U.S. Securities and Exchange Commission
Operations Center, Stop 0-7
6432 General Green Way
Alexandria, VA 22312
Re: Amfac/JMB Hawaii, Inc.
Commission File No. 33-24180
Form 10-K
Amfac/JMB Finance, Inc.
Commission File No. 36-3611183
Form 10-K
Gentlemen:
Enclosed, for the above-captioned registrants, is one paper
copy of which is manually executed of registrant's current
report on Form 10-K for the year ended December 31, 1996.
Please acknowledge receipt of the Form 10-K filing by signing
and returning the enclosed self-addressed postcard.
Thank You,
Very truly yours,
By: Northbrook Corporation
Parent Company
By: _______________________
Gary Smith
Vice President
and Principal Accounting Officer
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Act of 1934
For the fiscal year ended December 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.
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
None
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
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K X
State the aggregate market value of the voting stock held by
non-affiliates of the registrant. Not applicable.
As of March 21, 1997, 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.
Certain pages of the prospectus of the registrant dated
December 5, 1988 and filed with the Commission pursuant to
Rules 424(b) and 424(c) under the Securities Act of 1933 are
incorporated by reference in Part III of this Annual Report on
Form 10-K.
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
Page
PART I
Item 1. Business 1
Item 2. Properties 7
Item 3. Legal Proceedings 12
Item 4. Submission of Matters to a Vote of Security Holders 12
PART II
Item 5. Market for the Company's and Finance's Common
Equity and Related Security Holder Matters 13
Item 6. Selected Financial Data 14
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 15
Item 8. Financial Statements and Supplementary Data 30
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 59
PART III
Item 10. Directors and Executive Officers of the Registrant 59
Item 11. Executive Compensation 62
Item 12. Security Ownership of Certain Beneficial Owners and
Management 63
Item 13. Certain Relationships and Related Transactions 63
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K 65
SIGNATURES 71
PART I
Item 1. Business
All references to "Notes" are to Notes to the
Consolidated Financial Statements contained in this report.
Amfac/JMB Hawaii, Inc. (the "Company"), has assets
substantially all of which are agricultural and developmental
real property and related assets located in Hawaii. The
Company is an affiliate of JMB Realty Corporation ("JMB") as a
result of the 1988 merger (the "Merger") of an affiliate of
JMB into Amfac, Inc. ("Amfac"), the former parent corporation
of the Company (see Note 1 for discussion of Amfac, Inc.
merger into its parent, Northbrook Corporation, in May 1995),
and the subsequent merger of a subsidiary of such affiliate
into Amfac Hawaii, Inc., which (after changing its name to
Amfac/JMB Hawaii, Inc.) continues as the surviving
corporation. Unless otherwise indicated, references herein to
the Company shall include the Company's subsidiaries.
The assets of the Company, held primarily through its
wholly-owned subsidiaries, consist principally of
approximately 46,700 acres of land, portions of which include
acreage (i) in the process of development into residential,
resort, commercial and industrial projects, (ii) currently
being managed and operated as recreational facilities, and
(iii) used in connection with the cultivation and processing
of agricultural products, principally sugar cane and related
sugar products. In addition, the Company leases approximately
55,300 acres of land used primarily in the production of sugar
cane and for access to water sources.
The real properties owned by the Company are located on the
four principal islands of the State of Hawaii: Oahu, Maui,
Kauai and Hawaii. The Company has no real property located
outside of the State of Hawaii. The Company's real properties
are described in more detail under Item 2 below.
The real estate development and agricultural operations
of the Company comprise its two primary industry segments,
"Property" and "Agricultural", respectively. The Company
segregates total revenues, operating income (loss), total
assets, capital expenditures and depreciation and amortization
by each industry segment.
At December 31, 1996, the Company employed 967 persons.
PROPERTY. The Company is attempting to maximize the
value of its owned land through land use planning, management
and development. Such planning, management and development
take into account local zoning and economic and political
constraints in order to obtain the necessary land use
designations for development and realize appreciated values.
The Company also pursues opportunities, to the extent
economically advantageous, to sell undeveloped and partially
developed parcels of land, to develop directly the
improvements at a particular property and, in some instances,
to enter into joint venture arrangements for its land
development activities. 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 cost of required infrastructure, the planned
development of these land holdings and the ability to generate
cash flow from these land holdings are expected to be long-
term in nature.
Approximately 1,800 acres of the land owned by the
Company are currently classified as urban district by the
State of Hawaii Land Use Commission and have various zoning
and land use approvals for residential, resort, commercial and
industrial development, including 500 acres for the Company's
three existing golf courses. Additional governmental
approvals, permits and certifications will be required to be
obtained with respect to the other 1,300 acres as part of the
development process. There can be no assurance, however, that
all of the necessary approvals or permits will be obtained.
An additional 2,700 acres of Company-owned land are in
the preliminary planning stages for urbanization and potential
future sale or development. The Company intends to sell or
develop all of such land in connection with various
residential, resort, commercial and light industrial projects.
The Company's development projects may be affected by
competition from other projects of a similar nature in Hawaii,
as well as from other states or countries offering resort-type
properties.
The Company's real estate development approach is
intended to enhance the value of its real property in
successive phases. The determination of whether to develop a
property is based on factors such as location, physical
characteristics, demographic patterns and perceived absorption
rates, as well as regulatory and environmental considerations,
zoning, availability of utilities and governmental services
and estimated profitability. Generally, once the
determination has been made to develop a property, the first
step is to design a master development plan. The Company then
seeks to obtain regulatory and environmental approvals. The
approval process, which requires a lengthy period of time
(often at least three to five years), is a major factor in
determining the viability and prospects for profitability of
the Company's various development projects.
The first phase in the regulatory approval process
usually consists of obtaining proper state land use
designations and County planning and zoning approvals for the
intended development. Occasionally, environmental and special
management area approvals will be required, particularly if
the property borders the shoreline. Additionally, certain
other permits and approvals (such as grading permits, building
permits and subdivision approvals) must then be obtained.
Upon receipt of such approvals and permits, the Company may
then begin construction of infrastructure including roads,
water mains, sewer lines and other public facilities. The
expenditures for infrastructure are generally significant and
usually required early in the project development process.
All of the Company's development projects are subject to
approval and regulation by various federal, state and county
agencies, especially as it relates to the nature and extent of
improvements, zoning, building densities, environmental
impacts and in some instances marketing and sales. Generally,
governmental entities have the right to impose limits or
controls on growth in communities through limited land use
designations, restrictive zoning, density reduction, impact
fees and development requirements. Such limits and controls
have materially affected, and in the future may affect
materially, the utilization of the Company's real properties
and the costs associated with developing such properties.
Land use in Hawaii is regulated by both the State of
Hawaii and each county (Hawaii, Kauai, Maui and Oahu), each in
accordance with its own general set of objectives and
policies. At the State level, all land is classified into
four major land use districts: urban, rural, agricultural and
conservation. The Company believes that it will generally be
able to pursue development of that portion of its land for
which it has or can reasonably obtain an urban district
classification. Conservation land is that land which is
necessary for preserving natural conditions (e.g., watershed
or prevention of soil erosion) and, hence, generally cannot be
developed. Agricultural and rural districts are not permitted
to have concentrated development. Certain lands, particularly
shoreline parcels, are subject to special regulatory scrutiny.
For these lands, the Company must obtain additional federal,
state and/or county approvals, including a special management
area permit from the county in which such land is located.
Certain other approvals are also necessary once zoning has
been obtained. Obtaining any and all of these approvals can
involve a substantial amount of time and expense, and
approvals may need to be resubmitted if there is any
subsequent, substantial deviation from previously submitted
plans.
In connection with seeking approvals for its development
plans, the Company has been required (and may be required in
the future) to make significant improvements in public
facilities (such as roads), to dedicate property for public
use, to provide employee and affordable housing units and to
make other concessions (monetary and otherwise). The ability
of the Company to perform its development activities may be
materially adversely affected by state or county restrictions
or conditions that may be imposed in certain communities
because of inadequate public facilities (such as roads and
sewer facilities) and/or by local opposition to continued
growth.
The Company is subject to a number of statutes imposing
registration, filing and disclosure requirements with respect
to its residential real property developments including, among
others, the Federal Interstate Land Sales Full Disclosure Act,
the Federal Consumer Credit Protection Act and the State
Uniform Land Sales Practices Act.
During 1994, the Company derived a significant portion of
its property revenues from the sale of residential land
parcels to Schuler Homes, Inc., a local home builder in
Hawaii.
The Company currently owns no patents, trademarks,
licenses or franchises which are material to its business.
AGRICULTURE. Substantially all of the Company's
agricultural activities relate to the cultivation and
processing of sugar cane. Approximately 9,200 acres of the
Company's land holdings and approximately 14,800 acres of land
leased by the Company are currently under cultivation. The
remaining approximately 77,900 acres of owned and leased land
are predominantly conservation land and land appurtenant to
the cultivation of sugar cane.
During 1995, the Company implemented plans to restructure
its sugar operations to improve efficiencies and reduce costs,
including consolidation of the operations at its two Kauai
plantations and changing to a seasonal mode of operation at
each plantation (consistent with many other sugar operations).
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 Hawaiian 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 costs. The Company recognizes revenues and
related cost of sales upon delivery of its raw sugar by HSTC
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, which expires in
2002, 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
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. Oahu Sugar completed the final
harvest of its crop in April 1995. The Company has shutdown
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
pursuing development of 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.
The sugar industry in Hawaii has experienced significant
difficulties during the past several years. Growers in Hawaii
have struggled with the high costs of production, which have
led to the closure of several plantations, including the
Company's sugar operations on Oahu in 1995. The Company has
tried to address these challenges through a number of
different measures, including a restructuring in 1995, whereby
its two Kauai plantations were consolidated and its Maui
plantation was changed to a seasonal mode.
While the above-noted changes have helped to reduce
expenses, the Company must continue to explore alternatives to
further address the high costs of sugar production. One such
alternative relates to the three-year labor contract the
Company has with its sugar plantation employees, which expires
in February 1998. Within the contract is a provision that
allows the Company and the union to renegotiate wages in 1997.
In light of the difficulties the Company has had in trying to
improve the operating results of its sugar business,
management has been meeting with union representatives to
discuss appropriate wage levels. After discussions and
negotiations with the union, it was agreed that wages would
remain at the current levels until the end of the contract.
This agreement is subject to ratification by the union
membership. The Company and the union have tentatively agreed
to return to the bargaining table during the summer of 1997 to
negotiate the terms for a new contract which will begin in
1998. Although the Company is hopeful that it will reach
agreement on contract modifications that would help improve
the viability of its sugar plantations, there can be no
assurance that sufficient changes will be agreed upon.
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 very 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 three year period subsequent to the
hurricane.
In the past, the Company has considered various uses for
its sugar-growing lands, such as alternative crops, to address
the uncertainty of the long-term viability of the sugar
industry. Although the Company still continues to explore
alternative crops, including cultivating approximately 500
acres of coffee trees on Maui, alternative crops remain an
insignificant portion of the Company's agriculture segment.
The principal competitive factors in the Company's sugar
agricultural business are price, sugar yields, processing
capabilities, technological know-how and delivery. In
addition, the Company's agricultural business must contend
with high labor costs and with transportation expenses of
shipping its raw sugar from Hawaii to the C & H refinery in
California.
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.
Except for C&H (through the Company's interest in HSTC,
as discussed above), there is no single agricultural customer
of the Company the loss of which would have a material adverse
effect on the Company. C&H is contractually bound to purchase
all of the sugar the Company produces. If, for any reason,
C&H were to cease its operations, the Company would seek other
purchasers for its sugar.
The Company historically has been involved in the
production of energy through the burning of bagasse, the
fibrous by-product from sugar cane processing, in the
Company's sugar plantations' boilers. The Company is
currently using these boilers to generate electrical energy
and steam for the sugar plantations' own consumption and for
the sale of the excess energy, if any, to the local public
utilities.
WATER RESOURCES. On the islands of Kauai, Oahu and Maui,
the Company controls approximately 300 million gallons of
water per day, 100 million gallons of water per day on land
which the Company owns and the remainder on land which is
leased by the Company. The Company also owns extensive civil
engineering improvements including tunnels, ditches and pumps
which distribute water. Most of the Company's water is
currently used for irrigating sugar cane. If sugar cane
cultivation is curtailed, water resources may become available
for other uses. However, there can be no assurance that the
Company will be able to apply the water that it currently
controls to other uses since landowners' rights under laws
governing the use and ownership of water in Hawaii, especially
as it pertains to surface water, are restricted and unsettled
in many respects.
The Company must maintain access to its significant water
sources to conduct its agricultural operations and, in many
cases, must demonstrate a sufficient supply of water in order
to obtain land development permits. The Company believes that
it has sufficient water sources for its present and planned
uses; however, there can be no assurance that the Company
will be able to retain or obtain sufficient water rights to
support all of its current or future development plans.
The Company owns the Waiahole Ditch, which is a series of
tunnels and ditches (constructed in the early 1900's) that
collects and has the capacity to transport in excess of twenty
million gallons of water per day from the windward part of
Oahu to the central Oahu plain on the Leeward side of the
Koolau mountain range. The Company has filed a petition with
the State of Hawaii Water Commission (the "Commission") for
continued use of water that flows through the Waiahole Ditch
and is currently waiting for a decision from the Commission
regarding such petition. Water from the Waiahole Ditch had
previously been used to irrigate sugar cane by Oahu Sugar
Company, a wholly-owned subsidiary of the Company. With the
closure of the Company's sugar operations on Oahu, the Company
had to apply for a new use permit for the Waiahole Ditch
water. The Company is seeking to realize significant value
from this extensive ditch system by finding alternate end
users for the water. The State of Hawaii favors continuation
of the flow of water through the Waiahole Ditch for many
reasons, among them being the recharge of the central Oahu
aquifer and the fact that central Oahu is one of the fastest
growth areas in the State. However, there are a number of
individuals and certain environmental groups that oppose the
continued flow of water in the Waiahole Ditch and want the
water to remain on the windward side of Oahu. There has been
an interim determination by the Water Commission that over one-
half of the Waiahole Ditch water must remain on windward Oahu
temporarily. A final decision from the Water Commission is
expected late in the second quarter of 1997. There can be no
assurance that the Water Commission will issue long-term use
permits to the Company or to potential users on the leeward
side.
Amfac/JMB Finance, Inc. ("Finance") is a wholly-owned
subsidiary of Northbrook Corporation ("Northbrook"). The sole
business of Finance is to repurchase, upon request of the
holders thereof, the Certificate of Land Appreciation Notes
("COLAS") pursuant to the Repurchase Agreement. In connection
with such repurchase obligations of Finance, Northbrook has
agreed to contribute sufficient capital or make loans to
Finance pursuant to a Keep-Well Agreement, to enable Finance
to meet its repurchase obligations of the COLAS. For a descrip
tion of such obligations pursuant to the Repurchase Agreement
and the Keep-Well Agreement referred to above, see Notes 2 and
3 of Notes to Balance Sheets of Finance. For a description of
the COLAS, see Note 5 of Notes to Consolidated Financial
Statements of the Company.
Item 2. Properties
LAND HOLDINGS. The major real properties owned by the
Company are described below by island.
(a) Oahu
At December 31, 1996, the Company owned approximately 800
acres of land on Oahu. These consist of approximately 136
acres for the Waikele Golf Course at Waikele, approximately 60
acres at the Oahu Sugar Company mill- site in Waipahu,
approximately 500 acres on the northeastern, watershed area of
windward Oahu (which have been designated by the State as
conservation lands) and certain other land parcels.
Waikele is a master-planned community developed by the
Company. It is situated on 577 acres of land located adjacent
to Waipahu, a rapidly growing town eight miles west of
downtown Honolulu, and at the intersection of Oahu's two major
highways. Construction of the Waikele Project commenced in
1989 and includes approximately 2,900 residential units on 19
parcels, a retail commercial center and an 18-hole golf
course. The development of the commercial center at Waikele
is complete, while development of residential units, ranging
from multi-family units to single-family homes, is continuing
and is expected to be completed by the end of 1998. All of
the residential land in Waikele was sold to 3 builders from
1990 through 1994. The Company sold the land used for the
retail commercial center in 1992. The Waikele golf course,
which is still owned by the Company, opened for public play in
May 1993. Waikele competes with other master-planned
communities on Oahu.
The Company expended approximately $1.3 million, $.5
million and $3.0 million in 1996, 1995 and 1994, respectively,
for project costs at Waikele. Such costs include construction
of roadways, utilities and related infrastructure improvements
and the golf course and clubhouse. On a cumulative project-to-
date basis, the Company has expended approximately $118
million on project costs and completed sales at Waikele of
approximately $231 million. Such sales have included
commercial property and parcel sales to home builders. Except
for certain contingent participation rights, the Company has
already received all of its proceeds from the sales of the
residential and commercial parcels at Waikele.
The Company is currently developing the approximately 60
acres of fee simple land it owns at the mill-site of Oahu
Sugar Company (which was shut down in 1995). The Company has
received zoning for a light industrial subdivision on a 37-
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. Marketing of parcels within the light industrial
subdivision is slated for mid-to-late 1997 after the
subdivision is complete. In addition, the Company has begun
the process of seeking the necessary government approvals for
the redevelopment for the remainder of the mill-site parcels,
including planned commercial, public and quasi-public uses.
During 1996, the Company sold approximately 3 acres on
Oahu for $1 million, and received $.3 million for certain
contingent participation rights at Waikele.
(b) Maui
On the island of Maui, the Company owns approximately
13,800 acres of land, most of which is currently in
agriculture or classified as conservation land. Approximately
all of the Company's land holdings are located on West Maui
near the Kaanapali Beach Resort area. Approximately 900 acres
in West Maui are presently designated urban and zoned for
resort and residential development, including approximately
320 acres comprising the two Kaanapali Golf Courses. The
Company is currently pursuing development approvals for
portions of the surrounding acreage.
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 the north
end of 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. It is anticipated that the Company will
expend up to $3.5 million (in the aggregate), of which $2.2
million has been spent as of December 31, 1996, in the design
of the bypass highway and widening of the existing highway.
The Company is marketing Kaanapali Golf Estates, a residential
community that is part of South Beach Mauka adjacent to the
Kaanapali Beach Resort in West Maui. During 1996, the Company
sold 18 homesites for approximately $5.5 million, which
includes 10 homesites to a developer who plans to construct
and sell houses on these lots. The Company currently has 6
homesites on the market, which are priced at approximately $.5
million each.
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. A significant portion of the housing in this
project will be 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 its lands in future periods. Moreover,
development of most 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 for the Company's North Beach
property (described below). The Company commenced construction
of infrastructure for Puukolii Village in the last quarter of
1996, beginning with an access road.
The planned development of the Company's land on Maui is
longer term in nature than the time frame experienced at
Waikele. 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 inventory of homesites on
Maui, which is primarily targeted to the second home buyer,
has experienced very slow sales activity to date. The
Company's competitors on Maui have also experienced slow sales
activity in the second home market. In connection with the
development of North Beach Mauka and adjacent parcels, the
Company has committed an additional $6.7 million for the
construction of the bypass highway, subject to certain
conditions. The development and construction of the bypass
highway is expected to be a long-term project that will not be
completed until the year 2004 or later. The Company has over
300 acres of land in the adjacent North Beach Mauka area,
currently designated by the State Land Use Commission for
agricultural use, but with an underlying project district
designation in the county community plan. The Company plans
to seek State urbanization approval for this land. 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. Concurrently, the Company is evaluating certain
land parcels for bulk sales. These parcels are not considered
strategic to the Company's long-term development plans.
In 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 for public
use on the North Beach site, which is part of the master plan
for this property and was a requirement imposed by Maui 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 seeking final approvals to develop a time-
share resort on 14 acres of the North Beach property (the
"Site"). A land option/purchase agreement was entered into
with Tobishima in October 1996. This agreement gives the
Company an option to purchase Tobishima's 50% interest in the
Site for $7 million. The Company does not expect to
consummate the purchase until all discretionary land use
permits are received for development of the time-share resort.
In accordance with the land option/purchase agreement, the
Company has made a nonrefundable deposit of $.1 million (which
may be applied to the purchase price) to keep the option
available through September 30, 1997. Additional
nonrefundable deposits may be made to extend the option
through August 31, 2000. The Company has filed development
plans and related information with the County of Maui to
obtain a Special Management Area ("SMA") permit for the time-
share resort. Although there can be no assurance that the SMA
permit will be received (and that if such permit is received,
that its terms and conditions will be acceptable to the
Company), management is optimistic that the Company will
receive the necessary approvals to proceed with the project.
The Company believes that the potential for a successful
time-share development at North Beach will be greatly enhanced
by the involvement of a company with experience in the time-
share business. As a result, on February 1, 1997, the Company
entered into a partnership with affiliates of Interval Resorts
West, the developer of The Ridge Tahoe resort in South Lake
Tahoe, Nevada. The partnership will be responsible for
constructing, developing, operating, maintaining, owning and
managing the time-share resort project. The Company has a
majority ownership interest in the partnership. After receipt
of the SMA permit, the partnership will need to arrange
project financing for the development of the time-share
resort. In addition, the aforementioned land option/purchase
agreement with Tobishima Pacific, Inc. includes short-term
seller financing, which the time-share partnership may decide
to utilize.
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
recommendation of certain citizens groups that wanted two-
third's of North Beach to be downzoned to "Park" designation.
The ordinance was signed by the Mayor of the County of Maui
and became effective on February 27, 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 ensure
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.
During 1996, the Company sold 10 acres on Maui for
approximately $8.4 million, including 18 residential lots at
Kaanapali Golf Estates.
The Company also owns and manages the championship
Kaanapali Golf Courses, consisting of a clubhouse and two 18-
hole golf courses located at the Kaanapali Beach Resort.
Approximately 4,900 acres of the Company's land on Maui
are designated as a conservation district.
(c) Kauai
The Company owns approximately 28,700 acres of land on the
island of Kauai, most of which is on the eastern (windward)
side of the island. The large parcels of Company land on
eastern Kauai are predominantly used for sugar cane
cultivation. Approximately 700 acres of this land is zoned for
urban development and approximately 12,300 acres has been
classified as conservation land.
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 Company proposed a project 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. In December 1995, the LUC granted the
land use amendments sought by the Company, subject to a number
of conditions. In May 1996, the Kauai County approved the
Company's application to rezone the project. Before
construction can commence, the Company must satisfy several
conditions imposed during the approval process and obtain
additional administrative development permits for requirements
such as grading and subdivision. The permitting process in
Hawaii has historically been a very difficult, time consuming
and arduous process. There can be no guarantee that all
permits will be obtained. Once construction commences, subject
to market conditions and profitability needs, the project is
expected to span over 20 years.
During 1996, the Company sold, in the aggregate, 711 acres
of miscellaneous land parcels on Kauai for approximately $5.6
million.
(d) Hawaii
The approximately 3,400 acres of land owned by the
Company on the island of Hawaii are located on the eastern
(windward) side of the island, primarily in the Keaau and
Pahoa districts, south of the town of Hilo. Portions of these
lands are currently leased to independent papaya growers. The
Company does not currently have any plans for real property
development on the island of Hawaii, but will continue to
pursue ad hoc parcel sales when opportunities exist.
During 1996, the Company sold, in the aggregate, 3,525
acres of miscellaneous land parcels on Hawaii for
approximately $3.6 million.
LONG-TERM LEASES. Each of the Company's plantation
subsidiaries leases agricultural lands from unrelated third
parties. Such leases vary in length from month-to-month to 9
years and cover parcels of land ranging in acreage from one
acre to 27,474 acres. Certain of such leases provide the
Company, as lessee, with licenses for water use. Almost all
of the leased land of the Company is used in its agricultural
businesses, primarily in connection with the cultivation and
processing of sugar cane, with almost 15,000 acres of leased
land currently under cultivation. Most of the leases provide
for the Company to pay fixed annual minimum rents (ranging
from $13 to $131 per usable acre), plus additional rents based
upon a percentage of gross receipts generated by the Company's
sugar cane operations on such land.
The following summary lists the material agricultural
land leases of the Company's subsidiaries, as lessees, and
certain material terms thereof:
Approximate Current
Current Approximate Annual Additional Rent
Expiration Sugar Cane Gross Minimum as % of Gross Renewal
Lease Date Acreage Acreage Rent Receipts Option
- ------ ------- --------- ----------- ------- -------- ----------
Kekaha mnth to mnth 7,926 27,474 $251,500 variable --
Lihue 10/30/99 4,054 6,200 $ 56,370 variable --
Lihue 12/15/02 0 3,106 $ 20,630 none --
Lihue 1/31/95(1) 1,919 5,151 $ 21,500 variable --
Pioneer mnth to mnth 889 1,639 $ 51,000 variable --
Pioneer 12/31/05 770 2,509 $100,917 7.25% --
(1) The Company is currently finalizing a new lease with the lessor.
Item 3. 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
conduct of its businesses. While it is impossible to predict
the outcome of the pending (or threatened) litigation and for
which potential liability is not covered by insurance, the
Company is of the opinion that the ultimate liability from
such litigation will not materially adversely affect the
Company's financial condition.
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security
holders during 1995 and 1996.
PART II
Item 5. Market for the Company's and Finance's Common Equity
and Related Security Holder Matters
The Company is a wholly-owned subsidiary of Northbrook
Corporation and, hence, there is no public market for the
Company's common stock. Finance is a wholly-owned subsidiary
of Northbrook Corporation and there is no public market for
Finance's common stock.
<TABLE>
Item 6. Selected Financial Data
AMFAC/JMB HAWAII, INC.
For the years ended December 31, 1996, 1995, 1994, 1993 and 1992
(Dollars in Thousands)
<CAPTION>
1996 1995 1994 1993 1992(c)
------ ------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
Total revenues (d) $97,406 101,607 157,963 140,462 230,212
======== ======= ======= ======= ========
Net income (loss) (e) $(34,166) 12,708 (13,033) (509) (60,979)
======== ======= ======== ======= ========
Net income (loss) per share (b)
Total assets $483,605 527,598 614,547 644,711 633,995
======== ======= ======= ======== ========
Amounts due affiliates -
financing $ 103,579 76,911 15,097 15,097 28,098
======== ======== ======= ======== ========
Certificate of Land Appreciation
Notes $220,692 220,692 384,737 384,737 384,737
======== ======== ======= ======== ========
<FN>
(a) The above selected financial data should be read in conjunction with the
financial statements and the related notes appearing elsewhere in this annual
report on Form 10-K.
(b) The Company is a wholly-owned subsidiary of Northbrook Corporation ;
therefore, net loss per share is not presented.
(c) In 1992, the Company adopted Statement of Financial Accounting Standards
No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions." The Company elected to immediately recognize the cumulative effect
of the change in accounting for postretirement benefits of $43,442 (after
reduction of income taxes of $26,626), which is reflected in the 1992 net loss.
(d) Total revenues includes interest income of $463 in 1996, $1,288 in 1995,
$1,977 in 1994, $1,070 in 1993 and $1,534 in 1992.
(e) In 1995, the Company recognized an extraordinary gain from the
extinguishment of debt of $32,544 (after reduction of income taxes of $20,807),
which is reflected in 1995 net income.
</TABLE>
Item 7. 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, Inc. ("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 June 1, 1999) to repurchase, upon request of
the holders thereof, the COLAS. The COLAS were issued in
units consisting of one Class A COLA and one Class B COLA. As
specified in the Repurchase Agreement, the repurchase of the
Class A COLAS on June 1, 1995 may have been requested of
Finance by the holders of such COLAS 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 repurchase of the Class B COLAS on June 1, 1999 may be
requested of Finance by the holders of such COLAS 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 COLA and Class B COLA is
approximately $165 and $165, 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 the COLA repurchase obligations, if any, 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. 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.
In addition to the $52 million borrowed from Northbrook
to redeem Class A COLAS pursuant to the Redemption Offer (see
Note 5), the Company has also borrowed approximately $18.8
million and $9.8 million during 1996 and 1995, respectively,
to fund COLA Base Interest payments and other operational
needs. These loans from Northbrook are payable interest only,
mature on June 1, 1998 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 COLA repurchases, the Company retired
approximately $164 million face value of 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 was
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) were not
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, 1996; the appraised values of such
assets were sufficient to meet the Value Maintenance Ratio. 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. 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, 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
million loan from the Employees' Retirement System of the
State of Hawaii ("ERS"). 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
year or (ii) ten percent per annum through June 30, 1993 and
nine percent per annum thereafter. The annual interest
payments were in excess of the cash flow generated by the
Kaanapali Golf Courses.
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 or refinancing of the golf
courses or at the 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
adjusted 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 8.73%. 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 Interest"). The Company has
made payments in 1996 totaling $6.5 million, which represents
the Minimum Interest due through October 1, 1996. Accrued
Minimum Interest as of December 31, 1996 was $1.2 million. The
scheduled minimum payments are paid quarterly on the principal
balance of the $66 million loan. The difference between the
accrued interest expense 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.
The total accrued interest payable from excess cash flow was
approximately $3.2 million as of December 31, 1996. Although
the outstanding loan balance remains nonrecourse, certain
payments and obligations, such as the Minimum Interest
payments and the ERS's share of appreciation, if any, are
recourse to the Company. However, the Company's obligations
to make future Minimum Interest payments and to pay the ERS a
share of appreciation would be terminated if the Company
tendered an executed deed to the golf course property to the
ERS in accordance with the terms of the amendment.
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 bore interest only for
the first two years with interest and principal payments based
upon a 20 year amortization period for the remaining three
years. The loans bear interest at prime (8.25% at December
31, 1996) plus 1/2% and LIBOR (5.5% at December 31, 1996) plus
3%, respectively. WGCI received an initial funding of $14
million of which $.6 million was held back by the lenders to
pay interest. In October 1994, in accordance with the loan
agreement, the Company received an additional funding of $6
million (part of the aggregate $20 million) and a release of
the $.6 million interest holdback, both of which were
contingent upon achieving a certain level of Net Operating
Income (as defined) by the golf course during the first six
months of 1994. The loan is secured by WGCI's assets (see
Note 6), is guaranteed by the Company and is considered
"Senior Indebtedness" (as defined in the COLA Indenture). In
February 1997, WGCI entered into an amended and restated loan
agreement with the Bank of Hawaii, whereby the outstanding
principal amount of the loan has been increased to $25
million, the maturity date has been extended to February 2007,
the interest rate has been changed to LIBOR plus 2% until the
fifth anniversary and LIBOR plus 2.5% thereafter and principal
is to be repaid based on a 30-year amortization schedule.
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
and depending on the price and resolution of certain issues, a
payment of up to $15 million might be required to be given to
the City to be used to assist in the City's affordable housing
developments.
In December 1996, Amfac Property Development Corporation,
a wholly-owned subsidiary of the Company, obtained a $10
million loan facility from a Hawaii bank. The loan is secured
by a mortgage on property under development at the former mill-
site of Oahu Sugar, and is considered "Senior Indebtedness"
(as defined in the Indenture relating to the COLAS). The loan
bears interest at the bank's base rate (8.25% at December 31,
1996) plus .5% and matures on December 1, 1998.
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 and by a planned real estate project
on 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.
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.
During 1996, the Company generated approximately $13.4 million
from non-strategic land sales and an additional $5.5 million
from the sale of 18 lots at the 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, during
1995 the Company received an approximate $1.0 million deposit,
which represents the purchase price for 10 acres on Oahu.
During 1994, the Company generated approximately $44.3
million in property sales primarily from the sale of the last
two remaining residential parcels at the Waikele project on
Oahu for approximately $37 million. The remaining $7.3 million
of property sales in 1994 related to land sales on the islands
of Maui, Kauai and Hawaii. Additionally, the Company received
an approximate $4.2 million deposit, which represented the
purchase price for 452 acres on Maui.
At December 31, 1996, the Company had cash and cash
equivalents of approximately $8.7 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 remaining development costs at Waikele and
on West Maui, Oahu and Kauai, agricultural deficits, payment
of interest expense, and the repayment of principal on debt
obligations, as necessary. The Company's long-term remaining
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 source of
future land sale revenues. However, due to current market
conditions, the difficulty in obtaining land use approvals and
the high development cost of required infrastructure, the
planned development of these land holdings and the ability to
generate cash flow from these land holdings are longer term in
nature than the time frame experienced at Waikele.
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 long-term 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 uses the effective interest method and
accrued interest on the COLAS at 4% per annum ("Mandatory Base
Interest") for the years ended December 31, 1994, 1995 and
1996. The Company did not generate a sufficient level of Net
Cash Flow to pay Base Interest on the COLAS (see Note 5) in
excess of 4% for 1994, 1995 and 1996. With respect to any
calendar year, JMB or its affiliates may receive 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)) for providing certain advisory
services for the Company. However, such amounts shall be
earned and 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. JMB has
informed the Company that no incremental costs or expenses
have been incurred relating to the provision of these advisory
services. The Company believes that using an incremental cost
methodology is reasonable.
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 expended approximately $7.9 million in project costs
during 1996.
During 1995, the Company restructured its sugar
operations to improve efficiencies and reduce costs, including
consolidation of the operations at its two Kauai plantations
and changing to a seasonal mode of operations at its Maui
plantation (consistent with other global sugar operations).
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, which expires in
2002, 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
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. 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
pursuing development of 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.
The sugar industry in Hawaii has experienced significant
difficulties during the past several years. Growers in Hawaii
have struggled with the high costs of production, which have
led to the closure of several plantations, including the
Company's sugar operations on Oahu in 1995. The Company has
tried to address these challenges through a number of
different measures, including a restructuring in 1995, whereby
its two Kauai plantations were consolidated and its sugar
operations on Maui were changed to a seasonal mode.
While the above-noted changes have helped to reduce
expenses, the Company must continue to explore alternatives to
further address the high costs of sugar production. One such
alternative relates to the three-year labor contract the
Company has with its sugar plantation employees, which expires
in February 1998. Within the contract is a provision that
allows the Company and the union to renegotiate wages in 1997.
In light of the difficulties the Company has had in trying to
improve the operating results of its sugar business,
management has been meeting with union representatives to
discuss appropriate wage levels. After discussions and
negotiations with the union, it was agreed that wages would
remain at the current levels until the end of the contract.
This agreement is subject to ratification by the union
membership. The Company and the union have tentatively agreed
to return to the bargaining table during the summer of 1997 to
negotiate the terms for a new contract which will begin in
1998. Although the Company is hopeful that it will reach
agreement on contract modifications that would help improve
the viability of its sugar plantations, there can be no
assurance that sufficient changes will be agreed upon.
In early March 1997, the Company announced a management
restructuring that has resulted in the creation of six
separately operating entities in the following businesses:
Sugar, Golf, Coffee, Water, Land Management and Real Estate
Development. Each separate company or division will be
responsible for its own operations. The Company believes it
will operate more effectively as several smaller
entrepreneurial companies, rather than as one large
conglomerate. Approximately four percent of the Company's
total employees were released as a result of the
restructuring.
Results of Operations
General:
The Company and its subsidiaries report its taxes as a
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).
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
(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 December 31, 1996 as
compared to December 31, 1995, primarily due to the
reclassification of deferred interest on the ERS loan to non-
current.
Current portion of long-term debt decreased and long-term
debt increased as of December 31, 1996 as compared to December
31, 1995, due primarily to the reclassification of the ERS
loan from current to long-term (see Note 6). In addition,
long-term debt increased as of December 31, 1996 as compared
to December 31, 1995 due to financing obtained for the Oahu
Industrial Project.
The current portion of amounts due to affiliates
decreased as of December 31, 1996 as compared to December 31,
1995 due to the payment of interest on financing provided by
affiliates and the reclassification of certain intercompany
payables from current to long-term (see Note 9).
The long-term portion of amounts due to affiliates
increased as of December 31, 1996 as compared to December 31,
1995, due to the reclassification of certain intercompany
payables from current to long-term (see Note 9).
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 6) offset in part by reductions to reserves for
prior land sales.
Interest expense increased for the year ended December
31, 1996 as compared to the year ended December 31, 1995
primarily due to interest expense related to additional
affiliated financing, partially offset 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, which expires in
2002, 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
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.
The sugar industry in Hawaii has experienced significant
difficulties during the past several years. Growers in Hawaii
have struggled with the high costs of production, which have
led to the closure of several plantations, including the
Company's sugar operations on Oahu in 1995. The Company has
tried to address these challenges through a number of
different measures, including a restructuring in 1995, whereby
its two Kauai plantations were consolidated and its sugar
operations on Maui were changed to a seasonal mode.
While the above-noted changes have helped to reduce
expenses, the Company must continue to explore alternatives to
further address the high costs of sugar production. One such
alternative relates to the three-year labor contract the
Company has with its sugar plantation employees, which expires
in February 1998. Within the contract is a provision that
allows the Company and the union to renegotiate wages in 1997.
In light of the difficulties the Company has had in trying to
improve the operating results of its sugar business,
management has been meeting with union representatives to
discuss appropriate wage levels. After discussions and
negotiations with the union, it was agreed that wages would
remain at the current levels until the end of the contract.
This agreement is subject to ratification by the union
membership. The Company and the union have tentatively agreed
to return to the bargaining table during the summer of 1997 to
negotiate the terms for a new contract which will begin in
1998. Although the Company is hopeful that it will reach
agreement on contract modifications that would help improve
the viability of its sugar plantations, there are no
assurances that sufficient changes will be agreed upon.
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 very 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 finalized the settlement of its insurance
claims in 1995 for damage suffered and collected approximately
$30 million in proceeds over the approximately three year
period subsequent to the hurricane.
Receivables decreased as of December 31, 1996 as compared
to December 31, 1995 primarily due to the timing of production
and related payments received for deliveries of raw sugar and
the collection of certain insurance claims outstanding as of
December 31, 1995.
Machinery and equipment increased as of December 31, 1996
as compared to December 31, 1995 due primarily to the purchase
of equipment and improvements at the sugar plantations.
Agricultural revenues and cost of sales increased and the
operating loss decreased for the year ended December 31, 1996
as compared to the year ended December 31, 1995 due to
increased sales of raw sugar. The increase in cost of sales
was offset in part by higher cost in 1995 associated with the
final phase of operations at Oahu Sugar.
Agriculture's revenues from sugar operations decreased
for the year ended December 31, 1995 as compared to the year
ended December 31, 1994 as a result of lower production due to
less acres harvested. Non-sugar revenues also decreased due
to non-recurring revenues received in 1994. Agriculture's
operating loss for the year ended December 31, 1995 increased
as compared to the year ended December 31, 1994 due to a
deterioration of gross margin resulting from lower production
and the receipt of non-recurring non-sugar revenues in 1994.
The lower production is attributable to the shutdown of Oahu
Sugar and inclement weather which adversely affected
operations at the Company's two Kauai plantations. Inclement
weather has a greater impact on the Company's seasonal mode of
operations because of reduced flexibility in the harvesting
schedule.
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.
Inventory increased as of December 31, 1996 as compared
to December 31, 1995 due to the reclassification of land to
inventory discussed below, offset in part by a decrease in
agricultural inventory.
Land and land improvements decreased as of December 31,
1996 as compared to December 31, 1995 due primarily to land
sales and the reclassification of certain land parcels held
for sale to inventory.
In accordance with the provisions of the COLA Indenture,
appraisals were performed for certain assets of the Company as
of December 31, 1996 and 1994, which reflected a decline in
value for certain properties. Accordingly, the Company
recorded, as a matter or prudent accounting practice,
reductions to the carrying value of these properties in the
fourth quarter of 1996 and the fourth quarter of 1994 in the
amounts of $18.3 million and $5.0 million, respectively, to
properly reflect the estimated market value of the property in
its current state of development.
Other assets increased as of December 31, 1996 as
compared to December 31, 1995 primarily due to deferred costs
related to preliminary planning costs associated with
potential future development projects.
For the year ended December 31, 1996 and December 31,
1995, the Company generated approximately $18.9 million and
$30.8 million of land sales, respectively.
Property sales decreased and cost of sales increased as
of December, 31, 1996 as compared to December 31, 1995
primarily due to the lower level of sales of non-strategic
land parcels in 1996 and the lower margins realized for the
parcels sold in 1996.
During 1994, the Company generated approximately $44.3
million of land sales, primarily from the sales of the
remaining two residential parcels at the Waikele project on
Oahu for approximately $37 million. The balance of the 1994
proceeds resulted from the sale of parcels aggregating 225
acres on various islands for approximately $7.3 million.
Additionally, the Company received an approximate $4.2 million
deposit, which represented the purchase price for 452 acres of
agriculture-zoned land on Maui. The gain from such sale is
being deferred due to certain profit participation rights
retained by the Company.
OAHU ACTIVITY
The Company expended approximately $1.3 million, $.5
million and $3 million in 1996, 1995 and 1994, respectively,
for project costs at Waikele. Such costs include construction
of roadways, utilities and related infrastructure improvements
and the golf course and clubhouse. On a cumulative project-to-
date basis, the Company has expended approximately $118
million on project costs and has completed sales at Waikele of
approximately $231 million. Such sales have included
commercial property and parcel sales to home builders. Except
for certain contingent participation rights, the Company has
received all of its proceeds from the sales of the residential
and commercial parcels at Waikele.
The Company is currently developing the approximately 60
acres of fee simple land it owns at the mill-site of Oahu
Sugar Company (which was shut down in 1995). The Company has
received zoning for a light industrial subdivision on an
approximately 37-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. Marketing of parcels within the light industrial
subdivision is slated for mid-to-late 1997 after subdivision
is complete. In addition, the Company has begun the process of
seeking the necessary government approvals for the
redevelopment for the remainder of the mill-site parcels,
including planned commercial, public and quasi-public uses.
MAUI ACTIVITY
The planned development of the Company's land on Maui is
longer term in nature than the time frame experienced with
Waikele. 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
very 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
residential community that is part of South Beach Mauka,
adjacent to the Kaanapali Beach Resort in West Maui. During
1996, the Company sold 18 homesites for approximately $5.5
million, which includes 10 homesites to a developer who plans
to construct and sell houses on these lots. The Company
currently has 6 homesites on the market, which are priced at
approximately $.5 million.
In addition, the Company 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 four lots individually, and as a
package to local builders.
In 1986, the Company entered into a joint venture
agreement with Tobishima Pacific Inc. ("Tobishima"), 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. These development plans may be affected by
the current review of state land designations (discussed
below). 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 seeking final approvals to develop a time-
share resort on 14 acres of the North Beach property (the
"Site"). A land option/purchase agreement was entered into
with Tobishima in October 1996. This agreement gives the
Company an option to purchase Tobishima's 50% interest in the
Site for $7 million. The Company does not expect to
consummate the purchase until all discretionary land use
permits are received for development of the time-share resort.
In accordance with the land option/purchase agreement, the
Company has made a nonrefundable deposit of $.1 million (which
may be applied to the purchase price) to keep the option
available through September 30, 1997. Additional
nonrefundable deposits may be made to extend the option
through August 31, 2000. The Company has filed development
plans and related information with the County of Maui to
obtain a Special Management Area ("SMA") permit for the time-
share resort. Although there can be no assurance that the SMA
permit will be received (and that if such permit is received,
that its terms and conditions will be acceptable to the
Company), management is optimistic that the Company will
receive the necessary approvals to proceed with the project.
The Company believes that the potential for a successful
time-share development at North Beach will be greatly enhanced
by the involvement of a company with experience in the time-
share business. As a result, in February 1997, the Company
entered into a partnership with affiliates of Interval Resorts
West, the developer of The Ridge Tahoe resort in South Lake
Tahoe, Nevada. The partnership will be responsible for
constructing, developing, operating, maintaining, owning and
managing the time-share resort project planned for the 14-acre
portion of North Beach. The Company has majority ownership
interest in the partnership. After receipt of the SMA permit,
the partnership will need to arrange project financing for the
development of the time-share resort. The aforementioned land
option/purchase agreement with Tobishima includes short-term
seller financing, which the time-share partnership may decide
to utilize.
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
recommendation of certain citizens groups that wanted two-
third's of North Beach to be downzoned to "Park" designation.
The ordinance was signed by the Mayor of the County of Maui
and became effective on February 27, 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 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 the north
end of 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. It is anticipated that the Company will
expend up to $3.5 million (in the aggregate), of which $2.2
million has been spent as of December 31, 1996, in the design
of the bypass highway and/or the widening of the existing
highway.
In connection with the development of North Beach Mauka
and adjacent parcels, the Company has committed $6.7 million
for the construction of the bypass highway, subject to certain
conditions. The development and construction of the bypass
highway is expected to be a long-term project that will not be
completed until the year 2004 or later.
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. A significant portion of the housing in this
project will be 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's to
develop its lands in future periods. Moreover, development of
most 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 for the Company's North Beach
property (described above). The Company commenced construction
of infrastructure of Puukolii Village in the last quarter of
1996, beginning with an access road.
KAUAI ACTIVITY
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. In
December 1995, the LUC granted the Company the land use
amendments sought by the Company subject to a number of
conditions. In May 1996, the Kauai County approved the
Company's application to rezone the project. Before
construction can commence, the Company must satisfy several
conditions imposed during the approval process and obtain
additional administrative development permits for requirements
such as grading and subdivision. The permitting process in
Hawaii has historically been a very difficult and arduous
process and there is no guarantee that all permits will be
obtained. Once construction commences, subject to market
conditions, the project is expected to span over 20 years.
Inflation
Due to the lack of significant fluctuations in the level
of inflation in recent years, inflation generally has not had
a material effect on real estate development.
In the future, high rates of inflation may adversely
affect real estate development generally because of their
impact on interest rates. High interest rates not only
increase the cost of borrowed funds to the Company, but can
also have a significant effect on the affordability of
permanent mortgage financing to prospective purchasers.
However, high rates of inflation may permit the Company to
increase the prices that it charges in connection with real
property sales, subject to general economic conditions
affecting the real estate industry and local market factors.
Item 8. Financial Statements and Supplementary Data
AMFAC/JMB HAWAII, INC.
INDEX
Report of Independent Auditors
Consolidated Balance Sheets, December 31, 1996 and 1995
Consolidated Statements of Operations for the years ended
December 31, 1996, 1995 and 1994
Consolidated Statements of Stockholder's Equity (Deficit) for
the years ended December 31, 1996, 1995 and 1994
Consolidated Statements of Cash Flows for the years ended
December 31, 1996, 1995 and 1994
Notes to Consolidated Financial Statements
Schedule
Valuation and Qualifying Accounts II
Schedules not filed:
All schedules other than the one indicated in the index
have been omitted as the required information is inapplicable
or the information is presented in the financial statements or
related notes.
AMFAC/JMB FINANCE, INC.
INDEX
Report of Independent Auditors
Balance Sheets, December 31, 1996 and 1995
Notes to the Balance Sheets
Schedules not filed:
All schedules have been omitted as the required
information is inapplicable or the information is presented in
the financial statements or related notes.
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholder
AMFAC/JMB HAWAII, INC.
We have audited the accompanying consolidated balance
sheets of Amfac/JMB Hawaii, Inc. as of December 31, 1996 and
1995, and the related consolidated statements of operations,
stockholder's equity (deficit), and cash flows for each of the
three years in the period ended December 31, 1996. Our audits
also included the financial statement schedule listed in the
Index at Item 8. These financial statements and schedule are
the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements and schedule based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements
referred to above present fairly, in all material respects,
the consolidated financial position of Amfac/JMB Hawaii, Inc.
at December 31, 1996 and 1995, and the consolidated results of
its operations and its cash flows for each of the three years
in the period ended December 31, 1996, in conformity with
generally accepted accounting principles. Also, in our
opinion, the related financial statement schedule, when
considered in relation to the basic financial statements taken
as a whole, presents fairly in all material respects the
information set forth therein.
ERNST & YOUNG LLP
Honolulu, Hawaii
March 21, 1997
<TABLE>
AMFAC/JMB HAWAII, INC.
Consolidated Balance Sheets
December 31, 1996 and 1995
(Dollars in Thousands)
A s s e t s
<CAPTION>
1996 1995
<S> <C> <C>
Current assets:
Cash and cash equivalents $8,736 11,745
Receivables - net 4,741 8,720
Inventories 56,808 49,641
Prepaid expenses 3,439 3,102
------- --------
Total current assets 73,724 73,208
------- --------
Investments 46,187 45,080
------- --------
Property, plant and equipment:
Land and land improvements 289,294 336,069
Machinery and equipment 60,981 56,882
Construction in progress 1,365 1,428
------- --------
351,640 394,379
Less accumulated depreciation and amortization 33,856 27,762
------- --------
317,784 366,617
Deferred expenses 12,975 14,225
Other assets 32,935 28,468
------- --------
$483,605 527,598
======== ========
L i a b i l i t i e s
Current liabilities:
Accounts Payable $ 5,719 8,562
Accrued expenses 9,274 13,268
Current portion of long-term debt 1,471 67,730
Current portion of deferred income taxes 5,422 10,902
Amounts due to affiliates 8,905 22,862
------- -------
Total current liabilities 30,791 123,324
------- -------
Amounts due to affiliates 103,579 76,911
Accumulated postretirement benefit obligation 57,662 61,037
AMFAC/JMB HAWAII, INC.
Consolidated Balance Sheets - Continued
December 31, 1996 and 1995
(Dollars in Thousands)
1996 1995
Long-term debt 100,606 26,765
Other long-term liabilities 35,501 34,366
Deferred income taxes 88,345 98,691
Certificate of Land Appreciation Notes 220,692 220,692
-------- --------
Total liabilities 637,176 641,786
-------- --------
Commitments and contingencies (notes 3, 4, 5, 6, 7, 8, 9, and 11)
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 6,278 11,495
Retained earnings (deficit) (159,850) (125,684)
-------- --------
Total stockholder's equity (deficit) (153,571) (114,188)
-------- --------
483,605 527,598
========= =========
<FN>
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
<TABLE>
AMFAC/JMB HAWAII, INC.
Consolidated Statements of Operations
Years ended December 31, 1996, 1995 and 1994
(Dollars in Thousands)
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Revenues:
Agriculture $51,805 47,656 89,237
Property 45,138 52,663 66,749
------- ------- --------
96,943 100,319 155,986
------- ------- --------
Cost of sales:
Agriculture 54,640 53,430 86,181
Property 34,627 30,853 38,531
------- ------- -------
89,267 84,283 124,712
Operating expenses:
Selling, general and administrative 11,160 11,666 13,817
Depreciation and amortization 6,354 6,723 7,216
Reduction to carrying value of investments in
real estate 18,315 -- 5,000
------- ------- --------
Total costs and expenses 125,096 02,672 150,745
------- ------- --------
Operating income (loss) (28,153) (2,353) 5,241
------- ------- --------
Non-operating income (expenses):
Amortization of deferred costs (1,222) (1,557) (2,086)
Interest income 463 1,288 1,977
Interest expense (26,297) (25,233) (25,929)
------- ------- --------
(27,056) (25,502) (26,038)
------- ------- -------
Loss before taxes and extraordinary item (55,209) (27,855) (20,797)
Income tax benefit (21,043) (8,019) (7,764)
------- -------- -------
Loss before extraordinary item (34,166) (19,836) (13,033)
Extraordinary gain from extinquishment of debt
(less applicable income taxes of $20,807) -- 32,544 --
------- -------- --------
Net income (loss) (34,166) 12,708 (13,033)
======== ======== ========
<FN>
The accompanying notes are an integral part of the consolidated financial
statements
</TABLE>
<TABLE>
AMFAC/JMB HAWAII, INC.
Consolidated Statements of Stockholder's Equity (Deficit)
Years ended December 31, 1996, 1995 and 1994
(Dollars in Thousands)
<CAPTION>
Total
Stock-
Retained holder's
Common Paid-In Earnings Equity
Stock Capital (Deficit) (Deficit)
<S> <C> <C> <C> <C>
Balance, December 31, 1993 $ 1 (10,370) (125,359) (135,728)
Net loss -- -- (13,033) (13,033)
Capital contribution -
current income taxes (note 12) -- 24,754 -- 24,754
------- -------- --------- ---------
Balance, December 31, 1994 1 14,384 (138,392) (124,007)
Net income -- -- 12,708 12,708
Capital distribution -
current income taxes (note 12) -- (2,889) -- (2,889)
------- -------- --------- --------
Balance, December 31, 1995 $ 1 11,495 (125,684) (114,188)
Net loss -- -- (34,166) (34,166)
Capital distribution -
current income taxes (note 12) -- (5,217) -- (5,217)
------- -------- --------- ---------
Balance, December 31, 1996 $ 1 6,278 (159,850) (153,571)
====== ======== ======== ========
<FN>
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
<TABLE>
AMFAC/JMB HAWAII, INC.
Consolidated Statements of Cash Flows
Years ended December 31, 1996, 1995 and 1994
(Dollars in Thousands)
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (34,166) 12,708 (13,033)
Items not requiring (providing) cash:
Depreciation and amortization 6,354 6,723 7,216
Amortization of deferred costs 1,222 1,557 2,086
Equity in earnings of investments (14) 69 69
Income tax expense (benefit) (21,043) 12,788 (7,764)
Extraordinary gain from extinguishment of debt -- (53,351) --
Reduction to carrying value of investments
in real estate 18,315 -- 5,000
Changes in:
Receivables - net 3,979 6,223 29
Inventories 22,052 12,364 33,437
Prepaid expenses (337) 1,277 1,453
Accounts payable (2,843) (1,320) (4,093)
Accrued expenses (3,994) (2,104) (1,116)
Amounts due to affiliates (13,957) 12,751 922
Other long-term liabilities (4,489) (7,006) (2,258)
------- ------- --------
Net cash provided by (used in)
operating activities (28,921) 2,679 21,948
------- ------- --------
Cash flows from investing activities:
Property additions (4,257) (5,145) (6,763)
Property sales, disposals and retirements - net` 63 4,478 129
Investments in joint ventures and partnerships (1,093) (103) (174)
Short-term investments -- 31,998 (31,998)
Other assets (4,467) (1,927) (1,442)
Other long-term liabilities 1,388 (4,945) 1,413
------- ------- -------
Net cash provided by (used in)
investing activities (8,366) 24,356 (38,835)
------- ------- -------
Cash flows from financing activities:
Deferred expenses 28 29 (394)
AMFAC/JMB HAWAII, INC.
Consolidated Statements of Cash Flows - Continued
Years ended December 31, 1996, 1995 and 1994
(Dollars in Thousands)
1996 1995 1994
-------- -------- --------
Payment to redeem and purchase Certificate of
Land Appreciation Notes (COLAS) -- (105,452) --
Net borrowings (repayments) under bank
line-of-credit agreement -- -- (8,000)
Net amounts due to affiliates 26,668 61,814 --
Net (repayments) proceeds of long-term debt 7,582 (2,489) 5,103
Other costs related to extinguishment of debt -- (894) --
------- ------- -------
Net cash provided by(used in)financing activities 34,278 (46,992) (3,291)
------- ------- -------
Net decrease in cash and cash
equivalents (3,009) (19,957)(20,178)
Cash and cash equivalents, beginning of year 11,745 31,702 51,880
------- ------- -------
Cash and cash equivalents, end of year $ 8,736 11,745 31,702
======= ======= =======
Supplemental disclosure of cash flow information:
Cash paid for interest(net of amt capitalized) $31,111 24,347 25,898
======= ======= =======
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 29,481 9,240 9,531
======= ======= =======
Disposition of debt:
Gain on extinguishment of debt $ -- 53,351 --
Face value of debt extinguished -- (164,045) --
Other costs related to debt extinguishment -- 894 --
Write-off of Contingent Base Interest -- (5,667) --
Write-off of deferred COLA costs -- 10,015 --
-------- ------- -------
Cash paid to redeem and purchase COLAS $ -- (105,452) --
======== ======= =======
<FN>
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
AMFAC/JMB HAWAII, INC.
Notes to Consolidated Financial Statements
December 31, 1996, 1995 and 1994
(Dollars in Thousands)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND 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,
Inc. ("the Company") was wholly-owned by Amfac, a subsidiary of Northbrook
Corporation ("Northbrook"). In May 1995, Amfac merged into Northbrook, with
Northbrook being the surviving corporation.
The Company, or its subsidiaries, hold title to substantially all of the
agricultural and developmental real property and related assets of its parent
corporation, Northbrook, located in Hawaii. The Company is wholly-owned by
Northbrook, and is an affiliate of JMB as a result of the Merger and the
subsequent merger of a subsidiary of an affiliate of JMB into Amfac Hawaii,
Inc., which (after changing its name to Amfac/JMB Hawaii, Inc.) continues as the
surviving corporation.
On December 5, 1988, the Company commenced a public offering of Certificate of
Land Appreciation Notes due 2008 ("COLAS") of which a total of 384,737 COLAS
were subscribed for and issued. The offering terminated on August 31, 1989.
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.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries. All significant intercompany balances and
transactions have been eliminated in consolidation.
STATEMENT OF CASH FLOWS
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 $4,900 and $3,700 at December 31, 1996 and
1995, respectively) as cash equivalents which approximates market. These
amounts include $1,552 and $1,623 at December 31, 1996 and 1995, respectively,
which were restricted primarily to fund debt service on long-term debt related
to the acquisition of power generation equipment (see note 6).
AMFAC/JMB HAWAII, INC.
Notes to Consolidated Financial Statements - Continued
(Dollars in Thousands)
FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107 ("SFAS No. 107"),
"Disclosures about Fair Value of Financial Instruments", requires entities to
disclose the SFAS No. 107 value of certain on-and off-balance sheet financial
instruments for which it is practicable to estimate. Value is defined in SFAS
No. 107 as the amount at which the instrument could be exchanged in a current
transaction between willing parties, other than in a forced or liquidation sale.
The Company believes the carrying amounts of its financial instruments
classified as current assets and liabilities in its balance sheet approximate
SFAS No. 107 value due to the relatively short maturity of these instruments.
The Company believes the carrying value of its long-term debt (notes 4 and 6)
approximates fair value. SFAS No. 107 states that quoted market prices are the
best evidence of the SFAS No. 107 value of financial instruments, even for
instruments traded only in thin markets. On March 15, 1995, pursuant to the
indenture that governs the terms of the COLAS (the "Indenture"), the Company
elected to exercise its right to redeem, and therefore was obligated to
purchase, any and all Class A COLAS submitted pursuant to the Redemption Offer
at a price of $.365 per Class A COLA (see note 5). In conjunction with the
Company's election to repurchase the Class A COLAS submitted for repurchase, 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
Redemption Offer and the Tender Offer expired on June 1, 1995. Since such
expiration, the secondary market for COLAS has been extremely thin. Since June
1, 1995, a limited number of COLA units have been sold in transactions arranged
by brokers for amounts ranging from approximately $.250 to $.330 per Class B
COLA and from approximately $.482 to $.545 per combined Class A and Class B
COLA. Based on the range of transactions since June 1, 1995 and the number of
COLAS outstanding (with a per unit carrying value of $1.0 and a total carrying
value of $220,692 at December 31, 1996 in the accompanying consolidated
financial statements), the implied SFAS No. 107 value of the COLAS would range
from approximately $108,000 to 128,000. However, due to restrictions on
prepayment and redemption as specified in the COLA Indenture, as well as the
methodology used to determine such value, the Company does not believe that it
would be able to refinance or repurchase all of its outstanding COLA units as of
December 31, 1996 at this value. Reference is made to note 5 for results of the
Redemption and Tender Offer.
INVENTORY CAPITALIZATION AND RECOGNITION OF REVENUE FROM THE SALE OF SUGAR
The Company capitalizes all of the expenditures incurred in bringing crops
to their existing condition and location. Such capitalized expenditures include
those costs related to the planting, cultivation and growing of sugar cane grown
on the agricultural properties of the Company. Inventory reflected in the
accompanying consolidated balance sheets at
AMFAC/JMB HAWAII, INC.
Notes to Consolidated Financial Statements - Continued
(Dollars in Thousands)
December 31, 1996 and 1995 is not in excess of its estimated net realizable
value. Reductions in the estimated net realizable value of unsold sugar are
recognized when anticipated. In determining the net realizable value of unsold
sugar, the price the Company uses is based upon the domestic price of sugar. The
Company recognizes revenue and related cost of sales upon delivery of its raw
sugar to the California and Hawaii Sugar Company ("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, which expires in 2002, 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 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.
INVESTMENTS
Investments in certain partnerships and joint ventures, if any, over which
the Company exercises significant influence are accounted for by the equity
method. To the extent the Company engages in such activities as general
partner, the Company is contingently liable for the obligations of its
partnership and joint venture investments.
LAND DEVELOPMENT
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
fair value as reviewed periodically or as considered necessary. In addition,
interest is capitalized to qualifying assets
AMFAC/JMB HAWAII, INC.
Notes to Consolidated Financial Statements - Continued
(Dollars in Thousands)
during the period that such assets are undergoing activities necessary to
prepare them for their intended use. Such capitalized interest is charged to
cost of sales as revenue from the real estate development is recognized.
Interest costs of approximately $1,327 have been capitalized for the year ended
1996. No material amounts have been capitalized for the year ended 1995 and
1994.
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.
LONG-LIVED ASSETS
In March 1995, the Financial Accounting Standard Board issued Statement of
Financial Accounting Standards No. 121 ("SFAS No. 121"), Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,
which requires impairment losses to be recorded on long-lived assets used in
operation when indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the assets'
carrying amount. SFAS No. 121 also addresses the accounting for long-lived
assets that are expected to be disposed of. The Company adopted SFAS No. 121 in
1995, with no effect on the accompanying financial statements.
In accordance with the provisions of the COLA Indenture, appraisals were
performed for certain assets of the Company as of December 31, 1996 and 1994,
which reflected a decline in value for certain properties. Accordingly, the
Company recorded, as a matter or prudent accounting practice, reductions to the
carrying value of these properties in the fourth quarter of 1996 and the fourth
quarter of 1994 in the amounts of $18,315 and $5,000, respectively, to properly
reflect the estimated market value of the property in its current state of
development.
EFFECTIVE INTEREST
For financial reporting purposes, the Company uses the effective interest
rate method and accrued interest on the COLAS at 4% per annum ("Mandatory Base
Interest") for the years ended December 31, 1996, 1995 and 1994.
INTEREST RATE SWAPS AND CAPS
Net interest received (paid) on contracts that qualify as hedges is
recognized over the life of the contract as an adjustment to interest income
(expense) of the hedged financial instrument.
AMFAC/JMB HAWAII, INC.
Notes to Consolidated Financial Statements - Continued
(Dollars in Thousands)
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost. Depreciation is based on
the straight-line method over the estimated economic lives of 20-40 years for
land improvements and 3-18 years for machinery and equipment, or the lease term,
whichever is less. Maintenance and repairs are charged to operations as
incurred. Renewals and significant betterments and improvements are capitalized
and depreciated over their estimated useful lives.
DEFERRED EXPENSES
Deferred expenses consist primarily of financing costs related to the
COLAS. Such costs are being amortized over the term of the COLAS on a straight-
line basis.
RECOGNITION OF PROFIT FROM REAL PROPERTY SALES
For real property sales, profit is recognized in full when the
collectibility of the sales price is reasonably assured and the earnings process
is virtually complete. When the sale does not meet the requirements for full
profit recognition, a portion of the profit is deferred until such requirements
are met.
INCOME TAXES
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 that 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).
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 to additional paid-in capital in the accompanying consolidated
financial statements.
USE OF ESTIMATES
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) ASSETS AND LIABILITIES INFORMATION
1996 1995
------- -------
Receivables - net:
Trade accounts and notes (net of allowance) $ 2,161 2,252
Sugar and molasses 1,663 3,877
Insurance claims, net -- 1,440
Other 917 1,151
------- -------
$4,741 8,720
======= =======
Accrued expenses:
Payroll and benefits $ 2,540 2,592
Interest 4,470 7,929
Other 2,264 2,747
------- -------
$ 9,274 13,268
======= =======
(3) INVESTMENTS
The Company's investments at December 31, 1996 and 1995 consist of the
following:
Carrying Value
--------------
Ownership
Description Percentage 1996 1995
- ----------- ----------- ------ ------
Sugar Cooperatives 26.0% $ 41 40
North Beach Joint Venture 50.0% 46,146 45,040
------- -------
$ 46,187 45,080
======= =======
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 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. The Company holds a 26 percent equity interest in HSTC.
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.
AMFAC/JMB HAWAII, INC.
Notes to Consolidated Financial Statements - Continued
(Dollars in Thousands)
The North Beach joint venture was formed during 1986 to plan, manage and
develop approximately 96 acres of beachfront property located at the Kaanapali
Beach Resort on West Maui.
The following is the condensed, combined financial statement information
(unaudited) of HSTC and the North Beach joint venture:
1996 1995
----------------- -----------------
North Beach North Beach
Joint Venture HSTC Joint Venture HSTC
-------------------- -------------------
Current assets $ 255 13,613 210 31,558
Noncurrent assets 40,100 1,907 40,122 3,797
Current liabilities (202) (14,011) (205) (31,046)
Noncurrent liabilities -- (1,400) -- (4,200)
-------- ------- ------- --------
Equity $ 40,153 109 40,127 109
======== ======= ======== ========
1996 1995 1994
------ ------ ------
Revenue $203,406 202,954 312,526
Cost and expenses 19,755 20,493 28,472
-------- -------- --------
Net income $183,651 182,461 284,054
======== ======== ========
AMFAC/JMB HAWAII, INC.
Notes to Consolidated Financial Statements - Continued
(Dollars in Thousands)
(4) AMOUNTS DUE AFFILIATES - FINANCING
The maturity date of the approximately $15,097 of remaining acquisition-
related financing owed to affiliates has been extended to June 1, 1998 and bears
interest at a rate per annum based upon the prime interest rate (8.25% at
December 31, 1996), plus one percent.
In addition to the $52,000 borrowed from Northbrook in 1995 to redeem Class
A COLAS pursuant to the Redemption Offer (see Note 5), the Company has also
borrowed approximately $18,746 and $9,814 during 1996 and 1995, respectively, to
fund COLA Base Interest payments and other operational needs. These loans from
Northbrook are payable interest only, mature on June 1, 1998 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.
In February 1997 the above noted affiliate loans, along with certain other
amounts due Northbrook, were converted into a new $104,759 ten year note
payable. The new note is payable interest only, which accrues at the prime
interest rate plus 2%.
(5) 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 $.165 and $.165, 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. 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.
As a result of the repurchases, the Company retired approximately $164,045
in face value of COLA debt and recognized a financial statement extraordinary
gain 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
AMFAC/JMB HAWAII, INC.
Notes to Consolidated Financial Statements - Continued
(Dollars in Thousands)
was treated as cancellation of indebtedness income for tax purposes and,
accordingly, the income taxes related to the Class A Redemption Offer
(approximately $9,106) were not 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.
(6) 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"). 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 year or (ii) ten percent per annum through June 30, 1993 and nine percent
per annum thereafter. The annual interest payments were in excess of the cash
flow generated by the Kaanapali Golf Courses.
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 or the refinancing of the golf
courses or at the 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 adjusted 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 8.73%. 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 Interest"). The Company made payments in 1996 totaling
$6,512, which represents the Minimum Interest due through October 1, 1996.
Accrued Minimum Interest as of December 31, 1996 was $1,244. The scheduled
minimum payments are paid quarterly on the principal balance of the $66,000
loan. The difference between the accrued interest expense 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. The total accrued
interest payable from excess cash flow was approximately $3,151 as of December
31, 1996. Although the outstanding loan balance remains nonrecourse, certain
payments and obligations, such as the Minimum Interest payments and the ERS's
share of appreciation, if any, are recourse to the Company. However, the
Company's obligations to make future Minimum Interest payments and to pay the
ERS a share of appreciation would be terminated if the Company tendered an
executed deed to the golf course property to the ERS in accordance with the
terms of the amendment.
AMFAC/JMB HAWAII, INC.
Notes to Consolidated Financial Statements - Continued
(Dollars in Thousands)
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 forty consecutive installments commencing July 1, 1993
in the principal amount of $250 and $81, respectively (plus interest). The
$10,000 and $3,250 loans have outstanding balances of $6,500 and $66,
respectively, as of December 31, 1996 and bear interest at a rate equal to prime
rate (8.25% at December 31, 1996) plus three and one half percent and prime rate
plus four and one-half percent, respectively. Lihue has purchased an interest
rate agreement which protects against fluctuations in interest rates and
effectively caps the prime rate for the first seven 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 that 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 December 31, 1996) plus 3%, respectively. WGCI received
an initial funding of $14,000, of which $600 was held back by the lenders to pay
interest. In October 1994, in accordance with the loan agreement, the Company
received an additional funding of $6,000 and a release of the $600 interest
holdback, both of which were contingent upon achieving a certain level of Net
Operating Income (as defined) by the golf course during the first six months of
1994. 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 December 31, 1996, the outstanding balance was $19,511, with scheduled annual
principal maturities of $405 in 1997 and the balance of $19,106 in 1998. In
February 1997, WGCI entered into an amended and restated loan agreement with the
Bank of Hawaii, whereby the outstanding principal amount of the loan has been
increased to $25,000, the maturity date has been extended to February 2007, the
interest rate has been changed to LIBOR plus 2% until the fifth anniversary and
LIBOR plus 2.5% thereafter and principal is to be repaid based on a 30-year
amortization schedule.
In December 1996, Amfac Property Development Corporation, a wholly-owned
subsidiary of the Company, obtained a $10,000 loan facility from a Hawaii bank.
The loan is secured by a mortgage on property under development at the mill-site
of Oahu Sugar, and is considered "Senior Indebtedness" (as defined in the
Indenture relating to the COLAS). The loan bears interest at the bank's base
rate (8.25% at December 31, 1996) plus .5% and matures on December 1, 1998.
AMFAC/JMB HAWAII, INC.
Notes to Consolidated Financial Statements - Continued
(Dollars in Thousands)
(7) RENTAL ARRANGEMENTS
As Lessee
The Company rents, as lessee, various land, facilities and equipment under
operating leases. Most land leases provide for renewal options and minimum
rentals plus contingent payments based on revenues or profits. Included in rent
expense are minimum rentals and contingent payments for operating leases in the
following amounts:
1996 1995 1994
------ ------ ------
Minimum and fixed rents $2,357 2,789 3,956
Contingent payments 1,181 1,261 2,476
Property taxes, insurance and other
charges 1,241 445 669
------- ------ ------
$4,779 4,495 7,101
======== ======== =======
Future minimum lease payments under noncancelable operating leases
aggregate approximately $13,403 and are due as follows: 1997, $1,960; 1998,
$2,138; 1999, $1,959; 2000, $2,005; 2001, $1,663; and thereafter, $3,678.
(8) 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.
Northbrook's policy is to fund pension costs in accordance with the minimum
funding requirements under provisions of the Employee Retirement Income Security
Act ("ERISA"). Under ERISA guidelines, amounts funded may be more or less than
the pension expense recognized for financial reporting purposes. 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 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.
Charges for pension and Core Retirement Award costs allocated to the
Company aggregated approximately $628, $961 and $1,000 for the years ended
December 31, 1996, 1995 and 1994, respectively.
AMFAC/JMB HAWAII, INC.
Notes to Consolidated Financial Statements - Continued
(Dollars in Thousands)
In addition to providing pension benefits, the Company also provides
certain healthcare and life insurance benefits to eligible retired employees of
some of its businesses. Where such benefits are offered, substantially all
employees may become eligible for such benefits if they reach a specified
retirement age while employed by the Company and if they meet a certain length
of service criteria. The postretirement healthcare plan is contributory and
contains cost-sharing features such as deductibles and copayments. However,
these features, as they apply to bargaining unit retirees, are subject to
collective bargaining provisions of a labor contract between the Company and the
International Longshoremen's & Warehousemen's Union. The postretirement life
insurance plan is non-contributory. The Company continues to fund benefit costs
for both plans on a pay-as-you-go basis.
Net periodic postretirement benefit cost (credit) for 1996, 1995 and 1994
includes the following components:
December 31, December 31, December 31,
1996 1995 1994
------------------ ----------------- ----------------
Life Life Life
Medical Insurance Medical Insurance Medical Insurance
Plans Plans Total Plans Plans Total Plans Plan Total
------- ------- ------ ------ ------- ------ ---- ----- -----
Service cost $394 23 417 378 15 393 483 17 500
Interest cost 1,681 289 1,970 1,991 296 2,287 3,428 292 3,720
Amortization of
net(gain)loss (3,396) 30 (3,366) (3,310) 24 (3,286)(1,290) 35 (1,255)
------- ------ ------ ------ ----- ------ ----- ----- ----
Net periodic
postretirement
benefit cost
(credit) $(1,321) 342 (979) (941) 335 (606) 2,621 344 2,965
====== ====== ====== ====== ====== ===== ====== ===== =====
The following table sets forth the plans' combined funded status reconciled with
the amounts included in the Company's consolidated financial statements at
December 31, 1996 and 1995:
December 31, December 31,
1996 1995
------------------- ------------------
Life Life
Medical Insurance Medical Insurance
Plans Plan Total Plans Plan Total
------ ------- ------- ------ ------ --------
Accumulated postretirement
benefit obligation:
Retirees $17,385 3,827 21,212 16,048 3,915 19,963
Fully eligible active plan
members 195 16 211 310 29 339
Other active plan members 4,514 164 4,678 6,928 153 7,081
------ ------ ------ ------ ------ -----
22,094 4,007 26,101 23,286 4,097 27,383
Unrecognized net gain(loss) 31,912 (351) 31,561 33,958 (304) 33,654
------ ------ ------ ------ ------ ------
Acc. postretirement benefit
cost 54,006 3,656 57,662 57,244 3,793 61,037
====== ====== ====== ====== ===== ======
AMFAC/JMB HAWAII, INC.
Notes to Consolidated Financial Statements - Continued
(Dollars in Thousands)
For measuring the expected postretirement benefit obligation, an 11% annual
rate of increase in the per capita claims cost was assumed for 1996 through
2002. This rate was assumed to decrease to 6% in 2003 and remain at that level
thereafter. The healthcare cost trend rate assumption has a significant effect
on the amount of the obligation and periodic cost reported. An increase in the
assumed healthcare trend rate by 1% in each year would increase the medical
plans' accumulated postretirement benefit obligation as of December 31, 1996 by
7% and the aggregate of the service and interest cost components of net periodic
postretirement benefit cost for the year then ended by 8%. During 1995, premiums
for health benefits for retirees were adjusted to match actual claims
experience. This adjustment resulted in a reduction to the cost absorbed by the
Company due to the cost sharing provisions of the health care benefit plan.
This adjustment also resulted in the reduction of the accumulated postretirement
benefit obligation as of December 31, 1995.
The Company currently amortizes unrecognized gains over the shorter of 10
years or the average remaining service period of active plan participants.
However, due to the significant amount of unrecognized gain at December 31,
1996, which is included in the financial statements as a liability, and the
disproportionate relationship between the unrecognized gain and accumulated
postretirement benefit obligation at December 31, 1996, the Company may, in the
future, change its amortization policy to accelerate the recognition of the
unrecognized gain. In considering such change, the Company would need to
determine whether significant changes in the accumulated postretirement benefit
obligation and unrecognized gain may occur in the future as a result of changes
in actuarial assumptions, experience and other factors. Any future change to
accelerate the amortization of the unrecognized gain would have no effect on the
Company's cash flows, but could have a significant effect on its statement of
operations.
The weighted-average discount rate used in determining the accumulated
postretirement benefit obligation was 7.5% as of December 31, 1996 and 1995.
(9) TRANSACTIONS WITH AFFILIATES
The Company incurred interest expense of approximately $8,935, $5,360 and
$1,267 for the years ended December 31, 1996, 1995 and 1994, respectively, in
connection with the financing obtained from an affiliate (see note 4), all of
which was paid as of December 31, 1996.
With respect to any calendar year, JMB or its affiliates may receive 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)) for providing certain advisory services for the Company. However,
such amounts shall be earned and 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. A Qualified Allowance for 1989 of approximately $6,200 was paid on
February 28, 1990. Any Qualified Allowance for 1990 through 1996 has been
deferred and is payable only to the
AMFAC/JMB HAWAII, INC.
Notes to Consolidated Financial Statements - Continued
(Dollars in Thousands)
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. JMB has informed the
Company that no incremental costs or expenses have been incurred relating to the
provision of these advisory services. The Company believes that using an
incremental cost methodology is reasonable.
The Company, its subsidiaries and their joint ventures reimburse
Northbrook, JMB and their affiliates for direct expenses incurred on their
behalf, including salaries and salary-related expenses incurred in connection
with the management of the Company's or its subsidiaries' and the joint
ventures' operations. The total of such costs for the years ended December 31,
1996, 1995 and 1994 was approximately $653, $587 and $500, respectively, of
which $1,241 was unpaid as of December 31, 1996. In addition, as of December 31,
1996, the current portion of amounts due to affiliates includes $9,106 of income
tax payable related to the Class A COLA Redemption Offer (see note 5). Also,
the Company pays a non-accountable reimbursement of approximately $30 per month
to JMB or its affiliates in respect of general overhead expense, all of which
was paid as of December 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 years ended December 31, 1996,
1995 and 1994 was approximately $774, $653 and $983, respectively, all of which
was paid as of December 31, 1996.
Northbrook and its affiliates allocated certain charges for services to the
Company based upon the estimated level of services for the years ended December
31, 1996, 1995 and 1994 of approximately $1,460, $7,868 and $1,757,
respectively, of which $6,488 was unpaid as of December 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. All
amounts described above, deferred or currently payable, do not bear interest and
are expected to be paid in future periods.
As discussed in note 4, in February 1997 certain intercompany payables to
Northbrook totaling $7,922 were converted into a new ten year note payable.
Accordingly, these intercompany amounts were classified as long-term as of
December 31, 1996 in the accompanying consolidated financial statements.
(10) SIGNIFICANT CUSTOMER
During 1994, approximately 24% of the Company's revenues were derived from
the sale of land parcels at Waikele to a single builder.
AMFAC/JMB HAWAII, INC.
Notes to Consolidated Financial Statements - Continued
(Dollars in Thousands)
As a result of the Company's interest in HSTC, C&H is contractually bound
to purchase all of the sugar the Company produces. If, for any reason, C&H were
to cease its operations, the Company would seek other purchasers for its sugar.
(11) COMMITMENTS AND CONTINGENCIES
The Company is involved in various matters of litigation and other claims.
Management, 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 had contractual commitments (related to
project costs) of approximately $2,100 as of December 31, 1996. Additional
development expenditures are dependent upon the ability to obtain financing and
the timing and extent of property development and sales.
As of December 31, 1996, certain portions of the Company's land not
currently under development or used in sugar operations are mortgaged as
security for $1,300 of performance bonds related to property development.
(12) INCOME TAXES
Total income tax expense (benefit) for the years ended December 31, 1996,
1995 and 1994 was allocated as follows:
1996 1995 1994
------ -------- -------
Loss before extraordinary gain $(21,043) (8,019) (7,764)
Extraordinary gain -- 20,807 --
------- ------- ------
$(21,043) 12,788 (7,764)
======= ======= ======
Income tax expense (benefit) attributable to loss before extraordinary gain
for the years ended December 31, 1996, 1995 and 1994 consists of:
Current Deferred Total
------- --------- -------
Year ended December 31, 1996:
U.S. federal $(4,414) (13,391) (17,805)
State (803) (2,435) (3,238)
------- -------- --------
$(5,217) (15,826) (21,043)
======= ======= ========
Year ended December 31, 1995:
U.S. federal $(10,475) 3,689 (6,786)
State (1,904) 671 (1,233)
------- ------ ------
$(12,379) 4,360 (8,019)
======= ======= =======
Year ended December 31, 1994:
U.S. federal $ 20,946 (27,515) (6,569)
State 3,808 (5,003) (1,195)
-------- ------- --------
$24,754 (32,518) (7,764)
======== ======= ========
AMFAC/JMB HAWAII, INC.
Notes to Consolidated Financial Statements - Continued
(Dollars in Thousands)
In 1995, income tax expense related to the COLA redemption approximated
$20,807. Of this amount, approximately $9,106 was attributable to current taxes
related to the redeemed Class A COLA's and, accordingly, was not indemnified by
Northbrook (see note 9). Current income tax expense attributable to the Class
B COLA's of approximately $9,490 was indemnified by Northbrook and, accordingly,
was deducted from the 1995 current tax benefit of $12,379 attributable to loss
before extraordinary gain to derive the 1995 capital contribution related to
current income taxes.
Income tax benefit attributable to loss before extraordinary gain differs
from the amounts computed by applying the U.S. federal income tax rate of 35
percent to pretax loss before extraordinary gain as a result of the following:
1996 1995 1994
------ ------ ------
Computed "expected" tax benefit $(19,323) (9,749) (7,279)
Increase (reduction) in income taxes
resulting from:
Pension and Core Retirement Award expense 321 2,478 365
State income taxes, net of federal income
tax benefit (2,158) (823) (796)
Other, net 117 75 (54)
------- ------- -------
Total $(21,043) (8,019) (7,764)
======== ======= =======
AMFAC/JMB HAWAII, INC.
Notes to Consolidated Financial Statements - Continued
(Dollars in Thousands)
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, 1996 and
1995 are as follows:
1996 1995
--------- --------
Deferred tax (assets):
Postretirement benefits $ (22,488) (23,804)
Interest accruals (2,975) (3,149)
Other accruals (3,549) (3,074)
-------- --------
Total deferred tax assets (29,012) (30,027)
-------- --------
Deferred tax liabilities:
Accounts receivable related to profit on sales
of sugar 3,065 3,332
Inventories, principally due to sugar production
costs,capitalized costs, capitalized interest
and purchase accounting adjustments 258 4,716
Plant and equipment, principally due to
depreciation and purchase accounting adjustments 8,129 7,696
Land and land improvements, principally due to
purchase accounting adjustments 89,537 101,204
Deferred gains due to installment sales for
income tax purposes 7,429 8,492
Investments in unconsolidated entities,
principally due to purchase
accounting adjustments. 14,361 14,180
------- -------
Total deferred tax liabilities 122,779 139,620
------- -------
Net deferred tax liability $ 93,767 109,593
========= ========
AMFAC/JMB HAWAII, INC.
Notes to Consolidated Financial Statements - Concluded
(Dollars in Thousands)
(13) SEGMENT INFORMATION
Agriculture and Property comprise the separate industry segments of the
Company. Operating income (loss)-Other consists primarily of unallocated
overhead expenses and Total assets-Other consists primarily of cash and deferred
expenses.
Total revenues, operating income (loss), assets, capital expenditures, and
depreciation and amortization by industry segment for 1996, 1995 and 1994 are
set forth below:
1996 1995 1994
Revenues:
Agriculture $51,805 47,656 89,237
Property 45,138 52,663 66,749
-------- -------- --------
$96,943 100,319 155,986
======== ======== ========
Operating income (loss):
Property:
Reduction to carrying value
of investments in real
estate $(18,315) -- (5,000)
Other 732 11,122 17,934
Agriculture (7,525) (10,882) (3,893)
Other (3,045) (2,593) (3,800)
-------- -------- --------
$ (28,153) (2,353) 5,241
======== ======== ========
Total assets:
Property $225,372 199,999 207,980
Agriculture 239,222 304,170 321,906
Other 19,011 23,429 84,661
-------- -------- --------
$483,605 527,598 614,547
======== ======== ========
Capital expenditures:
Property $ 845 1,529 2,872
Agriculture 3,160 3,616 3,891
Other 252 -- --
------- -------- --------
$ 4,257 5,145 6,763
======= ======== ========
Depreciation and amortization:
Property $ 2,179 1,991 2,128
Agriculture 4,120 4,538 4,889
Other 55 194 199
------- ------- --------
$ 6,354 6,723 7,216
======= ======= ========
(14) Subsequent Event
On February 28, 1997, an interest payment of approximately $4,414 was paid
to the holders of COLAS. The Company borrowed approximately $4,414 from
Northbrook to make the interest payment.
<TABLE>
Schedule II
AMFAC/JMB HAWAII, INC.
Valuation and Qualifying Accounts
Years ended December 31, 1996, 1995 and 1994
(Dollars in Thousands)
<CAPTION>
Additions Additions
Balance at Charges to Charges to Balance at
Beginning Cost and Other End
Description of Period Expenses Accounts Deductions of Period
-------- ------- --------- ---------- -------
<S> <C> <C> <C> <C> <C>
Year ended December 31,
1996:
Allowance for doubtful
accounts:
Trade accounts $ 361 11 -- 54 318
Claims and other -- -- -- -- --
------- ------ ------ ------ ------
$ 361 11 -- 54 318
======= ====== ====== ====== ======
Year ended December 31,
1995:
Allowance for doubtful
accounts:
Trade accounts $ 285 102 -- 26 361
Claims and other 1,144 -- -- 1,144 --
------ ------ ------ ------ ------
$1,429 102 -- 1,170 361
====== ====== ====== ====== ======
Year ended December 31,
1994:
Allowance for doubtful
accounts:
Trade accounts $ 235 89 -- 39 285
Claims and other 1,144 -- -- -- 1,144
------ ------ ------ ------- -------
$1,379 89 -- 39 1,429
====== ====== ====== ======= =======
</TABLE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholder
AMFAC/JMB FINANCE, INC.
We have audited the accompanying balance sheets of
Amfac/JMB Finance, Inc. as of December 31, 1996 and 1995.
These balance sheets are the responsibility of the Company's
management. Our responsibility is to express an opinion on
these balance sheets based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance
about whether the balance sheets are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the balance
sheets. An audit also includes assessing the accounting
principles used and significant estimates made by management,
as well as evaluating the overall balance sheet presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the balance sheets referred to above
present fairly, in all material respects, the financial
position of Amfac/JMB Finance, Inc. at December 31, 1996 and
1995, in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
Honolulu, Hawaii
March 21, 1997
AMFAC/JMB FINANCE, INC.
Balance Sheets
December 31, 1996 and 1995
(Dollars in thousands, except per share information)
A S S E T S
1996 1995
Current assets:
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 3)
Common stock, $1 par value;
authorized, issued and outstanding - 1,000 shares $ 1 1
======= =======
The accompanying notes are an integral part of these balance sheets.
AMFAC/JMB FINANCE, INC.
Notes to the Balance Sheets
December 31, 1996 and 1995
(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) KEEP-WELL AGREEMENT
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 the COLA repurchase obligations described below in
note 3.
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 purchase, any and all Class A COLAS submitted
pursuant to the June 1, 1995 Redemption Offer at a price of
$.365 per Class A COLA. Pursuant to Amfac/JMB Hawaii, Inc.'s
election to redeem the Class A COLAS for repurchase, Amfac/JMB
Hawaii, Inc. assumed Finance's maximum amount of its liability
from the June 1, 1995 COLA repurchase obligation of $140,425.
(3) REPURCHASE OBLIGATION
On March 14, 1989, Finance and a subsidiary of Northbrook
(Amfac/JMB Hawaii, Inc.) entered into an agreement (the
"Repurchase 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 $.165 and $.165, respectively.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
There were no changes in or disagreements with the
accountants during the fiscal years 1996 and 1995.
PART III
Item 10. Directors and Executive Officers of the Registrant
As of December 31, 1996, the directors, executive
officers and certain other officers of the Company were as
follows:
Position
Held with
Name the Company
Judd D. Malkin Chairman
Neil G. Bluhm Vice Chairman
Edward G. Karl President, Chief Executive
Officer and Director
Gary Grottke Executive Vice President,
Chief Operating
Officer and Director
Chris J. Kanazawa Senior Vice President
and Director
Peggy H. Sugimoto Senior Vice President and
Chief Financial Officer
Timothy E. Johns Vice President
Teney K. Takahashi Vice President
Certain of these officers are also officers and/or
directors of JMB and numerous affiliated companies of JMB
(hereinafter collectively referred to as "JMB affiliates") and
many of such officers are also partners of certain
partnerships (herein collectively referred to as the
"Associate Partnerships") which are associate general partners
(or general partners thereof) in publicly offered real estate
limited partnerships. The publicly offered partnerships in
which the Associate Partnerships are partners have not engaged
in the agriculture business and have primarily purchased, or
made mortgage loans securing, existing commercial, retail,
office, industrial and multi-family residential rental
buildings. However, certain partnerships sponsored by JMB and
other affiliates of JMB are engaged in development activities
including planned communities, none of which are in Hawaii.
There is no family relationship among any of the
foregoing directors or officers.
The foregoing directors have been elected to serve one-
year terms until the next annual meeting to be held on the
Second Tuesday of August 1997 or until his successor is
elected and qualified.
There are no arrangements or understandings between or
among any of said directors or officers and any other person
pursuant to which any director or officer was selected as
such.
The business experience during the past five years of the
directors and such officers of the Company includes the
following:
Judd D. Malkin (age 59) is Chairman of the Board of JMB,
an officer and/or director of various JMB affiliates and an
individual general partner of several publicly offered real
estate limited partnerships affiliated with JMB. Mr. Malkin
has been associated with JMB since October 1969. Mr. Malkin is
a director of Urban Shopping Centers, Inc., an affiliate of
JMB that is a real estate investment trust in the business of
owning, managing and developing shopping centers. He is a
Certified Public Accountant.
Neil G. Bluhm (age 59) is President and director of JMB,
an officer and/or director of various JMB affiliates and an
individual general partner of several publicly offered real
estate limited partnerships affiliated with JMB. Mr. Bluhm
has been associated with JMB since August 1970. Mr. Bluhm is a
director of Urban Shopping Centers, Inc., an affiliate of JMB
that is a real estate investment trust in the business of
owning, managing and developing shopping centers. He is a
member of the Bar of the State of Illinois and a Certified
Public Accountant.
Edward G. Karl (age 41) is President and Chief Executive
Officer since January 1994. He was previously an officer of
JMB and various partnerships related to JMB. Prior to joining
JMB in 1984, Mr. Karl was a Manager at Peat, Marwick, Mitchell
& Co. He is a Certified Public Accountant.
Gary R. Grottke (age 41) is Executive Vice President and
Chief Operating Officer since January 1994. He was an officer
of JMB from May 1989 to December 1993. Prior to joining JMB
in 1989, Mr. Grottke was a Senior Manager at Peat, Marwick,
Mitchell & Co. He holds a Masters degree in Business
Administration from the Krannert School of Management at
Purdue University and is a Certified Public Accountant.
Peggy H. Sugimoto (age 46) is Senior Vice President and
Chief Financial Officer since 1994. Ms. Sugimoto has been
associated with the Company since 1976. She is a Certified
Public Accountant.
Chris Kanazawa (age 44) is Senior Vice President and
Director of the Company since January 1, 1994 and has served
as such since January 1990. Prior to assuming this position,
Mr. Kanazawa was Vice President of Amfac Property Development
Corporation (1986 to 1990). He has been associated with the
Registrant since September 1981. Mr. Kanazawa holds a
Bachelors degree in Economics from the University of Hawaii
and a Masters degree in Business Administration from the
University of Southern California.
Teney K. Takahashi (age 58) is Vice President of
Amfac/JMB Hawaii - Properties since rejoining the Company in
April 1995. Prior to rejoining Amfac, Mr. Takahashi served as
President and Director of Princeville Corporation, and
President and Director of Malama Pacific, Inc. Mr. Takahashi
previously worked for Amfac from 1973 - 1988.
P. Eric Hohmann (age 38) is Vice President of Amfac/JMB
Hawaii, Inc. - Properties Division since 1994. Mr. Hohmann
served for 4 years as a Vice President of Amfac Property
Development Corporation, which is a wholly-owned subsidiary of
the Company. Prior to 1990, Mr. Hohmann was associated with
JMB for 5 years. He holds a Masters degree in Business
Administration from the UCLA Anderson Graduate School of
Business.
Timothy E. Johns (age 40) is Vice President of Amfac/JMB
Hawaii - Properties Division since January 1994. He holds a
J.D. degree from the University of Southern California Law
Center and is a member of the Hawaii State Bar Association.
Item 11. Executive Compensation
Except for the executive officers listed on the table
below, certain of the listed officers and directors of the
Company in item 10 above are officers and/or directors of JMB
or Northbrook and are compensated by JMB, Northbrook, or an
affiliate thereof (other than the Company and its
subsidiaries). The Company will reimburse Northbrook, JMB and
their affiliates for any expenses incurred while providing
services to the Company as described under the caption
"Description of the COLAS - Limitations on Mergers and Certain
Other Transactions" at pages 42-43 of the Prospectus, a copy
of which description was filed herewith and incorporated
herein by reference. In addition, JMB and its affiliates may
earn an amount, the Qualified Allowance (as defined), as
described under the caption "Description of the COLAS -
Certain Definitions" at page 51 of the Prospectus, a copy of
which description was filed herewith and is incorporated
herein by reference. See Item 13 below.
SUMMARY COMPENSATION TABLE
Annual Compensation
-------------------------------------
Other
Annual
Compensa-
Name Principal Salary Bonus tion
(1) Position Year ($) (2) ($) ($)
-------- ----------- ------- -------- ------- --------
Edward G. President, Chief Exec. 1996 80,000 N/A N/A
Karl Officer and Director 1995 75,000 N/A N/A
1994 72,000 N/A N/A
Gary Executive Vice Pres. 1996 199,500 N/A N/A
Grottke and Chief Operating 1995 190,000 N/A N/A
Officer 1994 187,500 N/A N/A
Chris J. Senior Vice President 1996 275,000 200,000 N/A
Kanazawa 1995 250,000 175,000 N/A
1994 250,000 75,000 N/A
Teney K. Vice President 1996 191,000 100,000 N/A
Takahashi 1995 128,076 N/A N/A
1994 N/A N/A N/A
P. Eric Vice President 1996 150,000 90,000 N/A
Hohmann 1995 142,000 85,000 N/A
1994 135,000 30,000 N/A
------------
(1) Includes CEO and 4 most highly compensated executives
whose salary and bonus exceed $100,000.
(2) Salaries for Mr. Karl and Mr. Grottke represent the
portions of their total compensation allocated and charged
to the Company.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
All of the outstanding shares of the Company are owned by
Northbrook. Approximately 6% of the shares of Northbrook are
owned by JMB and approximately 90% are owned directly or
indirectly by individuals who are shareholders or employees of
JMB or members of their families (or trusts for their
benefit). Randi Malkin Steinberger, Stephen Malkin and Barry
Malkin, individually or through trusts which they control,
each have beneficial ownership of approximately 9.7% of the
shares of Northbrook. Leslie Bluhm, Andrew Bluhm and Meredith
Bluhm, individually or through trusts which they control, each
have beneficial ownership of approximately 10.0% of the shares
of Northbrook. Kathleen Schreiber, in her capacity as trustee
of various trusts for the benefit of members of her family,
which trusts comprise the managing partners of a partnership
which owns Northbrook shares, has beneficial ownership of
approximately 5.1% of the shares of Northbrook. Stuart Nathan,
Executive Vice President and a director and shareholder of
JMB, and his children, Scott Nathan and Robert Nathan,
collectively have beneficial ownership of slightly more than
5.1% of the shares of Northbrook; each of them, primarily by
virtue of their status as general partners of partnerships
which own such shares would also be considered to individually
have beneficial ownership of substantially all of such shares.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Other than as set forth in Notes to Consolidated
Financial Statements and Notes to Balance Sheets contained
under Item 8 above, Items 10 and 11 above, and this Item 13,
there were no other significant transactions or business
relationships with Northbrook, JMB, affiliates or their
management.
The Company, its subsidiaries and the joint ventures in
which the Company or its subsidiaries are partners are
permitted to engage in various transactions involving
Northbrook, JMB and their affiliates, as described under the
captions "Description of the COLAS - Limitation on Dividends,
Purchases of Capital Stock and Indebtedness" and "Limitations
on Mergers and Certain Other Transactions" and "Purchase or
Joint Venture of Properties by Affiliates; Development of
Properties as Excluded Assets; Residual Value of Company in
Certain Projects" at pages 41-45, and "Risk Factors -
Conflicts of Interest" at page 19 of the Prospectus, a copy of
which descriptions are hereby incorporated herein by reference
to Exhibit 28.1 to the Company's Report on Form 10-K for
December 31, 1988 (File No. 33-24180) dated March 27, 1989.
The relationship of the Company (and its directors and
executive officers and certain other officers) to its
affiliates is set forth above in Item 10.
The Company incurred interest expense of approximately
$8.9 million, $5.4 million and $1.3 million for the years
ended 1996, 1995 and 1994, respectively, in connection with
the acquisition and additional financing obtained from an
affiliate, all of which was paid as of December 31, 1996.
With respect to any calendar year, JMB or its affiliates
may receive a Qualified Allowance in an amount equal to: (i)
approximately $6.2 million 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)) for providing
certain advisory services for the Company. However, such
amount shall be earned and 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. A
Qualified Allowance for 1989 of approximately $6.2 million was
paid on February 28, 1990. Any Qualified Allowance for 1990
through 1996 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. JMB has informed the
Company that no incremental costs or expenses have been
incurred relating to the provision of these advisory services.
The Company believes that using an incremental cost
methodology is reasonable.
The Company, its subsidiaries and their joint ventures,
reimburse Northbrook, JMB and their affiliates for direct
expenses incurred on their behalf, including salaries and
salary related expenses incurred in connection with the
management of the Company's or its subsidiaries and the joint
ventures' operations. The total of such costs through
December 31, 1996, 1995 and 1994 was $.7 million, $.6 million,
$.5 million, respectively, of which $1.2 million was unpaid as
of December 31, 1996. In addition, as of December 31, 1996,
the current portion of amounts due affiliates includes
approximately $9.1 million of income tax payable related to
the Class A Redemption Offer. Also, the Company pays a non-
accountable reimbursement of approximately $.03 million per
month to JMB or its affiliates in respect of general overhead
expense, all of which was paid as of December 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 years ended December 31, 1996, 1995 and 1994 was
approximately $.8 million, $.7 million and $1 million, all of
which was paid as of December 31, 1996.
Northbrook and its affiliates allocated certain charges
for services to the Company based upon the estimated level of
services for the years ended December 31, 1996, 1995 and 1994
of approximately $1.5 million, $7.9 million and $1.7 million,
respectively, of which $6.5 million was unpaid as of December
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. All amounts described
above, deferred or currently payable, do not bear interest and
are expected to be paid in future periods.
In February 1997 certain intercompany payables to
Northbrook totaling $7.9 million were converted into a new ten
year note payable. Accordingly these intercompany payables
were classified as long-term as of December 31, 1996 in the
accompanying consolidated financial statements.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) The following documents are filed as part of this report:
(1) Financial Statements (See
Index to Financial Statements and Supplementary
Data filed with this report.)
(2) Exhibits
3.1* Articles of
Incorporation of Amfac/JMB
Hawaii, Inc.
3.2* Amended and Restated By-Laws of Amfac/JMB
Hawaii, Inc.
3.3* Articles of
Incorporation of Amfac/JMB
Finance, Inc.
3.4* Amended and
Restated By-Laws of Amfac/JMB
Finance, Inc.
3.7* Articles of
Incorporation of Amfac Property
Development Corp.
3.8* Amended and
Restated By-Laws of Amfac
Property Developments Corp.
3.9* Articles of
Incorporation of Amfac Property
Investment Corp.
3.10* Amended and
Restated By-Laws of Amfac
Property Investment Corp.
3.11* Articles of
Incorporation of Amfac Sugar and
Agribusiness, Inc.
3.12* Amended and
Restated By-Laws of Kaanapali
Water Corporation
3.13* Articles of
Incorporation of Kaanapali Water
Corporation.
3.14* Amended and
Restated By-Laws of Amfac
Agribusiness, Inc.
3.15* Articles of
Incorporation of Amfac
Agribusiness, Inc.
3.16* Amended and
Restated By-Laws of Kekaha Sugar
Company, Limited.
3.17* Articles of
Association of Kekaha Sugar
Company, Limited.
3.18* Amended and
Restated By-Laws of The Lihue
Plantation Company, Limited.
3.19* Articles of
Association of The Lihue
Plantation Company, Limited
3.20* Amended and
Restated By-Laws of Oahu Sugar
Company, Limited.
3.21* Articles of
Association of Oahu Sugar
Company, Limited.
3.22 Amended and
Restated By-Laws of Pioneer Mill
Company, Limited
3.23* Articles of
Association of Pioneer Mill
Company, Limited.
3.24 Amended and
Restated By-Laws of Puna Sugar
Company, Limited.
3.25* Articles of
Association of Puna Sugar
Company, Limited.
3.26 Amended and
Restated By-Laws of H. Hackfeld &
Co., Ltd.
3.27* Articles of
Association of H. Hackfeld & Co.,
Ltd.
3.28 Amended and
Restated By-Laws of Waiahole
Irrigation Company, Limited.
3.29* Articles of
Incorporation of Waiahole
Irrigation Company, Limited.
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********* 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 13,
1996 and hereby incorporated by
reference. Standard Sugar
Marketing Contracts between
Hawaiian Sugar Transportation
Company and Hawaii Sugar Growers
dated June 4, 1993.
4.10********** Amendment to the $66,000,000 loan
with the Employees' Retirement
System of the State of Hawaii to
Amfac/JMB Hawaii, Inc. as of
April 18, 1996.
4.11*********** Amended and Restated $52,000,000
Promissory Note to Northbrook
Corporation from Amfac/JMB
Hawaii, Inc. extended and
reissued effective June 1, 1996.
4.12************ Amended and Restated $28,087,832
Promissory Note from Amfac, Inc.
to Amfac/JMB Hawaii, Inc.
extended and reissued effective
June 1, 1996.
4.13 $10,000,000
loan agreement between Amfac
Property Development Corp. and
City Bank at December 18, 1996
4.14 $104,759,324
promissory Note between
Northbrook Corporation and
Amfac/JMB Hawaii, Inc. dated
February 17, 1997
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 June 15, 1992, 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.
10.19** Keep-Well
Agreement between Northbrook
Corporation and Amfac/JMB
Finance, Inc.
10.20** Repurchase
Agreement, dated March 14, 1989,
by and between Amfac/JMB Hawaii,
Inc. and Amfac/JMB Finance, Inc.
10.21** 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.
10.22** Amfac-Amfac
Hawaii Tax Agreement, dated
February 27, 1989 between Amfac,
Inc. and Amfac/JMB Hawaii, Inc.
10.23** 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.
22.1* Subsidiaries
of Amfac/JMB Hawaii, Inc.
28.1** A copy of
pages 19, 41-45 and 51 of the
Prospectus of the Company dated
December 5, 1988 (relating to SEC
Registration Statement on Form S-
1 (as amended) File No. 33-24180)
and hereby incorporated by
reference.
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.
* 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 on November 11, 1993 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, 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.
******** 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 13, 1996 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 13, 1996 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 on August 13, 1996 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 August 13, 1996 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 August 13, 1996 and hereby incorporated by
reference.
(b)No Reports on Form 8-K were required or filed
since the beginning of the last quarter of the
period covered by this report.
No annual report or proxy material for 1996 was sent to the
COLA holders of the Company. An annual report will be sent to
the COLA holders subsequent to this filing.
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: March 27, 1997
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the
capacities and on the dates indicated.
By: Edward G. Karl
President, Chief Executive Officer and
Director
Date: March 27, 1997
By: Peggy Sugimoto
Senior Vice President and
Chief Financial Officer
Date: March 27, 1997
By: Gary Grottke
Executive Vice President,
Chief Operating Officer and Director
Date: March 27, 1997
By: Gary Smith
Vice President and
Principal Accounting Officer
Date: March 27, 1997
By: Chris Kanazawa
Senior Vice President and
Director
Date: March 27, 1997
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: March 27, 1997
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the
capacities and on the dates indicated.
By: Edward G. Karl
President and
Chief Executive Officer
Date: March 27, 1997
By: Steven E. Plonsker
Senior Vice President
Date: March 27, 1997
By: Gary Nickele
Director
Date: March 27, 1997
By: Gary Smith
Vice President Finance and
Principal Accounting Officer
Date: March 27, 1997
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: March 27, 1997
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the
capacities and on the dates indicated.
By: Chris J. Kanazawa
President and
Director
Date: March 27, 1997
By: Gary Grottke
Vice President and Director
Date: March 27, 1997
By: Gary Smith
Vice President and
Principal Accounting Officer
Date: March 27, 1997
By: Edward G. Karl
Vice President and Director
Date: March 27, 1997
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: March 27, 1997
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the
capacities and on the dates indicated.
By: Chris J. Kanazawa
President and
Director
Date: March 27, 1997
By: Gary Grottke
Vice President and Director
Date: March 27, 1997
By: Gary Smith
Vice President and
Principal Accounting Officer
Date: March 27, 1997
By: Edward G. Karl
Vice President and Director
Date: March 27, 1997
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: March 27, 1997
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the
capacities and on the dates indicated.
By: Robert B. Heiserman, Jr.
President and Director
Date: March 27, 1997
By: Gary Grottke
Vice President and Director
Date: March 27, 1997
By: Gary Smith
Vice President and
Principal Accounting Officer
Date: March 27, 1997
By: Edward G. Karl
Vice President and Director
Date: March 27, 1997
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: March 27, 1997
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the
capacities and on the dates indicated.
By: Chris J. Kanazawa
President and Director
Date: March 21, 1997
By: Gary Grottke
Vice President and Director
Date: March 21, 1997
By: Gary Smith
Vice President and
Principal Accounting Officer
Date: March 21, 1997
By: Edward G. Karl
Vice President and Director
Date: March 21, 1997
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: March 21, 1997
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the
capacities and on the dates indicated.
By: Robert B. Heiserman, Jr.
President and Director
Date: March 21, 1997
By: Gary Grottke
Vice President and Director
Date: March 21, 1997
By: Gary Smith
Vice President and
Principal Accounting Officer
Date: March 21, 1997
By: Edward G. Karl
Vice President and Director
Date: March 21, 1997
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: March 21, 1997
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the
capacities and on the dates indicated.
By: Robert B. Heiserman, Jr.
President and Director
Date: March 21, 1997
By: Gary Grottke
Vice President and Director
Date: March 21, 1997
By: Gary Smith
Vice President and
Principal Accounting Officer
Date: March 21, 1997
By: Edward G. Karl
Vice President and Director
Date: March 21, 1997
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: March 21, 1997
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the
capacities and on the dates indicated.
By: Robert B. Heiserman, Jr.
President and Director
Date: March 21, 1997
By: Gary Grottke
Vice President and Director
Date: March 21, 1997
By: Gary Smith
Vice President and
Principal Accounting Officer
Date: March 21, 1997
By: Edward G. Karl
Vice President and Director
Date: March 21, 1997
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: March 21, 1997
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the
capacities and on the dates indicated.
By: Robert B. Heiserman, Jr.
President and Director
Date: March 21, 1997
By: Gary Grottke
Vice President and Director
Date: March 21, 1997
By: Gary Smith
Vice President and
Principal Accounting Officer
Date: March 21, 1997
By: Edward G. Karl
Vice President and Director
Date: March 21, 1997
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: March 21, 1997
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the
capacities and on the dates indicated.
By: Robert B. Heiserman, Jr.
President and Director
Date: March 21, 1997
By: Gary Grottke
Vice President and Director
Date: March 21, 1997
By: Gary Smith
Vice President and
Principal Accounting Officer
Date: March 21, 1997
By: Edward G. Karl
Vice President and Director
Date: March 21, 1997
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: March 21, 1997
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the
capacities and on the dates indicated.
By: Robert B. Heiserman, Jr.
President and Director
Date: March 21, 1997
By: Gary Grottke
Vice President and Director
Date: March 21, 1997
By: Gary Smith
Vice President and
Principal Accounting Officer
Date: March 21, 1997
By: Edward G. Karl
Vice President and Director
Date: March 21, 1997
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: March 21, 1997
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the
capacities and on the dates indicated.
By: Robert B. Heiserman, Jr.
President and Director
Date: March 21, 1997
By: Gary Grottke
Vice President and Director
Date: March 21, 1997
By: Gary Smith
Vice President and
Principal Accounting Officer
Date: March 21, 1997
By: Edward G. Karl
Vice President and Director
Date: March 21, 1997
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: March 21, 1997
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the
capacities and on the dates indicated.
By: Gary Grottke
Vice President and Director
Date: March 21, 1997
By: Gary Smith
Vice President and
Principal Accounting Officer
Date: March 21, 1997
By: Chris Kanazawa
President and Director
Date: March 21, 1997
By: Edward G. Karl
Vice President and Director
Date: March 21, 1997
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: March 21, 1997
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the
capacities and on the dates indicated.
By: Chris J. Kanazawa
President and
Director
Date: March 21, 1997
By: Gary Grottke
Vice President and Director
Date: March 21, 1997
By: Gary Smith
Vice President and
Principal Accounting Officer
Date: March 21, 1997
By: Edward G. Karl
Vice President and Director
Date: March 21, 1997
EXHIBIT INDEX
Document Sequentially
incorporated numbered
Exhibit No. Exhibit by reference page
3.1 to 3.30* Articles of Incorporation
and Amended and Restated By-Laws Yes --
4.1** Indenture, including the
forms of COLAS, among
Amfac/JMB Hawaii, Inc., its
subsidiaries and Continental
Illinois Bank National
Association, as Trustees
(dated March 14, 1989) Yes --
4.2*** Amendment dated as of
January 17, 1990 to the
Indenture relating to the
COLAS. Yes --
4.3*** $28,097,832 Promissory Note
from Amfac, Inc. to
Amfac/JMB Hawaii, Inc.
Extended and Reissued
Effective December 31,
1990. Yes --
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. Yes --
4.5***** $15,000,000 Credit Agreement dated March 31,
1993 among AMFAC/JMB Hawaii, Inc. and
Continental Bank N.A. Yes --
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. Yes --
4.7******* $52,000,000 Promissory Note to Northbrook
Corporation from Amfac/JMB Hawaii, Inc.,
effective May 31, 1995 is filed herewith Yes --
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. Yes --
4.9********* 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 13, 1996 and hereby
incorporated by reference. Standard Sugar
Marketing Contracts between Hawaiian Sugar
Transportation Company and Hawaii Sugar Growers
dated June 4, 1993. Yes --
4.10**********Amendment to the $66,000,000 loan with the
Employees' Retirement System of the State of
Hawaii to Amfac/JMB Hawaii, Inc. as of April
18, 1996. Yes --
4.11***********Amended and Restated $52,000,000 Promissory Note
to Northbrook Corporation from Amfac/JMB Hawaii,
Inc. extended and reissued effective June 1,
1996. Yes --
4.12************Amended and Restated $28,087,032 Promissory
Note from Amfac, Inc. to Amfac/JMB Hawaii, Inc.
extended and reissued effective June 1, 1996.Yes --
10.1 to 10.22* Material Contracts Yes --
10.3* Grove Farm Haiku Lease, dated
January 25, 1974 by and between
Grove Farm Company, Incorporated
and The Lihue Plantation Company
Limited. Yes --
10.4* General Lease S-4412, dated
October 31, 1974 by and between
the State of Hawaii and the
Lihue Plantation Company
Limited. Yes --
10.5* General Lease S-4576, dated
March 15, 1978, by and between
the State of Hawaii and The
Lihue Plantation Company,
Limited. Yes --
10.6* General Lease S-3827, dated
July 8, 1964 by and between
the State of Hawaii and East
Kauai Water Company, Ltd. Yes --
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. Yes --
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. Yes --
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. Yes --
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. Yes --
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. Yes --
10.13* Honokohau Water License, dated
December 22, 1980, between Maui
Pineapple Company Ltd. and
Pioneer Mill Company, Limited. Yes --
10.14* Water Licensing Agreement, dated
September 22, 1980, by and between
Maui Land & Pineapple Company,
Inc. and Amfac, Inc. Yes --
10.15* Joint Venture Agreement, dated as
of March 19, 1986, by and between
Amfac Property Development Corp.
and Tobishima Properties of
Hawaii, Inc. Yes --
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. Yes --
10.19** Keep-Well Agreement between
Northbrook Corporation and
Amfac/JMB Finance, Inc.,
dated March 14, 1989. Yes --
10.20** Repurchase Agreement, dated
March 14, 1989, by and between
Amfac/JMB Hawaii, Inc. and
Amfac/JMB Finance, Inc. Yes --
10.21** 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.; Kehaha
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. Yes --
10.22** Amfac-Amfac Hawaii Tax Agreement,
dated February 27, 1989 between
Amfac, Inc. and Amfac/JMB Hawaii,
Inc. Yes --
10.23** Services Agreement, dated November
18, 1988, between Amfac/JMB Hawaii,
Inc., and Amfac Property Develop-
ment Corp.; Amfac Property Invest-
ment Corp.; Amfac Sugar and Agri-
business, Inc.; Kaanapali Water
Corporation; Amfac Agribusiness,
Inc.; Kehaha Sugar Company,
Limited; The Lihue Plantation
Company, Limited; Oahu Sugar
Company, Limited; Pioneer Mill
Company, Limited; Puna Sugar
Company, Limited; H. Hackfeld &
Co., Ltd.; Waiahole Irriga-
tion Company, Limited and JMB
Realty Corporation Yes --
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 Yes --
22.1 Subsidiaries of
Amfac/JMB Hawaii Inc. Yes --
28.1** A copy of pages 19, 41-45 and
51 of the Company's Prospectus
dated December 5, 1988
filed pursuant to Rules
424(b) and 424(c) (relating
to SEC Registration Statement
on Form S-1 (as amended)
File No. 33-24180) Yes --
* Previously filed as exhibits to the Company's
Registration Statement on 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 on 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 on 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.
********** Previously filed as exhibit to the Company's Form 10-
K report under the Securities Act of 1934 (File No. 33-24180)
filed on August 17, 1996 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 August 13, 1996 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 August 13, 1996 and hereby incorporated by reference.
NOTE
$104,759,324 February 17, 1997
FOR VALUE RECEIVED, the undersigned, AMFAC/JMB HAWAII,
INC. (herein called "Borrower"), a Hawaii corporation,
hereby promises to pay to NORTHBROOK CORPORATION (the
"Payee") the principal sum of ONE HUNDRED FOUR MILLION SEVEN
HUNDRED FIFTY-NINE THOUSAND THREE HUNDRED TWENTY-FOUR
DOLLARS ($104,759,324) on February 17, 2007 (the "Maturity
Date"), with interest (computed on the basis of a 365- (or,
if applicable, 366-) day year) on the unpaid balance thereof
at a per annum rate equal to the "Base Rate" as announced
from time to time by Bank of Hawaii plus 2% per annum
(changing as and when such "Base Rate" changes) from the
date hereof, payable on the 15th day of May, August,
November and February in each year, commencing May 15, 1997;
provided, that the Payee may, at its option, defer all or
any portion of the interest payable on any such date (in
which case such deferred amounts shall be added to the
principal of the loan), but in no event shall such payment
be deferred beyond the Maturity Date.
Payments of principal and premium, if any, and of
interest on this Note are to be made in lawful money of the
United States of America at the principal office of the
Payee in Chicago, Illinois.
If any of the following events ("Events of Default")
occurs and is continuing
(a) Borrower fails to pay any principal hereon
when the same shall become due and payable, or fails,
within five day after the same becomes due payable, to
pay any undeferred interest hereon;
(b) Borrower fails to make any payment in respect
of any of Borrower's indebtedness for borrowed money
having an aggregate principal amount of more than
$1,000,000 when due (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise,
but subject to any applicable grace period) or fails to
perform or observe any other condition or covenant, or any
other event shall occur or condition shall exist, under
any agreement or instrument relating to any such
indebtedness for borrowed money, if the effect of such
failure, event or condition is to cause, or to permit
holders of such indebtedness to cause, such indebtedness
to become due prior to its expressed maturity;
(c) Borrower becomes insolvent or generally fails
to pay, or admits in writing its inability to pay its
debts as they become due; Borrower applies for a
trustee, receiver or other custodian for it or a
substantial part of its property; a trustee, receiver or
other custodian is appointed for Borrower or for a
substantial part of its property; or any bankruptcy,
reorganization, debt arrangement, or other case or
proceeding under any bankruptcy or insolvency law, or
any dissolution or liquidation proceeding, is commenced
in respect of Borrower; or
(d) a final judgment or order for the payment of
money in excess of $50,000 shall be rendered against
Borrower or any of its subsidiaries and such judgment or
order shall continue unsatisfied and unstayed for a period
of 30 days,
then, in the case of any Event of Default under clause (c)
above, all indebtedness evidenced by this Note and all
interest hereon shall automatically be and become
immediately due and payable, and in the case of any other
Event of Default, the holder hereof may, by notice to
Borrower, declare all indebtedness evidenced by this Note
and all interest hereon to be forthwith due and payable,
whereupon all indebtedness evidenced by this Note and all
such interest will become and be forthwith due and payable,
all without presentment, demand, protest or further notice
of any kind, all of which are hereby expressly waived by
Borrower.
Borrower acknowledges that its obligations hereunder
constitute "Senior Indebtedness" for purposes of the
Indenture, dated as of March 14, 1989, among Borrower,
certain of Borrower's affiliates, and Continental Bank,
National Association, as trustee, as the same may be
amended, supplemented or otherwise modified from time to
time.
Notwithstanding anything to the contrary contained in
this Note, no director, officer or employee of the Borrower
shall have any personal liability of any kind or nature
directly or indirectly in connection with this Note.
This Note shall be governed by and construed in
accordance with the laws of the State of Illinois applicable
to contracts made and to be wholly performed in said State,
including, but not limited to, the legality of interest
rate.
AMFAC/JMB HAWAII, INC.
By___________________________
Title: Vice President
PROMISSORY NOTE
(Secured by Mortgage)
$10,000,000.00 December 18, 1996
Honolulu, Hawaii
FOR VALUE RECEIVED, the undersigned (the "Maker")
promises to pay to CITI BANK, a Hawaii corporation, at 201
Merchant Street, Honolulu, Hawaii 96813, or at such other
place as may be designated in writing by the holder of this
Note (the "Holder") the principal sum of TEN MILLION AND
NO/100 DOLLARS ($10,000,000.00), or so much hereof as may
be advanced pursuant to the Loan Agreement hereinafter
referred to, in lawful money of the United States of
America with interest on each advance of the principal sum
from the date of such advance at a floating rate per annum
equal to one-half percentage point (0.5%) higher than the
City Bank Base Rate, fluctuating from time to time during
the term of this Note. Each change in such interest rate
shall take effect at such time as the City Bank Base Rate
changes. Interest shall be computed for the actual number
of days elapsed, on the basis of a 365 or 366 day year, as
the case may be.
The "City Bank Base Rate" is that rate which
corresponds with, and is the same rate as, the Prime Rate
("Rate") published in the Money Rates section of the West
Coast Edition of the Wall Street Journal, which is as of
December 11, 1996, 8.25%. The City Bank Base Rate shall be
adjusted on the same date as, or within three (3) business
days after, the Rate changes. If the Rate ceases to be
established and publicly announced, the prime rate of major
money center banks, as published in the Money Rates section
of the Wall Street Journal, shall be used in lieu thereof.
If such prime rate is no longer so published, then a
comparable index rate selected by City Bank's Loan
Administration Section in its sole discretion will be used
in lieu thereof.
Accrued interest in arrears shall be payable monthly
commencing on January 1st, 1997 and on the 1st day of each
month (the "Due Date") thereafter until December 1, 1998,
when all unpaid principal, any cost, and accrued and unpaid
interest shall be due and payable. Except in the case of
an election to the contrary by the Holder in the event of a
default, all payments will be applied first to interest,
then principal. The Maker may make prepayments of
principal without a prepayment charge at any time. By
acceptance of this Note, Holder agrees to provide Maker
with a notice or billing not less than five (5) business
days after the Due Date (the "Billing Date") stating the
amount of interest due on the Due Date and the interest
rate or rates applied in calculating the amount due.
Should any installment required under this Note be not
paid within twenty (20) days after the Due Date, it is
recognized by the undersigned that the holder of this Note
will incur extra expenses for handling of delinquent
payments, the exact amount of such extra expensed being
impossible to ascertain, but that a charge of five percent
(5%) of the amount of the delinquent installment payments
would be a fair and reasonable approximation of the
expenses so incurred by the holder. Therefore, the
undersigned shall, in such event, without further notice
and without prejudice to the right of the holder of this
Note to collect any other amounts provided to be paid
hereunder or under any security for this Note, or to
declare a default, pay to holder as the holder's sole
monetary recovery to cover such expenses incurred in
handling delinquent payments, a "late charge" of five
percent (5%) of the amount of such delinquent installment
payment.
If there is a default under Section 11 of the Loan
Agreement then, and in any such event, the Holder shall
have the option to declare the unpaid principal sum of this
Note together with all charges and interest accrued thereon
to be immediately due and payable, together with any
applicable prepayment charge, and such principal sum,
charges, interest and prepayment charge (if applicable)
shall thereupon become and be due and payable without
presentment, demand, protest or notice of any kind, all of
which are hereby expressly waived, and upon such maturity
or acceleration, the unpaid principal balance shall bear
interest at the higher 18% per annum or 4% over City Bank's
Base Rate. Failure to exercise this option shall not
constitute a waiver of the right to exercise the same in
the event of the same or any subsequent default. In the
event of any such default, the Holder may, but shall not be
required to, apply sums received, first to any fees or
charges due and owing to the Holder pursuant to the Loan
Documents, then to principal and then to interest.
The Maker acknowledges that nonpayment at maturity as
described in the foregoing paragraph (whether or not
resulting from acceleration due to an event of default
under the Loan Agreement) will cause damages to the Holder
by reason of the additional expenses incurred in servicing
the indebtedness evidenced by this Note and by reason of
the loss to the Holder of the use of the money due and
frustration to the Holder in meeting its other commitments.
The Maker further acknowledges that it is and will be
extremely difficult and impracticable to ascertain the
extent of such damages caused by such nonpayment of any
sums when due or resulting from any other such event of
default under the Loan Agreement. The Maker by its
execution and delivery hereof and the Holder hereof by the
acceptance of this Note agree that a reasonable estimate of
such damages must be based in part upon the duration of the
default and that the rate of interest prescribed above with
respect to the amount due and payable upon maturity or
acceleration would not unreasonable compensate the Holder
for such damages.
Principal and interest shall be payable in lawful
money of the United States of America.
The Maker promises to pay reasonable attorney's fees
and such expenses as are incurred to induce or compel the
payment of this Note or any portion of the indebtedness
evidenced hereby, whether suit is brought hereon or not.
Except as otherwise provided herein, the Maker and all
others who may become liable for any part of this
obligation severally waive presentment, protest, demand and
notice of protest, demand, dishonor and nonpayment of this
Note and consent to any number of renewals or extensions of
the time of payment hereof and to any release obligated
hereunder or forbearance in the enforcement hereof.
This Note shall be governed and construed according to
the laws of the State of Hawaii.
This Note is secured by the Loan Documents as defined
in that certain Loan Agreement executed concurrently with
this Note.
Notwithstanding any provision to the contrary
contained in the Loan Documents, the rate of interest which
the Maker shall be required to pay to the Holder shall in
no event, contingency or circumstances exceed the greater
of the maximum rate which may be stipulated by written
contract under the laws of the State of Hawaii or any
higher rate which may be permitted under the laws of the
State of Hawaii. If, from any circumstance whatsoever,
performance by the Maker of any obligation under the Loan
Documents at the time performance shall be due (including,
without limiting the generality of the foregoing, the
payment of any fee, charge or expense paid or incurred by
the maker which shall be held to be interest), shall
involve transcending the limits of validity prescribed by
law, then, automatically, such obligation to be performed
shall be reduced to the limit of such validity prescribed
by law. If, notwithstanding the foregoing limitations, any
excess interest shall at the maturity of the Note be
determined to have been received, the same shall be deemed
to have been held as additional security. The foregoing
provisions shall never be superseded or waived and shall
control every other provision of all agreements between the
Holder and the Maker.
IN WITNESS WHEREOF, the Maker has caused this Note to
be duly executed the date first above written.
AMFAC PROPERTY DEVELOPMENT CORP.
a Hawaii corporation
By___________________________
Its Senior Vice President
STATE OF HAWAII )
)SS.
CITY AND COUNTY OF HONOLULU )
On this 18th day of December, 1996, personally
appeared Peggy H. Sugimoto, to me personally known, who,
being by me duly sworn or affirmed did say such person(s)
executed the foregoing instrument as the free act and deed
of such person(s), and if applicable, in the capacity
shown, having been duly authorized to execute such
instrument in such capacity.
__________________________________
Notary Public, State of Hawaii
My Commission Expires: Dec. 29,
1997
LAND COURT SYSTEM REGULAR SYSTEM
- -----------------------------------------------------------
- ---------
Return by Mail ( ) Pickup ( ) To:
CITY BANK
201 Merchant Street
Honolulu, Hawaii 96813
- --------------------------------------------------------------------
TMK: (1) 9-4-02:4 (portion)
UNIFORM COMMERCIAL CODE - FINANCING STATEMENT
-------------------------------------------------
1. Name of Debtor: AMFAC PROPERTY DEVELOPMENT CORP.
a Hawaii corporation
700 Bishop Street, 21st Floor
Honolulu, Hawaii 96813
2. Name of Secured Party: CITY BANK
a Hawaii corporation
201 Merchant Street
Honolulu, Hawaii 96813
3. This financing statement cover, and the Debtor hereby
grants to the Secured Party a security interest in,
the types of items or property described in Exhibit "B"
attached hereto.
4. The Debtor is the owner of record of the property
described in Exhibit "A" attached hereto.
5. This financing statement also covers proceeds of the
collateral.
6. Check if applicable ( ): The above described goods
are affixed or are to affixed to:
7. This financing statement is to be filed in the real
estate records.
DEBTOR: SECURED PARTY:
AMFAC PROPERTY DEVELOPMENT CORP. CITY BANK
By__________________________ By_______________________
Its Senior Vice President Its Vice President
By__________________________
Its
EXHIBIT "A"
All of that certain parcel of land (all of the lands
described in and covered by Royal Patent Number 592, Land
Commission Award Number 60 to T. Hunt, and portions of
Royal Patent Grant Number 712 to Kaholo and Land Patent
Number 8408, Land Commission Award Number 5930, Apana 1 to
Puhalahua) situate, lying and being at the northerly side
of Waipahu Street, at Ahualii, Waikele, District of Ewa,
City and County of Honolulu, State of Hawaii, being Lot D-
1, and thus bounded and described as per survey of Ronald
Casuga, Licensed Professional Land Surveyor, with Community
Planning, Inc., dated --, revised December 1, 1995, to-wit:
Beginning at the southeast corner of this parcel of
land, on the westerly side of Hans L'Orange Park, the
coordinates if which referred to Government Survey
Triangulation Station "Ewa Church" being 1,146.98 feet
south and 9,090.13 feet west and running by azimuths
measured clockwise from true South:
1. 55 52' 48" 327.79 feet along remainder
of Grant 712 to
Kaholo (Lot D-2);
2. 58 10' 30" 849.12 feet along remainder
of Grant 712 to
Kaholo (Lot D-2);
3. 58 00' 341.65 feet along remainder
of Grant 712 to
Kaholo (Lot D-2);
4. 117 16' 0.12 feet along remainder
of Grant 712 to
Kaholo, along the
north side of Waipahu
Street;
5. 70 50' 558.70 feet along remainder
of Grant 712 to
Kaholo, along the
north side of Waipahu
Street;
6. Thence along remainder of Grant 712 to Kaholo, on a
curve to
the right with a
radius of 548.14 feet,
the chord azimuth and
distance being:
183 49' 47" 72.56 feet;
7. 187 37' 30" 121.10 feet along remainder
of Grant 712 to Kaholo;
8. Thence along remainder of Grant 712 to Kaholo, on a
curve to
the left with a radius of
598.14 feet,
the chord azimuth and
distance being:
177 24' 212.36 feet;
9. 77 10' 30" 5.00 feet along remainder of
Grant 712 to Kaholo;
10. Thence along remainder of Grant 712 to Kaholo and Land Patent
8408, Land Commission
Award 5930, Apana 1 to
Puhalahua, on a curve
to the left with a radius
of 593.14 feet,the chord
azimuth and distance being:
156 06' 227.88 feet;
11. 145 01' 30" 97.80 feet along remainder
of Land Patent 8408,
Land Commission Award
5930, Apana 1 to
Puhalahua;
12. 173 45' 69.20 feet along remainder
of Land Patent 8408,
Land Commission Award
5930, Apana 1 to
Puhalahua;
13. 216 15' 134.00 feet along remainder
of Land Patent 8408,
Land Commission Award
5930, Apana 1 to
Puhalahua;
14. 251 50' 665.00 feet along remainder
of Grant 712 to
Kaholo (Lot 6);
15. 254 00' 227.65 feet along remainder
of Grant 712 to
Kaholo (Lot 6);
16. 322 30' 30" 135.61 feet along Lot 80 of
Waipahu Estates,
Unit 4-A (File Plan
1577);
17. 236 52' 978.09 feet along Lots 80,
79 and 18 of Waipahu Estates,
Unit 4-A (File Plan
1577);
18. 310 07' 57" 195.95 feet along remainder
of Grant 712 to
Kaholo (Lots A and B);
19. 220 07' 57" 150.34 feet along remainder
of Grant 712 to Kaholo
(Lot B);
20. Thence along remainder of Grant 712 to Kaholo (Lot B), on a
curve to the right with a
radius of 320.00 feet,
the chord azimuth and
distance being:
223 32' 29" 38.06 feet;
21. Thence along remainder of Grant 712 to Kaholo (Lot C), on a
curve to the right with
a radius of
42.00 feet, the chord
azimuth and distance
being:
274 03' 09" 61.54 feet;
22. Thence along remainder of Grant 712 to Kaholo (Lot C), on a
curve to the left
with a radius
of 641.00 feet, the chord
azimuth and distance being:
318 21' 54.5" 62.39 feet;
23. Thence along remainder of Grant 712 to Kaholo (Lot C), on a
curve to the left with
a radius of 330.00 feet,
the chord
azimuth and distance being:
310 13' 46.5" 61.49 feet;
24. Thence along remainder of Grant 712 to Kaholo (Lot C), on a
curve to the left with
a radius of
930.00 feet, the
chord azimuth and distance being:
299 20' 21.5" 179.71 feet;
25. Thence along the southerly side of Paiwa Street, on a curve to the left
with a radius of
630.00 feet,
the chord azimuth and
distance being:
280 33' 51" 288.38 feet;
26. 87 18' 27" 258.43 feet along Hans
L'Orange Park;
27. 81 09' 15" 69.06 feet along Hans
L'Orange Park;
28. 63` 27' 30" 392.50 feet along Hans
L'Orange Park;
29. 20 01' 166.35 feet along Hans
L'Orange Park, to the point
of beginning and containing an
area of 34.561 acres,
more or less.
Being a portion of the real property conveyed to Amfac
Property Development Corp., a Hawaii corporation, by
Limited Warranty Deed and Reservation of Rights dated
December 16, 1996, recorded in the Bureau of Conveyances,
State of Hawaii, as Document No. 96-176731.
SUBJECT, HOWEVER, to the following:
1. Title to all minerals and metallic mines reserved
to the State of Hawaii.
2. Lease in favor of Hawaiian Electric Company,
Inc., dated September 26, 1944, recorded in the Bureau of
Conveyances, State of Hawaii, in Book 1849, Page 186;
leasing and demising a right and easement to build,
construct, rebuild, reconstruct, repair, maintain and
operate pole and wire lines, etc., for the transmission of
electricity, etc., along, across and over a portion of said
electricity, etc., along, across and over a portion of said
parcel, besides other lands, for a period commencing with
the date hereof and ending April 6, 1957, and thereafter
from year to year until terminated, said easement being
twelve (12) feet wide, six (6) feet on either side of the
center line.
3. Lease in favor of Hawaiian Electric Company,
Inc., and Hawaiian Telephone Company, dated January 20,
1956, recorded in said Bureau, in Book 3088, Page 223;
leasing and demising a right and easement to build,
construct, rebuild, reconstruct, repair, maintain and
operate pole and wire lines, etc., for the transmission of
electricity, etc., over, across, through and within a
portion of said parcel, besides other lands, for a period
of 60 years commencing on the date hereof, said easement
being ten (10) feet wide, extending five (5) feet on either
side of the center line.
4. Grant in favor of Hawaiian Electric Company,
Inc., dated July 15, 1970, recorded in said Bureau, in Book
7108, Page 319; granting a perpetual right and easement to
build, construct, reconstruct, rebuild, repair, maintain
and operate a transformer pad, etc., for the transmission
and distribution of electricity, etc., over, under, upon,
across and through those certain premises as shown on the
map attached thereto.
5. Grant if favor of the City and County of
Honolulu, dated January 25, 1971, recorded in said Bureau,
in Book 7428, Page 417; granting the right, in the nature
of an easement, to construct, install, maintain, operate
and repair a roadway.
6. Easement "3" for temporary access purposes,
containing an area of 181,018 square feet, as granted to
Amfac Nurseries, Inc., a Hawaii corporation, doing business
as "Amfac Nurseries-Hawaii", in unrecorded Lease dated as
of January 1, 1978, of which a Short Form is recorded in
said Bureau, in Book 12817, Page 576, said easement being
more particularly described therein.
7. Grant in favor of the City and County of
Honolulu, dated June 17, 1980, recorded in said Bureau, in
Book 15220, Page 264; granting easement for the proper
operation, maintenance, repair, replacement and removal of
sanitary sewer pipelines, replacement and removal of
sanitary sewer pipelines, facilities and appurtenant
equipment under and across a portion of said parcel, said
easement being more particularly described as follows:
All of that certain parcel of land (portion of the
land described in and covered by Royal Patent Grant Number
712 to Kaholo) situate, lying and being at Ahualii,
Waikele, District of Ewa, City and County of Honolulu,
State of Hawaii, being Easement "L", ten feet wide for
sanitary sewer purposes, and thus bounded and described:
Beginning at the Southeast corner of this easement,
the coordinates of which referred to Government Survey
Triangulation Station "Ewa Church" being 1106.63 feet South
and 10039.40 feet West and running by azimuths measured
clockwise from true south:
1. 56 52' 19.92 feet along remainder
of Grant 712 to
Kaholo;
2. 146 52' 10.00 feet along remainder
of Grant 712 to
Kaholo;
3. 236 52' 19.16 feet along remainder
of Grant 712 to
Kaholo;
4. 322 30' 30" 10.03 feet along Lot 80 of
Waipahu Estates Unit
4-A (File Plan 1577)
to the point of
beginning and
containing an area of
195 square feet, more
or less.
8. Grant in favor of the City and County of
Honolulu, dated July 9, 1981, recorded in said Bureau, in
Book 15708, Page 64; granting the right, in the nature of
an easement, to be exercised and enjoyed by the Board of
Water Supply, to construct, install, maintain, operate,
replace and remove an underground water pipeline or
pipelines together with such meters, control cable and
other appurtenances, through a portion of Easement "G" for
water pipeline purposes.
9. Easement "M" (10 feet wide) for drainage
purposes, as shown on survey map prepared by Ronald Casuga,
Licensed Professional Land Surveyor, with Community
Planning, Inc., dated -, revised December 1,1995.
10. Floodway zone, as shown on survey map prepared by
Ronald Casuga, Licensed Professional Land Surveyor, with
Community Planning, Inc., dated ---, revised December 1,
1995.
11. A 60' roadway setback, as shown on survey map
prepared by Ronald Casuga, Licensed Professional Land
Surveyor, with Community Planning, Inc., dated ---, revised
December 1, 1995.
12. A 60' wide roadway setback line, as shown on
survey map prepared by Ronald Casuga, Licensed Professional
Land Surveyor, with Community Planning, Inc., dated ---,
revised December 1, 1995.
13. The terms and provisions, including the failure
to comply with any covenants, conditions and reservations,
contained in the Unilateral Agreement and Declaration for
Conditional Zoning dated November 6, 1996, recorded in said
Bureau, as Document No. 96-159180.
14. The terms and provisions, including the failure
to comply with any covenants, conditions and reservations,
contained in the Amended Unilateral Agreement and
Declaration for Conditional Zoning dated November 12, 1996,
recorded in said Bureau, as Document No. 96-160631.
EXHIBIT "B"
FIRST: All right, title and interest of the Debtor to all
personal property of any kind including without limitation,
machinery, equipment, building materials, furniture,
fixtures, furnishings, fittings, attachments, appliances
and appurtenances of every kind and nature now fixed or
hereafter fixed, placed upon or used in connection with the
improvements located on Paiwa Street, Lot D-1, Waipahu,
Hawaii, TMK: (1) 9-4-02-4 (portion).
SECOND: All right, title and interest of Debtor in sub-
contracts, escrow proceeds, deposits, refunds, rebates,
security deposits, accounts, contract rights, management
agreements and any other personal property of every kind
and nature now or hereafter existing for the improvements
located on Paiwa Street, Lot D-1, Waipahu, Hawaii, TMK (1)
9-4-02-4 (portion).
THIRD: All right, title and interest of the Debtor in and
to rents, leases, subleases and/or concessions and in any
contracts affecting the buildings, spaces in buildings
and/or in the improvements located on Paiwa Street, Lot D-
1, Waipahu, Hawaii, TMK: (1) 9-4-02-4 (portion)
FOURTH: All of the Debtor's right, title and interest in
and to construction contracts and engineering agreements,
building permits, other permits, applications, licenses,
soil tests, survey, engineering reports, and appraisals
used in connection with the subdivision, development and
improvements located on Paiwa Street, Lot D-1, Waipahu,
Hawaii, TMK: (1) 9-4-02-4 (portion).
LAND COURT REGULAR SYSTEM
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AFTER RECORDATION, RETURN BY MAIL( ) PICK-UP ( )
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TMK: (1) 9-4-2:4(Por.)
MORTGAGE
1 WORDS USED OFTEN IN THIS MORTGAGE
1.1 "Mortgage" means this document which is dated
December 18, 1996.
1.2 "Mortgagor" means AMFAC PROPERTY DEVELOPMENT
CORP., a Hawaii corporation, whose address is 700 Bishop
Street, 21st Floor, Honolulu, Hawaii 96813.
1.3 "Lender" means CITI BANK, a Hawaii corporation,
whose address is 201 Merchant Street, Honolulu, Hawaii
96813.
1.4 "Loan Agreement" means collectively, the Loan
Agreement and the Loan Documents, as defined therein,
entered into by and between Mortgagor and Lender
concurrently with the Note and this Mortgage.
1.5 "Note" means the promissory note signed by
Mortgagor and payable to Lender which is dated the same
date as this Mortgage and any extensions, renewals and
amendments of the Note. The Note shows that Mortgagor owes
Lender U.S. TEN MILLION AND NO/100 DOLLARS
($10,000,000.00), plus interest and other applicable
charges.
1.6 "Property" means the fee simple real property
located on Paiwa Street, Lot D-1, Waipahu, Hawaii, which is
more particularly described in Exhibit "A" attached hereto
and incorporated herein by this reference. The Property
includes the other property that is described below in
Section 3.
1.7 "Hazardous Materials" means and includes any and
all radioactive materials, asbestos organic compounds known
as polychlorinated biphenyls, chemicals known to cause
cancer or reproductive toxicity, pollutants, contaminants,
hazardous wastes, toxic substances, and any and all other
substances or materials defined as or included in the
definition of "hazardous substances," "hazardous wastes",
"hazardous materials", or "toxic substances" under, or for
the purposes of, all federal, state or local laws,
ordinances or regulations, now or hereafter in effect,
relating to environmental conditions, industrial hygiene or
Hazardous Materials on, within, under or about the
Property, including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of
1980, as amended, 42 U.S.C. Section 9601, et seq., the
Resource Conservation and Hazardous Materials
Transportation Act, 49 U.S.C. Section 1801, et seq., the
Clean Water Act, 33 U.S.C. Section 1251, et seq., the Clean
Air Act, 42 U.S.C. Section 7401, et seq., the Toxic
Substances Control Act, 15 U.S.C. Sections 2601 through
2629, the Safe Drinking Water Act, 42 U.S.C. Sections 300f
through 300j, and any similar state or local laws or
ordinances and the regulations now or hereafter adopted,
published and/or promulgated pursuant thereto.
2 MORTGAGOR'S TRANSFER TO LENDER RIGHTS IN THE PROPERTY
Mortgagor mortgages, grants and conveys the Property
to Lender subject to the terms of this Mortgage. This
means that, by signing this Mortgage, Mortgagor is giving
Lender those rights that are stated in this Mortgage and
also those rights the law gives to lenders who hold
mortgages on real property. Mortgagor is giving Lender
these rights to protect Lender from possible losses that
might result if Mortgagor does not:
2.1 Pay all the amounts that Mortgagor owes Lender as
stated in the Note;
2.2 Pay, with interest, any amounts that Lender
spends under this Mortgage to protect the value of the
Property and Lender's rights in the Property;
2.3 Pay for any damages sustained by Lender arising
from Mortgagor failing to perform under any of the terms or
covenants in the Loan Agreement;
2.4 Keep all of the Mortgagor's promises and
agreements under this Mortgage.
3 DESCRIPTION OF THE PROPERTY
Mortgagor gives to Lender all of Mortgagor's rights in
the following Property;
3.1 The Property which is described in Section 1.6
above which has the legal description set forth in Exhibit
"A" attached hereto;
3.2 All buildings and other improvements that are
located on the Property or included in the Property
described in Section 1.6 above;
3.3 All easements, rights and appurtenances attached
to the Property;
3.4 All rents or royalties arising from or relating
to the Property;
3.5 To the extent permitted by law, all profits,
water and water rights that are part of the Property;
3.6 All rights that Mortgagor has in the land which
ties in the streets or roads in front of, or next to, the
Property;
3.7 All fixtures that are now or in the future will
be on the Property, and all replacements of and additions
to those fixtures;
3.8 All rights that Mortgagor has in any insurance
proceeds or condemnation proceeds, (but only to the extent
provided in Section 8) which are described in this Mortgage
and any other right described in this Mortgage;
3.9 All of the rights and property described in
subsections 3.2, 3.3, 3.4, 3.5, 3.6 and 3.7 of this Section
3 that Mortgagor acquires in the future;
3.10 All replacements of or additions to the property
described in subsections 3.2, 3.3, 3.4, 3.5, 3.6 and 3.7 of
this Section 3.
4 MORTGAGOR'S OWNERSHIP OF THE PROPERTY, RIGHT TO
MORTGAGE AND WARRANTY TO LENDER
Mortgagor covenants and promises that: (A) Mortgagor
lawfully owns the Property; (B) Mortgagor has the right to
mortgage, grant and convey the Property to Lender; and (C)
there are no outstanding claims or charges against the
Property other than claims and charges of record or which
has been disclosed to and approved by Lender in writing.
Mortgagor is fully responsible for any losses which Lender
may suffer if someone other than Mortgagor has any of the
rights in the Property which Mortgagor promises and agrees
that it has. Mortgagor promises that it will defend its
ownership of the Property against any claims of such
rights.
5 STANDARD COVENANTS AND PROMISES
Mortgagor covenants, promises and agrees as follows:
5.1 Mortgagor will promptly pay to Lender when due
principal and interest under the Note and any penalties and
late charges and prepayment charges (if any) as stated in
the Note.
5.2 Unless the law requires otherwise, Lender will
apply each of Mortgagor's payments under the note in the
order set forth and described in the Note.
5.3 Mortgagor will pay all taxes, assessments and any
other charges and fines that may be imposed on the Property
and that may be superior to this Mortgage.
5.4 Any claim, demand or charge that is made against
the Property because an obligation has not been fulfilled
is know as a "lien." Mortgagor agrees to promptly pay or
satisfy all lines against the Property that may be superior
to this Mortgage except for those listed on Exhibit "A"
attached hereto. However, this Mortgage does not require
Mortgagor to satisfy a superior lien if: (1) Mortgagor
agrees to pay the obligation which gave rise to the
superior lien and Lender approves in writing, the way in
which Mortgagor has agreed to pay that obligation; or (2)
Mortgagor, in good faith, argues or defends and bonds, if
required by Lender, against the superior lien in a lawsuit
so that, during the lawsuit, the superior lien may not be
enforced and no part of or any rights in the Property must
be given up.
5.5 Mortgagor will not commit waste of the Property
and will not take any action with respect to the Property
which would impair its value, provided however, that
Mortgagor may demolish any structures or improvements
existing on the Property on the date of this Mortgage.
5.6 Mortgagor will maintain in effect a blanket
policy of Commercial General Liability insurance, naming
Lender as an additional insured with aggregate limits of
not less than $5,000,000.
THIS MORTGAGE SERVES AS WRITTEN NOTICE TO THE BORROWER
AND MORTGAGOR THAT BORROWER AND MORTGAGOR ARE FREE TO
PROCURE ANY INSURANCE REQUIRED BY THIS MORTGAGE, THE LOAN
AGREEMENT, OR ANY OTHER SECURITY INSTRUMENT FROM ANY
INSURANCE COMPANY AUTHORIZED TO DO BUSINESS IN THE STATE OF
HAWAII.
6 LENDER'S RIGHT TO TAKE ACTION TO PROTECT THE PROPERTY
If: (A) Mortgagor does not keep its promises and
agreements made in this Mortgage, or (B) someone, including
Mortgagor, begins a legal proceeding that may significantly
affect Lender's rights in the Property (such as, for
example, a legal proceeding in bankruptcy, in probate, for
condemnation, to enforce laws or regulations, foreclosure
on a mortgage or lien affecting the Property), then Lender
may do an pay for whatever is necessary to protect the
value of the Property and Lender's rights in the Property
after thirty (30) days prior written notice to Borrower
that it intends to take such action. Lender's actions
under this Section 6 may include, for example, appearing in
court, paying reasonable attorney's fees and court costs,
and entering on the Property to make repairs.
Mortgagor will pay to Lender any amounts, with
interest, which Lender spends under this Section 6. This
Mortgage will protect Lender in case Mortgagor does not
keep this promise to pay those amounts with interest.
Mortgagor will pay those amounts to Lender when Lender
sends Mortgagor a notice requesting that it do so.
Mortgagor will pay interest on those amounts at the same
rate stated in the Note. However, if payment of interest
at that rate would violate the law, Mortgagor will pay
interest on the amounts spent by Lender under this Section
6 at the highest rate that the law allows. Interest on
each amount will begin on the date that the amount is spent
by Lender. However, Lender and Mortgagor may agree in
writing to terms of payment that are differences from those
in this Section 6. At the election of Lender, the amount
spent by Lender under this Section 6 may be added to the
Note.
Although Lender may take action under this Section 6,
Lender does not have to do so.
7 LENDER'S RIGHT TO INSPECT THE PROPERTY
Lender, and other authorized by Lender, may enter on
and inspect the Property. Lender will conduct its
inspections in a reasonable manner and at reasonable times.
Before one of those inspections is make, Lender will
provide Mortgagor with notice stating a reasonable purpose
for the inspection.
8 AGREEMENTS ABOUT CONDEMNATION OF THE PROPERTY
Mortgagor gives to Lender its right: (A) to proceeds
of all awards or claims for damages resulting from
condemnation or other governmental taking of the Property;
and (B) to proceeds from a sale of the Property that is
made to avoid condemnation, but only if, in either case, as
a result of the condemnation, the loan to value ratio of
the remaining balance of the loan to the fair market value
of the remaining Property is more than sixty percent (60%).
Mortgagor may at its option (i) elect to waive any right to
condemnation proceeds notwithstanding the loan to value
ration after condemnation, and if Mortgagor so elects, all
condemnation proceeds shall be paid to Lender and Lender
shall have no further rights against Borrower, or (ii)
obtain a current appraisal at its sole expense, and if it
is determined by Lender in its reasonable discretion after
review of such appraisal, that the loan to value ratio is
more than sixty (60%) after the condemnation, then such
portion of the condemnation proceeds necessary to reduce
the balance of the loan to an amount which is sixty percent
(60%) of the then fair market value of the remaining
Property shall be paid to Lender, and Lender shall apply
the net proceeds toward the payment of the Note. Any
remaining proceeds will be paid to the Mortgagor.
9 CONTINUATION OF MORTGAGOR'S OBLIGATION
If Mortgagor transfers or conveys all or any part of
the Property, that person to whom the property is
transferred or conveyed and Mortgagor will both be fully
obligated under this Mortgage unless otherwise agreed in
writing between the Lender and Mortgagor.
10 CONTINUATION OF LENDER'S RIGHTS
Even if Lender does not exercise or enforce any right
of Lender under this Mortgage or under the law, Lender will
still have all of those rights and may exercise and enforce
them in the future. Even if Lender obtains insurance, pays
taxes, or pays other claims, charges or liens against the
Property, Lender will still have the right under Section 15
below, to demand that Mortgagor pay in full the amount that
Mortgagor owes to Lender under the Note, Loan Agreement and
under this Mortgage.
11 LENDER'S ABILITY TO ENFORCE MORE THAN ONE OF LENDER'S
RIGHTS
Each of Lender's rights under this Mortgage are
separate. Lender may exercise and enforce one or more of
those rights, as well as any of Lender's other rights under
the law, one at a time, all at once and at any time.
12 OBLIGATIONS OF MORTGAGOR AND OF PERSONS TAKING OVER
MORTGAGOR'S RIGHTS OR OBLIGATIONS; AGREEMENTS CONCERNING
CAPTIONS
Any person who takes over Mortgagor's rights or
obligations under this Mortgage will have all of
Mortgagor's liabilities and rights and will be obligated to
keep all of Mortgagor's covenants, promises and agreements
made in this Mortgage. Any person who takes over Lender's
rights or obligations under this Mortgage will have all of
Lender's rights and will be obligated to keep all of
Lender's convenience, promises and agreements.
13 AGREEMENTS ABOUT GIVING NOTICES REQUIRED UNDER THE
MORTGAGE
Unless the law requires otherwise, any notice that
must be given under this Mortgage will be given by
delivering it or by mailing it addressed to the respective
parties at the address stated in Section 1 above. A notice
will be delivered or mailed to Mortgagor at a different
address if Mortgagor gives Lender written notice of a
different address. Any notice that must be given to Lender
under this Mortgage will be given by mailing it to Lender's
address stated in Section 1. A notice will be mailed to
Lender at a different address if Lender gives Mortgagor
notice of the different address. A notice required by this
Mortgage is given when it is mailed (postage prepaid) or
when it is delivered according to the requirements of this
Section 13.
14 AGREEMENTS ABOUT LENDER'S RIGHTS IF MORTGAGOR
TRANSFERS THE PROPERTY
If any of the Property described in this Mortgage is
conveyed or assigned by Mortgagor to any other party except
as hereinafter set forth in this Section 14, then unless
the Lender consents in writing to the conveyance or
assignment, the Note shall become due at once, at the
option of the Lender (any provision to the contrary herein
notwithstanding), and any delay on the part of the Lender
to demand Immediate Payment in full shall not prejudice
Lender's rights. For the purposes of this Section 14, the
phrase "conveyance or assignment" shall be deemed to
include the voluntary or involuntary dissolution or
termination of the Mortgagor. Mortgagor may make transfers
of the Property directly or indirectly as provided in the
following subparagraphs a. and b. with the prior written
consent of Lender, which consent will not be unreasonably
withheld, and will be given or denied within twenty (20)
days of a written request from Mortgagor, or be deemed
given if Lender has responded to the request for consent
within said 20-day period:
a. a transfer its assets to a subsidiary, a
parent, a subsidiary of its parent, an affiliated
corporation, limited liability company or partnership, or
to a corporation under common control with its parent or
another subsidiary; or
b. a transfer its assets by way or merger to a
corporation or limited liability company which is an
affiliate of Borrower or its parent, or with which its
parent consolidates or pools its assets.
Notwithstanding the foregoing, Lender will not have
the right to require Immediate Payment in Full as a result
of certain transfers. Those transfers are: (i) the
creation of liens or other claims against the Property that
are inferior to this Mortgage with the prior written
consent of Lender; or (ii) leasing the Property for a term
of one year or less, as long as the lease does not include
an option to purchase the Property.
15 LENDER'S RIGHTS IF MORTGAGOR FAILS TO KEEP PROMISES
AND AGREEMENTS
If there is a default under Section 11 of the Loan
Agreement, Lender may require that Mortgagor immediately
pay the entire amount then remaining unpaid under the Note,
Loan Agreement and under this Mortgage. Lender may do this
without making any further demand for payment. This
requirement will be called "Immediate Payment in Full." If
Lender requires Immediate Payment in Full, Lender may bring
a lawsuit to take away all of Mortgagor's remaining rights
in the Property and to have Property sold. At this sale
Lender or another person may acquire the Property. This is
known as "foreclosure and sale." In any lawsuit for
foreclosure and sale, Lender will have the right to collect
all of Lender's reasonable attorney's fees and costs
allowed by law and any fees and costs expended by Lender
under the terms of this Mortgage. At the election of
Lender, Lender may foreclose on the Property by a power of
sale as provided in Section 667-5, Hawaii Revised Statutes,
as amended.
16 LENDER'S RIGHTS TO RENTAL PAYMENTS FROM THE PROPERTY
AND TO TAKE POSSESSION OF THE PROPERTY
As additional protection for Lender, Mortgagor gives
to Lender all of its rights to any rental payments from the
Property. However, until default under Section 11 of the
Loan Agreement, or until Mortgagor abandons the Property,
Mortgagor has the right to collect and keep those rental
payments as they become due. Mortgagor warrants that it is
has not given any of its rights to rental payments from the
Property to anyone else (except as acknowledged in writing
by Lender), and Mortgagor will not do so without Lender's
consent in writing.
If there is a default under Section 11 of the Loan
Agreement, or if Mortgagor abandons the Property, then
Lender, persons authorized by Lender or receiver appointed
by a court at Lender's request may: (A) collect the rental
payments, including overdue rental payments, directly from
the tenants; (B) enter on and take possession of the
Property; (C) manage the Property; and (D) sign, cancel and
change leases. Mortgagor agrees that if Lender notifies
the tenants that Lender has the right to collect rental
payments directly from them under this Section 16, the
tenants may make those rental payments to Lender without
having to verify whether Mortgagor has failed to keep its
promises and agreements under this Mortgage.
All rental payments collected by Lender or by a
receiver, other than the rent paid by Mortgagor under this
Section, will be first used to pay the costs of collecting
rental payments and of managing the Property. If any part
of the rental payment remains after those costs have been
paid if full, the remaining part will be used to reduce the
amount that Mortgagor owes to Lender under the Note, Loan
Agreement and under this Mortgage. The costs of managing
the Property may include the rental agent fees, receiver's
fees, reasonable attorney's fees, the cost of any necessary
bonds, and any reimbursement of rent and deposits to
tenants. Lender and the receiver will be obligated to
account only for those rental payments that they actually
receive.
Notwithstanding the foregoing, Mortgagor agrees that
it will not anticipates for more than one month any rents
that may be collectible under any leases affecting the
Property. Additionally, Mortgagor shall perform every
obligation of the lessor and shall enforce every material
obligation of the lessee in every lease affecting the
Property.
17 ELECTION OF REMEDIES
Lender has the right to enforce one or more remedies
hereunder, or any other remedy the Lender may have
including any remedies it has in the Note, Loan Agreement,
or Loan Documents (as defined in the Loan Agreement)
successively or concurrently including the right to
foreclose the lien of this Mortgage or to enforce the
assignment of rents herein mentioned with respect to any
portion of the Property, without thereby impairing the lien
or security interest created by this Mortgage on the
remainder of the Property or affecting the other remedies
of Lender available with respect thereto or any other
remedies available in the Note, Loan Agreement or Loan
Documents (as defined in the Loan Agreement).
18 HAZARDOUS WASTE
18.1 Representations
Mortgagor represents and warrants to Lender that the
Property has never been used as a dump site or storage site
(whether permanent or temporary) for any Hazardous
Materials or has any Hazardous Materials ever been disposed
on the Property to the best of Mortgagor's knowledge after
due and diligent inquiry, except as disclosed in those
certain Environmental Site Assessments, (Phase I dated
August 26, 1996 covering Parcel "A" as identified therein;
Phase II dated November 20, 1996 covering Parcel "B" as
identified therein; Phase I dated August 26, 1996 covering
Parcel "C" as identified therein, and that certain letter
dated October 7, 1996 BES Job No. 4815) prepared by Brewer
Environmental Services.
18.2 Positive Covenants
a. Mortgagor covenants to Lender that the
Mortgagor will not use, generate, manufacture, treat,
handle, refine, produce, process, store, discharge,
release, dispose of or allow to exist on, within, under or
about the Property, any Hazardous Material, except in full
compliance with all applicable Hazardous Materials laws.
b. If the Mortgagor at any time becomes aware
of any discharge of any Hazardous Material whether by
Mortgagor or any prior owner or user of the Property or of
any claim affecting Hazardous Materials in respect of the
Property, the Mortgagor will immediately advise Lender
thereof, in writing, and provide to Lender such detailed
reports thereof as may be reasonably requested by Lender.
Upon such discovery, Mortgagor shall cease to allow any
further discharge and/or shall cause the Hazardous Material
to be removed and/or abated. Lender shall have the right
to join and participate in, as a party if it so elects, any
settlements, remedial actions, legal proceedings or actions
initiated in respect of any Hazardous Material claims.
c. If Lender reasonably believes that the
Property has been contaminated after recording of this
Mortgage, then if requested by Lender, Mortgagor (or a
third party designated by Lender) shall conduct an
environmental audit of the Property to verify the existence
or non-existence of Hazardous Materials. All cost and
expenses of any such audit shall be paid by Mortgagor.
18.3 Indemnification
Mortgagor will indemnify Lender against and hold the
Lender harmless from all costs and expenses (including
reasonable attorney's fees), losses, damages (including
foreseeable or unforeseeable consequential damages) and
liabilities incurred by Lender which may arise out of or
may be directly or indirectly attributable to (1) the use,
generation, manufacture, treatment, handling, refining,
production, processing, storage, release, discharge,
disposal or presence of any Hazardous Material on, within,
under or about the Property, (2) Lender's investigation and
handling (including the defense) of any formal legal
proceedings shall have been commenced in respect thereof
(3) any expenditures made by Lender in connection with the
removal, abatement or containment of any Hazardous
Materials on, within, or under the Property, and (4)
Lender's enforcement of this Section 18, whether or not
suit is brought therefor.
The provisions of this Section 18 shall survive the
repayment of the indebtedness secured by this Mortgage; any
foreclosure of this Mortgage; and any deed (or assignment)
of the Property in lieu of foreclosure.
19 LENDER'S OBLIGATION TO DISCHARGE OR PARTIALLY RELEASE
THIS M MORTGAGE
19.1 Payment in Full.
When Lender has been paid all amounts due under the
Note, Loan Agreement and under this Mortgage, Lender will
discharge this Mortgage by delivering a certificate stating
that this Mortgage has been satisfied. Mortgagor will not
be required to pay Lender for the discharge, but Mortgagor
will pay all reasonable costs of preparing the discharge
and recording the discharge in the proper official records.
19.2 Partial Payment.
If Mortgagor pays to Lender the sum of FOUR MILLION
AND NO/DOLLARS ($4,000,000.00), then Lender will release
from the lien of this Mortgage, that portion of the
Property to be known as Lot 1-A, resulting from the
consolidation and resubdivision of the Property and Lot D-2
and containing 14.240 acres, more or less.
20 NO WAIVER
The failure on the part of Lender to insist and demand
upon the strict performance by Mortgagor of any of the
terms and provisions of this Mortgage shall not be deemed
to be a waiver of any of the terms and provisions hereof
and Lender, notwithstanding any such failure, shall have
the right thereafter to insist and demand upon the strict
performance of Mortgagor of any and all of the terms and
provisions of this Mortgage to be performed by Mortgagor.
21 SEVERABILITY
If any term or provision of this Mortgage or the
application thereof to any person or entity or
circumstances shall to any extent by invalid or
unenforceable, the remainder to this Mortgage, or the
application of such term or provision to persons or
entities or circumstances other than those as to which it
is invalid or unenforceable, shall not be affected thereby,
and each term and provision of this Mortgage shall be valid
and enforceable to the fullest extent permitted by law.
22 NO RELEASE OF LIABILITY
Mortgagor hereby agrees and Lender hereby reserves the
right to release any security or collateral securing the
loan including any guarantor(s) without notice to, or the
consent or approval of the Mortgagor, which release, if
any, shall not impair or in any manner affect the validity
or priority of this Mortgage on the Property, nor act as a
release of the full performance of all covenants and
provisions contained herein, provided however, that no such
release shall impair or limit the right of Mortgagor to a
partial release as provided in Section 19.2 above.
23 DESTRUCTION OF NOTE
In the event the original Note shall be lost,
mutilated or destroyed, Mortgagor will upon receipt of a
written request from Lender and including an affidavit of
an authorized officer of Lender certifying that the
original Note was lost, mutilated or destroyed, execute a
substitution of the Note containing the same terms and
conditions as the old Note with a notation thereon of the
then outstanding principal balance.
24 GOVERNING LAW
This Mortgage shall be governed by the laws of the
State of Hawaii.
By signing this Mortgage, Mortgagor agrees to all of
the above.
MORTGAGOR:
AMFAC PROPERTY DEVELOPMENT CORP.
a Hawaii corporation
By_______________________________
its Senior Vice President
STATE OF HAWAII )
)SS.
CITY AND COUNTY OF HONOLULU )
On this 18th day of December, 1996, personally
appeared Peggy H. Sugimoto, to me personally known, who
being by me duly sworn or affirmed did say that such
person(s) executed the foregoing instrument as the free act
and deed of such person(s), and if applicable, in the
capacity shown, having been duly authorized to execute such
instrument in such capacity.
________________________________
Notary Public, State of Hawaii
My Commission Expires Dec 29, 1997
EXHIBIT "A"
All of that certain parcel of land (all of the lands
described in and covered by Royal Patent Number 592, Land
Commission Award Number 60 to T. Hunt, and portions of
Royal Patent Grant Number 712 to Kaholo and Land Patent
Number 8408, Land Commission Award Number 5930, Apana 1 to
Puhalahua) situate, lying and being at the northerly side
of Waipahu Street, at Ahualii, Waikele, District of Ewa,
City and County of Honolulu, State of Hawaii, being Lot D-
1, and thus bounded and described as per survey of Ronald
Casuga, Licensed Professional Land Surveyor, with Community
Planning, Inc., dated --, revised December 1, 1995, to-wit:
Beginning at the southeast corner of this parcel of
land, on the westerly side of Hans L'Orange Park, the
coordinates if which referred to Government Survey
Triangulation Station "Ewa Church" being 1,146.98 feet
south and 9,090.13 feet west and running by azimuths
measured clockwise from true South:
1. 55 52' 48" 327.79 feet along remainder
of Grant 712 to
Kaholo (Lot D-2);
2. 58 10' 30" 849.12 feet along remainder
of Grant 712 to
Kaholo (Lot D-2);
3. 58 00' 341.65 feet along remainder
of Grant 712 to
Kaholo (Lot D-2);
4. 117 16' 0.12 feet along remainder
of Grant 712 to
Kaholo, along the
north side of Waipahu
Street;
5. 70 50' 558.70 feet along remainder
of Grant 712 to
Kaholo, along the
north side of Waipahu
Street;
6. Thence along remainder of Grant 712 to Kaholo, on a
curve to
the right with a
radius of 548.14 feet,
the chord azimuth and
distance being:
183 49' 47" 72.56 feet;
7. 187 37' 30" 121.10 feet along remainder
of Grant 712 to Kaholo;
8. Thence along remainder of Grant 712 to Kaholo, on a
curve to the left with
a radius of 598.14 feet,
the chord azimuth and
distance being:
177 24' 212.36 feet;
9. 77 10' 30" 5.00 feet along remainder of
Grant 712 to
Kaholo;
10. Thence along remainder of Grant 712 to Kaholo and Land Patent
8408, Land Commission
Award 5930, Apana 1 to
Puhalahua, on a curve
to the left with a radius
of 593.14 feet,the chord
azimuth and distance being:
156 06' 227.88 feet;
11. 145 01' 30" 97.80 feet along remainder
of Land Patent 8408,
Land Commission Award
5930, Apana 1 to
Puhalahua;
12. 173 45' 69.20 feet along remainder
of Land Patent 8408,
Land Commission Award
5930, Apana 1 to
Puhalahua;
13. 216 15' 134.00 feet along remainder
of Land Patent 8408,
Land Commission Award
5930, Apana 1 to
Puhalahua;
14. 251 50' 665.00 feet along remainder
of Grant 712 to
Kaholo (Lot 6);
15. 254 00' 227.65 feet along remainder
of Grant 712 to
Kaholo (Lot 6);
16. 322 30' 30" 135.61 feet along Lot 80 of
Waipahu Estates,
Unit 4-A (File Plan
1577);
17. 236 52' 978.09 feet along Lots 80,
79 and 18 of Waipahu Estates,
Unit 4-A (File Plan
1577);
18. 310 07' 57" 195.95 feet along remainder
of Grant 712 to
Kaholo (Lots A and B);
19. 220 07' 57" 150.34 feet along remainder
of Grant 712 to Kaholo
(Lot B);
20. Thence along remainder of Grant 712 to Kaholo (Lot B), on a
curve to the right with
a radius of 320.00 feet,
the chord azimuth and
distance being:
223 32' 29" 38.06 feet;
21. Thence along remainder of Grant 712 to Kaholo (Lot C), on a
curve to the right with
a radius of
42.00 feet, the chord
azimuth and distance being:
274 03' 09" 61.54 feet;
22. Thence along remainder of Grant 712 to Kaholo (Lot C), on a
curve to the left with
a radius of 641.00 feet,
the chord
azimuth and distance being:
318 21' 54.5" 62.39 feet;
23. Thence along remainder of Grant 712 to Kaholo (Lot C), on a
curve to the left with
a radius of 330.00 feet,
the chord
azimuth and distance being:
310 13' 46.5" 61.49 feet;
24. Thence along remainder of Grant 712 to Kaholo (Lot C), on a
curve to the left with
a radius of 930.00 feet,
the chord azimuth and
distance being:
299 20' 21.5" 179.71 feet;
25. Thence along the southerly side of Paiwa Street, on a curve to the left
with a radius of 630.00 feet,
the chord azimuth and
distance being:
280 33' 51" 288.38 feet;
26. 87 18' 27" 258.43 feet along Hans
L'Orange Park;
27. 81 09' 15" 69.06 feet along Hans
L'Orange Park;
28. 63` 27' 30" 392.50 feet along Hans
L'Orange Park;
29. 20 01' 166.35 feet along Hans
L'Orange Park, to the point
of beginning and containing an
area of 34.561 acres,
more or less.
Being a portion of the real property conveyed to Amfac
Property Development Corp., a Hawaii corporation, by
Limited Warranty Deed and Reservation of Rights dated
December 16, 1996, recorded in the Bureau of Conveyances,
State of Hawaii, as Document No. 96-176731.
SUBJECT, HOWEVER, to the following:
1. Title to all minerals and metallic mines reserved
to the State of Hawaii.
2. Lease in favor of Hawaiian Electric Company,
Inc., dated September 26, 1944, recorded in the Bureau of
Conveyances, State of Hawaii, in Book 1849, Page 186;
leasing and demising a right and easement to build,
construct, rebuild, reconstruct, repair, maintain and
operate pole and wire lines, etc., for the transmission of
electricity, etc., along, across and over a portion of said
electricity, etc., along, across and over a portion of said
parcel, besides other lands, for a period commencing with
the date hereof and ending April 6, 1957, and thereafter
from year to year until terminated, said easement being
twelve (12) feet wide, six (6) feet on either side of the
center line.
3. Lease in favor of Hawaiian Electric Company,
Inc., and Hawaiian Telephone Company, dated January 20,
1956, recorded in said Bureau, in Book 3088, Page 223;
leasing and demising a right and easement to build,
construct, rebuild, reconstruct, repair, maintain and
operate pole and wire lines, etc., for the transmission of
electricity, etc., over, across, through and within a
portion of said parcel, besides other lands, for a period
of 60 years commencing on the date hereof, said easement
being ten (10) feet wide, extending five (5) feet on either
side of the center line.
4. Grant in favor of Hawaiian Electric Company,
Inc., dated July 15, 1970, recorded in said Bureau, in Book
7108, Page 319; granting a perpetual right and easement to
build, construct, reconstruct, rebuild, repair, maintain
and operate a transformer pad, etc., for the transmission
and distribution of electricity, etc., over, under, upon,
across and through those certain premises as shown on the
map attached thereto.
5. Grant if favor of the City and County of
Honolulu, dated January 25, 1971, recorded in said Bureau,
in Book 7428, Page 417; granting the right, in the nature
of an easement, to construct, install, maintain, operate
and repair a roadway.
6. Easement "3" for temporary access purposes,
containing an area of 181,018 square feet, as granted to
Amfac Nurseries, Inc., a Hawaii corporation, doing business
as "Amfac Nurseries-Hawaii", in unrecorded Lease dated as
of January 1, 1978, of which a Short Form is recorded in
said Bureau, in Book 12817, Page 576, said easement being
more particularly described therein.
7. Grant in favor of the City and County of
Honolulu, dated June 17, 1980, recorded in said Bureau, in
Book 15220, Page 264; granting easement for the proper
operation, maintenance, repair, replacement and removal of
sanitary sewer pipelines, replacement and removal of
sanitary sewer pipelines, facilities and appurtenant
equipment under and across a portion of said parcel, said
easement being more particularly described as follows:
All of that certain parcel of land (portion of the
land described in and covered by Royal Patent Grant Number
712 to Kaholo) situate, lying and being at Ahualii,
Waikele, District of Ewa, City and County of Honolulu,
State of Hawaii, being Easement "L", ten feet wide for
sanitary sewer purposes, and thus bounded and described:
Beginning at the Southeast corner of this easement,
the coordinates of which referred to Government Survey
Triangulation Station "Ewa Church" being 1106.63 feet South
and 10039.40 feet West and running by azimuths measured
clockwise from true south:
1. 56 52' 19.92 feet along remainder
of Grant 712 to
Kaholo;
2. 146 52' 10.00 feet along remainder
of Grant 712 to
Kaholo;
3. 236 52' 19.16 feet along remainder
of Grant 712 to
Kaholo;
4. 322 30' 30" 10.03 feet along Lot 80 of
Waipahu Estates Unit
4-A (File Plan 1577)
to the point of beginning and
containing an area of
195 square feet, more
or less.
8. Grant in favor of the City and County of
Honolulu, dated July 9, 1981, recorded in said Bureau, in
Book 15708, Page 64; granting the right, in the nature of
an easement, to be exercised and enjoyed by the Board of
Water Supply, to construct, install, maintain, operate,
replace and remove an underground water pipeline or
pipelines together with such meters, control cable and
other appurtenances, through a portion of Easement "G" for
water pipeline purposes.
9. Easement "M" (10 feet wide) for drainage
purposes, as shown on survey map prepared by Ronald Casuga,
Licensed Professional Land Surveyor, with Community
Planning, Inc., dated -, revised December 1,1995.
10. Floodway zone, as shown on survey map prepared by
Ronald Casuga, Licensed Professional Land Surveyor, with
Community Planning, Inc., dated ---, revised December 1,
1995.
11. A 60' roadway setback, as shown on survey map
prepared by Ronald Casuga, Licensed Professional Land
Surveyor, with Community Planning, Inc., dated ---, revised
December 1, 1995.
12. A 60' wide roadway setback line, as shown on
survey map prepared by Ronald Casuga, Licensed Professional
Land Surveyor, with Community Planning, Inc., dated ---,
revised December 1, 1995.
13. The terms and provisions, including the failure
to comply with any covenants, conditions and reservations,
contained in the Unilateral Agreement and Declaration for
Conditional Zoning dated November 6, 1996, recorded in said
Bureau, as Document No. 96-159180.
14. The terms and provisions, including the failure
to comply with any covenants, conditions and reservations,
contained in the Amended Unilateral Agreement and
Declaration for Conditional Zoning dated November 12, 1996,
recorded in said Bureau, as Document No. 96-160631.
EXHIBIT "B"
FIRST: All right, title and interest of the Debtor to all
personal property of any kind including without limitation,
machinery, equipment, building materials, furniture,
fixtures, furnishings, fittings, attachments, appliances
and appurtenances of every kind and nature now fixed or
hereafter fixed, placed upon or used in connection with the
improvements located on Paiwa Street, Lot D-1, Waipahu,
Hawaii, TMK: (1) 9-4-02-4 (portion).
SECOND: All right, title and interest of Debtor in sub-
contracts, escrow proceeds, deposits, refunds, rebates,
security deposits, accounts, contract rights, management
agreements and any other personal property of every kind
and nature now or hereafter existing for the improvements
located on Paiwa Street, Lot D-1, Waipahu, Hawaii, TMK (1)
9-4-02-4 (portion).
THIRD: All right, title and interest of the Debtor in and
to rents, leases, subleases and/or concessions and in any
contracts affecting the buildings, spaces in buildings
and/or in the improvements located on Paiwa Street, Lot D-
1, Waipahu, Hawaii, TMK: (1) 9-4-02-4 (portion)
FOURTH: All of the Debtor's right, title and interest in
and to construction contracts and engineering agreements,
building permits, other permits, applications, licenses,
soil tests, survey, engineering reports, and appraisals
used in connection with the subdivision, development and
improvements located on Paiwa Street, Lot D-1, Waipahu,
Hawaii, TMK: (1) 9-4-02-4 (portion).
SECURITY AGREEMENT
THIS AGREEMENT is made and entered into this 18th day
of December, 1996, between AMFAC PROPERTY DEVELOPMENT
CORP., a Hawaii corporation, whose address is 700 Bishop
Street, 21st Floor, Honolulu, Hawaii 96813, hereinafter
referred to as "Debtor", and CITY BANK, a Hawaii
corporation, having its principal office at 201 Merchant
Street, Honolulu, Hawaii 96813, hereinafter called "Secured
Party."
W I T N E S S E T H:
WHEREAS, Debtor has requested Secured Party to lend to
Debtor such sums as may be from time to time be mutually
agreed upon, on the security of certain collateral
described below; and
WHEREAS, in order to induce Secured Party to make the
loan described below to Debtor, Debtor has agreed to pledge
and assign certain collateral to the Secured Party; and
WHEREAS, Secured Party is willing to lend such sums
upon the terms and conditions described below;
NOW, THEREFORE, it is hereby agreed as follows:
1. Pursuant to the provisions of the Uniform
Commercial Code, (Chapter 490, Hawaii Revised Statutes, as
amended) Debtor hereby grants to Secured Party, and Secured
Party hereby accepts a security interest in the property
described in Exhibit "B" attached hereto and incorporated
herein by reference, and as to Items FIRST through FOURTH,
inclusive, are located in or affecting the improvements on
the land described in Exhibit "A" attached hereto and
incorporated herein by reference.
2. This agreement secures the payment, in lawful
money of the United States of America to said Secured
Party, at its address set forth above, of the following:
(a) a Promissory Note of even date herewith, executed by
Debtor and payable to Secured Party, in the principal
amount of TEN MILLION AND NO/DOLLARS ($10,000,000.00) with
interest as provided therein; (b) all further advances
which may be made by Secured Party to Debtor in connection
with that loan including, but not limited to all advances
and expenditures made by Secured Party for the protection,
maintenance, preservation or repair of the collateral; and
(c) all liabilities of any kind, whether primary or
secondary which are now due or which may hereafter become
due from Debtor to Secured Party in connection with the
loan; and (d) performance by Debtor of the agreements
hereinafter set forth and all other loan documents executed
in connection with the Note described in (a) above.
3. Debtor warrants that (a) Debtor is the owner of
the collateral clear of all items and security interest
except the security interest granted herein and (b) Debtor
has the right to make this Agreement.
4. Debtor will:
a. Pay the Secured Party all amounts payable on
the notes mentioned above and on all other obligations of
Debtor held by Secured Party as and when the same shall be
due and payable, whether at maturity, by acceleration or
otherwise, and will perform all obligations for which this
Security Agreement has been given as security.
b. Defend the collateral against the claims and
demand of all persons.
c. Insure any tangible existing collateral
against all hazards requested by Secured Party in form and
amount satisfactory to Secured Party.
d. Immediately pay Secured Party for all monies
expended by it which shall be construed as part of the debt
hereby secured including but not limited to attorneys' fees
with interest thereon paid or advanced by Secured Party (i)
for taxes, levies, insurance, repairs to or maintenance of
the collateral, and (ii) in taking possession of, disposing
of, or preserving the collateral after any default
hereinafter described.
e. Immediately inform Secured Party in writing
of any change in the address of Debtor.
5. Without the prior consent in writing of the
Secured Party, Debtor will not permit any liens or security
interest (other than Secured Party's security interest or
any junior mortgages to which Secured Party may consent,
such consents not to be unreasonably withheld) to attach to
any of the collateral or to be levied upon under any legal
process. Debtor may, without any consent of or notice to
Secured Party, demolish any buildings or other improvements
existing on the land described in Exhibit A.
6. If Debtor fails to obtain insurance as required
herein, Secured Party shall have the right to obtain it at
Debtor's expense and Debtor assigns to Secured Party all
rights to receive proceeds of insurance, not exceeding the
liabilities of Debtor to Secured Party hereunder; Debtor
directs any insurer to pay all proceeds directly to Secured
Party and authorizes Secured Party to endorse any draft or
check for the proceeds. If Debtor fails to make any
payments necessary to preserve and protect the collateral,
the Secured Party may make such payments. Any payments
made by the Secured Party under the provisions of this
Section 6 shall be secured by this Security Agreement and
shall be immediately due and payable by Debtor to Secured
Party.
7. Debtor hereby nominates and appoints Secured
Party at attorney-in-fact to do all acts and things which
Secured Party may deem necessary or advisable to perfect
and continue perfected the security interest created by
this Security Agreement and to preserve, process, develop,
maintain and protect the collateral. In order to protect,
preserve and develop the collateral, Debtor authorizes
Secured Party to enter upon the premises where said
collateral is located and to use for such purposes any
equipment and facilities of Debtor. Debtor authorizes
Secured Party to collect and receive proceeds and products
of the said collateral, and this Agreement shall be deemed
an assignment thereof to Secured Party.
8. If there is a default under Section 11 of the
Loan Agreement, Secured Party shall have all of the rights
and remedies of a secured party under the Uniform
Commercial Code following default, all of which rights and
remedies shall, to the full extent permitted by law be
cumulative. Without limiting the generality of the
foregoing, upon the occurrence of such default the Secured
Party is entitled to take possession of the collateral or
any part thereof, and to take such other measures as
Secured Party may deem necessary for the protection of the
collateral. Secured Party may, after any such event of
default, require Debtor to assemble the collateral and to
make it available to Secured Party at a place designated by
Secured Party which is reasonable convenient to Secured
Party and Debtor. Any notice of sale, disposition or other
intended action by Secured Party sent to Debtor at least
five days prior to such action shall constitute reasonable
notice to Debtor. The waiver of any default hereunder
shall not be a waiver of any subsequent default.
9. Upon payment by Debtor of the sum of FOUR MILLION
AND NO/100 DOLLARS ($4,000,000.00), Secured Party will
release from the lien of this Security Agreement, that
portion of the Property to be known as Lot 1-A, resulting
from the consolidation and resubdivision of the Property
and Lot D-2 and containing 14.240 acres, more or less.
Secured Party will provide to Debtor at the time of such
release a form UCC-2 releasing said Lot 1-A from the lien
of the security interest granted herein.
10. Any notices or communications provided for to be
given in this agreement shall be sent by either party to
the address set forth above, or to such other address as
may be substituted in writing by either party from time to
time.
11. All rights of Secured Party hereunder shall inure
to the benefit of its successors and assigns, all
obligations of Debtor shall bind its successors and
assigns. If there be more than one Debtor hereunder, their
obligations shall be joint and several. Debtor will
execute any additional agreements, assignments or documents
that may be deemed necessary or advisable by Secured Party
to effectuate the purposes of this agreement.
IN WITNESS WHEREOF, Debtor and Secured Party have
caused this agreement to be executed the day and year first
above written.
SECURED PARTY: DEBTOR:
CITY BANK AMFAC PROPERTY DEVELOPMENT
CORP.
By________________________ By________________________
Its Vice President Senior Vice President
EXHIBIT "B"
FIRST: All right, title and interest of the Debtor to all
personal property of any kind including without limitation,
machinery, equipment, building materials, furniture,
fixtures, furnishings, fittings, attachments, appliances
and appurtenances of every kind and nature now fixed or
hereafter fixed, placed upon or used in connection with the
improvements located on Paiwa Street, Lot D-1, Waipahu,
Hawaii, TMK: (1) 9-4-02-4 (portion).
SECOND: All right, title and interest of Debtor in sub-
contracts, escrow proceeds, deposits, refunds, rebates,
security deposits, accounts, contract rights, management
agreements and any other personal property of every kind
and nature now or hereafter existing for the improvements
located on Paiwa Street, Lot D-1, Waipahu, Hawaii, TMK (1)
9-4-02-4 (portion).
THIRD: All right, title and interest of the Debtor in and
to rents, leases, subleases and/or concessions and in any
contracts affecting the buildings, spaces in buildings
and/or in the improvements located on Paiwa Street, Lot D-
1, Waipahu, Hawaii, TMK: (1) 9-4-02-4 (portion)
FOURTH: All of the Debtor's right, title and interest in
and to construction contracts and engineering agreements,
building permits, other permits, applications, licenses,
soil tests, survey, engineering reports, and appraisals
used in connection with the subdivision, development and
improvements located on Paiwa Street, Lot D-1, Waipahu,
Hawaii, TMK: (1) 9-4-02-4 (portion).
EXHIBIT "A"
All of that certain parcel of land (all of the lands
described in and covered by Royal Patent Number 592, Land
Commission Award Number 60 to T. Hunt, and portions of
Royal Patent Grant Number 712 to Kaholo and Land Patent
Number 8408, Land Commission Award Number 5930, Apana 1 to
Puhalahua) situate, lying and being at the northerly side
of Waipahu Street, at Ahualii, Waikele, District of Ewa,
City and County of Honolulu, State of Hawaii, being Lot D-
1, and thus bounded and described as per survey of Ronald
Casuga, Licensed Professional Land Surveyor, with Community
Planning, Inc., dated --, revised December 1, 1995, to-wit:
Beginning at the southeast corner of this parcel of
land, on the westerly side of Hans L'Orange Park, the
coordinates if which referred to Government Survey
Triangulation Station "Ewa Church" being 1,146.98 feet
south and 9,090.13 feet west and running by azimuths
measured clockwise from true South:
1. 55 52' 48" 327.79 feet along remainder
of Grant 712 to
Kaholo (Lot D-2);
2. 58 10' 30" 849.12 feet along remainder
of Grant 712 to
Kaholo (Lot D-2);
3. 58 00' 341.65 feet along remainder
of Grant 712 to
Kaholo (Lot D-2);
4. 117 16' 0.12 feet along remainder
of Grant 712 to
Kaholo, along the
north side of Waipahu
Street;
5. 70 50' 558.70 feet along remainder
of Grant 712 to
Kaholo, along the
north side of Waipahu
Street;
6. Thence along remainder of Grant 712 to Kaholo, on a
curve to
the right with a
radius of 548.14 feet,
the chord azimuth and
distance being:
183 49' 47" 72.56 feet;
7. 187 37' 30" 121.10 feet along remainder
of Grant 712 to Kaholo;
8. Thence along remainder of Grant 712 to Kaholo, on a
curve to the left with
a radius of 598.14 feet,
the chord azimuth and
distance being:
177 24' 212.36 feet;
9. 77 10' 30" 5.00 feet along remainder of
Grant 712 to
Kaholo;
10. Thence along remainder of Grant 712 to Kaholo and Land Patent
8408, Land Commission
Award 5930, Apana 1 to
Puhalahua, on a curve
to the left with a radius
of 593.14 feet,the chord
azimuth and distance being:
156 06' 227.88 feet;
11. 145 01' 30" 97.80 feet along remainder
of Land Patent 8408,
Land Commission Award
5930, Apana 1 to
Puhalahua;
12. 173 45' 69.20 feet along remainder
of Land Patent 8408,
Land Commission Award
5930, Apana 1 to
Puhalahua;
13. 216 15' 134.00 feet along remainder
of Land Patent 8408,
Land Commission Award
5930, Apana 1 to
Puhalahua;
14. 251 50' 665.00 feet along remainder
of Grant 712 to
Kaholo (Lot 6);
15. 254 00' 227.65 feet along remainder
of Grant 712 to
Kaholo (Lot 6);
16. 322 30' 30" 135.61 feet along Lot 80 of
Waipahu Estates,
Unit 4-A (File Plan
1577);
17. 236 52' 978.09 feet along Lots 80,
79 and 18 of Waipahu Estates,
Unit 4-A (File Plan
1577);
18. 310 07' 57" 195.95 feet along remainder
of Grant 712 to
Kaholo (Lots A and B);
19. 220 07' 57" 150.34 feet along remainder
of Grant 712 to Kaholo
(Lot B);
20. Thence along remainder of Grant 712 to Kaholo (Lot B), on a
curve to the right with
a radius of 320.00 feet,
the chord azimuth and
distance being:
223 32' 29" 38.06 feet;
21. Thence along remainder of Grant 712 to Kaholo (Lot C), on a
curve to the right with
a radius of
42.00 feet, the chord
azimuth and distance being:
274 03' 09" 61.54 feet;
22. Thence along remainder of Grant 712 to Kaholo (Lot C), on a
curve to the left with
a radius of 641.00 feet,
the chord
azimuth and distance being:
318 21' 54.5" 62.39 feet;
23. Thence along remainder of Grant 712 to Kaholo (Lot C), on a
curve to the left with
a radius of 330.00 feet,
the chord
azimuth and distance being:
310 13' 46.5" 61.49 feet;
24. Thence along remainder of Grant 712 to Kaholo (Lot C), on a
curve to the left with
a radius of 930.00 feet,
the chord azimuth and
distance being:
299 20' 21.5" 179.71 feet;
25. Thence along the southerly side of Paiwa Street, on a curve to the left
with a radius of 630.00 feet,
the chord azimuth and
distance being:
280 33' 51" 288.38 feet;
26. 87 18' 27" 258.43 feet along Hans
L'Orange Park;
27. 81 09' 15" 69.06 feet along Hans
L'Orange Park;
28. 63` 27' 30" 392.50 feet along Hans
L'Orange Park;
29. 20 01' 166.35 feet along Hans
L'Orange Park, to the point
of beginning and containing an
area of 34.561 acres,
more or less.
Being a portion of the real property conveyed to Amfac
Property Development Corp., a Hawaii corporation, by
Limited Warranty Deed and Reservation of Rights dated
December 16, 1996, recorded in the Bureau of Conveyances,
State of Hawaii, as Document No. 96-176731.
SUBJECT, HOWEVER, to the following:
1. Title to all minerals and metallic mines reserved
to the State of Hawaii.
2. Lease in favor of Hawaiian Electric Company,
Inc., dated September 26, 1944, recorded in the Bureau of
Conveyances, State of Hawaii, in Book 1849, Page 186;
leasing and demising a right and easement to build,
construct, rebuild, reconstruct, repair, maintain and
operate pole and wire lines, etc., for the transmission of
electricity, etc., along, across and over a portion of said
electricity, etc., along, across and over a portion of said
parcel, besides other lands, for a period commencing with
the date hereof and ending April 6, 1957, and thereafter
from year to year until terminated, said easement being
twelve (12) feet wide, six (6) feet on either side of the
center line.
3. Lease in favor of Hawaiian Electric Company,
Inc., and Hawaiian Telephone Company, dated January 20,
1956, recorded in said Bureau, in Book 3088, Page 223;
leasing and demising a right and easement to build,
construct, rebuild, reconstruct, repair, maintain and
operate pole and wire lines, etc., for the transmission of
electricity, etc., over, across, through and within a
portion of said parcel, besides other lands, for a period
of 60 years commencing on the date hereof, said easement
being ten (10) feet wide, extending five (5) feet on either
side of the center line.
4. Grant in favor of Hawaiian Electric Company,
Inc., dated July 15, 1970, recorded in said Bureau, in Book
7108, Page 319; granting a perpetual right and easement to
build, construct, reconstruct, rebuild, repair, maintain
and operate a transformer pad, etc., for the transmission
and distribution of electricity, etc., over, under, upon,
across and through those certain premises as shown on the
map attached thereto.
5. Grant if favor of the City and County of
Honolulu, dated January 25, 1971, recorded in said Bureau,
in Book 7428, Page 417; granting the right, in the nature
of an easement, to construct, install, maintain, operate
and repair a roadway.
6. Easement "3" for temporary access purposes,
containing an area of 181,018 square feet, as granted to
Amfac Nurseries, Inc., a Hawaii corporation, doing business
as "Amfac Nurseries-Hawaii", in unrecorded Lease dated as
of January 1, 1978, of which a Short Form is recorded in
said Bureau, in Book 12817, Page 576, said easement being
more particularly described therein.
7. Grant in favor of the City and County of
Honolulu, dated June 17, 1980, recorded in said Bureau, in
Book 15220, Page 264; granting easement for the proper
operation, maintenance, repair, replacement and removal of
sanitary sewer pipelines, replacement and removal of
sanitary sewer pipelines, facilities and appurtenant
equipment under and across a portion of said parcel, said
easement being more particularly described as follows:
All of that certain parcel of land (portion of the
land described in and covered by Royal Patent Grant Number
712 to Kaholo) situate, lying and being at Ahualii,
Waikele, District of Ewa, City and County of Honolulu,
State of Hawaii, being Easement "L", ten feet wide for
sanitary sewer purposes, and thus bounded and described:
Beginning at the Southeast corner of this easement,
the coordinates of which referred to Government Survey
Triangulation Station "Ewa Church" being 1106.63 feet South
and 10039.40 feet West and running by azimuths measured
clockwise from true south:
1. 56 52' 19.92 feet along remainder
of Grant 712 to
Kaholo;
2. 146 52' 10.00 feet along remainder
of Grant 712 to
Kaholo;
3. 236 52' 19.16 feet along remainder
of Grant 712 to
Kaholo;
4. 322 30' 30" 10.03 feet along Lot 80 of
Waipahu Estates Unit
4-A (File Plan 1577)
to the point of
beginning and
containing an area of
195 square feet, more
or less.
8. Grant in favor of the City and County of
Honolulu, dated July 9, 1981, recorded in said Bureau, in
Book 15708, Page 64; granting the right, in the nature of
an easement, to be exercised and enjoyed by the Board of
Water Supply, to construct, install, maintain, operate,
replace and remove an underground water pipeline or
pipelines together with such meters, control cable and
other appurtenances, through a portion of Easement "G" for
water pipeline purposes.
9. Easement "M" (10 feet wide) for drainage
purposes, as shown on survey map prepared by Ronald Casuga,
Licensed Professional Land Surveyor, with Community
Planning, Inc., dated -, revised December 1,1995.
10. Floodway zone, as shown on survey map prepared by
Ronald Casuga, Licensed Professional Land Surveyor, with
Community Planning, Inc., dated ---, revised December 1,
1995.
11. A 60' roadway setback, as shown on survey map
prepared by Ronald Casuga, Licensed Professional Land
Surveyor, with Community Planning, Inc., dated ---, revised
December 1, 1995.
12. A 60' wide roadway setback line, as shown on
survey map prepared by Ronald Casuga, Licensed Professional
Land Surveyor, with Community Planning, Inc., dated ---,
revised December 1, 1995.
13. The terms and provisions, including the failure
to comply with any covenants, conditions and reservations,
contained in the Unilateral Agreement and Declaration for
Conditional Zoning dated November 6, 1996, recorded in said
Bureau, as Document No. 96-159180.
14. The terms and provisions, including the failure
to comply with any covenants, conditions and reservations,
contained in the Amended Unilateral Agreement and
Declaration for Conditional Zoning dated November 12, 1996,
recorded in said Bureau, as Document No. 96-160631.
LOAN AGREEMENT
Borrower: AMFAC PROPERTY Lender: CITY BANK
DEVELOPMENT CORP.
Address: 700 Bishop St, 21st Floor Address: 201 Merchant St.
Honolulu, Hawaii 96813 Honolulu, HI 96813
Date: December 18, 1996
Borrower has made an application to the Lender for the
loan, as described in that certain commitment letter dated
November 22, 1996, as it may have been amended, between
Borrower and Lender ("Commitment Letter"), and Lender and
Borrower desire to enter into this Loan Agreement (the
"Agreement") to evidence the terms and conditions of the
loan contemplated by the Commitment Letter. For good and
valuable consideration, the parties agree as follows:
1. AMOUNT. Lender agrees to lend to Borrower, the
principal amount of TEN MILLION AND NO/100 DOLLARS
($10,000,000.00) (the "loan").
2. PROMISSORY NOTE. The obligation of the Borrower
to repay the loan shall be evidenced by a Promissory Note
executed by the Borrower and payable to the order of the
Lender (the "Note"). The Note sets forth terms relating to
maturity, repayment schedule, interest rate, and other
matters governing the repayment of the loan made hereunder.
Lender agrees to provide to Borrower a notice or billing on
each Billing Date (as defined in the Note) stating the
amount of interest due for the interest period immediately
preceding the Billing Date.
3. LOAN DOCUMENTS. Borrower has signed and/or
caused the following loan documents to be executed in
connection with this Agreement and the loan (collectively
the "Loan Document"):
a. Security Agreement and Financing Statement
b. Mortgage over property described as follows
(the `property")
Oahu Sugar Mill Property
TMK (1) 9-4-02:4 (portion)
Paiwa Street, Lot D-1
Honolulu, Hawaii
c. Hazardous Waste and Materials Agreement
4. COSTS AND FEES. Borrower shall reimburse the
Lender for all reasonable and customary costs incurred with
documentation and closing of the loan including all filing
fees, recording costs and also where permitted by
applicable law, for all costs and expenses (including,
without limitation, reasonable attorneys' fees) paid or
incurred by the Lender in connection with the enforcement
of this Agreement, the Note or any of the Loan Documents,
or the collection of any indebtedness of the Borrower to
the Lender hereunder or under the Note, whether or not suit
is filed with respect thereto.
In consideration of the loan, Borrower shall pay to
Lender, prior to any advance under the loan, the remaining
balance of the Loan Fee being the sum of $50,000.00.
Lender acknowledges receipt of $25,000.00 paid by Borrower
in advance toward the total Loan Fee of $75,000.00.
5. COVENANTS. So long as any indebtedness or
liability (whether under the Note or otherwise) of the
Borrower to the Lender remains outstanding and unpaid, the
Borrower covenants and agrees with the Lender:
a. To furnish to Lender such documents, credit
documents, information, instruments, and such other
financial statements or other information as the Lender any
reasonably request from time to time relating to or
affecting the property. An annual income statement and a
balance sheet in reasonable detail and form approved by
Lender, shall be furnished to Lender not later than 90 days
after the end of the fiscal or calendar year as the case
may, and shall be certified by Borrower as true and
correct.
b. Without the prior written consent of Lender,
which consent shall not be unreasonably withheld, Borrower
will not further encumber the property. Notwithstanding
the foregoing sentence, Borrower may record Covenants,
Conditions and Restrictions (the "CC&Rs") covering the
Property as required by Unilateral Agreement and
Declaration for Conditional Zoning dated November 6, 1996
and recorded in the Bureau of Conveyances of the State of
Hawaii as Document No. 96-159180 and Amended Unilateral
Agreement and Declaration for Conditional Zoning dated
November 12, 1996, recorded in said Bureau as Document No.
96-60631, and containing such other matters as Borrower
shall deem necessary and appropriate for development of the
Property as an industrial park. Lender shall be given
thirty (30) days after receipts of the proposed CC&Rs to
consent or recommend any proposed changes. Consent shall
be deemed to have been given if Lender has not responded
within said 30-day period.
c. Borrower shall file all tax returns it was
required by law to have filed prior to the date of this
Agreement, and covenants that it has paid or caused to be
paid all taxes, assessments and other governmental charges
that were due and payable prior to the date of this
Agreement.
d. Borrower shall not sell, assign, transfer,
pledge, mortgage, or otherwise dispose of all or
substantially all of the major assets of Borrower, except
in the ordinary course of its business; provided however,
that Borrower may, with the prior written consent of
Lender, which consent will not be unreasonably withheld or
delayed if the surviving entity or assignee has at least
the financial strength of Borrower:
i. transfer its assets to a subsidiary, a
parent, a subsidiary of its parent, an affiliated
corporation, limited liability company or partnership, or
to a corporation under common control with its parent or
another subsidiary; or
ii. transfer its assets by way of merger to a
corporation or limited liability company which is an
affiliate of Borrower or its parent, or with which its
parent consolidates or pools its assets.
e. Borrower has shall comply with all laws,
restrictions or other requirements pertaining to the
operation of the property, the use, maintenance and
operations of the property.
f. Borrower agrees to furnish to Lender within 45
days of receiving a written notice from Lender, a current
appraisal on the property which appraisal shall be made by
an appraisal duly licensed under the laws of Hawaii. The
appraiser shall be acceptable to Lender and the cost of the
appraisal shall be borne by Borrower. In the event
Borrower fails to obtain such appraisal, Lender may obtain
the appraisal on behalf of and at the expense of Borrower.
Notwithstanding the foregoing, Lender may only require an
appraisal if one or more of the following events or
conditions have occurred:
i. Borrower is in default under this Agreement
and has failed to cure such default within any applicable
period set forth in Section 11 of this Loan Agreement; or
ii. There has been a substantial decline in the
value of the property as determined by Lender and Lender
has determined in its reasonable discretion that such
decline in value substantially and materially impairs
Borrower's ability to repay the loan.
Borrower shall be liable for the cost of the appraisal
even if Borrower subsequently cures the default or it is
determined that the value of the property did not decline
in value as indicated in subparagraph ii. above.
6. CONSOLIDATION AND RESUBDIVISION OF PROPERTY.
Lender hereby consents to the consolidation of the property
and Lot D-2, and resubdivision of Lot D-1 into Lots 1-A and
1-B and the further resubdivision of Lot 1-A into 23
industrial lots, and the further resubdivision of Lot 1-B
and 41 industrial lots, and other miscellaneous lots.
Lender further consents to the grant, acquisition,
cancellation, modification or replacement by Borrower of
such easements, licenses or rights-of entry as are
necessary or advisable in connection with the subdivision
and development of the property as an industrial park.
Lender agrees to join in and execute any consent or joinder
reasonably required by Borrower in connection with the
application for consolidation and resubdivision, easements,
licenses of rights-of-way; and such other documents as are
reasonably requested by the Borrower in connection with
such consolidation and resubdivision, easements, licenses
or rights-of-way, including but not limited to the CC&Rs,
subject to Lender's consent requirements set forth in
Section 5.b. Borrower shall likewise execute and deliver
to Lender such documents as are reasonably requested by
Lender in connection with such consolidation and
resubdivision, easement, licenses or rights-of-way,
including without limitation an amendment of mortgage to
reflect the consolidation and resubdivision.
7. NOTICES. All notices or other correspondence
with Borrower or Lender should be sent to their respective
addresses stated above. The notice or correspondence shall
be effective when deposited in the mail, properly addressed
and postage prepaid, or delivered to Borrower in person or
by facsimile. Any notice sent by facsimile shall be
confirmed with an original within two business days after
the facsimile is sent. Facsimiles shall be sent as
follows:
a. If to Borrower
Phone No. (808) 543-8925
Fax No. (808) 543-8933
Attention: Paula Y. Hino, Vice President/Controller
With a Copy to
Phone No. (808) 543-8523
Fax No. (808) 543-8528
Attention: Kirk H. Anderson, Esq.
b. If to Lender
Phone No. (808) 546-2480
Fax No. (808) 546-2400
Attention: Commercial Mortgage Department
Melvin Tanaka, Vice President
8. MISCELLANEOUS. This Agreement may not be changed
except by a written agreement signed by Borrower and
Lender. This Agreement, the Loan Documents, the Note, and
the rights and obligations of the parties hereunder and
thereunder shall be governed by and interpreted in
accordance with the laws of the State of Hawaii. If there
are any conflicts between the terms of the Commitment
Letter and this Agreement, the latter shall control.
9. REPRESENTATIONS. The Borrower represents,
covenants and warrants to the Lender that:
a. The Borrower is a Hawaii corporation, is
duly organized and existing, in good standing under the
laws of the State of Hawaii, and has the power to own its
property and to carry on its business as now being
conducted, and is duly qualified to do business and is in
good standing in each jurisdiction in which the character
of the properties owned by it therein or in which the
transaction of its business makes such qualifications
necessary.
b. The Borrower has full power and authority to
enter into this Agreement, to enter into the Loan
Documents, to make the borrowing hereunder, to execute and
deliver the Note, to grant a mortgage on the property and a
security interest in its personal property as provided in
any of the Loan Documents and to incur the obligations
provided for in this Agreement, the Note and the Loan
Documents, all of which have been duly authorized. No
consent nor further approval of any public authority or of
any other person or entity is required as a condition to
the validity and enforcement of this Agreement, the Loan
Documents, the Note or any other written agreement with the
Lender.
c. This Agreement and all Loan Documents, and
the Note when issued and delivered pursuant to this
Agreement, and for value received, will constitute the
valid and legally binding obligations of the Borrower and
are enforceable in accordance with their respective terms.
d. There are no proceedings pending or
threatened to the actual knowledge of Borrower before any
court or administrative agency which will materially
adversely affect the financial condition or operations of
the Borrower.
e. There is no provision of any organization
documents of Borrower and no provision of any existing
mortgage, security agreement, indenture, lease, contract,
or agreement binding on the Borrower or affecting its
property, which would conflict with or in any way prevent
the execution, delivery, or carrying out of the terms of
this Agreement, any Loan Document or the Note.
f. All financial statements, schedules, and
other written documents relating to the financial
conditions of the property and Borrower which have been
submitted by Borrower to the Lender are correct, and there
has been no material adverse change in the financial
condition of the property and Borrower as shown by any such
statements, schedules or documents.
10. CONDITIONS FOR ADVANCE. Lender agrees to make a
single advance of the entire loan at closing. The
obligation of the Lender to make the advance of loan
proceeds under this Agreement, is and shall be subject to
the following conditions precedent:
a. The Borrower shall have executed and
delivered the Loan Documents to the Lender, and the Lender
shall have a mortgage lien (with such priority as set forth
in such mortgage) in form and content reasonably acceptable
to Lender, and a security interest or other interest on or
in all of the properties identified in any of the Loan
Documents. If there is a mortgage, Borrower shall have
obtained an ALTA Form Lender's Title Insurance Policy in
the amount of $10,000,000, assuring to Lender the validity
and agreed upon priority of its mortgage lien.
b. The Borrower shall have paid the Loan Fee
identified in Section 4.
c. The Lender shall have received.
i. a certified copy of Borrower's
corporate resolutions authorizing this Agreement, the Loan
Documents, the Note, and the borrowing under this
Agreement, and authorizing the execution of this Agreement,
the Loan Documents and the Note by the officers of the
Borrower who have executed the same; and
ii. a copy of the Articles of Incorporation
and Bylaws of the Borrower certified by the Secretary of
the Corporation.
d. The Lender shall have received a favorable
written opinion of counsel for the Borrower, dated the date
hereof and satisfactory in form and substance to the
Lender, as to the matters referred to in Section 9.c.
11. EVENTS OF DEFAULT. Borrower shall be in default
under this Agreement:
a. If Borrower has failed to pay the amounts
that Borrower owes Lender under the Note within twenty (20)
days after the Due Date as defined in the Note, or fails to
keep any promise or agreement made in this Agreement, the
Note, or the Loan Documents and fails to remedy the same
within thirty (30) days after written notice from Lender;
b. If it is determined that Borrower has made a
material representation or warranty in this Loan Agreement,
the Note or the Loan Documents that is untrue, and Borrower
shall have failed to remedy the same within thirty (3) days
after written notice from Lender;
c. If Borrower is adjudged to be insolvent or
to be a bankrupt, or Borrower files any petition or answer
seeking relief as a debtor under any law for the relief or
aid of debtors, whether voluntary or involuntary, or
Borrower enters into any arrangement or composition with
creditors, or if the State of Hawaii or any other
governmental authority seeks to dissolve the Borrower or
cancel, withdraw any charger, certificate, license or
registration necessary for Borrower's operations, or if
Borrower shall consent or acquiesce to the appointment of
any trustee, liquidator or receiver of a substantial part
of Borrower's properties or assets, UNLESS such event shall
have been rescinded, dismissed, terminated, or vacated
within sixty (60) days of the commencement of such
proceeding or event;
d. If a final judgment shall be rendered
against Borrower in the aggregate amount of $50,000 or more
and such judgment has a material adverse effect on
Borrower's ability to repay the loan, and shall not be
discharged or execution thereof stayed pending appeal
within thirty (30) days after entry of such judgment;
e. If any of the collateral described in the
Loan Documents is confiscated or subject to forfeiture
proceedings under state or federal law and such
confiscation or forfeiture proceedings materially impair
Borrower's ability to repay the loan;
f. If Borrower changes its name or assumes an
additional name without first notifying Lender before
making such change;
g. If the value of the property substantially
declines in value as determined by Lender in its reasonable
discretion and such decline in value materially impairs
Borrower's ability to repay the loan; and
h. If Lender shall reasonably determine that
there has been a material adverse change in the financial
condition of the Borrower which would affect the ability of
the Borrower to perform Borrower's obligations under this
Loan Agreement, the Note, or the Loan Documents, and any
such adverse change was not been fully remedied to the
satisfaction of Lender within thirty (30) days from
Lender's demand.
12. REMEDIES. If an Event of Default occurs under
Section 11, then:
a. The Note and any and all other liability or
indebtedness of Borrower to Lender, shall be immediately
due and payable:
b. Lender may take any action as provided under
the terms of the Note and Loan Documents including but not
limited to its right of set off against any checking,
savings, or other accounts held with Lender. To secure the
repayment of the Note, Borrower grants to Lender a security
interest in all checking and savings accounts now or
hereafter maintained by Borrower with Lender; or
c. Lender may use any remedy provided by state
or federal law.
By selecting any of the remedies, Lender does not give
up its right to later use any other remedy. By not
deciding to use any remedy should Borrower default, Lender
does not waive its right to later consider the Event of
Default should it happen again.
13. CUMULATIVE RIGHTS AND NO WAIVER. Each and every
right granted to the Lender under this Agreement, the Note,
and any Loan Documents or any other document delivered
hereunder, thereunder, in connection herewith, or in
connection therewith, or allowed it by law or equity, shall
be cumulative and may be exercised from time to time. No
failure on the part of the Lender to exercise, and no delay
in exercising any right shall operate as a waiver thereof,
nor shall any single or partial exercise by the Lender of
any right preclude any other or future exercise thereof, or
the exercise of any other right.
14. SEVERABILITY. The invalidity of any one or more
covenants, phases, clauses, sentences, or paragraphs of
this Agreement, any Loan Documents, the Note or any other
document or instrument executed and delivered in connection
herewith shall not affect the remaining portions of this
Agreement, any Loan Documents, the Note or any other
document or instrument executed and delivered in connection
herewith or any part thereof, and in case of such
invalidity, this Agreement, any Loan Documents, the Note,
or any other document or instrument executed and delivered
in connection herewith or therewith, shall be construed as
if such invalid covenants, phases, clauses, sentences, or
paragraphs had not been inserted.
15. ASSIGNMENT.
a. Except as permitted in Paragraph 5.d,
Borrower shall have no right to assign any of its rights or
obligation under the Loan Documents without the prior
written consent of Lender, which consent may be withheld in
the sole and absolute discretion of Lender.
b. Lender may sell participations in the loan,
so long as Lender remains primarily obligated to Borrower
under this Agreement and so long as Borrower shall not be
obligated in any manner to deal directly with the purchaser
of such participation. Lender may also negotiate, pledge,
transfer or assign the Note.
16. CAPTIONS AND DESIGNATIONS. The captions of the
various sections, subsections and clauses hereof are for
convenience only and shall not control, limit or otherwise
affect the meaning or construction hereof. All collective
designations shall refer to the subject thereof severally
as well as collectively.
17. PARTIES. This Agreement shall inure to the
benefit of and shall be binding jointly and severally upon
all signing as Borrower and its successors and assigns.
18. COMPLETE AGREEMENT. This Agreement and Loan
Documents supersede any prior agreements and contains the
entire agreement of the parties and all representations
with respect to the loan. Any prior correspondence,
memoranda or agreements are replaced in their entirety by
this Agreement and the Loan Agreement.
The Borrower and Lender have executed this Agreement
the date first above written.
BORROWER: LENDER:
AMFAC PROPERTY DEVELOPMENT CITY BANK
CORP.
By________________________ By_______________________
Its Senior Vice President Its Vice President
HAZARDOUS WASTE AND MATERIALS AGREEMENT
This Agreement is made this 18th day of December,
1996, by AMFAC PROPERTY DEVELOPMENT CORP., a Hawaii
corporation, whose address is 700 Bishop Street, 21st
Floor, Honolulu, Hawaii 96813 (hereinafter called the
"Borrower") in favor of and for the benefit of CITY BANK, a
Hawaii corporation, whose address is 201 Merchant Street,
Honolulu, Hawaii 96813 (hereinafter called the "Bank").
1 DEFINITIONS. Unless the context otherwise requires,
in this Agreement, and in the Loan Documents, the following
terms when capitalized have the meanings respectively
ascribed to them:
1.1 "Hazardous Discharge" means any event involving
the use, deposit, disposal, spill, release or discharge of
any Hazardous Material on, within or under the Property.
1.2 "Hazardous Material" means and includes any and
all radioactive materials, asbestos, organic compounds
known as polychlorinated biphenyls, chemicals known to
cause cancer or reproductive toxicity, pollutants,
contaminants, hazardous wastes, toxic substances, and any
and all other substances or materials defined as or
included in the definition of `hazardous substances",
"hazardous wastes", "hazardous materials", or "toxic
substances" under, or for the purposes of, the Hazardous
Materials Law.
1.3 "Hazardous Materials Claims" means and includes
(i) any and all enforcement, clean-up, removal, mitigation
or other governmental or regulatory actions instituted, or
to the best of the Borrower's actual knowledge contemplated
or threatened, in respect of the Property pursuant to any
Hazardous Materials Laws, and (ii) any and all claims made
or (iii) any and all claims to Borrower's actual knowledge,
contemplated or threatened by any third party against the
Borrower seeking damages, contribution, cost recovery,
compensation, injunctive relief or similar relief resulting
from any Hazardous Discharge or from the existence of any
Hazardous Material on, within or under the Property.
1.4 "Hazardous Materials Law" means and includes all
federal, state or local laws, ordinances or regulations,
now or hereafter in effect, relating to environmental
conditions, industrial hygiene or Hazardous Materials on,
within, under or about the Property, including, without
limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42
U.S.C. Section 9601, et seq., the Resource Conversation and
Hazardous Materials Transportation Act, 49 U.S.C. Section
1801, et seq., the Clean Water Act, 33 U.S.C. Section 1251,
et seq., the Clean Air Act, 42 U.S.C. Section 7401, et
seq., the Toxic Substances Control Act, 15 U.S.C. Sections
2601 through 2629, the Safe Drinking Water Act, 42 U.S.C.
Sections 300f through 300j, and any similar state or local
laws or ordinances and the regulations now or hereafter
adopted, published and/or promulgated pursuant thereto.
1.5 "Loan" means the loan made to Borrower in the
principal amount of $10,000,000.00 or any other
indebtedness of the Borrower to Bank.
1.6 "Loan Documents" means any documents executed and
delivered by Borrower to Bank in connection with, or to
secure the loan as defined in the Loan Agreement executed
concurrently herewith and covering the conditions of the
Loan.
1.7 "Property" means all of the Borrower's right,
title and interest in and to the real property located on
Paiwa Street, Lot D-1, Waipahu, Hawaii (TMK: (1) 9-4-02:4
[portion]), and all improvements located or to be located
on the real property, the legal description of which is
attached hereto as Exhibit "A".
2 AGREEMENT
IN CONSIDERATION of the Loan to Borrower from Bank and
to induce the Bank to make the loan or extend the credit
secured by the Loan documents, and for other good and
valuable consideration, the receipt and sufficiency of
which is hereby acknowledged by Borrower, the Borrower does
hereby agree as follows:
2.1 Representations. The Borrower represents and
warrants to Bank that the Property has never been used as a
dump site or storage site (whether permanent or temporary)
for any Hazardous materials or has any Hazardous Materials
ever been disposed on the Property to the best of
Borrower's actual knowledge after due and diligent inquiry,
except as disclosed in those certain Environmental Site
Assessments (Phase I dated August 26, 1996 covering Parcel
"A" as identified therein, Phase II dated November 13, 1996
covering Parcel "B" as identified therein; and Phase I
dated August 26, 1996 covering Parcel "C" as identified
therein, and that certain letter dated October 7, 1996
covering BES Job No. 4815, together referred to herein as
the "Reports") prepared by Brewer Environmental Services.
The Consultant Agreement between Borrower and Brewer
Environmental Industries, Inc. for the remedial work
described therein is attached hereto as Exhibit "B"
attached hereto and made a part hereof. Borrower covenants
and agrees that it will use its best efforts to cause the
consultant to carry out the remediation recommended by said
Consultant Agreement within the time period specified in
such Consultant's Agreement.
2.2 Positive Covenants.
2.2.1 Borrower covenants to the Bank that the
Borrower will not use, generate, manufacture, treat,
handle, refine, produce, process, store, discharge,
release, dispose of or allow to exist on, within, under or
about the Property, any Hazardous Material, except in full
compliance with all applicable Hazardous Materials Laws.
2.2.2 If the Borrower at any time becomes
aware of any Hazardous Discharge whether by Borrower or any
prior owner or user of the Property or of any Hazardous
Materials Claim in respect of the Property, the Borrower
will immediately advise the Bank thereof, in writing, and
provide to the Bank such detailed reports thereof as may be
reasonably requested by the Bank. Upon such discovery,
Borrower shall cease to allow any further discharge and/or
shall cause the Hazardous Waste to be removed and/or
abated. The Bank shall have the right to join and
participate in, as a party if it so elects, any
settlements, remedial actions, legal proceedings or actions
initiated in respect of any Hazardous Materials Claims.
2.2.3 If Bank reasonably believes that the
Property has been contaminated after the date of this
Agreement, then if requested by Bank, Borrower (or a third
party designated by Bank) shall conduct an environmental
audit of Borrower's operations and/or the Property to
verify the existence or non-existence of Hazardous
Materials or Hazardous Discharge. All cost and expenses of
any such audit shall be paid by Borrower.
2.2.4 To the best of Borrower's actual
knowledge and belief, no Hazardous Materials has been
stored, disposed of, is generated nor is there any
Hazardous Discharge on or within or under the property
identified as Parcel B in that certain Environmental Site
Assessment (Phase II dated November 20, 1996, hereinafter
called the "B Report") prepared by Brewer Environmental
Services, except as described in the B Report. Borrower
covenants that it has and will complete the remediation
recommended by the B Report.
2.3 Indemnification.
The Borrower will indemnify the Bank against and hold
the Bank harmless from all costs and expenses (including
reasonable attorney's fees), losses, damages (including
foreseeable or unforeseeable consequential damages) and
liabilities incurred by the Bank which may arise out of or
may be directly or indirectly attributable to (a) the use,
generation, manufacture, treatment, handling, refining,
production, processing, storage, release, discharge,
disposal or presence of any Hazardous Material on, within,
under or about the Property, (b) the Bank's investigation
and handling (including the defense) of any formal legal
proceedings shall have been commenced in respect thereof,
and (c) the Bank's enforcement of this Agreement, whether
or not suit is brought thereof.
The provisions of this Paragraph (c) shall survive the
repayment of the indebtedness secured by the Mortgage, any
foreclosure of the Mortgagor; and any deed (or assignment)
of the Property in lieu of foreclosure.
2.4 Applicable Law. This Agreement shall be
construed and interpreted in accordance with the laws of
the State of Hawaii.
2.5 Successors and Assigns. This Agreement shall be
inure to the benefit of and may be enforced by the Bank and
any subsequent holder of the Mortgage to whom the Bank may
have assigned this Agreement, and shall be binding upon and
enforceable against the Borrower and its successors, and
assigns of the Borrower.
2.6 Attorney's Fees. If any proceeding is brought
for the enforcement of this Agreement, the prevailing party
shall be entitled to recover from the other party
reasonable attorneys' fees, costs of court and all other
expenses incurred in such proceeding, in addition to any
other relief to which such party may be entitled.
2.7 Severability. If any term or provision of this
Agreement or the application thereof to any person or
entity or circumstances shall to any extent be invalid or
unenforceable, the remainder of this Agreement, or the
application of such term or provision to persons or
entities or circumstances other than those as to which it
is invalid or unenforceable, shall not be affected thereby,
and each term and provision of this Agreement shall be
valid and enforceable to the fullest extent permitted by
law.
IN WITNESS WHEREOF, the Borrower has executed this
Agreement as of the day and year first above written.
BORROWER:
AMFAC PROPERTY DEVELOPMENT CORP.
By______________________________
Its Senior Vice President
STATE OF HAWAII )
)SS.
CITY AND COUNTY OF HONOLULU )
On this 18th day of December, 1996, personally
appeared Peggy H. Sugimoto, to me personally known, who,
being by me duly sworn or affirmed did say such person(s)
executed the foregoing instrument as the free act and deed
of such person(s), and if applicable, in the capacity
shown, having been duly authorized to execute such
instrument in such capacity.
__________________________________
Notary Public, State of Hawaii
My Commission Expires: Dec. 29, 1997
EXHIBIT "A"
All of that certain parcel of land (all of the lands
described in and covered by Royal Patent Number 592, Land
Commission Award Number 60 to T. Hunt, and portions of
Royal Patent Grant Number 712 to Kaholo and Land Patent
Number 8408, Land Commission Award Number 5930, Apana 1 to
Puhalahua) situate, lying and being at the northerly side
of Waipahu Street, at Ahualii, Waikele, District of Ewa,
City and County of Honolulu, State of Hawaii, being Lot D-
1, and thus bounded and described as per survey of Ronald
Casuga, Licensed Professional Land Surveyor, with Community
Planning, Inc., dated --, revised December 1, 1995, to-wit:
Beginning at the southeast corner of this parcel of
land, on the westerly side of Hans L'Orange Park, the
coordinates if which referred to Government Survey
Triangulation Station "Ewa Church" being 1,146.98 feet
south and 9,090.13 feet west and running by azimuths
measured clockwise from true South:
1. 55 52' 48" 327.79 feet along remainder
of Grant 712 to
Kaholo (Lot D-2);
2. 58 10' 30" 849.12 feet along remainder
of Grant 712 to
Kaholo (Lot D-2);
3. 58 00' 341.65 feet along remainder
of Grant 712 to
Kaholo (Lot D-2);
4. 117 16' 0.12 feet along remainder
of Grant 712 to
Kaholo, along the
north side of Waipahu
Street;
5. 70 50' 558.70 feet along remainder
of Grant 712 to
Kaholo, along the
north side of Waipahu
Street;
6. Thence along remainder of Grant 712 to Kaholo, on a
curve to
the right with a
radius of 548.14 feet,
the chord azimuth and
distance being:
183 49' 47" 72.56 feet;
7. 187 37' 30" 121.10 feet along remainder
of Grant 712 to Kaholo;
8. Thence along remainder of Grant 712 to Kaholo, on a
curve to the left with
a radius of 598.14 feet,
the chord azimuth and
distance being:
177 24' 212.36 feet;
9. 77 10' 30" 5.00 feet along remainder of
Grant 712 to
Kaholo;
10. Thence along remainder of Grant 712 to Kaholo and Land Patent
8408, Land Commission
Award 5930, Apana 1 to
Puhalahua, on a curve
to the left with a radius
of 593.14 feet,the chord
azimuth and distance being:
156 06' 227.88 feet;
11. 145 01' 30" 97.80 feet along remainder
of Land Patent 8408,
Land Commission Award
5930, Apana 1 to
Puhalahua;
12. 173 45' 69.20 feet along remainder
of Land Patent 8408,
Land Commission Award
5930, Apana 1 to
Puhalahua;
13. 216 15' 134.00 feet along remainder
of Land Patent 8408,
Land Commission Award
5930, Apana 1 to
Puhalahua;
14. 251 50' 665.00 feet along remainder
of Grant 712 to
Kaholo (Lot 6);
15. 254 00' 227.65 feet along remainder
of Grant 712 to
Kaholo (Lot 6);
16. 322 30' 30" 135.61 feet along Lot 80 of
Waipahu Estates,
Unit 4-A (File Plan
1577);
17. 236 52' 978.09 feet along Lots 80,
79 and 18 of Waipahu Estates,
Unit 4-A (File Plan
1577);
18. 310 07' 57" 195.95 feet along remainder
of Grant 712 to
Kaholo (Lots A and B);
19. 220 07' 57" 150.34 feet along remainder
of Grant 712 to Kaholo
(Lot B);
20. Thence along remainder of Grant 712 to Kaholo (Lot B), on a
curve to the right with
a radius of 320.00 feet,
the chord azimuth and
distance being:
223 32' 29" 38.06 feet;
21. Thence along remainder of Grant 712 to Kaholo (Lot C), on a
curve to the right with
a radius of
42.00 feet, the chord
azimuth and distance being:
274 03' 09" 61.54 feet;
22. Thence along remainder of Grant 712 to Kaholo (Lot C), on a
curve to the left with
a radius of 641.00 feet,
the chord
azimuth and distance being:
318 21' 54.5" 62.39 feet;
23. Thence along remainder of Grant 712 to Kaholo (Lot C), on a
curve to the left with
a radius of 330.00 feet,
the chord
azimuth and distance being:
310 13' 46.5" 61.49 feet;
24. Thence along remainder of Grant 712 to Kaholo (Lot C), on a
curve to the left with
a radius of 930.00 feet,
the chord azimuth and
distance being:
299 20' 21.5" 179.71 feet;
25. Thence along the southerly side of Paiwa Street, on a curve to the left
with a radius of 630.00 feet,
the chord azimuth and
distance being:
280 33' 51" 288.38 feet;
26. 87 18' 27" 258.43 feet along Hans
L'Orange Park;
27. 81 09' 15" 69.06 feet along Hans
L'Orange Park;
28. 63` 27' 30" 392.50 feet along Hans
L'Orange Park;
29. 20 01' 166.35 feet along Hans
L'Orange Park, to the point
of beginning and containing an
area of 34.561 acres,
more or less.
Being a portion of the real property conveyed to Amfac
Property Development Corp., a Hawaii corporation, by
Limited Warranty Deed and Reservation of Rights dated
December 16, 1996, recorded in the Bureau of Conveyances,
State of Hawaii, as Document No. 96-176731.
SUBJECT, HOWEVER, to the following:
1. Title to all minerals and metallic mines reserved
to the State of Hawaii.
2. Lease in favor of Hawaiian Electric Company,
Inc., dated September 26, 1944, recorded in the Bureau of
Conveyances, State of Hawaii, in Book 1849, Page 186;
leasing and demising a right and easement to build,
construct, rebuild, reconstruct, repair, maintain and
operate pole and wire lines, etc., for the transmission of
electricity, etc., along, across and over a portion of said
electricity, etc., along, across and over a portion of said
parcel, besides other lands, for a period commencing with
the date hereof and ending April 6, 1957, and thereafter
from year to year until terminated, said easement being
twelve (12) feet wide, six (6) feet on either side of the
center line.
3. Lease in favor of Hawaiian Electric Company,
Inc., and Hawaiian Telephone Company, dated January 20,
1956, recorded in said Bureau, in Book 3088, Page 223;
leasing and demising a right and easement to build,
construct, rebuild, reconstruct, repair, maintain and
operate pole and wire lines, etc., for the transmission of
electricity, etc., over, across, through and within a
portion of said parcel, besides other lands, for a period
of 60 years commencing on the date hereof, said easement
being ten (10) feet wide, extending five (5) feet on either
side of the center line.
4. Grant in favor of Hawaiian Electric Company,
Inc., dated July 15, 1970, recorded in said Bureau, in Book
7108, Page 319; granting a perpetual right and easement to
build, construct, reconstruct, rebuild, repair, maintain
and operate a transformer pad, etc., for the transmission
and distribution of electricity, etc., over, under, upon,
across and through those certain premises as shown on the
map attached thereto.
5. Grant if favor of the City and County of
Honolulu, dated January 25, 1971, recorded in said Bureau,
in Book 7428, Page 417; granting the right, in the nature
of an easement, to construct, install, maintain, operate
and repair a roadway.
6. Easement "3" for temporary access purposes,
containing an area of 181,018 square feet, as granted to
Amfac Nurseries, Inc., a Hawaii corporation, doing business
as "Amfac Nurseries-Hawaii", in unrecorded Lease dated as
of January 1, 1978, of which a Short Form is recorded in
said Bureau, in Book 12817, Page 576, said easement being
more particularly described therein.
7. Grant in favor of the City and County of
Honolulu, dated June 17, 1980, recorded in said Bureau, in
Book 15220, Page 264; granting easement for the proper
operation, maintenance, repair, replacement and removal of
sanitary sewer pipelines, replacement and removal of
sanitary sewer pipelines, facilities and appurtenant
equipment under and across a portion of said parcel, said
easement being more particularly described as follows:
All of that certain parcel of land (portion of the
land described in and covered by Royal Patent Grant Number
712 to Kaholo) situate, lying and being at Ahualii,
Waikele, District of Ewa, City and County of Honolulu,
State of Hawaii, being Easement "L", ten feet wide for
sanitary sewer purposes, and thus bounded and described:
Beginning at the Southeast corner of this easement,
the coordinates of which referred to Government Survey
Triangulation Station "Ewa Church" being 1106.63 feet South
and 10039.40 feet West and running by azimuths measured
clockwise from true south:
1. 56 52' 19.92 feet along remainder
of Grant 712 to
Kaholo;
2. 146 52' 10.00 feet along remainder
of Grant 712 to
Kaholo;
3. 236 52' 19.16 feet along remainder
of Grant 712 to
Kaholo;
4. 322 30' 30" 10.03 feet along Lot 80 of
Waipahu Estates Unit
4-A (File Plan 1577)
to the point of
beginning and
containing an area of
195 square feet,more
or less.
8. Grant in favor of the City and County of
Honolulu, dated July 9, 1981, recorded in said Bureau, in
Book 15708, Page 64; granting the right, in the nature of
an easement, to be exercised and enjoyed by the Board of
Water Supply, to construct, install, maintain, operate,
replace and remove an underground water pipeline or
pipelines together with such meters, control cable and
other appurtenances, through a portion of Easement "G" for
water pipeline purposes.
9. Easement "M" (10 feet wide) for drainage
purposes, as shown on survey map prepared by Ronald Casuga,
Licensed Professional Land Surveyor, with Community
Planning, Inc., dated -, revised December 1,1995.
10. Floodway zone, as shown on survey map prepared by
Ronald Casuga, Licensed Professional Land Surveyor, with
Community Planning, Inc., dated ---, revised December 1,
1995.
11. A 60' roadway setback, as shown on survey map
prepared by Ronald Casuga, Licensed Professional Land
Surveyor, with Community Planning, Inc., dated ---, revised
December 1, 1995.
12. A 60' wide roadway setback line, as shown on
survey map prepared by Ronald Casuga, Licensed Professional
Land Surveyor, with Community Planning, Inc., dated ---,
revised December 1, 1995.
13. The terms and provisions, including the failure
to comply with any covenants, conditions and reservations,
contained in the Unilateral Agreement and Declaration for
Conditional Zoning dated November 6, 1996, recorded in said
Bureau, as Document No. 96-159180.
14. The terms and provisions, including the failure
to comply with any covenants, conditions and reservations,
contained in the Amended Unilateral Agreement and
Declaration for Conditional Zoning dated November 12, 1996,
recorded in said Bureau, as Document No. 96-160631.
CONSULTANT AGREEMENT
Between
AMFAC PROPERTY DEVELOPMENT CORP.
and
BREWER ENVIRONMENTAL INDUSTRIES, INC.
for
PHASE III
OVER-EXCAVATION AND VERIFICATION SAMPLING
OAHU SUGAR MILL SITE, WAIPAHU, HAWAII
EXHIBIT "B"
CONSULTANT AGREEMENT
THIS AGREEMENT, made this 16th day of December, 1996
and effective as of the 16th day of December, 1996, by and
between BREWER ENVIRONMENTAL INDUSTRIES, INC., a Hawaii
corporation, whose address is 401 Waiakamilo Road, Suite
101, Honolulu, Hawaii 96817 (hereinafter referred to as
"Consultant") and AMFAC PROPERTY DEVELOPMENT CORP, a Hawaii
corporation, whose address is 700 Bishop Street, 21st
Floor, Honolulu, Hawaii 96813 (hereinafter referred to as
"Amfac").
W I T N E S S E T H:
WHEREAS, Amfac desires to retain Consultant as an
independent contractor to provide certain services with
respect to the matters outlined herein; and
WHEREAS, Consultant desires to provide said certain
services with respect to the matters outlined herein;
NOW, THEREFORE, in consideration of the mutual
covenants and promises herein contained, the parties hereto
agree as follows:
Section 1.0 Appointment and Engagement as Independent
Contractor. Amfac agrees to engage Consultant as an
independent contractor to provide services in connection
with the matters described in Section 2.0 herein.
Consultant agrees to properly perform its obligations as
provided herein all in accordance with the terms,
provisions, covenants and conditions set forth herein.
Section 2.0 Scope of Work. Consultant shall perform
a Phase III, overexcavation and verification sampling of
Oahu Sugar Mill's former Cane Haul Service Station Site in
Waipahu, Hawaii (the "Project"). The services to be
provided by Consultant are more fully described as Option 1
only in Consultant's proposal dated November 21, 1996 (BEI
Project No. 4743), attached hereto as Exhibit "A" and
incorporated herein by reference (the "Work").
Section 3.0 Timing. Consultant shall complete the
services to be provided by Consultant under this Agreement
as expeditiously as possible, but no later than April 30,
1997.
Section 4.0 Compensation, Payment and Expenses.
Amfac agrees to pay Consultant a total lump sum fee in the
amount of Sixteen Thousand Ninety-Eight and No/100 Dollars
($16,098.00), plus 4.166% Hawaii general excise tax, upon
completion of the Work. A cost breakdown is more fully
described as Option 1 costs in Exhibit "A" attached hereto
and incorporated herein by reference. Consultant shall be
responsible for all expenses actually incurred in
performing the Work.
Section 5.0 Extra Work. Work which is not covered by
the services described in Exhibit "A" shall be considered
extra work. Consultant shall perform such extra work as
may be authorized in writing by Amfac's representative
prior to such work being performed, and in the absence of
such prior written authorization, Consultant shall not be
entitled to payment for such extra work. All bills for
extra work performed shall be submitted to Amfac not later
than the first day of the month following the month in
which the extra work was performed. If extra work is
authorized, such work shall be considered as part of this
Agreement and subject to each and all of the terms an d
requirements hereof.
Section 6.0 Insurance and Indemnity.
A. Consultant shall carry and maintain at its
own cost, with companies having a minimum rating of "A X"
in the then current edition of "Best Key Insurance Rating
Guide", all necessary liability insurance (which shall
include as a minimum the requirements as set forth below)
during the term of this Agreement, for damage caused or
contributed to by Consultant, and insuring Consultant
against claims which may arise out of or result from
Consultant's performance or failure to perform the Work.
1. Worker's Compensation to the full
extent as required by applicable law; and Employer's
Liability Insurance $500,000 each accident.
2. Commercial General Liability Coverage,
including Contractual Liability and Personal Liability
Coverages, and naming Amfac Property Development Corp.,
Oahu Sugar Company, Limited, Northbrook Corporation, their
partners, their parent corporations, their subsidiaries,
their affiliates and their respective officers, employees
and agents and other designated by Amfac and Amfac's
mortgagees as Additional Insureds, in not less than the
following amounts:
Bodily Injury and Property Damage Liability
$1,000,000 each occurrence
$1,000,000 aggregate
3. Comprehensive Automobile Liability
Insurance covering all owned and non-owned and hired
vehicles including the loading and unloading thereof with
limits of:
Bodily Injury and Property Damage Liability
$1,000,000 each accident
All such liability insurance shall include
the condition that it is primary coverage and that any such
insurance maintained by Amfac and any other Additional
Insured is excess and non-contributory.
B. From and after the date hereof for a period
of at least three (3) years following the date of
substantial completion of the Project, Consultant shall
maintain an errors and omissions insurance policy (the
"Policy" insuring Consultant with limits of insurance of at
least One Million and 00/100 Dollars ($1,000,000) per claim
and in the aggregate with respect to claims made against
Consultant for negligent acts, errors or omissions of or
attributable to Consultant in the performance of services
in connection with the Project, including prior acts, which
amount shall not, however, be construed as a limitation of
the liability of Consultant with respect to the Work. The
Insurance herein provided may allow for a reasonable
deductible amount of to a maximum deductible of Fifty
Thousand and 00/100 Dollars ($50,000.00).
C. Consultant waives all rights of action and
subrogation against Amfac to the extent of any insurance
recoveries that may be obtained by Consultant for damages
to Consultant's property caused by fire or other peril
covered by insurance, except such rights as Consultant may
have to proceeds of insurance held by any other person as
trustee or otherwise on behalf of Consultants.
D. Consultant hereby agrees to protect, defend,
indemnify and hold harmless Amfac Property Development
Corp., Oahu Sugar Company, Limited, Northbrook Corporation,
their partners, their parent corporations, their
affiliates, their subsidiaries and their respective
officers, employees, agents and assigns (collectively,
sometimes called "Indemnitees") from and against all
losses, claims, liabilities and expenses, including, but
not limited to, reasonable attorneys' fees, court costs and
expenses of collection which result from Consultant's
negligent performance of professional services or breach of
this Agreement. This indemnification shall include, but
not be limited to, loss or destruction of property,
including loss of use thereof, and/or because of bodily
injury, personal injury, sickness or disease, or death
sustained by any person. Such obligations of Consultant
hereunder shall not be limited by the availability, limits,
or coverage of insurance carried or required herein, or
required by law to be carried.
E. In the event that Consultant fails to effect
or maintain the required insurance, Amfac may, but is not
obligated to, procure the same or pay the premium therefor,
in which case the cost shall be charged to Consultant or
deducted from payments due to Consultant.
F. Certificates of insurance acceptable to
Amfac shall be filed with Amfac prior to commencement of
the Work. The certificate shall set forth evidence of all
coverages required hereunder. Consultant shall furnish to
Amfac copies of any endorsements that are subsequently
issued amending any coverage required hereunder.
G. Each policy shall provide that it will not
be canceled or materially altered except after thirty (30)
days' advance written notice to Amfac mailed to the address
noted herein, and the certificate(s) of insurance shall so
state.
Section 7.0 Amfac's Responsibilities.
A. Amfac shall designate at representative
authorized to act in its behalf. Amfac's present
representative is John Higham. Amfac shall examine
documents submitted by Consultant and render decisions
pertaining thereto promptly to avoid unreasonable delay in
the progress of the Work.
B. Amfac shall furnish information required of
it as necessary for the orderly progress of the Work.
C. Amfac shall provide access to enter upon all
lands owned or controlled by Amfac as reasonably required
for Consultant to perform its services under this
Agreement.
Section 8.0 Accounting Records. Records of
Consultant's services and expenses, if any, pertaining to
this Agreement shall be maintained using generally accepted
accounting principles and shall be available to Amfac or
its authorized representative for inspection at mutually
convenient times.
Section 9.0 Termination of Agreement. This Agreement
may be terminated at any time, for any reason, by either
party to its expiration, by giving thirty (30) days prior
written notice to the other party delivered in person or
mailed to the last known address of the other party. Upon
such termination, Consultant shall be entitled to only such
fee as shall have been earned by performance of the Work as
of the date of termination.
Section 10.0 Relationship of Parties. The parties to
this Agreement intend and hereby agree that the
relationship of Amfac and Consultant created herein shall
be that of principal and independent contractor.
Consultant shall have control and discretion with respect
to the performance of its obligations hereunder and shall
have authority and control over the manner and details of
all work which is to be performed (Amfac being interested
in the proper and necessary results to be obtained).
Consultant shall be solely responsible for the use,
discipline and supervision of Consultant's employees, if
any, and for providing all tools, texts, equipment or
supplies generally used by Consultant in its business.
Consultant shall be responsible for complying with and
shall comply with all applicable federal, state and local
laws regarding the Work and the operation of Consultant's
business or employment of employees, including but not
limited to federal, state and local taxes and general
excise tax. Nothing contained herein shall be construed to
create any employment, partnership, joint venture or co-
ownership relationship between the parties hereto. Neither
Amfac nor Consultant shall be responsible for any
liabilities or obligations incurred or created by the other
party except as specifically agreed to. Consultant shall
have no authority to execute any document in the name or on
behalf of Amfac, enter into any oral or written commitments
involving Amfac, or otherwise obligate Amfac in any manner
whatsoever.
Section 11.0 Non-Waiver. It is expressly understood
and agreed that the failure of Amfac to insist in any one
or more instances upon strict performance of any of the
terms and conditions of this Agreement, or to exercise any
right herein conferred, shall not be deemed a waiver or
relinquishment of any of Amfac's right to assert or rely
upon such terms, conditions, or rights in any other
instance.
Section 12.0 Confidentiality. At all times during
the term of this Agreement and thereafter, Consultant will
hold in strictest confidence, and not disclose to any
person, firm or corporation, any information, manner of
doing business, techniques, process, trade secret, or any
other information or confidential matter relating to the
products, operations, activities and businesses of Amfac,
or its divisions, subsidiaries and affiliates which
Consultant presently has knowledge of, may learn while
performing hereunder or which is developed hereunder for
Amfac, its divisions, affiliates and subsidiaries.
Section 13.0 Successors and Assigns. Amfac and
Consultant each binds itself, its successors, assigns and
legal representatives to the other party to this Agreement
and to the partners, successors, assigns and legal
representatives of such other party in respect of all
covenants of this Agreement. Consultant shall not assign
or otherwise transfer its interest in or obligations under
this Agreement without the prior written consent of Amfac.
Amfac may assign its interest in this Agreement.
Section 14.0 Legal Construction of Agreement. This
Agreement shall at all time be construed under the laws of
the State of Hawaii. Section 15.0 Severability. The
invalidity or enforceability of any provision hereof shall
in no way affect the validity or enforceability of any
other provision.
Section 16.0 Extent of Agreement. This Agreement,
including the exhibits attached hereto, represents the
entire and integrated agreement between Amfac and
Consultant and supersedes all prior negotiations,
representations or agreement either written or oral. This
Agreement may be amended only by written instruments signed
by both Amfac and Consultant.
Section 17.0 Attorneys' Fees and Costs. In the event
suit is brought at law or in equity to enforce or interpret
the terms of this Agreement, the prevailing party shall be
entitled to all costs and expenses of litigation, including
reasonable attorneys' fees.
IN WITNESS WHEREOF, the parties have hereunto set
their hands on the day and year first above written.
AMFAC PROPERTY DEVELOPMENT CORP. BREWER ENVIRONMENTAL INDUSTRIES, INC.
By_________________________ By_____________________________
Its Vice President Its Vice President
"Amfac" "Consultant"
BREWER ENVIRONMENTAL INDUSTRIES, INC.
ENVIRONMENTAL SERVICES DIVISION
Mr. John Higham November 21, 1996
Amfac/JMB Hawaii, Inc. BES Project No. 4743
700 Bishop Street, 21st Floor
Honolulu, Hawaii 96801
Dear Mr. Higham:
Brewer Environmental Services is pleased to present this
proposal to Amfac/JMB Hawaii, Inc. to conduct over-excavation and
verification sampling at the former Cane Haul Fueling Station
location at the Oahu Sugar Company (OSCO) sugar mill in Waipahu.
1.0 BACKGROUND
During the OSCO Mill Phase II sampling activities, BES
collected four soil samples from the perimeter of the former Cane
Haul Fuel Station at the locations shown in Figure 1 and analyzed
them for total petroleum hydrocarbons as diesel; benzene, toluene,
ethylbenzene, and xylene (BTEX); and the four DOH-regulated
polynuclear aromatic hydrocarbons (PAH). One sample contained a
concentration of benzo(a)pyrene, a PAH, at 103 ppm. Based on this
result, BES recommends overexcavation of the contaminated soil and
soil sample collection to verify that the extent of the
contamination has been removed. The contaminated soil can either
be stored and remediated on site in a soil management unit (SMU)
or transported and recycled at a thermal treatment center on Oahu.
BES' proposed scope of services for the remedial
investigation are outlined below.
2.0 SCOPE OF SERVICES
BES will conduct over-excavation and sample activities at the
OSCO Waipahu Sugar Mill's former Cane Haul Service Station.
Specifically BES will:
* Excavate soil in the area of the Cane Haul Service Station using
a Backhoe and trained operator.
* Monitor over-excavation soils with a PID and place contaminated
soils in a visqueen lined temporary or long-term SMU for storage
or onsite remediation, respectively.
* Collect six soil samples from the excavation pit for
verification that all contaminated soils have been removed, using
a California State Department of Health Services-certified
laboratory for the following - analytes:
* Total Petroleum Hydrocarbons, as Diesel (TPH-D), EPA Method
8015M
* Benzene, Toluene, Ethylbenzene, and Xylenes (BTEX), EPA
Method 8020
* Four regulated Polynuclear Aromatic Hydrocarbons (PAHs),
EPA Method 8100
* Document all field activities, soil lithology, sample collection
methodologies and laboratory analytical results.
* Evaluate soil sample analytical results and determine if all
contaminated soil has been excavated or if additional over-
excavation and/or sample collection is necessary
* Prepare a final report documenting the field activities and
methodologies and summarizing the analytical results and
conclusions
ADDITIONAL WORK
* Provide an additional backhoe to transport excavated soil to
Parcel B for stockpiling
OPTION 1
* Construct the SMU with bermed soil and lined with two layers of
10 mil plastic on Parcel B property
* Approximately one month after excavation activities collect,
four soil samples from the SMU soil in order to determine if soil
is remediated to DOH Clean up Criteria
* Backfill excavation with remediated soil and compact to grade in
six to nine inch lifts
OPTION 2
* Construct temporary SMU lined with two layer of 10 mil plastic
on Parcel B property
* Collect one composite soil sample from stockpile to characterize
the contamination for disposal at the thermal treatment facility
* Analyze one composite soil sample for the following analytes:
TPH-D by EPA Method 8015M
BTEX by EPA Method 8020
PAHs by EPA Method 8100
Total Cadmium, Chromium, and Lead by EPA Method 6010
TCLP Cadmium, Chromium, and Lead by EPA Method 6010
Flammability
* Approximately two weeks after excavation activities, transport
and recycle soil to a local thermal treatment facility
* Backfill excavation with imported material and compact to grade
in six to nine inch lifts
3.0 COSTS
BES is prepared to conduct this Over-Excavation and Sampling
Activities on a time and materials basis plus Hawaii General
Excise Tax of 4.166 percent. The cost breakdown for this fee is a
follows:
Mobilization
Health & safety and work plans $ 750.00
Over-Excavation and Sample Collection $ 3,412.00
Backhoe and mobilization costs $ 920.00
Backhoe operator $ 1,012.00
BES geologist, equipment and
Onsite monitoring $ 1,480.00
Laboratory Analysis $ 1,100.00
Data evaluation and reporting $ 2,050.00
ADDITIONAL COSTS
Moving soil from Parcel A to Parcel B for
soil management unit $ 2,697.00
Backhoe and mobilization costs $ 920.00
Backhoe operator $ 1,012.00
Truck to move soil $ 465.00
Plastic $ 300.00
OPTION 1
Remediate soil onsite and backfill $ 6,089.00
Remobilization of backhoe $ 920.00
Backhoe operator $ 1,012.00
One additional laborer $ 1,012.00
BES geologist onsite to
monitor activities $ 1,120.00
Compaction tests $ 460.00
Laboratory analysis of soil
stockpile $ 1,100.00
Truck to move soil $ 465.00
OPTION 2
Recycle soil and backfill with
imported material $13,459.00
Remobilization of backhoe $ 920.00
Backhoe operator $ 1,012.00
One additional laborer $ 1,012.00
Compaction tests $ 460.00
Imported material $ 830.00
BES geologist onsite to
monitor activities $ 1,120.00
Characterization analysis of
soil stockpile $ 405.00
Disposal fees at treatment
facility $ 5,920.00
Trucking fee to treatment
facility $ 1,320.00
Compaction tests $ 460.00
TOTAL WITH OPTION 1 $16,098.00
TOTAL WITH OPTION 2 $23,468.00
4.0 ASSUMPTIONS AND LIMITATIONS
The above scope of work and cost estimate is based on the
following assumptions and limitations:
* All work will be performed on a time and materials basis.
Any costs above the estimate quoted above will not be incurred
without authorization from Amfac/JMB. Any budgeted costs not
incurred will not be billed.
* The backhoe, operator and Laboratory are available for the
scheduled period.
* Excavation will require removing soil from an area
approximately 15 feet x 10 feet to a depth of 10 feet
* An area for construction of the SMU is available on Parcel B
* A separate Phase II Investigation report will be written
* There will be two mobilizations, one for excavation and the
other for backfilling (for both options)
* All laboratory analyses will be performed on a normal ten day
turn around time
* Approximately 60 cubic yards or 88 tons will be excavated
from Parcel A Cane Haul Service Station
* All laboratory analyses for disposal characterization is
within thermal treatment facility established action levels
BES warrants that its services are provided with the usual
competence and thoroughness of the consulting profession, in
accordance with the standard operating procedures of this time.
BES provides no other guarantee or warranty. If this proposal is
acceptable, please notify us at your convenience. BES understands
that Amfac will prepare a project-specific contract for this work.
We greatly appreciate this opportunity to assist Amfac/JMB
with their development of the former OSCO Waipahu Sugar Mill and
well look forward to a successful completion of the project. If
you have any questions regarding this proposal, please call me at
832-7934.
Sincerely,
Sherrie K. Sasaki
Geologist II
CITI BANK
Member FDIC
MORTGAGE LOAN CLOSING STATEMENT
NAME(S) OF BORROWER(S): AMFAC PROPERTY DEVELOPMENT CORP.
Mailing Address(es): 700 Bishop Street
Address of Property: Paiwa Street, Waipahu Hawaii TMK No. (1) 9-4-2-4 por.
Identified as Lot D-1
Appraisal/Recertification Fee to: John Child & CO. $17,150.00
Credit Report Fee to
Title Search/Insurance to Title Guaranty of Hawaii 12,500.00
Mortgage Insurance to
Prepaid Interest
Prepaid Escrow Impounds
Condominium Processing Fee
Finance Fee 0.75% of $10,000,000.00 75,000.00
Attorney's Fee to Michael H. Sakai, Esquire 1,500.00
Mortgage
Trust Review and Opinion
UCC Financing Statement & Security Agreement
Notary Fee(s) to
Mortgage
Deed or Lease
Recording Fee to Bureau of Conveyances
Mortgage 20.00
Special Mortgage Recording Fee 10,000.00
Assignment of Mortgage
Deed or Lease
(Partial) Release of Mortgage
Assignment of Lease
Consent to Assignment
UCC Financing Statement 20.00
Flood Zone Verification to Land Loan
TOTAL MORTGAGE CLOSING REQUIREMENTS $116,190.00
===========
SUMMARIZATION YOUR MONTHLY INSTALLMENT
SOURCE OF FUNDS PAYMENT
Advance Deposit(s)$ 33,000.00 Principal and Interest
Loan Funds 10,000,000.00 Impounds
Final Deposit 83,190.00
Sub-total $ 10,116,190.00 TOTAL Interest Only
---------------
MORTGAGE LOAN CLOSING STATEMENT - Continued
LESS: APPLICATION OF FUNDS
Mortgage Closing
Requirements $ 116,190.00 Prepared by A. Tanouye/C. Yamato
Escrow Closing
Requirements Date: December 18, 1996
Construction
Contract Sum
Sub-total $ (116,190.00)
--------------
BALANCE Refundable $10,000,000.00
===============
The Borrower acknowledges that figures presented herein above were
derived in good faith at the time of preparation. Furthermore, City Bank
is hereby unconditionally authorized to disburse the proceeds of loan
evidence by my/our note and/or mortgage dated December 18, 1996 in the
amounts and to the parties specified above.
AMFAC PROPERTY DEVELOPMENT CORP.
By:____________________________
Its Senior Vice President
CITY BANK
LOAN AUTHORIZATION
Date of Mortgage: 12/18/96
Date: December 20, 1996 Class: Industrial Mortgage Branch:
Borrower(s): Amfac Property Development Corp.
Address: Paiwa Street, Waipahu, Hawaii Phone:
Mailing Address: Amfac Tower, 21st Floor 700 Bishop Street, Honolulu
REQUESTED: ENDORSER/GUARANTOR: LINE OF CREDIT:
Loan Amount:$10 Million None Line Amount:
Maturity: 12/1/97 Total Usage:
Finance Fee: .75% ($75,000) Expiration:
Annual Percentage Rate *%
* .5% above City Bank's base rate, floating
PURPOSE OF LOAN: The Land Loan proceeds will be sued for: 1) $6,000,000
for investments in other projects and developments on Maui and Kauai, and
2) $4,000,000 for the development of 23 lots in "Phase 1A" of the Property;
and
SOURCE OF REPAYMENT: From Borrower Funds.
TERMS OF REPAYMENT: Interest only monthly on amounts of principal
disbursed. A $4,000,000 principal reduction will be due upon the release
of lot 1-A.
SECURITY DESCRIPTION: ALTA insured first mortgage lien on approximately 34.5
acres of fee simple land currently zoned I-1 located on Paiwa Street in
Waipahu, Hawaii. TMK: (1) 9-4-2-4 port. identified as lot D-1. Appraisal
by John Child and Company dated December 1, 1996 valued property at
$16,700,000.
AUTHORITY TO DISBURSE INSTRUCTIONS TO NOTE DEPARTMENT
a) Deposited to A/C Payments begin January 1, 1997
Loan No. 77-24-7383051523
Charge A/C
Name of A/C: Amfac Property
b) Cashier's Check No. Development Corp.
c) Refinance CO. No. of Times Renewed and/or
extended as applicable 0
d) Other Note No. 000052
Total
CITY BANK
LOAN AUTHORIZATION - Continued
SIGNATURE OF BORROWER(S): AMFAC PROPERTY DEVELOPMENT CORP.
By:___________________________
Its Senior Vice President
DOCUMENTS REQUIRED
(*Indicate documents required by checking the applicable line under
"required")
COMMERCIAL Req. On Hand: COLLATERAL Req. On Hand:
Note X X Coll. Agreement
Borr. Res. X X Passbook/Cert.
Sec. Agreement X X Coll. Receipt
Financing Stmt. X X Hypothecation Agmt.
Cont. Guar. Stock Certificate
Liability Ins. X X Stock Powers
Loan Agreement X X Regul. "U" Stmt.
Lgl Own-shp Cer. X X Insurance Policy
Not. of Mort. Insurance Quest.
Pledge or Purch. X X Assign. of Life
Hazardous Waste Insurance
Agmt. X X Other
Mortgage X X
Federal ID#
Census Tract: Industry Code: 0801
It is hereby certified that all required documents are correct and in file.
- ----------------------- Loan-to-Value Ratio: (As Applicable) 60%
Signature
AUTHORIZATION BY: Senior Loan Committee 10/29/96 Date Booked: 12/20/96
RECOMMENDED BY: Ann Tanouye/Melvin Tanaka Date: 10/22/96
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-K FOR THE YEAR ENDED DECEMBER 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> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 8,736
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<RECEIVABLES> 8,180
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<TOTAL-LIABILITY-AND-EQUITY> 483,605
<SALES> 96,943
<TOTAL-REVENUES> 97,406
<CGS> 89,267
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<OTHER-EXPENSES> 1,222
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<INTEREST-EXPENSE> 26,297
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