Document:

Exhibit 10.7

 

FIRST AMENDMENT TO

THE AMENDED AND RESTATED OPERATING AGREEMENT

OF

KUKUI’ULA DEVELOPMENT COMPANY (HAWAII), LLC

 

This First Amendment to the Amended and Restated Operating Agreement of Kukui’ula Development Company (Hawaii), LLC (the “Company”), is entered into as of September 28, 2010, by and between KDC, LLC, a Hawaii limited liability company (“KDC”), and DMB KUKUI’ULA LLC, an Arizona limited liability company (“DMB”).

 

KDC and DMB entered into the Amended and Restated Operating Agreement of the Company dated as of May 1, 2009 (the “Operating Agreement”).

 

KDC and DMB hereby agree to amend the Operating Agreement as follows:

 

1.                                      Section 2.3(d) is amended to read as follows:

 

(d)                                 In the event the Company is required to make any payments pursuant to the Guaranty (Collateral Support Agreement) dated September 28, 2010 made by the Company in favor of KDC or the two Guaranty Agreements dated September 28, 2010, made by the Company in favor of Bank of America, N.A., as Administrative Agent, to support loans made to Kukui’ula Village LLC, each Member shall contribute to the Company as Additional Capital Contributions 50% of any required payment.  Failure to make an Additional Capital Contribution required under this Section 2.3(d) within ten (10) days after the delivery of a Contribution Notice from any Representative setting forth the amount of the required contribution shall be a default hereunder, subject to the provisions of Section 2.4.

 

2.                                      A new Section 3.3 is added to read as follows:

 

3.3                               Lot 11 Distribution Adjustment.  In the event that Lot 11 or Lot 11C is sold or otherwise disposed of pursuant to the enforcement of mortgages dated September 28, 2010, in favor of Bank of America, N.A., as agent (“BofA”) granted by the Company as additional collateral to secure a $43,524,000 loan made to Kukui’ula Village LLC pursuant to the Amended and Restated Loan Agreement dated September 28, 2010 among Kukui’ula Village LLC, Bank of America, N.A. as Administrative Agent, and the lenders named therein (collectively the “Lenders”), then an amount equal to (i) 29% of the amount paid or credited on the indebtedness to the Lenders from the sale or other disposition of Lot 11 or Lot 11C, as applicable, shall be paid to KDC as follows:100% of distributions otherwise due to DMB will be distributed to KDC following the distributions pursuant to Section 3.1(c) and prior to distributions pursuant to Section 3.1(d) or following the distributions pursuant to Section 3.2(e) and prior to the distributions pursuant to Section 3.2(f) until 

 

 

such amount payable to KDC is paid or credited in full.  The foregoing priority distribution to KDC is based upon full funding of Supplemental, Preferred and Additional Capital Contributions by each Member with no Optional Capital Contributions paid by either Member.  If that is not the case, then in lieu of 29%, the actual percentage to be paid to KDC pursuant to the Sections listed above shall equal 50% minus the percentage calculated where (x) the numerator is equal to total Supplemental Capital, Additional Capital and Optional Capital Contributions paid by DMB and (y) the denominator is equal to total Supplemental Capital, Additional Capital and Optional Capital Contributions paid by both KDC and DMB”.

 

3.                                      Section 9.14 is amended by adding the definition of the following term:

 

“Lot 11C” means the 44.453 acre portion of Lot 11 of the Kukui’ula Large-Lot Subdivision Koloa (Makai), Koloa, Kauai, Hawaii being more particularly described in the mortgage dated September 28, 2010 granted by the Company in favor of Bank of America, N.A., as Administrative Agent.

 

Other defined terms herein shall have be defined as stated in the Operating Agreement.

 

IN WITNESS WHEREOF, the parties have entered into this Agreement as of the date first above written.

 

 

	
DMB KUKUI’ULA LLC,
    	
 
    	
MEMBERS:
    
	
an Arizona limited liability company
    	
 
    	
KDC,   LLC, 
    
	
By
    	
DMB   Associates, Inc., 
    	
 
    	
a   Hawaii limited liability company 
    
	
 
    	
an   Arizona corporation 
    	
 
    	
By
    	
A & B Properties, Inc.
    
	
 
    	
Its   Manager 
    	
 
    	
 
    	
a Hawaii corporation
    
	
 
    	
 
    	
 
    	
Its Manager
    
	
By
    	
/s/ Andrew Beams 
    	
 
    	
By
    	
/s/ Paul Hallin 
    
	
Its EVP 
    	
 
    	
Its Exec. Vice President 
    
	
 
    	
 
    	
 
    	
 
    
	
c/o DMB Associates, Inc. 
    	
 
    	
By
    	
/s/ Alyson J. Nakamura 
    
	
7600 E. Doubletree Ranch Road, Suite 300 
    	
 
    	
Its Secretary 
    
	
Scottsdale, Arizona   85258 
    	
 
    	
 
    
	
Fax No. (480) 367-9788 
    	
 
    	
822 Bishop Street 
    
	
 
    	
 
    	
Honolulu, Hawaii   96813 
    
	
 
    	
 
    	
Fax No. (808) 525-6616 
    
							

 

2Exhibit 10.8

 

SECOND AMENDMENT TO

THE AMENDED AND RESTATED OPERATING AGREEMENT

OF

KUKUI’ULA DEVELOPMENT COMPANY (HAWAII), LLC

 

This Second Amendment to the Amended and Restated Operating Agreement of Kukui’ula Development Company (Hawaii), LLC (the “Company”), is entered into as of July 20, 2011, by and between KDC, LLC, a Hawaii limited liability company (“KDC”), and DMB KUKUI’ULA LLC, an Arizona limited liability company (“DMB”).

 

KDC and DMB entered into the Amended and Restated Operating Agreement of the Company dated as of May 1, 2009 and entered into the First Amendment to the Amended and Restated Operating Agreement dated as of September 28, 2010 (the “Operating Agreement”).

 

KDC and DMB hereby agree to amend the Operating Agreement as follows:

 

1.                                      Section 2.3(c) is amended to change the references to “Sections 2(a) and 2(b)” in the first sentence to “Sections 2.3(a) and 2.3(b)”.

 

2.                                      Section 2.4 is amended to read as follows:

 

2.4                               Failure to Make Contributions.  If a Member fails to make its entire share of any Additional Capital Contribution, Supplemental Capital Contribution or Preferred Capital Contribution payment required under Section 2.3 and if the other Member (“Non-Defaulting Member”) has, if applicable, made the Capital Contributions required of it to date under Section 2.3, then the Non-Defaulting Member may give written notice (a “Default Notice”) to the Member failing to make the required contribution (“Defaulting Member”), setting forth the amount of the delinquent Capital Contributions (the “Deficit Amount”). If the Deficit Amount remains unfunded by the Defaulting Member for more than ten (10) days following a Default Notice, then without further notice or action until the Default is cured (i) distributions to the Members shall be made in accordance with Section 3.2, (ii) the Non-Defaulting Member’s obligation to make further Capital Contributions shall be terminated, and (iii) the Non-Defaulting Member shall have the right, but not the obligation to make further Capital Contributions from time to time required to continue the Business Activities of the Company, which aggregate amounts, together with any contribution made by the Non-Defaulting Member pursuant to the Contribution Notice the Defaulting Member failed to fund, shall be designated Priority Preferred Capital Contributions.  The Non-Defaulting Member’s remedies with respect to a Defaulting Member’s failure to contribute a Deficit Amount are limited to the consequences specified hereinabove, including the Non-Defaulting Member’s right to make Priority Preferred Capital Contributions, and to the remedy specified in Section 7.5.  This limitation is not intended to 

 

 

limit the rights of a Member or an Affiliate thereof to pursue any remedies provided under separate guaranties or assurances whether or not related to this Agreement.  In the event a Non-Defaulting Member receives a payment under a separate guaranty reimbursing the Non-Defaulting Member for the contribution of a Deficit Amount with interest, over and above all costs and expenses of collection under such guaranty, such payment will be applied to the Defaulting Member’s Additional Capital Contributions, Supplemental Capital Contributions or Preferred Capital Contributions, as appropriate, and credited toward the payment of the Non-Defaulting Member’s Priority Preferred Capital Return.

 

3.                                      Section 5.2(b) is amended to read as follows:

 

Appointment of Representatives.  KDC’s initial Representatives are Norbert M. Buelsing and Paul W. Hallin.  DMB’s initial Representatives are Eneas A. Kane and Mark C. Kehke.  A Representative may be changed effective upon written notice from the Member making the change to the other Member.  The Representatives of each Member are authorized to make any decision required of such Member and to vote on behalf of such Member on the Executive Committee.  In the event a Member (the “Contributing Member”) receives a financial report disclosing that the Capital Differential attributable to the other Member equals or exceeds $6,000,000, then the Contributing Member shall have the right (the “Management Option”) to provide upon written notification to the other Member of the Contributing Member’s exercise of its Management Option whereupon (i) the other Member shall become a nonvoting Member of the Company, (ii) the Executive Committee shall thereafter consist of two Representatives appointed by the Contributing Member and one Representative appointed by the other Member, and (iii) the Contributing Member shall be the sole Managing Member.  If the Contributing Member fails to make the written notification within a 30 day period following the receipt of the financial report, the right to exercise the Management Option shall be deemed waived.  The Management Option shall be exercisable again on the foregoing terms each time the Capital Differential increases by an additional $6,000,000.  KDC shall be the sole Member eligible to exercise the Management Option effective upon the date the aggregate Capital Contributions by KDC have been paid pursuant to Sections 2.3(a), (b) and (c).

 

4.                                      Section 9.14 is amended by adding the definitions of the following terms:

 

“Capital Differential” of a Member means the total of (i) a Member’s aggregate Deficit Amount, if any, plus (ii) the amount by which the other Member’s Optional Capital Contributions exceeds the Member’s Optional Capital Contributions.

 

2

 

“Contributing Member” has the meaning given that term in Section 5.2(b).

 

“Management Option” has the meaning given that term in Section 5.2(b).

 

Other defined terms herein shall have been defined as stated in the Operating Agreement.

 

IN WITNESS WHEREOF, the parties have entered into this Agreement as of the date first above written.

 

 

	
DMB KUKUI’ULA LLC,
    	
 
    	
MEMBERS:
    
	
an Arizona limited liability company
    	
 
    	
KDC,   LLC, 
    
	
By
    	
DMB   Associates, Inc., 
    	
 
    	
a   Hawaii limited liability company 
    
	
 
    	
an   Arizona corporation 
    	
 
    	
By
    	
A & B Properties, Inc.
    
	
 
    	
Its   Manager 
    	
 
    	
 
    	
a Hawaii corporation
    
	
 
    	
 
    	
 
    	
Its Manager
    
	
By
    	
/s/ Andrew Beams 
    	
 
    	
By
    	
/s/ Paul Hallin 
    
	
Its EVP 
    	
 
    	
Its Executive Vice   President 
    
	
 
    	
 
    	
 
    	
 
    
	
c/o DMB Associates, Inc. 
    	
 
    	
By
    	
/s/ Alyson J. Nakamura 
    
	
7600 E. Doubletree Ranch Road, Suite 300 
    	
 
    	
Its Secretary 
    
	
Scottsdale, Arizona   85258 
    	
 
    	
 
    
	
Fax No. (480) 367-9788 
    	
 
    	
822 Bishop Street 
    
	
 
    	
 
    	
Honolulu, Hawaii   96813 
    
	
 
    	
 
    	
Fax No. (808) 525-6616 
    
							

 

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