AND CONTINGENCIES
The Company is involved in various matters of litigation
and other claims. Management, with knowledge of facts and
after consultation with legal counsel, is of the opinion that
the Company's liability (if any), when ultimately determined,
will not have a material adverse effect on the Company's
financial position.
The Company's Property segment has contractual
commitments (related to project costs) of approximately $3,100
as of March 31, 1996. Additional development expenditures are
dependent upon the Company's ability to obtain financing for
such costs and on the timing and extent of property
development and sales.
As of March 31, 1996 certain portions of the Company's
land not currently under development or used in sugar
operations are mortgaged as security for approximately $1,128
of performance bonds related to property development.
AMFAC/JMB HAWAII, INC.
Notes to Consolidated Financial Statements - Concluded
(Dollars in Thousands)
(9) INCOME TAXES
Deferred income taxes reflect the net tax effects of
temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used
for income tax purposes. Significant components of the Company's
deferred tax liabilities and assets
as of December 31, 1995 are as follows:
Deferred tax assets:
Postretirement benefits $(23,804)
Interest accruals (3,149)
Other accruals (3,074)
---------
Total gross deferred tax assets (30,027)
---------
Deferred tax liabilities:
Accounts receivable, related to profit
on sales of sugar 3,332
Inventories, principally due to sugar production
costs, capitalized interest and purchase 4,716
accounting adjustments
Plant and equipment, principally due to differences
in depreciation and purchase
accounting adjustments 7,696
Land and land improvements, principally due
to purchase accounting adjustments 101,204
Deferred gains, due to installment
gains for income tax purposes 8,492
Investments in unconsolidated entities, principally
due to purchase accounting adjustments 14,180
--------
Total deferred tax liabilities 139,620
--------
Net deferred tax liability $109,593
=========
(10) ADJUSTMENTS
In the opinion of the Company, all adjustments (consisting
solely of normal recurring adjustments) necessary for a fair
presentation have been made to the accompanying figures as of
March 31, 1996 and for the three months ended March 31, 1996 and
1995.
<TABLE>
AMFAC/JMB FINANCE, INC.
Balance Sheets
March 31, 1996 and December 31, 1995
(Dollars in thousands, except per share information)
(Unaudited)
<CAPTION>
A s s e t
March 31, December 31,
1996 1995
----------- -----------
<S> <C> <C>
Cash $ 1 1
========= ==========
L i a b i l i t y a n d S t o c k h o l d e r ` s E q u i t y
Repurchase obligation (note 2)
Common stock, $1 par value; authorized, issued
and outstanding - 1,000 shares $ 1 1
========== ==========
<FN>
The accompanying notes are an integral part of these balance sheets.
</TABLE>
AMFAC/JMB FINANCE, INC.
Notes to the Balance Sheets
(Unaudited)
(Dollars in Thousands)
(1) ORGANIZATION AND ACCOUNTING POLICY
Amfac/JMB Finance, Inc. ("Finance") was incorporated
November 7, 1988 in the State of Illinois. Finance has had no
financial operations. All of the outstanding shares of
Finance are owned by Northbrook Corporation ("Northbrook").
(2) REPURCHASE OBLIGATIONS
On March 14, 1989, Finance and a subsidiary of Northbrook
(Amfac/JMB Hawaii, Inc.) entered into an agreement (the
"Redemption Agreement") concerning Finance's obligation (on
June 1, 1995 and 1999) to repurchase, upon request of the
holders thereof, the Certificate of Land Appreciation Notes
due 2008 ("COLAS"), to be issued by Amfac/JMB Hawaii, Inc. in
conjunction with the acquisition of Amfac/JMB Hawaii, Inc.. A
total aggregate principal amount of $384,737 of COLAS were
issued during the offering, which terminated on August 31,
1989. The COLAS were issued in two units consisting of one
Class A and one Class B COLA. As specified in the Repurchase
Agreement, the repurchase of the Class A COLAS may have been
requested of Finance by the holders of such COLAS on June 1,
1995 at a price equal to the original principal amount of such
COLAS ($.500) minus all payments of principal and interest
allocated to such COLAS. The cumulative interest paid per
Class A COLA through June 1, 1995 was $.135. The repurchase
of the Class B COLAS may be requested of Finance by the
holders of such COLAS on June 1, 1999 at a price equal to 125%
of the original principal amount of such COLAS ($.500) minus
all payments of principal and interest allocated to such
COLAS. To date, the cumulative interest paid per Class A and
Class B COLA is approximately $.155 and $.155, respectively.
On March 14, 1989, Northbrook entered into a keep-well
agreement with Finance, whereby it agreed to contribute
sufficient capital to Finance to enable Finance to meet the
COLA repurchase obligations described above. Notwithstanding
Finance's repurchase obligations, Amfac/JMB Hawaii, Inc. may
elect to redeem any COLAS requested to be repurchased at the
specified purchase price all in accordance with the terms in
the Indenture.
On March 15, 1995, pursuant to the indenture that governs
the terms of the COLAS (the "Indenture"), Amfac/JMB Hawaii,
Inc. elected to exercise its right to redeem, and therefore
was obligated to repurchase, any and all Class A COLAS
submitted pursuant to the Redemption Offer at a price of $.365
per Class A COLA.
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
All references to "Notes" herein are to Notes to
Consolidated Financial Statements contained in this report.
On December 5, 1988, the Company commenced an offering to
the public of COLAS pursuant to a Registration Statement on
Form S-1 under the Securities Act of 1933. A total of 384,737
COLAS were issued prior to the termination of the offering on
August 31, 1989. The net proceeds received from the sale of
the COLAS totaled approximately $352 million (after deduction
of organization and offering expenses of approximately $33
million). Such net proceeds have been used to repay a portion
of the acquisition-related financing, which was incurred to
pay certain costs associated with the Merger including a
portion of the Merger consideration paid to shareholders of
Amfac.
On March 14, 1989, Amfac/JMB Finance ("Finance"), a
wholly-owned subsidiary of Northbrook Corporation
("Northbrook"), and the Company entered into an agreement (the
"Repurchase Agreement") concerning Finance's obligations (on
June 1, 1995 and 1999) to repurchase the COLAS upon request of
the holders thereof. The COLAS were issued in two units
consisting of one Class A and one Class B COLA. As specified
in the Repurchase Agreement, the repurchase of the Class A
COLAS may have been requested by the holders of such COLAS on
June 1, 1995 at a price equal to the original principal amount
of such COLAS ($500) minus all payments of principal and
interest allocated to such COLAS. The cumulative interest
paid per Class A COLA through June 1, 1995 was $135. The
repurchase of the Class B COLAS may be requested of Finance by
the holders of such COLAS on June 1, 1999 at a price equal to
125% of the original principal amount of such COLAS ($500)
minus all payments of principal and interest allocated to such
COLAS. Through the date of this report, the cumulative
interest paid per Class A and Class B COLA is approximately
$155 and $155, respectively.
On March 14, 1989, Northbrook entered into a keep-well
agreement with Finance, whereby it agreed to contribute
sufficient capital or make loans to Finance to enable Finance
to meet its COLA repurchase obligations described above.
Notwithstanding Finance's repurchase obligations, the Company
may elect to redeem any COLAS requested to be repurchased at
the specified price.
On March 15, 1995, pursuant to the indenture that governs
the terms of the COLAS (the "Indenture"), the Company elected
to offer to redeem (the "Redemption Offer") all Class A COLAS
from its registered holders. Pursuant to the Redemption
Offer, and in accordance with the terms of the Indenture, the
Company was therefore obligated to purchase any and all Class
A COLAS submitted pursuant to the Redemption Offer at a price
of $365 per Class A COLA. In conjunction with the Company's
Redemption Offer, the Company made a tender offer (the "Tender
Offer") to purchase up to approximately $68 million principal
value of the Class B COLAS at a price of $220 per Class B COLA
from COLA holders electing to have their Class A COLAS
repurchased.
The two offers to repurchase the COLAS terminated on
April 17, 1995 in accordance with their terms and with the
Indenture. Approximately 229,000 Class A COLAS were submitted
for repurchase pursuant to the Redemption Offer and
approximately 99,000 Class B COLAS were submitted for
repurchase pursuant to the Tender Offer, requiring an
aggregate payment of the Company of approximately $105 million
on June 1, 1995. The Company used its available cash to
purchase Class B COLAS pursuant to the Tender Offer and
borrowed $52 million from Northbrook to purchase Class A COLAS
pursuant to the Redemption Offer.
As described above, the Company borrowed $52 million from
Northbrook to redeem Class A COLAS pursuant to the Redemption
Offer (see Note 3). The Company has also borrowed
approximately $7.4 million and $9.8 million at March 31, 1996
and December 31, 1995, respectively, to fund COLA Base
Interest payments and working capital needs. The loans from
Northbrook are payable interest only, mature on June 1, 1997
and carry an interest rate per annum equal to the prime
interest rate plus two percent. Pursuant to the Indenture
relating to the COLAS, the amounts borrowed from Northbrook
are considered "Senior Indebtedness" to the COLAS.
As a result of the repurchases, the Company retired
approximately $164 million face value of COLA debt and
recognized a financial statement gain in the second quarter of
1995 of approximately $32.5 million (net of income taxes of
$20.8 million, the write-off of deferred financing costs of
$10.0 million, the write-off of accrued contingent base
interest of $5.7 million and expenses of $.9 million). Such
gain is treated as cancellation of indebtedness income for tax
purposes and, accordingly, the income taxes related to the
Class A Redemption Offer (approximately $9.1 million) will not
be indemnified by the tax agreement with Northbrook (see Note
1).
Pursuant to the terms of the Indenture, relating to the
COLAS, the Company is required to maintain a Value Maintenance
Ratio of 1.05 to 1.00. Such ratio is equal to the relationship
of the Company's Net Asset Value (defined as the excess of (i)
Fair Market Value of the gross assets of the Company over (ii)
the amount of the liabilities (excluding liabilities resulting
from generally accepted accounting principles enacted
subsequent to the date of the Indenture) of the Company other
than the outstanding principal balance of the COLAS, any
unpaid Mandatory and Contingent Base Interest, and certain
other liabilities, to the sum of (x) the outstanding principal
amount of the COLAS, plus (y) any unpaid Base Interest, plus
(z) the outstanding principal balance of any Indebtedness
incurred to redeem COLAS. The COLA Indenture requires the
Company to obtain independent appraisals of the fair market
value of the gross assets used to calculate the Value
Maintenance Ratio as of December 31 in each even-numbered
calendar year. Accordingly, the Company obtained independent
appraisals of substantially all of its gross real estate
assets as of December 31, 1994; the appraised values of such
assets ranged in total from approximately $600-$650 million.
In odd-numbered years (during which time appraisals are not
required), the Fair Market Value of the gross assets of the
Company used to compute the Value Maintenance Ratio is
determined by the Company's management. To the extent that
management believes that the aggregate Fair Market Value of
the Company's assets exceeds by more than 5% the Fair Market
Value of such assets included in the most recent appraisal,
the Company must obtain an updated appraisal supporting such
increase. As of December 31, 1995, management does not
believe that the aggregate Fair Market Value of the Company's
assets has increased by more than 5% from the appraisal values
obtained as of December 31, 1994. Based on such values, and
after consideration of the other components of the
computation, the Company was in compliance with the Value
Maintenance Ratio as of December 31, 1994 and December 31,
1995. It should be noted that the concept of Fair Market
Value is intended to represent the value that an independent
arm's-length purchaser, seeking to utilize such asset for its
highest and best use, would pay after taking into
consideration the risks and benefits associated with such use
or development, current restrictions on development (including
zoning limitations, permitted densities, environmental
restrictions, restrictive covenants, etc.) and the likelihood
of changes to such restrictions; provided, however, that with
respect to any Fair Market Value determination of all of the
assets of the Company, such assets shall not be valued as if
sold in bulk to a single purchaser. There can be no assurance
that the Company's properties can be ultimately sold at prices
equivalent to their appraised values.
In June 1991, the Company obtained a five-year $66,000
loan from the Employees' Retirement System of the State of
Hawaii ("ERS"). An initial funding of $60,000 was received in
June 1991. The remaining balance of $6,000 was added to the
principal balance on July 1, 1992 in payment of the first year
of accrued interest on the loan. The nonrecourse loan is
secured by a first mortgage on the Kaanapali Golf Courses, and
is considered "Senior Indebtedness" (as defined in the
Indenture relating to the COLAS). The loan bore interest at a
rate per annum equal to the greater of (i) the base interest
rate announced by the Bank of Hawaii on the first of July for
each subsequent year or (ii) ten percent per annum through
June 30, 1993 and nine percent per annum thereafter. The loan
is payable interest only on a quarterly basis. The annual
interest payments are in excess of the cash flow generated by
the Kaanapali Golf Courses and the Company ceased making
required debt service payments in April 1995. The Company has
been working with the ERS to renegotiate the terms of the loan
including an extension of the June 1996 maturity date. The
principal balance was included in the current portion of long-
term debt as of December 31, 1995 in the accompanying
consolidated financial statements. In conjunction with the
Company's renegotiations, the Company made an interest payment
of $1,650 in August 1995.
In April 1996, the Company reached an agreement to amend
the loan with the ERS, extending the maturity date for five
years. In exchange for the loan extension, the ERS received
the right to participate in the "Net Disposition Proceeds" (as
defined) related to the sale of the golf courses or the
refinancing or maturity of the loan. The ERS share of the Net
Disposition Proceeds increases from 30% through June 30, 1997,
to 40% for the period from July 1, 1997 to June 30, 1999 and
to 50% thereafter. The loan amendment effectively adjusts the
interest rate as of January 1, 1995 to 9.5% until June 30,
1996. After June 30, 1996, the loan bears interest at a rate
per annum equal to the five-year treasury rate on July 1, 1996
(5.97% at March 31, 1996) plus 2 1/4%. The loan amendment
requires the Company to pay interest at the rate of 7% for the
period from January 1, 1995 to June 30, 1996, 7.5% from July
1, 1996 to June 30, 1997, 7.75% from July 1, 1997 to June 30,
1998 and 8.5% thereafter ("Minimum Pay Rates"). The Company
made a payment in April 1996 for $4,119, representing the
minimum interest payment due for the period April 1995 to
April 1996. The scheduled minimum interest payments are paid
quarterly on the principal balance of the $66,000 loan. The
difference between the interest expense accrued and the
minimum interest payment accrues interest and is payable on an
annual basis from excess cash flow, if any, generated from the
Kaanapali Golf Courses. Although the outstanding loan balance
remains nonrecourse, the amendment makes the minimum interest
payments and the ERS's share of appreciation, if any, recourse
to the Company. Such payments would become nonrecourse if the
Company were to elect to tender an executed deed to the
property to the ERS.
In October 1993, Waikele Golf Club, Inc. ("WGCI"), a
wholly-owned subsidiary of the Company that owns and operates
the Waikele Golf Course, obtained a five-year $20 million loan
facility from two lenders. The loan consists of two $10
million amortizing loans. Each loan bears interest only for
the first two years and interest and principal payments based
upon an assumed 20-year amortization period for the remaining
three years. The loans bear interest at prime plus 1/2% and
LIBOR (5.5% at March 31, 1996) plus 3%, respectively. The loan
is secured by WGCI's assets (the golf course and related
improvements and equipment), is guaranteed by the Company, and
is considered "Senior Indebtedness" (as defined in the
Indenture relating to the COLAS).
Pursuant to an agreement entered into with the City of
Honolulu in 1991 relating to the development of the Company's
Waikele project, if the Company sells the Waikele golf course,
depending on the price and certain other contingencies, a
payment of up to $15 million might be required to be made to
the City to be used to assist in the City's affordable housing
developments.
A significant portion of the Company's cash needs result
from the nature of the real estate development business, which
requires significant investment in preparing development
plans, seeking land urbanization and other governmental
approvals, and completing infrastructure improvements prior to
the realization of sales proceeds. The Company has funded its
cash requirements to date primarily through the use of short-
term bank borrowings, long-term financing secured by its golf
courses on Maui and Oahu, borrowings from affiliates and
revenues generated from the development and sale of its
properties and investments. Funding of the Company's future
cash requirements is dependent upon obtaining appropriate
financing and revenues generated from the development and sale
of its properties. Although under current market conditions
development financing is difficult to obtain, the Company is
not currently seeking this type of financing based upon the
stage of development of its various land holdings in Hawaii.
In order to generate additional cash flows for the
Company, management has identified certain land parcels that
are not included in the Company's long-term development plans.
The Company continues to pursue an aggressive land sales
program for these non-strategic assets. During the three
months ended March 31, 1996, the Company generated
approximately $.7 million from non-strategic land sales and an
additional $2.4 million from the sale of 10 lots at its
Kaanapali Golf Estates development on the island of Maui.
During 1995, the Company generated approximately $30.8 million
in land sales, most of which related to non-strategic parcels.
In addition, the Company received an approximate $1.0 million
deposit, which represents the purchase price for 10 acres on
Oahu.
At March 31, 1996, the Company had cash and cash
equivalents of approximately $10.6 million.
The Company intends to use its cash reserves, sales
proceeds and financing or joint venture arrangements to meet
its short-term and long-term liquidity requirements, which
include funding the development costs remaining at Waikele,
West Maui and Kauai, agricultural deficits, payment of
interest expense and the repayment of principal on debt
obligations (as necessary). The Company's long-term liquidity
is dependent upon its ability to obtain additional financing
and the consummation of certain property sales. There can be
no assurance that additional long-term financing can be
obtained or property sales consummated. The Company's land
holdings on Maui and Kauai are its primary sources of future
land sale revenues. However, due to current market
conditions, the difficulty in obtaining land use approvals and
the high development costs of required infrastructure, the
planned development of these land holdings and the ability to
generate cash flow from them are expected to be long-term in
nature. Accordingly, if no such financing can be obtained or
additional property sales consummated, the Company will defer
(to the extent possible) development costs and capital
expenditures to meet liquidity requirements. Additionally,
the Company's plans for property sales may also be adversely
impacted by the inability of potential buyers to obtain
financing.
The Company does not expect to generate a sufficient
level of Net Cash Flow to pay Base Interest in excess of four
percent for 1996.
The Company continues to implement certain cost savings
measures and to defer development project costs and capital
expenditures for longer-term projects. The Company's Property
segment is anticipated to expend an additional approximately
$12.4 million in project costs during the remainder of 1996.
During 1995, the Company has restructured its sugar
operations, including consolidation of the operations at its
two Kauai plantations and changing to a seasonal mode of
operations at each of its plantations (consistent with other
global sugar operations). The Company anticipates that cost
savings related to the sugar operations will be associated
with these changes.
The price of raw sugar that the Company receives is based
upon the price of domestic sugar (less delivery and
administrative costs) as currently controlled by U.S.
Government price supports legislation. On April 4, 1996,
President Clinton signed the Federal Agriculture Improvement
and Reform Act of 1996 ("the Act"). The Act keeps the loan
rate at 18 cents per pound. However, the Act includes certain
other adjustments to the sugar program including making crop
loans recourse to the producer and repealing marketing
allotments which may over time depress the domestic price of
raw sugar. There can be no assurance that in the future, the
government price support will not be reduced or eliminated
entirely. Such a reduction or an elimination of price
supports could have a material adverse affect on the Company's
agriculture operations, and possibly could cause the Company
to evaluate the cessation of its remaining sugar cane
operations.
In August 1993, the Company announced its plans to phase
out the sugar operations at its Oahu Sugar Company by mid-
1995, such phase out coinciding with the expiration of its
major land lease on Oahu. Oahu Sugar, which operated almost
entirely on leased land, had incurred losses in its sugar
operations in prior years and expected those losses to
continue in the future. For several months, Oahu Sugar had
negotiated with the plantation's major lessor to reach an
agreement on concessions in rent and other lease terms
required by Oahu Sugar to continue its agricultural
operations. To grant such concessions, the lessor required a
long-term commitment from the plantation that it would
continue its sugar operations. Because of the plantation's
losses, along with the future uncertainties posed by the
domestic agriculture price support legislation and
international trade policy, Oahu Sugar could not agree to such
a long-term commitment to stay in operation. Oahu Sugar
completed the final harvest of its crop in April 1995. The
Company has shut down Oahu Sugar and any estimated future
costs related to the shut down are not expected to have a
material adverse effect on the financial condition of the
Company. The Company is currently examining options for
developing the fee simple land it owns adjacent to the Oahu
Sugar mill site, including seeking the necessary government
approvals for a light industrial subdivision for a portion of
the property, as discussed below.
RESULTS OF OPERATIONS
GENERAL:
The Company and its subsidiaries report their taxes as a
part of the consolidated tax return of the Company's parent,
Northbrook. The Company and its subsidiaries entered into a
tax indemnification agreement with Northbrook, which
indemnifies them for responsibility for all past, present and
future federal and state income tax liabilities (other than
income taxes which are directly attributable to cancellation
of indebtedness income caused by the repurchase or redemption
of securities as provided for in or contemplated by the
Repurchase Agreement).
Effective January 1, 1993, the Company adopted SFAS No.
109 - Accounting for Income Taxes ("SFAS No. 109"). This
statement establishes financial accounting and reporting
standards for the effects of income taxes that result from an
enterprise's activities during the current and preceding
years. SFAS No. 109 changed the Company's previous practice
in that it requires the accrual of deferred taxes and the
recording of a provision for taxes in the separate financial
statements of members of a consolidated tax group, including
the recognition of deferred tax assets and liabilities for the
tax effects of differences between assigned values and tax
bases of assets acquired and liabilities assumed in the Merger
(see Note 1). Accordingly, current and deferred taxes have
been allocated to the Company as if the Company were a
separate taxpayer. However, in general, the tax
indemnification agreement does not require the Company to
actually pay income taxes; current taxes payable or receivable
(excluding income taxes which are directly attributable to
cancellation of indebtedness income caused by the repurchase
or redemption of securities as provided for in or contemplated
by the Repurchase Agreement) have been reflected as deemed
contributions and distributions, respectively, to additional
paid in capital in the accompanying consolidated financial
statements.
Accrued expenses decreased as of March 31, 1996 as
compared to December 31, 1995, primarily due to the timing of
COLA interest payments and reclassification of deferred
interest on the ERS loan to non-current off-set by interest
accrued on affiliated financing.
Current portion of long-term debt decreased and long-term
debt increased as of March 31, 1996 as compared to December
31, 1995, due primarily to the reclassification of the ERS
loan from current to long-term (see Note 4).
Current deferred income taxes increased at March 31, 1996
as compared to December 31, 1995 due primarily to an increase
in agricultural inventory costs which are deductible for tax
purposes. Non current deferred income taxes decreased at
March 31, 1996 as compared to December 31, 1995 due primarily
to deferred interest on the ERS loan.
The current portion of amounts due affiliates increased
as of March 31, 1996 as compared to December 31, 1995
primarily due to accrued interest on additional affiliated
financing.
Other long-term liabilities increased as of December 31,
1996 as compared to December 31, 1995 primarily due to the
difference between the interest expense accrued and minimum
interest payments required under the amended terms of the ERS
loan. (see Note 4).
Interest expense increased for the three months ended
March 31, 1996 as compared to the three months ended March 31,
1995 primarily due to interest expense related to additional
affiliated financing partially off-set by the early retirement
of Class A and Class B COLAS.
AGRICULTURE:
The Company's Agriculture segment is responsible for
activities related to the cultivation, processing and sale of
sugar cane and other agricultural products. Agriculture's
revenues are primarily derived from the Company's sale of its
raw sugar.
The Company's sugar plantation subsidiaries sell their
raw sugar production to the Hawaiian Sugar and Transportation
Company ("HSTC"), which is an agricultural cooperative owned
by the major Hawaii producers of raw sugar (including the
Company), under a marketing agreement. HSTC sells the raw
sugar production to the California and Hawaii Sugar Company
("C&H") pursuant to a long-term supply contract. The terms of
the supply contract do not require a specified level of
production by the Hawaii producers; however, HSTC is obligated
to sell and C&H is obligated to purchase any raw sugar
produced. HSTC returns to its raw sugar suppliers proceeds
based upon the domestic sugar price less delivery and
administrative charges. The Company recognizes revenues and
related cost of sales upon delivery of its raw sugar to C&H.
The price of raw sugar that the Company receives is based
upon the price of domestic sugar (less delivery and
administrative costs) as currently controlled by U.S.
Government price supports legislation. On April 4, 1996,
President Clinton signed the Federal Agriculture Improvement
and Reform Act of 1996 ("the Act"). The Act keeps the loan
rate at 18 cents per pound. However, the Act includes certain
other adjustments to the sugar program including making crop
loans recourse to the producer and repealing marketing
allotments which may over time depress the domestic price of
raw sugar. There can be no assurance that in the future, the
government price support will not be reduced or eliminated
entirely. Such a reduction or an elimination of price
supports could have a material adverse affect on the Company's
agriculture operations, and possibly could cause the Company
to evaluate the cessation of its remaining sugar cane
operations.
As part of the Company's agriculture operations, the
Company enters into commodities futures contracts and options
in sugar as deemed appropriate to reduce the risk of future
price fluctuations in sugar. These futures contracts and
options are accounted for as hedges and, accordingly, gains
and losses are deferred and recognized in cost of sales as
part of the production cost.
In September 1992, Hurricane Iniki struck the Island of
Kauai causing considerable damage and loss to the people and
businesses on Kauai. The Company has two sugar plantations on
Kauai, both of which sustained considerable damage. The
Company's real estate assets on Kauai suffered little damage,
since most of the Company's development expenditures up to
that time had been focused on the islands of Oahu and Maui.
The Company settled its insurance claims in 1995 for the
damage suffered and collected approximately $30 million in
proceeds over the approximately three year period.
Receivables decreased as of March 31, 1996 as compared to
December 31, 1995 primarily due to the timing of payments for
deliveries of raw sugar and the collection of certain
insurance claims outstanding as of December 31, 1995.
Inventories increased as of March 31, 1996 as compared to
December 31, 1995 primarily due to the capitalization of
planting and other costs and the timing of the harvesting of
sugar cane.
Agricultural revenues and cost of sales increased for the
three months ended March 31, 1996 as compared to the three
months ended March 31, 1995 primarily due to the timing of
shipments of raw sugar to C&H. Agricultural operating income
for the three months ended March 31, 1996 as compared to an
operating loss for the three months ended March 31, 1995 is
primarily due to the amortization of unrecognized gains
related to postretirement benefit obligations.
PROPERTY:
The Company's Property segment is responsible for the
following: land planning and development activities;
obtaining land use, zoning and other governmental approvals;
selling or financing developed and undeveloped land parcels;
and the management and operation of the Company's golf course
facilities.
The Company expended approximately $.1 and $.2 million
for the three months ended March 31, 1996 and 1995,
respectively, for planned project costs at Waikele. Such
costs include construction of roadways, utilities and related
infrastructure improvements and the golf course and clubhouse,
all of which are substantially complete. On a cumulative
project-to-date basis, the Company has generated revenues at
Waikele totaling approximately $230 million. Such sales have
included commercial property and parcel sales to home
builders.
For the three months ended March 31, 1996, the Company
generated approximately $3.1 million of land sales.
Property sales and cost of sales decreased for the three
months ended March 31, 1996 as compared to the three months
ended March 31, 1995 primarily due to the receipt of proceeds
related to certain contingent participation rights at Waikele
in 1995 and the decreased sales volume of non-strategic land
parcels, offset in part by increased sales at the Kaanapali
Golf Estates in 1996.
The Company is currently examining options for developing
the approximately 60 acres of fee simple land it owns at the
mill site of Oahu Sugar Company, and has begun the process of
seeking community input and the necessary government approvals
for a light industrial subdivision on an approximately 31-acre
portion of the property, which excludes property containing
the sugar mill and adjacent buildings. In connection with the
development of this property, the Company has received state
land use urbanization for the entire 60-acre site. In
addition, the Company has received an "industrial" city
development plan designation for 25.5 acres of the proposed 31-
acre light industrial subdivision, and has obtained City
Council approval of "industrial" designation for the remaining
5.5 acres, which designation must also be approved by the
Mayor.
In March 1991, the Company received final land use
approval from the State for development of approximately 240
residential lots on approximately 125 acres of land known as
"South Beach Mauka" and located adjacent to the existing
Kaanapali Beach Resort. In connection with this land use
approval, the Company is committed to providing additional
housing on Maui in the affordable price range, and to
participating in the funding of the design and construction of
the planned bypass highway extending from Lahaina to
Kaanapali. The Company has entered into a development
agreement with the State Department of Transportation covering
the Company's participation in the design and construction of
the bypass highway development. It is anticipated that, upon
the receipt of government approvals, the Company will expend
up to $3.5 million (in the aggregate) in the design of the
bypass highway and/or the widening of the existing highway.
Financial participation by the Company of up to $6.7 million
for the construction of the bypass highway is subject to
certain conditions related to certain future land use
designations and zoning of Company lands. The development and
construction of the bypass highway is expected to be a long-
term project.
During 1993, the Company obtained final land use approval
from the State, and certification through the State's Housing
Finance Development Corporation ("HFDC"), for the development
of a project on approximately 300 acres of Company land known
as "Puukolii Village", which is also located near Kaanapali
Beach Resort. In connection with this land use approval, the
Company is committed to providing additional housing on Maui
in the affordable price range. The final land use approval
and the HFDC development agreement contain certain conditions
which must be satisfied in order for the Company to develop
Puukolii Village, including realigning the access road (which
will benefit uses for adjacent Company lands in future
periods). Moreover, development of certain portions of
Puukolii Village cannot commence until after completion of the
state-planned Lahaina bypass highway (mentioned above). The
proposed development of Puukolii Village is anticipated to
satisfy the Company's affordable housing requirements in
connection with the South Beach Mauka land use approval as
well as the North Beach property (described below). The
Company anticipates commencing construction of infrastructure
of Puukolii Village in the later half of 1996.
The planned development of the Company's land on Maui is
expected to be long term in nature. As Maui is less populated
than Oahu and more dependent on the resort/tourism industry,
much of the Company's land is intended for resort and resort-
related uses. Due to overall economic conditions and trends
in tourism, recent demand for these land uses has been
relatively weak. The Company's currently available homesite
product on Maui, which is targeted to the second home buyer,
has experienced slow sales activity to date. The Company's
competitors on Maui have also experienced slow sales activity
in the second home market. The Company is continuing to
evaluate its planned products and the timing of development of
its land holdings in light of the current weak market demand
and the capital resources needed for future development.
The Company is marketing Kaanapali Golf Estates, a new
residential community, which is part of South Beach Mauka
adjacent to the Kaanapali Beach Resort in West Maui. During
the three months ended March 31, 1996, the Company sold 10
homesites for approximately $2.4 million which includes 8
homesites to a developer who plans to construct and sell
houses on these lots. Between April 1 and May 15, 1996, the
Company sold an additional 6 homesites for approximately $2.2
million. The Company currently has approximately 8 homesites
on the market, which are priced from approximately $400,000 to
$1 million.
In 1995, the Company has subdivided an ocean front parcel
in Kaanapali into six single family homesites of approximately
one acre each. The individual lot prices range from $1.9
million to $2.4 million. Sales of two of the lots in the
project closed in December 1995, generating total sales
proceeds of approximately $4.1 million. The Company is
marketing the remaining 4 lots.
In early 1986, the Company entered into a joint venture
agreement with Tobishima Pacific Inc., a wholly- owned
subsidiary of a Japanese company, the purpose of which is to
plan, manage and develop approximately 96 acres of beachfront
property at Kaanapali (known as "North Beach"). The joint
venture (in which the Company has a 50% interest) has State
land use and County zoning approvals for the subdivision and
development of the infrastructure improvements necessary to
accommodate up to 3,200 hotel and/or condominium units on this
site. This North Beach property constitutes nearly all of the
remaining developable beachfront acreage at Kaanapali. In
October 1992, the Company completed construction of a 3-acre
park on the North Beach site, which is part of the master plan
for this property and was a requirement imposed by the County
in obtaining certain permits. The development of North Beach
continues to be tied to the completion of the aforementioned
Lahaina bypass highway or other traffic mitigation measures
satisfactory to the Maui County Planning Commission. The
Company is currently reviewing alternatives in providing other
traffic mitigation measures.
In February 1996, the Maui County Council adopted a
Community Plan ordinance for West Maui that does not include
any amendments to the current Community Plan designation of
the Company's North Beach property (thus rejecting the CAC
recommendations that two-third's of North Beach be downzoned
to "Park"). The ordinance was signed by the Mayor of the
County of Maui in late February 1996.
Further, the Department of the Army has determined that
there are two wetlands sites on the North Beach property,
totaling approximately 21,800 square feet. The Company has
retained experts to evaluate these sites and to insure
compliance with all laws. While there can be no assurance as
to the ultimate determinations with respect to the wetlands
issue, the Company does not anticipate that these sites will
materially adversely affect the development plans for North
Beach.
In June 1994, the Company submitted a Land Use Boundary
Amendment Petition with the State of Hawaii Land Use
Commission ("LUC") and a General Plan Amendment Application
with the County of Kauai for the urbanization of approximately
552 acres of land on Kauai currently in sugar cane
cultivation. The proposed project is planned to be a mixed
use master planned community which will include a variety of
both affordable and market rate residential units, commercial
and industrial projects and a number of community and public
based facilities. The filing of these land use applications
is the first step required in converting agriculture zoned
land into urban zoned land. There are a number of additional
reports, studies, applications and permits that will be
required before final land use approvals are obtained. In May
1995, the County of Kauai approved the Company's General Plan
Amendment Application, subject to a number of conditions (to
be addressed during the subsequent zoning amendment process).
In December 1995, the LUC granted the Company the land use
amendments sought by the Company subject to a number of
conditions. In April 1996, the Kauai County Council approved
the Company's application to rezone the project. The Mayor of
the County of Kauai has not yet approved the rezoning. While
the Company is optimistic that the proposed project will
continue to receive favorable support, it is anticipated that
the approval process will require at least 3 - 5 years. The
entitlement process in Hawaii has historically been a very
difficult and arduous process and there is no guarantee that
all approvals will be obtained. Once construction commences,
subject to market conditions, the project is expected to span
over 20 years.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company and/or certain of its affiliates have been
named as defendants in several pending lawsuits, most of which
constitute routine litigation arising from the ordinary course
of business. While it is impossible to predict the outcome of
the litigation that is now pending (or threatened) and for
which the potential liability is not covered by insurance, the
Company is of the opinion that the ultimate liability from any
of the litigation will not materially adversely affect the
Company's financial condition.
<TABLE>
<CAPTION>
<S>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a)The following documents are included as an
exhibits to this report.
<C> <C>
4.1* Indenture, including the form of COLAS,
among Amfac/JMB Hawaii,Inc., its
subsidiaries as Guarantors and
Continental Bank National Association,
as Trustee (dated as of March 14, 1989).
4.2** Amendment dated as of January 17, 1990
to the Indenture relating to the COLAS.
4.3*** $28,097,832 Promissory Note from
Amfac, Inc. to Amfac/JMB Hawaii, Inc.
extended and reissued effective December 31, 1993.
4.4**** The five year $66,000,000 loan with
the Employees'Retirement System of the
State of Hawaii to Amfac/JMB Hawaii, Inc.
as of June 25, 1991.
4.5*****$15,000,000 Credit Agreement dated
March 31, 1993 among AMFAC/JMB Hawaii, Inc.
and Continental Bank N.A.
4.6******$10,000,000 loan agreement between Waikele
Golf Club, Inc. and ORIX USA Corporation.
$10,000,000 loan agreement between
Waikele Golf Club, Inc. and Bank of Hawaii.
4.7*******$52,000,000 Promissory Note to Northbrook
Corporation from Amfac/JMB Hawaii, Inc.
effective May 31, 1995 is filed herewith.
4.8 Agreement for delivery and sale of raw sugar
between Hawaii Sugar Transportation Corporation,
as seller, and C&H, as Buyer, dated June 4, 1993.
4.9 Standard Sugar Marketing Contracts between
Hawaiian Sugar Transportation Company and
Hawaii Sugar Growers dated June 4, 1993.
10.1* Escrow Deposit Agreement.
10.2* General Lease S-4222, dated January 1, 1969,
by and between the State of Hawaii and Kekaha
Sugar Company, Limited.
10.3* Grove Farm Haiku Lease, dated January 25, 1974
by and between Grove Farm Company, Incorporated
and The Lihue Plantation Company, Limited.
10.4* General Lease S-4412, dated October 31, 1974,
by and between the State of Hawaii and the
Lihue Plantation Company, Limited.
10.5* General Lease S-4576, dated March 15, 1978,
by and between the State of Hawaii and
The Lihue Plantation Company, Limited.
10.6* General Lease S-3827, dated July 8, 1964,
by and between the State of Hawaii and
East Kauai Water Company, Ltd.
10.7* Amended and Restated Power Purchase
Agreement, dated as of July 14, 1978,
by and between The Lihue Plantation Company,
Limited and Citizens Utilities Company.
10.8* U.S. Navy Waipio Peninsula Agricultural
Lease, dated May 26, 1964, between
The United States of America (as
represented by the U.S. Navy) and
Oahu Sugar Company, Ltd.
10.9* Amendment to the Robinson Estate Hoaeae
Lease, dated May 15, 1967, by and
between various Robinsons, heirs of
Robinsons, Trustees and Executors, etc.
and Oahu Sugar Company, Limited
amending and restating the previous lease.
10.10* Amendment to the Campbell Estate Lease,
dated April 16, 1970, between Trustees
under the Will and of the Estate of James
Campbell, Deceased, and Oahu Sugar Company,
Limited amending and restating the
previous lease.
10.11* Bishop Estate Lease No. 24,878, dated
June 17, 1977, by and between the Trustees
of the Estate of Bernice Pauahi Bishop and
Pioneer Mill Company, Limited.
10.12* General Lease S-4229, dated February 25, 1969,
by and between the State of Hawaii, by its
Board of Land and Natural Resources and
Pioneer Mill Company, Limited.
10.13* Honokohau Water License, dated December 22, 1980,
between Maui Pineapple Company Ltd. and
Pioneer Mill Company, Limited.
10.14* Water Licensing Agreement, dated September 22, 1980,
by and between Maui Land & Pineapple
Company, Inc. and Amfac, Inc.
10.15* Joint Venture Agreement, dated as of March 19, 1986,
by and between Amfac Property Development Corp.
and Tobishima Properties of Hawaii, Inc.
10.16* Development Agreement, dated March 19, 1986,
by and between Kaanapali North Beach
Joint Venture and Amfac Property Investment
Corp. and Tobishima Pacific, Inc.
10.17 Keep-Well Agreement between Northbrook Corporation
and Amfac/JMB Finance, Inc.
10.18* Repurchase Agreement, dated March 14, 1989,
by and between Amfac/JMB Hawaii, Inc.
and Amfac/JMB Finance, Inc.
10.19* Amfac Hawaii Tax Agreement, dated
November 21, 1988 between
Amfac/JMB Hawaii, Inc., and
Amfac Property Development Corp.; Amfac
Property Investment Corp.; Amfac Sugar
and Agribusiness, Inc.; Kaanapali Water
Corporation; Amfac Agribusiness, Inc.;
Kekaha Sugar Company, Limited; The Lihue
Plantation Company, Limited; Oahu Sugar
Company, Limited; Pioneer Mill Company,
Limited; Puna Sugar Company, Limited; H.
Hackfeld & Co., Ltd.; and Waiahole
Irrigation Company, Limited.
10.20* Amfac-Amfac Hawaii Tax Agreement, dated
February 27, 1989 between Amfac, Inc.
and Amfac/JMB Hawaii, Inc.
10.21* Services Agreement, dated November 18, 1988,
between Amfac/JMB Hawaii, Inc., and
Amfac Property Development Corp.;
Amfac Property Investment Corp.; Amfac
Sugar and Agribusiness, Inc.; Kaanapali Water
Corporation; Amfac Agribusiness, Inc.;
Kekaha Sugar Company, Limited; The Lihue
Plantation Company, Limited; Oahu Sugar
Company, Limited; Pioneer Mill Company,
Limited; Puna Sugar Company, Limited; H.
Hackfeld & Co., Ltd.; and Waiahole
Irrigation Company, Limited and JMB
Realty Corporation.
19.0*******$35,700,000 agreement for sale of C&H
and certain other C&H assets, to A&B Hawaii,
Inc. in June of 1993.
Pursuant to item 6.01 (b)(4) of Regulation
SK, the registrant hereby undertakes to
provide the commission upon its request a
copy of any agreement with respect to
long-term indebtedness of the registrant
and its consolidated subsidiaries that
does not exceed 10 percent of the total
assets of the registrant and its subsidiaries
on a consolidated basis.
</TABLE>
* Previously filed as exhibits to the Company's
Registration Statement of Form S-1 (as amended) under the
Securities Act of 1933 (File No. 33-24180) and hereby
incorporated by reference.
** Previously filed as exhibits to the Company's Form
10-K report under the Securities Act of 1934 (File No. 33-
24180) filed on March 27, 1989 and hereby incorporated by
reference.
*** Previously filed as exhibits to the Company's Form
10-K report under the Securities Act of 1934 (File No. 33-
24180) filed on March 27, 1991 and hereby incorporated by
reference.
**** Previously filed as exhibits to the Company's Form
10-Q report under the Securities Act of 1934 (File No. 33-
24180) filed on August 13, 1991 and hereby incorporated by
reference.
***** Previously filed as exhibit to the Company's Form 10-
Q report under the Securities Act of 1934 (File No. 33-24180)
filed on May 14, 1993 and hereby incorporated by reference.
****** Previously filed as exhibit to the Company's
Form 10-Q report under the Securities Act of 1934 (File No. 33-
24180) filed November 11, 1993 and hereby incorporated by
reference.
******* Previously filed as exhibit to the Company's
Form 10-K report under the Securities Act of 1934 (File No. 33-
24180) filed March 27, 1994 and hereby incorporated by
reference.
******** Previously filed as an exhibit to the Company's Form
10-Q report under the Securities Act of 1934 (File No. 33-
24180) filed May 12, 1995 and hereby incorporated by
reference.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
AMFAC/JMB HAWAII, INC.
By: Gary Smith
Vice President
Date: May 13, 1996
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following person in the capacity and on the date indicated.
Gary Smith
Principal Accounting Officer
Date: May 13, 1996
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
AMFAC/JMB FINANCE, INC.
By: Gary Smith
Vice President
Date:May 13, 1996
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following person in the capacity and on the date indicated.
Gary Smith
Principal Accounting Officer
Date:May 13, 1996
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
AMFAC PROPERTY DEVELOPMENT CORP.
By: Gary Smith
Vice President
Date:May 13, 1996
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following person in the capacity and on the date indicated.
Gary Smith
Principal Accounting Officer
Date:May 13, 1996
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
AMFAC PROPERTY INVESTMENT CORP.
By: Gary Smith
Vice President
Date:May 13, 1996
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following person in the capacity and on the date indicated.
Gary Smith
Principal Accounting Officer
Date:May 13, 1996
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
AMFAC SUGAR AND AGRIBUSINESS, INC.
By: Gary Smith
Vice President
Date:May 13, 1996
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following person in the capacity and on the date indicated.
Gary Smith
Principal Accounting Officer
Date:May 13, 1996
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
KAANAPALI WATER CORPORATION
By: Gary Smith
Vice President
Date:May 13, 1996
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following person in the capacity and on the date indicated.
Gary Smith
Principal Accounting Officer
Date:May 13, 1996
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
AMFAC AGRIBUSINESS, INC.
By: Gary Smith
Vice President
Date:May 13, 1996
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following person in the capacity and on the date indicated.
Gary Smith
Principal Accounting Officer
Date:May 13, 1996
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
KEKAHA SUGAR COMPANY, LIMITED
By: Gary Smith
Vice President
Date:May 13, 1996
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following person in the capacity and on the date indicated.
Gary Smith
Principal Accounting Officer
Date:May 13, 1996
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
THE LIHUE PLANTATION COMPANY, LIMITED
By: Gary Smith
Vice President
Date:May 13, 1996
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following person in the capacity and on the date indicated.
Gary Smith
Principal Accounting Officer
Date:May 13, 1996
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
OAHU SUGAR COMPANY, LIMITED
By: Gary Smith
Vice President
Date:May 13, 1996
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following person in the capacity and on the date indicated.
Gary Smith
Principal Accounting Officer
Date:May 13, 1996
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
PIONEER MILL COMPANY, LIMITED
By: Gary Smith
Vice President
Date:May 13, 1996
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following person in the capacity and on the date indicated.
Gary Smith
Principal Accounting Officer
Date:May 13, 1996
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
PUNA SUGAR COMPANY, LIMITED
By: Gary Smith
Vice President
Date:May 13, 1996
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following person in the capacity and on the date indicated.
Gary Smith
Principal Accounting Officer
Date:May 13, 1996
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
H. HACKFELD & CO., LTD.
By: Gary Smith
Vice President
Date:May 13, 1996
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following person in the capacity and on the date indicated.
Gary Smith
Principal Accounting Officer
Date:May 13, 1996
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
WAIAHOLE IRRIGATION COMPANY, LIMITED
By: Gary Smith
Vice President
Date:May 13, 1996
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following person in the capacity and on the date indicated.
Gary Smith
Principal Accounting Officer
Date:May 13, 1996
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
WAIKELE GOLF CLUB, INC.
By: Gary Smith
Vice President
Date:May 13, 1996
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following person in the capacity and on the date indicated.
Gary Smith
Principal Accounting Officer
Date:May 13, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
INCLUDED IN SUCH REPORT.
</LEGEND>
<CIK> 0000839437
<NAME> AMFAC/JMB HAWAII, INC.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 10,561
<SECURITIES> 0
<RECEIVABLES> 8,848
<ALLOWANCES> 0
<INVENTORY> 56,558
<CURRENT-ASSETS> 75,967
<PP&E> 394,401
<DEPRECIATION> 29,358
<TOTAL-ASSETS> 528,472
<CURRENT-LIABILITIES> 58,813
<BONDS> 312,971
0
0
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AGREEMENT FOR DELIVERY AND SALE OF RAW SUGAR
between
HAWAIIAN SUGAR TRANSPIRATION COMPANY, INC.
and
CALIFORNIA AND HAWAIIAN SUGAR COMPANY
TABLE OF CONTENTS
Page
ARTICLE I - DEFINITIONS 1
SECTION 1.01 CERTAIN DEFINED TERMS 1
ARTICLE II - PURCHASE AND SALE OF RAW SUGAR
SECTION 2.01 GENERAL 4
SECTION 2.02 AIEA REFINERY REQUIREMENT 5
SECTION 2.03 PLACEMENT OF SUGAR
UNDER LOAN 5
ARTICLE III - SUGAR PRICING 5
SECTION 3.01 BASIS PRICE 5
SECTION 3.02 ADJUSTMENTS TO BASIS PRICE 5
SECTION 3.03 NO. 14 CONTRACT NO LONGER
REPRESENTATIVE 6
SECTION 3.04 PAYMENT FOR RAW SUGAR 7
SECTION 3.05 LATE PAYMENTS 7
SECTION 3.06 CASH ADVANCES 7
SECTION 3.07 PRICING FOR SUGAR DELIVERED
TO THIRD PARTY REFINERS 7
ARTICLE IV - DELIVERY OF SUGAR 9
SECTION 4.01 PLACE OF DELIVERY 9
SECTION 4.02 SCHEDULE OF DELIVERIES 10
SECTION 4.03 GENERAL TERMS OF SHIPPING 11
ARTICLE V - DISCHARGE OF VESSEL AT CROCKETT
REFINERY 12
SECTION 5.01 NOTICE OF READINESS 12
SECTION 5.02 DISCHARGE OF VESSEL 12
SECTION 5.03 CHARGES CONNECTED WITH
DISCHARGE AT THE
CROCKETT REFINERY 13
SECTION 5.04 SETTLEMENT WITH DELIVERY
VESSEL 14
SECTION 5.05 MAINTENANCE OF DOCKS 14
ARTICLE VI-WEIGHING AND QUALITY DETERMINATIONS 15
SECTION 6.01 WEIGHT 15
SECTION 6.02 TRANSFER OF TITLE AND
RISK OF LOSS 15
SECTION 6.03 SAMPLING AND TESTING
PROCEDURES 15
SECTION 6.04 QUALITY PREMIUMS AND
DISCOUNTS 16
ARTICLE VII - EXCUSE FROM PERFORMANCE AND
TERMINATION 17
SECTION 7.01 FORCE MAJEURE 17
SECTION 7.02 EVENTS OF DEFAULT 19
SECTION 7.03 DEFAULTS UNDER STANDARD
SUGAR MARKETING CONTRACTS 20
ARTICLE VIII - MISCELLANEOUS 21
SECTION 8.01 ARBITRATION 22
SECTION 8.02 INTERPRETATION OF
AGREEMENT 23
SECTION 8.03 ENTIRE AGREEMENT 24
SECTION 8.04 NOTICES 24
SECTION 8.05 AMENDMENT 24
SECTION 8.06 NO STRICT CONSTRUCTIONS 24
SECTION 8.07 SUCCESSORS AND ASSIGNS 24
SECTION 8.08 SEVERABILITY 24
SECTION 8.09 FURTHURING ASSURANCES 24
SECTION 8.10 GOVERNING LAW 24
SECTION 8.11 COUNTERPARTS 25
AGREEMENT FOR THE DELIVERY AND SALE OF RAW SUGAR
THIS AGREEMENT FOR THE DELIVERY AND SALE OF RAW SUGAR,
(this "Agreement"), dated as of June 4, 1993 is made between
Hawaiian Sugar Transportation Company, Inc., and agricultural
association organized under the laws of the State of Hawaii
("Seller"), and California and Hawaiian Sugar Company, a
California corporation ("Buyer").
RECITALS
WHEREAS, concurrently herewith, Seller is entering into
contracts for the supply and marketing of raw sugar with
certain of the present growers of sugarcane in Hawaii;
WHEREAS, Buyer desires to contract for a supply of raw
sugar for processing at its raw sugar refineries located at
Crockett, California and at Aiea, Oahu, Hawaii;
WHEREAS, Seller desires to sell and deliver, and Buyer
desires to purchase and receive raw sugar form Seller on the
terms and conditions set forth below;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements herein contained, Seller and
Buyer agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 CERTAIN DEFINED TERMS.
As used in this Agreement, the following terms shall have
the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
"Adjusted Basis Price" shall have the meaning set forth
in Secion 3.02(a).
"Aiea Quality Raw Sugar" shall mean raw centrifugal cane
sugar produced from sugarcane grown in Hawaii, with a
polarization of not less than 99.1 degrees, whole raw color of
not more than 1200 ICUMSA color units at a pH of 7, ash of not
more than 0.25%, dextran of not more than 100 mau and starch
of not more than 150 ppm.
"Aiea Refinery" shall mean the sugar refinery located at
Aiea Hawaii which heretofore has been owned and operated by
Buyer and the liquid sugar refining facility to be constructed
by Buyer at Aiea, Hawaii adjacent to the existing sugar
refinery.
"Arbitrators" shall have the meaning set forth in Section
8.01(a).
"Available Quantity of Raw Sugar" shall have the meaning
set forth in Section 4.02.
"Basis Price" shall have the meaning set forth in Section
3.01.
"Bills of Lading" with respect to any delivery of Raw
Sugar hereunder, shall mean the bills of lading or dock
receipts, issued in connection with such delivery.
"Buyer" shall have the meaning set forth in the preamble.
"Business Days" shall mean any day on which commercial
banks in San Francisco, California and Honolulu, Hawaii are
required by law to be open for business.
"Commercial Pounds" shall mean the actual physical weight
in pounds, avoirdupois.
"Crockett Refinery" shall mean the sugar refinery located
in Crockett, California, which heretofore has been owned and
operated by C&H.
"Date of Arrival" shall mean (i) for a shipment of Raw
Sugar to the Crockett Refinery, the date on which a Vessel
tenders its Notice of Readiness in accordance with Section
5.01(a),and (ii) for a shipment of Raw Sugar to the Aiea
Refinery, the last Market Day of the calendar week within
which the shipment is delivered to the Aiea Refinery.
"Delivery Schedule" for any period hereunder, shall mean
the schedule of deliveries of Raw Sugar for such period
established pursuant to the terms of Section 4.02.
"Despatch Amount" shall have the meaning set forth in
Section 5.03(a).
"Domino" shall mean Domino Sugar Company, which, together
with C&H is a party to the Domino Agreement.
"Domino Agreement" shall mean the Agreement for the sale
of Raw Sugar dated as of June 22, 1987 between C&H and Amstar
Sugar Corporation (now know as Domino), as amended by a letter
agreement between such parties dated August 6, 1990, as
amended.
"Estimated Value" shall have the meaning set forth in
Section 3.04(a).
"Event of Default" shall have the meaning set forth in
Section 7.02.
"Event of Force Majeure" shall mean an event that causes
a permanent or temporary interruption in, on the one hand, the
sale and delivery of Raw Sugar hereunder by Seller, or on the
other hand, the purchase and receipt of Raw Sugar hereunder by
Buyer, which is beyond the reasonable control of Seller or
Buyer, respectively, and, except as to subparts (a), (b), and
(c), of this definition, could not, by the exercise of due
diligence, have been avoided by Seller or Buyer, respectively,
and shall include, without limitation:
(a) an act of God, including, without
limitation, fire, flood, earthquake, landslide, storm,
hurricane, epidemic, typhoon, and influx of pests, or
similar occurrence;
(b) war whether declared or undeclared,
blockade, port closing, revolution, insurrection, civil
disturbances, sabotage, or acts of public enemies;
(c) strike, boycott, lockout or other labor
disturbance;
(d) explosion, breakage or other damage to or
failure or breakdown of facilities or equipment related
to, in the case of Seller, the storage or transportation
of Raw Sugar (including the loss or substantial
impairment of the sugar delivery Vessels owned,
controlled or regularly employed under this Agreement by
Seller), or, in the case of Buyer, the storage or
refining of Raw Sugar at the Crockett Refinery or the
Aiea Refinery;
(e) power failure, unavailability of ocean
transportation, shortage or lack of water, fuel or
materials resulting from another Event of Force Majeure
or the acts or omissions of a person or entity not under
the control or direction of Seller or Buyer, as the case
may be;
(f) an order, judgment, ruling, decision or other
act or failure to act of any governmental, civil or
military or judicial authority, including, without
limitation, any adoption of, or change in, any law,
regulation or other legal requirement; and
(g) as to Seller, an event of Force Majeure under
any Standard Sugar Marketing Contract as provided for at
Section 7.01(a)(iii).
"Exchange" shall mean the Coffee, Sugar & Cocoa
Exchange.
"Final Net Price" shall have the meaning set forth
in Section 3.02(b).
"Final Invoice Amount" shall have the meaning set
forth in Section 3.04(c).
"Fine Cleaning" shall refer to that stage of the Vessel
discharging procedures normally and customarily employed at
the Crockett Refinery in which shovels and brooms are used to
discharge the Raw Sugar from a Vessel, but shall not include
the washing down or cleaning of a Vessel.
"Hawaii Growers" shall mean the growers of sugarcane in
Hawaii who have entered into or hereafter enter into a
Standard Sugar Marketing Contract or other agreement with
Seller for the delivery of Raw Sugar to Seller, and the
successors and assigns of such growers.
"Hawaii Terminal Facilities" shall mean each of the Raw
Sugar storage facilities in Hawaii used by the Seller to store
Raw Sugar.
"Jones Act Vessel" shall mean an ocean transportation
vessel which shall meet and comply with the requirements of
the Jones Act, 46 U.S.C. 688.
"Long Tons, Commercial" shall mean 2,240 Commercial
Pounds.
"Market Day" shall mean any day on which the Exchange is
open for the trading of commodity futures contracts.
"Nearest Futures Month" for any date shall mean the first
succeeding month, from the month in which such date occurs,
for which a No. 14 Contract is traded on the Exchange.
"No.11 Contract" shall mean the Sugar No. 11 Contract, as
its terms may be amended from time to time, which is traded on
the Exchange.
"No.14 Contract" shall mean the Sugar No. 14 Contract, as
its terms may be amended from time to time, which is traded on
the Exchange.
"Notice of Readiness" shall have the meaning set forth in
Section 5.01.
"Outturn Weight" shall have the meaning set forth in
Section 6.01
"Price Discount" shall have the meaning set forth in
Section 3.02(c).
"Prime Rate" shall mean the "prime or "base" rate
announced from time to time by Bank of America N.T. & S.A. at
its principal office in San Francisco, California in respect
of 90-day loans to its corporate borrowers.
"Pro Forma Invoice Amount" shall have the meaning set
forth in Section 3.04(a).
"Raw Sugar" shall mean raw centrifugal cane sugar which
polarizes at not less than 94 degrees and during such periods
as sugar may be processed or consumed only under a quota or
allotment plan decreed by any United States government
department or agency, then Raw Sugar shall include only sugar
that may be processed and consumed without penalty on the date
of delivery to Buyer.
"Raw Value" of any quantity of Raw Sugar shall mean its
equivalent in terms of ordinary commercial raw sugar testing
96 degrees by the polariscope. The conversion is to be done
for Raw Sugar testing more than 92 degrees by the polariscope
by multiplying (i) the number of pounds, avoirdupois, thereof
by (ii) the quantity obtained by adding (A) 0.93 to (B) the
quantity obtained by multiplying 0.0175 by the number of
degrees and fractions of a degree of polarization above 92
degrees for such Raw Sugar.
"Seller" shall have the meaning set forth in the
preamble.
"Settlement Price" shall mean the closing settlement
price for any commodity futures contract set at the end of
trading on any Market Day by the Exchange for such commodity
futures contract.
"Standard Sugar Marketing Contracts" shall mean any
contract between Seller and a Hawaii Grower under which Seller
is to acquire or market sugar of Hawaiian origin.
"Stand-By Fee" shall have the meaning set forth at
Section 7.01(b)(iii).
"STRV" shall mean short tons, Raw Value of 2,000 pounds,
avoidupois.
"Standard Quality" shall refer to Raw Sugar within the
quality ranges set forth in Exhibit D.
"Sugar Price Support Programs" shall mean any program of
the United States government, presently in effect or hereafter
enacted, which, as its primary purpose, provides an economic
subsidy and/or price support or other similar form of support
to U.S. domestic growers of sugarcane.
"Vessel" (i) in the case of a delivery of Raw Sugar to
the Crockett Refinery, shall mean a ship that is capable of
efficient discharge with Buyer's current discharging equipment
and procedures, that meets with Buyer's approval, which shall
not be unreasonably withheld, and that meets or exceeds the
requirements of the Bulk Sugar Charter U.S.A.-April 1962 as
amended from time to time and subject to such conditions as
the Board of Managers of the Exchange may from time to time
determine are appropriate to make such charter fair and
equitable and, (ii) in the case of a delivery to the Aiea
Refinery, any vehicle. Without limiting the foregoing, the
MOKU PAHU and the SUGAR ISLANDER as well as any other vessel
that can be discharged at rates and efficiencies at least
equal to those such vessels, shall be deemed a "Vessel" for
purposes of this Agreement.
ARTICLE II
PURCHASE AND SALE OF RAW SUGAR
SECTION 2.01 GENERAL
Seller agrees to sell and deliver, except as provided in
Section 2.03, and Buyer agrees to purchase and receive all Raw
Sugar received by Seller under Standard Sugar Marketing
Contracts or otherwise from the Hawaii Growers for a period
commencing on June 4, 1993 and ending on June 3, 2003. The
parties agree that any Raw Sugar delivered to the Hawaii
Terminal Facilities on or prior to June 3, 2003 shall be
subject to the terms of this Agreement. However, Seller shall
have no liability under this Agreement for failing to deliver
or sell Raw Sugar if such failure arises from a default by any
of the Hawaii Growers under the terms of the Standard Sugar
Marketing Contracts. Furthermore, nothing in this Agreement
shall obligate either Seller or any of the Hawaii Growers to
cultivate sugarcane or produce Raw Sugar for sale to Buyer.
SECTION 2.02 AIEA REFINERY REQUIREMENTS
Seller shall sell and deliver to Buyer at the Aiea
Refinery Buyer's requirements for Aiea Quality Raw Sugar, up
to a maximum of 40,000 STRV of Aiea Quality Raw Sugar in each
calendar year beginning with the 1994 calendar year, provided,
however, that Seller shall have no obligation to deliver more
Aiea Quality Raw Sugar to Buyer than that received by Seller
from the Hawaii Growers and provided further that nothing
herein shall require Seller or any of the Hawaii Growers to
cultivate sugarcane or produce Aiea Quality Raw Sugar. Unless
directed or agreed in writing by Buyer only Aiea Quality Raw
Sugar shall be delivered to the Aiea Refinery.
SECTION 2.03 PLACEMENT OF SUGAR UNDER LOAN
Nothwithstanding Section 2.01, in each calendar year
hereunder Seller shall be permitted to place up to 5% of the
Raw Sugar received by Seller within such year under loan in
accordance with the terms of the existing or any future Sugar
Price Support Programs, with the express right, in Seller's
sole discretion, to forfeit such Raw Sugar to the U.S.
government agency administering such loan programs (which as
of the date of this Agreement is the Commodity Credit
Corporation) in lieu of repayment of such loan. To the extent
that Seller or any Hawaii Grower shall forfeit Raw Sugar to
any U.S. government agency as provided for herein, there shall
be no requirement to sell and deliver or replace the forfeited
Raw Sugar to Buyer; provided, however, that nothing in this
Section 2.03 shall relieve Seller of its obligations under
Sections 2.02 and 4.02.
ARTICLE III
SUGAR PRICING
SECTION 3.01 BASIS PRICE
(a) With respect to each shipment of Raw Sugar delivered
by Seller to Buyer at the Crockett Refinery hereunder, a basis
price ("Basis Price") shall be established for each Commercial
Pound of Raw Sugar equal to the simple average of the daily
Settlement Prices for the No. 14 Contract, for the Nearest
Futures Month, for each of the fifteen (15) consecutive Market
Days immediately preceding and including the Date of Arrival
of the delivery Vessel at Buyer's Crockett Refinery or, if the
Date of Arrival is not a Market Day, the next succeeding
Market Day.
(b) With respect to each shipment of Raw Sugar delivered
by Seller to Buyer at the Aiea Refinery, a basis price ("Basis
Price") shall be established for each Commercial Pound of Raw
Sugar equal to the simple average of the daily Settlement
Prices for the No. 14 Contract, for the Nearest Futures Month,
for each of the fifteen (15) consecutive market Days
immediately preceding and including the Date of Arrival of
Seller's delivery Vessel at Buyer's Aiea Refinery.
(c) All Basis Prices shall be calculated to the nearest
one-thousandth of a cent ($.00001) per Commercial Pound.
SECTION 3.02 ADJUSTMENT TO BASIS PRICE
(a) The "Adjusted Basis Price" with respect to each
shipment of Raw Sugar delivered by Seller to Buyer at the Aiea
Refinery or the Crockett Refinery shall be equal to the Basis
Price less the sum of (i) the Price Discount, (ii) the
despatch rate set forth in Section 5.03(a)(i), and (iii) the
stevedoring rate as determined pursuant to Section 5.03(b).
(b) The "Final Net Price" with respect to each shipment
of Raw Sugar delivered by Seller to Buyer at the Aiea Refinery
or the Crockett Refinery shall be equal to the Basis Price:
(i) increased or decreased, as the case may be, by the net
quality premium or discount calculated pursuant to the terms
of Section 6.04, and following such adjustment, (ii) decreased
by the Price Discount, and, following such adjustments, (iii)
with respect to (a) Raw Sugar delivered to the Crockett
Refinery, increased or decreased, as the case may be, by the
net amount per Commercial Pound of the charges relating to
discharge of the delivery Vessel calculated pursuant to the
terms of Section 5.03 and (b) Raw Sugar delivered to the Aiea
Refinery, decreased by the sum of the despatch rate plus the
stevedoring rate determined pursuant to Section 5.03(b).
Examples of the calculation of the Final Net Price are set
forth in Schedule 1.
(c) The "Price Discount" shall be equal to $.0125 per
Commercial Pound, unless during any calendar year beginning on
or after January 1, 1994 Seller shall deliver in excess of
550,000 STRC of Raw Sugar at which time the Price Discount
shall be reduced to $.0075 per Commercial Pound, for all Raw
Sugar delivered to Buyer in excess of 550,000 STRV during such
calendar year, up to 750,000 STRV; provided, however, that for
any calendar year beginning on or after January 1, 1994 during
which Hamakua Sugar Company produces Raw Sugar, the 550,000
STRV threshold shall be increased by the number of tons of Raw
Sugar delivered by Hamakua Sugar Company to Seller for
purposes of determining when the Price Discount shall be
reduced to $.0075 per Commercial Pound and provided, further
that for any calendar year beginning on or after January 1,
1994 in which Alexander and Baldwin, Inc., or any subsidiary
thereof (collectively, "A&B") delivers Raw Sugar to any
person(s) other than Seller, the 550,000 STRV threshold as
otherwise adjusted pursuant to this Section shall be reduced
by the number of tons of Raw Sugar delivered by A&B to such
person(s). The Price Discount for Raw Sugar delivered by
Seller to Buyer in excess of 750,000 STRV in any calendar year
shall be $.0125 per Commercial Pound.
SECTION 3.03 NO. 14 CONTRACT NO LONGER REPRESENTATIVE
(a) If at any time during the term of this Agreement, the
No. 14 Contract price no longer represents the U.S. duty-paid,
domestic price of Raw Sugar, the parties may agree that any
Raw Sugar which remains unpriced hereunder shall be priced by
using (i) the No. 11 Contract rules, adjusted as required to
reflect the U.S. duty-paid, domestic price of Raw Sugar, (ii)
any successor contract to the No. 14 Contract which Seller and
Buyer mutually agree represents the U.S. duty-paid, domestic
price for Raw Sugar as of such date, or (iii) such other
pricing mechanism as may be mutually acceptable to both Buyer
and Seller.
(b) If, after good faith negotiations, Seller and Buyer
are unable to agree upon whether the No. 14 Contract continues
to represent the U.S. duty-paid domestic price of Raw Sugar or
upon an alternative pricing mechanism, either-party may submit
such matter to Arbitration in accordance with Section 8.01,
and the Arbitrators appointed for such proceeding shall have
the power to establish an alternative pricing mechanism.
(c) Seller and Buyer agree that, among other reasons not
specified herein, the No. 14 Contract price shall no longer be
deemed to be representative of the U.S. duty-paid, domestic
price of Raw Sugar if either of the following events shall
occur: (i) the total open interests in No. 14 Contracts falls
below 2,000 lots for twenty (20) consecutive Market Days, or
(ii) a sugar futures contract other than the No. 14 Contract,
which shall purport to represent the duty-paid, domestic price
of Raw Sugar, and shall be generally recognized by the U.S.
domestic sugar industry as such, trades on the Exchange in a
greater volume than the No. 14 Contract for ten (10)
consecutive Market Days.
SECTION 3.04 PAYMENT FOR RAW SUGAR.
(a) In connection with a delivery of Raw Sugar, Seller
shall present to Buyer a pro forma invoice in an amount (the
"Pro Forma Invoice Amount") equal to the Estimated Value of
the Raw Sugar delivered. The Raw Sugar's Estimated Value
shall be equal to the product of (i) the Raw Sugar's Outturn
Weight multiplied by (ii) the Adjusted Basis Price for such
Raw Sugar. The pro forma invoice shall be presented to Buyer
by Seller no later than eight (8) days after the Date of
Arrival and shall be in sufficient detail to demonstrate
compliance with the pricing terms of this Agreement. Buyer
shall pay such Pro Forma invoice Amount to Seller (or persons
designed by Seller) by the end of the tenth day following the
Date of Arrival for such delivery or, if such day is not a
Business Day, on the next following Business Day. Such
payment shall be made in immediately available funds to a bank
specified from time to time in writing by Seller to Buyer.
(b) In the event that the Outturn Weight of any shipment
of Raw Sugar shall not be available to Seller prior to the
time the pro forma invoice must be submitted to Buyer, Seller
shall be permitted to substitute the weight reflected on the
Bill of Lading into the calculation of the Pro Forma Invoice
Amount and Buyer shall pay the Pro Forma Invoice Amount so
calculated. If, prior to the final pricing determination
described in subsection (c), the actual Outturn Weight becomes
available, Seller may (or upon Buyer's request shall) submit
an interim invoice to Buyer with a revised Pro Forma Invoice
Amount based on the actual Outturn Weight requesting payment
or making a refund, as the case may be.
(c) Promptly after the final pricing determinations have
been made and the final weights, polarizations and quality
tests have been performed or ascertained, which shall in no
event be later than sixty (60) days after the Date of Arrival,
Seller shall calculate the "Final Invoice Amount" by
multiplying (i) the Raw Sugar's final Outturn Weight by (ii)
the Final Net Price. When such calculations are complete,
Seller shall present to Buyer a final invoice which shall
request payment or provide for a refund, as the case may be
for the difference between the Pro Forma Invoice Amount, as
adjusted by any interim invoices which may have been rendered
by Seller, and the Final Invoice Amount. Such final invoice
shall be in sufficient detail to demonstrate compliance with
the pricing terms of this Agreement.
(d) Each payment to Seller or Buyer required under
subsections (b) or (c) shall be made by the end of the second
Business Day following the presentation of such interim or
final invoice, as the case may be; provided, however, that in
no event shall any payment be due prior to the time the Pro
Forma Invoice Amount, payable with respect to such shipment of
Raw Sugar, shall be due pursuant to subsection (a). Such
payments shall be made in immediately available funds to a
bank specified from time to time in writing by Seller to
Buyer.
SECTION 3.05 LATE PAYMENTS
In the event that either Buyer or Seller shall fail to
pay any amount payable hereunder to the other party in full
when due, such unpaid amount shall bear interest at a rate per
annum equal to 133% of the Prime Rate in effect at such time,
which shall accrue from the date any amount is first due
hereunder until the date such amount is paid in full.
SECTION 3.06 CASH ADVANCES
Buyer agrees to make advances to Seller pursuant to the
terms and conditions of Exhibit E hereto which is hereby
incorporated herein by reference and shall be binding on each
of the parties hereto as if each and every term were set forth
herein.
SECTION 3.07 PRICING FOR SUGAR DELIVERED TO THIRD PARTY
REFINERS.
(a) In the event that Buyer shall direct Seller to
deliver any Raw Sugar to Domino, or other third party refinery
designated by Domino, in satisfaction of Buyer's obligations
under the Domino Agreement (as permitted by Section 4.01), the
pricing terms to the Seller of such delivery or deliveries,
including quality premiums and discounts, demurrage and
despatch, shall be determined solely in accordance with the
Domino Agreement. None of the pricing terms of this
Agreement, including but not limited to the Price Discount,
shall be applied to any such delivery. In connection with
such deliveries, Seller shall look to Buyer, rather than
Domino or such third party refinery for payment of the amount
payable for such Raw Sugar under the Domino Agreement and
Buyer agrees to make such payment or payments, and to do so to
the extent practicable, in accordance with the payment
provisions of Section 3.04 applicable to Raw Sugar delivered
to the Crockett Refinery.
(b) In the event that Buyer shall direct Seller to
deliver any Raw Sugar to any United States refinery or refiner
other than the Crockett Refinery, the Aiea Refinery, Domino or
a third party refiner designated by Domino (as permitted by
Section 4.01), the pricing terms of such delivery or
deliveries, to the extent not otherwise negotiated by Buyer in
accordance with the last sentence of this subsection, shall be
determined solely in accordance with the terms of the No. 14
Contract. None of the pricing terms of this Agreement,
including, but not limited to, the Price Discount, shall be
applied to any such delivery. In connection with such
deliveries, Seller shall look to Buyer, rather than such other
United States refiner, for payment of the amount payable for
such payment or payments, and to do so, to the extent
practicable, in accordance with the payment provisions set
forth in Section 3.04 applicable to Raw Sugar delivered to the
Crockett Refinery. For all deliveries of Raw Sugar to a third
party refiner hereunder, Buyer agrees that it shall use its
best efforts to cause the terms of the "Domino General
Contract Provisions" to govern such deliveries to the extent
that such provisions conflict or are inconsistent with the
terms of the No. 14 Contract.
ARTICLE IV
DELIVERY OF SUGAR
SECTION 4.01 PLACE OF DELIVERY.
(a) Buyer and Seller agree that, except as provided in
subsection (c) below, Raw Sugar shall only be delivered by
Seller to Buyer at the Crockett Refinery or the Aiea Refinery.
Except as provided in (b) below, the actual place of delivery
between the Crockett Refinery and the Aiea Refinery shall,
subject to the quantity limitations of Section 2.02, be at the
election of Buyer which election shall be exercised by written
notice as described below. On or before the 15th day of
October of each year hereunder, Buyer shall provide to Seller
its best estimate of the quantity of Raw Sugar Buyer will
require for the Aiea Refinery during each month of the
immediately following calendar year. Buyer shall give written
notice to Seller of its election to receive Raw Sugar at Aiea
on or before the 10th day of each month from December through
September following delivery of Seller's Initial Delivery
Schedule under Section 4.02(a). Such notice shall set forth
the quantity of Raw Sugar to be delivered by Seller to the
Aiea Refinery for the three consecutive calendar months
following such notice, and Buyer's best estimate of the
quantity of Raw Sugar Buyer will require for the Aiea Refinery
for the balance of the calendar year. No adjustments shall be
made by Buyer to the quantity of Raw Sugar to be delivered to
the Aiea Refinery for the three consecutive calendar month
period following delivery of Buyer's notice except as made
necessary by Force Majeure or as mutually agreed by the
parties.
(b) Seller shall be obligated to deliver to the Aiea
Refinery Raw Sugar produced on the Island of Oahu unless
Seller is unable to supply Buyer's requirement for Aiea
Quality Raw Sugar (up to an annual maximum of 40,000 tons
beginning with the 1994 calendar year) with Raw Sugar produced
on Oahu. Seller's obligation to deliver to the Aiea Refinery,
Aiea Quality Raw Sugar produced outside of the island of Oahu
shall be subject to marine facilities existing on the island
of Oahu that can, with reasonable efficiency, receive raw
sugar cargoes for transshipment to the Aiea Refinery.
(c) Buyer and Seller acknowledge that there may be times
during the term of this Agreement where economic or
operational circumstances cause Buyer to desire that certain
quantities of the Raw Sugar to be delivered by Seller not be
delivered to the Crockett Refinery or the Aiea Refinery, but
rather be delivered to (i) Domino in satisfaction of Buyer's
obligation under the Domino Agreement or (ii) a different
sugar refiner on the Gulf Coast or the East Coast of the
United States. In recognition of this possibility, Buyer and
Seller agree that, in addition to having the option of
directing Seller to deliver Raw Sugar either to the Crockett
Refinery or to the Aiea Refinery, Buyer shall have the right
to direct Seller to deliver up to 100,000 Long Tons,
Commercial of the Raw Sugar to Domino or to any other United
States sugar refiner, provided that the quantity to be
delivered represents a commercially practical quantity, and
that the Raw Sugar is to be delivered to a location designated
by the No. 14 Contract. In connection therewith, Seller
acknowledges that under the terms of the Domino Agreement,
Domino has the right to require that raw sugar delivered under
such agreement to be delivered to a refiner located in the
continental United States other than Domino. Buyer shall give
Seller written notice of the exercise of such option to direct
the delivery of Raw Sugar to a third party refiner prior to
the date the delivery Vessel departs from the last Hawaii
Terminal Facility at which Raw Sugar is loaded aboard the
Vessel.
(d) The scheduling of all deliveries of Raw Sugar
hereunder, including deliveries to third party United States
sugar refiner, shall be done in accordance with the terms of
Section 4.02.
SECTION 4.02 SCHEDULE OF DELIVERIES.
(a) Initial Delivery Schedules. On or before the 15th
day of October of each year hereunder, Seller, after
consultation with Buyer, shall deliver to Buyer a delivery
schedule (the "Initial Delivery Schedule"), based upon the
general delivery principles of Section 4.02(e), for the Raw
Sugar it will have available for delivery to Buyer during the
immediately succeeding calendar year taking into account
Seller's beginning inventory stocks, the quantity of Raw Sugar
expected to be delivered to Seller by the Hawaii Growers
during such year under the Standard Sugar Marketing Contract
or otherwise, the quantity of Raw Sugar Seller anticipates it
will place under loan pursuant to Section 2.03, Seller's need
to load and deliver Raw Sugar to Buyer in a commercially
practicable manner, and such other factors consistent with
this Agreement as may be appropriate for such purpose (the
"Available Quantity of Raw Sugar"), provided, however, that
the consideration of such factors shall not have the effect of
reducing Seller's general obligation to sell to Buyer Raw
Sugar actually received from the Hawaii Growers under Section
2.01 or the obligations at Section 2.02. For purposes of the
preceding sentence and subsection (b) and (d), a proposed
delivery of Raw Sugar shall be deemed to be "commercially
impracticable" and thus permit Seller to exclude such Raw
Sugar from the Available Quantity of Raw Sugar for such year
if it would cause an undue disruption in the efficient and
economic shipping operations of Seller. Examples of
circumstances in which delivery hereunder would be deemed
"commercially impracticable" would include, but not be limited
to, deliveries that would require Seller to (1) load a
delivery Vessel at more that three ports, (2) employ two or
more delivery Vessels in concurrent, active Raw Sugar service,
(3) deliver less and 23,000 Long Tons, Commercial of Raw Sugar
aboard the MOKU PAHU or less than two-thirds of a full cargo
to the Crockett Refinery on any other Vessel, and (4) deliver
to the Crockett Refinery on more than four occasions in any
one calendar year, less than 30,000 Long Tons, Commercial, of
Raw Sugar aboard the MOKU PAHU or less than 90% of a full
cargo on any other Vessel.
(b) Revised Delivery Schedules. On or before the 15th day
of each month from December through September following
delivery of an Initial Delivery Schedule, Seller, after
consultation with Buyer, shall deliver to Buyer an update of
the Initial Delivery Schedule with such adjustments, if any,
as may be appropriate to reflect new information regarding the
Available Quantity of Raw Sugar and Buyer's requirements for
the Crockett Refinery and the Aiea Refinery; provided,
however, that no adjustments shall be made to the Three Month
Best Efforts Supply Commitment as described in the following
subsection except as made necessary by Force Majeure or
Buyer's direction to deliver Raw Sugar to a third party
refiner pursuant to Section 4.01(c) or the mutual agreement of
the parties, in which case Seller's obligations shall be
reduced in an equitable manner to be determined at such time
after consideration by Seller and Buyer of all the facts and
circumstances connected with such event. Initial Delivery
Schedules as updated are referred to herein as Revised
Delivery Schedules.
(c) Three Month Best Efforts Supply Commitment. Seller
shall use its best efforts to deliver to Buyer the Raw Sugar
scheduled under a Revised Delivery Schedule for delivery
during each of the three consecutive calendar months
commencing with the calendar month next following the month in
which the Revised Delivery Schedule is delivered to Buyer.
(d) Deliveries During First Calendar Year. Seller's
schedule of deliveries of Raw Sugar to Buyer during the period
from the date of this Agreement through December 31, 1993 is
attached hereto as Schedule 2. Seller shall use its best
efforts to deliver to Buyer and Raw Sugar scheduled for
delivery during the first three calendar months of Schedule 2.
On or before the 15th day of each month commencing with the
first month beginning after the date of this Agreement and
ending with the month of September 1993, Seller, after
consultation with Buyer, shall deliver to Buyer an update of
Schedule 2, with such adjustments, if any, as may be
appropriate to reflect any changes in the Available Quantity
of Raw Sugar (as otherwise defined under Section 4.02(a)) and
Buyer's requirements for the Crockett Refinery and the Aiea
Refinery; provided, however, that no adjustments shall be made
to the three month best efforts supply commitment described in
the following sentence, except as made necessary by Force
Majeure or Buyer's direction to deliver Raw Sugar to a third
party refiner pursuant to Section 4.01(c) or the mutual
agreement of the parties, in which case Seller's obligations
shall be reduced in an equitable manner to be determined at
such time after consideration by Seller and Buyer of all the
facts and circumstances connected with such event. Seller
shall use its best efforts to deliver to Buyer the Raw Sugar
Scheduled for delivery under such updated schedules during
each of the three consecutive calendar months commencing with
the calendar month next following the month in which an
updated schedule is delivered to Buyer.
(e) General Delivery Principles. The parties agree that
they will work with each other to accommodate Buyer's need to
have an orderly supply of Raw Sugar to keep the Aiea Refinery
and the Crockett Refinery operating on an efficient commercial
basis and Seller's need to schedule shipments with regard to
the availability and efficient use of Jones Act Vessels,
provided, however, that Seller shall in any event have the
right to schedule the delivery of Raw Sugar to Buyer at a rate
equal to the maximum delivery capacity of the MOKU PAHU.
Notwithstanding anything herein to the contrary. Buyer shall
have no obligation to buy or take delivery of more than 125%
of the Raw Sugar Scheduled for delivery during any period
subject to a "best efforts" supply commitment under
Subsections (b) or (d).
(f) Arrival Dates. For each shipment of Raw Sugar to
the Crockett Refinery, Seller shall declare the arrival date
thereof not less than 14 days prior to the day the Vessel is
expected to arrive. Delivery shall be considered timely if
Seller's delivery Vessel tenders Notice of Readiness in
accordance with Section 5.01 within 5 days of the declared
arrival date.
(g) Status of Arrival. Following declaration of the
arrival date pursuant to Subsection (f), Seller shall keep
Buyer informed as to the status of the expected arrival of the
delivery Vessel and matters pertinent thereto, including the
Vessel's loading schedule, the Vessel's expected departure
date for the Crockett Refinery, and 72 hours, 48 hours and 24
hours in advance, the expected time of arrival of the Vessel
at the Pilot Station of the Port of San Francisco.
(h) Supplemental Information. On the first Business Day
of each calendar week, Seller shall give written notice to
Buyer of the quantity of Raw Sugar on hand at each Hawaii
Terminal Facility, the quantity of Raw Sugar produced by each
Hawaii Grower during the immediately preceding calendar week,
the quantity of Raw Sugar each Hawaii Grower currently plans
to produce during each of the sixteen consecutive calendar
weeks beginning with the week in which such notice is given,
together with such other information as may be known to
Seller, or reasonably should be known, regarding matters
material to the then current Delivery Schedule.
SECTION 4.03 GENERAL TERMS OF SHIPPING.
(a) All Raw Sugar delivered to the Crockett Refinery
shall be delivered on a Vessel as defined under Article I of
this Agreement.
(b) The MOKU PAHU shall not be employed by Seller in
nonsugar service between April 1 and October 31 of any
calendar year or at any time when there is, or is expected to
be, an aggregate of more than 23,000 Long Tons, Commercial of
Raw Sugar in storage at any three Hawaii Terminal Facilities,
without the prior written consent of Buyer, which consent
shall not be unreasonably withheld.
(c) Following completion of loading a Vessel at the
Hawaii Terminal Facility for a delivery to the Crockett
Refinery, Seller shall provide to Buyer the total weight of
the Raw Sugar loaded on such delivery Vessel as determined at
the Hawaii Terminal Facilities.
(d) Seller shall furnish to Buyer information as to the
delivery Vessel's stowage as soon as possible after completion
of loading of its Raw Sugar cargo.
(e) Seller shall not load any Raw Sugar which it shall
know to be damaged on the Vessel designated for delivery.
(f) For deliveries to the Crockett Refinery, Seller
shall present a Bill of Lading to Buyer not sooner than seven
days nor later than two days prior to the later to occur of
either:
(i) the expected Date of Arrival of the delivery Vessel;
(ii) the expected date the Raw Sugar being
delivered hereunder shall be available for discharge, when any
Raw Sugar or other shipment is being discharged from another
vessel at the time Seller's Vessel shall arrive.
(g) For deliveries to the Aiea Refinery, Seller shall
present a bill of lading to Buyer on the day of delivery.
ARTICLE V
DISCHARGE OF VESSEL AT CROCKETT REFINERY
SECTION 5.01 NOTICE OF READINESS.
(a) At the time Seller's delivery Vessel arrives at the
Pilot Station of the Port of San Francisco, it shall tender a
notice of readiness to Buyer (or its authorized agent) (the
"Notice of Readiness"), and Buyer (or its authorized agent)
shall accept such Notice of Readiness, whether or not such
arrival shall be during normal business hours.
(b) For deliveries to the Aiea Refinery, Seller (or its
authorized agent) shall advise Buyer or its arrival at the
Aiea Refinery location and readiness for unloading, Buyer
shall use best efforts to unload Seller's delivery Vessel in a
prompt and efficient manner.
SECTION 5.02 DISCHARGE OF VESSEL.
(a) Buyer shall be responsible in all respects for the
discharge of Raw Sugar in connection with each delivery. All
such discharging, shall be done at Buyer's own expense,
subject to the reimbursement provisions for deliveries of Raw
Sugar to the Crockett Refinery set forth in Section 5.03.
Discharging of Raw Sugar delivered to the Crockett Refinery
shall be performed in accordance with the standards generally
prevailing at the time of such delivery under the No. 14
Contract, except that to the extent certain discharging
standards are specifically addressed by this Agreement, then
the provisions of this Agreement shall control.
(b) Buyer shall, at its own expense, cause Seller's
Vessel to be Fine Cleaned under the supervision of the master
of the Vessel unless Buyer gives Seller notice not later than
three (3) days before the commencement of discharge of its
election not to Fine Clean the Vessel. If Buyer so elects,
the Vessel shall not be Fine Cleaned, a corresponding credit
shall be taken against the stevedoring allowance payable by
Seller with respect to such delivery pursuant to Section
5.03(b), and Buyer shall pay Seller interest on the Estimated
Value of the Raw Sugar left aboard the Vessel until such time
as the Vessel is Fine Cleaned or placed in non-sugar service.
The rate of such interest shall be the weighted average
interest rate of the outstanding cash advances from Buyer to
Seller during the period such Raw Sugar is left aboard the
Vessel or if no such cash advance is outstanding, the Prime
Rate. If Buyer shall elect not to Fine Clean the Vessel for
any delivery, the Vessel shall in any event be cleaned such
that no more than fifteen (15) Long Tons, Commercial of Raw
Sugar is left following such cleaning in any hold of the
Vessel and no more than ninety (90) Long Tons, Commercial of
Raw Sugar is left in the Vessel in total. Seller may override
Buyer's election not to Fine Clean the delivery Vessel by
giving notice to Buyer prior to commencement of discharge if
(i) Seller expects the Vessel's next cargo to be delivered to
a third party, (ii) the Vessel is to undergo maintenance or
repair requiring any hold to be Fine Cleaned, or (iii) the
Vessel is delivering its last Raw Sugar cargo within the
calendar year.
SECTION 5.03 CHARGES CONNECTED WITH DISCHARGE AT THE
CROCKETT REFINERY.
The various charges and fees connected with the discharge
and offloading of Seller's Raw Sugar cargo from each delivery
Vessel at the Crockett Refinery shall be allocated between
Seller and Buyer as follows:
(a) Lay-Time, Demurrage and Despatch.
(i) With respect to each delivery of Raw Sugar by Seller
to the Crockett Refinery or Aiea Refinery, Seller shall pay
Buyer an amount equal to $0.00133 per Commercial Pound of Raw
Sugar discharged by Buyer (the "Despatch Amount").
(ii) Lay-time shall commence at the start of the
first regular stevedore working period following Seller's
notice to Buyer that the delivery Vessel is safely berthed
alongside Buyer's dock and ready in all respects to begin
discharging but not sooner than four hours after the time
Notice of Readiness for such delivery is tendered in
accordance with Section 5.01; provided, however, that if Buyer
actually begins to discharge the delivery Vessel before such
time, lay-time shall commence when such discharging begins.
Buyer shall be allowed 72 hours lay-time during Saturday's,
Sundays, stevedore holidays, and stevedore stop work meetings.
(iii) Except as provided in subpart (iv) of this Section
5.03(a) if the delivery Vessel is ready to proceed to the
discharging berth and Buyer does not provide a berth, lay-time
shall commence at the beginning of the first regular stevedore
working period starting not sooner than four hours following
tender of Notice of Readiness pursuant to Section 5.01
(iv) In the event that any of the Seller's
delivery Vessels shall tender a Notice of Readiness in
accordance with Section 5.01 but shall be unable to ready
itself for discharge at the Crockett Refinery because another
of Seller's delivery Vessels shall be discharging, or readying
itself for discharge, at the Crockett Refinery dock at such
time, lay-time with respect to such waiting Vessel shall not
commence before such time as Seller's discharging Vessel shall
have been shifted off-berth and the waiting Vessel shall be
shifted on-berth and be ready to begin discharging its cargo.
(v) In the event discharge is prevented or stopped by
adverse weather conditions, lay-time shall be extended for a
corresponding period in the determination of demurrage.
(vi) Lay-time for discharging shall not commence,
or if commenced shall be suspended during any period in which
discharging is prevented or delayed by an Event of Force
Majeure.
(vii) Demurrage shall be payable by Buyer to Seller at a
rate of $950 per hour for each hour (calculated to the nearest
quarter hour) by which the time taken to complete discharge
exceeds the expiration of lay-time.
(viii) Notwithstanding the foregoing, if Seller delivers
Raw Sugar to the Crockett Refinery on any Vessel other than
the MOKU PAHU laytime shall be determined in accordance with
the Bulk Sugar Charter USA - April 1962, as amended from time
to time, and demurrage and despatch shall be both calculated
at the rate of $5,000 per 24-hour day (partial days pro rata).
(b) Stevedoring.
(i) Actual stevedoring charges shall be paid by the
Buyer and an allowance for stevedoring shall be charged to
Seller at the rate per Commercial Pound provided for in the
No. 14 Contract.
(ii) In the event that Buyer elects not to
perform Fine Cleaning on Seller's Vessel for a particular
delivery, the stevedoring allowance to be paid by Seller for
such delivery shall be reduced by 4%.
(c) Dockage. Dockage charges shall be paid by Seller and
shall be charged by Buyer at the customary rate for the Port
of San Francisco from time to time.
(d) Wharfage Charges, Dues and Taxes. All wharfage
charges, dues and taxes, including sales taxes, charged with
respect to Seller's sale and delivery of Raw Sugar shall be
paid by Buyer with no offset against any amounts to be paid to
Seller hereunder in respect of delivered Raw Sugar.
(e) Ship's Clerk. All amounts relating to work
performed by the ship's clerk during the discharge of the
Vessel shall be paid by Seller for Seller's own account, with
no offset against any amounts to be paid to Buyer.
SECTION 5.04 SETTLEMENT WITH DELIVERY VESSEL.
Seller shall pay the freight, discharge all liens, and
make all settlements with the delivery Vessel and its owners.
If an arbitration should arise under the charter party or
contract of affreightment applicable to a shipment of Raw
Sugar hereunder, Buyer shall upon Seller's request, consent to
become a party to such arbitration and shall be bound by any
award against Seller in such proceeding.
SECTION 5.05 MAINTENANCE OF DOCKS.
(a) Buyer shall be responsible for maintaining the docks
and dock access area at the Crockett Refinery in a manner
sufficient to allow docking and the efficient unloading and
servicing of Vessels of a size and draft which are customary
for Vessels which prior to the date of this agreement had been
used by Buyer for the delivery of Raw Sugar to the Crockett
Refinery. At a minimum Buyer shall maintain the dock and dock
access area at the Crockett Refinery such that the Vessels
employed for delivery by Seller shall be able to, in the
opinion of the master of such Vessels, proceed to, depart from
and always lie safely afloat at the dock and dock access area
at a draft of such dock of at least 35 feet. Seller shall be
permitted to refuse to dock a Vessel if, in the sole judgment
of the master of the Vessel, the dock or dock access area is
inadequate for safe and proper docking thereof, whether or not
the inadequate docking conditions shall be excused under any
other provisions of this Agreement, including an Event of
Force Majeure. Seller shall proceed to dock its Vessel as
soon thereafter as practicable upon Buyer's remedying the
unsafe or improper conditions. Notwithstanding the inability
of Buyer to begin the discharge of Seller's Raw Sugar due to
the dock conditions at the Crockett Refinery, lay-time shall
commence at the beginning of the next regular stevedore
working period starting not sooner than four hours after
tender of Notice of Readiness pursuant to Section 5.01, unless
the commencement of lay-time is suspended under Section
5.03(a).
(b) Buyer shall maintain all unloading facilities at the
Aiea Facility, in a manner sufficient to allow the prompt and
efficient unloading of Seller's Vessels delivering Raw Sugar
to the Aiea Refinery.
ARTICLE VI
WEIGHING AND QUALITY DETERMINATIONS
SECTION 6.01 WEIGHT.
All Raw Sugar shipped in each Vessel for delivery to
Buyer shall be deemed to be of the same mark and shall be
weighed, sampled and tested for polarization and refining
quality as one mark. The net landed weight of each shipment
hereunder shall be determined at time of discharge on the
certified refinery scale of the Crockett Refinery or the Aiea
Refinery (the "Outturn Weight"), as the case may be, by public
weighers employed by Seller in the presence of a
representative of Buyer. The scales to be used shall be
tested for accuracy in the manner customary at the designated
refinery.
SECTION 6.02 TRANSFER OF TITLE AND RISK OF LOSS.
Title and risk of loss to Raw Sugar to be delivered by
Seller to the Crockett Refinery, the Aiea Refinery, or a third
party refiner under this Agreement shall pass from Seller to
Buyer when it is placed on the designated refinery receiving
scale.
SECTION 6.03 SAMPLING AND TESTING PROCEDURES.
(a) Raw Sugar delivered to the Crockett Refinery shall
be sampled and tested as follows:
(i) Upon the discharge of Raw Sugar, samples of Raw
Sugar shall be drawn in the presence of representative of
Seller and Buyer by means of Buyer's automatic continuous
sampling device, which shall in all cases meet or exceed the
standards for such equipment generally prevailing in the U.S.
domestic sugar industry. Samples from each 700,000 Commercial
Pounds of Raw Sugar discharged from Seller's Vessel shall be
taken and mixed, and prepared for polarization and quality
evaluation purposes, in accordance with the "Raw Sugar
Sampling Procedure" specified in Exhibit A. However, if
Seller and Buyer agree that the Raw Sugar is in such condition
that the automatic sampling device will not extract a
representative sample, the samples shall be drawn manually and
the procedures for mixing samples shall be altered so as to
provide samples for polarization and quality evaluation which
are representative.
(ii) Three polarizations shall be made for each sample,
one by Seller's laboratory, one by Buyer's laboratory and one
by the New York Sugar Trade Laboratory. The average of the
two nearest polarizations shall be used as the final test of
each sample or if the two are equidistant from the median,
then the median shall be taken as the final test of each
sample. Each laboratory shall utilize the methods set forth
in "Sugar Analysis, ICUMSA Methods," F. Schneider,
Peterborough, England, 1979, Page 25, Raw Sugar, for the
Polarization Analysis of Raw Sugar Samples.
(iii) For testing refining quality, samples shall
be prepared at the completion of discharge in accordance with
the procedure described in Exhibit B. One sample shall be
forwarded to Seller's laboratory, one to the New York Sugar
Trade Laboratory and one to Buyer's laboratory. Each
laboratory shall follow the applicable procedures specified in
Exhibit B and shall use the equipment and methods described
therein for testing the whole Raw Sugar for moisture, ash,
color, and dextran, and for testing affined Raw Sugar prepared
from the whole Raw Sugar for grain size and color. An average
test result shall be used to determine each such quality
factor. Such average shall be determined for each quality
specification separately and shall be the average of the two
nearest test results of the three laboratories which shall
perform such testing procedures pursuant to this Section, but
if the two are equidstant from the median, then the median
shall be used.
(iv) The charges for testing Raw Sugar pursuant to this
Section shall be borne by Buyer and Seller, with each paying
its own chemist and one-half of the fee of the New York Sugar
Trade Laboratory.
(b) Raw Sugar deliveries to the Aiea Refinery shall be
sampled in the manner heretofore customary at the Aiea
Refinery and shall be tested in the same manner as Raw Sugar
delivered to the Crockett Refinery, except that a single test
of each sample shall be performed by the Hawaiian Sugar
Planters' Association in lieu of the three tests required with
respect to Raw Sugar delivered to the Crockett Refinery, whole
raw color shall be tested at a pH of 7, and starch content
shall be tested as specified in Exhibit B. The cost of such
testing shall be paid one-half by Seller and one-half by
Buyer.
SECTION 6.04 QUALITY PREMIUM AND DISCOUNTS.
Pursuant to the terms of Section 3.02(b), the Basis Price
shall be adjusted for polarization and quality allowances,
premiums and discounts as follows:
(a) The allowance per Commercial Pound for each degree
of polarization above or below 96 degrees shall be determined
pursuant to the following tables, it being understood that
allowances for fractions of a degree under the "Ratable
Adjustments" table shall be in proportion:
Ratable Adjustments
For the full degree from 96 up to and including 97, add
0.5% of the Basis Price.
For the full degree above 97 up to and including 98, add
an additional 1.2% of the Basis Price.
For the full degree above 98 up to and including 99, add
an additional 1.2% of the Basis Price.
For the full degree above 99 up to and including 100, add
an additional 0.6% of the Basis Price.
For the full degree below 96 to and including 95, deduct
5.50% of the Basis Price.
For the full degree below 95 to and including 94, deduct
an additional 2.75% of the Basis Price.
Step Adjustment
For polarizations of 98 and above, add 1.05% to the Basis
Price to the ratable adjustment determined under the
preceding table.
(b) The percentage discount or premium per Commercial
Pound for quality factors other than polarization shall be
determined in accordance with the terms of the No.14 Contract
as in effect on the date of delivery; provided, however, that
a premium of $2.00 per STRV shall be paid for Aiea Quality Raw
Sugar delivered to the Aiea Refinery and a deduction of $4.00
per STRV shall be charged for Raw Sugar received at the Aiea
Refinery that fails to satisfy the criteria for Aiea Quality
Raw Sugar. The applicable terms of the No.14 Contract as in
effect on the date of this Agreement are attached hereto as
Exhibit C.
ARTICLE VII
EXCUSE FROM PERFORMANCE AND TERMINATION
SECTION 7.01 FORCE MAJEURE.
(a) In addition to adjustments provided for at Article
IV, the obligations of Seller to sell and deliver Raw Sugar
hereunder shall be qualified in all cases to the following
extent:
(i) In the event that an Event of Force Majeure shall
destroy any Raw Sugar that Seller had designated for delivery
to Buyer, or damage such Raw Sugar such that it shall no
longer be of sufficient quality to satisfy the requirements of
this Agreement, and such event shall cause the quantity of Raw
Sugar available to Seller for delivery to Buyer for the period
in which such Raw Sugar was to have been delivered to be less
than Seller's delivery obligation for such period, then at
Seller's option, its delivery obligation for such period shall
be reduced to the quantity of Raw Sugar actually available to
Seller for delivery to Buyer for such period.
(ii) In the event that an Event of Force Majeure shall
prevent Seller from (a) receiving Raw Sugar in Hawaii from the
Hawaii Growers, (b) loading any cargo of Raw Sugar on any
delivery Vessel, (c) transporting any cargo of Raw Sugar to
Crockett Refinery or Aiea Refinery, (d) discharging the Vessel
employed for such delivery upon arrival at the Crockett
Refinery or Aiea Refinery, or (e) taking any other required
action hereunder, and such event shall cause Seller to deviate
from the Delivery Schedule in effect at such time, then
Seller's obligation to deliver Raw Sugar to Buyer in
accordance with such Delivery Schedule shall be suspended from
the duration of such event. At the time such Event of Force
Majeure shall terminate, Seller and Buyer shall meet to
renegotiate in good faith the terms of the Delivery Schedule
for the remainder of the period in which such event shall
occur. If such an Event of Force Majeure shall carry over
from one calendar year to the next, Seller's obligation to
deliver Raw Sugar to Buyer for the concluded calendar year
shall, at Seller's option, terminate in its entirety. If such
an Event of Force Majeure shall commence and terminate within
the same calendar year, the total quantity of Raw Sugar Seller
shall be obligated to deliver to Buyer during such year shall
remain unaffected, unless it shall be deemed by Seller to be
"commercially impracticable" (as defined in Section 4.02(a))
to arrange for the delivery of such quantity to Buyer taking
into account Seller's shipping constraints in the remainder of
such calendar year in which case Seller's obligation to
deliver Raw Sugar for such period shall be reduced in an
equitable manner to be determined at such time after
consideration by Seller and Buyer of all of the facts and
circumstances connected with such event.
(iii) In the event that any Hawaii Grower shall be
excused from its obligation to deliver Raw Sugar to Seller
under a Standard Sugar Marketing Contract due to the
occurrence of any event of force majeure thereunder, and such
event shall cause the quantity of Raw Sugar available to
Seller for delivery to Buyer for the period in which such Raw
Sugar was to have been delivered to be less than Seller's
delivery obligation for such period, then the quantity of Raw
Sugar Seller shall be obligated to deliver to Buyer for such
period shall be reduced to the quantity of Sugar actually
available to Seller for delivery to Buyer for such period.
(b) The obligations of Buyer to receive and purchase Raw
Sugar hereunder shall be qualified in all cases to the
following extent:
(i) In the event that an Event of Force Majeure shall
prevent Buyer from (x) receiving or off-loading any shipment
of Raw Sugar delivered by Seller hereunder to the Crockett or
Aiea Refinery, (y) refining, processing or storing such Raw
Sugar, or (z) taking any other required action hereunder, and
such event shall cause Buyer to deviate from the Delivery
Schedules in effect at such time, then Buyer's obligations to
purchase and accept delivery of Raw Sugar from Seller shall be
suspended for the duration of such event. At the time such
Event of Force Majeure shall terminate, Buyer and Seller shall
meet to renegotiate in good faith the terms of the Delivery
Schedules for the remainder of the period in which such event
shall occur. If such an Event of Force Majeure shall carry
over from one calendar year to the next, Buyer's obligation to
purchase Raw Sugar from Seller for the concluded calendar year
shall, at Buyer's option, terminate in its entirety. If such
an Event of Force Majeure shall commence and terminate within
the same calendar year, the total quantity of Raw Sugar Buyer
shall be obligated to purchase from Seller during such year
shall remain unaffected, unless it shall be deemed by Buyer to
be commercially impracticable to accept delivery of such
quantity from Seller in the remainder of such calendar year,
in which case Buyer's obligation to purchase Raw Sugar for
such period shall be reduced in an equitable manner to be
determined at such time after consideration by Buyer and
Seller of all of the facts and circumstances connected with
such event.
(ii) Notwithstanding the terms of subparagraph (i) above,
if following arrival of Seller's delivery Vessel at the Pilot
Station of the port of the designated refinery, Seller's
delivery Vessel shall be unable to discharge by reason of an
Event of Force Majeure and Buyer gives Seller notice that it
will pay Seller a Stand-By Fee, then Seller shall keep the
delivery Vessel available to discharge its cargo at the
designated refinery for the period stated in Buyer's notice;
provided, however, that after the tenth (10th) day with
respect to which the Stand-By Fee is payable, Seller may, at
its option, sell such Sugar, for its own account, to any third
party without further obligation to Buyer with respect to such
shipment. The Stand-By Fee shall be $5,000 per day for each
day with respect to which demurrage would be payable assuming
the Event of Force Majeure had not occurred. In the event
that Raw Sugar is sold by Seller to a third party pursuant to
this subsection, Seller's delivery obligation shall be reduced
for the applicable period by the quantity so sold. An
equitable adjustment shall be made to the applicable Delivery
Schedule to reflect the additional time it may take to make
any unforeseen deliveries to a third party pursuant to this
subsection. In addition, the parties hereto agree that Seller
may enter into contractual arrangements to sell and deliver
its Raw Sugar to third parties during the expected duration of
an Event of Force Majeure that prevents Buyer from taking
delivery of Raw Sugar hereunder.
(iii) An Event of Force Majeure shall not excuse
Buyer from its obligation to make cash advances to Seller
pursuant to the terms of Section 3.06, until such time as
Buyer's obligations have been suspended under this subsection
(b) for a period in excess of twelve (12) months.
(c) If either party hereto is prevented from performing
its obligations hereunder in full or in part as a result of
the occurrence of an Event of Force Majeure, such party shall
give prompt written notice thereof to the other (but in no
event more than ten (10) days after the affected party is
aware that its performance will be prevented), which notice
shall specify the nature of such occurrence, the steps being
taken and intended to be taken to remove the disability, and
an estimate of the date when full performance will be resumed
hereunder. The affected party shall keep the other party
informed of all material developments with respect to such
Event of Force Majeure.
(d) In the event that (i) Buyer shall fail to give
notice on timely basis that it is unable to take delivery of
Raw Sugar at the Crockett Refinery due to the occurrence of an
Event of Force Majeure, (ii) Seller shall attempt to make
delivery of Raw Sugar at the Crockett Refinery without
knowledge of such disability, and (iii) Seller shall make such
delivery to another refinery, as permitted by subsection (b),
then Buyer shall be required to compensate Seller for the
difference between (A) the actual cost incurred in making the
delivery to the alternative refinery and (B) the cost it would
have incurred in making delivery to the alternative refinery
had it proceeded there directly, for the purpose of
compensating Seller for the incremental steaming time, if any,
required for the delivery Vessel to travel the additional
distance, if any, to such alternative refinery by reason of
Buyer's failure to give timely notice.
(e) If the occurrence of an Event of Force Majeure is
expected to excuse either party from the performance of its
obligations hereunder for a period in excess of twelve (12)
months, then the other party may terminate this Agreement,
provided, however, that if within such twelve month period the
Board of Directors of the non-performing party shall have
approved a business plan to enable such party to resume full
performance within forty-eight months (48) of the occurrence
of the Event of Force Majeure (including approval of such
capital expenditures as may be required by such plan), then
the other party may not terminate this Agreement unless the
non-performing party fails to diligently pursue such plan or
resume full performance within 48 months of the occurrence of
such Event of Force Majeure.
SECTION 7.02 EVENTS OF DEFAULT.
(a) Events of Default. Any of the following events
shall constitute an "Event of Default" under this Agreement:
(i) Payments. Buyer shall fail to pay any amount payable
under this Agreement when due, such failure shall continue for
seven Business Days after written notice has been delivered by
Seller to Buyer as to such delinquency, and the aggregate
amount in delinquency shall exceed $1,000,000; provided,
however, that such seven Business Day period shall be
suspended for any period during which Buyer shall be
contesting in good faith its liability with respect to any
such amount if Buyer provides security for the payment or
payments Seller alleges are due which security shall be
determined pursuant to Section 8.01(b).
(ii) Failure to Make Cash Advances. Buyer shall fail to
make any cash advance to Seller required under Exhibit E
hereto and such failure shall continue for fifteen Business
Days after written notice has been delivered by Seller to
Buyer with respect to such failure, and the aggregate amount
of the default shall exceed $1,000,000.
(iii) Inability to Pay Debts. Either party hereto
shall admit in writing its inability to, or shall fail
generally or be generally unable to, pay its debts, including
its payrolls, as such debts become due, or shall make an
assignment for the benefit of, or enter into a composition
with, its creditors.
(iv) Voluntary Bankruptcy. Either party hereto shall
petition or apply to any tribunal for, or consent to the
appointment of, or taking possession by, a trustee, receiver,
custodian, liquidator or similar official of such party or any
substantial part of its assets, or commence any proceedings
relating to such party under any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or
other liquidation law of any jurisdiction.
(v) Involuntary Bankruptcy. An order for relief shall
be entered in an involuntary case under the bankruptcy laws of
the United States, or an order, judgment, or decree shall be
entered appointing a trustee, receiver, custodian, liquidator
or similar official or adjudicating either party hereto
bankrupt or insolvent, or ordering or approving either party's
liquidation or reorganization, or any significant modification
of the rights of its creditors or approving the petition in
any such proceedings, and such order, judgment or decree
remains in effect for 90 days; or an involuntary petition or
complaint shall be filed against either party hereto under the
bankruptcy laws of the United States, or seeking the
appointment of a trustee, receiver, custodian, liquidator or
similar official, and such petition or complaint shall not
have been dismissed within 90 days of the filing thereof.
(vi) Covenants and Agreements. Either party hereto shall
in any material respect breach any material term, covenant or
agreement contained herein on its part to be performed or
observed other than a breach described in (i) and (ii) above,
and any such breach shall remain unremedied for 60 days
(unless such party shall be diligently attempting to remedy
such breach at the expiration of such 60 day period, then such
longer period as reasonably necessary to diligently cure but
in no event more than 120 days) after written notice thereof
shall have been given to the breaching party by the non-
breaching party, provided, however, that such cure period,
shall be suspended for any period during which the party in
breach shall be contesting in good faith its liability with
respect to the breach if it provides such security for
performance as determined pursuant to Section 8.01(b).
(b) Effect of Event of Default. If any Event of Default
shall occur and be continuing, (i) the non-defaulting party
shall be entitled to terminate this Agreement upon written
notice to the defaulting party hereunder; and (ii)
notwithstanding whether the action referred to in clause (i)
shall be taken, the nondefaulting party shall be entitled to
exercise all other rights and remedies available to such party
under applicable law including the right to sue for damages
arising from any default or breach of this Agreement.
SECTION 7.03 DEFAULTS UNDER STANDARD SUGAR MARKETING
CONTRACTS
(a) Seller shall promptly notify Buyer in writing of any
breach under any Standard Sugar Marketing Contract. Seller
shall further consult with Buyer prior to taking any legal
action to enforce the terms of any Standard Sugar Marketing
Contract, including, but not limited to, the initiation of
arbitration proceedings. Seller shall promptly notify Buyer
in writing of any claim asserted against Seller under any
Standard Sugar Marketing Contract, including but not limited
to the initiation of any arbitration proceeding, and shall,
upon Buyer's request, promptly provide Buyer, with a copy of
any documents or other materials received by Seller in
connection with such claim. Seller, upon Buyer's request,
shall keep Buyer informed of all material developments
relating to any such claim. Notwithstanding the foregoing and
prior to an assignment pursuant to (b) below, Seller shall not
be obligated to provide such documentation or information if
such information or documents are determined by Seller's
counsel to be privileged.
(b) Seller agrees, upon Buyer's written request, to
assign to Buyer any rights, claims or remedies which Seller
may have which arise out of any breach of a Standard Sugar
Marketing Contract to the extent that the subject matter
thereof is related to or may affect, directly or indirectly,
Seller's performance under this Agreement, including, but not
limited to any right, claim or remedy relating to an
obligation owed to Seller by a party to a Standard Sugar
Marketing Contract which if breached could result in Seller's
performance under this Agreement being different from the
performance that could have been rendered if such obligation
were not breached. Seller agrees to fully cooperate with
Buyer in the prosecution of any actions brought or pursued by
Buyer under any Standard Sugar Marketing Contract.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01 ARBITRATION.
(a) Except for any controversy or disagreement arising
out of or relating to the interpretation or enforcement of
this Section 8.01, any controversy or disagreement arising out
of or relating to this Agreement or any breach hereof shall be
submitted by the parties to arbitration in San Francisco,
California, under the Commercial Arbitration Rules of the
American Arbitration Association for commercial arbitration
and, to the extent not inconsistent therewith or with the
terms hereof, the laws of the State of California. Such
arbitration shall be undertaken by three disinterested
arbitrators (the "Arbitrators") one of whom shall be selected
by Buyer, one by Seller, and one of whom shall be chairman of
the arbitral tribunal and shall be chosen by agreement between
the first and second Arbitrators. The Buyer and Seller shall
select such Arbitrators within fifteen (15) days after the
party desiring arbitration notifies the other party in
writing. Such notice demanding arbitration shall state
specifically the question or questions to be submitted for
decision or the point or points in controversy and shall
include such party's selection of an Arbitrator. If, at the
expiration of fifteen (15) days from receipt of such notice,
the party receiving such notice has not informed the party
demanding the arbitration of its selection of a second
arbitrator, the party making the demand may make such
selection. The first and second Arbitrators shall select a
third Arbitrator within fifteen (15) days from the date of the
appointment of the second Arbitrator. If the first and second
Arbitrators cannot agree as to a third Arbitrator, such third
Arbitrator may be appointed upon ten days' notice upon
application of either party to the chief of presiding judge,
or judge acting as chief or presiding judge, of the Superior
Court of California in and for the County of Contra Costa.
The arbitral tribunal shall set the date, time and place for
each hearing, shall give to each of the parties at least 10
days' advance written notice of the date, time and place of
the initial hearing and shall proceed without delay to hear
and determine the matters in dispute. Each of the parties
hereto may be represented by counsel or other authorized
representative at any hearing. The party intending to be so
represented shall notify the Arbitrators and the other party
of the name and address of the representative at least three
days prior to the date set for the hearing. Such arbitration
shall be conducted in such manner as the Arbitrators Rules.
Each party shall bear any expenses incurred by it prior to
arbitration, including legal and accounting fees, if any, with
respect to any disagreement hereunder. If the matter is
submitted to arbitration, the Arbitrators shall designate the
party or parties to bear the expenses of such arbitration
and/or the respective amounts to be borne by each party. In
making such an allocation of costs, the Arbitrators shall be
expressly instructed by the parties that, absent extraordinary
circumstances, the prevailing party in such a proceeding shall
be entitled to reimbursement for its reasonable attorneys'
fees and other reasonable expenses incurred in connection
therewith by the non-prevailing party. The Arbitrators shall
have the authority to resolve any dispute under this Agreement
that is submitted to them, including, without limitation the
right to determine (a) whether any party is in breach of any
of its obligations under this Agreement, (b) whether such
breach has resulted in damage to another party to this
Agreement, (c) the amount of money necessary to compensate
such damage, and (d) any equitable relief appropriate under
the circumstances. The Arbitrators shall render their written
decision in respect of the controversy at issue within 90 days
after the date on which a notice demanding arbitration is
first given. The determination of the Arbitrators as to any
matter submitted to arbitration shall be conclusive and
binding upon the parties hereto. Each party shall immediately
make such changes in the conduct of such party's business or
such payment of damages, as the case may be, as required by
such determinations and award, if any. Judgment upon any
award rendered by the Arbitrators may be entered in any court
having jurisdiction over the parties and the subject matter.
In the event that either party hereto shall be required to
take any action to enforce any such judgment, such party shall
be entitled to reimbursement for its reasonable attorneys'
fees and other reasonable expenses incurred in connection
therewith by the nonprevailing party. A written transcript of
the proceedings shall be prepared at the expense of the party
requesting such transcript, if any, or if both parties hereto
shall so request, they shall share the cost equally.
Discovery in such proceedings shall be limited to the taking
of depositions and document production. Unless ordered by the
Arbitrators, the submission of interrogatories will not be
permitted. The Arbitrators shall have the power to enforce
the discovery rights and obligations set forth in this
Section. The books and papers of the parties hereto, so far
as they relate to matters submitted to arbitration, shall be
open to the investigation of the Arbitrators. The parties
hereto agree that they will cooperate in good faith in such
proceedings in order to work toward the prompt resolution of
the subject conflict.
(b) In the event that a dispute to be resolved by
arbitration is alleged to involve an Event of Default under
Section 7.02(a)(vi), upon application of the party alleging
such Event of Default, the Arbitrators shall promptly, but in
no event more that fifteen days after such application,
determine what security for performance, if any, should be
given by the party alleged to be in breach pending a final
resolution of the dispute. Such security may consist of a
deposit of money in escrow, or such other collateral or
measure as the Arbitrators may determine to be appropriate
security for the continued performance of the party alleging
such breach and otherwise fair and reasonable under all
circumstances. Such determination shall be subject to review
from time to time upon application of either party. If the
dispute is alleged to involve an Event of Default under
Section 7.02(a)(i) then the Buyer shall with fifteen (15) days
after written notice by the Seller deposit into escrow the
amount of the payments(s) alleged by Seller to be in
delinquency with instructions to the escrow holder to pay so
much of such amount to Seller as the Arbitrators may direct
and return the remainder to Buyer.
(c) In an arbitration proceeding conducted pursuant to
this Section, the chairman of arbitral tribunal shall be a
citizen of the United States who shall (i) be admitted to
practice law in one of the states of the United States, (ii)
shall have had at least 20 years' experience as an attorney or
a judge and (iii) have expertise in the area of commercial
law. Experience with respect to transactions involving the
purchase and sale of commodities shall be regarded as a highly
desirable, but not essential, attribute in selection of a
chairman of the arbitral tribunal.
SECTION 8.02 INTERPRETATION OF AGREEMENT.
Any reference in this Agreement to an Article, a Section,
and Appendix or an Exhibit is a reference to an article
hereof, a section hereof, an appendix hereto or an exhibit
hereto, respectively, and to a subsection or a clause is,
unless otherwise stated, a reference to a subsection or a
clause of the Section or subsection in which the reference
appears. The words "hereof", "herein", "hereto", "hereunder",
and the like mean and refer to this Agreement as a whole and
not merely to the specific Article, Section, subsection or
clause in which the respective word appears. References to
agreement and other contractual instruments shall be deemed to
include all subsequent amendments and other modifications
thereto, but only to the extent such amendments and other
modifications are not prohibited by the terms of this
Agreement. References to statutes or regulations are to be
construed as including all statutory and regulatory provisions
consolidating, amending or replacing the statute or regulation
referred to. The captions and headings used in this Agreement
are for convenience of reference only and shall not affect the
construction of this Agreement.
SECTION 8.03 ENTIRE AGREEMENT.
This Agreement, including the exhibits hereto, and the
other agreements and documents expressly referred to herein,
embodies the entire agreement and understanding of the parties
hereto in respect of the transaction contemplated by such
agreement. There are no restrictions, promises, inducements,
representations, warranties, covenants or undertakings, other
than those expressly set forth or referred to herein or
therein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such
transactions.
SECTION 8.04 NOTICES.
Any notice, request, instruction or other documents to be
given hereunder by any party hereto to the other party hereto
shall be in writing, shall be deemed to have been duly given
or delivered when (i) delivered personally, (ii) telecopied
(receipt confirmed, with a copy sent by certified or
registered mail), (iii) telexed (and the appropriate
answerback received, with a copy sent by certified or
registered mail), or (iv) sent by certified or registered
mail, postage prepaid, return receipt requested, or by Federal
Express or other overnight delivery service, to the address of
the party set forth below or to such address as the party to
whom notice is to be given may provide in a written notice to
the other party hereto:
(a) To Seller:
Hawaiian Sugar Transportation Company
c/o C. Brewer and Company, Limited
827 Fort Street
Honolulu, Hawaii 96813
Telex: 723-8972
Telecopier: (808) 544-6182
Telephone: (808) 536-4461
Attention: President
with copies to:
Hawaiian Sugar Transportation Company
c/o JMB Realty Corp.
900 North Michigan Avenue, 20th Floor
Chicago, Illinois 60611-1575
Telecopier: (312) 915-2409
Telephone: (312) 915-2396
Attention: First Vice President
(b) To Buyer:
California and Hawaiian Sugar Company
830 Loring Avenue
Crockett, California 94525
Telecopier: (510) 787-1135
Telephone: (510) 787-2121
Attention: President
with copies to:
California and Hawaiian Sugar Company
830 Loring Avenue
Crockett, California 94525
Telecopier: (510) 787-2058
Telephone: (510) 787-4209
Attention: General Counsel
SECTION 8.05 AMENDMENT.
No amendment or waiver of any provision of this Agreement
nor consent to any departure thereof by any party in any event
shall be effective unless the same shall be in writing and
signed by the party against which enforcement is sought and
then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which
given.
SECTION 8.06 NO STRICT CONSTRUCTIONS.
This Agreement has been prepared jointly by the parties
hereto and shall not be strictly construed against either of
such parties.
SECTION 8.07 SUCCESSORS AND ASSIGNS.
All of the covenants and provisions of this Agreement by
or for the benefit of Seller or Buyer shall bind and inure to
the benefit of their respective successors and assigns
hereunder; provided, however, that no assignment of this
Agreement or any portion thereof shall relieve the assigning
party of any of its duties or obligations hereunder and in
addition Buyer shall guarantee the performance of such
assignee of its obligations hereunder. Notwithstanding the
foregoing, Buyer shall not make any assignment of this
Agreement or any portion thereof except in connection with a
sale or transfer of the Crockett Refinery or Aiea Refinery or
the borrowing of money. In addition, any such assignee shall
agree in writing for the benefit of Seller to assume all of
Buyer's obligations under this Agreement.
SECTION 8.08 SEVERABILITY.
If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or
other authority to be invalid, illegal, void or unenforceable
under applicable law, such term, provision, covenant or
restriction shall be excluded from this Agreement and the
balance of the Agreement shall be interpreted as if such term,
provision, covenant or restriction were so excluded and shall
be enforceable in accordance with its terms to the fullest
extent permitted by law.
SECTION 8.09 FURTHER ASSURANCES.
Each of the parties shall, without further consideration,
use reasonable efforts to execute and deliver to the other
such additional documents and take such other action, as the
other may reasonably request to carry out the intent of this
Agreement and the transactions contemplated hereby.
SECTION 8.10 GOVERNING LAW.
This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of California
(without reference to its conflict of law rules) as applied to
agreements among California residents entered into and to be
performed entirely within California.
SECTION 8.11 COUNTERPARTS.
This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed
an original, and all of which taken together shall constitute
but one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed all as of the date first above
written.
SELLER
HAWAIIAN SUGAR TRANSPORTATION COMPANY
By___________________________________
Title
BUYER
CALIFORNIA AND HAWAIIAN SUGAR COMPANY
By___________________________________
President - Harold R. Somerset
<TABLE>
SCHEDULE 1
SAMPLE CALCULATION - FINAL NET PRICE
<CAPTION>
Example 1 Example 2 Example 3 Example 4 Example 5
<S> <C> <C> <C> <C> <C>
Purchase of Hawaiian Raws (See Note A)
Basis Price Basis Price Basis Price Basis Price Basis Price
(Supply Agr. Terms) & Volume & Volume & Volume & Volume & Volume
Pol 97.990** 98.000** 98.010** 99.000** 99.400**
#14 Setm't Basis Price $21.00 $21.40 $21.50 $21.70 $21.75
- - --------------------------------------------------------------------------------
Pol Premium $0.016880 0.027500 0.027620 0.039500 0.041900
Pol Premium $$0.35448 $0.58850 $0.59383 $0.85715 $0.91133
Price,inc. pol premium $21.354480 $21.988500 $22.557150 $22.557150 $22.661325
#14 Price/Commercial ton $427.09 $439.77 $441.88 $451.14 $453.23
Deduct Discount $25.00 $25.00 $25.00 $25.00 $25.00
Price B4 Refiner's
Delivery Charge $402.09 $414.77 $416.88 $426.14 $428.23
Add Aiea Prem. $2.00B
Refiner's Delivery Charges
Stevedoring $12.26 L/T(See Note C)
$10.95 $10.95 $10.95 $10.95 $10.95
Despatch $2.66 $2.66 $2.66 $2.66 $2.66
Dockage (See Note C) $0.25 $0.25 $0.25 $0.25 $0.25
Less Fine Cleaning Credit($0.44) ($0.44) ($0.44) ($0.44) $0.00
Total Allowances - Comm. $13.42 $13.42 $13.42 $13.42 $13.61
Price per Comm. ton
- - -after Del Ch. $388.67 $401.35 $403.46 $412.72 $416.62
<FN>
** Excludes quality premium and/or penalties.
Note A: All examples apply to Crockett except example 5 applies to Aiea and
Aiea Quality Raw Sugar.
Note B: Aiea Quality Raw Sugar premium
Note C: Rate subject to change as provided in Section 5.03
Note D: There shall be no premium or penalty for variance from Standard
Quality for Raw Sugar polarizing
at 99 degrees or higher except for Dextran and except for Aiea
Premium.
</TABLE>
<TABLE>
SCHEDULE 1
SAMPLE POL PREMIUM CALCULATIONS
<CAPTION>
POL Adj. to #14 Basis Price Ex. 1 Ex. 2 Ex. 3 Ex. 4 Ex. 5
<S> <C> <C> <C> <C> <C>
Premium POL @ POL @ POL @ POL @ POL @
Adj. 97.990 98.000 98.010 99.000 99.400
Table
Above:
96 to and incl. 97 deg 0.50 0.50000 0.50000 0.50000 0.50000 0.50000
97 to and incl. 98 deg 1.20 1.18800 1.20000 1.20000 0.20000 1.20000
Step Adj-98 deg & above 1.05 0.00000 1.05000 1.05000 1.05000 1.05000
98 to and incl. 99 deg 1.20 0.00000 0.00000 0.01200 1.20000 1.20000
99 to and incl 100 deg 0.60 0.00000 0.00000 0.00000 0.00000 0.24000
-------------------------------------------------
Total Premium Adj. 4.55 1.68800 2.75000 2.76200 3.95000 4.19000
</TABLE>
SCHEDULE 2
1993 RAW SUGAR DELIVERY BY SCHEDULE
MOKU PAHU ARRIVE COMMERCIAL
VOYAGE # CROCKETT TONS
--------- -------- ----------
145 JUN 10 37,000
146 JUN 29 38,000
147 JUL 18 34,000
148 AUG 8 37,500
149 AUG 29 37,500
150 SEP 19 37,500
151 OCT 10 37,500
152 OCT 31 37,500
153 NOV 21 37,500
154 DEC 12 37,500
155 JAN 2 37,500
Notwithstanding anything herein to the contrary, if A&B-
Hawaii, Inc., or McBryde Sugar Company, Limited, delivers Raw
Sugar to anyone other than Seller at any time during the
period from the effective date of this Agreement to December
31, 1993, the Raw Sugar deliveries scheduled under this
Schedule 2 shall be subject to an equitable adjustment.
EXHIBIT A
RAW SUGAR SAMPLING PROCEDURES
Sampling of Raw Sugar cargoes delivered to the Crockett
Refinery shall be accomplished using a suitably designed
mechanical sampler. The sampler may operate either
continuously or batchwise and may be either fully automatic or
semi-automatic. The design and location of the sampler shall
assure collection of a representative sample of the total Raw
Sugar stream passing the sampler. The sample discharged from
the sampler shall be emptied into a suitable collection can.
The Raw Sugar in the collection can shall be mixed and a
portion put in smaller container as described below.
Samples of Raw Sugar shall be collected whenever Raw
Sugar is being discharged.
In order to obtain representative samples, the entire
discharge of a Raw Sugar cargo must be sampled. Furthermore,
since an individual sample representing the composite of three
700,000 lb. increments is tested for polarization, it is
necessary that each of the samples drawn by the sampler be
representative of the individual 700,000 lb. increment. In
order to accomplish this, the sample cans are to be changed
after each 700,000 lbs. has been weighed over the scale.
The sample collection cans shall be sealed containers of
a design that preserves the integrity of the sample and hold
between 25 and 30 pounds of Raw Sugar.
When Raw Sugar discharging is discontinued for an
overnight or weekend period, if a full increment has not been
discharged, the sample collecting can containing the Raw Sugar
shall be removed from the sampling mechanism, a cover affixed
tightly and the sample taken to a suitably secure room for
storage. When discharge is resumed, the can shall be put back
in the sampling mechanism for continuing sample collection.
At the end of the cargo discharge the last sample
collected shall be considered a full 700,000 lb. increment if
more than 350,000 lbs. have passed through the scale. If the
quantity passed through the scale is 350,000 lbs. or less, the
sample collected for this amount shall be mixed with the
sample collected from the preceding full 700,000 lb.
increment.
The sample collecting can's contents shall be dumped into
a funnel which has been placed in a mixer. The sugar is to be
pushed through the 1/4-inch screen in the funnel. The mixer
is to be run for four minutes.
After mixing, the Raw Sugar is to be tightly packed into
a one-gallon size can, leaving no headspace. The neck of the
can is to be wiped free of sugar crystals and the lid tightly
sealed. A one gallon can for each 700,000 lb. increment is to
be set aside for the preparation of a polarization sample.
After three (3) such gallon size samples have been
accumulated, they are all to be dumped into a funnel which as
been placed in the mixer. The sugar is pushed through the 1/4
inch screen in the funnel. The mixer is to be run for four
minutes. This blend represents 2,100,000 lbs. of the cargo.
This procedure is repeated for every three (3) successive
700,000 lb. samples collected.
At the end of the cargo discharge, the last group of
samples collected shall be considered a full 2,100,000 lbs. if
two or more 700,000 lbs. increments have been collected. If
the sample collected represents less that two 700,000 lbs.
increments, they will be mixed with the samples collected from
the preceding 2,100,000 lbs. increment.
After mixing, the Raw Sugar is to be tightly packed into
8 oz. size containers leaving no headspace. The neck of the
container shall be wiped free of sugar crystals and the cover
of the container tightly sealed. These 8 oz. size containers
for each 2,100,000 lb. increment shall be distributed for
polarization as follows:
One for the New York Sugar Trade Laboratory
One for the Buyer's Laboratory
One for the Seller's Laboratory
Two retained by Buyer
In addition to the sample for polarization, an additional
sample from each 700,000-lb. increment must also be taken.
Thus additional samples will be used in preparing the sample
for the raw sugar quality evaluation tests. The size of the
additional sample depends on the weight of sugar being
delivered. The following schedule may be used as a guide.
No. 700,000 Lb. Amount Collected
No. Long Tons Increments Per Increment
- - ------------- --------------- -----------------
650-1,100 2-4 9 1- Quart Size Cont.
1,100-1,700 3-6 7 1- Quart Size Cont.
1,700-3,575 5-12 7 1- Quart Size Cont.
3,576-7,025 11-23 2 1- Quart Size Cont.
7,026-13,900 22-45 2 16- Quart Size Cont.
13,901-25,000 44-80 2 8 Oz. Size Cont.
Over 25,000 Over 80 1 8 Oz. Size Cont.
At the completion of the cargo discharge the following
procedure shall be followed to prepare the quality
evaluation samples for testing:
One-half of the number of samples collected for the
quality evaluation tests shall be emptied into the mixer
and the mixer is to be run for four minutes. Two (2) one
gallon-size sample containers shall be filled from this
mix and reserved. Any raw sugar remaining in the mixer
shall be discarded.
The above procedure shall be followed for the remaining
half of the samples collected.
The reserved four (4) gallon sample size sample
containers shall be emptied into the mixer and the mixer is to
be run for four minutes. Four (4) one gallon size sample
containers are to be filled from this mix and the covers
tightly affixed. The filled sample containers shall be
distributed as follows:
* One for the New York Sugar Trade Laboratory
* One for the Buyer's Laboratory
* One of the Seller's Laboratory
* One retained by Buyer
Each laboratory shall follow the procedures specified in
Exhibit B and shall use the equipment and methods described
therein for testing the whole raw sugar for moisture, color,
ash and dextran and for testing affined raw sugar prepared
from the whole raw sugar for grain size and color.
EXHIBIT B
METHODS OF ANALYSIS
The following apparatus are listed to indicate types of
equipment which are suitable for the following procedures:
MOISTURE TEST
Weighing dishes Cat. #08-732
Vacuum oven Cat. #13-264A
GRAIN SIZE TEST
Extraction flask, 250 ml. Cat. #09-650 D
Vacuum flask, 1000 ml. Cat. #10-180 F
Screens (or sieves) Cat. #04-881
Mechanical shaker Cat. #04-909
The supplier for the above equipment is the Fisher
Scientific Company, 52 Fadem Road, Springfield, N.J. 07081.
Catalog numbers are taken from the 1991/2 catalog. Equivalent
equipment may be substituted as availability and circumstances
dictate.
AFFINATION PROCEDURE
Mixer: Kitchen-Aid -- Model K-5, with flat beaters, #K-
5-A-B, manufactured by Kitchen-Aid, Inc., 2303 Pipestone Rd.,
Benton Harbor, Michigan 49022.
Centrifugal Machine: Model K with 8" basket with
draining chamber, manufactured by International Equipment Co.,
Needham, MA -- If 8" basket is unavailable, an 11" basket may
be substituted. The inside of the basket is to be faced with
a metal screen #00 mesh 0.020" dia., 625 holes/sq. inch. Can
be purchased from Ferguson Perforation & Wire Co., 140 Earnest
Street, Providence, RI.
TEST PROCEDURES -- WHOLE RAW SUGAR
I. MOISTURE -- DETERIORATION FACTOR
1. Weigh a moisture dish to plus/minus 0.0001 g. A
metal dish with a tight fitting cover should be used.
2. Place approximately 5 g. of a representative sample
into the dish, cover quickly and weigh to plus/minus 0.0001 g.
as rapidly as possible.
3. Remove cover and place dish and cover in a vacuum
oven that has been preheated to 70C. The sample should be
heated for 4 hours at 70C at a minimum of 28 inches of vacuum.
Air should be bled into the vacuum chamber at a rate of 100
ml./min. The oven temperature should be controlled to a +/-
1C. The air for bleeding is to be predried by passing through
a desiccant such as barium oxide or sulfuric acid.
4. After four hours, reduce vacuum by eliminating
vacuum source and increasing the air flow through the
desiccant. Replace cover and remove sample from oven.
5. Place in a desiccator and cool to room temperature.
The sample and dish should be weighed as soon as possible
after reaching room temperature.
6. Immediately when cool, weigh to plus/minus 0.0001 g.
7. The percent moisture is calculated by the following
formula:
Weight loss X 100 = % moisture
-----------
Starting Weight
8. The laboratory will report % moisture to the nearest
hundredth of a percent for each sample.
9. The Deterioration Factor is calculated in the
following way:
% Moisture = Deterioration Factor
-------------------------------
100 - Settlement Polarization
II. ASH
1. Weigh a pre-ignited and cooled crucible of 50 ml.
capacity to plus/minus 0.0001 g. (A platinum dish may be used
in the place of the crucible.)
2. Weigh approximately 4 g. of a representative sample
to plus/minus 0.0001 g. in the weighed crucible.
3. Add approximately 1 ml. of 1:1 sulfuric acid, in
drops, to the sample until completely wetted, and heat until
the sample is well carbonized. (A 275 watt Fisher infra-
radiator placed about six inches above the sample is
recommended for this purpose.) Approximately 20 minutes of
heating under the lamp is adequate to prevent splattering when
the crucible is placed in the furnace. This procedure must be
performed under a laboratory hood.
4. Transfer the carbonized sample to a furnace at 555
plus/minus 30C and heat until the carbon is burnt off. A
heating period of about two hours is sufficient for this
ignition.
5. Remove the crucible, and after cooling it to near
room temperature, add approximately 0.5 ml of 1:1 sulfuric
acid solution, in drops, in such a manner as to wet the
material remaining in the crucible.
6. Heat the crucible so that the sulfuric acid solution
is evaporated without loss of liquid or solid material through
splattering from the crucible. A hot plate is used for this
purpose. This procedure must be performed under a laboratory
hood.
7. Place the crucible inside the furnace at 555
plus/minus 30C and heat for two hours.
8. Remove the crucible from the furnace and cool it to
room temperature in a desiccator. Weigh crucible and contents
to plus/minus 0.0001 g.
9. The percent ash is calculated in the following way:
Weight of Ash X 100 = % Ash
--------------
Starting Weight
10. The laboratory will report % ash for each sample to
the nearest hundredth of a percent.
III. COLOR -- ICUMSA METHOD 4 (1978) (MODIFIED)
1. Prepare a 25% solids solution (25 g. of sample + 75
ml. distilled water) of the sugar to be tested.
2. Filter the solution through 47 mm. Millipore filter
apparatus using a Whatman GF/C 47 mm. glass microfibre filter.
Collect the filtrate in a clean dry filter flask. (Note: The
sample may require changing the filters more than once to
collect all of the filtrate.)
3. Transfer the filtrate to a clean dry 150 ml. beaker.
Adjust the pH of the filtrate to 8.5 plus/minus .1 (7.0 for
Raw Sugar delivered to the Aiea Refinery) with 0.5N HCL or
0.5N NaOH.
4. Remove entrained air under vacuum or in an
ultrasonic cleaner if necessary.
5. Place the solution into one of a previously matched
pair of 1 cm. absorption cells. (The other cell will contain
distilled water and can be used as a zero reference when
changing wavelengths.) Determine the absorbance (or-log of
the transmittance) at 420 nm. and at 720 nm. Record both
values.
6. Calculate the color of the solution as follows:
Color = (Absorbance* at 420 nm. - 2 x absorbance at 720 nm.) x 1000
------------------------------------------------------------
.2764
If the sample is too dark to analyze, further dilution with
distilled water and possible Ph readjustment will be needed.
In this case the calculation would be as follows:
Color = (Absorbance* at 420 nm. - 2 x absorbance at 720 nm.) x 1000
------------------------------------------------------------
Specific gravity x Brix x cell length (cm.)
----
100
*(- log of transmittance) can be substituted if there is no
absorbance function on the spectrophotometer.
IV. DEXTRAN
Equipment and Reagents:
(1) Ion exchange resins; Amberlite IR-120 (H) and any
one of the following: Duolite A-368, Duolite A-392, Amberlite
IRA-93, or Amberlite IRA-68. These resins normally are
supplied wet and should be washed with at least twice their
weight in distilled water, drained dry, then washed briefly
with acetone for no longer than 2 minutes, the solvent being
immediately removed, as before. The resins are air-dried or
oven-dried at low temperature, approximately 30C., and stored
closed container.
(2) Acid-washed Johns Manville Supercel; Supercel (50
plus/minus 5 g.) is added to 1 liter of distilled water.
Concentrated hydrochloric acid (50 plus/minus 5 ml.) is added
and the mixture stirred for 5 minutes. After filtration the
Supercel cake is washed with distilled water until the Ph of
the washings equals that of the distilled water. The Supercel
is dried for 6 hours at 100C. and stored in a closed
container.
(3) Trichloroacetic acid-J.T. Baker Reagent #1-0414
(TCA): Trichloracetic acid (10.0 plus/minus 0.1 g.) is
dissolved in distilled water and diluted to 100 ml. This
reagent will keep for two weeks. (Note: This reagent attacks
protein and should not be allowed to come into contact with
skin. Do not pipette TCA by mouth or store it in plastics.)
(4) Starch-removing enzyme: Mycolase enzyme, GB
Fermentation Industries, Inc. 1 N. B'Way, Des Plaines, IL
60016. Or alpha-Amylase type X-A Fungal Crude from
Aspergillus oryzae, (Catalog No. A-0273), Sigma Chemical
Company, P.O. Box 14508, St. Louis, MO 63178.
(5) Alcohol: Anhydrous, 200 proof, J.T. Baker Reagent
#9401-1.
(6) 25 ml. volumetric flasks, Corning NO. 5660 or
equivalent. (At the end of each analysis the flasks should be
washed with acid-cleaning solution, rinsed with distilled
water, and dried for future use.)
(7) Nessler Tubes, Kimble No. 45310A-100 or equivalent.
Wash and dry the tubes the same way as described in point #6
above.
(8) Filtering flasks, 1000 ml. size, Pyrex No. 5340 or
equivalent.
(9) Burette, 50 ml. size, Pyrex No. 2317 (right hand) or
equivalent.
(10) 12.5 ml. Class A volumetric transfer pipette (custom
ordered).
(11) Pipette filler, rubber bulb type or equivalent.
(12) Millipore funnel #XX 1004720 and 0.45 um. Millipore
filter #HAWG 047 AO and absorbent pads.
(13) Vacuum pump with multiple outlet connections for
filtration (manifold).
(14) UV-visible spectrophotometer, two matched 5 cm. size
cells, and two matched 1 cm. size cells.
(15) Jars, wide mouth, 4 oz. size, flint glass with screw
caps.
(16) Hot plate stirrer, Corning Producer's Customary Raw
Sugar Terminal-351 or equivalent, and stirring bars. Hot
plate may be used for incubation providing a water bath is
improvised.
Procedure:
(1) Weigh 23.5 g. whole raw sugar sample into a wide
mouth jar, add 35 ml. of distilled water, insert a magnetic
bar, cover, and place on a magnetic stirrer to dissolve.
(2) Add 0.05 g. of Mycolase enzyme or alpha-Amylase to
the above sample and incubate at 55C. for one hour, in an oven
or a water bath with agitation every 15 minutes.
(3) Following the incubation add to the sample 5 g. of
Amberlite IRA-120(H) and 5 g. of one of the following:
Duolite A-368, Duolite A-392, Amberlite IRA-93, or Amberlite
IRA-68 and stir for 30 minutes.
(4) Add 1 g. of acid-washed Supercel to the sample, mix,
and filter through a Millipore absorbent pad only into a 100
ml. size Nessler tube placed inside a one liter size filtering
flask. Rinse sample jar with approximately 10 ml. of
distilled water, allowing the washings to go through the
funnel into the Nessler tube. Follow this with two small
washing of the funnel and contents, taking care not to exceed
100 ml. of total filtrate volume.
(5) The sample and washing in the Nessler tube are
diluted to the 100 ml. mark with distilled water and then 10
ml. of TCA is added. The Nessler tube is stoppered and
shaken.
(6) Filter the above through a 0.45 um Millipore filter
covered with an absorbent pad into a clean Nessler tube inside
a one liter size filtering flask, collecting at least 30 ml.
of filtrate.
(7) Pipette 12.5 ml. of the filtrate into each of the
two 25 ml. volumetric flasks, designating the first as the
control and the second as the sample, respectively. (Note:
use safety pipette filler.) Clean the pipette for the next
use by rinsing it with distilled water.
(8) To the first flask ("the control") add distilled
water to the 25 ml. mark while swirling the flask, stopper and
shake.
(9) To the second flask (the sample) add anhydrous 200
proof alcohol dropwise (from a 50 ml. size burette) to the 25
ml. mark while swirling the flask. Stopper and mix by
inverting the flask gently three to five times.
(10) Let the sample stand for 60 plus/minus 2 minutes
from the time of completion of the mixing step.
(11) During the above waiting period fill two clean 5 cm.
size matched cells with distilled water and the control
respectively. After zeroing the spectrophotometer at 720
nanometers with the cell containing distilled water, read the
absorbance of the control which is designated as B.
(12) Then save the control by pouring it back into its 25
ml. size flask for possible future use. Clean the empty cell
by rinsing it several times with distilled water and dry it by
rinsing with acetone.
(13) At the expiration time of the 60 minutes period fill
the clean 5 cm. size cell with the sample. After zeroing the
spectrophotometer at 720 nm. with the cell containing
distilled water read the absorbance of the sample which is
designated as A. Report results as follows:
(A - B) x 1000
When the absorbance of the sample exceeds 0.7 in value
both the control and the sample should reread immediately in 1
cm. size cells respectively. (After zeroing the
spectrophotometer at 720 nm. with distilled water in a 1 cm.
size cell.) Report results as follows:
(A - B) x 1000
The results represent dextran content expressed in milli-
absorbance units (m.a.u.)
Note:
(1) To achieve reproducible results this procedure must
be followed precisely.
(2) Equivalent equipment and/or reagents may be
substituted for those specified in this procedure only after
comparability with the designated equipment and and/or
reagents has been demonstrated. This applies particularly to
the alcohol reagent.
V. STARCH
(Applies Only to Aiea Refinery Deliveries)
Reagents and Equipment
1. Amylopectin, Sigma A 7780 or equivalent, from corn
(maize). Do not substitute material from potato, rice, wheat,
or other sources.
2. Potassium Iodate, Reagent grade.
3. Potassium Iodide, Reagent grade.
4. Sodium hydroxide, 1.00 N. solution.
5. Hydrochloric acid, 1.00 N. solution.
6. Benzoic acid, saturated solution, prepared from
Reagent grade material.
7. Phosphoric acid, 75%.
8. Ethanol, 95%.
The spectrophotometer used should be capable of light
transmission measurement at 560 nm. with the narrowest
practical bandwidth. The instrument should be fitted with a
grating, prism, or interference filter monchromator -- i.e.,
not colored glass or gelatin filters.
All glassware must be clean and free from yeast spores.
Preparation of Standard Amylopectin
1. Determine the moisture content of the amylopectin by
drying 10 gm. overnight at 70C in a vacuum oven.
Wet wt. - Dry wt.
% moisture in amylopectin = ------------------------ x 100%
Wet wt.
Discard the dried amylopectin after determining the moisture
content. For the calibration curve, use only unheated
amylopectin, and adjust the weighed amount for the calculated
moisture content.
2. Determine how much amylopectin is needed to obtain
the equivalent of 500 mg. of dry amylopectin. For example, if
the moisture content were 10.5% 500 mg. dry amylopectin = 500
/ (1.00 - 0.105) = 558.66 mg. (wet) amylopectin.
3. Weigh out the equivalent of 500 mg. of amylopectin.
Transfer to a 250 ml. Erlenmeyer flask with 10 ml. of ethanol,
and disperse the amylopectin by swirling. Add 50 ml. of 1.00
N sodium hydroxide and a boiling chip. Heat to boiling with
continuous stirring. Boil gently for 15 minutes, then allow
to cool. Add 50 ml. of 1.00 N hydrochloric acid, and again
allow to cool. Transfer to a 500 ml. volumetric flask and
make up to volume with saturated benzoic acid. This solution
contains nominally 0.1% (1,000 ppm) of amylopectin.
4. Prepare dilutions of freshly prepared standard
amylopectin using saturated benzoic acid solution. Prepare
standards of nominal 5, 10, 25, 40, and 50 ppm amylopectin.
For the first three standards, use 1,000 ml. volumetric
flasks, and for the other two, use 100 ml. flasks.
Preparation of Reagents
1. Prepare stock solutions of potassium iodide (30.0
gm./l.) and potassium iodate (2.14 gm./l.).
2. To prepare the test reagent, pipet 25 ml. of each
stock solution, freshly prepared, into a 500 ml. volumetric
flask. Make up to volume with distilled water. All pipetting
should be done with rubber bulbs, to prevent possible
contamination by saliva enzymes which might hydrolyze
amylopectin in the standards or starch in the test samples.
Analysis of Raw Sugar
1. Prepare a 10.0% sugar solution by weight.
2. Into a 125 ml. Erlenmeyer flask, add 20 ml. of sugar
solution, 10 ml. of freshly prepared test reagent, and 10
drops of 75% phosphoric acid. Swirl to mix.
3. Within four to five minutes after mixing, read the
absorbance in a 1 cm. cell on a spectrophotometer at 560 nm.
using water as a reference blank. All absorbance are to be
multiplied by 1,000. If the absorbance is greater than 0.7,
repeat using a raw sugar solution more dilute than 10% solids.
4. Correct for the original color of the raw sugar
sample by repeating step 2 above, but substituting distilled
water for the test reagent. Measure the absorbance at 560 nm.
and subtract this figure from that obtained in step 3 above.
5. Repeat steps 2 and 3 using the five amylopectin
standards in place of the sugar to prepare a standard curve.
Do not use a proportionality constant from the slope (ppm
amylopectin per unit absorbance) as a "factor", because this
does not allow a distinction to be made between interpolation
and extrapolation.
6. Determine the starch content as amylopectin of the
raw sugar sample by interpolation. Multiply by 10 to correct
for the solids content of the raw sugar sample solution. If
the raw sugar sample was more dilute than 10 Brix, this factor
of 10 should be changed to 100 / (actual Bx). Then divide by
10,000 to convert from ppm to percent. Report the result as
Percent starch on Solids to three decimal places, i.e., to the
nearest thousandth of one percent.
7. If the starch content of the raw sugar falls beyond
the standard curve, do not extrapolate. Instead, repeat the
determination using a 5% raw sugar solution instead of a 10%
solution.
Example of Calculation
1. From Steps 1 and 2 under "Analysis of Raw Sugar"
(above), absorbance reading from 10 Brix raw sugar solution,
test reagent, and phosphoric acid = 0.450. Multiply by 1,000
obtaining 450.
2. From Step 4, absorbance reading for raw sugar
solution, water, and phosphoric acid = 0.019. Multiply by
1,000 obtaining 19.
3. Subtracting, 450 -19 = 431. This figure should be
used on your calibration curve to find the corresponding ppm
of amylopectin. Assume the value from your curve is 25 ppm.
Then
(25) (10)
Percent Starch on Solids = ------------- = 0.025%
(10,000)
TEST PROCEDURES -- AFFINED RAW SUGAR
I. PREPARATION OF THE SAMPLE
1. Place 1000 g. of well-mixed raw sugar in the mixer.
Turn the mixer on to speed #1 (low speed).
2. Gradually add 380 ml. of 64.0 Brix granulated sugar
syrup at room temperature. (A 64.0 Brix syrup made from high
quality sugar syrup may be substituted for a syrup made from
granulated sugar). The syrup is added slowly from a
dispensing burette and must be added at a uniform rate of
approximately 4-1/2 minutes.
3. The raw sugar and syrup continue to mix for an
additional one minute. The total mixing period is 5-1/2
minutes.
4. Transfer the entire magma at once from the mixer to
the laboratory centrifugal machine.
5. Bring the centrifuge up to 3000 rpm in 15 seconds
and spin at 3000 rpm for exactly two minutes. If an 11"
basket is employed, to maintain the same G force, bring the
centrifuge up to 2550 rpm in 15 seconds, and spin a 2550 rpm
for exactly two minutes.
6. Remove the sugar from the basket and spread it on a
clean surface in a thin layer not to exceed 1/4 inch thick.
7. Immediately after spreading, take representative
portions totaling approximately 100 g. from all areas in the
spread layer and immerse in 75 ml. of anhydrous methanol
contained in a 250 ml. extraction flask. This portion of the
sample is to be used for the grain size test.
8. The remaining portion of the spread sample which is
to be used for color is mixed periodically (by hand) during
drying so that at the end of drying, the sample is well mixed.
9. If the sample is not to be tested immediately, it
should be stored in sealed jars.
II. GRAIN SIZE
A. Method A
1. The flask containing the sample previously collected
for the Grain Size Test is swirled vigorously for two minutes
so that the sugar is well mixed with the anhydrous methanol
solvent.
2. Drain the solvent from the flask in the manner
indicated in Diagram 1. After the solvent has drained, break
vacuum, shake the extraction flask and place back over the
vacuum flask. Repeat two or three times.
3. After draining, return flask to an upright position,
and 50 ml. of anhydrous methanol and repeat swirling and
draining procedure.
4. Repeat swirling and draining procedure twice, using
a 50 ml. portion of sugar-saturated 99.7 isopropyl alcohol
each time. (Caution: Do not use near an open flame.)
5. Spread drained sugar on absorbent filter paper and
allow to air dry. No lumping or caking should occur on
drying. Soft conglomerates, if any, should be broken by
gentle hand pressure. If lumping is observed after drying,
discard the sample. Begin again, starting with the affination
procedure.
Whenever a solvent is used for testing, the test should
be conducted underneath a laboratory hood and away from any
flame or any other heat source.
6. Weigh (to plus/minus 0.1 g) the entire amount of
affined raw sugar which has been washed with solvent and
dried.
7. Assemble the screen with a 14 mesh Tyler as the top
screen, followed by the Tyler 20 and Tyler 28 mesh screens. A
pan, and additional screens if necessary, are added to make up
a set of screens that will fit on a mechanical shaker.
8. Place the weighed amount on the 14 mesh Tyler
screen.
9. Place the set of screen on a mechanical shaker and
run for five minutes.
10. The amount of sample passing through the 28 mesh
Tyler screen is determined as follows:
Weight through 28 mesh screen x 100 = % Through 28 mesh Tyler Screen
- - ------------------------------
Starting weight.
11. The laboratory shall report the % through the 28
mesh Tyler screen to the nearest percent.
B. Method B (Alternative Method)
1. The flask containing the sample previously collected
for the grain size test is swirled vigorously for two minutes
so that the sugar is ell mixed with the anhydrous methanol
solvent.
2. Drain the solvent from the flask in the manner
indicated in Diagram 1. If a pump is used to provide the
vacuum source, it must be rated explosion proof such as a
Sargent-Welch dual-seal No. 1405-W-01 or equivalent.
Additionally, the pump must be vented outside of the
laboratory environment, for example to a laboratory fume hood.
After the solvent has drained, break vacuum, shake the
extraction flask and place back over the vacuum flask. Repeat
two or three times.
3. Repeat the above swirling and draining procedure
twice, beginning each methanol wash by returning the flask to
its upright position and adding 50 ml. of anhydrous methanol.
4. Repeat the swirling and draining procedure for a
fourth and final time again by adding 50 ml. of anhydrous
methanol. Extreme care must be taken to ensure that the sugar
is sufficiently dried by the vacuum. This is accomplished by
draining the solvent and subjecting the sugar to the vacuum
for a longer period of time than the previous washes. The
sequence of breaking the vacuum, shaking the flask and placing
back over the vacuum flask should be repeated a number of
times during this last drying step. If the sugar is
sufficiently dried the majority of crystals will not adhere to
the sides of the flask or can be dislodged with a minimum of
shaking or tapping. The average length of time to complete
this fourth anhydrous methanol wash should be 40 to 50
minutes.
5. Spread drained sugar on absorbent filter paper and
allow to air dry. No lumping or caking should occur on
drying. Soft conglomerates, if any, should be broken be
gentle hand pressure. If lumping is observed after drying,
discard the sample, begin again, starting with the affination
procedure.
Whenever a solvent is used for testing, the test should
be conducted underneath a laboratory hood and away from any
flame or any other heat source.
6. Weigh (to plus/minus 0.1 g.) the entire amount of
affined raw sugar which has been washed with solvent and
dried.
7. Assemble the screens with a 14 mesh Tyler as the top
screen, followed by the Tyler 20 and Tyler 28 mesh screens. A
pan, and additional screens if necessary, are added to make up
a set of screen that will fit on a mechanical shaker.
8. Place the weighed amount on the 14 mesh Tyler
screen.
9. Place the set of screens on a mechanical shaker and
run for five minutes.
10. The amount of sample passing through the 28 mesh
Tyler screen is determined as follows:
Weight through 28 meshscreen x 100 = % Through 28 mesh Tyler Screen
- - -----------------------------
Starting Weight
11. The laboratory shall report the % through the 28
mesh screen to the nearest percent.
III. COLOR -- ICUMSA METHOD 4 (MODIFIED)
1. Prepare a 50% solids solution (50 grams of sample +
50 ml. distilled water) of the sugar to be tested.
2. Filter the solution through a 47 mm. millipore
filter apparatus using a Whatman GF/C 47 glass microfibre
filter. Collect the filtrate in a clean dry filter flask.
(Note: The sample may require changing the filters more than
once to collect all the filtrate.)
3. Transfer the filtrate to a clean dry 150 ml. beaker.
Adjust the pH of the filtrate to 8.5 plus/minus .1 with 0.5N
Hcl or 0.5N NaOH.
4. Remove entrained air under vacuum or in an
ultrasonic cleaner if necessary.
5. Place the solution into one of a previously matched
pair of 1 cm. absorption cells. (The other cell will contain
distilled water and can be used as a zero reference when
changing wavelengths.) Determine the absorbance (or -log of
the transmittance) at 420 nm. and at 720 nm. Record both
values.
6. Calculate the color of the solution as follows:
Color =(Absorbance* at 420 nm. - 2 x absorbance at 720 nm.) x 1000
-----------------------------------------------------------
.6159
If the sample is too dark to analyze, further dilution with
distilled water and possible pH readjustment will be needed.
In this case the calculation would be as follows:
Color = (Absorbance* at 420 nm. - 2 x absorbance at 720 nm.) x 1000
-----------------------------------------------------------
Specific gravity x Brix x cell length (cm.)
----
100
*(or -log of transmittance) can be substituted if there is no
absorbance function on the spectrophotometer.
EXHIBIT C
PREMIUMS AND PENALTIES
The percentage discount or premium per pound for
variances from Standard Quality shall be determined pursuant
to the following table. Discounts and premiums for variances
from Standard Quality shall be applied separately for each
specification. Fractions shall be in proportion. There shall
be no premium or penalty for variance from Standard Quality
for Raw Sugar polarizing at 99 or higher, except for dextran.
For the purposes of determining whether Raw Sugar meets the
specifications for Standard Quality and calculating the
premiums and discounts hereunder, an average test result shall
be used. Such average shall be determined for each quality
specification separately and with respect to Raw Sugar
delivered to the Crockett Refinery, shall be the average of
the two nearest test results of the three laboratories, but if
the two are equidistant from the median, then the median shall
be used.
SPECIFICATIONS
MOISTURE
Factor of Safety For each .01 in excess of.30 deduct
0.09 percent of Basis Price.
ASH
Ash content (Percent For each .01 percent of ash content in
of raw sugar) excess of derived maximum standard ash
content, deduct 0.015 percent of
Basis Price; for each .01 percent of
ash content below derived minimum
standard ash content, add 0.00625
percent of Basis Price.
GRAIN SIZE
Percent through 28 mesh For each 1 percent above 52 percent,
Tyler (30 mesh U.S.) sieve deduct 0.06 percent of Basis Price.
For each 1 percent below 22 percent,
add 0.025 percent of Basis Price.
COLOR - AFFINED RAW
ICUMSA Color Units For each 10 units above 1500 up to
Method 4 (1978) Modified and including 1800, deduct 0.0135
percent of Basis Price. For each 10
units above 1800 up to and including
2100, deduct an additional 0.027 percent
of Basis Price.
For each 10 units above 2100 up to and
including 2400, deduct an additional
0.0405 percent of Basis Price. For each
10 units above 2400, deduct an
additional 0.0540 percent of
Basis Price.
For each 10 units below 800, add
0.0081 percent of Basis Price.
COLOR - WHOLE RAW For each 25 units above 6000 up to
ICUMSA COLOR UNITS and including 7000, deduct 0.0015
METHOD 4 (1978) MODIFIED percent of Basis Price. For each 25
units above 7000 up to and including
8000, deduct an additional 0.0030
percent of Basis Price. For each 25
units above 8000 up to and including
9000, deduct an additional 0.0045
percent of Basis Price. For each 25
units above 9000, deduct an additional
0.0060 percent of Basis Price.
For each 25 units below 3000, add
0.0009 percent of Basis Price.
DEXTRAN For each 1 unit above 250 up to and
including 350, deduct 0.007 percent
of Basis Price.
For each 1 unit above 350 up to and
including 450, deduct an additional
0.009 percent of Basis Price.
For each 1 unit above 450 up to and
including 550, deduct an additional
0.011 percent of Basis Price.
For each 1 unit above 550, deduct an
additional 0.013 percent of Basis Price.
EXHIBIT D
STANDARD QUALITY RANGE
FACTOR STANDARD QUALITY RANGE
- - ------- ----------------------
MOISTURE
Factor of Safety
(High number indicates low quality) Not exceeding 0.30
ASH
Ash Content..............Maximum and minimum standard ash content is
(percent of derived by multiplying percent non-sucrose
raw sugar) solids by the factor listed below which
corresponds to the final polarization of
the cargo.
MAXIMUM MINIMUM
Up to and including 98.0 .25 .17
Over 98.0 up to and
including 98.2 .26 .18
Over 98.2 up to and
including 98.4 .27 .19
Over 98.4 up to and
including 98.6 .28 .20
Over 98.6 up to and
including 98.8 .29 .21
Over 98.8 up to but not
including 99.0 .30 .22
GRAIN SIZE
Percent through 28 mesh Tyler (30 mesh U.S.) sieve.
(High number indicates low quality).....Between 52 and 22
COLOR-AFFINED RAW
ICUMSA Color Units Method 4 (1978) Modified
(High number indicates low quality).....Between 800 and 1500
COLOR-WHOLE RAW
ICUMSA Color Units Method 4 (1978)
(High number indicates low quality)......Between 3000 and 6000
DEXTRAN.............................Not Exceeding 250 M.A.U.
For the purposes of determining whether Raw Sugar meets
the foregoing specifications for Standard Quality, an average
test result shall be used. Such average shall be determined
for each quality specification separately and shall be the
average of the two nearest test results of the three
laboratories, but if the two are equidistant from the median,
then the median shall be used.
EXHIBIT E
CASH ADVANCES
(and Security Agreement)
1. Definitions. In addition to the terms defined
elsewhere in this Exhibit E or the Agreement of which it is a
part (the "Sugar Agreement"), the following terms have the
meanings indicated for the purposes hereof:
"Acceptable Inventory" means Raw Sugar in good order and
sound condition produced from sugar cane grown in Hawaii
which:
(a) has been acquired by Borrower from patrons of
Borrower pursuant to Standard Sugar Marketing Contracts;
(b) has been acquired by Borrower, in the case of
the first request for an Advance, since June 3, 1993;
(c) is owned by Borrower free and clear of al
security interest, liens, encumbrances, and rights of
others, except for "Permitted Liens" (as that term is
hereinafter defined), if any;
(d) is not covered by a negotiable document of
title unless such document has been delivered to Lender;
and
(e) is held by Borrower as inventory (as defined in
the UCC) at the Hawaii Storage Facilities or is in
transit to Lender's refinery in Crockett, California.
"Advance Basis Price" means the simple average of the
daily Settlement Prices for the No. 14 Contract, for the
Nearest Fixtures Month, for each day of the Test Period ending
immediately before the date of such Advance, less the
applicable Price Discount.
"Availability Period" means the period commencing on the
date of this Agreement and ending on the earlier of ten years
from the date hereof, or termination of this Agreement.
"Borrower" means Hawaiian Sugar Transport Company, Inc.,
an agricultural cooperative organized under the laws of the
State of Hawaii.
"Credit Facility" means the line of credit described in
Paragraph 2.1 of this Exhibit.
"Event of Debt Default" has the meaning provided at
Section 7.01.
"Final Net Price" means such price as defined in Section
3.02(b) of this Agreement.
"Hawaii Storage Facilities" mean the facilities used by
Borrower to store raw sugar, the locations of which are
described on Schedule 1 hereto.
"Interest Rate" means at any time the rate of interest
from time to time paid by Lender for moneys borrowed for and
dedicated to financing loans hereunder, or in the absence
thereof, the weighted average rate of interest paid by Lender
on commercial paper issued by Lender, outstanding in the
immediately preceding calendar year quarter and maturing no
more than six months after the date of issue or, in the event
that Lender does not have commercial paper outstanding during
such quarter the average rate of interest on loans obtained by
Lender and maturing not more than six months after the date of
such loans during such preceding calendar quarter.
"Lender" means California and Hawaiian Sugar Company, a
California corporation.
"Permitted Liens" means liens in favor of Lender;
Producers Liens; liens for current taxes, assessments or other
governmental charges which are not delinquent or remain
payable without penalty; liens of carriers, warehousemen,
mechanics, bailees, materialmen and landlords incurred in the
ordinary course of business for sums not in default or which
are being diligently contested in good faith; and liens
consented to by Lender (Provided, however, that Lender may
request on thirty (30) days prior written notice that
thereafter waiver of producer's liens be obtained).
"Producer's Liens" means liens in favor of the growers of
agricultural products arising pursuant to Hawaiian statutes,
as now in effect or hereafter amended.
"Reference Rate" means the "prime", "base" or "reference"
rate announced from time to time by Bank of America NT & SA at
its principal office in San Francisco, California in respect
of its ninety (90) day loans to its prime corporate borrowers,
whether or not loans are actually made at such rate.
"Test Period" means any of the following twelve periods
within a calendar year. The first period in each year shall
commence on January 1 and end at midnight on the Saturday
preceding the last Sunday of January provided, however, that
in the case of the 1993 calendar year, the first period shall
commence on the date hereof and end at midnight on the
Saturday preceding the last Sunday of the month in which such
period commences. Each succeeding period shall commence at
the end of the preceding period and continue until midnight on
the Saturday preceding the last Sunday of the next succeeding
calendar month; provided, however, however, that the last
period in each calendar year shall commence midnight on the
Saturday preceding the last Sunday in November and continue
through December 31 of such year.
"UCC" means the Hawaiian Uniform Commercial Code as in
affect from time to time.
2. The Credit Facility.
2.1 The Credit Facility. From time to time during the
Availability Period Lender, upon Borrower's request, will make
advances to Borrower (each an "Advance") on the tenth of each
month in an amount not to exceed ninety percent (90%) of the
"Advance Basis Price" for each Commercial Pound of Acceptable
Inventory receipted by Borrower at the Hawaiian Storage
Facilities during the immediately preceding Test Period.
2.2 Interest. Advances under the Credit Facility shall
bear interest at a rate per annum equal to the Interest Rate.
2.3 Payment of Advances Under the Credit Facility.
During the Availability Period Advances and interest shall be
repaid when and to the extent Borrower becomes entitled to
payment on account of the sale of such Acceptable Inventory to
Lender pursuant to the Sugar Agreement. Borrower shall repay
the entire principal balance of Advances and unpaid interest
under the Credit Facility on the last day of the Availability
Period except to the extent that there is Acceptable Inventory
yet undelivered having a value in excess of outstanding
Advances and interest.
More specifically, (1) Lender shall first apply the
amount of Borrower's pro forma invoice under Section 3.04 of
the Sugar Agreement and then pay any excess to Borrower; and
(2) Lender shall then apply the amount of the Final Net Price
under Section 3.04 of the Sugar Agreement (less any payment
under (1)) and then pay any excess to the Borrower. All
amounts payable to Borrower to be applied pursuant to this
Section shall first be applied to accrued and unpaid interest
and thereafter to reduce the amount of any outstanding
Advances.
2.4 Interest Not to Exceed Maximum. In the event that
the interest due on the Advances for a month exceeds or shall
be deemed to have exceeded the maximum rate allowed by law,
the amount of interest which shall accrue during such month
shall be reduced to the maximum amount of interest permitted
by law. If the amount of interest payable in any month has
been reduced or deemed to have been reduced pursuant to the
first sentence of this Section 2.4, the amount of interest
payable in any subsequent month or months shall be
automatically increased or deemed to have been increased by an
amount necessary to compensate Lender for such reduction,
provided that (i) such increase or deemed increase shall not
increase the rate of interest for such month or months by any
amount which exceeds the maximum rate of interest permitted by
law, (ii) at no time shall the aggregate amount by which the
interest paid for the account of Borrower has been increased
pursuant to this sentence exceed the aggregate amount by which
interest paid for its account would have been paid had the
interest not been reduced pursuant to the first sentence of
this Section 2.4, and (iii) upon payment in full of the
principal outstanding on the loan, any deficit arising under
the first sentence of this Section 2.4 which has not been
compensated under this sentence by the date of such payment in
full shall be excused and no further compensation shall become
due with respect to such deficit.
2.5 Default Rate. Upon the occurrence and during the
continuation of any Event of Debt Default, and without
constituting a waiver of any such Event of Debt Default,
advances under the Credit Facility shall at the option of
Lender bear interest at a rate per annum which is one
percentage point (1%) higher than the Reference Rate.
2.6 Requests for Advances. Each request for an Advance
shall be made in writing, setting forth the amount of
Acceptable Inventory, the Hawaii Storage Facilities at which
such Acceptable Inventory is stored and the Advance Basis
Price thereof and certifying that all conditions precedent for
making an Advance have been satisfied and shall be in the form
of Exhibit 2.6 to this Exhibit E or in any other manner
acceptable to Lender.
2.7 Disbursements and Payments. Each disbursement by
Lender and each payment by Borrower under this Agreement shall
be made in the funds and at such bank as Borrower may from
time to time select.
2.8 Evidence of Indebtedness. Principal, interest and
all other sums due Lender under this Agreement shall be
evidenced by entries in records maintained by Lender, and, if
required by Lender, by a promissory note or notes. Each
payment on and any other credits with respect to principal,
interest and all other sums due under this Agreement shall be
evidenced by entries to records maintained by Lender. Lender
will provide copies of such records to Borrower quarterly or
at such other reasonable times as may be requested by
Borrower.
2.9 Interest Calculation. Except as otherwise stated in
this Agreement, all interest and fees, if any, payable under
this Agreement shall be computed on the basis of a three
hundred sixty-five (365) day year and actual days elapsed.
Upon request by Borrower, Lender shall deliver not later than
ten (10) days after the end of the preceding calendar quarter,
Lender's calculation of the Interest Rate for each calendar
quarter. Borrower shall have the right, at its cost and
expense, to audit and employ such audit procedures as are
reasonably necessary to verify the accuracy of Lender's
calculation of the Interest Rate.
3. Collateral.
3.1 Grant of Security. Borrower hereby grants to Lender
a continuing Security interest in and lien upon all of the
following property of Borrower, wherever located, now owned or
hereafter acquired or arising (the "Collateral"):
(a) all Acceptable Inventory and documents of title
concerning or related to such inventory; and
(b) all proceeds, products, rents and profits of
any and all of the foregoing Collateral and, to the
extent not otherwise included therein, all payments under
insurance (whether or not Lender is the loss payee
thereof), or any indemnity, warranty or guaranty, payable
by reason of loss or damage to or otherwise with respect
to any of the foregoing Collateral.
3.2 Security for Obligations. The security interest
granted under this Exhibit secures repayment of credit
extended pursuant to, and performance of all obligation of
Borrower in, this Exhibit, as the same may be amended,
modified or supplemented from time to time, whether such
obligations now exist or hereafter arise (the "Obligations").
3.3 Inspection of Collateral. Lender may, after giving
reasonable notice to Borrower and during normal business
hours, inspect the Hawaii Storage Facilities which contain
Collateral and may conduct or perform such tests and
examinations as Lender shall determine necessary to verify the
weight and quality of the inventory included in the
Collateral.
3.4 Lender Appointed Attorney-in-Fact. Subject to the
limitations on Lender set forth in Section 7.2 of this
Exhibit, Borrower hereby irrevocably appoints Lender as
Borrower's attorney-in-fact, with full authority in the place
and stead of Borrower and in the name of Borrower, Lender or
otherwise, from time to time in Lender's discretion upon the
occurrence and during the continuance of an Event of Debt
Default, to take any action and to execute any instrument
which Lender may deem necessary or advisable to accomplish the
purposes of this Agreement, including, without limitation:
(a) to file one or more financing or continuation
statements, and amendments thereto, relative to all or
any part of the Collateral without the signature of
Borrower where permitted by law;
(b) to obtain and adjust insurance required to be
paid to Lender pursuant to Section 6.7 hereof;
(c) to ask, demand, collect, sue for, recover,
compound, receive and give acquaintance and receipts for
moneys due and to become due under or in respect of any
of the Collateral;
(d) to receive, endorse and collect any drafts or
other instruments, documents and chattel paper, in
connection with clauses (a) and (b) above; and
(e) to file any claims or take any action or
institute any proceedings which Lender may deem necessary
or desirable for the collection of any of the Collateral
or otherwise to enforce the rights of Lender with respect
to any of the Collateral.
4. Conditions to Availability of Credit.
Lender's obligation to extend credit under this Agreement
is subject to satisfaction of the following conditions and
Lender's receipt of the following, each of which must be in
form and substance satisfactory to Lender:
4.1 Conditions to First Advance. Before the first
Advance:
(a) financing statements, notices and such other
documentations as Lender may reasonably request to
perfect Lender's security interest in the Collateral;
(b) evidence that the execution, delivery and
performance by Borrower of this Agreement and the
execution, delivery and performance by Borrower and any
guarantor or subordinating creditor of any instrument or
agreement required under this Agreement, as appropriate,
have been duly authorized; and
(c) evidence that Borrower has obtained the
insurance coverage required under Section 6.7 of this
Agreement.
4.2 Conditions to Each Advance. Before each Advance,
including the first:
(a) on reasonable request, evidence satisfactory to
Lender that the security interest and liens to favor of
Lender are valid, enforceable and prior to the rights and
interest of other except Permitted Liens or those
consented to in writing by Lender;
(b) all representations and warranties of Borrower
shall be true, complete and correct as of the date of
such Advance; and
(c) the amount of the Advance, together with prior
unpaid Advances and accrued and unpaid interest, does not
exceed ninety percent (90%) of the then effective
"Advance Basis Price" applied to the then existing
Collateral.
5. Representations and Warranties.
Borrower represents and warrants (and each request for an
extension of credit under this Agreement shall be deemed a
representation and warranty made on the date of such request)
that:
5.1 Organization. Borrower is an agricultural
cooperative duly organized and existing under the laws of the
State of Hawaii and the execution, delivery and performance of
this Agreement and of any instrument or agreement required by
this Agreement are within Borrower's powers, have been duly
authorized, and are not in conflict with the terms of any
charger, bylaw or other organization papers of Borrower.
5.2 No Conflicts. The execution, delivery and
performance of this agreement and of any instrument or
agreement required by this Agreement are not in conflict in
any material respect with any law or any indenture, agreement
or undertaking to which Borrower is a party or by which
Borrower is bound or affected except conflicts which would not
adversely affect Lender's rights and interests hereunder.
5.3 Enforceability. This Agreement is a legal, valid
and binding agreement of Borrower, enforceable against
Borrower in accordance with its terms, and any instrument or
agreement required under this Agreement, when executed and
delivered, will be similarly legal, valid, binding and
enforceable except as such enforceability may be limited by
equitable principles and by applicable bankruptcy, insolvency
or reorganization laws or laws and judicial decisions of
general application affecting creditors rights and remedies.
5.4 Good Standing. Borrower is duly incorporated and in
good standing in the State of Hawaii.
5.5 Compliance with Laws. Borrower is in compliance in
all material respects with all federal, state and local laws,
rules and regulations affecting the business of Borrower
except to the extent that noncompliance would not adversely
affect Lender's rights hereunder.
5.6 Ownership of Collateral. All Collateral is owned by
Borrower free and clear of all security interests, liens,
encumbrances and rights of others except for Permitted Liens.
5.7 Location of Inventory. Except as permitted by
Section 6.3 of this Exhibit, all of the Acceptable Inventory
is located at the Hawaii Storage Facilities or will be in
transit to Lender's Crockett refinery.
5.8 Perfected Security Interest in Collateral. The
grant of a security interest herein in the Collateral pursuant
to this Agreement together with steps for perfection create a
valid and perfected first priority security interest in the
Collateral securing the payment of the Obligations, subject
only to Permitted Liens.
5.9 No Event of Debt Default. No event has occurred and
is continuing or would result from the extension of credit
under this Agreement which constitutes or would constitute an
Event of Debt Default or which, upon a lapse of time or notice
or both, would become an Event of Default.
6. Covenants.
So long as credit is available under this Agreement and
until full and final payment of all of Borrower's obligations
under this Agreement and any instrument or agreement required
under this Agreement, Borrower shall, unless Lender waives
compliance in writing:
6.1 Notices of Certain Events. Promptly give written
notice to Lender of:
(a) all litigation affecting Borrower where the
amount claimed is One Million Dollars ($1,000,000) or
more;
(b) any substantial dispute which may exist between
Borrower and any governmental regulatory body or law
enforcement authority;
(c) any Event of Debt Default or any event which,
upon a lapse of time or notice or both, would become an
Event of Debt Default;
(d) the occurrence of any reportable event under
section 4043(b) of ERISA for which the Pension Benefit
Guaranty Corporation requires thirty (30) days' notice;
any action by Borrower to terminate or withdraw from an
ERISA Plan or the filing of any notice of intent to
terminate under section 4041 of ERISA; any notice of
noncompliance made with respect to an ERISA Plan under
section 4041(b) of ERISA; or the commencement of any
proceeding with respect to an ERISA Plan under section
4042 of ERISA; and
(e) any other matter which has resulted or might
result in a material and adverse change in Borrower's
financial condition or operations.
6.2 Liens. Not create, assume or suffer to exist any
security interest, lien (including the lien or an attachment,
judgment or execution) or encumbrance, securing a charge or
obligation, on or of any of the Collateral, except for
Permitted Liens.
6.3 Inventory. Borrower shall keep the Acceptable
Inventory (other than Inventory in transit to Lender or
Lender's designee) (i) at the Hawaii Storage Facilities or
(ii) at such other location which shall have been disclosed in
writing to Lender not less than thirty (30) days prior to the
date of the removal or relocation of such Inventory to such
location, except that no such location may be outside of the
United States. Borrower shall, as to any Inventory which is
in the possession (or otherwise under the control) of any
agent or bailee of Borrower at the time of the occurrence of
and Event of Debt Default, instruct such agent or bailee to
hold such Acceptable Inventory for the account of Lender.
6.4 Sale of Collateral. Not sell, lease or otherwise
dispose of the Collateral, except to Lender or otherwise
dispose of the Collateral, except to Lender or otherwise
pursuant to or as permitted in the Sugar Agreement.
6.5 Records and Reports. Borrower shall maintain at
each of he Hawaii Storage Facilities accounting records of the
Advances. Upon request by Lender, Borrower shall promptly
furnish to Lender from time to time copies of such records and
statements and schedules further identifying and describing
the Collateral and such other reports in connection with the
Collateral as Lender may reasonably request, all in reasonable
detail.
6.6 Further Assurance. Borrower agrees that at any time
and from time to time, at the expense of Borrower, Borrower
will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary
or that Lender may reasonably request, in order to perfect,
preserve the priority and perfection of, and otherwise to
protect, any security interest granted or purported to be
granted hereby or by this Agreement or to enable Lender to
exercise and enforce its rights and remedies hereunder with
respect to any Collateral.
6.7 Insurance.
(a) Borrower shall, at its own expense, maintain
insurance against loss or damage to the Collateral (including
liability insurance) in such amounts, against such risks, in
such form and with such insurers, as shall be reasonably
satisfactory to Lender from time to time. The insurance
coverage maintained by Lender with respect to raw sugar stored
and transported by Lender currently is deemed satisfactory by
Lender and comparable coverage will be deemed satisfactory by
Lender. Each policy of property damage insurance shall bear
standard first mortgage endorsement in favor of Lender and
shall provide that, upon notification by Lender to the
appropriate insurer that an Event of Debt Default has occurred
and is continuing, all losses shall be paid directly to
Lender. Each policy of insurance shall in addition (i) name
Borrower and Lender as insured parties thereunder (without any
representation or warranty by or obligation upon Lender) as
their interests may appear, (ii) contain the agreement by the
insurer that any loss thereunder shall be payable to Lender,
notwithstanding any action, inaction or breach of
representation or warranty by Borrower, (iii) provide that
there shall be no recourse against Lender for payment of
premiums or other amounts with respect thereto, and (iv)
provide that at least ten (10) days' prior written notice of
cancellation or of lapse shall be given to Lender by the
insurer. Borrower shall furnish to Lender insurance
certificates, in form and substance satisfactory to Lender,
evidencing compliance by Borrower with the terms of this
Section 6.7, and, if so requested by Lender, shall deliver to
Lender originals or duplicate copies of such policies and, as
often as Lender may reasonably request, a report of a
reputable insurance broker with respect to such insurance.
Further, Borrower shall, at the request of Lender at any time
after an Event of Default has occurred and is continuing, duly
execute and deliver instruments of assignment of such
insurance policies and cause the respective insurers to
acknowledge notice of such assignment. Marine insurance
coverage shall be no less than that required by No.14
Contract.
(b) At least thirty (30) days prior to the expiration of
each insurance policy, upon written request of Lender,
Borrower shall furnish Lender with evidence satisfactory to
Lender of the payment of the premium and the reissuance of a
policy continuing insurance in force as required by this
Agreement. In the event Borrower fails to provide, maintain,
keep in force or deliver and furnish to Lender policies of
insurance required by this Section 6.5, Lender, upon fifteen
(15) days' prior written notice to Borrower, may procure such
insurance or single interest insurance for such risks covering
Lender's interest, and Borrower will pay all premiums thereof
promptly upon demand by Lender, together with interest thereon
at rate per annum equal to the Interest Rate, from the date of
expenditure by Lender until reimbursement by Borrower.
(c) Each such policy or certificate therefor issued by
an insurer shall to the extent obtainable contain a provision
that no act or omission of Borrower which would otherwise
result in forfeiture or reduction of the insurance therein
provided shall affect or limit the obligation of the insurance
company so as to pay the amount of any loss sustained.
(d) All policies of insurance required to be furnished
by Borrower pursuant to this Section 6.5 shall have attached
thereto the Lender's Loss Payable Endorsement or its
equivalent, or a loss payable clause acceptable to Lender.
6.8 Change in Name, Structure or Location. Borrower
shall notify Lender in writing prior to any change in (a)
Borrower's name, (b) Borrower's business or legal structure,
or (c) Borrower's place of business or chief executive office
if Borrower has more than one place of business.
7. Events of Debt Default and Remedies.
7.1 Events of Debt Default. The occurrence of any of
the following "Events of Debt Default" shall terminate any
obligation on the part of Lender to extend credit under this
Agreement, without notice of default, presentment or demand
for payment, protest or notice of nonpayment or dishonor, or
other notices or demands of any kind or character:
(a) Borrower fails to pay, when due, any
installment of interest or principal or any other sum due
under this Agreement in accordance with the terms hereof;
(b) any representation or warranty herein or in any
agreement, instrument or certificate executed pursuant
hereto or in connection with any transaction contemplated
hereby proves to have been false or misleading in any
material respect when made and shall not have been
corrected by Borrower within thirty (30) days after
written notice to Borrower specifying the
misrepresentations;
(c) Lender fails to have a valid and enforceable
perfected security interest in or lien on the Collateral
or such security interest or lien fails to be prior to
the rights and interest of other except Permitted Liens;
(d) Borrower fails to pay its debts generally as
they come due, or files any petition, proceeding, case or
action for relief under any bankruptcy, reorganization,
insolvency or moratorium law, or any other law or laws
for the relief of, or relating to, debtors;
(e) an involuntary petition is filed under any
bankruptcy or similar statute against Borrower, or a
receiver, trustee, liquidator, assignee, custodian,
sequestrator or other similar official is appointed to
take possession of the properties of Borrower and not
dismissed in sixty (60) days;
(f) Lender, in good faith, considers any Collateral
to be unsafe or in danger of misuse to the extent that
Lender's prospect of or right to payment or performance
under this Exhibit or any instrument or agreement
required hereunder is materially impaired, and, within
thirty (30) days after written notice to Borrower
specifying Lender's reasons for so considering, Borrower
has not remedied such reasons or established that such
reasons are without foundation; or
(g) any default occurs under any other obligation
of Borrower to Lender under this Exhibit and is not cured
within thirty (30) days after written notice to Borrower
of such default.
7.2 Remedies. Upon the occurrence and during the
continuance of (i) any Event of Debt Default under Section
7.1(c),(d) or (e), or (ii) any other Event of Debt Default and
an Event of Default under the Sugar Agreement, Lender shall
not be obliged to make any further Advances and all Advances
shall become immediately due and payable, together with
interest thereon, and:
(a) Lender may decline to make any further Advances
and may declare all Advances immediately due and payable,
together with interest thereon.
(b) Lender may exercise in respect of the
Collateral, in addition to other rights and remedies provided
for herein or other wise available to it, all of the rights
and remedies of a secured party against a debtor in default
under the UCC (whether or not the UCC applies to the affected
Collateral) and also may (i) require Borrower to, and Borrower
hereby agrees that it will at its expense and upon request of
Lender forthwith, assemble all or part of the Collateral as
directed by Lender and make it available to Lender at a place
to be designated by Lender (provided, however, that Lender
acknowledges that Acceptable Inventory in the Hawaiian Storage
Facilities satisfies this requirement), (ii) without notice or
demand or legal process, enter upon any premises of Borrower
and take possession of the Collateral, and (iii) without
notice except as specified below, sell the Collateral or any
part thereof in one or more parcels at public or private sale,
at any of Lender's offices for elsewhere, at such time or
times, for cash, on credit or for future delivery, and at such
price or prices and upon such other terms as Lender may deem
commercially reasonable. Borrower agrees that, to the extent
notice of sale shall be required by law, at least ten (10)
days' notice to Borrower of the time and place of any public
sale or the time after which any private sale is to be made
shall constitute commercially reasonable notification. As any
sale of the Collateral, if permitted by law, Lender may bid
(which bid may be, in whole or in part, in the form of
cancellation of indebtedness) for and purchase the Collateral
or any portion thereof for the account of Lender. Lender
shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. Lender may
adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such
sale may, without further notice, be made at the time and
place to which it was so adjourned. Lender shall have the
right to assign, transfer and deliver the Collateral so sold
to the purchaser or purchasers at any such sale, and such
purchasers shall hold the same, absolutely free from any right
or claim of Borrower of whatsoever kind. To the extent
permitted by law, Borrower hereby specifically waives all
right of redemption, stay or appraisal what it has or may have
under any rule of law or statute now existing or hereafter in
force.
(c) Borrower agrees that any sale of the Collateral
conducted by Lender in accordance with the provisions of
Section 7.2 shall be deemed to be a commercially reasonable
sale under section 9504 of the UCC.
(d) All cash proceeds received by Lender in respect of
any sale of, collection from or other realization upon all or
any part of the Collateral may, in the discretion of Lender,
be (i) held by Lender as collateral for, (ii) then or at any
time thereafter applied as follows:
First: To the payment of the costs and
expenses of such sale, collection or other
realization, and all expenses, liabilities
and advances made or incurred by Lender in
connection therewith and in connection with
this Agreement, in accordance with Section 8.6;
Second: After payment or cash collat-
eralization in full of the amounts specified
in the preceding subparagraph, to the payment
of the obligations; and
Third: After payment or cash collat-
eralization in full of the amounts specified
in the preceding subparagraphs, to the
payment to or upon the order of Borrower, or
to whosoever may be lawfully entitled to
receive the same or as a court of competent
jurisdiction may direct, or any surplus then
remaining from such cash proceeds.
If the sale of all or any part of the Collateral is made on
credit or for future delivery, Lender shall not be required to
apply any portion of the sale price to the Obligations until
such amount actually is received by Lender, and any Collateral
so sold may be retained by Lender until the sale price is paid
in full by the purchaser or purchasers thereof. Lender shall
not incur any liability in case any such purchaser or
purchasers shall fail to pay for the Collateral so sold; and,
in case of any such failure, the Collateral may be sold again.
(e) Without limitation, as an alternative to exercising
any of the rights herein conferred upon it, Lender may proceed
by a suit or suits at law or in equity to foreclose the
security interest granted under this Agreement and to sell the
Collateral, or any portion thereof, pursuant to a judgment or
decree of a court or courts of competent jurisdiction.
(f) Borrower may elect by notice to Lender that Lender
shall, in lieu of proceeding under the above provisions, take
possession of the Collateral in partial satisfaction of the
secured indebtedness if free of any liens other than Permitted
Liens and if the Permitted Liens are senior to the security
interest of Lender and are not being contested. The extent of
the satisfaction would be the amount by which the final amount
payable by Lender to Borrower exceeds the reasonable expenses
(including attorneys fee and costs incurred in obtaining
possession) of Lender in obtaining possession and effecting
the storage, transportation and other actions required of
Borrower under the Sugar Agreement as conditions precedent to
a right of payment by Borrower and any amounts necessary to
satisfy any such Permitted Liens.
7.3 Cure. If, notwithstanding the occurrence of any
Event of Debt Default, there is no Event of Default under the
Sugar Agreement and Borrower cures that and any other then-
existing Event of Debt Default (even though not yet matured
because of lack of notice or the non-expiration of the periods
specified on Section 7.1), this Agreement shall resume its
effectiveness.
8. Miscellaneous.
8.1 Destruction of Borrower's Documents. Lender shall
be under no obligation to return any schedules, invoices,
statements, budgets, forecasts, reports or other papers
delivered by Borrower and shall destroy or otherwise dispose
of same at such time as Lender, in its discretion, deems
appropriate.
8.2 Lender May Perform. If Borrower fails to perform
any agreement contained herein promptly after a notice from
Lender demanding performance, Lender may itself perform, or
cause performance of, such agreement, and the expenses so
incurred in connection therewith shall be payable by Borrower
under Section 8.8 hereof, together with interest thereon at
the rate specified in Section 2.5 from the date Lender incurs
such expense until the date Lender is reimbursed therefor. If
Lender does so without prior demand, the amounts payable by
Borrower shall be reduced by the expenses Borrower would have
avoided by performance.
8.3 Lender's Duties. The powers conferred on Lender
hereunder are solely to protect its interest in the Collateral
and shall not impose any duty upon it to exercise any such
powers. Except for the safe custody of any Collateral in its
possession and the accounting for moneys actually received by
it hereunder, Lender shall have no duty as to any Collateral
or as to the taking of any necessary steps to preserve rights
against prior parties or any other rights pertaining to any
Collateral. Lender shall be under no obligation to take any
necessary steps to preserve rights against prior parties or
any other rights pertaining to any Collateral, but may do so
at its option, and all expenses incurred in connection
therewith shall be for the sole account of Borrower and shall
be included in the Obligations. Notwithstanding the
foregoing, nothing in this Section shall release Lender from
any obligations or liability under the Sugar Agreement.
SCHEDULE 1
HAWAII TERMINAL FACILITIES
Exhibit 2.6 to
Exhibit E
CALIFORNIA AND HAWAIIAN SUGAR COMPANY
1390 WILLOW PASS ROAD CONCORD, CA 94520
May 20, 1993
C and H Sugar Co. SAMPLE INVOICE
We debit your
Account as Follows:
FORM 0048-ACCOUNTS RECEIVABLE TERMS: NET CASH
Amount
Moku Pahu V. 141
Hawaiian Sugar Delivered to Crockett
Pounds Discharged: 69411053 34705.53 ST
Pol: 99.275
Basis Price-Avg. #14 Sett 3/9-3/29: 21.619333
Pol Premium:
96 - 97: 1 @.5% 0.108097
97 - 98: 1 @1.2% 0.259432
97 - 98: 1 @1.05% 0.227003
98 - 99: 1 @1.20% 0.259432
99 - 99.275 @.6% 0.035672
---------
Price Including Pol 22.508969
Less Discount 1.250000
Net Price 21.258969 cents/lb.
69,411,053 pounds @ 21.258969 cents/lb. $14,756,073.93
Less: Delivery charges:
Stevedoring @ $10.95/ST ($380,025.52)
Despatch @ $2.66/ST ($92,316.70)
Dockage @ $.25/ST ($8,676.38)
Ship's Clerk ($4,000.00)
Plus: Fine Cleaning Credit @ $.438/ST $15,201.02
TOTAL DUE HSTC $14,286,256.35
Less: ProForma Payment/Advances
NET DUE HSTC
CREDIT DISTRIBUTION A/C
HAWAIIAN SUGAR TRANSPORTATION COMPANY
STANDARD SUGAR MARKETING CONTRACT
TABLE OF CONTENTS
Page
ARTICLE I - DEFINITIONS 1
ARTICLE II - OBLIGATION TO DELIVER AND
RECEIVE SUGAR 4
ARTICLE III - DELIVERY OF SUGAR 4
SECTION 3.01 PLACE OF DELIVERY AND
DELIVERY COSTS 4
SECTION 3.02 DELIVERY SCHEDULES 5
SECTION 3.03 MANNER OF DELIVERY 5
SECTION 3.04 TRANSFER OF TITLE AND
RISK OF LOSS 5
ARTICLE IV - WEIGHING AND QUALITY DETERMINATIONS 6
SECTION 4.01 WEIGHT 6
SECTION 4.02 QUALITY DETERMINATIONS,
PREMIUMS AND DISCOUNTS 6
SECTION 4.03 TEST PERIODS 6
ARTICLE V - PAYMENT FOR SUGAR 7
SECTION 5.01 SALE OF RAW SUGAR 7
SECTION 5.02 PAYMENT FOR SUGAR 7
SECTION 5.03 CAPITAL RESERVES 9
SECTION 5.04 OVERPAYMENTS 10
SECTION 5.05 METHOD OF PAYMENT 10
SECTION 5.06 AUDITOR 10
ARTICLE VI - FORCE MAJEURE 10
SECTION 6.01 FORCE MAJEURE 10
SECTION 6.02 NOTICE 10
ARTICLE VII - THIRD PARTY BENEFICIARY 11
SECTION 7.01 INTENDED BENEFICIARY 11
SECTION 7.02 AMENDMENT AND WAIVER 11
ARTICLE VIII - GENERAL 11
SECTION 8.01 TERM 11
SECTION 8.02 ARBITRATION 11
SECTION 8.03 MISCELLANEOUS 13
STANDARD SUGAR MARKETING CONTRACT
THIS STANDARD SUGAR MARKETING CONTRACT (this "Contract"),
dated as of June 4, 1993, is made between Hawaiian Sugar
Transportation Company, Inc., an agricultural cooperative
association organized under the laws of the State of Hawaii
(the "Association"), and Oahu Sugar Company, Limited a Hawaii
corporation organized under the laws of the State of Hawaii
(the "Producer").
RECITALS
WHEREAS, the Association is organized to market raw sugar
produced from sugarcane grown in the State of Hawaii and the
byproducts thereof for the producers thereof on a cooperative
basis;
WHEREAS, the Producer is a producer of raw sugar from
sugarcane grown in the State of Hawaii;
WHEREAS, concurrently herewith the Association is entering
into an Agreement for the Delivery and Sale of Raw Sugar with
California and Hawaiian Sugar Company, a corporation organized
under the laws of the State of California ("C&H"), pursuant to
which the Association has agreed to sell raw sugar to C&H (the
"C&H Raw Sugar Agreement");
WHEREAS, C&H and A&B-Hawaii, Inc., a Hawaii corporation
("ABHI"), the Producer and each of the other principal
producers of raw sugar from sugarcane grown in the State of
Hawaii (the "Principal Producers") are concurrently herewith
entering into a Purchase Agreement pursuant to which the
Producer has agreed to enter into this Contract;
WHEREAS, each of the Principal Producers is concurrently
herewith also entering into a Standard Sugar Marketing
Contract with the Association in substantially the form of
this Contract (the "Standard Sugar Marketing Contract"); and
WHEREAS, the Producer desires to sell and deliver, and the
Association desires to purchase and receive, raw sugar on the
terms and conditions set forth below;
NOW THEREFORE, in consideration of the premises and of the
mutual covenants and agreement herein contained, the
Association and the Producer hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 CERTAIN DEFINED TERMS.
As used in this Contract, the following terms shall have
the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
"Business Day" shall mean any Day on which commercial banks
in San Francisco, California and Honolulu, Hawaii are required
by law to be open for business.
"C&H" shall have the meaning set forth in the third recital
hereof.
"C&H Raw Sugar Agreement" shall have the meaning set forth
in the third recital hereof.
"Contract Year" shall mean a calendar year.
"Event of Force Majeure" shall mean an event that causes a
permanent or temporary interruption in, on the one hand, the
sale and delivery of Sugar hereunder by the Producer or, on
the other hand, the purchase and receipt of Sugar hereunder by
the Association, which is beyond the reasonable control of the
Producer or the Association, respectively, and could not, by
the exercise of due diligence, have been avoided by the
Producer or the Association, respectively, and shall include,
without limitation:
(a) an act of God, including,
without limitation, fire, flood,
earthquake, landslide, storm, hurricane,
typhoon, epidemic, an influx of pests
or similar occurrence;
(b) war, whether declared or
undeclared, blockade, port closing,
revolution, insurrection, civil
disturbances, sabotage, or acts of
public enemies;
(c) strike, boycott, lockout or
other labor disturbance;
(d) explosion, breakage, or other
damage to or failure or breakdown of
facilities or equipment related to, in
the case of the Producer, the growing or
processing of sugarcane by the Producer
or, in the case of the Association, the
storage or transporting of raw sugar by
the Association, the storage or
transporting of raw sugar by the
Association (including the loss or
substantial impairment of the sugar
delivery vessels owned, controlled or
regularly employed by the Association);
(e) power failure, unavailability
of ocean transportation, shortage or
lack of water, fuel or materials
resulting from another Event of Force
Majeure or the acts or omissions of a
person or entity not under the control
or direction of the Producer or the
Association, as the case may be; and
(f) an order, judgment, ruling,
decision or other act or failure to act
of any governmental, civil or military
or judicial to act of any governmental,
civil or military or judicial authority,
including, without limitation, any
adoption of, or change in, any law,
regulation or other legal requirement.
"Final Net Price Per Pound" shall refer to the payment
described in Section 5.02(d).
"Final Payment" shall refer to the payment described in
Section 5.02(d).
"Initial Delivery Schedule" shall have the meaning set
forth in Section 3.02(a).
"Initial Per Unit Allocation" shall refer to the payments
described in Section 5.02(a)
"Molasses" shall refer to the final or blackstrap molasses
produced, by or for the account of a Patron in connection with
the production of raw sugar by or for the account of such
Patron.
"Patrons" shall mean all of the producers of raw sugar from
sugarcane grown in the State of Hawaii, including the
Producer, who are parties to Standard Sugar Marketing
Contracts.
"Prime Rate" shall mean the "prime" or "base" rate
announced from time to time by Bank of America N.T. & S.A. at
its principal office in San Francisco, California in respect
of 90-day loans to its corporate borrowers.
"Producer's Customary Raw Sugar Terminal" shall have the
meaning set forth in Section 3.01(a).
"Raw Sugar Terminal" shall refer to each of the raw sugar
terminals located in Hawaii which heretofore has been used by
C&H to store raw sugar.
"Raw Value" of any quantity of Sugar shall mean its
equivalent in terms of ordinary commercial raw sugar testing
96 degrees by the polariscope. This conversion is to be done
for Sugar testing more than 92 degrees by the polariscope by
multiplying (i) the number of pounds, avoirdupois, thereof by
(ii) the quantity obtained by adding (A) 0.93 to (B) the
quantity obtained by multiplying (X) 0.0175 by (Y) the number
of degrees and fractions of a degree of polarization above 92
degrees for such Sugar.
"Revised Delivery Schedule" shall refer to the schedules
described in Section 3.02(a) and Section 3.02(b).
"Standard Sugar Marketing Contract" shall have the meaning
set forth in the fifth recital hereof.
"Sugar" shall mean any grade or type of saccharine product
other than molasses produced from sugarcane grown in Hawaii.
"Sugar of a Contract Year" shall mean, for any Contract
Year, all Sugar produced by the Patrons to which the
Association has taken title in accordance with Section 3.04
during such Contract Year.
"Supplemental Per Unit Allocation" shall refer to the
payments described in Section 5.02(b).
"Test Period" shall mean any of the periods described in
Section 4.03.
"Total Payment" shall have the meaning set forth in Section
5.02(e).
ARTICLE II
OBLIGATION TO DELIVER AND RECEIVE SUGAR
(a) Basic Obligation. Unless otherwise set forth in a
rider attached hereto, for the term of this Contract the
Producer agrees to sell and deliver to the Association, and
the Association agrees to purchase and receive from the
Producer, all of the Sugar produced by the Producer from
sugarcane grown in the State of Hawaii. All Sugar delivered
to the Association shall be delivered in the form of raw
centrifugal cane sugar polarizing at not less than 94 degrees
and shall be in good order and sound condition.
(b) Limitation. Nothing in this Contract shall, however,
obligate the Producer to cultivate sugarcane or, except as set
forth in Section 3.02(c), to produce Sugar for sale to the
Association. Nor shall the Association have any liability
under this Agreement for failing to purchase and receive Sugar
if such failure arises from a default by C&H under the terms
of the C&H Raw Sugar Agreement. Further, if the C&H Raw Sugar
Agreement terminates during the term hereof, this Contract
shall be amended as appropriate.
ARTICLE III
DELIVERY OF SUGAR
SECTION 3.01 PLACE OF DELIVERY AND DELIVERY COSTS.
(a) Place of Delivery. All Sugar to be delivered by the
Producer pursuant to this Contract shall be delivered to the
Raw Sugar Terminal customarily used by the Producer (the
"Producer's Customary Raw Sugar Terminal"), or to such other
place or places within the State of Hawaii, as may be directed
by the Association.
(b) Delivery Costs. All costs incurred in delivering the
Producer's Sugar to the Association in accordance with
subsection (a) above shall be borne by the Producer, except
that if the Association shall direct the Producer to deliver
any portion of its Sugar to a place or places within the State
of Hawaii other than the Producer's Customary Raw Sugar
Terminal, then the Association shall charge or pay to the
Producer, as the case may be, an amount equal to the
difference between (i) the delivery costs for such Sugar from
the Producer's mill to the place of actual delivery and (ii)
the delivery costs which would have been incurred if the Sugar
had been delivered to the Producer's Customary Raw Sugar
Terminal. Such charge or payment with respect to delivery
costs incurred during any Test Period hereunder shall be set
forth together with supporting detail in a statement presented
by the Producer to the Association promptly following the end
of such Test Period, and shall be due and payable on the tenth
(10th) day of the month next following such Test Period.
(c) Emergency Storage. Whenever conditions make it
necessary in the judgment of the Association for Sugar to be
put into emergency storage in Hawaii, the Association may
direct the Producer to deliver its Sugar into emergency
storage facilities, which may include facilities at the
Producer's mill. All costs connected with the use of such
emergency storage shall be separately accumulated and shall be
apportioned among all of the Patrons of the Association on
such fair and equitable basis as may be agreed upon by the
Association and such Patrons.
SECTION 3.02 DELIVERY SCHEDULES.
(a) Initial and Revised Delivery Schedules. On or before
the first day of October and each Contract Year, the Producer
shall furnish the Association with a delivery schedule setting
forth the quantity of Sugar it expects to deliver to the
Association during each calendar week of the immediately
succeeding Contract Year (the "Initial Delivery Schedule").
On the next to the last Business Day of each calendar week the
Producer shall furnish the Association with an update of the
delivery schedule last furnished to the Association, with such
adjustments, if any, as may be appropriate to reflect new
information pertinent to the quantities of Sugar the Producer
expects to deliver in each calendar week of the Contract Year;
provided, however, that no adjustments shall be made to the
Sixteen Week Best Efforts Supply Commitment described in
Section 3.02(c) except as made necessary by an Event of Force
Majeure. Initial Delivery Schedules as updated are referred
to herein as "Revised Delivery Schedules".
(b) Delivery Schedules for 1993 Contract Year. On or
before the next to the last Business Day of the first calendar
week beginning after the date of this Contract, the Producer
shall furnish the Association with a delivery schedule setting
forth the quantity of Sugar it expects to delivery to the
Association during each calendar week of the 1993 Contract
Year. On the next to the last Business Day of each succeeding
calendar week of the 1993 Contract Year, the Producer shall
furnish the Association with updated delivery schedules
("Revised Delivery Schedules") conforming in all respects to
Revised Delivery Schedules as described in Section 3.02(a).
(c) Sixteen Week Best Efforts Supply Commitment. The
Producer shall use its efforts to deliver the Sugar scheduled
under a Revised Delivery Schedule for delivery during each of
the sixteen consecutive calendar weeks commencing with the
calendar week next following the week in which the Revised
Delivery Schedule is delivered to the Association.
(d) The Producer shall exercise due diligence and
reasonable care in the preparation of delivery schedules
hereunder and shall furnish the Association with such other
information as the Association may reasonably request
regarding the Producer's expected deliveries of Sugar to the
Association.
SECTION 3.03 MANNER OF DELIVERY.
(a) Suitable Vehicles. The Producer shall deliver all
Sugar to the Association in bulk and by vehicles equipped for
the transportation of raw sugar.
(b) Commingled Sugar. When Sugar produced by the Producer
is commingled with Sugar from other Patrons for transportation
to the designated point of delivery, the Producer's share of
any such shipment shall be determined by a method to be
mutually agreed upon by the Producer and the Association.
SECTION 3.04 TRANSFER OF TITLE AND RISK OF LOSS.
Notwithstanding any other provision hereof, title and risk
of loss to Sugar subject to this Contract shall pass from the
Producer to the Association: (i) when such Sugar is loaded by
the Producer aboard ground transportation equipment for
movement to the Producer's Customary Raw Sugar Terminal or any
alternative delivery point designated by the Association or
(ii) if emergency storage at the Producer's mill has been
authorized by the Association pursuant to Section 3.01(c), as
Sugar is put into such storage pursuant to the Association's
authorization. Upon such passage of title, all such Sugar
shall become the property of and shall be subject to the order
of the Association and any and all warehouse receipts or other
documents of title or accountability related to such Sugar
shall be delivered to and issued in the name of the
Association.
ARTICLE IV
WEIGHING AND QUALITY DETERMINATIONS
SECTION 4.01 WEIGHT.
The Association shall weigh, or cause to be weighed, all
Sugar delivered to the Association by the Producer. The
methods of weighing shall be in accordance with the
established practice for each place of delivery, or as may be
agreed upon between the Association and the Patrons. Weighing
shall be subject to check by representatives of the Producer.
SECTION 4.02 QUALITY DETERMINATIONS
PREMIUMS AND DISCOUNTS.
(a) Sampling and Testing. All Sugar delivered by the
Producer to the Association shall be sampled in accordance
with the procedures last employed by C&H as of the date of
this Contract and shall be tested by the Association or its
designee in accordance with the procedures set forth in the
C&H Raw Sugar Agreement, as amended from time to time.
(b) Premiums and Discounts. Quality premiums and
discounts for all Sugar delivered by the Producer to the
Association shall be calculated in accordance with the
provisions of the C&H Sugar Agreement, as amended from time to
time, except that the "Basis Price" for purposes of such
calculations shall mean the weighted average of the Basis
Prices determined under the C&H Raw Sugar Agreement with
respect to all Sugar delivered by the Association to C&H under
such Agreement. A premium for Aiea Quality Raw Sugar shall be
paid only on Aiea Quality Raw Sugar that is delivered to C&H's
Aiea refinery pursuant to the authorization or direction of
the Association. The Association shall allocate among the
Patrons the opportunity to deliver Aiea Quality Raw Sugar to
the C&H Refinery on a fair and equitable basis that takes into
account the ability to produce Aiea Quality Raw Sugar in a
manner that will enable the Association to fulfill its
obligations under the C&H Raw Sugar Agreement and the costs to
the Association of fulfilling such obligation.
(c) Costs. The cost of all test and determinations
required by this Section 4.02 shall be borne by the
Association.
(d) Commingling. The quality determination referred to in
this Section shall be made before the Producer's Sugar is
commingled with the Sugar of other Patrons. However, if more
than one Patron shall have its sugarcane ground at the same
mill, the sugarcane may at the option of such Patrons be
commingled prior to grinding or milled separately and the
juices and other after-products therefrom commingled. In such
case, the quality determinations referred to in the Section
4.02 shall be made with respect to the resulting commingled
Sugar and the Sugar of each of the Patrons whose sugarcane or
sugarcane juices or other after-products were commingled shall
be deemed equal in quality for purposes of this Section.
SECTION 4.03 TEST PERIODS.
(a) Separate Determinations. Quality determinations shall
be made and premiums and discounts computed separately for the
Sugar delivered by the Producer to the Association in each of
the Test Periods in each Contract Year hereunder.
(b) Twelve Periods. There shall be twelve Test Periods in
each Contract Year. The first Test Period in each Contract
Year shall commence on January 1 and end at midnight on the
Saturday preceding the last Sunday of such month provided,
however, that in the case of the 1993 Contract Year, the first
Test Period shall commence on the date hereof and end at
midnight on the Saturday preceding the last Sunday of the
month in which such Test Period commences. Each succeeding
Test Period shall commence at the end of the preceding Test
Period and continue until midnight on the Saturday preceding
the last Sunday of the next succeeding calendar month;
provided, however, that the last Test Period in each Contract
Year shall commence at midnight on the Saturday preceding the
last Sunday in November and continue through December 31 of
such year.
(c) Advice to Producer. Quality determinations shall be
made and discounts and premiums computed for each Test Period
with respect to all Sugar of the Producer delivered to the
Association during such Test Period. Promptly following the
close of each Test Period there shall be furnished by the
Association to the Producer full information as to the
quantity and quality of all of the Sugar of the Producer for
which quality determinations were made during such Test
Period.
ARTICLE V
PAYMENT FOR SUGAR
SECTION 5.01 SALE OF RAW SUGAR.
The Producer acknowledges that all of the raw Sugar
delivered to the Association by the Producer and the other
Patrons shall be sold by the Association under or subject to
the terms of the C&H Raw Sugar Agreement.
SECTION 5.02 PAYMENT FOR SUGAR.
The Association shall make payment to the Producer, as full
return and payment for all Sugar of the Contract Year
delivered by the Producer to the Association, in amounts and
at times as follows:
(a) Initial Per Unit Allocation. The Association shall, at
the end of each Test Period, compute the total number of
pounds, Raw Value, of all Sugar delivered by the Producer to
the Association during such Test Period. In addition, at such
time the Association shall also estimate the Final Net Price
Per Pound (as described in Section 5.02(d)) to be realized
from all sales of Sugar during the Contract Year. Ninety
percent (90%), of the amount so determined or such larger or
smaller percentage as the Board of Directors of the
Association, in its sole discretion, may from time to time
determine, shall be the Initial Per Unit Allocation per pound,
Raw Value, payable by the Association with respect to all
Sugar of the Contract Year delivered during such Test Period.
The product of such Initial Per Unit Allocation multiplied by
the number of pounds, Raw Value, of Sugar delivered by the
Producer to the Association during such Test Period shall be
paid on the tenth (10th) day of the month following the close
of the Test Period.
(b) Supplemental Per Unit Allocations. Supplemental Per
Unit Allocations may be paid to the Producer from time to time
with respect to Sugar of the Contract Year which has
theretofore qualified for an Initial Per Unit Allocation in
such amounts and at such times during each Contract Year as
determined in the sole discretion of the Board of Directors of
the Association provided that in the judgment of the
Association, such payments can be made without risk of
overpayment to the Patrons and without prejudicing the
financial position of the Association.
(c) Equal Per Unit Allocations. Notwithstanding
subsections (a) and (b)above, Initial Per Unit Allocations and
Supplemental Per Unit Allocations shall be paid to the Patrons
in such manner that the aggregate amount of Initial Per Unit
Allocations and Supplemental Per Unit Allocations paid to each
Patron, including the Producer, per pound of Sugar, Raw Value,
shall at all times be as nearly equal as is practicable;
provided, however, that if the Board of Directors determines
that payment to the Producer of aggregate Initial Per Unit
Allocations and Supplemental Per Unit Allocations per pound of
Sugar, Raw Value, equal to such allocations per pound paid to
the other Patrons may create a risk of overpayment to the
Producer, it may direct that Initial Per Unit Allocations or
Supplemental Per Unit Allocations otherwise payable to the
Producer be reduced so as to avoid such overpayment, provided
that to the extent any such reduction exceeds the overpayment
that could have occurred but for such reductions, the Producer
shall be paid at the time of Final Payment such excess
together with interest at a rate equal to the Prime Rate.
(d) Final Payment. Within 60 days following the date on
which the Association shall complete the sale of all of the
Sugar of the Contract Year for each Contract Year, the Final
Payment for the Sugar of the Contract Year shall be made to
the Producer in an amount computed as follows:
(i) The net sum of all quality premiums and
discounts applicable to all Sugar of the Contract Year,
calculated in accordance with Section 4.02, shall be
determined. If the total of such premiums and discounts is a
negative figure, the sum thereof shall be added to the Total
Payment for Sugar of the Contract Year as determined pursuant
to subsection (e) below. If the total of such premiums and
discounts is a positive figure, the sum thereof shall be
subtracted from the Total Payment for Sugar of the Contract
Year. In either event, the resulting amount shall then be
divided by the number of pounds of Sugar of the Contract Year
(the "Final Net Price per Pound").
(ii) Such Final Net Price Per Pound shall then be
multiplied by the number of pounds of Sugar of the Contract
Year delivered by the Producer to the Association. From the
result thereof there shall then be deducted:
(A) The aggregate amount of all Initial Per
Unit Allocations paid by the Association to the Producer
with respect to Sugar of the Contract Year; and
(B) The aggregate amount of all Supplemental
Per Unit Allocations paid by the Association to the
Producer with respect to Sugar of the Contract Year.
(iii)The amount so determined shall, subject
to the adjustments required by subsections (f) and (g)
below, be the Final Payment due from the Association to
the Producer with respect to the Sugar of the Contract
Year.
(e) Total Payment. The total payment to be made by the
Association for all of the Sugar of any Contract Year to all
Patrons who delivered Sugar to the Association pursuant to a
Standard Sugar Marketing Contract during such year shall be
calculated as follows:
(i) There shall first be added together:
(A) The gross proceeds received by the
Association from the sale of all Sugar of the Contract
Year. In determining the gross proceeds from the sale of
Sugar of the Contract Year the Association shall consider
that all sales of Sugar are sales of Sugar of a given
Contract Year until such time as the total amount of Sugar
sold or otherwise accounted for and not allocated to a
prior Contract Year is equivalent to the total amount of
Sugar of the given Contract Year. Sale of Sugar
thereafter shall be considered to be sales of Sugar of the
subsequent Contract Year.
(B) All other receipts of the Association
in the nature of income received or accrued during the
Contract Year, which, insofar as practicable by the
application of proper accounting principles, are
attributable to Sugar of the Contract Year, but not
including any proceeds from the sale or other disposition
by the Association of molasses.
(ii) From the sum of the items described in
subsection (i) above, there shall be deducted all marketing,
operating distribution, transportation and other expenses of
the Association of whatever kind or nature, whether paid or
accrued, including, without limitation, depreciation, bonuses,
contribution to pension, insurance and disability plans,
charitable contributions, and all other types of expenses
which by the application of proper accounting principles are
allocable to Sugar of the Contract Year.
The remainder determined pursuant to the foregoing
calculation shall constitute the Total Payment for the Sugar
of the Contract Year.
(f) Terminal Costs. The Association shall determine,
separately for each Raw Sugar Terminal, all costs incurred
during each Contract Year for receiving, weighing, sampling,
sorting, loading, wharfage, loading laytime, and any other
expenses relating to Sugar of the Contract Year after its
delivery at such terminal and prior to completion of loading
and the commencement of ocean transportation. The sum so
determined shall be dived by the number of pounds of Sugar of
the Contract Year delivered at each terminal by all Patrons.
If the amount per pound so computed for any Raw Sugar Terminal
exceeds the Contract Year's average of such costs for all Raw
Sugar Terminals, then the Final Payment for all Sugar of the
Contract Year delivered at such terminal shall be reduced by
the amount of such excess, and if the amount per pound so
computed for any Raw Sugar Terminal is less than the average
of such costs for all Raw Sugar Terminals, then the Final
Payment for all Sugar of the Contract Year delivered at such
terminal shall be similarly increased. For purposes of the
foregoing computations, Sugar delivered pursuant to Section
3.01 to a place other than the Producer's Customary Raw Sugar
Terminal shall be deemed to have been delivered to such
terminal and the costs incurred with respect to such terminal
shall include the costs that would have been incurred had such
sugar actually been delivered to the terminal.
(g) Quality Premiums and Discounts. The quality premiums
and discounts applicable to the Producer's Sugar of a Contract
Year, calculated in accordance with Section 4.02, shall be
accumulated until the time for Final Payment for Sugar of the
Contract Year, at which time the sum thereof, after adjustment
to reflect the payment of Initial and Supplemental Per Unit
Allocations on a Raw Value basis, shall be added to the amount
of the Final Payment to be made by the Association to the
Producer, or shall be deducted by the Association from the
Final Payment otherwise payable to the Producer, as the case
may be.
SECTION 5.03 CAPITAL RESERVES.
If during any Contract Year the Board of Directors of the
Association has determined to withhold a sum from the members
of the Association for the purpose of a capital reserve, as
permitted by the Bylaws of the Association, then the portion
of such sum allocable to the Producer shall be subtracted from
such payment or payments due hereunder to the Producer for
such Contract Year as the Board of Directors of the
Association may determine. The Association shall maintain
records of all sums so withheld by it from the patronage
allocation of the Producer and shall advise the Producer in
writing of the dollar amount of any sum so withheld.
SECTION 5.04 OVERPAYMENTS.
If for any reason the aggregate amount of the Initial Per
Unit Allocations and the Supplemental Per Unit Allocations
paid to the Producer for Sugar of a Contract Year exceeds the
total net amount due to such Producer for such Contract Year
as computed under Section 5.02, less any sum directed to be
withheld from such Producer pursuant to Section 5.03 for
capital reserves of the Association, then the Association may,
at its option, either (i) invoice such Producer for the amount
of the overpayment so determined and the Producer shall
promptly, and in any event with five (5) Business Days, pay
the Association such amount following receipt of such invoice
or (ii) deduct such overpayment from any amount or amounts
payable to the Producer with respect to Sugar of the next
succeeding Contract Year, or both.
SECTION 5.05 METHOD OF PAYMENT.
The Association shall make all payments by check or wire
transfer; provided, however, that at all times the Association
shall have the option of making any payment due hereunder, in
whole or in part, by means of an unsecured note due within
thirty days, bearing a rate of interest to be mutually agreed
upon between the Association and the Producer.
SECTION 5.06 AUDITOR.
The Producer may at his own expense employ a certified
public accountant satisfactory to the Association to audit
such accounts of the Association as may be necessary in order
to ascertain the correctness of an amounts allocated by the
Association to the Producer under this Contract. The
Association agrees to extend necessary facilities to such
auditor.
ARTICLE VI
FORCE MAJEURE
SECTION 6.01 FORCE MAJEURE.
In the event that an Event of Force Majeure shall prevent
the Producer or the Association from taking any action
required hereunder, then the Producer's or the Association's
obligations, as the case may be, shall be suspended for the
duration of such event.
SECTION 6.02 NOTICE.
If the Producer or the Association shall be prevented from
performing its obligations hereunder in full or in part as a
result of the occurrence of an Event of Force Majeure, such
party shall give prompt notice thereof to the other (but in no
event more than ten (10) days after the disabled party is
aware that its performance will be prevented) which notice
shall specify the nature of such occurrence, the steps being
taken and intended to be taken to remove the disability, and
an estimate of the date when full performance will be resumed
hereunder. The disabled party shall keep the other party
informed of a material developments with respect to such Event
of Force Majeure.
ARTICLE VII
THIRD PARTY BENEFICIARY
SECTION 7.01 INTENDED BENEFICIARY.
The Producer and the Association acknowledge and agree the
C&H is an intended third party beneficiary of this Contract
and shall be entitled to enforce any and all obligations of
the Producer under this Contract.
SECTION 7.02 AMENDMENT AND WAIVER.
This Contract, including the riders and exhibits hereto, if
any, may be amended, any right, obligation or condition
hereunder waived, and any departure from any provision hereof
permitted, only upon the prior written consent of C&H, which
consent shall not be unreasonably withheld.
ARTICLE VIII
GENERAL
SECTION 8.01 TERM.
The term of the Contract shall commence June 4, 1993 and
shall end on June 3, 2003.
SECTION 8.02 ARBITRATION.
(a) General. Except for any controversy or disagreement
arising out of or relating to the interpretation or
enforcement of this Section 8.02 any controversy or
disagreement arising out of or relating to this Contract or
any breach hereof shall be submitted by the parties to
arbitration in Honolulu, Hawaii, under the Commercial
Arbitration Rules of the American Arbitration Association for
commercial arbitration and, to the extent not inconsistent
therewith or with the terms hereof, the laws of the State of
Hawaii. Such arbitration shall be undertaken by three
disinterested arbitrators (the "Arbitrators") one of whom
shall be selected by the Producer, one by the Association, and
one of whom shall be the chairman of the arbitral tribunal and
shall be chosen by agreement between the first and second
Arbitrators. The Producer and the Association shall select
such Arbitrators within fifteen (15) days after the party
desiring arbitration has notified the other party in writing.
Such notice demanding arbitration shall state specifically the
question or questions to be submitted for decision or the
point or points in controversy and shall include such party's
selection of an Arbitrator. If, at the expiration of fifteen
(15) days from receipt of such notice, the party receiving
such notice has not informed the party demanding the
arbitration of its selection of a second arbitrator, the party
making the demand may make such selection. The first and
second Arbitrators shall select a third Arbitrator within
fifteen (15) days from the date of the appointment of the
second Arbitrator. If the first and second Arbitrators cannot
agree as to a third Arbitrator, such third Arbitrator may be
appointed upon ten days' notice upon application of either
party to the chief or presiding judge, or judge acting as
chief of presiding judge, of the First Circuit Court of the
State of Hawaii. The arbitral tribunal shall set the date,
time and place for each hearing, shall give to each of the
parties at least 10 days' advance written notice of the date,
time and place of the initial hearing and shall proceed
without delay to hear and determine the matters in dispute.
Each of the parties hereto may be represented by counsel or
other authorized representative at any hearing. The party
intending to be so represented shall notify the Arbitrators
and the other party of the name and address of the
representative at least three days prior to the date set for
the hearing. Such arbitration shall be conducted in such
manner as the Arbitrators shall determine, consistent with the
above referred to Commercial Arbitration Rules. A written
transcript of the proceedings shall be prepared at the expense
of the party requesting such transcript, if any, or if both
parties hereto shall so request, they shall share the cost
equally.
(b) Expenses. Each party shall bear any expenses incurred
by it prior to arbitration, including legal and accounting
fees, if any, with respect to any disagreement hereunder. If
the matter is submitted to arbitration, the Arbitrators shall
designate the party or parties to bear the expenses of such
arbitration and/or the respective amounts to be borne by each
party. In making such an allocation of costs, the Arbitrators
shall be expressly instructed by the parties that, absent
extraordinary circumstances, the prevailing party in such a
proceeding shall be entitled to reimbursement for its
reasonable attorneys' fees and other reasonable expenses
incurred in connection therewith by the non-prevailing party.
(c) Remedies. The Arbitrators shall have the authority to
resolve any dispute under this Contract that is submitted to
them, including, without limitation the right to determine (a)
whether any party is in breach of any of its obligations under
this Contract, (b) whether such breach has resulted in damage
to another party to this Contract (c) the amount of money
necessary to compensate such damage, and (d) any equitable
relief appropriate under the circumstances. The Arbitrators
shall render their written decision in respect of the
controversy at issue within 90 days after the date on which a
notice demanding arbitration is first given. The
determination of the Arbitrators as to any matter submitted to
arbitration shall be conclusive and binding upon the parties
hereto. Each party shall immediately make such changes in the
conduct of such party's business or such payment of damages,
as the case may be, as required by such determination and
award, if any.
(d) Enforcement. Judgment upon any award rendered by the
Arbitrators may be entered in any court having jurisdiction
over the parties and the subject matter. In the event that
either party hereto shall be required to take any action to
enforce any such judgment, such party shall be entitled to
reimbursement for its reasonable attorneys' fees and other
reasonable expenses incurred in connection therewith by the
non-prevailing party.
(e) Discovery. Discovery in such proceedings shall be
limited to the taking of depositions and document production.
Unless ordered by the Arbitrators, the submission of
interrogatories will not be permitted. The Arbitrator shall
have the power to enforce the discovery rights and obligations
set forth in this Section. The books and papers of the
parties hereto, so far as they relate to matters submitted to
arbitration, shall be open to the investigation of the
Arbitrators.
(f) Chairman. In an arbitration proceeding conducted
pursuant to this Section, the chairman of the arbitral
tribunal shall be a citizen of the United States who shall (i)
be admitted to practice law in one of the states of the United
States, (ii) shall have had at least 20 years' experience as
an attorney or a judge and (iii) have expertise in the area of
commercial law.
(g) Notice to C&H. The party initiating an arbitration
shall give C&H a copy of the notice demanding arbitration at
the same time it serves the other party with such notice. C&H
shall be entitled to intervene in such arbitration and, to the
extent its interest are affected, to participate in such
arbitration.
(h) Cooperation. The parties hereto agree that they will
cooperate in good faith in such proceedings in order to work
toward the prompt resolution of the subject dispute.
SECTION 8.03 MISCELLANEOUS
(a) Interpretation of Agreement. Any reference in this
Contract to an Article, a Section, an Appendix or an Exhibit
is a reference to an article hereof, a section hereof, an
appendix hereto or an exhibit hereto, respectively, and to a
subsection or a clause is, unless otherwise stated, a
reference to a subsection or a clause of the Section or
subsection in which the reference appears. The words
"hereof", "herein", "hereto", "hereunder" and the like mean
and refer to this Contract as a whole and not merely to the
specific Article, Section, subsection or clause in which the
respective word appears. References to agreements and other
contractual instruments shall be deemed to include all
subsequent amendments and other modifications thereto, but
only to the extent such amendments and other modifications are
not prohibited by the terms of this Contract. References to
statutes or regulations are to be construed as including all
statutory and regulatory provisions consolidating, amending or
replacing the statute or regulation referred to. The captions
and headings used in the Contract are for the convenience of
reference only and shall not affect the construction of this
Contract.
(b) Execution and Effect of Amendments. If approved by not
less than sixty-seven percent (67%) of the votes of the
Patrons who are parties to Standard Sugar Marketing Contracts,
with such Patrons voting as hereinafter described, and if
approved by the written consent of C&H, as provided under
Section 7.02, the Board of Directors of the Association may
adopt amendments so approved to all, and not less than all, of
the Standard Sugar Marketing Contracts, including this
Contract; provided, however, that if the Association enters
into any contract or agreement contingent on the continuance
of any of the terms of the Standard Sugar Marketing Contract,
then, so long as such contract or agreement remains in effect,
the Standard Sugar Marketing Contract shall not be amended in
any way that might be in violation of any commitment of the
Association in connection with such contract or agreement; and
provided further that no amendment extending the period of,
changing materially the payment provisions of, or imposing
supply commitments under the Standard Sugar Marketing Contract
shall be adopted without the approval of all of the Patrons
who are parties to the Standard Sugar Marketing Contracts. In
voting on any proposed amendment to the Standard Sugar
Marketing Contract, each Patron shall be entitled to one vote
for each Raw Value ton of Sugar of the preceding two (2)
Contract Years credited to such Patron in the Association's
final accounting for such Contract Years. If a Patron was not
a party to the Standard Sugar Marketing Contract for the whole
of such period, it shall be entitled to votes equal to the
product of the tons of Sugar which were supplied by such
Patron, during the immediately preceding twelve months
multiplied by two (2). Upon the adoption of any amendment to
the Standard Sugar Marketing Contract, in the manner provided
herein, the provisions of such amendment shall, from and after
the specified effective date of such amendment, be treated for
all purposes as provisions of the Standard Sugar Marketing
Contract, and shall be binding on all parties to the Standard
Sugar Marketing Contract.
(c) Entire Agreement. This Contract, including the riders
and exhibits hereto, if any, together with the provisions of
the C&H Raw Sugar Agreement and the other agreements and
documents expressly referred to herein, embodies the entire
agreement and understanding of the parties hereto in respect
of the transactions contemplated by such agreements. There
are no restrictions, promises, inducements, representations,
warranties, covenants or undertakings, other than those
expressly set forth or referred to herein or therein. This
Contract supersedes all prior agreements and understandings
between the parties with respect to such transactions.
(d) Notices. Any notice, request, instruction or other
document to be given hereunder by any party hereto (or C&H) to
the other party hereto (or to C&H) shall be in writing, shall
be deemed to have been duly given or delivered when (i)
delivered personally, (ii) telecopied (receipt confirmed, with
a copy sent by certified or registered mail), (iii) telexed
(and the appropriate answer back received, with a copy sent by
certified or registered mail), or (iv) sent by certified or
registered mail, postage prepaid, return receipt requested, or
by Federal Express or other overnight delivery service, to the
address of the party (or C&H) set forth below or to such
address as the person to whom notice is to be given shall
provide in a written notice to the other party (or C&H).
(i) To the Association:
Hawaiian Sugar Transportation Company
c/o C. Brewer and Company, Limited
827 Fort Street
Honolulu, Hawaii 96813
Telecopier: (808) 544-6182
Telephone: (808) 536-4461
Attention: President
with copies to:
Hawaiian Sugar Transportation Company
830 Loring Avenue
Crockett, CA 94525-1199
Telecopier: (510) 787-3196
Telephone: (510) 787-4242
Attention: Vice President - Operations
(ii) To the Producer: c/o Amfac/JMB Hawaii, Inc.
900 N. Michigan Avenue
Chicago, IL 60611
Telecopier:_____________________
Telephone:______________________
Attention: President
with copies to:
Telecopier:_____________________
Telephone:______________________
Attention: General Counsel
(iii) To C&H:
C&H Sugar Company
830 Loring Avenue
Crockett, CA 94525-1199
Telecopier: (510) 787-2058
Telephone: (510) 787-4205
Attention: President
With copies to:
C&H Sugar Company
830 Loring Avenue
Crockett, CA 94525-1199
Telecopier: (510) 787-2058
Telephone: (510) 787-4209
Attention: General Counsel
(e) No Strict Constructions. This Contract has been
prepared jointly by representatives of the parties hereto and
shall not be strictly construed against either party.
(f) Successors and Assigns. All the covenants and
provisions of this Contract by or for the benefit of the
Producer or the Association shall bind and inure to the
benefit of their respective successors and assigns; provided,
however, that no assignment of this Contract or any portion
hereof shall relieve the assigning party of any of its duties
or obligations hereunder. Neither party shall assign this
Contract without the written consent of the other party and
C&H.
(g) Severability. If any term, provision, covenant or
restriction of this covenant is held by a court of competent
jurisdiction or other authority of arbitral tribunal to be
invalid, illegal, void or unenforceable under applicable law,
such term, provision, covenant or restriction shall be
excluded from this Contract and the balance of the Contract
shall be interpreted as if such term, provision, covenant or
restriction were so excluded and shall be enforceable in
accordance with its terms to the fullest extent permitted by
law.
(h) Further Assurances. Each of the parties shall, without
further consideration, use reasonable efforts to execute and
deliver to the other such additional documents and take such
other action, as the other may reasonably request to carry out
the intent of this Contract and the transaction contemplated
hereby.
(i) Governing Law. This Contract shall be governed by, and
construed in accordance with, the internal laws of the State
of Hawaii (without reference to its conflict of law rules) as
applied to agreements among Hawaii residents entered into and
to be performed entirely within Hawaii.
(j) Counterparts. This Contract may be executed in any
number of counterparts, each of which when so executed shall
be deemed an original, and all of which taken together shall
constitute but one and the same agreement.
(k) Approval of Bylaws. The Producer agrees to be and is
bound by the Bylaws of the Association, including all
amendments thereto. In the event of a conflict between this
Agreement and the Bylaws, the terms of this Agreement shall
prevail with respect to the subject matter hereof.
DATE: June 4, 1993
ASSOCIATION
HAWAIIAN SUGAR TRANSPORTATION COMPANY, INC.
By:_____________________
Title: President
PRODUCER
[HAWAII GROWER]
By:_____________________
Title:__________________
IN WITNESS WHEREOF, the parties hereto have caused this
Contract to by duly executed as of the date first above
written.
ASSOCIATION
HAWAIIAN SUGAR TRANSPORTATION COMPANY, INC.
By:_____________________
Title:__________________
PRODUCER
OAHU SUGAR COMPANY, LTD.
By:_____________________
Title:__________________
IN WITNESS WHEREOF, the parties hereto have caused this
Contract to be duly executed as of the date first above
written.
ASSOCIATION
HAWAIIAN SUGAR TRANSPORTATION COMPANY, INC.
By:_____________________
Title:__________________
PRODUCER
LIHUE PLANTATION COMPANY, LTD.
By:_____________________
Title:__________________
IN WITNESS WHEREOF, the parties hereto have caused this
Contract to be duly executed as of the date first above
written.
ASSOCIATION
HAWAIIAN SUGAR TRANSPORTATION COMPANY, INC.
By:_____________________
Title:__________________
PRODUCER
KEKAHA SUGAR COMPANY, LTD.
By:_____________________
Title:__________________
IN WITNESS WHEREOF, the parties hereto have caused this
Contract to be duly executed as of the date first above
written.
ASSOCIATION
HAWAIIAN SUGAR TRANSPORTATION COMPANY, INC.
By:_____________________
Title:__________________
PRODUCER
PIONEER MILL COMPANY, LIMITED
By:_____________________
Title:__________________
IN WITNESS WHEREOF, the parties hereto have caused this
Contract to be duly executed as of the date first above
written.
ASSOCIATION
HAWAIIAN SUGAR TRANSPORTATION COMPANY, INC.
By:_____________________
Title:__________________
PRODUCER
OLOKELE SUGAR COMPANY, LTD.
By:_____________________
Title:__________________
IN WITNESS WHEREOF, the parties hereto have caused this
Contract to be duly executed as of the date first above
written.
ASSOCIATION
HAWAIIAN SUGAR TRANSPORTATION COMPANY, INC.
By:_____________________
Title:__________________
PRODUCER
MAUNA KEA AGRIBUSINESS CO., INC.
By:_____________________
Title:__________________
IN WITNESS WHEREOF, the parties hereto have caused this
Contract to be duly executed as of the date first above
written.
ASSOCIATION
HAWAIIAN SUGAR TRANSPORTATION COMPANY, INC.
By:_____________________
Title:__________________
PRODUCER
KA'U AGRIBUSINESS CO., INC.
By:_____________________
Title:__________________
IN WITNESS WHEREOF, the parties hereto have caused this
Contract to be duly executed as of the date first above
written.
ASSOCIATION
HAWAIIAN SUGAR TRANSPORTATION COMPANY, INC.
By:_____________________
Title:__________________
PRODUCER
WAIALUA SUGAR COMPANY, INC.
By:_____________________
Title:__________________
IN WITNESS WHEREOF, the parties hereto have caused this
Contract to be duly executed as of the date first above
written.
ASSOCIATION
HAWAIIAN SUGAR TRANSPORTATION COMPANY, INC.
By:_____________________
Title:__________________
PRODUCER
GAY & ROBINSON, INC.
By:_____________________
Title:__________________
STANDARD SUGAR MARKETING CONTRACT
RIDER 5.02
WHEREAS, the transfer before the close of the 1993 Contract
Year from the Association's Standard Sugar Transportation
Contract to the Association's Standard Sugar Marketing
Contract of the costs of ocean transportation of Sugar
delivered by the Patrons to the Association would result in
the Patrons bearing different per ton costs for the ocean
transportation of Sugar delivered to the Association depending
upon when during such year the Patrons delivered Sugar to the
Association;
WHEREAS, the Association and the Patrons desire that all
Sugar delivered to the Association during the course of a
Contract Year bear the same per on cost of ocean
transportation without regard to when within such year such
Sugar is delivered to the Association; and
WHEREAS, the desired allocation of ocean transportation
costs is in accordance with the past practice of the Hawaiian
sugar industry and is fair and equitable to all Patrons of the
Association;
THE PARTIES AGREE AS FOLLOWS:
The cost of ocean transportation of the Sugar of the
1993 Contract Year shall be borne by the Patrons,
including the Producer, on a pooled basis pursuant to
the existing Standard Sugar Transportation Contracts
between the Association and its Patrons. All amounts
payable under the Standard Sugar Transportation
Contract between the Producer and the Association with
respect to Sugar of the 1993 Contract Year shall be
deducted from amounts payable under this Contract. If
the Association does not require 1993 Contract Year
Sugar delivered by the Producer to be transported
pursuant to such Standard Sugar Transportation
Contract, the Association shall charge to the Producer
an amount equal to the cost of ocean transportation
which would otherwise have been borne by the Producer.
DATE:_________________
ASSOCIATION
HAWAIIAN SUGAR TRANSPORTATION COMPANY, INC.
By:____________________
Title:_________________
PRODUCER
[HAWAII GROWER]
By:____________________
Title:_________________
