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2010-04-15_County_of_Hawaii_Motion_to_Dismiss_Counter_Claim_to_Expunge_Lis_Pendens_ORIG
�40 LINCOLN S. T. A9HIDA 4478 Corporation Counsel KATHERINE A. GARSON 5748 Assistant Corporation Counsel LAUREEN L. MARTIN 5927 BROOKS L. BANCROFT 8201 JULIE K. MECKLENBURG 8755 Deputies Corporation Counsel 101 Aupuni Street, Suite 325 Hilo, Hawaii 96720 Cl) Telephone: (808) 961-8251 C' 1 Facsimile: (808) 961-8622 pa E-mail: lmartinaco.hawaii.hi.us cn an Attorneys for Plaintiff = �o r; COUNTY OF HAWAII, a municipal ' C7� r -+ corporation of the State of Hawaii N IN THE CIRCUIT COURT OF THE THIRD CIRCUIT _ '} STATE OF HAWAII COUNTY OF HAWAII, a municipal CIVIL NO. 09-01-264K corporation of the State of Hawaii, (Other Civil Action) Plaintiff, PLAINTIFF COUNTY OF HAWAI`I'S MOTION TO DISMISS COUNTER-CLAIM vs. AND TO EXPUNGE LIS PENDENS OR IN THE ALTERNATIVE FOR PARTIAL UNIDEV, LLC, A Delaware Limited SUMMARY JUDGMENT; MEMORANDUM Liability Company; UNIDEV HAWAII, IN SUPPORT OF MOTION; DECLARATION LLC, A Delaware Limited Liability OF LAUREEN L. MARTIN; EXHIBITS "A"- Company; JOHN DOES 1-50; JANE DOES "J"; NOTICE OF MOTION; CERTIFICATE 1-50; DOE PARTNERSHIPS 1-50; DOE OF SERVICE CORPORATIONS 1-50; DOE NON- PROFIT ENTITIES 1-50; DOE LIMITED Trial Date: NONE SET YET LIABILITY COMPANIES 1-50; DOE ENTITIES 1-50, Hearin Defendants. Time: 11:30 a.m. Date: May 24, 2010 Judge: Honorable Elizabeth A. Strance Z � TABLE OF CONTENTS I. INTRODUCTION ......................................................................................................... 1-2 II. STATEMENT OF FACTS..............................................................................................3-4 111. ARGUMENT.................................................................................................................4-19 A. Defendants' Breach of Contract Claim is Without Merit....................................4-6 1. The County Never Owned WWH or HIHT....................................................4-6 2. The Amended and Restated Development Services Agreement ("ADSA") Confirms the County Cannot be Held Liable ..................................6 B. Defendants' Fraudulent Conveyance Cause of Action Mustbe Dismissed.............................................................................................7-13 1. Defendants Falsely State That WWH Became Indebted to Defendants Prior to the Transfer.....................................................................7-8 2. The Property Was Owned by HIHT Who is Not the Debtor..........................8-9 3. The Termination of a Lease Does Not Provide a Basis For a Fraudulent Conveyance...........................................................................9 4. The County Provided Significant Value and Had a Valid Mortgageon the Property.............................................................................9-12 5. Defendants' Fraudulent Conveyance Claim is Prohibited by the Express Language of the Contract................................................... 12-13 C. The Lis Pendens Should be Expunged............................. 1. Defendants' Claims do Not Represent an Interest in Land.........................13-17 2. A Lis Pendens is Not Necessary or Appropriate on PublicLand................................................................................................. 17-19 3. The ADSA Prohibits the Filing of a Lis Pendens ByDefendants.................................................................................................. 19 IV. CONCLUSION ................................................................................................................20 TABLE OF AUTHORITIES Cases A/S Kreditt-Finans v. Cia Yenetico De Navegacion, 560 F.Supp.2d 705(E.D. Pa.) affirmed 729 F.2d 1446 (3rd.Cir. 1984)....................................................................... 11, 12 Canales v. Artiga, 121 Hawaii 177, 214 P.3d 1167 2009 WL 2371909 (Haw.App. 2009)......................................................................... 16, 17 Chung v. Animal Clinic, Inc., 63 Haw. 642, 636 P.2d 721 (1981) ................................................................................... 5 City of Newport v. Fact Concerts, Inc., 453 U.S. 247, 101 S.Ct. 2748 (1981).......................................................................... 18-19 Kaapu v. Aloha Tower Development Corp., 72 Haw. 267, 814 P.2d 396 (1991)................................................................................... 14 Kahili, Inc. v. Yamamoto, 54 Haw. 267, 506 P.2d 9 (1973)......................................................................................... 5 Kekona v. Abastillas, 113 Hawaii 174, 150 P.3d 823 (2006)............................................................................... 7 Knauer v. Foote, 101 Hawaii 81, 63 P.3d 389 (2003)................................................................................. 13 Lathrop v. Sakatani, 111 Hawaii 307, 141 P.3d 480(2006)............................................................................. 16 Lauer v. YMCA of Honolulu, 57 Haw. 390, 557 P.2d 1334 (1976)................................................................................. 18 Levinson v. Eighth Judicial District Court, 109 Nev. 747, 857 P.2d 18 (1993).............................................................................. 16, 17 Matter of 2003 and 2007 Ala Wai Blvd., City and County of Honolulu, 85 Hawaii 398, 944 P.2d 1341 (Haw.App. 1997)........................................................... 14 Mehrtash v. Mehrtash, 93 Cal.App. 4`h 75 (2001)................................................................................................. 11 Rana v. Bishop Ins. of Hawaii, Inc., 6 Haw.App. 1, 713 P.2d 1363 (1985)............................................................................... 17 Richards v. Midkiff, 48 Haw. 32, 396 P.2d 49 (1964).........................................................................................2 S. Utsunomiya Enterprises Inc. v. Moomuku Country Club, 75 Haw. 480, 866 P.2d 951 (1994).......................................................... 12, l 4, l 5, 16, 19 Sports Shinko Co., Ltd., v. Q.K. Hotel, LLC, 457 F.Supp.2d 1121 (D.Hawai`i 2006) ............................................................................ 17 Southern Industries, Inc. v. Jeremias, 66 A.D.2d 178, 411 N.Y.S.2d 945 (1978)........................................................................ 12 TSA Intern. Ltd., v. Shimizu Corp., 92 Hawaii 243, 990 P.2d 713 (1999)............................................................................... 14 U.S. v. Jon-T Chemicals, Inc., 768 F.2d 686 (1985)........................................................................................................ 5 Rules Hawaii Rules of Appellate Procedure Rule35.............................................................................................................................. 16 Hawaii Rules of Civil Procedure Rule56................................................................................................................................2 Statutes Hawaii Revised Statute § 46-1.5 ............................................................................................................................ 18 § 46-1.5 (6)........................................................................................................................ 18 § 46-1.5 (16)................................................................................................................ 18, 20 § 46-171 ....................................................................................................................2, 7, 20 § 428-201 ............................................................................................................................ 5 § 428-303(b)........................................................................................................................5 § 634-51 ...................................................................................................................... 13, 15 § 651C-1.............................................................................................................................. 8 § 651C-3(b)....................................................................................................................... 10 § 651 C-4(a)(2) ....................................................................................................................9 § 651C-4(b)(3).................................................................................................................... 8 § 651C-5.............................................................................................................................. 9 § 651C-6(5)......................................................................................................................... 8 § 651C-8..............................................................................................................................9 § 651 C-8(e)(1) ....................................................................................................................9 ii § 661-7................................................................................................................................2 Chapter428......................................................................................................................... 5 Chapter651 C................................................................................................................ 8, 10 United States Code 31 U.S.C.A. § 3730.............................................................................................................2 Treatises 18 C.J.S. Corporations § 14 (2009).......................................................................................................................... 5 § 15 (2009).......................................................................................................................... 5 iii I%w PLAINTIFF COUNTY OF HAWAII'S MOTION TO DISMISS COUNTER-CLAIM AND TO EXPUNGE LIS PENDENS OR IN THE ALTERNATIVE FOR PARTIAL SUMMARY JUDGMENT COMES NOW, Plaintiff COUNTY OF HAWAII ("County"), by and through its undersigned counsel, and hereby respectfully moves this Honorable Court for an order granting County's Motion to Dismiss Counter-Claim and to Expunge Lis Pendens or in the Alternative for Partial Summary Judgment. This Motion is made pursuant to Rules 7 of the Hawaii Rules of Civil Procedure and is supported by the Memorandum in Support of Motion,Declaration of Laureen L. Martin, and Exhibits "A"—"J"attached hereto, the records and files in the instant case, and on such further and other grounds as may be adduced at the hearing on this Motion. Dated: Hilo, Hawaii, April 15, 2010. COUNTY OF HAWAII, Plaintiff By \k-�t� LAUREEN L. MARTIN Deputy Corporation Counsel Its attorney 2 IN THE CIRCUIT COURT OF THE THIRD CIRCUIT STATE OF HAWAII COUNTY OF HAWAII, a municipal CIVIL NO. 09-01-264K corporation of the State of Hawaii, (Other Civil Action) Plaintiff, VS. MEMORANDUM IN SUPPORT OF MOTION UNIDEV, LLC, A Delaware Limited Liability Company; UNIDEV HAWAII, LLC, A Delaware Limited Liability Company; JOHN DOES 1-50; JANE DOES 1-50; DOE PARTNERSHIPS 1-50; DOE CORPORATIONS 1-50; DOE NON- PROFIT ENTITIES 1-50; DOE LIMITED LIABILITY COMPANIES 1-50; DOE ENTITIES 1-50, Defendants. MEMORANDUM IN SUPPORT OF MOTON I. Introduction In order to meet the needs of the residents of Hawaii County, the County of Hawaii ("County")decided to have affordable housing built in Waikoloa. UniDev, LLC ("UniDev") and UniDev Hawaii, LLC ("UniDev Hawaii") (collectively referred to as "Defendants") represented to the County that they would be able to obtain the financing and oversee the construction of the affordable housing project. Defendants made numerous false representations and the project failed to progress. After several years of Defendants' inability to perform as promised,the contract with Defendants was finally terminated. Despite failing to provide the services promised, Defendants demanded $3.2 million from the County.I This amount is in addition to money Defendants received in the previous years when the project was pending. The County then filed suit against Defendants alleging various actions, including a claim for violation of the false claims act contained in Hawaii Revised Statutes ("HRS") § 46-171 for the submission of the invoices for$3.2 million.2 Not surprisingly,Defendants deny the invoices represent a false claim and they allege they are entitled to 33.2 milli(in. In their attempt to pressure the County to drop its claims, Defendants have also alleged fraudulent conveyance of the underlying land and filed a lis pendens. Defendants realize that the lis pendens will put a"cloud"on the title of the land which may stop the affordable housing project. However, Defendants' claim of fraudulent transfer is without merit and must be dismissed and the lis pendens must be expunged. Defendants counterclaim alleges four causes of action against the County: 1)breach of contract, 2)quantum meruit, 3) intentional interference with contract, and 4) fraudulent transfer. See Exhibit `B". Defendants subsequently filed a"Notice of Pendency of Action"("lis pendens"). See Exhibit "C". Defendants allege that the fraudulent conveyance cause of action against the County provides the basis for the lis pendens.3 See 12 of Declaration of Kurt Fritz ("Fritz Dec'), Exhibit "C". The County hereby moves to dismiss Counts 1 (breach of contract) and Count 4 (fraudulent transfer) of the Complaint and moves to expunge the lis pendens.4 Z HRS§46-171 prohibits false claims against the Counties. Similar statutes apply to claims submitted to the State of Hawaii and to the federal government. See HRS§661-7 and 31 U.S.C.A. §3730. 3 The County filed its Complaint against Defendants in state court on July 1,2009. See Exhibit"A". The Complaint alleges various causes of action,including intentional and negligent misrepresentations,fraudulent inducement and a violation of the false claims act,HRS§46-171. After being served with the Complaint,Defendants improperly removed this case to federal court. On February]],2010 Judge Kay issued his Order granting the County's motion to remand. Judge Kay agreed with Magistrate Kobayashi that the removal was"objectively unreasonable". "Exhibits"A"-"C"are pleadings filed in this case and are attached hereto for the Court's convenience. Exhibits"D'="1"are documents related to the subject project,authenticated by the Declaration of Jeremy McComber,attached as Exhibit"J". To the extent this Court deems it necessary to rely upon these exhibits,the County requests this motion be deemed a partial motion for summary judgment pursuant to Rule 56 of the Hawaii Rules of Civil Procedure("HRCP")and Richards v.Midkiff,48 Haw.32, 396 P.2d 49(1964). 2 II. Statement of Facts In 2004 the County requested proposals for the Waikoloa Employee Housing Project ("Waikoloa Project"). See 16 of Exhibit "A". The Waikoloa Project was intended to provide one thousand affordable homes and was to he built on property owned by the County. See¶ 7 of Exhibit "A". UniDev responded to the request for proposals and made numerous representations and was eventually awarded the Waikoloa Project. See 1110-17 of Exhibit "A". Various written agreements were then entered into, including the Conceptual Planning Agreement ("CPA"),the Development Services Agreement ("DSA") and the Development Agreement ("DA"). See¶¶ 18, 24 of Exhibit"A". As part of the agreements, UniDev created a non-profit subsidiary, Hawaii Island Housing Trust ("HIHT")which would obtain financing and hold title to the County land. See¶¶ 34-36 of Exhibit "A". In addition,the Waikoloa Workforce Housing LLC ("WWH")was also formed to be the leasee of a lease issued by the HIHT. See 137 of Exhibit"A". In July 2006, the County transferred title to the land to HIHT. See 140 of Exhibit "A". In addition to transferring the land, the County also assigned the DSA to WWH as recommended by UniDev. UniDev obtained some short term funding but failed to secure other financing as promised. See 1143-48 of Exhibit"A". As a result of UniDev's failure to secure funding as promised, the County initially provided nine million of dollars towards the Waikoloa Project. See 1145-46,152 of Exhibit"A". However, the nine million dollars was insufficient and UniDev was unable to secure further funding. Therefore, based upon the representations of the Defendants, the County 3 provided an additional thirty-one million dollars and entered into an additional agreement in June 2008 called the Development Financing Agreement. See 1154-57 of Exhibit "A". In determining whether to provide the additional funding, the County relied upon representation, in 2007 and 2008 made by the Defendants. The County later learned the representations made by them were untrue. See 1172-81 of Exhibit "A". In addition to the false representations made by both UniDev and UniDev Hawaii, Defendants submitted false invoices to the County in an attempt to obtain significant sums of money from the County. See 1165-69 of Exhibit "A". III. ARGUMENT A. DEFENDANTS' BREACH OF CONTRACT CLAIM IS WITHOUT MERIT 1. The County Never Owned WWH or HIHT Count 1 of the counterclaim alleges that the County is liable for breach of contract. See Exhibit `B"at p. 3 of counterclaim. However, Defendants' claim is clearly without any merit and therefore, must be dismissed. Defendants acknowledge that the County is not a party to a contract with UniDev which allegedly entitles UniDev to fees. Although the County and UniDev entered into a DSA on March 2, 2006, this DSA was assigned to WWH. See 1$ 16-17 of the counterclaim, Exhibit `B". Therefore, it is undisputed that the County is not contractually obligated to pay any fees to UniDev. Despite not having a contract which obligates the County to pay UniDev, Defendants argue that the County is required to perform WWH obligations because WWH was "a mere alter ego, agent, or instrumentality"of the County. See 1117-18 of the counterclaim, Exhibit`B". The language "alter ego, agent or instrumentality" seeks to disregard the corporate entity's 4 fir►' , separate existence and "pierce the corporate veil". See Kahili, Inc. v. Yamamoto, 54 Haw. 267, 271, 506 P.2d 9, 12 (1973)(disregarding corporate entity since stockholders used corporation as "alter ego"and as "agency or instrumentality"); U.S. v. Jon-T Chemicals, Inc., 768 F.2d 686, 691 (1985); 18 C.J.S. Corportitionx § 14 (2009)(noting alter eao and instrumentality are theories to disregard corporate form). Therefore, Defendants acknowledge that the County is not a party to the contracts, however, they seek to have the County liable for WWH obligations by piercing the corporate veil of WWH.6 The doctrine of piercing the corporate veil is the rare exception applied in the case of exceptional circumstances, and the act of disret?ardine a corporate entity is to be exercised with reluctance and caution. Thus, the decision to ignore the separate existence of a corporate entity is an extraordinary act to be taken only when necessary to promote justice(emphasis added). 18 C.J.S. Corporations § 15 (2009). Therefore,piercing the corporate veil is an exceptional remedy which is rarely permitted. The Hawai`i Supreme Court have stated the following regarding piercing the corporate veil: The general rule is that a corporation and its shareholders are to be treated as distinct legal entities. The corporate"veil"will be Pierced and the legal entity of the corporation will be disregarded only where recognition of the corporate fiction would bring about injustice and inequity or when there is evidence that the corporate fiction has been used to perpetrate a fraud or defeat a rightful claim (emphasis added). Chung v. Animal Clinic, Inc., 63 Haw. 642, 645, 636 P.2d 721, 723 (1981). Therefore, it is clear that when the corporate veil is pierced, the corporation existence is ignored and the shareholders may be directly liable. Piercing the corporate veil is a means to impose liability upon shareholders and officers of a corporation.' It is not a means to impose liability upon non-shareholders of the corporation. 6 As noted,W WH is a limited liability company. Pursuant to HRS§428-201 a limited liability company is"a legal entity distinct from its members". Rather than"shareholders",limited liability companies have"members". See HRS Chapter 428. It is even more difficult to pierce the corporate veil of a limited liability company since HRS§428-303(b)provides that managers and members are not liable even if they fail to"observe the usual company formalities or requirements relating to the exercise of its company powers or management of its business..." 5 The County is not and has never been a shareholder or member of WWH.' In fact, Defendants acknowledge the County is not a member or shareholder of WWH by failing to allege this critical fact. See counterclaim, Exhibit `B". There is no cause of action which hermit, piercing the corporate veil in order to simply pick someone on the sidelines with "deep pockets". It is legally impermissible to pierce the corporate veil to someone who is not a shareholder or member. Such a theory of liability simply does not exist. In failing to allege these basic and necessary elements,Defendants have failed to state a cause of action upon which relief can be granted. Therefore, this Court should not hesitate in dismissing Count 1 of the Complaint as to the County. 2. The Amended and Restated Development Services Agreement ("ADSA") Confirms the County Cannot be Held Liable Defendants counterclaim is based upon the ADSA. See counterclaim, Exhibit `B". The ADSA expressly prohibits any claims against the County. The ADSA states: All actions or claims against either the Sponsor [designated as WWH] or UniDev arising under or relating to this Agreement shall be made only against such party as a corporation, limited liability company or other legal entity, and any liability relating thereto shall be enforceable only against the corporate or company assets of such party. See¶ 14(c), Exhibit 2 of counterclaim, Exhibit `B". Therefore, on the clear and unambiguous language of the ADSA, Defendants are unable to reach parties other than WWH. Therefore, as matter of law, Defendants are precluded from bringing a breach of contract action against the County. a The sole member of WWH is HIHT. See Exhibit"G"at 2. 6 �%r B. DEFENDANTS' FRAUDULENT CONVEYANCE CAUSE OF ACTION MUST BE DISMISSED In their attempt to disrupt the County's affordable housing project and obtain millions of dollars which Defendants are not entitled to, Defendants have filed a lis pendens against the subject property. The sole basis for the lis pendens is Defendants' meritless"fraudulent transfer" cause of action. See 12 of Fritz Dec, Exhibit `B". In order to prevail on a fraudulent transfer theory, Defendants have a heightened burden of proof and must prove each element by"clear and convincing"evidence. Kekona v. Abastillas, 113 Hawaii 174, 181, 150 P.3d 823, 830(2006). Not only do Defendants fall far short of their burden of proof, they fail to even articulate a basis to establish a fraudulent transfer. 1. Defendants Falsely State that WWH Became Indebted to Defendants Prior to the Transfer Defendants allege that on April 17, 2009, WWH became indebted to UniDev in the amount of$3.2 million dollars. See 139 of counterclaim, Exhibit `B". Defendants allege that on April 22, 2009, WWH transferred its leasehold interest to HINT. See 140 of counterclaim, Exhibit `B". Therefore, Defendants allege the transfer was made simply to avoid the$3.2 million debt. However,contrary to the allegations in the counterclaim, it was not until April 30, 2009, 8 days after the property had been transferred, that Defendants first claimed they were entitled to $3.2 million.9 See Exhibit "H". Apparently, realizing that their"fraudulent transfer"theory would fail if their demand for $3.2 million was after the transfer, Defendants allege in the counterclaim that the debt arose on April 17, 2009, prior to the transfer of the property. However, as noted, their claim is without any merit. In fact, the invoices themselves are dated April 30, 2009. See Exhibit "H". In 9 These are same invoices which serve the basis for the County's false claims violation pursuant to HRS§46-171 and Exhibit "A"at pp. 12-13. 7 addition, HRS § 651C-6(5)states that an obligation is incurred when the writing is delivered. Therefore, the earliest Defendants' claim could have become "due"would have been April 30, 2009, eight days after the transfer. It is also important to note that Defendants were well aware before it submitted the invoices, that the property would be transferred back to the County. See Exhibit "H"at p. 2 (noting that on March 16, 2009, HIHT and WWH were notified that property would have to be conveyed to the County). Therefore, not only was the property transferred prior to Defendants' demand for$3.2 million, the County, WWH and HIHT fully disclosed that the transfer would be made.10 Interestingly, Defendants did not raise any concerns or accuse the County, WWH or HIHT of a fraudulent transfer at that time. See Exhibit "H". 2. The Property was Owned by HIHT Who Is Not The Debtor Defendants allege that in April 2009, WWH became indebted to UniDev for$3.2 million dollars. See 139 of counterclaim, Exhibit`B". Defendants note that WWH had a leasehold interest in the land and this interest was transferred to HIHT. Defendants allege that HIHT transferred all of its interest in the land to the County. See 140 of counterclaim, Exhibit`B". Defendants assert the transfers by WWH and HIHT constitute fraudulent transfers pursuant to Chapter 651 C of the HRS. See 145 of counterclaim, Exhibit `B". Defendants' fraudulent conveyance theory fails for several reasons. First, as Defendants admit, only WWH was indebted to UniDev. Therefore, any transfer by HIHT can not constitute a fraudulent transfer under Chapter 651 C because HIHT was never the "debtor". HRS § 651C-1 defines "debtor"as "a person against whom a creditor has a claim." Defendants do not allege, nor can they, that HIHT is the debtor. Therefore, it is clear that any property transferred by HIHT does not satisfy the requirements of Chapter 651 C. At best, 10 Whether the transfer was disclosed or concealed is a factor in determining whether a transfer is fraudulent. HRS§651 C-4(b)(3). Obviously,if one transfers property to avoid a debt,they would not notify the others of the transfer. 8 *aW Defendants claim of"fraudulent transfer"can only apply to property which WWH held, i.e., the lease.11 3. The Termination of a Lease Does Not Provide a_Basis For a Fraudulent Conveyance As noted, the only interest which the alleged "debtor", WWH, transferred was the lease. However, the termination of lease cannot serve as the basis for a fraudulent transfer cause of action. HRS § 651 C-8(e)(1)states: A transfer is not voidable under section 651 C-4(a)(2)or section 651 C-5 if the transfer results from: (1)Termination of lease upon default by the debtor when the termination is pursuant to the lease and applicable law. In the present case, the lease held by WWH was terminated on April 22,2009. See Exhibit"F". Therefore, by the express language of HRS § 651 C-8,the transaction is not voidable and Defendants' allegation that the transaction can be"avoided by UniDev"is patently wrong. 4. The County Provided Significant Value and Had a Valid Mortgage on the Property Since Defendants were unable to provide financing as promised, the County made available a total of$40 million in financing for the affordable housing project. See Exhibit"D". As a result of the financing provided by the County, various financing agreements and, not surprisingly, a mortgage was recorded against the property.1 Z See Exhibits "D"and "E". The financing agreement states that if WWH or HIHT fails to perform its obligations the County ��The hs pendens filed by Defendants is not limited to the lease interest. Rather,it places a"cloud"over the entire property. See Exhibit"C". "The financing agreement obligates WWH to"develop and operate the Project Land and the Project,or cause it to be developed and operated,as contemplated by the Project Guidelines..." Seel 1.3,at 3 of Exhibit"D". The mortgage secured not only the County's financial interests,but secured"every obligation"under the financing agreement. See Exhibit"E"at p.2. 9 %1/ Mao "may require WWH and/or HIHT to transfer all of their respective interests in the Project and the Project Land to the County..." See¶ 5.2(d), at 12 of Exhibit "D". Therefore, it is beyond dispute that the County had a valid mortgage against the property aril a riuht to the property upon default by Ww'H or HiHT. This riuht existed well before Defendants allegedly"earned" $3.2 million in April 2009. Forty million dollars is clearly"reasonably equivalent value"as contemplated by Chapter 651 C. In fact, HRS § 651 C-3(b) expressly provides the following: ...a Person gives a reasonably equivalent value if the person acquires an interest of the debtor in an asset pursuant to a regularly conducted, noncollusive foreclosure sale or execution of a power of sale for the acquisition or disposition of the interest of the debtor upon default under a mort2a2e, deed of trust, or security agreement (emphasis added). Therefore, based upon the express language of HRS § 651 C-3(b), the transfer to the County by WWH/HIHT was for"reasonably equivalent value"and there is no fraudulent transfer. Any other result would be absurd as it would negate the purpose of placing a mortgage on real estate. Even if Defendants' claims had merit, those claims do not magically take priority over a valid first mortgage, a mortgage which secured financing in the amount of$40 million, as well as other obligations. It is beyond dispute that the County had a valid mortgage on the property prior to WWH and HIHT returning their interests in the property to the County. The illogic of Defendants' argument is apparent. If WWH's interest was not transferred and Defendants succeeded on their claims,the most they could possibly obtain is a lien on the lease, which was already encumbered by a sizable mortgage. However, the County, as the mortgage holder,would still have superior rights to Defendants and nothing would prohibit the County from ultimately taking ownership as a result of a default. 10 Defendants were never entitled to a superior interest in the property and their meritless claims do not create a superior interest. Therefore, as a matter of law, Defendants could not have been injured as a result of the transfer on April 22, 2009. Courts across the county have resoundingly rejected providing any relief to a "creditor" who has not suffered injury as a result of a transfer. A transfer in fraud of creditors may be attacked only by one who is injured thereby...It cannot be said that a creditor has been injured unless the transfer puts beyond her reach property she otherwise would be able to subject to the payment of her debt. Mehrtash v. Mehrtash,93 Cal.App.41h 75, 80 (2001). In Mehrtash, the Court refused relief under the fraudulent conveyance claim because the property was already subject to several encumbrances. The Court noted that plaintiff failed to prove she was entitled to equitable relief and the law does not require"idle acts". Id. at 80. Similarly, in A/S Kreditt-Finans v. Cia Venetico De Navegacion, 560 F.Supp.705 (E.D. Pa. 1983), affirmed, 729 F.2d 1446 (3rd. Cir. 1984), the Court noted that the property which was subject to various encumbrances. The Court ruled that in order to be entitled to relief under the fraudulent conveyance act, the creditor had to demonstrate"proof of injury". Id. at 711. The Court noted "moreover, numerous courts in other jurisdictions in which the issue has arisen have stated as though it were axiomatic the requirement that a creditor be injured by the conveyance it seeks to invalidate." Id. The Court noted it was important to interpret the fraudulent conveyance act consistently throughout the nation: Because business throughout this country largely disregards State lines, the purpose of a uniform law on the subject of fraudulent conveyances was to enable lenders to know with certainty that they could rely upon the property of their debtors, though situated in another State [citation omitted]. Accordingly, in construing a provision of the Uniform Act we should, whenever possible, respect the decisions of the courts of other jurisdictions where it is in force, with a view to ensuring a harmonious national interpretation. 11 Id, quoting, Southern Industries, Inc. v. Jeremias, 66 A.D.2d 178, 183, 411 N.Y.S.2d 945, 949 (1978). Therefore, Courts around the nation have found that in order to prove a cause of action for fraudulent conveyance, the party must demonstrate an injury in fact. This Court should not hesitate in ruling that such a basic requirement is applicable in the present case. It is beyond dispute that Defendants were not injured. The subject property was already subject to a significant mortgage for the $40 million the County made available for financing as well to secure other performance obligations.13 Defendants were well aware of the substantial financing provided by the County as well as the mortgage. Hence, Defendants are certainly aware they were not injured as a result of the transfer back to the County in 2009. Therefore, it is apparent Defendants asserted the fraudulent conveyance in the desperate hope that it will provide some basis for the lis pendens. See 12 of Fritz Dec, Exhibit"C". Defendants realize the filing of the lis pendens may jeopardize the affordable housing project which is important to the citizens of the Hawaii County. Consequently, Defendants seek to use the lis pendens procedure in a blatant attempt to force the County"to settle not due to the merits of the suit but to rid ...[it]self of the cloud upon the title." S. Utsunomiya Enterprises Inc. v. Moomuku County Club, 75 Haw. 480, 512, 866 P.2d 951, 967 (1994). 5. Defendants' Fraudulent Conveyance Claim is Prohibited by the Express Language of the Contract Defendants claim for$3.2 million apparently rests on the language of the DSA and ADSA. See pp. 3-5 of counterclaim, Exhibit "B". The DSA was assigned to WWH"and WWH assumed the County's obligations thereunder." See 117 of counterclaim, Exhibit"B". WWH 'The leasehold land was appraised at$9.5 million. See Exhibit"I". 12 ``rr and Defendants then entered into the ADSA which amended the DSA. See Exhibit 2 of the counterclaim, Exhibit B". Therefore, Defendants are seeking relief pursuant to the ADSA. The ADSA expressly prohibits any claims against the County or the County's property. The ADSA states-. All actions or claims against either the Sponsor[designated as WWH] or UniDev arising under or relating to this Agreement shall be made only against such part as a corporation, limited liability company or other legal entity, and any liability relating thereto shall be enforceable only against the corporate or company assets of such party. See¶ 14(c), Exhibit 2 of counterclaim, Exhibit`B". Therefore, Defendants promised that all actions related to the ADSA would be enforced against WWH and WWH's assets only and Defendants are precluded from seeking the assets of the County. It is undisputed that the property is currently owned by the County and therefore, it does not constitute assets of WWH. C. THE LIS PENDENS SHOULD BE EXPUNGED In a blatant attempt to coerce the County into paying Defendants, Defendants have filed a lis pendens against the property. In their attempt to receive millions of dollars which they are not entitled to, Defendants have placed a"cloud"on the title and attempt to jeopardize the affordable housing project in Waikoloa. A project which the people of Hawaii County desperately need and have patiently waited for. However, Defendants are not entitled to a lis pendens against the property. "Whether a lis pendens should be expunged is a question to be resolved in the exercise of the trial court's discretion." Knauer v. Foote, 101 Hawaii 81, 84, 63 P.3d 389, 392 (2003). On appeal, the decision is reviewed for an abuse of that discretion. Id. I. Defendants' Claims Do Not Represent an Interest In Land HRS § 634-51 provides for the filing of a notice of pendency of action in "any action concerning real property or affecting the title or the right of possession of real property. The 13 Hawaii Supreme Court determined that the lis pendens statute"should be limited to actions directl seeking to obtain title to or possession of real property(emphasis in original)." S. Utsunomiya Enterprises, Inc. v. Moomuku Country Club, 75 Haw. 480, 510, 866 P.2d 951, 966 (1994). Tn doing so, Court reasoned that a "narrow construction of Hawaii's lis pendens statute is counseled by sound authority recognizing the real potential for abuse of lis pendens." Although a lis pendens statute is designed only to give notice to third parties and not to aid plaintiffs in pursuing their claims, the Hawaii Supreme Court acknowledged: [The] practical effect of a recorded lis pendens is to render a defendant's property unmarketable and unsuitable as security for a loan. The financial pressure exerted on the property owner may be considerable,forcing him to settle not due to the merits of the suit but to rid himself of the cloud upon his title. The potential for abuse is obvious (emphasis added). Id. at 512, 866 P.2d at 967,see also, TSA Intern. Ltd. v. Shimizu Corp., 92 Hawaii 243, 990 P.2d 713 (1999);Matter of 2003 and 2007 Ala Wai Blvd., City and County of Honolulu, 85 Hawaii 398, 944 P.2d 1341 (Haw.App. 1997). The Hawaii Supreme Court thereafter determined that a lis pendens is not merely a notice instrument,but is in fact an "encumbrance"because a lis pendens itself operates as a burden on the property, tending to lessen the value or interfere with its free enjoyment, separate and apart from the underlying claim. S Utsunomiya at 503, 866 P.2d 963. Accordingly,the Court found persuasive authority holding that the lis pendens statute must be strictly construed. The Court stated: "we find more persuasive the authority that holds that the lis pendens statute must be strictly construed and that the application of lis pendens should be limited to actions directly seeking to obtain title or possession of real property." Id.,see also,Kaapu v. Aloha Tower Development Corp., 72 Haw. 267, 269, 814 P.2d 396, 397 (1991)("although doctrine of lis pendens may be applied in actions other than foreclosures, we agree with courts which restrict the application of the doctrine, in order to avoid its abuse.") 14 va� Therefore, in order for Defendants' lis pendens to pass scrutiny under Hawaii law, it must relate directly to title or possession of the property in accordance with the strict requirements of HRS § 634-51. However,Defendants' claims do not relate directly to title or possession of the property. Rather, Defendants seek to be paid for services which they allegedly rendered under a contract. See Exhibit "B". In fact, the sole basis for asserting the lis pendens is the fraudulent conveyance claim. See 12 of Fritz Dec, Exhibit"C". As noted, the fraudulent conveyance claim is without merit. Therefore, since the fraudulent conveyance claim fails,the lis pendens is clearly not warranted. However, even if Defendants are able to prevail on their fraudulent conveyance claim, a lis pendens is still not appropriate. The fraudulent conveyance claim is pled merely to secure repayment of money damages. Although Defendants allege that they may be entitled to have the property transferred back to WWH/HIHT, it is clear that Defendants are not entitled to any right in the property. See Exhibit`B". In S. Utsunomiya, the Hawaii Supreme Court found that a complaint which was "predominately a fraud and breach of contract complaint...seeking damages...does not claim title or a right of possession of the property. Id. at 513, 866 P.2d at 967. Similarly, in the present case, Defendants counterclaim is predominately a breach of contract and fraud complaint which seeks damages. See Exhibit`B". The counterclaim never claims title or a right of possession to the underlying property. The Hawaii Supreme Court noted: ...Allegations of equitable remedies, even if colorable,will not support a lis pendens if, ultimately,those allegations act only as a collateral means to collect money damages. It must be borne in mind that the true purpose of the lis pendens statute is to provide notice of pending litigation and not to make plaintiffs secured creditors of defendants nor to provide plaintiffs with additional leverage for negotiating purposes. 15 Id. at 511-512, 866 P.2d at 966-967 see also, Lathrop v. Sakatani, 111 Hawaii 307, 310, 141 P.3d 480, 483 (2006)(noting trial court expunged lis pendens filed related to claims of fraudulent transfers and conveyances). It is beyond dispute that Defendants' claim of fraudulent conveyance is merely to secure their money damage claim. In fact, Defendants allege that the transFer wac to hinder Defendants' efforts to collect the $3.2 million owed to them. See 144 of Exhibit`B". However, Hawaii has rejected this as a basis for a lis pendens. In 2009, the Hawaii Intermediate Court of Appeals again confirmed Hawai`i's lis pendens statute did not apply in such instances. The Court stated: Plaintiffs seek a constructive trust over Defendants' real property as a collateral means of securing the repayment of money_that Plaintiffs claim was fraudulently obtained and used by Defendants...Plaintiffs' request for the equitable remedy of a constructive trust over Defendants' real property is insufficient to convert Plaintiffs' complaint into an action "directly seekingLy to obtain title to or possession of real prove " Canales v. Artiga,14 121 Hawaii 177, 214 P.3d 1167, 2009 WL 2371909, *5 (Haw. App. 2009). Therefore, the Hawaii Appellate Courts have consistently emphasized that constructive trusts or similar equitable remedies are insufficient to provide a basis for a lis pendens. In the present case, Defendants seek damages and want the property to serve as collateral for their alleged damages. By definition,Defendants do not have a right or interest in the subject property and the lis pendens must be expunged. In Levinson v. Eighth Judicial District Court, 109 Nev. 747, 857 P.2d 18 (1993), the complaint alleged alter ego, fraudulent conveyances and constructive trust. Id. at 750, 857 P.2d at 20. The plaintiff also filed a lis pendens and the Defendants moved to expunge. The trial court denied the motion to expunge and the Supreme Court of Neveda found the district court had erred and the lis pendens should have been expunged. Similar to the present case,Levinson 14 Although unpublished, Rule 35 of Hawaii Rules of Appellate Procedure permits citation to unpublished decisions after July 1, 2008. 16 "never had title to the property which is now being `corralled' to satisfied a money judgment." Id. at 752, 857 P.2d at 21. The Court noted: While...[plaintiff] has presented relevant case law indicating that lis pendens may apply to actions designed to avoid conveyances or transfers in fraud to creditors, she has not adequately demonstrated actionable fraud in the instant case...[Plaintiffl h-as merely attempted to obtain what amounts to a preiudgment attachment on ldefendants'l property through the guise of an action implicating a provisional lis pendens remedy...[Plaintiff) contends...that the [defendants'] real property is the only asset which would satisfy her claim. Even if we were to assume that [plaintiff s] fears are true, they would not support the relief she seeks by invoking the lis pendens statute. To repeat, lis pendens is not available to merely enforce a personal or money judgment. There must be some claim of entitlement to the real property affected by the lis pendens, a condition wholly absent in the case before us(emphasis added). Id. at 752, 857 P.2d at 21. Similarly, in the present case, Defendants have not demonstrated any actionable fraud in the conveyance. In addition, simply because WWH may not have sufficient assets to satisfy any potential judgment obtained by Defendants, this does not invoke the lis pendens statute.15 Defendants' claims simply do not allege an entitlement in real property as required for the filing of a lis pendens. 2. A Lis Pendens is Not Necessary or Appropriate on Public Land It is undisputed the property is currently owned by the County to be used for affordable housing. Therefore, Defendants have filed a lis pendens against property on public land which is held for the benefit of the citizens of Hawaii County. There is no legal authority to do so. There is simply no legitimate reason for filing a lis pendens against public land. Defendants seek money damages. The fraudulent conveyance cause of action and the lis pendens are merely a means to secure their alleged damages. Therefore, in the unlikely event 15 Defendants will likely attempt to rely upon Sports Shinko Co.,Ltd. v.Q.K.Hotel,LLC,457 F.Supp.2d 1121 (D. Hawaii 2006) which indicates a cause of action for fraudulent conveyance is sufficient for a Iis pendens. However,the federal district court did not certify a question to the Hawaii Supreme Court and this decision appears to be contrary to the decisions by the Hawaii appellate law,including Canales v.Artiga,which was decided in 2009,three years after Sports Shinko. It is well accepted that "state courts are the final arbiters of the state's own law...[and]are not bound by the federal court's interpretation of ...[Hawaii's]statutes." Rana v. Bishop Ins.of Hawaii, Inc.,6 Haw.App. 1, 10,713 P.2d 1363, 1369(1985). 17 that Defendants are able to prove their fraudulent conveyance cause of action, the County will be able to satisfy the judgment by paying money. There is no reason a"cloud" must be placed on the title which may delay or jeopardize the affordable housing project. The filing of a its pendens against public land is contrary to the very purpose which municipalities exist, i.e., for the public good. In order to act in the public good, municipalities, such as the County have the power of eminent domain.16 Therefore, regardless of any interest an individual may have in a property, the County has the right to take the property for a public purpose. If individuals could simply file a lis pendens and place a"cloud" on the title,this would obviously negate the power of the government to carry out its functions. In fact,HRS § 46-1.5(16) states the following: Each county shall have the power to purchase and otherwise acquire, lease, and hold real and personal property within the defined boundaries of the county and to dispose of the real and personal property as the interests of the inhabitants of the county may require... Therefore, the legislature expressly permits the County to acquire and dispose of real property for the public good. Permitting a lis pendens against public land is contradictory to the express provisions of HRS § 46-1.5 because it obstructs the County ability to dispose of property for the public good. Furthermore,permitting a lis pendens on public land would make the innocent taxpayers and citizens of Hawaii County suffer. Such a result is prohibited by sound public policy. Courts, including Hawaii, have refused to apply remedies if they violate public policy. For example, in Lauer v. YMCA of Honolulu, 57 Haw. 390, 557 P.2d 1334 (1976), the Hawaii Supreme Court held that municipalities cannot be held liable for punitive damages. The Court noted that the"innocent taxpayers...should not be made to suffer." Id. at 402, 557 P.2d at 1342. The United States Supreme Court reached a similar conclusion. See City of Newport v. Fact 16 The County's power to condemn power is provided by HRS§46-1.5(6). 18 %W 140 Concerts, Inc., 453 U.S. 247, 101 S.Ct. 2748 (1981). Therefore, Courts have found that certain remedies are not available against municipalities when the remedy is contrary to the public good. The lis pendens filed is clearly contrary to the public good and serves no legitimate purpose. There is simply no need for a lis pendens. The County will be able to satisfy any damages in the unlikely event that Defendants prevail on the fraudulent conveyance theory. However, the imposition of the lis pendens has the potential to cause significant negative impact against the citizens of Hawaii County. Therefore, the lis pendens must be expunged. 3. The ADSA Prohibits the Filing of a Lis Pendens by Defendants As noted,the lis pendens represents a "cloud"on the title which according to the Hawaii Supreme Court, effectively prevents the transfer of the property and the ability to obtain financing on the property. S. Utsunomiya Enterprises, Inc. v. Moomuku Country Club, 75 Haw. 480, 503, 866 P.2d 951, 963 (1994). The County is attempting to proceed with the affordable housing project and intends to sell individual homes to qualified buyers. The buyers will be required to secure their own financing for the home. See Exhibit "J". Therefore, it is likely the lis pendens will prevent or delay the progress of the project. The ADSA states the following: UniDev agrees, however, that it shall not attempt to delay the Project by seeking an injunction or similar legal remedy that could delay the Project. See¶ 14(a)of Exhibit 2 to the counterclaim, attached as Exhibit`B". The lis pendens operates as in an injunction which will effectively prevent the transfer of the land to homeowners. Clearly, such action "could delay the Project" and hence, the lis pendens is prohibited by the express terms of the ADSA. 19 IV. CONCLUSION Defendants' breach of contract claim against the County is based upon the rarely successfully theory of"piercing the corporate veil". However, it is undisputed that the County never Owned WWH and therefore, it cannot he liable under this theory. Defendants' fraudulent conveyance cause of action is likewise without merit. It is based upon the termination of a lease and Defendants were clearly not injured as a result. The County provided $40 million in financing and had a valid mortgage on the leasehold which was valued at $9.5 million. Finally,the lis pendens must be expunged since the fraudulent conveyance cause of action is without merit. However, even if the fraudulent conveyance cause of action survives,it is not one which seeks title or an interest in real property. Furthermore, it is contrary to HRS §46-1.5(16) and public policy to permit a lis pendens upon public lands. There is no legitimate reason for a lis pendens in this case and if it is not expunged, it will likely have significant impact upon the affordable housing project and the citizens of Hawaii County. It would truly be unjust and outrageous to permit Defendants to delay a necessary public housing project based upon invoices submitted to the County which serve the basis for violations under the False Claims Act contained in HRS § 46-171. DATED: Hilo,Hawaii, AT Respectfully Submitted, AATk-- Deputy Corporation Counsel 20 IN THE CIRCUIT COURT OF THE THIRD CIRCUIT STATE OF HAWAII COUNTY OF HAWAII, a municipal CIVIL NO. 09-01-264K corporation of the State of Hawaii, (Other Civil Action) Plaintiff, VS. DECLARATION OF LAUREEN L. MARTIN UNIDEV, LLC, A Delaware Limited Liability Company; UNIDEV HAWAII, LLC, A Delaware Limited Liability Company; JOHN DOES 1-50; JANE DOES 1-50; DOE PARTNERSHIPS 1-50; DOE CORPORATIONS 1-50; DOE NON- PROFIT ENTITIES 1-50; DOE LIMITED LIABILITY COMPANIES 1-50; DOE ENTITIES 1-50, Defendants. DECLARATION OF LAUREEN L. MARTIN I, LAUREEN L. MARTIN, declare the following: 1. I am a licensed attorney in Hawaii and I am one of the Deputy Corporation Counsels assigned to represent the County of Hawaii ("County") in this case and am the lead attorney on this matter. 2. I have personal knowledge of and am competent to testify to the matters hereinafter stated. 3. Exhibits "A"through "C" are true and accurate copies of pleadings submitted in this matter. I declare under penalty of perjury that the foregoing is true and correct. Dated: Hilo, Hawaii, April 15, 2010. LAUREEN L. MARTIN Deputy Corporation Counsel s ILED LINCOLN S. T. ASHIDA 4478 Corporation Counsel _ KATHERINE A. GARSON 5428 20Q9 JUL - 1 PM 2: 18 Assistant Corporation Counsel C. GANDALIRA,CLERK County of Hawaii THIRD CIRCUIT COURT Hilo Lagoon Centre STATE Or HAWAII 101 Aupuni Street, Suite 325 Hilo, Hawai'i 96720 Telephone No. (808) 961-8251 Facsimile No. (808) 961-8622 E-mail: kgar.s)1v.ii co.hawai i hi uti Attorneys for Plaintiff County of Hawai'i IN THE CIRCUIT COURT OF THE THIRD CIRCUIT STATE OF HAWAII COUNTY OF HAWAII, a municipal CIVIL NO. 0 9 — 01 — 6 4 corporation of the State of Hawai'i, (Other Civil Action)( Plaintiff, COMPLAINT; DEMAND FOR JURY TRIAL; SUMMONS VS. UNIDEV, LLC, A Delaware Limited Liability Company; UNIDEV HAWAII, LLC, A Delaware Limited Liability Company; JOHN DOES 1-50; JANE DOES 1-50; DOE PARTNERSHIPS 1-50; DOE CORPORATIONS 1-50; DOE NON-PROFIT ENTITIES 1-50; DOE LIMITED LIABILITY COMPANIES 1-50, DOE ENTITIES 1-50, Defendants. COMPLAINT Plaintiff COUNTY OF HAWAII ("County"), a municipal corporation of the State of Hawaii, by and through its undersigned counsel, hereby alleges and avers as follows: FACTUAL ALLEGATIONS 1. At all times mentioned herein, the County has been, and now is, a municipal I hereby certify that this is a full,true and correct COPY 4 the original on file in this office. EXHIBIT "A" Clerk,Third Circuit Court,State of Hawaii G i Iwo corporation duly organized and existing under, and by virtue of the State of Hawaii, and is located and maintains its principal place of business in the County of Hawaii, State of Hawaii. 2. Since on or around November 23, 2004, Defendant UNIDEV, LLC, ("UniDev") was a Delaware limited liability company licensed to do business in the State of Hawai'i. 3. Since on or around January 19, 2007, Defendant UNIDEV HAWAII, LLC ("UniDev Hawaii")was a Delaware limited liability company licensed to do business in the State of Hawaii,and has its principal place of business in the State of Haw•ai'i. 4. Defendants JOHN DOES 1-50,JANE DOES 1-50, DOE PARTNERSHIPS l- 50, DOE CORPORATIONS 1-50, DOES NON-PROFIT CORPORATIONS 1-50; DOE LIMITED LIABILITY COMPANIES 1-50, and DOE ENTITIES 1-10 ("Doe Defendants") are persons, corporations, partnerships, business entities, or non-profit entities who/which proximately caused or contributed to the violations and damages alleged by the County herein. The County has been unable to ascertain the names and identities of the above-named Doe Defendants from the investigation that has been conducted to date. Accordingly, the County has sued the unidentified Doc Defendants herein with fictitious names pursuant to Rule 17(d)of the Hawai'i Rules of Civil Procedure, and the County will substitute the true names; identities,capacities, acts and/or omissions of the Doe Defendants when the same are ascertained. 5. All of the acts and occurrences alleged herein occurred within the County of Hawaii and the State of Hawaii. 2 s y 6. In September of 2004, the County issued a Request for Proposals for the Waikoloa Employee Housing Project("RFP"). 7. ' The RFP requested qualifications and conceptual proposals from experienced developers for the planning, design, and phased construction of approximately 1,000 affordable homes for people employed in area businesses, on County-owned land in Waikoloa Village, South Kohala District, Island of Hawaii ("The Land"). 8. The RFP further states that the project, referred to as the "Waikoloa Employee Housing Project", would consist of a total of approximately 1,000 single-family and multi- family rental and for-sale homes, related infrastructure and site improvements, and several non-residential land uses, including a community park, a neighborhood commercial center, and a church site("The Project"). 9. The RFP further states that all of the residential units were to be rented or sold at prices affordable to families with incomes in the range of 50 to 140 percent of the median income for the County of Hawaii (for 2004: $51,000 per year for a family of four persons). 10. On or around November 30, 2004, UniDev responded to the RFP advertised by the County for The Project. H. UniDev's response to the RFP stated that"Un1Dev brings complete financing capabilities to each of its projects through its financing relationships with Citigroup and Fannie Mae. This allows the company to provide pre-development, construction and operating funds secured by the land and the future development. The project sponsor is required only to commit the land and the approvals and entitlements necessary to permit construction of the project to proceed". 3 12. On or about February 18, 2005, UniDev provided a Supplemental Submission to their response to the RFP. 13. In UniDev's Supplemental Submission, it made the following factual statements: "1. This entire transaction can be structured such that the County, in its sole discretion, will have no continuing obligations or liabilities. ... 3. UniDev will provide, through our financing partners, 100% of the financing for this project, 4. UniDev's financing arrangements for this project will be non-recourse to the County..." 14. UniDev's Supplemental Submission also stated: "at the county's request, UniDev will structure its proposal so that the development of the Waikoloa site, as well as the appropriate use of the revenue stream to be generated using UniDev's proprietary financing model for workforce housing development, can be undertaken by a stand-alone, not-for-profit corporation that will exist wholly independently of the county government. 15. UniDev's Supplemental Submission also stated that "A percentage of UniDev's Owner's Representative fee will remain "at risk" until the third phase of financing (i.e., the vertical construction financing)has been closed". 16. UniDev in its Supplemental Submission further stated- "UniDev brings 100% of the project financing to the table at each of the following phases: ° Predevelopment funding 'Infrastructure financing 'Vertical construction loan/bond financing". 17. Based on the representations made in UniDev's Response to Waikoloa Employee Housing Project Request for Proposals and Supplemental Submission, UniDev was awarded The Project suhject to negotiation of a master development agreement. 4 � a c a 18. On June 15, 2005, the County and UniDev entered into a Conceptual Planning Agreement ("CPA"). 19. The CPA provided that UniDev provide a number of services including the conducting of a charrette (also referred to as a "conceptual planning workshop"). 20. The CPA provided that UniDev's scope of services would include the provision of a Physical Conceptual Plan, a Financial Plan, and a Management Plan. 21. Tile CPA provided that the County would compensate UniDev for their services and expenses by payment of a fixed fee of$150,000. The fixed fee was to include all professional time, overhead, travel expenses, subconsultant fees,taxes. and any other costs that UniDev incurred in the execution of its scope of work under the CPA. 22. The charretteiconceptual planning workshop took place between July 25, 2005 and July 28, 2005. 23. On or about January 12, 2006, UniDev delivered to the County a report on the charrette/conceptual planning workshop which contained various plans for the development of The Project pursuant to the CPA. Amongst other items, the report states: "A Community Facilities District(CFD) will need to be created to provide funding for CFD.bonds to install the on-site infrastructure." 24. On March.2, 2006, a Development Services Agreement ("DSA") was entered into between UniDev and the County. 25. The DSA stated that "Phase I Services" (i.e. the conceptual planning workshop and resulting report) had been completed and that the remainder of the project was to be broken down into three additional phases each of which would include specific services to be provided by UniDev or consultants engaged by UniDev. 5 26. Pursuant to the DSA. UniDev was to earn a fee for their services for each phase. In the DSA, UniDev admitted that it received $150,000 or delivery of Phase I Services, and that said monies could be reimbursed to the County out of Predevelopment Funding which UniDev was to obtain. 27. Pursuant to the DSA, during Phase II (the Confirmatory Phase) UniDev was to perform certain preliminary activities such as forming a non-profit, refining the conceptual development plan, undertaking certain financing issues, such as estimating the costs for developing off-site and on-site infrastructure, and developing methods fbr paying for improvements, preparing financing options, finalizing a ground lease, and commencing obtaining pre-development financing, as well as other tasks. Phase II was estimated to take 6 months. 28. For performing its Phase II/Confirmatory Services, UniDev was to receive a lump sum fee of$180,000 plus all reimbursable costs incurred during Phase II, which fee and costs were not to exceed the confirmatory budget of$782.708. 29. Payment of the lump sum fee to UniDev was broken down as follows: $70,000 at the commencement of Phase II, $70,000 upon the completion of the Conceptual Development Plan refinements, and $40,000 upon UniDev's presentation of a revised Conceptual Development Plan. These Phase II tees and costs were to be reimbursed,at the option of the County, to the County out of the Construction Funding that UniDev was to obtain from third party funding sources. 30. Pursuant to the DSA. during Phase III (the Predevelopment Phase), UniDev was to perform a variety of services, including but not limited to establishing development/design contracts with builders/planners, architects and -;ngineers, advising the 6 County on establishment of financial and management contracts, working with financing entities to ensure that adequate funds are made available to construct the entire project, advising the County by establishing pro forma costs and revenue projections of various options that would result in a positive cash flow, conducting various project design activities including providing updated pro forma costs versus budgets,obtaining predevelopment funding (provided by Fannie Mae and/or another financing entity) in an amount sufficient to cover the Phase If fees/monthly payments and all costs set forth in the Predevelopment Budget, and confirming that all project financing is ready to close and that land and project plans are sufficiently complete so as to commence development of the project. 31. For performing its Phase III/Predevelopment Services, UniDev was to be compensated for performing Predevelopment Services for each construction phase, subject to and limited by a Predevelopment Budget, in the amount of$40,000 per month. In addition, UniDev would be reimbursed for Reimbursable Costs up to an amount agreed upon in the Predevelopment Budget, however, in no event was UniDev"s total compensation for predevelopment services to exceed an amount that, when aggregated with other fees and expenses provided for in the Predevelopment Budget, would cause the total of such fees and expenses to exceed the Predevelopment Budget. The County was to pay this amount until such time as predevelopment funding was obtained by UniDev and then such funds were to be reimbursed to the County from the Predevelopment Funding which UniDev was to obtain from third party sources. 32. During Phase IV, the Development/Construction Seriices Phase, UniDev was to,amongst other things, supervise the construction process, ensure the budgets and time schedules were met, and perform marketing tasks. 7 S 33. Pursuant to the DSA, during Phase 1V, UniDev was to be compensated for performing Development/Construction Services in the amount of 6% of the development costs for each Construction Phase. 60% of the 6% fee (less any monthly fee received by UniDev during Phase 111) was due to UniDev at the time of Initial Funding, which is defined as the first receipt by the County of any.construction funding applicable to such construction phase. During construction, UniDev was to receive a monthly payment of 35%of the Development Fee divided by the number of months anticipated to be required in order to achieve completion of the Project, and the remaining 50io of the development fee was due and payable on the date the notice of completion was published. 34. The DSA also provided (pursuant to UniDev's recommendation)that the County intended to transfer title to The Land to a to-be-formed non-profit entity which non- profit shall in turn form a non-profit subsidiary or affiliated entity to act as the borrower of the financing for The Project and shall enter into a ground lease with the non-profit subsidiary. 35. The DSA also stated that upon the formation of the subsidiary, the County "shall assign all of its rights and obligations" in and under the DSA to the subsidiary [emphasis added]. 36. Prior to the execution of the DSA, UniDev had already engaged the services of a law firm to create the non-profit entity, and in fact the Articles of Incorporation of the Hawaii Island Housing Trust ('*HIH'F") were filed on February 16, 2006. 37. On or about July 26, 2006 the County entered into a Development Agreement ("DA") with HIHT, which provided for the County's conveyance of The Land to HIHT, and HIHT's formation of an LLC to be named Waikoloa Workforce Housing LLC ("WWH")to which HIHT would grant a ground lease. 8 38. The DA also provided that the County agreed to assign all contracts for The Project to HIHT and WWH, including all agreements between UniDev and the County with respect to The Project. 39. UniDev recommended the creation of HIHT and WWH as separate entities in order to make the developer of The Project completely independent of the County. 40. Pursuant to the DSA and DA, on or about July 26, 2006, the County of Hawai'i transferred title to The Land to EIIHT. 41. Pursuant to the DSA and DA, HIHT entered into a ground lease with WWH as of.Iuly 26, 2006. 42. In accordance with the terms of the DSA. on or about July 26, 2006, the County and WWH entered into an Assignment and Assumption Agreement wherein the County assigned to WWH all right, title and interest to and under the UniDev contract to the fullest extent legal assignable and WWH accepted the assignment of the DSA between the County and UniDev and assumed and agreed to perform all of the terms, covenants and conditions of the DSA. 43. UniDev negotiated for funding in the amount of$4,20,000 in the form of a . pre-development loan from the National Electrical Benefit Fund ("NEBF") to WWH on August 2, 2006. The ground lease of The Land was used as collateral. 44. On information and belief, an employee or member of UniDev, had a close relationship with a member on the Board of the NEBF. 45. The NEBF loan was a short term loan. Because UniDev failed to secure other financing as it represented it would and as it contracted to do in the DSA, when the loan became due, the County had to provide interim financing to H11 IT and WWH in the amount 9 of$6.000.000 to pay-offthe NEBF loan and provide additional funding for the Pre- development Phase of The Project, as costs associated with The Project continued to accrue. 46. The County provided said $6,000,000 interim financing to HIHT and WWH through a Tri-Party Predevelopment Financing Agreement dated August 6, 2007. 47. If the County had failed to provide the interim financing to HIHT and WWH, control of The Land and The Project could have gone to NEBF. 48. The NEBF loan was the only funding from its "financing partners" that UniDev secured for The Project. 49. On or around February 2I, d008, UniDev entered into an Amended and Restated Development Services Agreement("Amended DSA") with WWII. The County was not a party to the Amended DSA. 50. According to the Amended DSA between UniDev and WWH. UniDev's tee in Phase 1V was reduced to 3.75% if the County provided funding. 51. Contrary to its statements in the response and supplemental response to the RFP. UniDev failed to provide any financing(other than the NEBF loan) for predevelopment or construction of The Project through their"financing partners''. 52. On or about May 8, 2008, the County entered,into a Second Tri-Party Predevelopment Financing Agreement with WWH and HIIIT te, provide an additional $3,000,000 for the ConfirrrratoD- and Predevelopment phases of the }project. 53. Because I JniDev continually tailed to obtaie third party financing, anti because the costs of The Project as negotiated by UniDev threatened to make housing not affordable for its target group, UniDev encouraged and requestet) that the County provide additional up-front financing for The Project. i0 e e , '• led 54. Throughout the course of Phases 1. 11. and 111. UniDev and/or UniDev Hawai'i provided pro formal to the County which purported to show the viability of The Project using UniDev's "proprietary financing-model", whereby the housing would still remain affordable to the target groups despite rising costs and expenses. 55. UniDev and/or UniDev Hawaii made numerous verbal and written representations to the County regarding the viability of The Project and the cost of the project, in inducing the County to continue to provide the f nancing for The Project. 56. Upon information and belief, UniDev and/or L niDev Hawaii submitted false, inaccurate, and/or misleading pro formas which failed to include all costs, or accurate assessments of the costs and/or contained unrealistic assumptions, thus making it appear that .the housing would remain affordable to the target groups, with the intent that the County rely on said false, misleading, and/or inaccurate statements and provide financing for The Project. UniDev and UniDev Hawai'i knew or should have known these pro formas were misleading, false and/or inaccurate. 57. In reliance on these talse, misleading and/or inaccurate statements, on June 12, 2008, the County entered into a Development Financing Agreement("DFA") with WWH and HIHT through which the County made.available to WWH $31,000,000 subject to and in accordance with the DFA. 58. Pursuant to the DFA. WWH was only to use the $31.000,000 in accordance with the budget attached to the DFA, and was subject to other terms and conditions contained therein. li 59. On or about November 2008, WWH and UniDevrUniDev Hawaii submitted alternative proposals regarding The Project, which purported to make The Project affordable to the target group, but which proposals deviated from The Project guidelines in the DFA. 60. On or about January 26, 2009, WWH was presented with the final results of an independent audit of UniDev's projects expenses. 61. The audit found, amongst other things, numerous instances where UniDev entered into contracts without WWH's approval as required in the Amended DSA, that UniDev's estimated costs to complete the project were understated, and that there were no contracts for significant services. 62. On February 6, 2009, the County sent a default letter to WWH and HIHT finding them in default of the DFA and providing an opportunity to cure. 63. WWH and HIHT did not cure within the requisite time period. FALSE CLAIMS (FIRS 4 46-171) 64. The County repeats and realleges the allegations contained in paragraphs 1-63 as though fully set forth herein. 65. On April 30, 2009.Jeffery A. Minter of"UniDev Hawaii LLC"submitted two invoices of UniDev LLC, along with a letter to the County demanding payment of UniDev's fees under the Amended DSA between WWH and UniDev. 17he County was never a party to the Amended DSA and UniDev recommended and created the structure for WWH to be entirely independent of the County. UniDev Hawaii and UniDev knew the County was not obligated or responsible for paying said invoices. 66. UniDev Hawai'i's invoices of April 30, 2009 also requests payment for amounts that, even under the Amended DSA between UniDev and WWH, would not be due 12 to UniDev. For example, (a) the invoice failed to deduct pro-rata shares of Phase II and III payments to UniDev; (b) included charges for"1A Predevelopment Services", despite the fact that the project was already in Phase IV and WWH had not been previously invoiced for said amounts; (c) included business expenses of UniDev as purported "Outstanding Vendor Payments"; and (d) included an invoice for its "Vertical Construction" fees when UniDev not only did not obtain, but could not obtain, funding for vertical construction. 67. UniDev Hawaii and/or UniDev knowingly presented or caused to be presented a false or fraudulent claim for payment or approval to the County in its submission of said April 30, 2009 invoices and demand for payment to the County. 68. UniDev and UniDev Hawaii knowingly made, used, or caused to be made or used, the April 30, 2009 invoice to get these false or fraudulent claims paid or approved by the County. 69. Further, because UniDev and UniDev Hawaii knew that WWH had been receiving funding from the County through WWH and the County's various financing agreements. UniDev and UniDev Hawai'i's false or fraudulent claims to WWH for payment or reimbursement of their subcontractors fees and expenses are also violations of HRS §46- 171. These false or fraudulent claims include but are not limited to: u. UniDev Invoice dated 3/17/08 for$124.160.86 which purports to be for "Supplementary Confirmatory Services'' but which include subcontractor invoices from 2.005 and 2006 for services which were primarily for UniDev's Phase 1 Services for which UniDev had previously been paid the contractual flat fee amount of$150.000. 13 t t b. Upon information and belief, based,on the finding of the audit, there are further subcontractor invoices submitted by UniDev and/or UniDev Hawai'i which are violations of HRS §46-171. INTENTIONAL MISREPRESENTATIONS 70. The County repeats and realleges the allegations contained in paragraphs 1-69 as though fully set forth herein. 71. Upori information and belief, because under its DSA and Amended DSA with WWH, a portion of UniDev's fees would be earned when funding was provided to WWH for The Project, UniDev and/or UniDev Hawai'i intentionally made numerous false representations and provided false documentation to the County to induce it to provide funding to WWH. 72. In inducing the County to provide funds to WWH, UniDev and/or UniDev Hawai'i, represented that $31,000,000 of the funds could be used for public/community facilities and for infrastructure so that rental prices could be maintained in the affordable range for the target groups (by amongst other things reducing the amount of the CFD). 73. UniDev and/or UniDev Hawai'i also represented that the County's funding advances (or a portion thereof)would be retired when a Community Facilities Bond was issued for the project. 74. UniDev and/or UniDev Hawai'i continued to represent that the project as they designed, with County financial contributions, would be a viable project and remain affordable to the target group. 75. Numerous such representations by UniDev and UniDev Hawai'i were made from 2007 through 2008 when the DFA between WWH, HIHT and the County was executed 14 4 on June 12, 2008. Such representations include, but are not limited to statements made in the following communications: a. March 5, 2007 e-mail between Craig Dougall of UniDev and Ed 'Taira of the County Office of Housing and Community Development; h. March 28, 2007 statements made by Craig Dougall of UniDev at a project coordination meeting regarding The Project, c. April 19, 2007 a-maii between Craig Dougall of UniDev and Nancy Crawford (Deputy Director of the Finance Department for the County of Hawaii at the time); d January 30, 2008 presentation by UniDev Hawai'i LLC to the HIHT Board; e. May 30, 2008 pro forma prepared by UniDev showing that the County's contribution would be used for community facilities and infrastructure; l Other similar communications and other communications as discovery will provide. 76. Upon information and belief, UniDev and 'UniDev Hawaii knew (or without knowledge as to the truth or falsity of their assertions) that it would not be able to obtain adequate independenUCFD funding for the construction portion of The Project and otherwise knew that "fhe Project as it was designed and represented was not affordable to the target groups and was otherwise not a viable project at the time it wa_h .making these false 15 e representations to induce the County to provide a total of more than $40,000,000 in financing to WWH. 77. Upon information and belief; UniDev and UniDev Hawaii made intentional misrepresentations in its pro formas submitted to the County by understating the costs/expenses of The Project and omitting other costs/expenses to make The Project appear affordable to the target groups. Upon information and belief, these costs/expenses include but are not limited to the costs/expenses of subcontractors: MVF. Pacific, Inc., PBR and Sam Hirota. 78. Upon information and belief, the pro formas ret�rred to above, include but are not limited to the pro formas dated on or about May 15, 2008 and May 30, 2008. 79. Upon information and belief. UniDev and t nil)ev Hawaii knew these representations were false and misleading at the time they made them or made these representations without knowledge of the truthfulness or falsity. 80. These representations were made in contemplation of the County's reliance upon these false representations. 81. The County relied on the false and misleading representations of UniDev in providing funding to WWH and The Project. 82. On or about July 17-2008, the County was informed that the community facilities could not be guaranteed to be delivered as UniDev continued to authorize planning for future phases of the project, with no future funding source Wentitied. 83. On or about August 28. 2008. Jeffery A. Minter of UniDev and UniDev Hawaii obtained a CFD Analysis from Citigroup (one of UniDev's supposed `'financing 16 5 partners") which showed that the proceeds from the CFD would be-insufficient to complete the first two phases of The Project (Phase 1 a and 1 b of the Conceptual Master Plan). 84. On or about September 12, 2008, UniDev informed the County that the project was not financially viable as previously represented. 85. On or about October 24, 2008, the County was informed that per UniDev, the County's $40,000,000 contribution would need to be diverted from community facilities and rental subsidies and used for construction. 86. The County has been damaged to the extent it has expended funds in reliance on the above misrepresentations, which are non-recoverable, and which provided no benefit to the County. FRAUDULENT INDUCEMENT 87. The County repeats and realleges the allegations contained in paragraphs 1-86 as though fully set forth herein. 88. UniDev and/or UniDev Hawai'i made representations of material fact to the County with the purpose of inducing the County to provide funding for The Project. 89. Upon information and belief, UniDev and/or UniDev Hawaii knew these representations were false. 90. The County reasonably believed these representations, relied on UniDev and UniDev Hawai'i's representations, and in reliance on said representations, did in fact provide funding for The Project. NEGLIGENT MISREPRESENTATIONS 91. The County repeats and realleges the allegations contained in paragraphs 1-90 as though fully set forth herein. 17 s 92. Because under its DSA and Amended USA with WWH a portion of UniDev's fees would be earned when funding was provided to WWH for The Project, UniDev negligently made numerous representations and provided documentation to the County to induce it to provide funding to WWH. 93. UniDev and UniDev Hawaii owed a duty to the County, which duty was breached when it made negligent misrepresentations and/or grossly negligent misrepresentations to the County regarding the affordability of the homes to the target groups and viability of The Project in general in order to induce the County to provide funding to The Project so that UniDev could obtain its fee. 94. Upon information and belief, UniDev and UniDev Hawaii provided false or misleading information as a result of the failure to exercise reasonable care or competence in communicating the information. 95. The County relied on the misrepresentations of UniDev and suffered losses in an amount to be proven at trial. NEGLIGENCE 96. The County repeats and realleges the allegations contained in paragraphs 1-95 as though fully set forih herein. 97. UniDcv and UniDev Hawaii owed a duty to the County to use reasonable care in the performance of its professional services. 98. Pursuant the DSA and Amended DSA, prior approval was to be obtained for certain consultant contracts and their estimated expenses. In many instances. UniDev and/or UniDev Hawai'i did not obtain such prior approval. 18 I 99. Upon information and belief, UniDev and or UniDev Hawaii, who purported to be the"owner's representative", did not make decisions regarding the choice of sub consultants, or the negotiations of any fees of said sub consultants in the best interest of the County, but rather allowed costs to escalate in order to escalate UniDev's own fees. 100. UniDev and UniDev Hawaii did not take reasonable efforts to protect and account for the expenditure of County funds. 101. UniDev and UniDev Hawaii breached their duties when they negligently administered The Project as set forth above. 102. UniDev and UniDev Hawai`i's breach of duties caused the County to stiffer economic losses in an amount to be proven at trial. PUNITIVE DAMAGES 103. The County repeats and realleges the allegations contained in paragraphs 1-102 as though fully set forth herein. 104. As set forth herein UniDev and UniDev Hawaii acted intentionally, wantonly, opressively, maliciously, grossly negligently, or with reckless indifference to the consequences of its actions which justify an award of punitive damages in an amount to be proven at trial. WHEREFORE, the County prays for judgment against Defendants as follows: 1. Civil penalties plus three times the amount of darriages in accordance with HRS §46-171 to be proven at trial; 2. Special damages in an amount to be proven at trial; 3. General damages in an amount to be proven at trial; 4. Punitive damages in an amount to be proven at trial; 19 5. All costs and expenses, including reasonable attorneys' fees; and 6. Any other relief to which the County may be justly and properly entitled. Dated: Hilo, Hawaii, June 24, 2009. COUNTY OF HAWAII, Plaintiff By KATHERINE A. GARSON Assistant Corporation Counsel Its attorney 20 IN THE CIRCUIT COURT OF THE THIRD CIRCUIT STATE OF HAWAII COUNTY OF HAWAII, a municipal CIVIL NO. corporation of the State of Hawaii. (Other Civil Action) (Hilo) Plaintiff, DEMAND FOR JURY TRIAL VS. UNIDEV, LLC, A Delaware Limited Liability Company; UNIDEV HAWAII, LLC, A Delaware Limited Liability Company, JOHN DOES 1-50; JANE DOES 1-50; DOE PARTNERSHIPS 1-50; DOE CORPORATIONS 1-50; DOE NON- PROFIT ENTITIES 1-50; DOE LIMITED LIABILITY COMPANIES 1-50; DOE ENTITIES 1-50, Defendants. DEMAND FOR JURY TRIAL Plaintiff COUNTY OF HAWAII ("County"), a municipal corporation of the State of Hawaii, by and through its undersigned counsel, hereby demands trial by jury in the case noted above. Dated: Hilo, Hawaii, June 24, 2009. COUNTY OF HAWAII, Plaintiff By KATHERINE A. GARSON Assistant Corporation Counsel Its attorney IN THE CIRCUIT COURT OF THE THIRD CIRCUIT STATE OF HAWAI-I COUNTY OF HAWA1`1, a municipal CIVIL NO. corporation of the State of Hawaii, (Other Civil Action) (Hilo) Plaintiff, SUMMONS VS. UNIDEV, LLC,A Delaware Limited Liability Company; UNIDEV HAWAII, LLC, A Delaware Limited Liability Company; JOHN DOES 1-50; JANE DOES 1-50; DOE PARTNERSHIPS 1-50; DOE CORPORATIONS 1-50. DOE NON- PROFIT ENTITIES 1-50; DOE LIMITED LIABILITY COMPANIES 1-50; DOE ENTITIES 1-50, Defendants. SUMMONS STATE OF HAWAII To the above-named Defendants: YOU ARE HEREBY SUMMONED and required to serve upon KATHERINE A. GARSON, Assistant Corporation Counsel, Plaintiffs attorney, whose address is Hilo Lagoon Centre, 101 Aupuni Street, Suite 325, Hilo, Hawaii 96720, an answer to the Complaint which is herewith served upon you, within twenty(20) days after service of the summons upon you, exclusive of the day of service. If you fail to do so,judgment by default will betaken against you for the relief demanded in the Complaint. This summons shall not be personally delivered between 10:00 p.m. and 6:00 a.m. on premises not open to the public, unless a Judge of the District or Circuit Courts permit, in writing on the summons, personal delivery during those hours. � f Failurc to obey the summons may result in an entry of default and default judgment against the person pi twned. JUL 012009 Date'E awai'i. G GANDALIRA (SEAL) CLERK OF THE ABOVE-ENTITLED COURT In accordance with the Americans with Disabilities Act, and other applicable state and Federal laws. if you require a reasonable accommodation for a disability. please contact the ADA Coordinator at the Third Circuit Court Administration Office at PHONE NO. 961-7440. FAX 961-7416, or TYY 961-7525. at least ten (l 0) working days prior to your hearing or appointment date. FLEE--D Of Counsel: ALSTON HUNT FLOYD & ING Attorneys at Law 2010 MAR 2 9 Pi 112: 5 9 A Law Corporation C. CLERK PAUL ALSTON 1126-0 THSTTE�OF HAWAII r KURT S. FRITZ 8437-0 J. BLAINE ROGERS 8606-0 1001 Bishop Street, Suite 1800 Honolulu, Hawaii 96813 Telephone: (808) 524-1800 Facsimile: (808) 524-4591 E-mail:palston @ahfi.com kfritz @ahfi.com brogers @ahfi.com Attorneys for Defendants UNIDEV, LLC and UNIDEV HAWAII, LLC IN THE CIRCUIT COURT OF THE THIRD CIRCUIT STATE OF HAWAII COUNTY OF HAWAII, a municipal CIVIL NO. 09-01-264K corporation of the State of Hawaii, (Other Civil Action) Plaintiff, DEFENDANTS UNIDEV, LLC'S ANSWER TO PLAINTIFF'S VS. COMPLAINT; DEFENDANT UNIDEV,LLC'S UNIDEV, LLC, a Delaware Limited Liability COUNTERCLAIM; CERTIFICATE Company; UNIDEV HAWAII, LLC, a OF SERVICE Delaware Limited Liability Company; JOHN DOES 1-50; JANE DOES 1-50; DOE PARTNERSHIPS 1-50; DOE CORPORATIONS 1-50; DOE NON-PROFIT (No Trial Date Set) ENTITIES 1-50; DOE LIMITED LIABILITY COMPANIES 1-50; DOE ENTITIES 1-50, Defendants. 1 Ftere t r�''yy That this is a:full;t and.cortect WPY the aipirlal do le in this Clerk,Third Circurt;eourt,State of Henii 723508vll9641-1 EXHIBIT "BIN DEFENDANTS' ANSWER TO PLAINTIFF'S COMPLAINT Defendants UniDev, LLC ("UniDev") and UniDev Hawaii, LLC ("UniDev Hawaii") (collectively "Defendants") answer the Complaint filed by Plaintiff County of Hawaii ("the County") on July 1, 2009, as follows: 1. Defendants admit the allegations contained in Paragraph Nos. 1, 2, 3, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 18, 19, 20, 21, 22, 24, 25, 27, 28, 29, 32, 36, 40, 41, 43, 50, and 74 of the Complaint. 2. Defendants deny the allegations contained in Paragraph Nos. 5, 39, 44, 47, 48, 51, 53, 55, 56, 57, 61, 66, 67, 68, 69, 71, 72, 73, 76, 77, 78, 79, 80, 81, 86, 88, 89, 90, 92, 93, 94, 95, 99, 100, 101, 102, and 104 of the Complaint. 3. Defendants at the present time lack knowledge or information sufficient to enable them to admit or deny the allegations contained in Paragraph Nos. 4, 37, 46, 52, 58, 62, 63, and 85 of the Complaint and on that basis deny them. 4. In response to Paragraph No. 17 of the Complaint, Defendants admit the County awarded the Project to UniDev subject to negotiation of a master development agreement. Except as expressly admitted herein, Defendants at the present time lack sufficient knowledge to admit of deny the remaining allegations contained in Paragraph No. 17 of the Complaint and on that basis deny them. 5. In response to Paragraph No. 23 of the Complaint, Defendants admit the charrette report contained the language quoted in that Paragraph. Defendants allege the report also stated, "The County may choose to provide Public Improvement bonds for all parks and community facilities that will provide services to non-residents as well as residents." 6. In response to Paragraph No. 26 of the Complaint, Defendants admit UniDev received $150,000 as payment for the charrette, much of which was spent on various subcontractors. Except as expressly admitted herein, Defendants deny the remaining allegations contained in Paragraph No. 26 of the Complaint. 7. In response to Paragraph No. 30 of the Complaint, Defendants state the DSA speaks for itself. To the extent the allegations contained in Paragraph No. 30 are inconsistent with or mischaracterize the express terms of the DSA, Defendants deny such allegations. 8. In response to Paragraph No. 31 of the Complaint, Defendants admit that under the DSA, UniDev was to be compensated $40,000 per month for performing Phase IIUPredevelopment Services and to be reimbursed for costs, provided total compensation would 723508v 11964 1-1 2 not exceed the agreed-upon budgeted amount. Defendants allege that upon the execution of the Amended and Restated DSA, UniDev was to be paid $50,000 per month, beginning in March 2008, for performing Phase III/Predevelopment Services. Defendants allege UniDev never received some of this monthly compensation, however. Except as expressly admitted herein, Defendants deny the remaining allegations contained in Paragraph No. 31 of the Complaint. 9. In response to Paragraph No. 33 of the Complaint, Defendants state the DSA speaks for itself. To the extent the allegations contained in Paragraph No. 33 are inconsistent with or mischaracterize the express terms of the DSA, Defendants deny such allegations. 10. In response to Paragraph No. 34 of the Complaint, Defendants state the DSA speaks for itself. To the extent the allegations contained in Paragraph No. 34 are inconsistent with or mischaracterize the express terms of the DSA, Defendants deny such allegations. H. In response to Paragraph No. 35 of the Complaint,Defendants state the DSA speaks for itself. To the extent the allegations contained in Paragraph No. 35 are inconsistent with or mischaracterize the express terms of the DSA, Defendants deny such allegations. 12. In response to Paragraph No. 38 of the Complaint, Defendants state the DA speaks for itself. To the extent the allegations contained in Paragraph No. 38 are inconsistent with or mischaracterize the express terms of the DA,Defendants deny such allegations. 13. In response to Paragraph No. 42 of the Complaint, Defendants state the DSA and Assignment and Assumption Agreement speak for themselves. To the extent the allegations contained in Paragraph No. 42 are inconsistent with or mischaracterize the express terms of the DSA and Assignment and Assumption Agreement, Defendants deny such allegations. 14. In response to Paragraph 45 of the Complaint,Defendants admit the terms 15. of the NEBF loan was one year. Except as expressly admitted herein, Defendants deny the remaining allegations contained in Paragraph No. 45 of the Complaint. 16. In response to Paragraph No. 49 of the Complaint, Defendants admit UniDev entered into the Amended DSA with WWH. Defendants also allege that although the County was not a named party or signatory to the Amended DSA, the County was intimately involved in the negotiations of the Amended DSA and parties' performance thereunder. Except as expressly admitted herein, Defendants deny the remaining allegations contained in Paragraph No. 49 of the Complaint. 17. In response to Paragraph No. 54 of the Complaint, Defendants admit that from time to time during the Project, UniDev provided pro formas to the County that showed the 723508Y 1(9641-1 3 housing would remain affordable to the target groups. Except as expressly admitted herein, Defendants deny the remaining allegations of Paragraph No. 54 of the Complaint. 18. In response to Paragraph No. 59 of the Complaint, Defendants admit that in November 2008, UniDev made a presentation that demonstrated the existing development plan continued to make the Project affordable to the target group. Except as expressly admitted herein, Defendants deny the remaining allegations contained in Paragraph No. 59 of the Complaint. 19. In response to Paragraph No. 60 of the Complaint, Defendants admit the final results of an audit were presented to WWH on or about January 26, 2009. Except as expressly admitted herein, Defendants deny the remaining allegations contained in Paragraph No. 60 of the Complaint. 20. In response to Paragraph Nos. 64, 70, 87, 91, 96 and 103 of the Complaint, Defendants repeat and re-allege their responses to the Paragraphs incorporated by reference into each of these Paragraphs as though their responses had been fully set forth herein. 21. In response to Paragraph No. 65 of the Complaint, Defendants admit UniDev submitted two invoices to WWH on April 30, 2009, and Jeffery A. Minter sent copies of those invoices and an accompanying explanatory letter to the County. Except as expressly admitted herein, Defendants deny the remaining allegations of Paragraph No. 65 of the Complaint. 22. In response to Paragraph No. 75 of the Complaint, Defendants admit that the communications listed in subparagraphs a. through e. occurred but deny the communications contained false or misleading statements made by Defendants. Except as expressly admitted herein,Defendants deny the remaining allegations contained in Paragraph No. 75 of the Complaint. 23. In response to Paragraph No. 82 of the Complaint, Defendants admit that, on or about July 17, 2008, UniDev responded to questions and concerns raised by WWH and the County regarding the then-current financial crisis, which included rapidly rising interest rates and collapse of the tax-exempt bond market and that UniDev informed WWH that the then- current financial crisis necessitated modification of the original financing plan for the Project. Except as expressly admitted herein, Defendants deny the remaining allegations of Paragraph No. 82 of the Complaint. 24. In response to Paragraph No. 83 of the Complaint, Defendants admit the CFD Analysis performed by Citigroup showed that due to rapidly rising interest rates and the collapse 723508v119641-1 4 of the tax-exempt bond market, the debt capacity of the CFD as earlier conceived would be insufficient to fund fully Phases 1 A and 1 B infrastructure. Except as expressly admitted herein, Defendants deny the remaining allegations contained in Paragraph No. 83 of the Complaint. 25. In response to Paragraph No. 84, Defendants admit that on or about September 12, 2008, UniDev advised the County that the then-current financial crisis necessitated modification of the original financing plan for the Project and suggested alternatives dealing with the original financing plan. Except as expressly admitted herein, Defendants deny the remaining allegations contained in Paragraph No. 84 of the Complaint. 26. In response to Paragraph No. 97 of the Complaint, Defendants admit UniDev had certain contractual duties to perform specified services in connection with the Project. Except as expressly admitted herein, Defendants deny the remaining allegations of Paragraph No. 97 of the Complaint. 27. In response to Paragraph No. 98 the Complaint, Defendants admit prior approval was contractually required for certain consultant contracts and expense estimates. Except as expressly admitted herein, Defendants deny the remaining allegations contained in Paragraph No. 98 of the Complaint. 28. Defendants deny each and every allegation contained in the Complaint that is not expressly admitted above. 29. In response to the Prayer for Relief contained on pages 19 and 20 of the Complaint, Defendants deny the County is entitled to any of the relief requested therein or to any other relief against them. DEFENSES In addition, and as defenses to the Complaint, Defendants allege as follows: 30. The Complaint is barred, in whole or in part, because the County lacks standing or is not the real party in interest with respect to some of the claims for relief asserted in the Complaint. 31. The Complaint is barred, in whole or in part, because it fails to state a claim upon which relief can be granted against Defendants. 32. The Complaint is barred, in whole or in part, because it fails to state the circumstances constituting fraud with the particularity required by Rule 9(b) of the Hawaii Rules of Civil Procedure. 723508019641-1 19641-1 5 33. The Complaint is barred, in whole or in part, because the County has failed to join necessary and/or indispensable parties. 34. The Complaint is barred, in whole or in part, by the Statute of Frauds, HRS section 656-1 et seq. 35. The Complaint is barred, in whole or in part, by the parol evidence rule, which precludes the County from relying on or introducing evidence regarding contemporaneous negotiations or agreements that vary or alter the terms of the contracts upon which the Complaint purports to be based. 36. The Complaint is barred, in whole or in part, because the County and/or WWH committed material breaches of the contracts upon which the Complaint is or purports to be based and thereby discharged or excused Defendants' obligations, if any, to perform the contracts. 37. The Complaint is barred, in whole or in part, because the injuries and damages complained of were caused by events which Defendants could not reasonably foresee and over which they had no control. 38. The Complaint is barred, in whole or in part, or the County's alleged damages must be reduced, because, and to the extent that, the County's own conduct caused or contributed to the injuries and damages complained of. 39. The Complaint is barred, in whole or in part, or the County's alleged damages must reduced, because, and to the extent that, the County did not take reasonable steps to minimize, reduce, or mitigate the injuries and damages complained of. 40. The Complaint is barred, in whole or in part, or the County's alleged damages must be reduced, because, and to the extent that, Defendants are entitled to set off against the County's claims the counterclaims Defendants have against the County. 41. The Complaint is barred, in whole or in part, by the applicable statutes of limitations. 42. The Complaint is barred, in whole or in part, by the doctrines of waiver and/or estoppel. 43. The Complaint is barred, in whole or in part, by the doctrine of unclean hands, whereby the County's own bad faith or other unlawful, unfair, fraudulent, or inequitable conduct in the transactions and occurrences alleged in the Complaint prevents or reduces any recovery from Defendants. 723508v]19641-1 6 44. Defendants reserve the right to assert additional defenses of which they may learn through investigation or discovery. PRAYER FOR RELIEF WHEREFORE, Defendants request that: I. The Complaint against Defendants be dismissed with prejudice; 2. Judgment be entered in favor of Defendants and against Plaintiff, 3. Defendants be awarded their costs, including reasonable attorney's fees; and 4. Defendants be awarded such other relief as the Court deems just and proper. DATED: Honolulu, Hawaii, March 26, 2010. PAUL ALSTON KURT S. FRITZ J. BLAINE ROGERS Attorneys for Defendants UNIDEV, LLC and UNIDEV HAWAII, LLC 723508v 11964 1-1 7 �✓ '00 IN THE CIRCUIT COURT OF THE THIRD CIRCUIT STATE OF HAWAII COUNTY OF HAWAII, a municipal CIVIL NO. 09-01-264K corporation of the State of Hawaii, (Other Civil Action) Plaintiff, COUNTERCLAIM vs. UNIDEV, LLC, a Delaware Limited Liability Company; UNIDEV HAWAII, LLC, a Delaware Limited Liability Company; JOHN DOES 1-50; JANE DOES I-50; DOE PARTNERSHIPS 1-50; DOE CORPORATIONS 1-50; DOE NON-PROFIT ENTITIES 1-50; DOE LIMITED LIABILITY COMPANIES 1-50; DOE ENTITIES 1-50, Defendants. UNIDEV, LLC, a Delaware limited liability company, Counterclaimant, vs. COUNTY OF HAWAII, a municipal corporation of the State of Hawaii; HAWAII ISLAND HOUSING TRUST, a Hawaii corporation; WAIKOLOA WORKFORCE HOUSING, LLC, a Hawaii limited liability company; DOE INDIVIDUALS 1-20; DOE PARTNERSHIPS I-20; DOE CORPORATIONS 1-20; DOE LIMITED LIABILITY COMPANIES 1-20; and DOE GOVERNMENTAL ENTITIES 1-20, Counterclaim Defendants. COUNTERCLAIM Defendant and Counterclaimant UNIDEV, I.LC ("UniDev"), for a Counterclaim against Plaintiff and Counterclaim Defendant County of Hawaii ("the County") and against Counterclaim Defendants HAWAII ISLAND HOUSING TRUST ("HIHT"), WAIKOLOA WORKFORCE HOUSING, LLC ("WWH"), DOE INDIVIDUALS 1-20, D013 PARTNERSHIPS 1-20, DOE CORPORATIONS 1-20, DOE LIMITED LIABILITY COMPANIES 1-20 and DOE GOVERNMENTAL ENTITIES 1-20, alleges as lollows: PARTIES 1. UniDev is, and al all times relevant to this Counterclaim was, a Delaware limited liability company registered to do business in the State of Hawaii. 2. The County is, and at all times relevant to this Counterclaim was, a liawai`i municipal corporation with its principal place of business in the County of Hawaii of the State of Hawaii. 3. HIHT is, and at all times relevant to this Counterclaim was, a Hawaii non-profit corporation with its principal place of business in the County of Hawaii of the State of Hawaii. 4. WWH is, and at all times relevant to this Counterclaim was, a Hawaii limited liability company with its principal place of business in the County of Hawaii of the State of Hawaii. S. DOE INDIVIDUALS 1-20, DOE PARTNERSHIPS 1-20, DOE CORPORATIONS 1-20, DOE LIMITED LIABILITY COMPANIES 1-20, and DOE GOVERNMENTAL ENTITIES 1-20(collectively, "the Doe Counterclaim Defendants") are natural persons, partnerships, corporations, limited liability companies and governmental entities that caused or are legally responsible for the wrongful acts and omissions alleged in this Counterclaim but whose identities and specific involvements UniDev has not been able to determine definitively despite its interviews of several persons who worked on the housing development project at the center of this dispute and its review of its own documents pertaining to the project. UniDev will identify the Doe Counterclaim Defendants and allege more particularly their involvement in the wrongful 737016-119641-2 1 acts and omissions alleged in this Counterclaim after further investigation and discovery have revealed the same. BACKGROUND FACTS 6. UniDev is, and at all times relevant to this Counterclaim was, in the business of developing affordable workforce housing and providing services for all aspects of the development of housing, from project conception to completion. Among the services UniDev provides during the development process are feasibility analysis and strategic planning, identifying and selecting all development team members, structuring and securing project financing, negotiating and managing construction contracts, and creating and implementing successful housing marketing programs. Based upon prior housing development projects it has undertaken for universities, municipalities, and other clients, UniDev and its principals have become well known and have developed a reputation for creativity, integrity, and excellence in the affordable housing development industry. 7. In September 2004,the County issued a Request for Proposals ("RFP") for the development of approximately 1,000 homes on land the County owned in Waikoloa Village in the South Kohala District of the Island of Hawaii for people employed in local businesses at prices that were to be affordable to families with incomes ranging from 50%to 140% of the median income for the County of Hawaii ("the Project"). 8. After UniDev responded to the County's RFP in November 2004 and supplemented its submission in February 2005, the County awarded UniDev the Project. 9. After several months of preliminary conceptual planning and negotiation of a master development agreement, UniDev and the County executed a Development Services Agreement ("the DSA") on March 2, 2006. As more specifically stated therein, UniDev agreed to perform certain development-related services for the Project and, in exchange, the County agreed, among other things,to pay UniDev a development fee of 6%of the development costs for each construction phase of the Project. 10. In the meantime, HIHT and WWH were created as new entities to remove the County from active management of the Project. HIHT was set up to take over from the County ownership of the land on which the Project was to be built and to lease the land to WWH. WWH was set up to take over from the County the performance of 737016-119641-2 2 O certain contracts pertaining to the Project, including the DSA. 11. In or around July or August 2006, the County transferred to HIHT title to the land on which the Project was going to be built and assigned certain contracts pertaining to the Project, including the DSA, to WWH. At the same time, HIHT and WWH executed a lease for the land and WWH assumed from the County certain contracts pertaining to the Project, including the DSA. 12. On February 21, 2008, UniDev and WWH executed an Amended and Restated Development Services Agreement("the ADSA"). As more specifically stated therein, UniDev agreed to perform certain development-related services for the Project, and, in exchange, WWH agreed, among other things, to pay UniDev a development fee of 3.75%of the development costs that would be funded by the County and 5.4% of all other development costs for each construction phase of the Project. 13. On April 17, 2009, WWH notified UniDev (through its local affiliate, UniDev Hawaii, LLC) by letter that the Project was being halted as of that date and instructed UniDev immediately to cease all work on the Project, submit its final invoices, and copy the County on all correspondence. 14. In response to WWH's letter, on April 30, 2009, UniDev submitted its final invoices to WWH, which totaled $3,230,343. These invoices have never been paid. COUNT ONE [Breach of Contract against the County and WWH] 15. UniDev incorporates into this Count the allegations contained in Paragraph Nos. 1 through 14 above. 16. On March 2, 2006, UniDev and the County entered into the DSA, a true and complete copy of which is attached hereto as Exhibit 1 and incorporated by reference. 17. As of July 26, 2006, the County assigned its rights under the DSA to WWH, and WWH assumed the County's obligations thereunder. Despite the assignment and assumption, the County remained intimately involved in all aspects of performance of the DSA and continuously instructed WWH how to proceed with all aspects of the Project, including its relationship with UniDev, so that WWH was in fact a mere alter ego, agent, or instrumentality of the County. 737016-119641-2 3 18. On February 21, 2008, UniDev and WWH entered into the ADSA, a true and complete copy of which is attached hereto as Exhibit 2 and incorporated by reference. County officials and employees were extensively involved in the negotiation of the ADSA and even insisted on certain changes that were not requested by WWH or WWH's counsel, even though the County was not then a named party to the DSA. Following the execution of the ADSA between UniDev and WWH, the County remained intimately involved in all aspects of performance of the ADSA and continuously instructed WWH how to proceed with all aspects of the Project, including its relationship with UniDev, so that WWH was in fact a mere alter ego, agent, or instrumentality of the County. 19. Under the DSA and the ADSA, UniDev agreed to perform certain development-related services for the Project and did perform all such services until WWH, upon instruction from the County and without good cause, halted the Project by letter dated April 17, 2009, and instructed UniDev immediately to cease all work on the Project. 20. Unlike the DSA, the ADSA did not give WWH the right to terminate the agreement for convenience. During the negotiation of the ADSA, that right was consciously and deliberately relinquished, along with UniDev's corresponding right to terminate for convenience. 21. Under Section 10(c)of Rider A to the ADSA, WWH had the right to terminate the agreement at the end of Construction Phase 1-A, 1-B, or II of future construction hade become infeasible for economic or financial reasons. Contrary to this provision, WWH terminated the ADSA and the Project after commencement but prior to completion of Construction Phase 1-A. The letter dated April 17, 2009, from WWH that instructed UniDev to cease all work on the Project had no basis in any other provision of the ADSA. 22. Under the DSA and ADSA, in exchange for its performance of certain development-related services for the Project, the County and WWH agreed to pay UniDev certain development fees calculated as a percentage of the overall development costs. 23. The County and WWH have breached the DSA and ADSA in that they 737016-119641-2 4 have unilaterally and without good cause halted the Project, instructed UniDev immediately to cease all work on the Project and refused to pay UniDev the agreed-upon development fees, despite their acceptance and use of the valuable services provided by UniDev, despite UniDev's offer to continue the Project and to perform the agreed-upon development-related services for the Project, and despite UniDev's demand that the County and WWH pay UniDev the agreed-upon development fees. 24. As a result of the County's and WWH's breaches of the DSA and ADSA, UniDev has been damaged in an amount to be proved at trial but not less than $3,230,343.00. COUNT TWO [Quantum Meruit against the County and WWH] 25. UniDev incorporates into this Count the allegations contained in Paragraph Nos. 1 through 24 above. 26. From approximately November 2004 through April 2009, UniDev performed certain valuable development-related services for the Project at the request of the County and WWH. These services included, among others, conducting feasibility analyses and strategic plans for the Project, identifying and selecting all Project team members, structuring and securing Project financing, developing architectural plans for the Project, negotiating and managing Project contracts, and creating and implementing marketing programs for the Project. 27. UniDev invested substantial amounts of time and money in performing these services and did so with the reasonable expectation that the County and WWH would pay UniDev for the services. 28. The services UniDev performed for the Project have substantially benefited the County and WWH and improved the land on which the Project was to be built. 29. The County and WWH would be unjustly enriched if they were permitted to retain the benefits of all the services UniDev performed for the Project without paying UniDev the reasonable value of those services. 30. For the foregoing reasons, the County and WWH should be ordered to pay restitution to UniDev for the reasonable value of the services it performed for the Project, 737016-119641-2 5 �✓ *04 in an amount to be proved at trial but not less than $3 million. COUNT THREE [Intentional Interference with Contract against the County] 31. UniDev incorporates into this Count the allegations contained in Paragraph Nos. 1 through 30 above. 32. From July 2006 through April 2009, UniDev had written contracts with WWH concerning the Project, namely, the DSA and the ADSA. 33. From July 2006 through April 2009, the County knew UniDev had these written contracts with WWH concerning the Project. 34. From July 2006 through April 2009, the County intentionally and maliciously interfered with these contracts in a deliberate and sustained effort to force UniDev out of the Project and either award the Project to another entity or devote the land on which the Project was being built to other purposes. Among other things, the County, either directly itself or through instructions to WWH: a. arbitrarily and in bad faith issued a stop-work order for the Project on September 25, 2006. b. arbitrarily and in bad faith refused to approve certain expenses for the Project, including those for architectural drawings and a marketing study, which were essential to obtain financing from third-party lenders for the Project. C. repeatedly, arbitrarily, and in bad faith altered the definition of"affordable housing" for the Project, in some cases to include as potential home buyers certain favored individuals and in other cases to exclude certain disfavored individuals. d. repeatedly, arbitrarily, and in bad faith changed the number and design of the housing units for the Project and required UniDev to re-do and re-submit pro formas that reflected the changes. e. after interest rates began to rise rapidly and the tax-exempt bond market collapsed in the summer of 2008, arbitrarily and in bad faith refused to work with UniDev to develop an alternative plan for third-party financing for the Project and instead blamed UniDev for the inability to proceed with the financing as originally planned. f. from July 2008 through February 2009, repeatedly, arbitrarily, and in bad faith sent UniDev or its local affiliate, UniDev Hawaii, LLC, letters and a-mails in which 737016-119641-2 6 it accused UniDev of various violations of and defaults under the ADSA even though it knew there was no factual or legal basis for the alleged violations or defaults. 9. told WWH's board members the decisions it wanted, threatened to cut off the compensation of any board member who did not vote for those decisions, and promised compensation increases to board members who did vote for those decisions. 35. As a result of the County's intentional and malicious interference with the DSA and the ADSA, UniDev had to incur substantial additional costs and expenses in connection with its performance of development-related services under the DSA and the ADSA. These costs and expenses, the amount of which will be determined at trial, would not have been incurred, and the profitability of UniDev's contractual relationship with WWH would not have been reduced, if the County had not intentionally and maliciously interfered with the DSA and the ADSA. 36. As a further result of the County's intentional and malicious interference with the DSA and the ADSA, on April 17, 2009, WWH unilaterally and without good cause halted the Project, instructed UniDev immediately to cease all work on the Project and refused to pay UniDev the agreed-upon development fees. 37. As a further result of the County's intentional and malicious interference with the DSA and the ADSA, UniDev has been damaged in an amount to be proved at trial but not less than $4 million. COUNT FOUR [Fraudulent Transfer against HIHT and the County] 38. UniDev incorporates into this Count the allegations contained in Paragraph Nos. 1 through 37 above. 39. On or about April 17, 2009, WWH became indebted to UniDev for development fees due under the ADSA in an amount to be proved at trial but not less than $3,230,343.00. 40. On or about April 22,2009, WWH transferred to HIHT or to the County its leasehold interest in the land on which the Project was being built, and HIHT transferred to the County all of its interest in that land. 41. WWH's leasehold interest in the land on which the Project was being built and HIHT's interest in that land were their only substantial assets. 737016-119641-2 7 42. In exchange for WWH's transfer to HINT or to the County of its leasehold interest in the land on which the Project was being built, WWH received nothing reasonably equivalent in value, and as a result of the transfer, WWH's debts greatly exceeded its assets. 43. In exchange for HIHT's transfer to the County of its interest in the land on which the Project was being built, HIHT received nothing reasonably equivalent in value, and as a result of the transfer, HIHT's debts greatly exceeded its assets. 44. WWH and HIHT made these transfers, and the County accepted them, with actual intent to hinder, delay or defraud UniDev in its efforts to collect the not less than $3,230,343.00 WWH owes it. 45. The transfers alleged above are fraudulent transfers within the meaning of the Uniform Fraudulent Transfer Act (Hawai`i Revised Statutes ch. 651 C) that may be avoided by UniDev. PRAYER FOR RELIEF WHEREFORE, UniDev demands judgment as follows: A. For damages against the County and WWH in an amount to be proven at trial but not less than $4 million; B. For restitution from the County and WWH in an amount to be proven at trial but not less than $3 million, in the event damages are not awarded; C. For an order avoiding WWH's transfer to HIHT or to the County of its leasehold interest in the land on which the Project was being built and HIHT's transfer to the County of its interest in that land, to the extent necessary to satisfy UniDev's counterclaims against WWH; D. For costs of suit, including reasonable attorney's fees; and E. For all other relief the Court deems just and proper. DATED: Honolulu, Hawaii, March 26, 2010. qJ !,� %' PAUL ALSTON KURT S. FRITZ J. BLAINE ROGERS Attorneys for Counterclaimant UNIDEV, LLC 737016-119641-2 8 CERTIFICATE OF SERVICE I HEREBY CERTIFY that on this date I caused a true and correct copy of the foregoing to be served on the following persons by facsimile, hand-delivery or U.S. mail, postage prepaid (as indicated below), to their respective addresses: HAND- FAXED MAILED DELIVERED LINCOLN S. T. ASHIDA,ESQ. O 0 O JULIE K.L. MECKLENBURG, ESQ. KATHERINE A. CARSON, ESQ. LAUREEN L. MARTIN, ESQ. BROOKS L. BANCROFT, ESQ. Corporation Counsel County of Hawaii Hilo Lagoon Centre 101 Aupuni Street, Suite 325 Hilo, Hawaii 96720 Attorneys for Plaintiff COUNTY OF HAWAII DATED: Honolulu, Hawaii, March 26, 2010. PAUL ALSTON KURT FRITZ J. BLAINE ROGERS Attorneys for Defendants UNIDEV, LLC and UNIDEV HAWAII, LLC 723508v1l 9641-1 Of Counsel: ALSTON HUNT FLOYD & ING Attorneys at Law A Law Corporation PAUL ALSTON 1126-0 KURT S. FRITZ 8437-0 J. BLAINE ROGERS 8606-0 1001 Bishop Street, Ste. 1800 Honolulu, Hawaii 96813 Telephone: (808) 524-1800 Facsimile: (808) 524-4591 E-mail: palston@ahfi.com kfritz@ahfi.com brogers@ahfi.com Attorneys for Defendants UNIDEV, LLC and UNIDEV HAWAII, LLC IN THE CIRCUIT COURT OF THE THIRD CIRCUIT STATE OF HAWAII COUNTY OF HAWAII, a municipal CIVIL NO. 09-01-264K corporation of the State of Hawaii, (Other Civil Action) Plaintiff, DEFENDANTS UNIDEV, LLC AND UNIDEV HAWAII, LLC'S VS. NOTICE OF ERRATA TO DEFENDANTS' ANSWER TO UNIDEV, LLC, a Delaware Limited PLAINTIFF'S COMPLAINT AND Liability Company; UNIDEV HAWAII, DEFENDANT UNIDEV, LLC'S LLC, a Delaware Limited Liability COUNTERCLAIM FILED ON Company; JOHN DOES 1-50; JANE MARCH 29, 2010; EXHIBITS DOES 1-50; DOE PARTNERSHIPS "1" AND "219; CERTIFICATE 1-50; DOE CORPORATIONS 1-50; OF SERVICE DOE NON-PROFIT ENTITIES 1-50; DOE LIMITED LIABILITY COMPANIES 1-50; DOE ENTITIES 1-50, Defendants. UNIDEV, LLC, a Delaware limited liability company, 739538v1 9641-1 Counterclaimant, VS. COUNTY OF HAWAII, a municipal corporation of the State of Hawaii; HAWAII ISLAND HOUSING TRUST, a Hawaii corporation; WAIKOLOA WORKFORCE HOUSING, LLC, a Hawaii limited liability company; DOE INDIVIDUALS 1-20; DOE PARTNERSHIPS 1-20; DOE CORPORATIONS 1-20; DOE LIMITED LIABILITY COMPANIES 1-20; and DOE GOVERNMENTAL ENTITIES 1-20, Counterclaim Defendants. DEFENDANTS UNIDEV, LLC AND UNIDEV HAWAII, LLC'S NOTICE OF ERRATA TO DEFENDANTS' ANSWER TO PLAINTIFF'S COMPLAINT AND DEFENDANT UNIDEV, LLC'S COUNTERCLAIM FILED ON MARCH 29, 2010 Defendants UniDev, LLC and UniDev Hawaii, LLC, make the following corrections regarding Defendant UniDev, LLC's Counterclaim attached to Defendants' Answer to Complaint filed on March 29, 2010. Copies of Exhibits "1" and "2" were inadvertently not attached to the Counterclaim. Attached hereto are copies of Exhibits "I" and "2." DATED: Honolulu, Hawaii, I q, 201 o PAUL ALSTON KURT S. FRITZ J. BLAINE ROGERS Attorneys for Defendants UNIDEV, LLC and UNIDEV HAWAII, LLC 739538v 1 9641-2 2 DEVELOPMENT SERVICES AGREEMENT of THIS DEVELOPMENT SERVICES AGREEMENT (this "Agreement") is entered into as MAR - 17006 by and between UNIDEV, LLC, a Delaware limited liability company ("UniDev"), and COUNTY OF HAWAII, a municipal corporation duly organized and existing under the laws of the State of Hawaii(the"Sponsor"). WITNESSETH: WHEREAS, the Sponsor owns in fee simple approximately 288 acres of land (the"Site") located at Waikoloa Village, South Kohala, Island and County of Hawaii, State of Hawaii(the "State`), known as T and 6-8-2:26 and 6-8-30:179, which is held for the purpose of providing affordable housing; and WHEREAS, pursuant to a certain Conceptual Planning Agreement dated as of June 15, 2005 by and between the Sponsor and UniDev(the "Conceptual Planning Agreement"), UniDev has provided certain conceptual planning services as described therein (the "Phase I Services"), in connection with the potential development of a housing project and related facilities (collectively, the "Project")on the Site; and WHEREAS, having completed the Phase I Services,the Sponsor now wishes to engage UniDev to perform additional development-related services, as described in Rider B attached hereto and made a part hereof(the"Services"), with respect to the Project, as more particularly described in Rider C attached hereto, for the consideration described in Rider D attached hereto and made a part hereof, and pursuant to the general terms of this Agreement as set forth in Rider A attached hereto and made a part hereof; and WHEREAS, the Sponsor and UniDev have determined that the remainder of the development process should be broken down into three additional phases(each individually,a "Phase"and collectively, the"Phases"),each of which will include specific Services to be provided by UniDev or by consultants engaged by UniDev, the fees and expenses for which consultants shall be the responsibility of the Sponsor; and WHEREAS, during the second and third Phases ("Phase Wand "Phase III" respectively), UniDev shall, working collaboratively with the Sponsor's staff, including in particular staff of the Sponsor's Office of Housing and Community Development ("OHCD"), provide certain Services leading to the complete planning, design and financing of the Project (as further described and defined in Rider 8 hereto); and WHEREAS, at the time of issuance of construction financing for the Project, the fourth Phase ("Phase IV")shall be commenced,during which UniDev shall undertake certain Services leading to the construction of the Project and sale/rental of the housing units (as further described and defined in Rider B hereto);and WHEREAS, the Sponsor intends to transfer title to the Site to a to-be-formed non-profit entity(the"Non-Profit"), which Non-Profit shall in turn forma non-profit subsidiary or affiliated entity to act as the borrower of the financing for the Project.(the "SPE")and shall enter into a ground lease with the SPE with respect to the Site; and WHEREAS, upon the formation of the SPE, the Sponsor shall assign all of its rights and obligations in and under this Agreement to the SPE. EXHIBIT 1 EXHIBIT 13-1 NOW, THEREFORE, in consideration of the foregoing premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, for themselves and for their successors and assigns, hereby agree as follows: 1. Engagement. The Sponsor hereby engages UniDev to undertake the Services in accordance with the terms and conditions set forth in this Agreement; provided, however, that UniDev shall not begin the Services with respect to any Phase until such time as it has received a written or verbal notice to proceed therefor from the Sponsor or from OHCD on behalf of the Sponsor. UniDev hereby agrees to undertake such Services in accordance with the terms and conditions set forth in this Agreement. 2. Arc reement. This Agreement shall consist of the matters set forth herein, including without limitations, Riders A, B, C and D (collectively, the"Riders"). 3. Co.nflict. In case of any conflict among the provisions of the Riders or between any of the Riders and this pre-Rider section of the Agreement, this pre-Rider section of the Agreement shall take first priority, Rider A shall take second priority, Rider B shall take third priority, Rider C shall lake fourth priority, and Rider D shall take fifth priority. 4. Notices. All notices, requests, demands and other communications with respect hereto shall be in writing and shall be delivered via facsimile and by hand, or sent by prepaid, nationally recognized, overnight delivery service, to the following addresses: To UniDev: Jeffrey A. Minter, Executive Vice President UniDev, LLC 500 Ala Moana Boulevard, Suite 7-517 Honolulu, HI 96813 Tel: (808)536-1110 Fax: (808)536-1104 Email: jminter @unidevllc.com With a copy to: Myron P. Curzan, Chief Executive Officer UniDev, LLC 7201 Wisconsin Avenue, Suite 450 Bethesda, MD 20814 Tel: (301)656-7742 Fax: (301)656-7764 Email: mcurzan @unidevllc.com And a copy to: Franklin Mukai, Esquire PO Box 2800 Five Waterfront Plaza, 4"'Floor 500 Ala Moana Blvd. Honolulu, HI 96813 Tel: (808)529-7300 Fax: (808)524-8293 Email: fkm @m4law.com 2 To the Sponsor. County of Hawaii clo Edwin S. Taira, Housing Administrator County of Hawaii Office of Housing and Community Development 50 Wailuku Drive Hilo, HI 96720 Tel: (808)961-8379 Fax: (808) 961-8685 Email: ohcddev@?co.-hawaii.hi.us [remainder of page intentionally left blank] :3 IN WITNESS WHEREOF, the parties hereto have executed this Development Services Agreement as of the date first above written. SPONSOR: County of Hawaii By: f 4af�, Maygf DIXIE KAUSUManaOig vireuor APPROVAL RECOMMENDED: By: Edw . Taira Housing Administrator Date:__ n9 ir_�G APPROVED AS TO FORM AND LEGALITY: Deputy Corporation Counsel Date: rL` 'Z$'cy' UNIDEV: UniDev, LLC Subscribed and swan befae me this _dar of b Zy toila vanes b s,tVosary Pu tia. j in and(oc rrland. By: Myr P. Curzan an Chief Executive Officer J By: re y i er Executive 1/ce President 4 CERTIFICATE, OF AUTHORITY TO ENTER INTO AN AGREEMENT WITH HAWAII COUNTY, HAWAII I,Jaunes ff. Edmondson, President of UniDev, I.f_C ("the Company"), certify that the Members of the Company have specifically authorized Jeffrey A. Minter. Ux'ecutive Vice President of the Company, to execute on behalf of the Company any and all contracts and agrecmcnts required to consummate and/or modify the relationship between the County of Hawaii (the"County")and the Company with respect to the workforce housing project in Hawaii County known as the Waikoloa Fmployee Housing project (the-Waikoloa Project"). The foregoing authorization is effective as of January 24, 2006 and shall continue until the earliest to occur of. a) the completion of the Waikoloa Pr(ject; b) the termination of' Mr. Minter's employment with the Company, or c) the termination of the relationship between the Company and the County. This authorization and certification are consistent with the bylaws of the Company. UNIDEV. I,I.(' ames t . E iuondson --- resident -%bwriibbedd and swan,b960 me aN leifa w Al. �1 Pub�R 20 In and for www-emidevllc .(on 7101 Wk((>nsw Avenue-, tiuN(, I )'Of Belflesda, MIS _0814 • Phoney ( ;Ql) h')()-7-`1' I ax f3OI1 656 ?0•1 STATE OF HAWAII } ) SS. COUNTY OF HAWAII ) On this 2nd day of March 2006, before me personally appeared. DIXIF. KAEYSU, to me personally known, who, being by me duly sworn, did say that she is the Managing Director of the County of Hawaii, a municipal corporation of the State of Hawaii; that the seal affixed to the foregoing instrument is the corporate seal of said County of Hawaii; that the foregoing instrument was signed and sealed in hehalf of the County of Hawaii by authority given to said Mayor of the County of Hawaii by Section 5-1.3(g) of the County Charter, County of Hawaii (2000), as amended, and assigned by the Mayor to the Managing Director pursuant to Section 6-1.3(11) of the County Charter; and said DIXIE KAl''I'SU acknowledged said instrument to be the tree act and deed of said County of Hawaii. 'IOTA ,¢ CAT "C. CORRFIA Notary Public, State of Hawaii B�<<� Nly commission expires: 10/13;06 OF HA STATE OF HAWAII ) SS: COUNTY OF HAWAII ) On this Yk day of C va. 20 0 before me personally appeared .7-Z d M: to me known to be the person described herein and who executed the foregoing instrument, and acknowledged that he/she executed the same as hi s44Q.L free act and deed. Witness my hand and seal. Glenn T. Ya ne L14 Notary Public, Third Judicial Circuit My COmmi ss ion Expires: to RIDER A-GENERAL TERMS 1. Commencement of Work. Phase II shall not commence until (a) UniDev and the Sponsor each have received a fully executed counterpart of this Agreement, (b) UniDev has received the first installment of the Phase II Fee(as defined and described in Rider D), and (c) UniDev has received from the Sponsor, or from OHCD on the Sponsor's behalf, a notice to proceed (either verbal or written). 2. Invoices: Consultants* Payment (a) Invoices shall be submitted to the Sponsor address stipulated in this Agreement. The Agreement date and UniDev's Federal Taxpayer Identification Number shall be included on each invoice. The final invoice shall be marked as such. The timing for submission of such invoices and for the payments to UniDev shall conform to the terms set forth in Rider D. (b) In the event that additional services are performed as authorized under this Agreement, UniDev shall submit separate invoices for such additional services,which shall be marked as such. (c) Subject to the conditions set forth herein. UniDev shall be reimbursed for the following (collectively, the"Reimbursable Costs"): actual, out-of-pocket costs of all reasonable travel, subsistence and business expenses (including third-party document reproduction costs, conference calling charges, overnight delivery service fees, and similar types of costs)necessary for the performance of the Services pursuant to this Agreement. In addition, it is understood and agreed that(i)the Sponsor or the SPE (as hereinafter defined), if and when such entity shall be in existence and sufficiently capitalized and shall have been assigned this Agreement by the Sponsor, shall be responsible for the performance of the Sponsor's obligations hereunder, including the payment of any and all fees or expenses of any consultants engaged by UniDev on behalf of the Sponsor to assist in the performance of the Services or to perform other services on behalf of the Sponsor(collectively, the"Consultants"), (ii)all invoices received by UniDev from any Consultant shall be reviewed and, once approved, submitted to the Sponsor or the SPE, as applicable, for processing, and(iii)the Sponsor or the SPE, as applicable, shall pay such Consultants directly. Prior approval by the Sponsor shall be obtained for all Consultants and for their fees and estimated expenses; such fees and estimated expenses shall be included in the Project budget.As soon as practicable after execution of this Agreement, UniDev shall furnish to the Sponsor in writing the names of persons or entities that are proposed to be engaged as Consultants under this Agreement. It is understood and agreed that UniDev shall have the right and responsibility for selecting and terminating such Consultants, subject to the review and approval of the Sponsor or the SPE. (d) Except as set forth in Rider D, each invoice shall be submitted within fifteen (15) calendar days after the end of each calendar month during the term hereof, and each payment shall be due within thirty(30)calendar days after receipt of a complete and accurate invoice. (e) UniDev shall keep accurate records of its Services in order to adequately document the extent of the Services it has provided under this Agreement. (f) In the event that any excise taxes are due with respect to any payments made pursuant to this Agreement, the Sponsor shall be responsible for the payment thereof 5 N (which amount shall be in addition to the payment amounts set forth herein)and for filing any documentation required to be reported by the payor. 3. Independent Status. UniDev, and the agents and employees of UniDev, in the performance of this Agreement, shall act in an independent capacity and not as officers, employees or agents of the Sponsor or any affiliate thereof. 4. Conflict of Interest. UniDev will provide recommendations for the actions that are required, suggested or otherwise deemed appropriate and that include the provision, acquisition or delivery of products or services. UniDev shall provide full disclosure of any financial interest including but not limited to service agreements that may foreseeably allow UniDev to materially benefit from the adoption of such recommendations. Upon any disclosure of a conflict of interest, the Sponsor may require competitive bidding for the relevant product or service. 5. Governing Law. This Agreement and all contracts and purchase orders shall be construed in accordance with, and their performance governed by, the laws of the State of Hawaii(the "State"). Further, UniDev shall comply with all municipal, State and federal laws applicable to UniDev's performance under this Agreement. 6. Assignments. This Agreement is not assignable by UniDev either in whole or in part without the prior written consent of the Sponsor, which consent may be withheld at the sole and absolute discretion of the Sponsor. The Sponsor, with the prior written consent of UniDev, may assign this Agreement to a non-profit entity established or approved by the Sponsor to undertake the Project and that has the authority to enter into this Agreement and other contractual arrangements, provided that the Sponsor shall assign this Agreement to the SPE upon its formation. In addition, the Sponsor and the SPE shall each have the right, in connection with any financing it may obtain for the Project, to assign its interest hereunder for collateral purposes, and UniDev agrees to execute and deliver any consent to or acknowledgment of any such collateral assignment. 7. General Indemnity. (a) The Sponsor shall indemnify and hold harmless UniDev for damages and costs caused by the negligence, gross negligence or willful misconduct of the Sponsor's officers, agents and employees occurring in the performance of(or failure to perform under)this Agreement. (b) UniDev shall indemnify and hold harmless the Sponsor for damages and costs caused by the negligence, gross negligence or willful misconduct of UniDev's officers, agents and employees occurring in the performance of(or failure to perform under)this Agreement. (c) In the event that a claim, suit or action (i)names both the parties hereto, (ii) alleges an act or failure to act by UniDev's officers, agents or employees for which UniDev must indemnify the Sponsor pursuant to Section 7(b)above, and(iii)does not allege an act or failure to act by the Sponsor for which the Sponsor must indemnify UniDev pursuant to Section 7(a) above or only alleges an involvement by the Sponsor in the claim, suit or action as a result of its execution of this Agreement with UniDev, then in such event, UniDev shall defend Sponsor from and against such claim, suit or action. 8. Insurance. Throughout the term of this Agreement, UniDev shall maintain the following insurance from a company or companies reasonably acceptable to the Sponsor and lawfully authorized to do business in the jurisdiction in which the Project is located* fi (a) Commercial general liability insurance with a minimum limit of$1,000,000 for bodily injury and property damage per occurrence, (b) Workers'compensation insurance that complies with all of the provisions of the Worker's Compensation Insurance and Safety Acts of the State:and (c) Professional liability insurance with minimum limits of$1,000,000 per occurrence. Any agreement entered into by UniDev with a third-party service provider to perform any of the Services shall contain the same insurance requirements as set forth above; provided, however, that if UniDev believes the insurance to be required by such third-party should differ from the above, given the scope of the Services to be performed by such third-party, UniDev shall obtain the Sponsor's approval therefor prior to entering into such agreement. 9. Use of Data; Confidentiality Work Product. (a) UniDev shall not utilize any information not a matter of public record that it receives by reason of this Agreement for pecuniary gain not contemplated by the terms of this Agreement, regardless of whether UniDev is or is not under contract at the time such gain is realized. Any report, survey,or other product developed by UniDev pursuant to this Agreement is the property of the Sponsor and shall not be made public by UniDev unless authorized to do so by the Sponsor. UniDev shall not be prevented from referring to the Sponsor as a client or describing the nature of its work with the Sponsor. (b) All financial, statistical, personal, technical and other data and information relating to the Sponsor's operations that are furnished by the Sponsor and made available to UniDev, or that become available to UniDev in order to carry out this Agreement, shall be protected by UniDev from unauthorized use and disclosure. UniDev shall not, however, be required by this Section to keep confidential any data or information that is or becomes publicly available, is already rightfully in UniDev's possession,is independently developed by UniDev outside the scope of this Agreement, is rightfully obtained from third parties, or is required to be disclosed by applicable law or court order. (c) Any work product developed, gathered,compiled or obtained by UniDev pursuant to this Agreement shall become the property of, and shall be turned over to, the Sponsor upon receipt by UniDev of all payments due hereunder,whether upon completion of the Services or the earlier termination of this Agreement. 10. Term_ ination. (a) Either the Sponsor or UniDev may terminate this Agreement without cause upon ninety(90)calendar days prior written notice to the other party. (b) In the event that: (i) UniDev substantially fails to perform under this Agreement or acts in a negligent manner such that the duties required are not substantially fulfilled or is so negligent as to jeopardize the completion of the Project; or (ii) UniDev becomes insolvent, is adjudged a bankrupt, makes a general assignment for the benefit of its creditors, or becomes the subject of any proceedings commenced under any statute or law for the relief of debtors: or 7 EMI (iii) A receiver, trustee or liquidator of any of the property or income of UniDev shall be appointed, then the Sponsor may terminate this Agreement if UniDev fails to cure such event within thirty(30)calendar days after receipt of written notice thereof from the Sponsor. (c) In the event that the Sponsor substantially fails to perform under this Agreement or makes a material misrepresentation in connection with the formation of this Agreement, and the Sponsor fails to cure such failure or misrepresentation within thirty(30)calendar days after receipt of written notice of such failure or misrepresentation, then UniDev may terminate this Agreement upon the expiration of such notice and cure period. In the event that UniDev elects to terminate this Agreement pursuant to the foregoing sentence, UniDev will continue to work under this Agreement for a period in excess of the required notice period in the event that the Sponsor and UniDev agree that it shall be to the benefit of both parties and to the Project for UniDev to complete a Phase of the Project commenced under the supervision of UniDev before said termination notice was given to the Sponsor. (d) In the event that this Agreement is terminated for any reason prior to the completion of the Services, UniDev shall be paid the Development Fee (as defined in Rider D) based on the pro rata portion of the percentage earned or the stipulated formula,and any outstanding Reimbursable Costs, all as set forth in Rider D.as of the date of termination. In addition,within thirty(30)days after any such termination and receipt of invoices as described below, the Sponsor shall pay the fees and expenses of each consultant engaged by UniDev on behalf of the Sponsor, provided that(i)such consultant shall have been approved by the Sponsor,as provided in Section 2(c)of this Rider A; (ii)such consultant shall submit to the Sponsor reasonably detailed invoices for the fees and expenses claimed; and (iii)the amount of such payment shall not exceed the amount budgeted for such consultant's services in the Confirmatory Budget(as defined in Rider B), the Predevelopment Budget (as defined in Rider B), or a construction budget, as applicable, as the same may be amended. 11. Personnel. (a) UniDev's personnel shall perform their duties off and on the Site. (b) Throughout the term of this Agreement, so long as Myron P. Curzan and Jeffrey A. Minter remain employees of UniDev, UniDev shall use its best efforts to ensure that they each remain personally involved in providing the Services. In the event that, for any reason, Jeffrey A. Minter is no longer actively involved in the performance of the Services, then the Sponsor shall have the right, using its reasonable discretion, to disapprove any individual suggested by UniDev to serve as his replacement with respect thereto. (c) This Agreement anticipates the assignment of several members of UniDev's staff, in addition to Myron P. Curzan and Jeffrey A. Minter, to perform the Services. The Sponsor shall have the right, using its reasonable discretion, to disapprove these employees or any other of UniDev's personnel substituted for the originally assigned employees, either at the time of assignment or thereafter. If the Sponsor exercises this right,and UniDev cannot immediately replace the disapproved personnel, the Sponsor agrees to an equitable adjustment in schedule or other terms that may be affected thereby. (d) UniDev shall make every effort consistent with sound business practices to honor the specific requests of the Sponsor with regard to assignment of its employees, subject to subsection (c)hereof, to determine the assignment of its employees. If an employee of UniDev is unable to perform due to illness, resignation, or other factors beyond UniDev's control, 8 N UniDev shall make every reasonable effort to provide suitable substitute personnel within sixty (60)calendar days or as mutually agreed upon. (e) This Agreement shall not prevent UniDev from performing services similar to that performed under this Agreement nor restrict UniDev from using the personnel assigned to perform under this Agreement to perform such similar services with respect to other clients and other projects, provided that such use does not conflict with or adversely affect the performance of services under this Agreement. 12. Nondiscrimination. During the performance of this Agreement, UniDev agrees as follows: (a) UniDev shall comply with all requirements set forth in federal and State laws and regulations relating to Title VI of the Civil Rights Act of 1964,as amended,which provide for non-discrimination in federally assisted programs. (b) UniDev shall not discriminate against any employee or applicant for employment because of race, ancestry/national origin, religion, color, disability, age, marital status, military status, veteran's status, sexual orientation, lactation, arrest and court record, citizenship, or any other classification protected by State or federal law. UniDev shall assure that applicants are considered during the application process and that employees are treated during employment without regard to race, ancestry/national origin, religion, color, disability, age, marital status, military status, veteran's status, sexual orientation, lactation, arrest and court record, citizenship, or any other classification protected by State or federal law. Such action shall include, but not be limited to, the following: employment, upgrading, demotion, or transfer; recruitment or recruitment advertising; layoff or termination; rates of pay or other forms of compensation;and selection for training. UniDev agrees to post in conspicuous places notices to be provided by the contracting officer setting forth the provisions of the nondiscrimination clause. (c) UniDev shall in all solicitations or advertisements for employees placed by or on behalf of UniDev, state that all qualified applicants shall receive consideration for employment without regard to race, ancestry/national origin, religion, color, disability, age, marital status, military status, veteran's status, sexual orientation, lactation,arrest and court record, citizenship, or any other classification protected by State or federal law. (d) In the event of UniDev's noncompliance with the nondiscrimination clauses of this Agreement, this Agreement may be canceled or suspended in whole or in part and UniDev may be declared ineligible for further County contracts until such time that UniDev by satisfactory evidence, in good faith, ceases such discriminatory practices or procedures. (e) If UniDev subcontracts any portion of this Agreement, it shall assure the County that such subcontractor shall abide by the nondiscrimination provisions stated herein and agrees that any subcontractor who is found in violation of such provisions shall be subject to the same termination or suspension provision as set forth in subsection (d)above. (f) The parties acknowledge and agree that the Sponsor may direct any bidder, prospective contractor or subcontractor to submit a statement in writing, signed by an authorized officer, agent or employee of the contracting party, stating that the signer's practices and policies do not discriminate on the grounds of race,ancestry/national origin, religion, color, disability, age, marital status, military status, veteran's status,gender, sexual orientation, lactation, arrest and court record, citizenship, or any other classification protected by State or federal law, and that the terms and conditions of employment under the proposed contract shall be in accordance with the purposes and provisions state herein. 9 SW 13. Dispute. Any dispute arising under the terms of this Agreement that is not resolved within a reasonable period of time by authorized representatives of UniDev and the Sponsor shall be brought to the attention of the Chief Executive Officer of UniDev and the Executive Director of the Sponsor for joint resolution. Thereafter, if the matter in dispute is still unresolved, then the parties shall in good faith mutually appoint a mediator to mediate the dispute, provided that if the parties cannot agree upon a mediator, then either a p rty may petition a court of competent jurisdiction to appoint a mediator. If the matter in dispute is still not resolved by mediation, then the parties shall submit the matter to arbitration as provided in the"Uniform Arbitration Act"under State law. The award of the arbitrator shall be final and binding upon the parties unless the award is vacated or modified in the manner provided in said Uniform Arbitration Act. Any mediation or arbitration proceeding shall take place in Hilo, Hawaii, unless otherwise mutually agreed upon by the parties. UniDev shall proceed diligently with performance of the services specified hereunder at all times in accordance with this Agreement. Such performance shall continue despite claims, disputes or Sponsor-caused delays. During the pendency of any claim,dispute or other matter covered hereunder or during any legal,equitable, mediation or arbitration proceeding, UniDev shall continue to diligently provide services in accordance with all of the provisions of this Agreement;provided, however, that UniDev shall be paid for such portion of UniDev's services as shall not be in dispute. 14. Rights and Remedies. (a) Subject to the requirements for mediation and arbitration as provided herein, the rights and remedies of the Sponsor and UniDev provided herein shall not be exclusive,and are in addition to any other rights and remedies provided by law. (b) The delay or failure of either party to exercise any of its rights under this Agreement for a breach hereof shall not be deemed to be a waiver of such rights, nor shall the same be deemed to be a waiver of any subsequent breach, either of the same provisions or otherwise. No waiver of any of the terms of this Agreement or of any breach of its terms shall be effective unless such waiver is in writing and signed by the waiving party. (c) All actions or claims against either the Sponsor or UniDev arising under or relating to this Agreement shall be made only against such party as a corporation or other legal entity, and any liability relating thereto shall be enforceable only against the corporate assets of such party. (d) In the event of a dispute between the parties hereto with respect to any of the obligations set forth in this Agreement, the prevailing party shall be entitled to recover reasonable attorney's fees and costs provided, and to the extent, that the non-prevailing party shall be covered therefor pursuant to a policy of insurance held by such non-prevailing party. 15. Additional Services. The Sponsor may, from time to time, commission UniDev to perform work in addition to the Services set forth herein, either because such additional work is currently unanticipated and, in the opinion of the parties hereto, is necessary to the successful accomplishment of the general scope of work outlined herein, or because the parties agree that UniDev's performance of such additional work is desirable. In each event that such additional work is commissioned, the procedures outlined in this Section shall be employed. (a) An amendment to this Agreement shall be prepared and shall be incorporated herein as an addendum. 10 (b) It is understood and agreed by each of the parties to this Agreement that all of the terms and conditions of this Agreement shall remain in force with the inclusion of any such amendment. Such amendment shall in no way constitute a separate contract nor in any way amend or supersede any of the other provisions of this Agreement, except as specifically set forth therein_ (c) Each amendment to add work shall consist of a detailed statement of the purpose, objective, or goals to be undertaken by UniDev, an identification of all significant materials or resources to be delivered by the Sponsor to UniDev,an estimated time schedule for the work to be performed, completion criteria for the work to be performed, and UniDev's total charges for the work to be performed pursuant to the amendment. work. (d) All amendments must be fully executed by the parties hereto prior to beginning (e) All additional work established pursuant to this Section or that is outside the scope of the original terms of this Agreement and that is not covered by the Development Fee (as defined and described in Rider D to this Agreement)shall be invoiced separately and identified as such. 16. Control and Supervision. The Services provided by UniDev with respect to the Project shall be under the control, management, and supervision of the Sponsor. The Sponsor shall notify UniDev,within five(5)calendar days after the date hereof, of the individual(s)appointed by the Sponsor to serve as UniDev's primary contact(s)for purposes of undertaking the Services and for invoicing matters. 17. Standard of Care: Limit of Authoritv. (a) UniDev accepts the relationship of trust and confidence established between it and the Sponsor and covenants with the Sponsor to at all times perform the Services in accordance with the standards of professional competence applicable to nationally-recognized owner's representative firms doing projects of this scale and type. (b) UniDev acknowledges that the Sponsor desires for the Project to be of the highest quality possible within the limits of the applicable budget and in accordance with the Sponsor's reasonable criteria and instructions. UniDev shall at all times diligently use its best efforts, subject to the standard of care described in subsection (a)above to attain the Sponsor's objective of a high quality, first class Project within the limits of the applicable budget and in accordance with the Sponsor's reasonable criteria and instructions. (c) UniDev, as the Sponsor's representative for the development of the Project, shall be authorized to act on the Sponsor's behalf with respect to the development of the Project as specifically set forth in this Agreement. Notwithstanding the foregoing, without the prior written approval of the Sponsor(which approval may be granted or withheld in the Sponsor's sole and absolute discretion), UniDev shall not have the authority to(i)issue any instructions or approvals which would result in an expense to or payment by the Sponsor in excess of Ten Thousand Dollars ($10,000.00), (ii) amend or terminate any of the agreements to be executed pursuant to Section 3.1.1.2 of Rider B, (iii)suspend, delay or interrupt all or any part of the prime contractor's or architect's services or duties under their respective agreements, (iv)issue any order to accelerate the work under the construction agreement or the architect's agreement, (v)grant any extension of time to the architect, prime contractor or any other service provider engaged pursuant to an agreement described in Section 3.1.1.2 of Rider B, (vi) award any t1 bonus, (vii)approve any claim for liquidated or other damages, or(viii)enter into any contracts on the Sponsor's behalf. 18. Miscellaneous. (a) Time is of the essence under this Agreement. (b) No alteration or variation of the terms of this Agreement shall be valid unless made in writing and signed by all of the parties hereto, and no oral understanding or agreement not incorporated herein shall be binding on any of the parties hereto. (c) The terms of this Agreement are severable such that if any term or provision is declared by a court of competent jurisdiction to be illegal, void, or unenforceable, the remainder of the provisions shall continue to be valid and enforceable. (d) Except as otherwise provided in this Agreement, all provisions in this Agreement shall be construed subject to a standard of reasonableness. (e) Each party executing this Agreement represents and warrants to the other that such party(i)has all requisite power and authority to enter into and perform the terms of this Agreement without the consent of any other person or entity whose consent has not been obtained; and (ii)is unaware of any order or requirement of any authority with jurisdiction, or any this Agreement. claim, pending or threatened, that may have a materially adverse effect on the performance of (f) Each party to this Agreement agrees to cooperate with the other as necessary to permit the other to carry out the obligations and intentions of this Agreement. (g) In the event that any action shall be brought to confirm or enforce an arbitration award pursuant to this Agreement, the appropriate venue shall be in the Third Circuit Court, Slate of Hawaii. Each of the parties consents to the jurisdiction of the foregoing courts and waives any objection to venue therein, including without limitation any objection based upon forum non conveniens. (h) This Agreement may be executed in counterparts, and by each party on separate counterparts, all of which together shall constitute one agreement binding on the parties hereto, notwithstanding that the parties are not signatories to the original or the same counterpart. 12 %V RIDER B-SERVICES BY PHASE This Rider B may be changed from time to time by written amendment to this Agreement. All references to the Sponsor shall include an Executive Group (as hereinafter defined) and a Working Group (as hereinafter defined)established by the Sponsor and UniDev, and/or the SPE. UniDev agrees to provide the services set forth in this Rider B (collectively, the "Services") during the specific Phases of the Project as set forth herein. The Sponsor agrees to participate actively during the applicable Phases of the Project as set forth herein. The Sponsor understands and agrees that, in order to enable UniDev to timely deliver the Services, the Sponsor shall be required to actively participate in the development process and timely make decisions, deliver approvals and discharge all of its other obligations hereunder. UniDev agrees to undertake the Services, and the Sponsor agrees to participate in the undertaking of the Services, as set forth in this Rider B, subject to and in compliance with any applicable requirements set forth in any financing documents to which it is a party or otherwise subject. 1. PHASE I -PRELIMINARY ANALYSIS/CONCEPTUAL PLANNING SERVICES During Phase I of the Services, UniDev, in collaboration with its consultants and the Sponsor, planned, prepared for,organized and facilitated a conceptual planning workshop,which took place from July 25 through July 28, 2005(the'Workshop"), and which resulted in the development of an updated conceptual development plan for the Project. In addition, as part of its Phase I Services, UniDev delivered to the Sponsor a report documenting the Workshop and the updated conceptual development plan (the "Workshop Report"). The parties understand and agree that all of the Services required to be performed during Phase I of the Services have been undertaken by UniDev pursuant to the Conceptual Planning Agreement,and that the Sponsor has accepted these Services and has determined to continue with the development of the Project, pursuant to the terms of this Agreement and in accordance with the updated conceptual development plan prepared by UniDev and preliminarily approved by the Sponsor as part of the Workshop (the "Conceptual Development Plan"). See Exhibit A hereto for an accounting of the fees and expenses incurred by the Sponsor in connection with the Phase I Services. 2. PHASE 11-CONFIRMATORY SERVICES Attached hereto as Exhibit B and Exhibit C, respectively, are a budget for the Confirmatory Services (the"Confirmatory Budget")and a predevelopment budget(the "Predevelopment Budget"), setting forth all reasonable and necessary costs of undertaking the Confirmatory Services and the Predevelopment Services, respectively, including fees and expenses related to land planners, civil engineers, architects and other Project Consultants, which amounts were based on the estimates of same provided by such Project Consultants. Execution of this Agreement evidences the Sponsor's approval of such budgets. 13 %W 2.1 UniDev's Phase If Services. During Phase II of the Services, UniDev shall perform the services described in this section (the "Confirmatory Services")in order to confirm its findings, to refine the Conceptual Development Plan, and to obtain approval of the Project as set forth in the revised Conceptual Development Plan. The estimated schedule for performing the Confirmatory Services is attached hereto as Exhibit D. The Confirmatory Services shall consist of the following matters: 2.1.1 Preliminary Activities. UniDev shall undertake the following preliminary tasks: 2.1.1.1 Formation of a committee, which shall include executives of the Sponsor and other agreed upon representatives, which shall be controlled by the Sponsor,to consider issues and make decisions regarding the planning for and development of the Project(the"Executive Group"), and one or more committees,which shall include staff of UniDev, the Sponsor and other agreed upon entities, to develop information and recommendations to be considered and decided upon by the Executive Group(the"Working Group"). 2.1.1.2 Assist the County in the formation of a non-profit corporation, instrumentality, or a land trust (the "Land Trust"), the board of directors of which shall be comprised primarily of Executive Group members, to hold title to the Site. 2.1.1.3 Assist the County in the selection, or formation of the SPE that shall be the master ground lessee under the ground lease from the Land Trust, and shall undertake the development of the Project. 2.1.1.4 Interact with the Sponsor and the Working Group to provide complete yet easy to read documents that facilitate efficient decision- making by the Executive Committee. 2.1.2 Refinement of Conceptual Development Plan. UniDev shall refine the Conceptual Development Plan, with the goal of obtaining approval thereof, which shall include undertaking the following tasks (as necessary and/or applicable): 2.1.2.1 Develop basic plans for off-site infrastructure requirements, including: water, sewer, electric power and roads. 2.1.2.2 Develop basic plans for on-site infrastructure requirements, including: water, sewer, electric power, storm water run-off, and roads. 2.1.2.3 Determine the governmental entitlements and approvals that will be required to proceed with the Project. 2.1.2.4 Determine priority of residents, and undertake market studies of Waikoloa area employees—particularly hotel and resort workers, public employees, and low-and moderate-income households —to derive the market demand for for-sale and rental housing at the Project. 2.1.2.5 Set forth a program for for-sate and rental units —including unit sizes and types—and estimate the expected development costs. 14 2.1.2.6 Establish a program for on-site amenities and estimate expected development costs. 2.1.3 Financing Issues. UniDev shall undertake the following tasks related to financing issues: 2.1.3.1 Estimate costs for developing off-site and on-site infrastructure, and develop methods for paying for improvements. 2.1.3.2 Prepare financing options with respect to the construction and purchase of the various housing units by homeowners. 2.1.3.3 Commence process for obtaining all required regulatory and tax approvals. 2.1.3.4 Finalize the ground lease. 2.1.3.5 Commence the process of obtaining pre-development financing, in accordance with the Predevelopment Budget. 2.1.4 County Council Approval. UniDev shall undertake the following tasks in order to achieve approval of the revised Conceptual Development Plan (as so approved, the "Development Plan"): 2.1.4.1 Prepare and present a comprehensive presentation to the Mayor and the Hawaii County Council describing the Conceptual Development Plan. 2.1.4.2 Prepare and deliver to the Mayor and the Hawaii County Council a comprehensive package(the "Conceptual Planning Package*) that includes the revised Conceptual Development Plan—including the schematic site plan, the phasing plan, the financing plan, the land use program, and the implementation plan —as well as the ground lease, the Development Services Agreement, the organizational documents for the Land Trust and the SPE, and the documentation necessary for formation of the CFD. 2.1.4.3 Provide additional backup information as may be requested by the Mayor or the Hawaii County Council in connection with their review of the Conceptual Planning Package. 2.2 Sponsor's Phase 11 Services. During Phase II, the Sponsor shall assist UniDev, as applicable, in the delivery of the Confirmatory Services, including providing information and staff as reasonably available and requested, participating in Working Group and Executive Group meetings, as applicable, and working collaboratively to obtain approval of the Conceptual Planning Package from the Mayor and the County Council. 15 3. PHASE III - PREDEVELOPMENT SERVICES 3.1 UniDev's Phase III Services. During Phase III of the Services, UniDev shall perform the services described in this section (the"Predevelopment Services") such that the Project is made ready for Phase IV as set forth below;provided, however, that one or more of the Construction Phases (as hereinafter defined)will be ready for and cause the commencement of Phase IV of the Services with respect thereto, prior to the remainder of the Construction Phases being ready for Phase IV of the Services. The Predevelopment Services shall be based on the Conceptual Development Plan. It is understood and agreed that the Predevelopment Services may be suspended, at the request of the Sponsor, in the event that Predevelopment Funding (as hereinafter defined)for the Project is not approved within six(6)months after the commencement of such Services, unless such suspension date is extended by the Sponsor. The Predevelopment Services shall include the following matters: 3.1.1 Administrative/Oversight Activities. 3.1.1.1 On behalf of the Sponsor, supervise and report on the development process to: Enable the Sponsor to participate in the development process. • Ensure (to the extent controllable by UniDev) that budgets and schedules are met. • Provide (to the extent controllable by UniDev) for quality of facilities. 3.1.1.2 Coordinate with the Sponsor on the establishment of appropriate development/design contracts in the following areas: • Between UniDev and builders. • Between UniDev and land planners. • Between UniDev and architects/engineers. • Between UniDev and other similar parties to the development process. 3.1.1.3 Advise the Sponsor on the establishment of appropriate financial and management contracts in the following areas: Between the Sponsor and financial institutions. • Between the Sponsor and management companies. • Between the Sponsor and brokers. 3.1.2 Ownership Structuring & Financing Activities. 3.1.2.1 Provide advice to achieve the most favorable operating structure for the Sponsor: • Create beneficial financial and operational arrangements for the Project. Document operating structures available to the Project. 3.1.2.2 Advise the Sponsor on methods for achieving favorable transactions and maximizing income for the Project through the following activities: 16 Iwo Identify applicable green building/sustainable building products and designs, set forth their costs and benefits, and oversee appropriate implementation. • Monitor and utilize beneficial private and public financing programs and combine with lax-exempt financing to reduce costs. • Identify opportunities for third-party contracts, set forth cost benefits, and oversee selection and documentation of service contracts. 3.1.2.3 Assist the Sponsor in addressing organizational/ownership issues, including: • Finalize the sub-ground lease. • Identify the most appropriate entities to own and buy back units, to finance the infrastructure,and to manage the Project once it has been built. 3.1.2.4 Work with selected financing entities to ensure that adequate funds are made available to construct the entire Project. • Work with the Sponsor on finalizing financing approach for construction and participate in negotiations. • Work with Fannie Mae and its bank partners to ensure that financing programs can be put in place. • Work with financing entities to insure that appropriate funding mechanisms are in place for the Project's financing so as to reimburse the Sponsor for all Project costs incurred, and to fully compensate all members of the development team in accordance with Rider D. 3.1.2.5 Advise the Sponsor by establishing pro forma costs and revenue projections of various options that will result in a positive cash flow. 3.1.2.6 Advise the Sponsor by proposing alternative and favorable financing structures and establishing Project development financial models that show: • Debt and equity financing options. Total project development costs of all components. • Total project revenue/cost models. 3.1.3 Project Design Activities. 3.1.3.1 Undertake the following general duties: • Review complete site development program with the Sponsor. • Review schematic design with the Sponsor's project team. • Review construction specifications with the Sponsor's project team. • Provide updated pro forma costs versus budget as necessary through variance analyses. • Participate in value engineering sessions. 3.1.3.2 Identify opportunities in the following areas for the Sponsor to develop state of the arl buildings and policies: • "Green building"options and cost benefits. 17 • "Smart building"options and cost benefits. • Establishment of energy efficiency guidelines and cost benefits. • Establishment of energy and cost efficient delivery systems. • Evaluate sustainability approaches by architects and engineers. 3.1.3.3 On behalf of the Sponsor, supervise and report on the planning and design progress of the Project to ensure (to the extent controllable by UniDev)that: • Budgets are met. • Time schedules are met. Quality standards are met. • Appropriate personnel are assigned to the Project. 3.1.4 Development Approval& Financing Activities. 3.1.4.1 Assist the Sponsor in applying for and obtaining pre-development financing for the Project(the "Predevelopment Funding"),which shall be secured by the Site and/or the ground lease thereof, as applicable, provided by Fannie Mae and/or another financing entity, and in an amount sufficient to cover the Phase II Fee and the Monthly Payments (as hereinafter defined)and all costs set forth in the Predevelopment Budget. 3.1.4.2 On behalf of the Sponsor, confirm that all Project financing is ready to close and that land and project development plans are sufficiently complete so as to commence development of the Project; provided, however, that one or more of the Construction Phases will be ready for and cause the commencement of Phase IV of the Services with respect thereto, prior to the remainder of the Construction Phases being ready for Phase IV of the Services. 3.1.4.3 Obtain approval from the Sponsor to implement development of the Project, including closing on all or a portion of the infrastructure financing(the"Infrastructure Funding")and/or the vertical construction financing(the"Vertical Construction Funding"and, together with the Infrastructure Funding, the "Construction Funding")therefore_ 3.1.4.4 Cause all or a portion (sufficient to complete the infrastructure work within the applicable Construction Phase)of the Infrastructure Funding to be closed, and the first draw thereon(the "First Draw")to be taken. The First Draw shall be used, as needed and as available, to repay the Predevelopment Funding. 3.1.4.5 Cause all or a portion (sufficient to complete the vertical construction work within the applicable Construction Phase)of the Vertical Construction Funding to be closed. 3.1.5 Homeowner Counseling. Assist the Sponsor in developing and delivering homeownership counseling services to prospective hornebuyers. 18 3.2 Sponsor's Phase III Participation. During Phase 111 of the Services, the Sponsor shall, among other activities,work with UniDev to obtain the Predevelopment Funding and close on the Construction Funding. 4. PHASE IV—DEVELOPMENT/CONSTRUCTION SERVICES 4.1 UniDev's Phase IV Services. During Phase IV of the Services, UniDev shall perform the services set forth herein (the "Development/Construction Services") with respect to each Construction Phase in order to establish and manage the construction process for the Project. It is understood that the Development/Construction Services shall only be commenced with respect to the first Construction Phase of the Project once the First Draw has occurred. The Development/Construction Services shall include the following services: 4.1.1 Project Management 4.1.1.1 Undertake the following general duties: d• Set up draw schedules and forms required for requesting raws. • Meet regularly on draw requests from contractors. • Work with demolition consultant on best approaches (if any demolition is necessary). • Oversee demolition work(if necessary). Meet regularly with builders and architects. • Work with builder to oversee construction and coordinate inspections with job completion activities. • Plan and set up unit customization approach and building center. • Establish warrantee approach. • Monitor application of warrantees. • Work out map recordation process. 4.1.1.2 On behalf of the Sponsor, supervise and report on the permitting and construction progress of the Project to ensure (to the extent controllable by UniDev)that: • Budgets are met. • Time schedules are met. • Quality standards are met. • Sale and/or rent-up of facilities takes place per arrangement with the Sponsor. • Appropriate personnel are assigned to the Project. 4.1.2 Marketing Tasks 4.1.2.1 Create sales office and sales program. 4.1.2.2 Supervise design of marketing materials. 4.1.2.3 Where applicable, prepare operating budgets and help the Sponsor employ appropriate management companies. 4.1.2.4 Work with the Sponsor to negotiate appropriate contracts with management companies. 19 4.1.2.5 Establish approach for monitoring performance of management companies. 4.1.2.6 Assist the Sponsor in preparing pre-qualification requirements for the sales/marketing vendor. 4.1.2.7 Continue to assist the Sponsor in delivering homeownership counseling services to prospective homebuyers. 4.2 Sponsor's Phase IV Participation. During Phase IV, the Sponsor shall work cooperatively with UniDev and other team members to ensure the successful development of the Project. 20 RIDER C -PROJECT The parties to this Agreement agree that the Project to be undertaken pursuant to this Agreement can be described as follows- • The development of affordable housing for Waikoloa area employees. • It is currently anticipated that the Project shall include approximately 800 to 1,200 for-sale and rental housing units, as well as related community facilities. The housing units will be designed so as to be affordable to a range of income levels. The intended primary market for the units will be households of employees working in the Waikoloa area(including Waikoloa Beach Resort,Waikoloa Village and government employees working in Waikoloa)earning gross annual incomes in the range of 50% to 140%of the median income of households in the County. In order to make rental units affordable to households earning 50%or less of area median income, the rents for these units will need to be subsidized out of Project proceeds. • The development shall take into consideration and shall fully meet all of the requirements of the County and the State. • The Site will be ground leased by the Non-Profit to the SPE that will in turn sub-ground lease the applicable portions of the Site to homebuyers. • The Project shall be constructed in several phases(collectively, the "Construction Phases"), the timing of which may be sequential or may overlap. Each Construction Phase shall be comprised of infrastructure construction, vertical construction, or some combination of infrastructure and vertical construction_ ?1 ENNENNEMMOMONOW RIDER D-UNIDEWS COMPENSATION BY PHASE 1. Phase I Compensation. UniDev,on behalf of itself and its team, has received compensation in the amount of One Hundred Fifty Thousand Dollars ($150,000)(the "Phase I Fee")for delivery of the Phase I Services pursuant to the Conceptual Planning Agreement. In the event that the Project proceeds to Phase 11, the Phase I Fee shall be identified as a Project cost and may be included in the Predevelopment Budget, at the option of the Sponsor, for reimbursement to the Sponsor out of the Predevelopment Funding. 2. Phase 11 Compensation. During Phase 11 of the Services, UniDev shall be compensated for performing the Confirmatory Services(as set forth in Rider B), subject to the Confirmatory Budget, as follows: (a) Amount. UniDev's compensation for Confirmatory Services shall equal a lump sum of One Hundred Eighty Thousand Dollars($180,000)(the"Phase II Fee"), plus all Reimbursable Costs incurred during Phase 11, but in no event shall the sum of the Phase II Fee and the applicable Reimbursable Costs exceed the total amount of the Confirmatory Budget. (b) Payment. The Phase 11 Fee shall be payable as follows: (i)Seventy Thousand Dollars ($70,000) shall be due and payable at the commencement of Phase 11, (ii) Seventy Thousand Dollars($70,000)shall be due and payable upon the completion of the Conceptual Development Plan refinements, and (ni)Forty Thousand Dollars ($40,000)shall be due and payable upon UniDev's presentation to the Mayor and the County Council of the revised Conceptual Development Plan. Reimbursable Costs shall be payable upon receipt of invoices therefor. (c) Source. The Sponsor shall be responsible for paying the Phase II Fee and the Reimbursable Costs for Phase It and, by executing this Agreement, acknowledges, represents, and warrants that it has sufficient funds to meet the payment schedule as set forth in subparagraph (b)of this Section. The Phase II Fee and the applicable Reimbursable Costs shall be identified as Project costs and may be reimbursed, at the option of the Sponsor, out of Construction Funding. 3. Phase III Compensation. During Phase III of the Services, UniDev shall be compensated for performing the Predevelopment Services (as set forth in Rider B)for each Construction Phase, subject to the Predevelopment Budget, as follows: (a) Amount. UniDev shall receive a monthly payment during each Construction Phase equal to Forty Thousand Dollars ($40,000) (the"Monthly Payments') for performing its Predevelopment Services with respect to the applicable Construction Phase of the Project. In addition, UniDev shall be reimbursed for Reimbursable Costs up to an amount to be agreed upon in the Predevelopment Budget. Notwithstanding the foregoing, in no event shall UniDev's total compensation for the Predevelopment Services exceed an amount that when aggregated with other fees and expenses provided for in the Predevelopment Budget,would cause the total of such fees and expenses to exceed the Predevelopment Budget. (b) Payment. UniDev shall submit invoices in arrears on a monthly basis for the Monthly Payments and Reimbursable Costs payable with respect to the previous month. Payment to UniDev shall be made in accordance with Rider A. 22 OEM (c) Source. The Sponsor shall pay the Monthly Payments and Reimbursable Costs incurred during Phase III until such time as the Predevelopmenl Funding is obtained. The Monthly Payments and Reimbursable Costs shall be identified as Project costs, which should be reimbursed to the Sponsor from the Predevelopment Funding. UniDev and the Sponsor shall use their best efforts to insure that appropriate funding mechanisms are in place for the Project's financing. In the event that the Project proceeds through all or a portion of Phase III but does not proceed to Phase IV for any reason, then upon such determination by the parties hereto, Monthly Payments and all Reimbursable Costs previously paid or then due to UniDev and/or other members of the development team shall be deemed to have been fully earned,and the Sponsor shall be responsible for payment of the remainder unpaid thereof. 4. Phase IV Compensation. During Phase IV of the Services, UniDev shall be compensated for performing the Development/Construction Services(as set forth in Rider B)for each Construction Phase as follows: (a) Amount. UniDev shall receive a fee equal to six percent(6%)of the Development Costs (as hereinafter defined) for each Construction Phase of the Project (the"Development Fee"), which fee shall include all Monthly Payments and all Reimbursable Costs paid during Phase III that are applicable to such Construction Phase. For purposes of this Agreement, "Development Costs"shall mean the total costs of the applicable Construction Phase of the Project, based upon the Project budget(s)as established by the parties at the commencement of construction of such Construction Phase, including (1)for rental units, all hard, soft, and financing costs, that are included in the development of the Project, and (2)for all for-sale units, the sales price of such units, including any capitalized ground lease payments. (b) Payment. The Development Fee shall be payable to UniDev as follows: (i)at the time of Initial Funding (as hereinafter defined), UniDev shall receive a lump sum payment equal to sixty percent (60%)of the Development Fee less any and all Monthly Fees received by UniDev during Phase III (the "Initial Funding Fee Payment"), (ii)during the construction period, UniDev shall receive monthly payments (the "Monthly Construction Period Payment"), equal to 35% of the Development Fee payable, divided by the number of months anticipated to be required in order to achieve completion of the Project,and (iii)the remaining 5% of the Development Fee (the"Retention Amount")shall be due and payable on the date that Notice of Completion is published. (See Exhibit E for an example of how the Development Fee is calculated and paid.) For purposes of this Agreement, "Initial Funding"shall mean the first receipt by the Sponsor of any Construction Funding applicable to such Construction Phase. In the event that, at the time of Notice of Completion, the amount of the Development Fee is greater than the sum of(a)the Initial Funding Fee Payment, plus (b)the Monthly Construction Period Payments, plus (c)the Retention Amount, then the difference shall become immediately due and payable to UniDev. If the amount of the 23 ENEWON Development Fee is less than the above sum, UniDev shall repay such overage to the Sponsor. (c) Source. The Development Fee for each Construction Phase shall be payable out of the proceeds of the applicable Construction Funding. UniDev and the Sponsor shall use their best efforts to insure that appropriate funding mechanisms are in place for the Project's financing. (d) Personnel Costs. In addition to providing the Services and in consideration for the Development Fee, UniDev shall provide a Project Manager and a Site Manager and pay for such Project Manager and Site Manager as part of its Services. Any Construction Accountant that must be retained (either by UniDev or directly by the Sponsor) must be approved by the Sponsor and UniDev and shall be paid for with Construction Funding and shall not be paid out of any of UniDev fees. 24 EXHIBIT A Phase I Fee and Budget Waikoloa Conceptual Planning Workshop Budget Legal (M4) $15,000 Demand Analysis (RCL) $10,000 Marketing (RCL) $6,000 Concept Planning (PBR) $15,000 Engineering (SOH) $15,000 Sustainability(RMI) $3,600 Financial Analysis (UD) $15,000 Management (UD) $18,000 Governmental Relations (]B) $15,000 Expenses $23,763 Contingency @ 10 % $13,636 Total $150,000 Total Workshop Budget $150,000 25 EXHIBIT B Confirmatory Phase Budget for Waikoloa August 1 - February 28, 2006 Architecture $60,000 Land Planning $114,000 Civil Engineering $106,808 Legal Fees National Real Estate $21,000 National Tax Counsel $55,000 Local Counsel $75,000 Marketing Study / Report $35,000 Owner's Representative Fees (Phase III Monthly Payments at $40,000 per month) $180,000 Expenses (10%) - including UnIDev's expenses $64,700 Total $711,508 Contingency (10%) $71,200 Total Confirmatory - including Contingency $782,708 26 EXHIBIT C Estimated Predevelopment Budget; for Waikoloa March 1, 2006 — February 28, 2007 Land Planning (PBR) $125,000 Architectural Plans (MVE) $600,000 (for DD's on two products and schematic on a third product remainder paid from bond financing) Engineering Plans (SOH) $700,000 (remainder is carried for infrastructure financing) Landscape Architecture (PBR) $100,000 Governmental Relations (JBC) $75,000 Legal Fees National Real Estate (MLB) $84,000 National Tax Counsel (A&P) $50,000 (remainder paid from bond Financing) Local Counsel (M4) $95,000 (remainder paid from bond Financing) Green Development (RMI) $60,000 Traffic Engineering Studies (SOH) $50,000 Home Ownership Education Program $50,000 Owner's Representative Fees (UD) $480,000 Expenses (12%) - including UniDev's expenses $296,280 Contingency (10%) $322.780 Total Predevelopment Planning $3,088,060 Utility Will Serve Funding $1,000,000 27 MOMMOMMUMMMS Subtotal Predevelopment $4,088,060 Interest Accrual $161,940 Total $4,250,000 Note: The Predevelopment Budget does not contain all costs necessary to complete the design work for the Waikoloa Employee Housing Project. Funding to support additional Design Costs will be included in the vertical construction and infrastructure financing for each phase of the Project. 28 "two EXHIBIT D SCHEDULE -Y a -f G 0 43 pp a. Y Ai c E c 44 L 10 Of 41 A of �l if LL u 41 lip -4 31 ci a V 14 up 44 IL 0 ii 'A pJ 0 me J ps - , a — (.ii ('A St t, ,D 0 4 6' 0 sp a IL j As u Ic n j 13 'f C U Ll > 101 L a 21 15 AL r u so C as t 0, q 4 7j Y6.0 fl i10 of•ij x f I cl 16 r . U m c -4 C< C 1. '1 0 ri a1 r r z. k, 41-3 -V 41 f C I tl 29 . $ 2 } \ } § � LA w (I k \ / / ( { all I 43 U L :4 3 3 1 -ki "j 74 -; N .: Al 4) gar 4.1 V. ju c 'A LLI U f c a c C 1L a I 9 E 2 .. z 9 k \� ` u E CL .1 u 03 4b } } b ) j� k F , o © 1 ;L. 1:4: U 2 r'l '. 1� 0 1 ! N A a 0 X c Ic r 2� r -,o) Lo 2 41 q 0 yo 30 AJ ej to qj;I ts L 1. lu 12 rl Z IL 0 IL < 3 41 rl 31 EXHIBIT E CALCULATION OF DEVELOPMENT FEE I. PAYMENT ASSUMPTIONS Phases of Services & Fees Payable Phase III Predevelopment ("PD") $40,000 per month Phase IV Construction ("C") Development Fee 6% of Hard Costs, less Predevelopment Fees for Project Development Phase 60% of Development Fee payable at Initial Funding (completion of Phase III) ("IF") 35% of Development Fee payable monthly during Construction 5% of Development Fee payable upon Notice of Completion ("NOC") -Project Development Phases 1 Predevelopment 12 months Construction 12 months Notice of Completion 2 months Hard Cost $20,000,000 Development Fee $1,200,000 2 Predevelopment 6 months Construction 12 months Notice of Completion 2 months Hard Cost $15,000,000 Development Fee $900,000 3 Predevelopment 6 months Construction 12 months Notice of Completion 2 months Hard Cost $15,000,000 Development Fee $900,000 4 Predevelopment 6 months Construction 12 months Notice of Completion 2 months Hard Cost $15,000,000 Development Fee $900,000 5 Predevelopment 6 months Construction 12 months Notice of Completion 2 months Hard Cost $15,000,000 Development Fee $900,000 :12 NNW 11. PAYMENT TIMELINE PROJECT DEVELOPMENT PHASES 1 - �1 -Fee 2- 2-Fee 3- 3-Fee 4- 4-Fee 5- 5-Fee Year Month Service Service Service Service Service 1 1 PD 40,000 2 PD 40,000 3 PD 40,000 4 PD 40,000 5 PD 40,000 6 PD 40,000 7 PD 40,000 8 PD 40,000 9 PD 40,000 10 PD 40,000 11 PD 40,000 12 IF 280,000 2 1 C 35,000 2 C 35,000 3 C 35,000 4 C 35,000 5 C 35,000 6 C 35,000 7 C 35,000 8 C 35,000 PD 40,000 9 C 35,000 PD 40,000 10 C 35,000 PD 40,000 11 C 35,000 PD 40,000 12 C 35,000 PD 40,000 _ 3 1 IF 340,000 2 NOC 60,000 C 26,250 3 C 26,250 4 C 26,250 5 C 26,250 6 C 26,250 � C 26,250 T6 C 26,250 9 C 26,250 PD 40,000 10 C 26,250 PO 40,000 11 C 26,250 PD 40.000 12 C 26,250 PD 40,000 4 1 C 26,250 PD 40,000 2 IF 340,000 3 NOC 45,000 C 26,250 4 C 26,250 5 C 26,250 6 C 26,250 7 C 26,250 s C 26,250 9 C 26,250 10 C 26,250 PD 40,000 11 C 26,250 PD 40,000 _ 12 __ _ C 26.250 PD 40,000 5 1 C 26,250 PD 40,000 2 C 26,250 PD 40,000 3 IF 340,000 4 NOC 45,000 C 26,250 5 C 26,250 6 C 26,250 C 26,250 33 8 C 26,250 9 C 26,250 10 C 26,250 11 C 26,250 PO 40,000 12 _ C 26,250 PO 40 000 6 1 C 26,250 PO 40,000 2 C 26,250 PO 40,000 3 C 26,250 PO 40,000 4 IF 340,000 5 NOC 45,000 C 26,250 6 C 26,250 7 C 26,250 a C 26,250 9 C 26,250 10 C 26,250 11 C 26,250 12 _ C 26.250 7 1 C 26,250 2 C 26,250 3 C 26,250 4 C 26,250 5 6 NOC 45.000 TOTAL 1,200,000 900.000 900,000 900,000 900,000 34 "No AMENDED AND RESTATED DEVELOPMENT SERVICES AGREEMENT THIS AMENDED AND RESTATED DEVELOPMENT SERVICES AGREEMENT(this "Agreement")is made and effective as of February 21, 2008, by and between UniDev, L.L.C.,a Delaware limited liability company("UniDev")and Walkoloa Workforce Housing, LLC, a Hawaii limited liability company("WWH"or"Sponsor"). WITNESSETH: WHEREAS, the County of Hawaii, a municipal corporation duly organized under the laws of the State of Hawaii(the"County")owned in fee simple approximately 288 acres of land located at Waikoloa Village, South Kohala, Island and County of Hawaii, State of Hawal'i(the "State"), known as TMK: 6-8-2:26 and 6-8-30:179(collectively, the"Site"),which was held for the purpose of providing affordable housing; and WHEREAS, pursuant to a Development Agreement dated as of July 26, 2006, the County conveyed the Site to Hawaii Island Housing Trust,a Hawaii nonprofit corporation, which then leased the Site to WWH for the purpose of developing affordable workforce housing primarily for employees working in hotels and resorts In the Waikoloa Resort Area and related facilities, as further described in Rider C of this Agreement(the"Project")on the Site;and WHEREAS, UnlDev and the County executed a Development Services Agreement(the "DSA")dated as of March 2, 2006 under which UniDev was engaged to provide various services with respect to the planning, pre-development, financing and construction of the Project(the "Services"); and WHEREAS, pursuant to Section 6 of Rider A of the DSA, the DSA was assigned by the County to WWH, as of July 26, 2006; and WHEREAS, pursuant to the DSA. UniDev has provided Conceptual Planning Services, Confirmatory Services and certain Predevelopment Services(ail as defined in the DSA)in connection with the Project;and WHEREAS, the remaining scope of services to be performed under the DSA Includes additional Predevelopment Services and DevelopmentlConstruction Services relating to the Project; and WHEREAS, the parties contemplate that these additional services will be provided separately for each Construction Phase of the Project(as defined in Rider C of this Agreement), beginning with Phase 1-A;and WHEREAS, WWH desires to continue the services of UniDev as Owner's Representative in the development of the Project under the DSA; and WHEREAS, UniDev and WWH now wish to amend the DSA to reflect certain changes in facts and circumstances that have occurred since the DSA was first executed by UniDev and the County. NOW,THEREFORE, in consideration of the foregoing premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the EXHIBff-a.. „ EXHIBIT 13-2 parties hereto, for themselves and for their successors and assigns, hereby agree to amend and restate the DSA as follows: 1. Engagement. The Sponsor hereby continues the engagement of UniDev to undertake the Services in accordance with the terms and conditions set forth in this Agreement; provided, however, that UniDev shall not begin the Services with respect to any Construction Phase of the Project until such time as it has received a written notice to proceed therefor from the Sponsor. UniDev hereby agrees to undertake such Services in accordance with the terms and conditions set forth in this Agreement. 2. Agreement. This Agreement shall consist of the matters set forth herein, including without limitation, Riders A, B, C and D(collectively,the"Riders"). 3. Con I . In case of any conflict among the provisions of the Riders or between any of the Riders and this pre-Rider section of the Agreement,this pre-Rider section of the Agreement shall take first priority, Rider A shall take second priority, Rider 8 shall take third priority, Rider C shall take fourth priority, and Rider D shall take fifth priority. 4. Notices, All notices, requests,demands and other communications with respect hereto shall be In writing and shall be delivered via facsimile and by hand,or sent by prepaid, nationally recognized,overnight delivery service, to the following addresses: To UniDev: Jeffrey A. Minter, Executive Vice President UnlDev, LLC 1100 Alakea Street, Suite 1550 Honolulu, HI 96813 Tel: (808)536-1110 Fax: (808)536-1104 Email: jminter @unidevllc.com With a copy to: Myron P. Curzan, Chief Executive Officer UniDev, LLC 7109 Wisconsin Avenue, Suite 1301 Bethesda, MD 20814 Tel: (301)656-7742 Fax: (301)656-7764 Email: mcurzan@unideAlc.com And a copy to: Michael A. Lee, Esquire UnlDev National Counsel 404 Allegheny Avenue Towson, MD 20814 Tel: (410)296-1735 Fax: (410)821-5432 Email: michael.lee @aporter.com 2 Waikoloa DSA Amendment 022008 WWH(3) %w To the Sponsor. Waikoloa Workforce Housing, LLC Tel: Fax: Email: Attn: Executive Director And a copy to; Nathan Natorl, Esquire 1003 Bishop Street, #1360 Honolulu, HI 96813-3429 Tel: (808)275-0155 Fax: (808)275-0199 Email: nn@hawaliiawgroup.com [remainder of page intentionally left blank] 3 Waikoloa DSA Amendment 022009 WWH(3) Iwo IN WITNESS WHEREOF, the parties hereto have executed this Development Services Agreement as of the date first above written. SPONSOR: Waikoloa Workforce Housing, LLC By: lzzz Pate Hendricks, Manager By: Ta K.� t�, t Patricia O'Toole,Manager By: u�rvt,-R.. Michael Sumja, Manager UNIDEV: UnlDev, LLC By: 160ey A. rce r ecutive Presi dent 4 gip/ . RIDER A-GENERAL TERMS 1. Commencement of Work. With respect to any Construction Phase of the Project, UniDev shall not commence work until UniDev has received from the Sponsor a written notice to proceed. 2. Invoices: Consultants: Payment. (a) Invoices shall be submitted by UniDev to the Sponsor's address stipulated in this Agreement and to the County. The Agreement date and UniDev's Federal Taxpayer Identification Number shall be included on each invoice. The Invoices shall Include all supporting documentation required by the Sponsor or the County. The final Invoice shall be marked as such. The timing for submission of such Invoices and for the payments to UniDev shall conform to the terms set forth in Rider D. (b) In the event that additional services are performed as authorized under this Agreement, UniDev shall submit separate invoices for such additional services,which shall be marked as such. (c) Subject to the conditions set forth herein, from the effective date of this Agreement, UniDev shall not be paid for its own Reimbursable Costs(as defined below). However, it is understood and agreed that(1)the Sponsor shall be responsible for the payment of any and all fees and Reimbursable Costs(as defined below)of any consultants(1)engaged by UniDev on behalf of the Sponsor with the approval of the Sponsor to assist in the performance of the Services or to perform other services on behalf of the Sponsor,or(2)engaged directly by Sponsor to assist with the Project (collectively, the`Consultants"), (11)all Invoices received by UniDev from any Consultant shall be reviewed by UniDev and, once approved, submitted to the Sponsor for processing, and(111)UniDev shall pay such Consultants directly after receiving payment from Sponsor. For purposes of this Agreement,"Reimbursable Costs'shall mean actual, out-of-pocket costs of all reasonable travel, subsistence and business expenses (including third-party document reproduction costs, conference calling charges, overnight delivery service fees, and similar types of costs)necessary for the performance of the Services pursuant to this Agreement. UniDev shall have the responsibility for screening and recommending such Consultants,whose selection shall be subject to the prior review and approval of the Sponsor. As part of Its recommendation, UniDev shall obtain an estimated budget from each Consultant, as well as proposed engagement letters from such Consultants. UniDev shall actively monitor all work performed by all Consultants(except for the Consultants that the Sponsor tells Unidev the Sponsor can monitor by itself)to ensure that they are performing in accordance with their engagements. (d) Except as set forth In Rider D,each invoice shall be submitted within fifteen(15) calendar days after the end of each calendar month during the term hereof, and each payment shall be due within thirty(30)calendar days after receipt of a complete and accurate invoice with all supporting documentation. (e) UniDev shall keep accurate records of its Services in order to adequately document the extent of the Services It has provided under this Agreement. (f) in the event that any excise taxes are due with respect to any payments made pursuant to this Agreement, the Sponsor shall be responsible for the payment thereof 5 Waikoloa DSA Amrndment 022008 WWH(3) (which amount shall be in addition to the payment amounts set forth herein)and for filing any documentation required to be reported by the payor. 3. Independent Status. UniDev and Its agents and employees, in the performance of this Agreement, shall act In an independent capacity and not as officers,employees or managers of the Sponsor or any affiliate thereof. 4. Conflict of Interest. UniDev will provide recommendations for the actions that are required, suggested or otherwise deemed appropriate and that include the provision.acquisition or delivery of products or services. UniDev shall provide full disclosure of any financial or other conflict of Interest, Including but not limited to service agreements that may foreseeably allow UniDev to materially benefit from the adoption of such recommendations. Upon any disclosure of a conflict of interest, the Sponsor may require competitive bidding for the relevant product or service. 5. Governing Law. This Agreement and all contracts and purchase orders shall be construed in accordance with, and their performance governed by, the laws of the State of Hawaii(the"State'). Further, UniDev shall comply with all municipal, State and federal laws applicable to UniDev's performance under this Agreement. 6. Assignments. This Agreement Is not assignable by either party, In whole or In part, without the prior written consent of the other party, provided that(a)UniDev shall have the right to assign this Agreement to an affiliate In which UniDev owns at least eighty percent(809'x)of the Interests, provided that such assignment shall not relieve UniDev of any of its obligations to Sponsor under this Agreement;(b)Sponsor shall have the right to assign this Agreement to the County, and (c)Sponsor shall have the right, in connection with any financing It may obtain for the Project, to assign its interest hereunder for collateral purposes, and UniDev agrees to execute and deliver any consent to or acknowledgment of any such collateral assignment. 7. General Indemnity. (a) The Sponsor shall indemnify and hold harmless UniDev for damages and costs caused by the negligence, gross negligence or willful misconduct of the Sponsor's managers, officers, agents and employees occurring In the performance of(or failure to perform under)this Agreement. (b) UniDev shall Indemnify and hold harmless the Sponsor for damages and costs caused by the negligence, gross negligence or willful misconduct of UniDev's officers, agents and employees occurring in the performance of(or failure to perform under)this Agreement. (c) In the event that a claim,suit or action(1)names both the parties hereto, (II) alleges an act or failure to act by UniDev's officers, agents or employees for which UniDev must indemnify the Sponsor pursuant to Section 7(b)above,and (111)does not allege an act or failure to act by the Sponsor for which the Sponsor must indemnify UniDev pursuant to Section 7(a) above or only alleges an Involvement by the Sponsor in the claim, suit or action as a result of its execution of this Agreement with UniDev or names Hawaii Island Housing Trust due to its ownership of the Site, then in such event, UniDev shall indemnify and defend Sponsor and Hawaii island Housing Trust(if applicable)from and against such claim, suit or action. 8. insurance. Throughout the term of this Agreement, UniDev shall maintain the following, at its own expense, insurance from a company or companies reasonably acceptable to the Sponsor and lawfully authorized to do business in the jurisdiction in which the Project is located: 6 Waikolos DSA Amendment 022009 WWII(3) (a) Commercial general liability insurance with a minimum limit of$1,000,000 for bodily injury and property damage per occurrence. and$2,000,000.00 in the aggregate; (b) Workers' compensation insurance that complies with all of the provisions of the Worker's Compensation Insurance and Safety Acts of the State; and (c) Professional liability insurance with minimum limits of$1,000,000 per occurrence, and$2,000,000.00 In the aggregate. Any agreement entered into by UniDev with a third-party service provider to perform any of the Services shall contain the same insurance requirements as set forth above; provided, however, that if UniDev believes the insurance to be required by such third-party should differ from the above, given the scope of the services to be performed by such third-party, UniDev shall obtain the Sponsor's approval therefor prior to entering Into such agreement. 9. Use of Data: Confidentiality:Work Product. (a) UniDev shall not utilize any information not a matter of public record that it receives by reason of this Agreement for pecuniary gain not contemplated by the terms of this Agreement, regardless of whether UniDev is or is not under contract at the time such gain Is realized. Any report, survey, or other product developed by UnlDev pursuant to this Agreement is the property of the Sponsor and shall not be made public by UniDev unless authorized to do so by the Sponsor. UniDev shall not be prevented from referring to the Sponsor as a client or describing the nature of its work with the Sponsor. (b) All financial, statistical, personal,technical and other data and information relating to the Sponsor's operations that are furnished by the Sponsor and made available to UnlDev,or that become available to UnlDev in order to carry out this Agreement, shall be protected by UniDev from unauthorized use and disclosure. UniDev shall not, however, be required by this Section to keep confidential any data or information that is or becomes publicly available, is already rightfully in UniDev's possession, is independently developed by UniDev outside the scope of this Agreement, is rightfully obtained from third parties, or is required to be disclosed by applicable law or court order. (c) Any work product developed, gathered, compiled or obtained by UniDev pursuant to this Agreement shall become the property of, and shall be turned over to, the Sponsor upon recelpt by UnlDev of all payments due hereunder,whether upon completion of the Services, the earlier termination of this Agreement or the lapse of this Agreement. 10. Termination or Susaension. (a) In the event that: (1) UniDev substantially falls to perform under this Agreement, or acts in a negligent manner such that the duties required are not substantially fulfilled, or is so negligent as to jeopardize the completion of the Project;or (ii) UniDev becomes insolvent, is adjudged a bankrupt, makes a general assignment for the benefit of its creditors, or becomes the subject of any proceedings commenced under any statute or law for the relief of debtors; or (iii) A receiver, trustee or liquidator of any of the property or income of UniDev shall be appointed, 7 WaikoW DSA Amendment 022009 WWH(3) u� then the Sponsor may terminate this Agreement if UniDev faits to cure such event within thirty(30)calendar days after receipt of written notice thereof from the Sponsor. (b) In the event that the Sponsor substantially falls to perform under this Agreement and falls to cure such failure within thirty(30)calendar days after receipt of written notice of such failure, then UniDev may terminate this Agreement upon the expiration of such notice and cure period. in the event that UniDev elects to terminate this Agreement pursuant to the foregoing sentence, UniDev will continue to work under this Agreement for a period in excess of the required notice period in the event that the Sponsor and UniDev agree that it shall be to the benefit of both parties and to the Project for UniDev to complete a Construction Phase of the Project commenced under the supervision of UnlDev before said termination notice was given to the Sponsor. (c) Sponsor may terminate this Agreement(1)at the end of Construction Phase 1-A In the event that Sponsor and the County determine that Phase 1-A was not successful or that future Construction Phases have become Infeasible for economic or financial reasons;(ii)at the and of Construction Phase 1-B In the event that Sponsor and the County determine that Phase 1-B was not successful or that future Construction Phases have become Infeasible for economic or financial reasons; or(iii)at the end of Construction Phase II In the event that Sponsor and the County determine that Phase it was not successful or that future Construction Phases have become Infeasible for economic or financial reasons. (d) Sponsor may suspend the Project at any time without terminating this Agreement. In such case, UniDev shall be paid the Monthly Service Payments and/or Development Fee(as defined in Rider D), If any, that it has earned through the applicable Construction Phase up to the date of suspension. Sponsor also shall pay the fees of each Consultant as in the case of a termination,as provided In Section 10(e)below. The parties agree that during the time of suspension Rider D's Service Phase IiI Monthly Service Payment of$50,000, and Rider D's Construction Phase IV Monthly Construction Period Payments, shall not be applicable and shall not be earned by UniDev, if Sponsor suspends the Project for a period of five (5)years, this Agreement shall be deemed terminated. The parties agree that after termination Rider D's Service Phase III Monthly Service Payment of$50,000, and Rider D's Service Phase IV Monthly Construction Period Payments, shall not be owed from and after the notice of suspension was sent to UniDev. (e) In the event that this Agreement is terminated under any of the foregoing paragraphs prior to the completion of the Services, UniDev shall be paid the Development Fee (as defined in Rider D), If any, that It has earned through the Construction Phase during or at the end of which the termination has occurred, and any outstanding Reimbursable Costs, In addition,within thirty(30)days after any such termination and receipt of Invoices as described below, the Sponsor shall pay the fees and expenses of each Consultant, provided that(i)such Consultant shall have been approved or retained by the Sponsor, as provided in Section 2(c)of this Rider A;(11)such Consultant shall submit to the Sponsor reasonably detailed invoices for the fees and expenses claimed; and(iii)the amount of such payment shall not exceed the amount budgeted for such Consultant's services in the Predevelopment Budget(as defined in Rider B), or a construction budget, as applicable, as the same may be amended, 11. Personnel. (a) UniDev's personnel shall perform their duties off and on the Site. 8 Waikoloa DSA Amcndmait 022008 WWH(3) (b) Throughout the term of this Agreement,so long Jeffrey A. Minter remains an officer or employee or Independent contractor of UniDev or its affiliates, UniDev shall use its best efforts to ensure that he remains personally involved in providing the Services. In the event that, for any reason, Jeffrey A. Minter is no longer actively Involved In the performance of the Services, then the Sponsor shall have the right,using Its reasonable discretion, to disapprove any Individual suggested by UniDev to serve as his replacement with respect thereto. (c) This Agreement anticipates the assignment of several members of UniDev's staff,In addition to Jeffrey A. Minter, to perform the Services. The Sponsor shall have the right, using Its reasonable discretion, to disapprove these employees or any other of UniDev's personnel substituted for the originally assigned employees, either at the time of assignment or thereafter. If the Sponsor exercises this right,and UniDev cannot immediately replace the disapproved personnel, the Sponsor agrees to an equitable adjustment in schedule or other terms that may be affected thereby. (d) UniDev shall make every effort consistent with sound business practices to honor the specific requests of the Sponsor with regard to assignment of Its employees, subject to subsection(c)hereof. If an employee of UniDev Is unable to perform due to illness, resignation, or other factors beyond Un1Dev's control, UniDev shall make every reasonable effort to provide suitable substitute personnel within sixty(60)calendar days or as mutually agreed upon. (e) This Agreement shall not prevent UniDev from performing services similar to that performed under this Agreement nor restrict UniDev from using the personnel assigned to perform under this Agreement to perform such similar services with respect to other clients and other projects, provided that such use does not conflict with or adversely affect the performance of services under this Agreement. 12. Nondiscrimination. During the performance of this Agreement, UniDev agrees as follows: (a) UniDev shall comply with all requirements set forth in federal and State laws and regulations relating to Title VI of the Civil Rights Act of 1964, as amended,which provide for non-discrimination in federally assisted programs. (b) UniDev shall not discriminate against any employee or applicant for employment because of race,ancestry/national origin, religion, color,disability,age, marital status, military status,veteran's status, sexual orientation, lactation, arrest and court record, citizenship, or any other classification protected by State or federal law. UniDev shall assure that applicants are considered during the application process and that employees are treated during employment without regard to race, ancestry/national origin, religion, color, disability, age, marital status, military status,veteran's status, sexual orientation, lactation, arrest and court record, citizenship, or any other classification protected by State or federal law. Such action shall include, but not be limited to, the following: employment, upgrading, demotion, or transfer; recruitment or recruitment advertising; layoff or termination; rates of pay or other forms of compensation; and selection for training. UniDev agrees to post in conspicuous places notices to be provided by the contracting officer setting.forth the provisions of the nondiscrimination clause. (c) UniDev shall in all solicitations or advertisements for employees placed by or on behalf of UniDev, state that all qualified applicants shall receive consideration for employment without regard to race, ancestry/national origin,religion,color, disability, age, marital status, military status, veteran's status, sexual orientation, lactation, arrest and court record, citizenship, or any other classification protected by State or federal law. 9 Waikoloa DSA Amendment 022009 W WH(3) `h IV Ind (d) In the event of UniDev's noncompliance with the nondiscrimination clauses of this Agreement, this Agreement may be canceled or suspended in whole or In part until such time that UniDev by satisfactory evidence, in good faith, ceases such discriminatory practices or procedures. (e) If UniDev subcontracts any portion of this Agreement, it shall assure the County that such subcontractor shall abide by the nondiscrimination provisions stated herein and agrees that any subcontractor who is found in violation of such provisions shall be subject to the same termination or suspension provision as set forth in subsection(d)above. (f) The parties acknowledge and agree that the Sponsor may direct any bidder, prospective contractor or subcontractor to submit a statement in writing, signed by an authorized officer. agent or employee of the contracting party,stating that the signer's practices and policies do not discriminate on the grounds of race, ancestry/national origin,religion,color, disability, age, marital status, military status, veteran's status,gender,sexual orientation, lactation,arrest and court record, citizenship,or any other classification protected by State or federal law,and that the terms and conditions of employment under the proposed contract shall be in accordance with the purposes and provisions state herein. 13. Dispute. Any dispute arising under the terms of this Agreement that Is not resolved within a reasonable period of time by authorized representatives of UniDev and the Sponsor shall be brought to the attention of the Chief Executive Officer of UniDev and the managers of the Sponsor for joint resolution. Thereafter,If the matter in dispute is still unresolved, then the parties shall in good faith mutually appoint a mediator to mediate the dispute, provided that if the parties cannot agree upon a mediator,then either party may petition a court of competent jurisdiction to appoint a mediator. If the matter in dispute is still not resolved by mediation, then the parties shall submit the matter to arbitration as provided in the"Uniform Arbitration Act" under State law. The award of the arbitrator shall be final and binding upon the parties unless the award is vacated or modified in the manner provided in said Uniform Arbitration Act. Any mediation or arbitration proceeding shall take place in Hilo, Hawaii, unless otherwise mutually agreed upon by the parties. UniDev shall proceed diligently with performance of the services specified hereunder at all times in accordance with this Agreement. Such performance shall continue despite claims, disputes or Sponsor-caused delays unless Sponsor notifies UniDev to stop all work.During the pendency of any claim,dispute or other matter covered hereunder or during any legal, equitable,mediation or arbitration proceeding, UniDev shall continue to diligently provide services in accordance with all of the provisions of this Agreement unless Sponsor notifies UniDev to stop all work; provided, however, that UniDev shall be paid for such portion of UniDev's services as shall not be in dispute. 14. Rights and Remedies. (a) Subject to the requirements for mediation and arbitration as provided herein, the rights and remedies of the Sponsor and UnlDev provided herein shall not be exclusive, and are In addition to any other rights and remedles provided by law. UniDev agrees, however, that it shall not attempt to delay the Project by seeking an injunction or similar legal remedy that could delay the Project. 1. (b) The delay or failure of either party to exercise any of its rights under this Agreement for a breach hereof shall not be deemed to be a waiver of such rights, nor shall the same be deemed to be a waiver of any subsequent breach, either of the same provisions or 10 Wnikolw DSA Amendmcnt 022008 W WH(I) V otherwise, No waiver of any of the terms of this Agreement or of any breach of its terms shall be effective unless such waiver is in writing and signed by the waiving party. (c) All actions or claims against either the Sponsor or UniDev arising under or relating to this Agreement shall be made only against such party as a corporation, limited liability company or other legal entity, and any liability relating thereto shall be enforceable only against the corporate or company assets of such party. (d) In the event of a dispute between the parties hereto with respect to any of the obligations set forth In this Agreement, the prevailing party shall be entitled to recover reasonable attorney's fees and costs. 15. Additional Services. The Sponsor may,from time to time, commission UniDev to perform work in addition to the Services set forth herein, either because such additional work Is currently unanticipated and,in the opinion of the parties hereto, is necessary to the successful accomplishment of the general scope of work outlined herein, or because the parties agree that UnIDev's performance of such additional work is desirable. In each event that such additional work is commissioned, the procedures outlined in this Section shall be employed. (a) An amendment to this Agreement shall be prepared and shall be incorporated herein as an addendum. (b) It is understood and agreed by each of the parties to this Agreement that all of the terms and conditions of this Agreement shall remain in force with the inclusion of any such amendment. Such amendment shall in no way constitute a separate contract nor in any way amend or supersede any of the other provisions of this Agreement,except as specifically set forth therein. (c) Each amendment to add work shall consist of a detailed statement of the purpose,objective, or goals to be undertaken by UniDev, an Identification of all significant materials or resources to be delivered by the Sponsor to UniDev,an estimated time schedule for the work to be performed, completion criteria for the work to be performed, and UniDev's total charges for the work to be performed pursuant to the amendment. (d) All amendments must be fully executed by the parties hereto prior to beginning work. (e) All additional work established pursuant to this Section or that Is outside the scope of the original terms of this Agreement and that is not covered by the Development Fee (as defined and described in Rider D to this Agreement)shall be invoiced separately and identified as such. 16. Sponsor's Contact. The Sponsor shall notify UniDev,within five (5)calendar days after the date hereof, of the Individual(s)appointed by the Sponsor to serve as UniDev's primary contact(s)for purposes of undertaking the Services and for invoicing matters. 17. Standard of Care: Limit of Authority. (a) UniDev accepts the relationship of trust and confidence established between it and the Sponsor and covenants with the Sponsor to at all times perform the Services in accordance with the standards of professional competence applicable to nationally-recognized owner's representative firms doing projects of this scale and type. II Naikoloa DSA Amendment 022008 WWH(3) (b) UniDev acknowledges that the Sponsor desires for the Project to be of the highest quality possible within the limits of the applicable budget and in accordance with the Sponsor's reasonable criteria and instructions. UniDev shall at all times diligently use its best efforts, subject to the standard of care described in subsection(a)above to attain the Sponsor's objective of a high quality, first Gass Project within the Amits of the applicable budget and In accordance with the Sponsor's reasonable criteria and instructions. UniDev shall actively monitor all work performed by all Consultants(except for the Consultants that the Sponsor taps Unidev the Sponsor can monitor by itself)to ensure that they are performing in accordance with their engagements. (c) UniDev, as the Sponsor's representative for the development of the Project, shall be authorized to act on the Sponsor's behalf with respect to the development of the Project as specifically set forth in this Agreement. Notwithstanding the foregoing,without the prior written approval of the Sponsor(which approval may be granted or withheld in the Sponsor's sole and absolute discretion), UniDev shall not have the authority to(1)approve any construction change order in excess of Fifty Thousand Dollars($50,000.00)or in excess Two Hundred Fifty Thousand Dollars($250,000.00)when combined with all other construction change orders for any Construction Phase, (ii)issue any other instructions or approvals or enter into any contract on the Sponsor's behalf that would result in an expense or payment by the Sponsor(or by UniDev as a Reimbursable Cost)in excess of Ten Thousand Dollars($10,000.00), (ill)amend or terminate any of the agreements to be executed pursuant to Section 3.1.1 of Rider B.(iv) suspend,delay or interrupt all or any part of the prime contractor's or architect's services or duties under their respective agreements, (v)issue any order to accelerate the work under the construction agreement or the architect's agreement, (vi)grant any extension of time to the architect, prime contractor or any other service provider engaged pursuant to an agreement described in Section 3.1.1 of Rider B,(vii)award any bonus, or(viii)approve any claim for liquidated or other damages.. 18. Miscellaneous. (a) Time is of the essence under this Agreement. (b) No alteration or variation of the terms of this Agreement shall be valid unless made in writing and signed by all of the parties hereto, and no oral understanding or agreement not Incorporated herein shall be binding on any of the parties hereto. (c) The terms of this Agreement are severable such that if any term or provision is declared by a court of competent jurisdiction to be illegal, void,or unenforceable, the remainder of the provisions shall continue to be valid and enforceable. (d) Except as otherwise provided in this Agreement, all provisions in this Agreement shall be construed subject to a standard of reasonableness. (e) Each party executing this Agreement represents and warrants to the other that such party(I)has all requisite power and authority to enter into and perform the terms of this Agreement without the consent of any other person or entity whose consent has not been obtained; and (ii)is unaware of any order or requirement of any authority with jurisdiction, or any claim, pending or threatened, that may have a materially adverse effect on the performance of this Agreement. (f) Each party to this Agreement agrees to cooperate with the other as necessary to permit the other to carry out the obligations and intentions of this Agreement. 12 Waikolon DSA Amendment 022009 WWII(J) (g) In the event that any action shall be brought to confirm or enforce an arbitration award pursuant to this Agreement,the appropriate venue shall be in the Third Circuit Court, State of Hawaii. Each of the parties consents to the jurisdiction of the foregoing courts and waives any objection to venue therein, including without limitation any objection based upon forum non convenlens. (h) This Agreement may be executed in counterparts, and by each party on separate counterparts, all of which together shall constitute one agreement binding on the parties hereto, notwithstanding that the parties are not signatories to the original or the same counterpart. Such executions may be transmitted to the parties by facsimile and such facsimile execution shall have the full force and effect of an original signature. 13 Wnikoloa DSA Amendment 022008 WNVH(3) RIDER 8—SERVICES BY PHASE This Rider B may be changed from time to time by written amendment to this Agreement. All references to the Sponsor shall include an Executive Group (as hereinafter defined)and a Working Group(as hereinafter defined)established by the Sponsor and UniDev. UniDev agrees to provide the services set forth in this Rider B(collectively, the"Services") during the specific Construction Phases of the Project as set forth In Rider C. The parties understand and agree that UniDev may perform one type of Service for a given Construction Phase of the Project concurrently with the performance of a different type of Service for another Construction Phase. The Sponsor understands and agrees that, in order to enable UniDev to timely deliver the Services, the Sponsor shall be required to cooperate In the development process and timely make decisions, deliver approvals and discharge all of Its other obligations hereunder. UniDev agrees to undertake the Services, and the Sponsor agrees to participate in the undertaking of the Services, as set forth In this Rider B. subject to and In compliance with any applicable requirements set forth in any financing documents to which it is a party or otherwise subject. 1. SERVICE PHASE I — PRELIMINARY ANALYSIS / CONCEPTUAL PLANNING SERVICES. During Service Phase 1, UniDev, in collaboration with its consultants and the County, planned, prepared for, organized and facilitated a conceptual planning workshop,which took place from July 25 through July 28, 2005(the"Workshop'), and which resulted in the development of an updated conceptual development plan for the Project. In addition, as part of Service Phase I, UniDev delivered to the County a report documenting the Workshop and the updated conceptual development plan(the"Workshop Report"). The parties understand and agree that all of the Services required to be performed during Service Phase 1 have been completed by UniDev pursuant to the Conceptual Planning Agreement, and that the County accepted these Services and determined to continue with the development of the Project in accordance with the updated conceptual development plan prepared by UniDev and preliminarily approved by the County as part of the Workshop(the "Conceptual Development Plan'). 2. SERVICE PHASE II—CONFIRMATORY SERVICES During Service Phase 11, UniDev performed the services described in Section 2 of Rider B of the DSA(the"Confirmatory Services")in order to confirm its findings, to refine the Conceptual Development Plan, and to obtain approval of the Project as set forth in the revised Conceptual Development Plan. The Confirmatory Services included the formation of a committee that includes executives of the County to consider issues and make decisions regarding the planning for and development of the Project(the"Executive Group"), and a, committee that includes staff of UniDev, the Sponsor and the County(the"Working Group")to develop information and recommendations to be considered and decided upon by the Executive Group. At the conclusion of the Confirmatory Phase, the County approved the revised Conceptual Development Plan (as so approved, the"Development Plan"). The parties understand and agree that all services required to be performed under Service Phase 11 have been completed. 14 Waikoba DSA Amendmcnt 022008 WNVK(3) 3. SERVICE PHASE III-PREDEVEL.OPMENT SERVICES 3.1 UniDev's Service Phase III. During Service Phase III, UniDev shall perform the services described in this section(the"Predevelopment Services")such that each Construction Phase of the Project(as defined in Rider C)is made ready for Service Phase IV as set forth below. The Predevelopment Services shall be based on the Development Plan. It is understood and agreed that the Predevelopment Services may be suspended,at the request of the Sponsor. Predevelopment Services also may be eliminated or suspended by the Sponsor for a Construction Phase after Phase 1-A, 1-B or II in the event that the County and Sponsor determine that such Construction Phase will not be pursued. The Predevelopment Services shall Include the following matters: 3.1.1 Administrative/Oversight Activities. 3.1.1.1 Supervise and report on the development process to: • Ensure(to the extent controllable by UniDev)that budgets and schedules are met. • Provide(to the extent controllable by UniDev)for quality of facilities. 3.1.1.2 Negotiate and facilitate Sponsor's execution of development/design contracts in the following areas: • Between Sponsor and builders. • Between Sponsor and land planners. • Between Sponsor and architects/engineers. • Between Sponsor and other similar parties to the development process. 3.1.1.3 Negotiate appropriate financial and management contracts in the following areas: • Between the Sponsor and financial Institutions/financing entities. • Between the Sponsor and management companies. • Between the Sponsor and brokers. 3.1.2 Ownership Structuring $ Financing Activities. 3.1.2.1 Develop the most favorable operating structure for the Sponsor: • Create beneficial financial and operational arrangements for the Project. Document operating structures available to the Project. 3.1.2.2 Develop methods for achieving favorable transactions and maximizing Income for the Project through the following activities: • Identify applicable green building/sustainable building products and designs, set forth their costs and benefits, and oversee appropriate Implementation. • Monitor and utilize beneficial private and public financing programs and combine with tax-exempt financing (where applicable)to reduce costs. 15 Waikoloa DSA Amendment 022008 WWH(3) MMENNOMMONNOW • Identify opportunities for third-party contracts, set forth costs and benefits, and oversee selection and assist in the documentation of service contracts. 3.1.2.3 Address organizational/ownership Issues, including: • Finalize the sub-ground leases. • Finalize Covenants, Conditions and Restrictions. • Prepare draft sales and mortgage documents. • Identify the most appropriate entities to own and buy back units, to finance the Infrastructure, and to manage the Project once it has been built. 3.1.2.4 Work with the County and/or selected financing entities to ensure that adequate funds are made available to construct each Construction Phase. • Finalize financing approach for construction and actively particlpate in negotiations, Including leading the negotiations if requested by Sponsor. • Work with Fannie Mae, its bank partners, HHFDC and other potential lenders to ensure that permanent mortgage financing programs are put In place. • Work with financing entities to ensure that appropriate funding mechanisms are in place for the Project's financing so as to reimburse the Sponsor for all Project costs incurred, and to fully compensate all members of the development team in accordance with Rider D. 3.1.2.5 Establish pro forma costs and revenue projections of various options that will result In a positive cash flow and that are satisfactory to Sponsor. 3.1.2.6 Identify alternative and favorable financing structures and establish Project development financial models that show: • Debt and equity financing options. • Total development costs of all components. • Total revenue/cost models. 3.1.3 Project Design Activities. 3.1.3.1 Undertake the following general duties: • Work with architects and planners to provide a complete site development program. • Oversee preparation of schematic design by architects. • Oversee preparation of construction specifications by architects. • Provide updated pro forma costs versus budget quarterly through variance analyses. • Participate in value engineering sessions. 3.1.3.2 Identify opportunities in the following areas to develop state of the art buildings and policies: 16 Naikoloa DSA A nendmad 022003 WWH(l) ttlr✓ • "Green building"options and cost/benefits. • "Smart building"options and costibenefits. • Establishment of energy efficiency guidelines and costibenefits. Establishment of energy and cost efficient delivery Systems. • Evaluate sustainability approaches by architects and engineers. 3.1.3.3 On behalf of the Sponsor, actively manage the planning and design progress to ensure(to the extent controllable by UniDev)that: • Budgets are met. • Time schedules are met. • Quality standards are met. • Appropriate personnel are assigned to the Project. 3.1.4 Development Approval $ Financing Activities. 3.1.4.1 On behalf of Sponsor, apply for and obtain pre-development financing for Construction Phase 1-A and 1-B(the"Predevelopment Funding"),which shall be secured by the Site and/or the ground lease thereof, as applicable, in an amount sufficient to cover the Monthly Payments(as hereinafter defined in Rider D)for Service Phase III of Construction Phase 1-A and 1-B and all costs set forth in the Predeveiopment Budget for Construction Phase 1-A and 1-B. 3.1.4.2 Confirm that all Project financing is ready to close and that land and development plans are sufficiently complete so as to commence development of the Construction Phase; provided, however, the parties understand that one or more of the Construction Phases will be ready for construction and Service Phase IV with respect thereto, prior to other Construction Phases being ready for Service Phase IV. 3.1.4.3 Obtain approval from the Sponsor to implement development of such Construction Phase, including closing on all or a portion of the Infrastructure financing (the"Infrastructure Funding")and/or the vertical construction financing(the"Vertical Construction Funding"and, together with the Infrastructure Funding,the°Construction Funding")for such Construction Phase. 3.1.4.4 Cause all or a portion(sufficient to complete the infrastructure work within the applicable Construction Phase)of the infrastructure Funding to be closed, and the first draw thereon(the "First Draw")to be taken. The First Draw shall be used, as needed and as available, to repay the Redevelopment Funding. 3.1.4.5 Cause all or a portion(sufficient to complete the vertical construction work within the applicable Construction Phase)of the Vertical Construction Funding to be closed. 3.1.5 Homeowner Counseling. On behalf of Sponsor, develop homeownership counseling services for prospective homebuyers. 17 Waikolon DSA Ameudment 022008 WWH(3) MWENNEMMON 3.1.6 Oversee the funding and development of the community park facilities from the Project proceeds, CFD bond or County G.O. bonds. 3.2 Sponsor's Phase iii Particl2ation. During Phase III of the Services, the Sponsor shall,among other activities,work with UniDev to obtain the Predevelopment Funding and close on the Construction Funding. 4. SERVICE PHASE IV—DEVELOPMENT i CONSTRUCTION SERVICES 4.1 UniDeVs Phase IV Services. During Service Phase IV, UniDev shall perform the services set forth herein(the"Development/Construction Services')with respect to each Construction Phase in order to establish and actively manage the construction process for the Project. it is understood that the Development/Construction Services shall only be commenced with respect to the first Construction Phase of the Project (Phase 1-A) once the First Draw has occurred. The Development/Constructlon Servioes shall include the following services: 4.1.1 Project Management 4.1.1.1 Undertake the following general duties: • Set up draw schedules and forms required for requesting draws. • Meet regularly on draw requests from contractors. • Work with demolition consultant on best approaches(if any demolition is necessary). • Oversee demolition work(if necessary). • Meet regularly with builders and architects. • Work with builder to oversee construction and coordinate inspections with job completion activities. • Plan and set up unit customization approach and building center. Establish warrantee approach. • Monitor application of warrantees. • Work out map recordation process. 4.1.1.2 On behalf of the Sponsor,supervise the permitting and construction progress of the Project to ensure(to the extent controllable by UniDev)that: • Budgets are met. • Time schedules are met. • Quality standards are met. • Sale and/or rent-up of facilities takes place per arrangement with the Sponsor. Appropriate personnel are assigned to the Project. 4.1.2 Marketing Tasks 4.1.2.1 Create sales office and sales program. 4.1.2.2 Supervise design of marketing materials. 18 Waikoba DSA Amen&nem 022008 W%VH(3) MMMMMM 4.1.2.3 Where applicable, prepare operating budgets and help the Sponsor employ appropriate management companies. 4.1.2.4 On behalf of Sponsor, negotiate appropriate contracts with management companies. 4.1.2.5 Establish approach for monitoring performance of management companies. 4.1.2.6 Prepare pre-qualification requirements for the sales/marketing vendor. 4.1.2.7 Arrange,for the delivery of homeownership counseling services to prospective homebuyers. 4.1.3 Transition 4.1.3.1 Prepare Sponsor's employees to undertake post-construction duties, such as training employees in Project management, preparing training manuals and providing other written instructions on how to operate the Project when completed. 4.2 Sponsor's Phase IV Participation. During Phase IV, the Sponsor shall work cooperatively with UniDev and other team members to ensure the successful development of each Construction Phase. 19 Wiikoloa DSA Amendment 022009 WNW(3) RiDER C-PROJECT The parties to this Agreement agree that the Project to be undertaken pursuant to this Agreement can be described as follows: • The development of affordable housing for Waikoloa area employees. • It is currently anticipated that the Project shall Include approximately 800 to 1,200 for-sale and rental housing units, as well as related community facilities. The housing units will be designed so as to be affordable to a range of Income levels. The intended primary market for the units will be households of employees working In the Walkoloa area(including Waikoloa Beach Resort,Walkoloa Village and government employees working in Waikoloa)earning gross annual Incomes not exceeding1400A of the median Income of households In the County. In order to provide rental units to households with gross annual Incomes not exceeding 100% of County median income, the County will have to partially subsidize the Infrastructure costs for the rental housing units. The development shall take Into consideration and shall fully meet all of the requirements of the County and the State. Applicable portions of the Site will be leased or sub-leased to homebuyers. • The Project shall be constructed in several phases designated as 1A, 18, II and IiI as depicted on the Conceptual Development Plan attached hereto as Exhibit B (each a"Construction Phase"and, collectively, the"Construction Phases"), the timing of which may be sequential or may overlap. Each Construction Phase shall be comprised of infrastructure construction, vertical construction, or some combination of infrastructure and vertical construction. The Construction Phases currently contemplated are as follows: • Phase 1A: Construction of Primary Backbone infrastructure for water and sewer service, neighborhood Infrastructure, and community park infrastructure;vertical construction of 118 rental apartments and 90 for-sale homes. • Phase 1 B: Construction of neighborhood infrastructure for 217 for-sale units and 48 rental units developed with low-income housing tax credits("LIHTC"), vertical construction of 217 for-sale homes and vertical construction of the community park facilities. • Phase II: Construction of Infrastructure and vertical construction of 48 LIHTC rental units, 72 other rental apartments and 312 for-sale units. • Phase III: Construction of infrastructure and vertical construction of 192 rental apartments and 144 for-sale homes. 20 Waiko o&DSA Amnxlment 022008 WWH(3) Val/ RIDER D—UNIDEWS COMPENSATION BY PHASE 1. Service Phase i Compensation. UniDev,on behalf of Itself and its team, received compensation in the amount of One Hundred Fifty Thousand Dollars($150,000)(the"Service Phase I Fee)for Preliminary Analysls/Conceptual Planning Services(Service Phase 1). 2. Service Phase II Compensation. UnlDev has received compensation in the amount of $162,000 against the One Hundred Eighty Thousand Dollars($180,000)due for performing the Confirmatory Services(Service Phase II). UniDev is still owed $60,177.13 for this Service Phase, including payments UniDev made to approved vendors and legal fees of law firms that worked on this Phase. 3. Service Phase III Compensation. During Service Phase III, UniDev shall be compensated for performing the Predevelopment Services(as set forth in Rider B)for each Construction Phase, subject to the Predevelopment Budget, as follows: (a) Amount. Following the Effective Date of this Agreement, UniDev shall receive a payment in March 2008 and each month thereafter equal to Fifty Thousand Dollars ($50,000)(the"Monthly Service Payment")for performing its Predevelopment Services with respect to each Construction Phase of the Project. This amount shall cover all UnlDev Reimbursable Costs(as defined In Section 2(c)of Rider A). UniDev shall separately be reimbursed for approved third-party expenditures to Consultants who were approved by Sponsor pursuant to Section 2(c)of Rider A, up to an amount to be agreed upon in the Predevelopment Budget. Notwithstanding the foregoing, in no event shall UnIDev's total compensation for the Predevelopment Services exceed an amount that, when aggregated with other fees and expenses provided for in the Predevelopment Budget for the applicable Construction Phase,would cause the total of such fees and expenses to exceed the Predevelopment Budget. (b) Payment. UniDev shall submit invoices in arrears on a monthly basis for the Monthly Service Payment payable with respect to the previous month. Payment to UniDev shall be made in accordance with Rider A. (c) Source, The Sponsor shall pay the Monthly Service Payment and Reimbursable Costs Incurred during Service Phase III from the Predevelopment Funding or construction funding of the previous Construction Phase,as applicable. The Monthly Service Payment and Reimbursable Costs shall be identified as Project costs,which should be reimbursed to the Sponsor from the Construction Funding or the Project proceeds. UniDev and the Sponsor shall use their best efforts to insure that appropriate funding mechanisms are In place for the Project's financing. In the event that a Construction Phase proceeds through all or a portion of Service Phase III but does not proceed to Phase IV for any reason, then upon such determination by the parties hereto, Monthly Service Payments and all Reimbursable Costs previously paid or then due to UniDev and/or other members of the development team shall be deemed to have been fully earned, and the Sponsor shall be responsible for payment of the remainder unpaid thereof. 4. Service Phase IV Compensation. During Service Phase IV, UniDev shall be compensated for performing the Development/Construction Services(as set forth in Rider B)for each Construction Phase as follows: 21 Waikoloa DSA Amendment 022008 WWH(3) 111110V )100 1#4W Vad (a) Amount. From and after the execution of this Agreement, for each Construction Phase of the Project, UniDev shall receive a development fee equal to(i)three and three-quarters percent(3.75%)of all Development Costs(as hereinafter defined)that are funded by the County, including the proceeds of General Obligation bonds issued by the County("County Funds")that will be used,In part,to construct community park infrastructure and facilities, and(ii)five and four-tenths percent(5.4%)of all other Development Costs,as hereinafter defined(collectively, the"Development Fee"). Fees received by UniDev for the Confirmatory Phase(Service Phase II)and Monthly Service Payments received during Service Phase III(collectively, the"Prior Payments')that are applicable to such Construction Phase shall be deducted from the total Development Fee. Prior Payments Incurred before each Construction Phase shall be partially deducted from the Development Fee based on the number of units planned for each Construction Phase as a percentage of the total number of units planned for the entire Project.Thus, based on current plans, 17.3 percent(208/1200)of the Prior Payments will be allocated to Construction Phase 1-A and deducted from the Development Fee for that Phase,and 18.1 percent(21711200)of the Payments will be allocated to ' Construction Phase 1-B and deducted from the Development Fee for that Phase. For Construction Phases II and 111, deductions from the Development Fee In each case will Include both the Prior Payments for Service Phase II and III provided for each such Construction Phase and an allocable portion of the Prior Payments incurred before Construction Phase I. For purposes of this Agreement,"Development Costs"shall mean the total costs of the applicable Construction Phase of the Project(1 A, 1-B, 11 or III), based upon the approved construction budget(s)as established by the parties prior to the commencement of construction of such Construction Phase, Including all hard casts, soft costs and financing costs that are Included In the development of the Construction Phase, but excluding the Development Fee, capitalized ground lease payments and lot premiums. "Development Costs'shall be fixed by the parties prior to the commencement of construction of such Construction Phase, and shall not be increased due to any subsequent construction Increases. (b) Payment. The Development Fee for each Construction Phase shall be earned and payable to UniDev at the following times: (1)at the time of Initial Funding (as hereinafter defined)of each such Construction Funding or County Funds(each referred to herein as"Implementation Funding"), UniDev shall receive a lump sum payment(the"Initial Funding Fee Payment")equal to(A)sixty percent(60%)of the Development fee as applied to that particular Implementation Funding, less(B)any and all Prior Payments that are allocable to such Implementation Funding for the applicable Construction Phase(as provided in Section 4(a)above); (ii)during the construction period, UniDev shall receive monthly payments(the "Monthly Construction Period Payments'), equal to 35%of the Development Fee as applied to that particular Implementation Funding,divided by the number of months specified in the Construction Schedule to achieve completion of the Construction Phase using such Implementation Funding. The Monthly Construction Period Payments shall be earned on the first of each month; and (iii)the remaining 5%of the Development Fee as applied to that particular Implementation Funding(the"Retention Amounr)shall be earned and paid within ninety (90)days after the issuance of a Notice of Completion and the receipt of mechanic's lien waivers for such Construction Phase completed with such Implementation Funding. 22 Waikoloa DSA ANncodmcnt 022009 W WH(7) �d For purposes of this Agreement.'Initial Funding"of such Construction Funding shall mean the first receipt by the Sponsor of the particular Construction Funding. When County Funds are used, Initial Funding shall occur when the Notice to Proceed is given to the contractor who is to receive such County Funds. In the event that,at the time of Notice of Completion for a particular Construction Phase, the amount of the Development Fee Is greater than the sum of(a)the Initial Funding Fee Payment, plus(b)the Monthly Construction Period Payments, plus(c)the Retention AmoGnt, then the difference shall become immediately due and payable to UniDev. If the amount of the Development Fee is less than the above sum, UniDev shall Immediately repay such overage to the Sponsor. (c) Source. The Development Fee for each Construction Phase shall be payable out of the proceeds of each applicable Construction Funding or County Funds. UniDev and the Sponsor shall use their best efforts to insure that appropriate funding mechanisms are in place for the financing of each Construction Phase. (d) Personngl Costs. In addition to providing the Services and In consideration for the Development Fee, UniDev shall provide a Construction Accountant and Project Manager and pay for their costs as part of Its Services. Separately, a Construction Site Manager retained by UniDev for the Project must be approved by the Sponsor and shall be paid for with Implementation Funding and not out of any of UniDev's fees. 5. Fee Schedule. Exhibit A contains a revised schedule of UniDev fees,which incorporates the foregoing terms and conditions,for Construction Phases 1-A, 1-13, II and III confirming that Development Fees are earned each time a separate funding occurs and not at the time a construction budget Is set, fees are not owed on fees, and predevelopment expenses are deducted at each funding closing from the fee payable at closing. The schedule is based on projections as of the date of this Agreement, and is subject to change if the Development Costs or amount of Implementation Funding should vary from the amounts shown in the schedule. 23 %Vailroloa OSA Amendment 022009 WWH(3) d Y 1,» � 4A P Ott M V u� sad ;t; �M$ Y {7 • � M M �n �A f Y » tk w M n _ f a s $ � Z 1�r low 9r F M M w E'1 y p7w lw f 7 M J Y � � a `� � Y 'M �t it �� � � � � M � « :r l: � :I � ?`� �a � ; .,� ,. :« � � �:. �. �'� �� `' �' !» �� � � � � � E� �� !» t �'- �� N � .� iN ,::` �.. $� :,'I 1'. i} 1• � .. �.I �� �; x s s � � ��: �� � » N � � . . � � � � �� �., !3 « .. '« ti� x '$ g � k � � .. �� ,� ,` � � � � � � � � � �1� � .R � � M g i� � g � � M � .M �� Y � t � � � � � �� �� � � p '« ".r `a � � � � gig . � • � „ !i {�, Y � N � 5 !' �' 9 r z � � � � � � $ � � � �� � � � � f' t Ep Y�1 R fi t M M „ � a Z � (alpyQ t � � Q:� �,� Qyp �>✓'�?�4��� � c {�] ', /�' �'' �} � ��1,y° ',1` , � �"��a i.: -+�i! � s; � '��t� ti � � .�;. �' e k w< ti ;� �i'� : ' �it1� J � l � .�1� A ) � 1 3 1 ].� � l i ��,�{�r t�` E a `.� � `� k { .�� ��� -...� Y.. ��� � � � _:� 'r.e t �n i.Ya�fg� i � F .sue ' r .� t ���000' + any-' '' 'yc -fir q k Y��� r �' t ��. ,, � �ecPS � � + + �' �f,a 1" � �� 1�A , a e{i1 �� . d�:��a �` ��' � d to�--' 1'"✓ �1 :i�� c t � Vii- �!�c j.�7y `\� 7T t \ t �',`t �r�fi t�t� � r t. aF 9 E'. E� to fi f h " � ° t`,a �"-ri,, + ,� r t` � t "� 4 )4a�� I�.�i `� Y ,.�'S 7 p';+,`> + e�}��t�.+�1�Y'=��i� r C/ _ � .-A S �. _ 'P��� f, ��s t s�T3-tF'r�' ' ' to�A ��`f �y:-Fib 3;. .,�"� � P lie IN THE CIRCUIT COURT OF THE THIRD CIRCUIT STATE OF HAWAII COUNTY OF HAWAII, a municipal CIVIL NO. 09-01-264K corporation of the State of Hawaii, (Other Civil Action) Plaintiff, CERTIFICATE OF SERVICE VS. UNIDEV, LLC, a Delaware Limited (No Trial Date Set) Liability Company; UNIDEV HAWAII, LLC, a Delaware Limited Liability Company; JOHN DOES 1-50; JANE DOES 1-50; DOE PARTNERSHIPS 1-50; DOE CORPORATIONS 1-50; DOE NON-PROFIT ENTITIES 1-50; DOE LIMITED LIABILITY COMPANIES 1-50; DOE ENTITIES 1-50, Defendants. UNIDEV, LLC, a Delaware limited liability company, Counterclaimant, vs. COUNTY OF HAWAII, a municipal corporation of the State of Hawaii; HAWAII ISLAND HOUSING TRUST, a Hawaii corporation; WAIKOLOA WORKFORCE HOUSING, LLC, a Hawaii limited liability company; DOE INDIVIDUALS 1-20; DOE PARTNERSHIPS 1-20; DOE CORPORATIONS 1-20; DOE LIMITED LIABILITY COMPANIES 1-20; and DOE GOVERNMENTAL ENTITIES 1-20, Counterclaim Defendants. 739538v 1 9641-1 CERTIFICATE OF SERVICE I HEREBY CERTIFY that on this date I caused two true and correct copies of the foregoing document was produced by U.S. mail, postage prepaid (as indicated below) to their respective addresses: HAND- MAILED DELIVERED LINCOLN S. T. ASHIDA, ESQ. Corporation Counsel JULIE K.L. MECKLENBURG, ESQ. KATHERINE A. GARSON, ESQ. LAUREEN L. MARTIN, ESQ. BROOKS L. BANCROFT, ESQ. County of Hawai i Hilo Lagoon Centre 101 Aupuni Street, Suite 325 Hilo, HI 96720 Attorneys for Plaintiff COUNTY OF HAWAI-I PATRICIA K. O'TOOLE, Officer Cl m 1675 Oneawa Way Hilo, HI 96720-5540 For Hawaii Island Housing Trust PATRICIA K. O'TOOLE, Manager 1675 Oneawa Way Hilo, HI 96720-5540 For Waikoloa Workforce Housing, LLC DATED: Honolulu, Hawaii, 9r� _-�/._,,,_. eo PAUL ALST�O.NN KURT S. FRITZ J. BLAINE ROGERS Attorneys for Defendants UNIDEV, LLC and UNIDEV HAWAII, LLC 2 739538v 1 9641-2 �w Of Counsel: ALSTON HUNT FLOYD & ING Attorneys at Law A Law Corporation PAUL ALSTON 1126-0 KURT S. FRITZ 8437-0 J. BLAINE ROGERS 8606-0 1001 Bishop Street, Suite 1800 Honolulu, Hawai`i 96813 Telephone: (808) 524-1800 Facsimile: (808) 524-4591 E-mail:palston @ahfi.com kfritz @ahfi.com brogers @ahfi.com Attorneys for Defendants UNIDEV, LLC and UNIDEV HAWAII, LLC IN THE CIRCUIT COURT OF THE THIRD CIRCUIT STATE OF HAWAII COUNTY OF HAWAII, a municipal CIVIL NO. 09-01-264K corporation of the State of Hawaii, (Other Civil Action) Plaintiff, NOTICE OF PENDENCY OF ACTION; DECLARATION OF KURT FRITZ; VS. EXHIBIT A; CERTIFICATE OF UNIDEV, LLC, a Delaware Limited Liability SERVICE Company; UNIDEV HAWAII, LLC, a Delaware Limited Liability Company; JOHN DOES 1-50; JANE DOES 1-50; DOE PARTNERSHIPS 1-50; DOE CORPORATIONS 1-50; DOE NON-PROFIT ENTITIES 1-50; DOE LIMITED LIABILITY COMPANIES 1-50; DOE ENTITIES 1-50, Defendants. UNIDEV, LLC, a Delaware limited liability company, Counterclaimant, 738346v 119641-2 EXHIBIT "C 101 vs. COUNTY OF HAWAII,a municipal corporation of the State of Hawaii; HAWAII ISLAND HOUSING TRUST, a Hawaii corporation; WAIKOLOA WORKFORCE HOUSING, LLC, a Hawaii limited liability company; DOE INDIVIDUALS 1-20; DOE PARTNERSHIPS 1-20; DOE CORPORATIONS 1-20; DOE LIMITED LIABILITY COMPANIES 1-20; and DOE GOVERNMENTAL ENTITIES 1-20, Counterclaim Defendants. NOTICE OF PENDENCY OF ACTION NOTICE IS HEREBY GIVEN,pursuant to Hawaii Revised Statutes section 634-51, that a Counterclaim has been filed by Defendant and Counterclaimant UniDev, LLC against Plaintiff and Counterclaim Defendant County of Hawaii and against Counterclaim Defendants Hawaii Island Housing Trust and Waikoloa Workforce Housing, LLC, and is now pending. One object of the Counterclaim is to set aside the fraudulent transfer of the subject property (TMK Nos. (3) 6-8-002-026 and (3)6-8-030-179) by the Quitclaim Deed dated April 22, 2009, between Hawaii Island Housing Trust, as Grantor, and the County of Hawai`i, as Grantee, which was recorded in the Bureau of Conveyances of the State of Hawaii as Document No. 2009-063816, on April 28, 2009. The real property that is the subject of this action includes those certain parcels of land more specifically described as Tax Map Key Nos. (3)6-8-002-026 and (3) 6-8-030-179, situate in the County of Hawaii, State of Hawaii, as more fully described in Exhibit A attached hereto. 738846v1l9641-2 2 The Counterclaim may affect the title or right to possession of said real property and the right of any person claiming or having an interest in said real property. DATED: Honolulu, Hawaii, March 31, 2010. PAUL ALSTON KURT S. FRITZ J. BLAINE ROGERS Attorneys for Defendants UNIDEV, LLC and UNIDEV HAWAII, LLC 738846v119641-2 3 IN THE CIRCUIT COURT OF THE THIRD CIRCUIT STATE OF HAWAII COUNTY OF HAWAII, a municipal CIVIL NO. 09-01-264K corporation of the State of Hawaii, (Other Civil Action) Plaintiff, DECLARATION OF KURT FRITZ; EXHIBIT A vs. UNIDEV, LLC, a Delaware Limited Liability Company; UNIDEV HAWAII, LLC, a Delaware Limited Liability Company; JOHN DOES 1-50;JANE DOES 1-50; DOE PARTNERSHIPS 1-50; DOE CORPORATIONS 1-50; DOE NON-PROFIT ENTITIES 1-50; DOE LIMITED LIABILITY COMPANIES 1-50; DOE ENTITIES 1-50, Defendants. UNIDEV, LLC, a Delaware limited liability company, Counterclaimant, VS. COUNTY OF HAWAII, a municipal corporation of the State of Hawaii; HAWAII ISLAND HOUSING TRUST, a Hawaii corporation; WAIKOLOA WORKFORCE HOUSING, LLC, a Hawaii limited liability company; DOE INDIVIDUALS 1-20; DOE PARTNERSHIPS 1-20; DOE CORPORATIONS 1-20; DOE LIMITED LIABILITY COMPANIES 1-20; and DOE GOVERNMENTAL ENTITIES 1-20, Counterclaim Defendants. 738846v 11 9641-2 DECLARATION OF KURT FRITZ I, KURT FRITZ, declare that: 1. I am an attorney licensed to practice before the courts of this State and am one of the attorneys representing Defendant and Counterclaimant UniDev, LLC in this action. I have personal knowledge of the facts stated in this Declaration and know they are true. 2. On March 29, 2010, on behalf of Defendant and Counterclaimant UniDev, LLC, I caused a Counterclaim to be filed against Plaintiff and Counterclaim Defendant County of Hawaii and against Counterclaim Defendants Hawaii Island Housing Trust and Waikoloa Workforce Housing, LLC. One object of the Counterclaim is to set aside as fraudulent the transfer of the real property with Tax Map Key Nos. (3) 6-8-002-026 and (3) 6-8-030-179 (which is described more specifically in Exhibit A hereto) from Counterclaim Defendant Hawaii Island Housing Trust to Plaintiff and Counterclaim Defendant County of Hawaii by the Quitclaim Deed dated April 22, 2009, and recorded in the Bureau of Conveyances of the State of Hawaii on April 28, 2009, as Document No. 2009-063816. 3. The purpose of the foregoing Notice of Pendency of Action is to place others on notice that the Counterclaim is pending and that it may affect the title or right to possession of the real property described in Paragraph 2 above. The Notice of Pendency of Action is not intended to create any additional liens against said real property. I declare under penalty of perjury that the foregoing is true and correct. Executed in Honolulu, Hawaii on March 31, 2010. KURT FRITZ 738846019641-2 2 1r+ low EXHIBIT"A- LEGAL DESCRIPTION ITEM L- PARCEL FIRST: LOT 7 KEKUMU SUBDIVISION LAND SITUATED ON THE SOUTHERLY SIDE OF LOT 3 OF WAHCOLOA LOT 4 SUBDIVISION(FILE PLAN 1967) AT WAIKOLOA,SOUTH KOHALA,ISLAND OF HAWAQ,HAWAII BEING A PORTION OF ROYAL PATENT 5671, LAND COMMISSION AWARD 8521-B,APANA l TO G.D.HUEU Beginning at the Southeast comer of this parcel of land,being also on the South side of Lot 3 of Waikoloa Lot 4 Subdivision(File Plan 1967),said point of beginning referred to Government Survey Triangulation Station"PUU HINAI"being 16,136.65 feet North and 3,929.57 feet West and thence ruining by azimuths measured clockwise from true South: 1. 1130 25' 30" 50.00 feet along Remainder Lot 4, Waikoloa Village School Site Subdivision(File Plan 2038),being a portion of R.P.5671, L.C.Aw. 8521-B,Ap. I to G.D.Hueu; 2• Thence along Lot 112 of Paniolo Estates Subdivision(F.P.2076),on a curve to the left with a radius of 20.00 feet,the chord azimuth and distance being: 248° 25' 30" 2818 feet; 3. 2030 25' 30" 915.02 feet along Lots IM 111, 110, 109, 108, 107, 106, 105, 104, 103, 102, 101, 100,99 and 98 of Paniolo Estates Subdivision(F.P. 2076),being portions of R.P.5671, L.C.Aw. 8521-8,Ap. 1.to G.D. Hueu; 4. Thence along Lots 98,97, 96,95,94 and 93 of Paniolo Estates Subdivision(F.P. 2076),being portions of R.P. 5671,LC.Aw. 8521-B, Ap. i to G.D.Hueu,on a curve to the right with a radius of 590.00 feet,the chord azimuth and distance being: ExWhj!"A.;' Page 1 IWO 2180 01' 33" 297.46 feet; 5. Thence along Lots 93,92,91,90 and 89 of Paniolo Estates Subdivision(F.P. 2076),being portions of R.P.5671,L.C.Aw. 8521-B,Ap. 1 to G.D.Hucu,on a curve to the left with a radius of 410.00 feet,the chord azimuth and distance being: 2070 53' 17.5" 343.15 feet; 6. 1830 08' 59" 420.00 feet along Lots 89 and 179 of Paniolo Estates Subdivision(F.P.2076),being portions of R.P.5671,L.C.Aw.8521-B,Ap. 1 to G.D.Hueu; 7. Thence along Lot 179 of Paniolo Estates Subdivision(1~.P.2076).being a portion of R.P. 5671,L.C.Aw.8521-B,Ap. I to G.D. Hueu,on a curve to the left with a radius of 20.00 feet,the chord azimuth and distance being. 1380 08' 59" 28.28 feet; 8. 930 08' 59" 104.00 feet along Lot 179 of Paniolo Estates Subdivision(F.P.2076),being a portion of R.P.5671, L.C.Aw.8521-B,Ap. 1 to G.D. Hueu; 9. Thence along Lot 179 of Paniolo Estates Subdivision(F.P.2076),being a portion of R.P. 5671,L.C.Aw.8521-B,Ap. 1 to G.D. Hueu,on a curve to the right with a radius of 525.00 feet, the chord azimuth and distance being: 1260 04' 29.5" 570.72 feet; 10. Thence along Lot 179 of Paniolo Estates Subdivision(F.P.2076),being a portion of R.P. 5671, L.C.Aw.8521-8,Ap. I to G.D. Hueu,on a curve to the left with a radius of 20.00 feet,the chord azimuth and distance being: 1140 00' 28.28 feet; 11. 69° 00' 50.00 feet along Lot 1.79 of Paniolo Estates Subdivision(F.P.2076),being a portion of R.P.5671,L.C.Aw. 8521-B,Ap. I to G.D. Hueu; 12. Thence along Lot 179 of Paniolo Estates Subdivision(F.P. 2076),being a portion Exhibit"A" Page 2 of R.P.5671,L.C.Aw. 8521-B,Ap. 1 to G.D. Hueu,on a curve to the left with a radius of 475.00 feet,the chord azimuth and distance being: 37° 55' 32" 490.34 feet; 13. 960 51' 04" 50.00 feet along Lot 4 of Kekumu Subdivision, being a portion of R.P.5671,L.C.Aw.8521- B.Ap. 1 to G.D.Hueu; 14. Thence along Lot l of Kekumu Subdivision,being a portion of R.P.5671,L.C.Aw. 8521-B,Ap. 1 to G.D.Hueu,on a curve to the right with a radius of 525.00 feet;the chord azimuth and distance being: 2060 33' 49" 354.17 feet; 15. 1150 00' 298.02 feet along Lot 1 of Kekunw'Subdivision, being a portion of R.P.5671,L.C.Aw.8521- B,Ap. 1 to G.D.Hueu; 16. 960 30' 81.73 feet along Lot l of Kekumu Subdivision, being a portion of R.P.5671,L.C.Aw.8521- B,Ap. 1 to G.D. Hueu; 17. 720 00' 222.23 feet along Lot 1 of Kekumu Subdivision, being a portion of R.P.5671, L.C.Aw.8521- 8,Ap. 1 to G.D. Hueu; 18. 880 00' 75.02 feet along Lot 3 of Kekumu Subdivision, being a portion of R.P.5671,L.C.Aw.8521- B,Ap. 1 to G.D.Hueu; 19. 117o 00' 126.00 feet along Lot 3 of Kekumu Subdivision, being a portion of R.P.5671,L.C.Aw.8521- B,Ap. 1 to G.D. Hueu; 20. 1220 30' 142.00 feet along Lot 3 of Kekumu Subdivision, being a portion of R-P. 5671,L.C.Aw.8521- B,Ap. 1 to G.D. Hueu; 21. 900 00' 150.00 feet along Lot 3 of Kekumu Subdivision, being a portion of 2P.5671,L.C.Aw.8521- 8,Ap. 1 to G.D. Hueu; 22. 330 00' 163.00 feet along Lot 3 of Kekumu Subdivision, being a portion of 2P.5671,L.C.Aw.8521- B,Ap. l to G.D. Hueu; Exhibit"A' Page 3 23. 70 00' 231.00 fdet along Lot 3 of Kekumu Subdivision, being a portion of R.P.5671,L.CAw.8521- B,Ap. l to G.D.Hueu; 24. 1200 00' 375.58 feet along Remainder Lot 4 of Wa"loa Village School Site Subdivision(File Plan 2038),being a portion of R.P.5671,L.CAw. 8521-8,Ap. 1 to G.D.Hueu; 25. 11 V 55' 380.00 feet along Remainder Lot 4 of Waikoloa Village School Site Subdivision(File Plan 2038),being a portion of R.P.5671, L.C.Aw.8521-B,Ap. 1 to G.D.Hueu; 26. 55° 20' 153.00 feet along Remainder Lot 4 of Waikoloa Village School Site Subdivision(File Plan 2038),being a portion of R.P.5671,L.C.Aw. 8521-8,Ap. 1 to G.D.Hueu; 27. 1 130 30' 200.00 feet along Remainder Lot 4 of Waikoloa Village School Site Subdivision(File Plan 2038),being a portion of R.P. 5671,L.C.Aw. 8521-B,Ap. I to G.D. Hueu; 28. 1690 30' 135.00 fax along Remainder Lot 4 of Waikoloa Village School Site Subdivision(File Plan 2038),being a portion of R.P.5671, L.C.Aw. 8521-B,Ap. 1 to G.D. Eiueu; 29. 1300 15' 280.00 feet along.Remainder Lot 4 of Waikoloa Village School Site Subdivision(File Plan 2038),being a portion of R.P. 5671, L.C.Aw. 8521-B,Ap. l to G.D.Hueu; 30. 65° 15' 224.00 feet along Remainder Lot 4 of Waikoloa Village School Site Subdivision(File Plan 2038),being a portion of R.P. 5671, L.C.Aw. 8521-B, Ap. l to G.D.Hueu; 31. 99° 50' 290.00 feet along Remainder Lot 4 of Waikoloa Village School Site Subdivision(File Plan 2038),being a portion of R.P.5671, L.C.Aw. 8521-B,Ap. 1 to G.D.Hueu; 32. 143° 35' 423.00 feet along Remainder Lot 4 of Waikoloa Village School Site Subdivision(File Plan 2038),being a portion of R.P. 5671, L.C.Aw. 8521-B,Ap. l to G.D. Hueu; 33. 1270 05' 583.00 feet along Remainder Lot 4 of Waikoloa Exhibit"A" Page 4 Village School Site Subdivision(File Plan 2038),being a portion of R.P.5671,L.C.Aw. 8521-B,Ap. 1 to G.D.Hueu; 34. 1370 50' 288.00 feet along Remainder Lot 4 of Waikoloa Village School Site Subdivision(F'!le Plan 2038),being a pottion of R.P.5671,L.CAw. 8521-B,Ap. L to G.D.Hueu; 35. Thence along Lot 5 of Waikoloa Development(File Plan 1172),being a portion of R.P.5671,L.C.Aw.8521-B,Ap. 1 to G.D. Hueµon a curve to the left with a radius of 5700.00 feet,the chord azimuth and distance being. 17V 20' 09.5° 404.29 feet; 36. Thence along Lot 5 of Waikoloa Development(File Plan 1172),being a portion of R.P.5671,L.C.Aw.8521-B,Ap. 1 to G.D. Hueu,on a curve to the right with a radius of 3800.00 feet,the chord azimuth and distance being: 1800 09' 10" 1560.55 feet; 37. 1920 00' 07" 260.00 feet along Lot 5 of Waikoloa Development (File Plan It 72),being a portion of R.P. 5671,L.C.Aw.8521-B,Ap. 1 to G.D.Hueu; 38. 2520 25' 107.00 feet along Lot 3 of Waikoloa Lot 4 Subdivision(File Plan 1967),being a portion of R.P.5671,L.C.Aw. 8521-B,Ap. 1 to G.D. Hueu; 39. 2870 00' 422.00 feet along Lot 3 of Waikoloa Lot 4 Subdivision(File Plan 1967),being a portion of R.P.5671,L.CAw.8521-B,Ap. l to G.D. Hueu; 40. 3240 40' 388.00 feet along Lot 3 of Waikoloa Lot 4 Subdivision(File Plan 1967),being a portion of R.P. 5671,L.C.Aw.8521-11,Ap. 1 to G.D. Hueu; 41. 2640 10' 603.00 feel along Lot 3 of Waikoloa Lot 4 Subdivision(File Plan 1967),being a portion of R.P. 5671, L.C.Aw.8521-9,Ap. I to G.D. Hueu; 42. 2980 40' 226.00 feet along Lot 3 of Waikoloa Lot 4 Exhibit"A" Page 5 Subdivision(File Plan 1%7).being a portion of R-P.5671,L.C.Aw.8521-B,Ap. l to G.D. Hueu; 43. 3169 55' 204.00 feet along Lot 3 of Waikoloa Lot 4 Subdivision(File Plan 1967),being a portion of R.P.5671,L.C.Aw.8521-B,Ap. l to G.D. Ham; 44. 2850 15' 521.00 feet along Lot 3 of Waikoloa Lot 4 Subdivision(File Plan 1967),being a portion of R.P.5671,L.C.Aw.8521-B,Ap. 1 to G.D. Hueu; 45. 2650 50' 278.00 feet along Lot 3 of Waikoloa Lot 4 Subdivision(File Plan 1967),being a portion of R.P.5671,L.C.Aw.8521-B,Ap. 1 to G.D. HUM; 46. 2890 40' 186.00 feet along Lot 3 of Waikoloa Lot 4 Subdivision(File Plan 1967),being a portion of R.P.5671,L.C.Aw.8521-8,Ap. 1 to G.D. Hueu; 47. 3200 20' 361.00 feet along Lot 3 of Waikoloa Lot 4 Subdivision(File Plan 1967),being a portion of R.P.5671,L.C.Aw. 8521-B,Ap. 1 to G.D. Hueu; 48. 2770 50' 282.00 feet along Lot 3 of Waikoloa Lot 4 Subdivision(File Plan 1967),being a portion of R.P.5671,L.C.Aw.8521-13,Ap. 1 to G.D. Hum; 49. 299° 30' 625.00 feet along Lot 3 of Waikoloa Lot 4 Subdivision(File Plan 1967),being a portion of R-P.5671,L.C.Aw.8521-B,Ap. 1 to G.D. Hum; 50. 2280 20' 128.00 feet along Lot 3 of Waikoloa Lot 4 Subdivision(File Plan 1967),being a portion of R.P.5671,L.C.Aw. 8521-B,Ap. 1 to G.D. Hueu; 51. 2530 25' 729.80 feet along Lot 3 of Waikoloa Lot 4 Subdivision(File Plan 1967),being a portion of R.P.5671,L.C.Aw. 8521-B, Ap. I to G.D. Hueu; 52. 220 47' 1 l" 523.47 fect along Lot 3 of Waikoloa Lot 4 Exhibit"A' Page 6 Subdivision(File Plan 1%7).being a portion of R.P.5671,L.C.Aw.8521-B,Ap. 1 to G.D. Hueu; 53. Thence along Lot 3 of Waikoloa Lot 4 Subdivision(File Plan 1967),being a portion of R-P.5671,L.C.Aw.8521-B,Ap. 1 to G.D.Hueu,on a curve to the left with a radius of 540.00 feet,the chord azimuth and distance being: 160' 31' 47" 117.70 feet; 54. Thence along Lot 3 of Waikoloa Lot 4 Subdivision(File Plan 1967),being a portion of R.P. 5671,L.C.Aw.8521-B,Ap. 1 to G.D.Hueu,on a curve to the right with a radius of 20.00 feet,the chord azimuth and distance being: 52" 42' 42.5" 26.99 feet; 55. 56 09' 02" 60.00 feet along Lot 3 of Waikoloa Lot 4 Subdivision(File Plan 1967),being a portion of R.P.5671,L.C.Aw. 8521-B,Ap. 1 to G.D. Hueu; 56. Thence along Lot 3 of Waikoloa Lot 4 Subdivision(File Plan 1967),being a portion of R.P.5 67 1,L.C.Aw.8521-B,Ap. 1 to G.D.Hueu,on a curve to the right with a radius of 20.00 feet, the chord azimuth and distance being: 3170 35' 21-5" 26.99 feet; 57. Thence along Lot 3 of Waikoloa Lot 4 Subdivision(File Plan 1967),being a portion of R.P.5671,L.C.Aw.8521-B,Ap. 1 to G.D.Hueu,on a curve to the Lett with a radius of 540.00 feet,the chord azimuth and distance being. 3470 19' 57.5" 237.35 feet; 58. 334° 38' 14" 907.84 feet along Lot 3 of Waikoloa Lot 4 Subdivision(File Plan 1967),being a portion of R-P. 5671, L.C.Aw. 8521-B,Ap. I to G.D. Hueu; 59. Thence along Lot 3 of Waikoloa Lot 4 Subdivision(File Plan 1967),being a portion of R.P.5671, L.C.Aw. 8521-13,Ap. I to G.U. Hueu,on a curve to the right with a radius of 460.00 feet,the chord azimuth Exhibit"A' Page 7 F and distance being: 3480 53' 36.5" 226.56 feet; 60. 30 08' 59" 1075.09 feet along Lot 3 of Wadwfoa Lot 4 Subdivision(File Plan 1967),being a portion of R.P.5671,L.C.Aw.8521-B,Ap. 1 to G.D. Hueu; 61. Thence along Lot 5 of Kekumu Subdivision,being a portion of R.P. 5671,L.C.Aw. 8521-B, Ap. 1 to G.D.Hueu,on a curve to the right with a radius of 635.00 feet,the chord azimuth and distance being: 22° 33' 59" 422.19 feet; 62. 410 58' 58" 100.00 feet along Lot 5 of Kekutnu Subdivision, being a portion of R-P.5671,L.C.Aw. 8521- „ B,Ap. 1 to G.D.Hueu; 63. Thence along Lot 5 of Kekumu Subdivision,being a portion of R-P.5671,L-C.Aw. 8521-B,Ap. 1 to G.D.Hueu,on a curve to the left with a radius of 715.00 feet,the chord azimuth and distance being. 32° 42' 14" 230.57 feet; 64. 230 25' 30" 915.02 feet along Lot 3 of Waikoloa Lot 4 Subdivision(File Plan 1967),being a portion of R.P. 5671,L.C.Aw.8521-B,Ap. 1 to G.D. Hueu; 65. Thence along Remainder Lot 4 of Waikoloa Village School Site Subdivision(File Plan 2038),being a portion of R.P.5671, L.C.Aw.8521-13,Ap. 1 to G.D.Hueu,on a curve to the right with a radius of 20.00 feet,the chord azimuth and distance being: 680 25' 30 28.28 feet to the point of beginning and containing an area of 268.029 acres,more or less. PARCEL SECOND: All of that certain parcel of land being a portion of Royal Patent 5671, Land Commission Award 8521- B,Apana l to C.U. Hueu,being Lot 5 and a portion of Tax Key designation(3)6-8-002-026,and containing an area of 0.250 acre,more or less. Exhibit"A" Page 8 UEM U: All of that certain parcel of land located at Wailmloa,South Kohala,Island of Hawaii,State of Hawaii, described as follows: Lot 178,area 90,320 square font,more or less,as shown on the map entitled"PANIOLO ESTATES", which said chap was filed in the Bureau of Conveyances of the State of Hawaii as File Plan No.2076. ITEM III: All of that certain parcel of land located at Wailcoloa,South Kohala,[eland of Hawaii,State of Hawaii, described as follows: Lot 179,area 374,729 square feet,more or less,as shown on the map entitled"PANIOLO ESTATES", which said map was filed in the Bureau of Conveyances of the State of Hawaii as File Plan No. 2076. Exhibit"A" Pagc 9 CERTIFICATE OF SERVICE I HEREBY CERTIFY that on this date I caused a true and correct copy of the Notice of Pendency of Action; Declaration of Kurt Fritz; Exhibit A to be served on the following persons by facsimile, hand-delivery or U.S. mail,postage prepaid (as indicated below), to their respective addresses: HAND- MAILED DELIVERED LINCOLN S.T.ASHIDA,ESQ. JULIE K.L. MECKLENBURG, ESQ. KATHERINE A. GARSON, ESQ. LAUREEN L.MARTIN, ESQ. BROOKS L. BANCROFT, ESQ. Corporation Counsel County of Hawaii Hilo Lagoon Centre 101 Aupuni Street, Suite 325 Hilo, Hawaii 96720 Attorneys for Plaintiff COUNTY OF HAWAN DATED: Honolulu, Hawaii, March 31, 2010. PAUL AL ;TON KURT FRITZ J. BLAINE ROGERS Attorneys for Defendants UNIDEV, LLC and UNIDEV HAWAII, LLC 738846v119641-2 rrr `r✓ i DEVELOPMENT FINANCING AGREEMENT This Development Financing Agreement(this"AgreemenY') is made and entered into as of the I 14'�* iay of 2008 by and between the COUNTY OF HAWAII, a municipal corporation(the"Coon '), WAIKOLOA WORKFORCE HOUSING, LLC, a Hawaii limited liability company("WWH'I and HAWAII ISLAND HOUSING TRUST, a Hawaii non-profit corporation and the sole member of WWH("HIHT'J. WHEREAS, the County owned in fee simple approximately 288 acres of land located at Waikoloa Village, South Kohala, Island and County of Hawaii, State of Hawaii, identified by tax map key numbers(3)6-8-002-026, (3)6-8-030-178 and(3)6-8-030-179 and more particularly described on Exhibit A hereto(the"Project Land"); and WHEREAS, the County entered into a Development Services Agreement with UniDev, L.L.C., a Delaware limited liability company("UniDev'1, dated as of March 2, 2006 (the "Original DSA'J,pursuant to which UniDev was engaged to provide various services with respect to the development of a proposed affordable workforce housing project on the Project Land primarily for employees of hotels and resorts in the Waikoloa area(the"Project"); and WHEREAS,pursuant to that certain Development Agreement dated as of July 26,2006 by and between the County and HIHT(the"Original Development AgreemenYI and by that certain Quitclaim Deed dated August 2, 2006 by and between the County and HINT, a copy of which is attached hereto as Exhibit H, the County conveyed the Project Land to HINT; and WHEREAS,pursuant to that certain Ground Lease dated as of July 26,2006, a copy of which is attached hereto as Exhibit C(the"Ground Lease'l, HINT leased the Project Land to WWH for the purpose of developing the Project; and WHEREAS,pursuant to that certain Assignment and Assumption Agreement dated as of July 26, 2006,a copy of which is attached hereto as Exhibit D, the County assigned all of its right, tide and interest in the Original DSA to WWH; and WHEREAS, UniDev and WWH subsequently entered into that certain Amended and Restated Development Services Agreement dated as of February 21, 2008, a copy of which is attached hereto as Exhibit E(as may be finther amended from time to time in accordance with this Agreement, the"DSA"); and WHEREAS, the current understandings of the County, WWH, and HINT with respect to the concept, design, scope,scheduling, phasing, budget, and marketing of the Project are set EXHIBIT "D" %W forth in the those following exhibits attached hereto and incorporated herein(collectively, the "Project Guidelines"): Exhibit F-1 Conceptual Site Plan 'Exhibit F-2 Phasing Plan Exhibit,F-3 Phase I-A Construction Plans Exhibit F-4 Community Facilities Exhibit F-5 Unit Mix, Cost Analysis and Pricing Plan Exhibit F-6 Design and Architectural Criteria Exhibit F-7 Description of Project Amenities Exhibit F-8 Description of Unit Amenities Exhibit F-9 Project Budget Exhibit F-10 Project Schedule Exhibit F-11 Marketing Plan Exhibit F-12 Sales Priorities WHEREAS,the County, HINT and WWH intend to enter into an Amended and Restated Development Agreement, a copy of which shall be attached hereto as Exhibit G(the "ARDA'I and which shall supersede the Original Development Agreement; and WHEREAS,WWH has primary responsibility for the development of the Project; and WHEREAS,pursuant to Section 201 H-40(b) and Section 46-15.1 of the Hawaii Revised Statutes("HRS'l,the County Office of Housing and Community Development is not subject to competitive bidding laws in connection with the Project; and WHEREAS,on June 1, 2007, the County adopted Bill 100(which became Ordinance 07- 93), a copy of which is attached hereto as Exhibit H.authorizing the appropriation of$6,000,000 for the predevelopment phase of the Project, finding that such funding was for a public purpose; , and WHEREAS, the County provided the$6,000,000 to WWH for the predevelopment phase of the Project pursuant to that certain Tri-Party Predevelopment Financing Agreement dated August 6, 2007 by and among the County,WWH and HINT, a copy of which is attached hereto as Exhibit I; and 2 ^ WHEREAS,pursuant to Ordinance 07-119(Bill 122), effective as of September 11, 2007, a copy of which is attached hereto as Exhibit J, the County appropriated an additional $34,000,000(the"2007 Appropriated Funds') for the Project, finding that such funding was for a public purpose; and WHEREAS,$3,000,000 of the 2007 Appropriated Funds has heretofore been made available to WWH pursuant to that certain Second Tri-Party Predevelopment Financing Agreement dated as of May 8, 2008 by and among the County,WWH and HINT, a copy of which is attached hereto as Exhibit K; and WHEREAS,the County desires to provide the remaining$31,000,000(the "DeveloWent Funds')to WWH for use in furtherance of the Project and specifically, subject to certain terms and conditions as set forth herein; NOW THEREFORE,in consideration of the mutual covenants and agreements herein contained,the parties hereby agree as follows: Article I FUNDING Section 1.1 Availability of Development Funds. The County shall make ( $31,000,000 available to WWH and shall disburse such funds in accordance with the provisions of this Agreement. Section 1.2 Use of Proceeds. WWH shall use the Development Funds solely for payment of costs and expenses of the Project in accordance with the budget attached hereto as Exhibit (the"Development Funds Bud 1. Section 13 Operation of the Project Land and Project. WWH shall develop and operate the Project Land and the Project,or cause it to be developed and operated, as contemplated by the Project Guidelines and may enter into contracts with third parties(each, a "Contract'I to so develop and operate the Project Land and the Project,provided that such Contracts shall comply with Section 6.1 hereof. Section 1.4 Term. This Agreement shall begin on the day and year first set forth above and, unless earlier terminated pursuant to the provisions hereof, shall continue in effect until the last to occur of the following: a. Site work, as set forth on Exhibit F-3, has been fully completed; b. The community facilities, as set forth on Exhibit F-4, are fully constructed; t, C. Development of the Project school site, including legal access thereto and the provision of utilities to the boundaries thereof, is fully completed; 3 d. WWH has fully performed its obligations with respect to securing CFD financing for the Project, as set forth in Section 3.2 b. hereof; and e. all of the Development Funds have been expended. Article II REPRESENTATIONS AND WARRANTIES WWH and, as applicable, HINT represent and warrant to the County as of the date of this Agreement and the date of each disbursement of funds hereunder. Section 2.1 Organization. WWH is a limited liability company, duly organized, validly existing and in good standing under the laws of the State of Hawaii. WWH has the full power and authority to transact the business in which it is presently engaged HIHT is a nonprofit corporation duly formed, validly existing and in good standing under the laws of the State of Hawaii and is organized and operated exclusively for charitable purposes as defined in section 501(c)(3)of the Internal Revenue Code of 1986. HIHT has the full power and authority to transact the business in which it is presently engaged. Section 2.2 Authority. WWH and HINT have legal authority to enter into, execute, and deliver this Agreement and all documents referred to herein,and have taken all actions (' necessary to authorize its execution,delivery and performance of all such documents. The execution,delivery and performance of this Agreement do not require the consent or approval of any other person,regulatory authority or governmental body and do not conflict with, result in a violation of or constitute a default under any provision of WWH's articles of organization or operating agreement, HIHT's articles of incorporation or bylaws,or any other agreement or other instrument binding upon WWH or HIHT or any law,governmental regulation,court decree or order applicable to WWH or HINT. Section 2.3 Enforceability. This Agreement and all other documents referred to herein are the legal, valid and binding obligations of WWH and HINT, enforceable against WWH and HIHT, respectively, in accordance with their respective terns. Section 2.4 Information. Neither WWH nor HINT has made any material false statement or misstatement of fact in connection with its receipt of the Development Funds, and all of the information WWH and HINT previously submitted to the County or will submit to the County in the future relating to the Development Funds or the disbursement of any of the Development Funds is and will be true and correct. Section 2.5 Violation of Law. Neither WWH nor HINT is in violation of any provisions of its Articles of Organization, Articles of Incorporation, Operating Agreement or Bylaws (collectively,the"Charter Documents'l, as applicable,or of the laws of the United States, the State of Hawaii or the County of Hawaii, and there are no actions, suits, or _ proceedings pending,or to the knowledge of WWH and HINT threatened, before any judicial 4 body or governmental authority against or affecting WWH or HINT relating to the Project Land or the Project, and neither WWH nor HINT is in default with respect to any order, writ, injunction,decree,or demand of any court or any governmental authority which would impair its ability to enter into this Agreement or any document referred to herein, or to perform any of the acts required of it in such documents. Section 2.6 No Conflict. Neither the execution and delivery of this Agreement or any document referred to herein,nor compliance with any of the terms, conditions,requirements,or provisions contained in any of such documents is prevented by, is a breach of, or will result in a breach of, any term,condition, or provision of the Charter Documents or any agreement or document to which WWH or HINT is now a party or by which it is bound. Section 2.7 No Liens or Encumbrances. As of the date hereof, the Project Land is free and clear of all liens and encumbrances. Article III COVENANTS OF VWVH AND HINT WWH and,as applicable,HINT covenant as follows: Section 3.1 Compliance with Agreements. WWH and HINT will comply with all of the terms, conditions,provisions, covenants,requirements, and warranties in this Agreement and all other documents referred to herein, as applicable. Section 3.2 Development and CFD Financing of the Project. a. WWH will develop,market, operate, maintain,and manage the Project Land and the Project in compliance with the Project Guidelines,Article VI hereof and all applicable laws, statutes,rules,ordinances, and regulations issued by any federal, state,or local political subdivisions having jurisdiction over the Project Land and the Project. WWH shall not and shall not permit its contractors to substantially deviate from the Project Guidelines and no portion of the Project Guidelines shall be amended without the prior written consent of the County, as set forth herein. b. WWH shall use its best efforts to obtain funding for the Project through the creation of a Community Facilities District("CFUJ,including but not limited to preparation and submittal of a CFD application and such other documents as may be required in connection therewith and pursuant to Chapter 32 of the Hawaii County Code. Section 33 Enforcement. WWH will fully enforce the terns and conditions contained in any Contract,but may waive or release terms and conditions if such waiver or release is not prohibited by the terms of this Agreement and WWH deems such waiver or release to be in the best interest of the Project. 5 Section 3.4 Notice of Default Under a Contract. WWH will fiunish to the County as soon as possible and in any event within fourteen(14)calendar days after it has obtained knowledge of the occurrence of any event of default under any Contract, or any event which with the giving of notice or lapse of time or both would constitute an event of default under any Contract, a statement setting forth details of such event of default,or event which with the giving of notice or upon the lapse of time or both would constitute an event of default, and the action it proposes to take with respect thereto. Section 3.3 Provision of Evidence. WWH and HIHT shall fiunish such satisfactory evidence regarding the representations and warranties described herein as may be required and requested in writing by the County. Section 3.6 Development Services Agreement. WWH will perform its obligations under the DSA and,except as required by Section 4.2 e.hereof, will not permit the DSA to be substantially amended or modified without the prior written consent of the County. Section 3.7 Insurance. WWH shall maintain or cause to be maintained fire and extended coverage insurance on the Project when it deems it appropriate in an amount equal to the full insurable value thereof, and shall name the County as loss payee thereunder. At the written request of the County,WWH shall promptly furnish thereto all written notices and all paid premium receipts received by WWH regarding the required insurance, or certificates of C insurance evidencing the existence of such required insurance. If damages which are covered by such required insurance occur to the Project, then WWH shall use or cause the insurance proceeds to be used to repair such damage and to provide or cause to be provided whatever additional fiords that may be needed to fully or partially repair such damage. As loss payee under the insurance required herein the County agrees to and will assign or pay over to WWH all insurance proceeds it receives so that WWH can comply with the requirements that this Section 3.7 imposes upon WWH as to the use of such insurance proceeds. Section 3.8 Use,Maintenance,Repair and Alterations. WWH and HIHT shall not, without the written consent of the County,permit or suffer the use of any of the Project Land and the Project for any purpose other than the use for which the same is intended as of the effective date of this Agreement. In addition,WWH(i)shall not abandon the Project Land and the Project,(ii)shall complete promptly and in good and workmanlike manner any building or other improvement which may be constructed on the Project Land and promptly restore in like manner any portion of the Project which may be damaged or destroyed thereon and pay when due all ' claims for labor performed and materials furnished therefore, (iii)shall comply with all laws, ordinances,regulations,requirements, covenants, conditions and restrictions now or hereafter, affecting the Project Land and the Project,or any part thereof, or requiring any alterations or improvements thereto, (iv) shall not commit or permit any waste or deterioration of the Project ( Land and the Project, (v)shall keep and maintain abutting grounds, sidewalks, roads,parking and landscape areas in good and neat order and repair, (vi)shall comply with the provisions of 6 C* the Ground Lease, and(vi) shall not commit, suffer or permit any act to be done in or upon the Project Land and the Project, in violation of any law, ordinance or regulation. Section 3.9 Records Keeping and Reporting. WWH shall maintain or cause to be maintained books,records,documents and other evidence pertaining to the costs or expenses associated with the completion and operation of the Project and compliance with the requirements contained in this Agreement,and upon request shall allow or cause the entity which is maintaining such items to allow the County or its designee to inspect, audit, copy,or abstract, all of its books, records,papers, or other documents relevant to the Development Funds. WWH shall use or cause the entity which is maintaining such books and records to use generally accepted accounting principles in the maintenance of such books and records, and shall retain or cause to be retained all of such books,records,documents and other evidence for a period of six (6)years from the date that the Project is fully completed and placed into operation. Section 3.10 Meetings. The County shall be permitted to attend all WWH managers' meetings and meetings between WWH or HIHT and contractors engaged or proposed to be engaged in connection with the Project and shall be given reasonable advance notice of all such meetings. As described in Section 7.2 below,the County's attendance is merely as an observer and its presence shall in no event be construed to indicate that the County is a co-partner or joint venture in the Project,or is directing the construction means or methods for the Project. ( Section 3.11 Inspection of Project. Upon reasonable request by the County, WWH shall allow the County to inspect the Project Land and the Project. Section 3.12 Non-Discrimination. WWH agrees to not engage in discriminatory employment practices in the operation or management of the Project. Additionally,Pursuant to Executive Order No. 142,County of Hawaii, dated February 11, 2005,during the term of this Agreement,WWH (referred to as"Contractor"for purposes of this paragraph)agrees as follows: a. Contractor shall comply with all requirements set forth in Federal and State laws and regulations relative to Title VI of the Civil Rights Act of 1964, as amended, which provide for non-discrimination in Federally assisted programs. b. Contractor shall not discriminate against any employee or applicant for employment because of race, ancestry/national origin, religion, color, disability, ' age,marital status, military status, veteran's status, sexual orientation, lactation, arrest and court record, citizenship, or any other classification protected by state or federal law. The contractor shall assure that applicants are employed and that employees are treated during employment without regard to race, ancestry/national origin, religion,color,disability, age, marital status, military status, veteran's status, sexual orientation,lactation, arrest and court record, citizenship, or any other classification protected by state or federal law. Such action shall include,but not be 7 limited to, the following: employment,upgrading, demotion, or transfer, recruitment or recruitment advertising, layoff or termination; rates of pay or other forms of compensation; and selection for training. The contractor agrees to post in conspicuous places notices to be provided by the contracting officer setting forth the provisions of the nondiscrimination clause. C. Contractor shall in all solicitations or advertisements for employees placed by or on behalf of Contractor, state that all qualified applicants shall receive consideration for employment without regard to race, ancestry/national origin,religion, color, disability, age,marital status,military status, veteran's status, sexual orientation,lactation, arrest and court record, citizenship,or any other classification protected by state or federal law. CL In the event of Contractor's noncompliance with the nondiscrimination clauses of this contract,this contract may be canceled or suspended in whole or in part and the contractor may be declared ineligible for further County contracts until such time that the contractor by satisfactory evidence,in good faith,ceases such discriminatory practices or procedures. e. Contractor who subcontracts any portion of the contract shall assure the County that such subcontractor shall abide by the nondiscrimination provisions stated herein and agrees that any subcontractor who is found in violation of such provisions shall subject the principal contractor's contract with the County to be terminated or suspended pursuant to subsection d. above. f. Contractor may direct any bidder,prospective contractor, or subcontractor to submit a statement in writing signed by an authorized officer, agent,or employee of the contracting party that the signer's practices and policies do not discriminate on the grounds of race,ancestry/national origin,religion,color,disability, age, marital status, military status,veteran's status, sexual orientation, lactation, arrest and court record, citizenship, or any other classification protected by state or federal law, and that the terms and conditions of employment under the proposed contract shall be in accordance with the purposes and provisions stated herein. Section 3.13 Compliance with Law. WWH and HIHT shall comply with Davis-Bacon and County labor requirements, including reporting requirements, the requirements of the Fair Housing Act(42 U.S.C. 3601 et seq.) as it may from time to time be amended, and all other applicable laws, ordinances and codes of Federal, State and County governments. Upon request by the County, WWH shall submit proof that any applicable Federal, State and County licensing requirements are met. It is the responsibility of WWH to obtain the necessary coverage, if any, for items such as workers' compensation and medical insurance. Section 3.14 Procurement. All procurement transactions for supplies, equipment, and services shall be conducted in a manner to provide, to the maximum extent practicable,open and 8 free competition. WWH and HINT shall comply with all bidding and purchasing regulations of all applicable Federal, State and County laws and requirements,to the extent required by law. Section 3.15 Conflict of Interest. In the procurement of supplies, equipment, construction and services by WWH and/or HINT, no employee,officer or agent of WWH and/or HINT or its contractors shall participate in the selection or in the award or administration of a contract if a conflict of interest, real or apparent,would be involved Such a conflict would arise when the employee,officer or agent; any member of his or her immediate family;his or her partner, or an organization which employs or is about to employ any of the above,has a financial or other interest in the party or firm selected for award. Officers, employees or agents of WWH and/or HINT shall neither solicit nor accept gratuities, favors or anything of monetary value from parties or potential parties to Contracts. Unsolicited items provided as gifts are not prohibited if the intrinsic value of such items is nominal. Section 3.16 Audit Upon written request and as specified by the County, an audit of WWH's and HIHT's financial records shall be conducted annually in accordance with generally accepted auditing standards at WWH's and HIHT's expense. The audited financial statements shall be made available to the County within sixty(60)days after the close of WWH's and HIHT's fiscal year. Section 3.17 Mortgage.Within thirty(30)days after the date of this Agreement,WWH t- and HINT, as applicable shall have duly executed and delivered to the County one or more documents constituting a mortgage, security agreement and conditional assignment of leases and rents in favor of the County on a form that is fully satisfactory to the County(the"Mortgage and Spry,AUNMen which shall be recorded at the Bureau of Conveyances or Office of the Assistant Registrar of the Land Court of this State of Hawai'i. Article IV DISBURSEMENT OF DEVELOPMENT FUNDS Section 4.1 Disbursement of Development Funds. Upon compliance with all of the conditions delineated in Section 4.2,the County shall disburse the Development Funds to WWH. Under no circumstance shall the County be required to disburse funds in excess of the amount requested by WWH under the provisions contained in Section 4.2.a even if such amount is less than the maximum amount of the Development Funds delineated in Section 1.1. Provided, however, if WWH has not fully complied with the provisions and requirements contained in > Section 4.2 by the date that is five(5)years from the effective date of this Agreement,then the County's obligation to disburse any of the Development Funds shall terminate as of such day and date and this Agreement shall become null and void. Section 4.2 Conditions Precedent to Disbursement of Development Funds. The obligation of the County to disburse funds to WWH is subject to the following conditions precedent: " 9 C_ a. The County shall have received a written request for disbursement of Development Funds specifying the amount of funds being requested and the purpose for which such funds shall be used. Both the amount and purpose of requested funds shall be in accordance with the Development Funds Budget, as such may be amended from time to time with the written consent of the Housing Administrator. b. The County shall have received a list of all contractors employed in connection with the construction of the improvements, showing the name, address, telephone number and license number of each contractor, a general description of the nature of the work to be done,that labor and materials to be supplied, and the appropriate dollar value of the labor, work,or materials with respect to each contractor. C. The County shall have received detailed budget and cash flow projections of total Project costs and a schedule of the estimated amount and time prior to each disbursement of Development Funds. d. As and when required pursuant to Section 3.17 hereof,the Mortgage and Security Agreement shall have been executed and recorded at the Bureau of Conveyances or Office of the Assistant Registrar of the Land Court of this State of Hawaii. The County hereby agrees and acknowledges that any request by WWH or HIHT for the C release or subordination of the Mortgage and Security Agreement in connection with any financing secured by the Project shall not be unreasonably withheld or denied. e. The DSA shall have been amended to provide the following: (1) that UniDev acknowledges and agrees to proceed in accordance with the Project Guidelines as set forth in this Agreement; (2) that UniDev shall pay one half of the administrative expenses of WWH,including office space expenses and salaries and family medical benefits of WWH employees; (3) that either party to the DSA shall have the ability to terminate the DSA without,cause or penalty upon ninety(90)calendar days' prior written notice to the other party; and (4) that UniDev shall maintain a presence in Hawaii and sufficient staffing in Hawaii County to coordinate planning,design, permitting, construction management, and financing of current and future phases of the Project and shall control and process Project-related payments and draws within Hawaii;staffing in the State of Hawaii shall include, at a minimum, (a) a C planning, permitting and design coordinator, (b) a project accountant,(c) a construction manager, and(d)a project manager, all full time positions. 10 Each amendment to the DSA that is required by this subsection e. shall be subject to the prior approval of the County and the requirement therefor may be temporarily or permanently waived by the Housing Administrator. f. The County shall have received copies of tax clearances for WWH from the Director of Taxation of the State of Hawaii and, if reasonably required by the County, the U.S. Internal Revenue Service. g. The finalized contract for mass grading for the Project shall have been received and approved by the Housing Administrator. h. WWH and HIHT shall have supplied to the County all other items that the County may reasonably require. Article V DEFAULT AND REMEDIES Section s.l Event(s) of Default. Each of the following events shall,unless waived in writing by the County or cured within any applicable cure period,constitute an event of default ("Event of DefaulY�under this Agreement: a. Any representation,covenant,or warranty made by WWH or HIHT herein or in any other document furnished pursuant to this Agreement or in order to induce the County to disburse any of the Development Funds shall prove to have been untrue or incorrect in any material respect or materially misleading as of the time such representation, covenant,or warranty was made. b. WWH or HINT fails to fully comply with any provision,term,condition, covenant,or warranty contained in this Agreement or any other document or agreement referenced herein or entered into with the County in connection with the Project and such failure to comply is not cured within thirty(30)days after receipt by WWH or HIHT, as applicable,of written notice of such failure(or within such other time period for cure allowed in the document under which such failure occurred). C. Any funds provided to HINT or WWH in connection with the Project are used for purposes other than the purposes for which they were disbursed. d. The DSA, as effective on the date of this Agreement, is substantially amended without the prior written consent of the County.. Section 5.2 Remedies. Upon the occurrence of an Event of Default and at any time thereafter unless such Event of Default is cured to the satisfaction of the County, the County (acting through the Mayor, Managing Director, Director of Finance or the Housing Administrator)may enforce any or all of the following remedies: 11 rr a. The County may refrain from disbursing the remainder of the 1..� Development Funds; p rovided, however, the County may make such a disbursement after the occurrence of an Event of Default without thereby waiving its rights and remedies hereunder, b. The County may demand that any portion of the Development Funds already disbursed to WWH be returned to it, and upon such demand WWH shall promptly return such portion to the County; C. If the Event of Default involved the use of Development Funds for purposes other than those set forth on the Development Funds Budget or otherwise consented to in writing by the County, then the County may declare that all Development Funds already disbursed to WWH shall represent indebtedness to the County that is immediately payable, due and owing, d. The County may require WWH and/or HINT to transfer all of their respective interests in the Project and the Project Land to the County, subject to any existing liens or encumbrances to which the County has previously consented. If WWH and HINT fail to voluntarily transfer their interests,the County may exercise its rights under the Mortgage and Security Agreement; (f e. The County may enforce any additional remedies it may have in law or equity. The rights and remedies herein specified are cumulative and not exclusive of any rights or remedies that the County would otherwise possess. If WWH does not repay any portion of the amount specified in Section 5.2 b. within thirty(30)days of demand by the County, then such amount may, unless precluded by law,be taken from or offset against any other monies that WWH or HINT is entitled to receive from the County. Section 53 Notification of Event of Default. WWH or HINT shall furnish to the County, as soon as possible and in any event within seven(7)calendar days after it has obtained knowledge of the occurrence of each Event of Default or each event which with the giving of notice or lapse of time or both would constitute an Event of Default, a statement setting forth details of each Event of Default or event which with the giving of notice or upon the lapse of time or both would constitute an Event of Default and the action which WWH proposes to take with respect thereto. Article VI OPERATION OF PROJECT t 12 Section 6.1 Contracts. Each and every Contract that WWH enters into must be necessary for the construction,operation or marketing of the Project and be consistent with the Project Guidelines and must allow for termination by WWH in the event of a default by the other contracting party. Section 6.2 Encumbrances. Neither WWH nor HIHT shall sell, lease or encumber its interest in the Project Land or the Project without the prior written consent of the County, which consent shall not be unreasonably withheld or denied. Any attempt by either WWH or HINT to sell, lease or encumber its interest in the Project Land or the Project in contravention of this Section 6.2 shall be null and void. Article VII MISCELLANEOUS Section 7.1 Indemnification by WWH- WWH shall bear all loss, expense(including attorneys' fees), and damage in connection with the completion of the Project or operation of the Project Land and the Project, and agrees to indemnify and hold harmless the County, its agents, servants and employees from all claims, demands and judgments made or recovered against the County, its agents, servants and employees,because of bodily injuries,including death at any time resulting therefrom,or because of damages to property of the County or others(including loss of use) from any cause whatsoever, arising out of, incidental to,or in connection with the completion or operation of the Project, whether or not due to any act of omission or commission, including negligence of WWH or any Contractor or his or their employees, servants or agents, and whether or not due to any act of omission or commission(excluding,however,negligence or breach of statutory duty)of the County,its employees, servants or agents. WWH's liability hereunder shall not be limited to the extent of insurance carried by or provided by WWH,or subject to any exclusions from coverage in any insurance policy. Section 7.2 Relationship of the Parties. Nothing contained in this Agreement is intended or should be construed in any manner as creating or establishing the relationship of co- partners or a joint venture between WWH and the County,nor shall WWH be considered or deemed to be an agent,representative, or employee of the County in the performance of this Agreement, the completion of the Project,or the operation of the Project Land and the Project. WWH represents that it has already or will secure or cause to be secured all personnel required for the performance of this Agreement or the operation and maintenance of the Project t Land and the Project. All personnel of WWH or other persons while engaging in the performance of this Agreement or the operation and maintenance of the Project Land and the Project shall be WWH's agents and employees and shall not have any contractual relationship with the County and shall not be considered employees of the County for the Project. WWH shall be responsible for the accuracy, completeness, and adequacy of any and all work and services performed by its agents and employees. Furthermore,WWH intentionally, voluntarily _ - and knowingly assumes the sole and entire liability, if any such liability is determined to exist,to 13 its agents and employees, or to third persons, for all loss, cost,damage,or injury caused by WWH and employees in the course of their employment. All claims that may arise on behalf of said personnel or other persons out of employment or alleged employment including,but not limited to,claims under the Workers'Compensation Act of the State of Hawaii, claims of discrimination against WWH, its officers, agents, contractors, or employees shall in no way be the responsibility of the County. Such personnel or other persons shall not require nor be entitled to any compensation, rights or benefits of any kind whatsoever from the County, including,but not limited to, tenure rights,medical and hospital care,sick and vacation leave, disability benefits,severance pay and retirement benefits. WWH shall be responsible for payment of income,social security, and any other federal, state,or local taxes that it may be required to pay. Section 7.3 Notices. In addition to any notice required under applicable law to be given in another manner, any notices required hereunder must be in writing, and shall be sufficient if personally served or sent by prepaid,registered,or certified mail(return receipt requested), to the business address of the party to whom it is directed. Such business address shall be that address specified below or such different address as may hereafter be specified,by either party by written notice to the other: To WWH at: WAIKOLOA WORKFORCE HOUSING, LLC 56 Kamehameha Avenue Hilo,HI 96720 Attn: Chief Executive Officer To HIHT at: HAWAII ISLAND HOUSING TRUST 56 Kamehameha Avenue Hilo,HI 96720 Attn: President To the County at: COUNTY OF HAWAI'I Office of Housing and Community Development 50 Wailuku Drive Hilo, HI 96720 Attn: Housing Administrator Section 7.4 Binding Effect and Assignment or Modificadon. This Agreement shall be binding upon and inure to the benefit of WWH, HIHT and the County, and their respective _ - successors and assigns. No party to this Agreement may assign any of its rights or obligations 14 Cunder this Agreement without the prior written consent of the other parties. No change or modification of the terms or provisions of this Agreement shall be binding on WWH, HINT or the County unless such change or modification is in writing and signed by authorized representatives of each party hereto. Notwithstanding the foregoing, any exhibits to this Agreement that are part of the Project Guidelines may be modified and replaced with the approval of the Housing Administrator of the County and authorized representatives of WWH and HINT,which approval shall be indicated on a cover sheet setting forth the name and signature of each person approving the amended exhibit and the date upon which his or her approval was given. Section 7.5 Waiver. Neither the failure by WWH, HIHT or the County in any one or more instances to insist upon the complete and total observance or performance of any term or provision hereof,nor the failure of WWH,HINT or the County to exercise any right,privilege, or remedy conferred hereunder or afforded by law shall be construed as waiving any breach of such term,provision,or the right to exercise such right,privilege,or remedy thereafter. In addition,no delay on the part of any of WWH,HIHT or the County in exercising any right or remedy hereunder shall operate as a waiver thereof', nor shall any single or partial exercise of any right or remedy preclude other or further exercise thereof or the exercise of any other right or remedy. Section 7.6 Entire Agreement. This Agreement and the documents,if any,referred to herein embody the entire agreement between WWH,HINT and the County on the subject matter hereof; and there are no other agreements, either oral or written,between WWH, HIHT and the County on the subject matter hereof. Section 7.7 Choice of Law and Venue. All matters relating to the validity, construction,performance,or enforcement of this Agreement shall be determined in accordance with the laws of the State of Hawaii. All legal actions initiated with respect to or arising from any provision contained in this Agreement shall be initiated, filed and venued in the Circuit Court of the Third Circuit of the State of Hawaii located in the County of Hawaii. Section 7.8 Severability. If any provision of this Agreement is finally judged by any court to be invalid,then the remaining provisions shall remain in full force and effect and they shall be interpreted, performed, and enforced as if the invalid provision did not appear herein Section 7.9 Time of Essence. Time is of the essence with respect to all of the matters contained in this Agreement. Section 7.10 Counterparts. This Agreement may be executed in any number of counterparts,each of which when so executed and delivered shall be an original,but such counterparts shall together constitute one and the same instrument. [the remainder of this page intentionally left blankl 15 16 %mI' IN WITNESS WHEREOF, this Agreement has been executed effective the day and year first above written. HAWAII ISLAND HOUSING TRUST, a Hawaii nonprofit corporation Name: t►. '�tc Title: fRES D tN f By. �1 - Name: M%,chi 4 Title: ice PAA"s By. f&4NAA-#"-' Name: I► IGt h . O t Title. WAIKOLOA WORKFORCE HOUSING,LLC,a Hawai'i limited liability company By: A2444:::: Name: CAX-v Title: I e N By; B . Name: Q Tide: Ul am. By: Name: tr Title: %W RECOMMEND APPROVAL: Edwin aira Housing Administrator COUNTY OF HAWAII By: Name: 'IM Title: APPROVED AS TO FORM AND LEGALITY: uty Corporation Counsel v STATE OF HAWAII ) ) SS. COUNTY OF HAWAII ) On June 12, 2008, before me personally appeared HARRY KIM, to me personally known, who, being by me duly sworn, did say that HARRY KIM is the Mayor of the County of Hawaii, a municipal corporation of the State of Hawaii; that the seal affixed to the foregoing instrument is the corporate seal of the said County of Hawaii; that the foregoing instrument was signed and sealed in behalf of the County of Hawaii by authority given to said Mayor of the County of Hawaii by Section 5-1.3 (g) of the County Charter, County of Hawaii (2000), as amended; and said HARRY KIM acknowledged said instrument to be the free act and deed of said County of Hawaii. 43-e�tll V JEA VIERNES Notary Public, State of Hawaii My commission expires: 11/1/2009 V I E Q�F T% .9T PAP F OF N LIST OF EXHIBITS Exhibit A Description of Project Land Exhibit B Quitclaim Deed Exhibit C Ground Lease Exhibit D Assignment and Assumption Agreement Exhibit E Amended and Restated Development Services Agreement Exhibit F-1 Conceptual Site Plan Exhibit F-2 Phasing Plan Exhibit F-3 Phase I-A Construction Plans Exhibit F-4 Community Facilities Exhibit F-5 Unit Mix,Cost Analysis and Pricing Plan Exhibit F-6 Design and Architectural Criteria ( Exhibit F-7 Description of Project Amenities Exhibit F-8 Description of Unit Amenities Exhibit F-9 Project Budget Exhibit F-10 Project Schedule Exhibit F-11 Marketing Plan Exhibit F-12 Sales Priorities Exhibit G Amended and Restated Development Agreement Exhibit H Ordinance 07-93 (Bill 100) Exhibit I Tri-Party Predevelopment Financing Agreement Exhibit J Ordinance 07-119(Bill 122) Exhibit K Second Tri-Party Development Financing Agreement Exhibit L Development Funds Budget • C�- •:�i oft COUNTY OF HAWAII CERTIFICATION OF AVAILABILITY OF FUNDS I hereby certify that on the date of filing of this contract with the Director of Finance, there remains an unexpended amount of $31,000,000.00 In 110.499.5494.09.115 sufficient to cover the obligation of the County of Hawaii under this contract. Contract Title: Development Financing Agreement Vendor: Waikoloa Workforce Housing, LLC Contract No.: c.001813 k of Financ Date: June 10, 2008 R401 STATE OF HAWAII r BUREAU OF CONVEYANCES RECORDED JUL 01,2008 08:02 AM Doc NO(s)2008-106637 191 CARL T.WATANABE II��I�I�I� III� REGISTRAR OF CONVEYANCES 20 111 Z9 LAND COURT �r°' REGULAR SYSTEM (AREA ABOVE RESERVED FOR RECORDING INFORMATION) After Recordation, Return by H Mail or O Pick-up (Phone #: ) FILL IN NAME AND ADDRESS BELOW: �- Office of the Corporation Counsel (JKM) Hilo Lagoon Centre 101 Aupuni Street, Suite 325 ; Hilo, Hawai'i 96720 This document contains 18 pages. TITLE OF DOCUMENT: MORTGAGE PARTIES TO DOCUMENT: MORTGAGEE: COUNTY OF HAWAII 25 Aupuni Street Hilo, Hawaii 96720 MORTGAGOR: HAWAII ISLAND HOUSING TRUST 56 Kamehameha Ave. Hilo, Hawai'i 96720 WAIKOLOA WORKFORCE HOUSING, LLC 56 Kamehameha Ave Hilo, Hawaii 96720 {. AFFECTS TAX MAP KEY: (3)6-8-002-026, (3) 6-8-030-178, (3) 6-8-030-179 EXHIBIT "E" • 'err rI' \_ MORTGAGE THIS MORTGAGE ("Mortgage"), made this day of , 2008, by and among HAWAII ISLAND HOUSING TRUST ("HIHT'), whose dress is 56 Kamehameha Avenue, Hilo, Hawaii 96720, and WAIKOLOA WORKFORCE HOUSING, LLC ("WWH'), whose address is 56 Kamehameha Avenue, Hilo, Hawaii 96720(collectively "Mortgagor"), and COUNTY OF HAWAI'I whose address is 25 Aupuni Street, Hilo, Hawaii 96720, ("Mortgagee"). WITNESSETH: THAT FOR THE PURPOSE OF SECURING the performance of every obligation and agreement of HINT and WWH under that certain Development Financing Agreement by and among Mortgagee, HIHT and WWH, executed as of even date herewith (the"DFA"), Mortgagor hereby mortgages to the Mortgagee and grants the Mortgagee a security interest in all right, title and interest of the Mortgagor now owned, or hereafter acquired, in and to the following property, rights and interests: (a) that certain property described on Exhibit A attached hereto and by reference made a part hereof(the"Property"); (b) all of Mortgagor's interest in the buildings and improvements now or hereafter located on the Property and the rents, issues and profits thereof; and (c) that certain Ground Lease dated as of July 26, 2006 by and between HINT and WWH, as such may be amended from time to time, and the leasehold estate created thereunder. TO HAVE AND TO HOLD the above granted and described property, rights and interests unto and to the proper use and benefit of the Mortgagee, and the successors and assigns of the Mortgagee, forever. In the event the Property or any part thereof, or any interest therein is sold, conveyed or alienated by the Mortgagor, whether voluntarily or involuntarily, except as prohibited by law, all obligations secured by this instrument, irrespective of the maturity dates express therein, at the option of the holder hereof and without demand or notice, shall immediately become due and payable. TO PROTECT THE SECURITY OF THIS MORTGAGE, MORTGAGOR AGREES: 1. To comply with and observe its obligations under the DFA by and between Mortgagor and Mortgagee. 2. To keep the Property in good condition, working order and repair, not to remove, destroy or suffer the removal or destruction of any building or other improvements or fixtures thereon; to complete or restore promptly and in good and workmanlike manner any building `►' which may be constructed, damaged or destroyed thereon; to comply with all laws, covenants and restrictions affecting the Property; not to commit or permit waste thereof; not to commit, suffer or permit any act upon the Property in violation of law; to do all other acts which from the charter or use of the Property may be reasonably necessary the specific enumerations herein not excluding the general; to observe and perform all obligations of Mortgagor under any lease of the Property. 3. To provide, maintain and deliver to Mortgagee fire and all other types of insurance of the type and in amounts as Mortgagee may require, with loss payable to Mortgagee. In the event of loss, the insurance proceeds, or any part thereof, may be applied by Mortgagee, at its option, to the reduction of the indebtedness hereby secured or to the restoration or repair of the Property damaged. In the event that the Mortgagor shall fail to provide satisfactory hazard insurance, the Mortgagee may procure, on the Mortgagor's behalf, insurance in favor of the Mortgagee alone. If insurance cannot be secured by Mortgagor to provide the required coverage, such inability shall constitute an event of default hereunder. 4. To appear in and litigate any action or proceeding purporting to affect the security hereof, the title to the Property, or the rights of powers of Mortgagee; Mortgagee may appear in and litigate any such action or proceedings, including any bankruptcy, partition or condemnation proceeding, affecting the Property, or Mortgagee's interest therein, in which event Mortgagor agrees to pay all costs and expenses thereof, including attorney's fees and costs of securing Cevidence of title. 5. To pay on or before the due date all taxes and assessments affecting the Property, including all assessments upon water company stock and all rents, assessments and charges for water, appurtenant to or used in connection with the Property; to pay, when due, all encumbrances, charges and liens, on the Property or any part thereof, which at any time appear to be prior or superior hereto. 6. To pay the reasonable amount of any attorney's fees, together with costs, incurred by Mortgagee in the event the obligation secured hereby is referred to an attorney for enforcement of Mortgagee's rights hereunder, or if Mortgagee retains an attorney to advise Mortgagee in connection with this Mortgage, or any other agreement related to the indebtedness secured by this Mortgage. The fees and costs described herein and elsewhere in this Mortgage shall be in addition to those set forth in the DFA or any other written agreement between Mortgagor and Mortgagee. 7. The failure on the part of the Mortgagee to promptly enforce any right hereunder shall not operate as a waiver of such right and the waiver by Mortgagee of any default shall not constitute a waiver of any other or subsequent defaults. Subsequent acceptance of any payment by the holder hereof shall not be deemed a waiver of any default by Mortgagor, or of Mortgagee's rights hereunder as the result of any sale, agreement to sell, conveyance or alienation, regardless of holder's knowledge of such default, sale, agreement to sell, conveyance or alienation at the time of acceptance of such payment. I 8. This Mortgage applies to, inures to the benefit of, and binds all parties hereto, their heirs, legatees, devisees, administrators, executors, successors and assigns. The term Mortgagee shall mean the holder and owner of any note secured hereby, or, if the note has been pledged, the pledgee thereof. In this Mortgage, whenever the context so requires, the masculine gender includes the feminine and/or neuter, and the singular number includes the plural. All obligations of Mortgagor hereunder are joint and several. 9. In the event any one or more of the provisions contained in this Mortgage or in any promissory note hereby secured shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Mortgage or said promissory note, but this Mortgage and said promissory notes shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein or therein. 10. The undersigned Mortgagor agrees that he is entitled only to those notices required by applicable law and requests that a copy of any notice of default and of any notice of sale thereunder be mailed to Mortgagor at the address set forth above. 11. This Mortgage may be executed simultaneously in one or more counterparts, each of which will be considered an original, but all of which together will constitute one and the same instrument. Q IN WITNESS WHEREOF, the parties have caused this Mortgage to be signed by their duly authorized representatives, as of the day and year first written above. HAWAII ISLAND HOUSING TRUST, a Hawai'i nonprofit corporation By: Peter L. Hendricks Its Director By:� K Patricia K. O'Toole Its Director By. I Michae um'a ` A Its Director %ar WAIKOLOA WORKFORCE HOUSING, LLC, a Hawai'i limited liability company By: Pe er L. Hendricks Its Manager By: tFart -K O<A Patricia K. O'Toole Its Manager By: Michael,�Sumja Its Manager C RECOMMEND APPROVAL: Edwin S. Taira Housing Administrator COUNTY OF HAWAII By: a4AK Name: DUOS KAM Title: Ad6i*i dre w APPROVED AS TO FORM AND LEGALITY: uty Corporation Counsel *00 STATE OF HAWAII ) SS: COUNTY OF HAWAII ) On 111 , 2008, before me, personally appeared PETER L. HENDRICKS, known personally to me (or proved to me on the basis of satisfactory evidence) to be the persons whose names are subscribed to the within instrument and acknowledged to me that they executed the same in their authorized capacities, and that by their signatures on the instrument the persons, or the entity upon behalf of which the persons acted,executed the instrument. WITNESS my hand and official seal. VS Notary Public, State of Hawaii Printed Name: Gumemt8 G. Sumera My Commission expires: q11-4 01 STATE OF HAWAII ) SS: COUNTY OF HAWAII ) On QP 2008, before me, personally appeared PATRICIA K. O'TOOLE, known personglly to me (or proved to me on the basis of satisfactory evidence) to be the persons whose names are subscribed to the within instrument and acknowledged to me that they executed the same in their authorized capacities, and that by their signatures on the instrument the persons, or the entity upon behalf of which the persons acted,executed the instrument. WITNESS my hand and official seal. `L� � - <_ s Notary Public, State of Hawaii Printed Name: Guillerma G. Sumera � al�llc9 My Commission expires: f1✓ Iwo STATE OF HAWAII ) SS: COUNTY OF HAWAII ) On 2008, before me, personally appeared MICHAEL"SUMJA, known personally to me (or proved to me on the basis of satisfactory evidence) to be the persons whose names are subscribed to the within instrument and acknowledged to me that they executed the same in their authorized capacities, and that by their signatures on the instrument the persons, or the entity upon behalf of which the persons acted,executed the instrument. WITNESS my hand and official seal. L S Notary Public, State of Hawaii Printed Name: Oulllerrm Q. Sumers My Commission expires: a yi�aq C STATE OF HAWAII ) ) SS. COUNTY OF HAWAI'I ) On JUN 2 5 2008 , before me personally appeared DIXIE KAETSU, to me personally known, who, being by me duly swom, did say that DIXIE KAETSU is the Managing Director of the County of Hawai'i, a municipal corporation of the State of Hawai'i; that the seal affixed to the foregoing instrument is the corporate seal of said County of Hawai'i; that the foregoing instrument was signed and sealed in behalf of the County of Hawai'i by authority given to said Mayor of the County of Hawai'i by Section 5-1.3(g) of the County Charter, County of Hawai'i (2000), as amended, and assigned by the Mayor to the Managing Director pursuant to Section 6-1.3(h) of the County Charter; and said DIXIE KAETSU acknowledged said instrument to be the free act and deed of said County of Hawai'i. VIRAINIA M. TOLENTINO Njzftary Public, State of Hawai'i My commission expires: 4/22/2009 i S$�O••�PT'4g•'' Co • �.• � a� r C, .• .�. IWO EXHIBIT"A" LEGAL DESCRIPTION ITEM I-- PARCEL FIRST: LOT 7 . .__.--I�BKI�-SUBD�SIOhF-. .. .._._..._ _.._ . _... --•--- - LAND STIVATED ON THE SOUTHERLY SIDE OF LOT 3 OF WAIKOLOA LOT 4 SUBDIVISION(FILE PLAN 1967) AT WAIKOLOA,SOUTH KOHALA,ISLAND OF HAWAII,HAWAII BEING A PORTION OF ROYAL PATENT 5671, LAND COMMISSION AWARD 8521-8.APANA l TO GD.HUEU Beginning at the Southeast comer of this parcel of lead,being also on the South side of Lot 3 of Waikoloa Lot 4 Subdivision(File Plan 1967),said point of beginning referred to Government Survey C Triangulation Station"PUU MNAI"being 16,136.65 feet North and 3,929.57 feet West and thence running by azimuths measured clockwise from true South: 1. 1130 25' 30" 50.00 feet along Remainder Lot 4, Waikoloa Village School Site Subdivision tale Plan 2038),being a portion of R.P.5671,L.C.Aw. 8521-B,Ap. 1 to G.D.Hueu; 2. Thence along Lot 112 of Paniolo Estates Subdivision(F.P.2076),on a curve to the left with a radius of 20.00 feet,the --�hnrd sizimuth and•distance-being--- -- 248° 25' 30" -28.28 feet; 3. 2030 25' 30" 915.02 feet along Lots 112, 111. 1 10, 109, t08, 107, 106. 105. 104. t03, 102, 101, 100,99 and 98 of Paniolo Estates Subdivision(F.P. 2076),being portions of R.P.5671,L.C.Aw. 8521-B,Ap. I.to G.D. Hueu; 4. Thence along Lots 98,97,96,95,94 and 93 of Paniolo Estates Subdivision(F.P. 2076),being portions of R.P. 5671,L.C.Aw. 8521-B,Ap. 1 to G.D.Hueu,on a curve to the right with a radius of 590.00 feet,the chord azimuth and distance being: Exhibit"A" Page t C r- 2190 01' 33" 297.46 feet; 5, Thence along Lob 93.92,91,90 and 892076),being portions Subdivision RF.5671,LCAw. 8521-B,Ap. l to G.D.Hueu,on a curve to the left with a radius of 410.00 feet,the chord azimuth and distance being. 2070 53' 17.5" 343.15 feet; 6. 1830 08' 59" 420.00 feet along Lots 99 and 179 of Paniolo Estates Subdivision(F.P.2076),being portions of R.P.5671,LCAw.8521-B,Ap. 1 to G.D.Hueu; 7. Thence along Lot 179 of Paniolo Estates Subdivision(FP.2076),being a portion __..____---of fzP:569tLeAw.8,52t=H,-Ap:--1-to G D.---- Hueu,on a curve to the left with a radius of 20.00 feet the chord azimuth and distance being: 1380 08' 59" 28.28 feet; 8. 930 08' 59" 104.00 feet along Lot 179 of Paniolo Estates Subdivision(F.P.2076).being a portion of R.P.5671.LC-kw.8521-13,Ap. 1 to G.D. Hueu; 9. Thence along Lot 179 of Paniolo Estates Subdivision(F.P.2076),being a portion of R.P.5671,LC.Aw.852 L-B.Ap. 1 to G.D. Hueu,on a curve to the right with a radius j of 525.00 feet,the chord azimuth and distance being. 1260 04' 29.5" 570.72 feet; 10. Thence along Lot 179 of Paniolo Estates Subdivision LCAw.852-B,a p.portion o G.D. ----lfuc%.on a,cumto the left•witha-radius-of --- 20.00 feet,the chord azimuth and distance being; 110 00' 28.28 feet; 11. 690 00' S0.00 fat along Lot 179 of Paniolo Estates Subdivision(F.P.2076),being a portion of R.P.5671,L.C.Aw.8521-B,Ap. l to G.D. Hueu; 12. Thence along Lot 179 of Paniolo Estates Subdivision(F.P.2076),being a portion Exhibit"A" Page 2 of R.P.5671,L.C.Aw.8521-B,Ap. 1 to G.D. Hueu,on a curve to the left with a radius of 475.00 feet,the chord azimuth and distance being: 37° 55' 32" 490.34 feet; 13. 960 51' 04" 50.00 feet along Lot 4 of Kekumu Subdivision, being portion of PM 5671,L.C.Aw.8521- B,Ap. 1 to G.D.Hueu; 14. Thence along Lot 1 of Kekumu Subdivision.being a portion of R.P.5671,L.C.Aw. 8521 H,Ap. 1 to Q.D.Hueu,on a curve to the right with a radius of 525.00 feet,the chord azimuth and distance being: 2060 33' 49" 354.17 fee, 15. 1150 00' 298.02 feet along Lot 1 of Kekumu Subdivision, being a portion of R.P.5671,L.C.Aw.8521- B,Ap. l to G.D.Hueu; 16. 960 30' 81.73 feet along Lot l of Kekumu Subdivision, being a portion of R.P.5671,L.C.Aw.8521- 0 B,Ap. I to G.D.Hueu; 17. 720 00' 222.23 feet along Lot 1 of Kekuma Subdivision, being a portion of R.P. 5671,L.C.Aw.852 l- B,Ap. 1 to G.D.Hueu; 18. 880 00' 75.02 feet along Lot 3 of Kekumu Subdivision, being a portion of R.P.5671,L.C.Aw.8521- B,Ap. 1 to G.D.Hueu; I 19. 117° 00' 126.00 feet along Lot 3 of Kekumu Subdivision, being a portion of R.P.5671,L.C.Aw.8521- B,Ap. 1 to G.D.Hueu; 20. 122° 30' 142.00 feet along Lot 3 of Kekumu Subdivision, - being-rpordowofR:P:567Y,LC.Aw.852t- B,Ap. 1 to G.D.Hueu; 21. 900 00' 150.00 feet along Lot 3 of Kekumu Subdivision, being a portion of R.P. 5671,L.C.Aw.8521- B.Ap. I to G.D. Hueu; 2. 33° 00' 163.00 feet along Lot 3 of Kekumu Subdivision, being a portion of R.P.5671,L.C.Aw.8521- B,Ap. I to G.D.Hueu; Exhibit"A" Page 3 C 23 r 00' 231.00 feet along Lot 3 of Kekumu Subdivision, _.._._—__being a-portkwof-R.P:567+;-iwC-Aw..85.2 --- B,Ap. l to G.D.Hueu; 24. 120° 00' 375.58 feet along Remainder Lot 4 of Waiiooloa Village School Site Subdivision(File Plan 2038).being a portion of R.P.5671,LCAw. 8521-8,Ap. 1 to G.D.Hueu; 25. 1110 55' 380.00 feet along Remainder Lot 4 of Waikoloa Village School Site Subdivision ale Plan 2038),being a portion of R.P.5671, L.C.Aw.8521-8,Ap.l to G.D.Hueu; 26. 550 20' 153.00 feet along Remainder Lot 4 of Wailmloa Village School Site Subdivision(File Plan 2038),being a portion of R.P.5671,LC.Aw. 8521-13,Ap. t to G.D.Hueu; 27. 1 l3° 30' 200.00 feet along Remainder Lot 4 of Wailmloa Village School Site Subdivision tale Plan 2038),being a portion of R.P.5671,LC.Aw. 852 1-13,Ap. l to G.D.Hueu; C 28. 16V 30' 135.00 r feet along Remainder Lot 4 of Waikoloa. - --` Village School Site Subdivision(File Plan 2038),being a portion of R.P.5671,L.C.Aw. 8521-8,Ap. L to G.D.Hueu; 29. '130* 15' 280.00 feet along Remainder Lot 4 of Waikoloa Village School Site Subdivision(File Plan 2038),being a portion of R.P.5671,L.C.Aw. 8521-8,Ap. 1 to G.D.Hueu; 30. 650 15' 224.00 fed along Remainder Lot 4 of Wadwica Village School Site Subdivision(File Pisa 2038),being a portion of R.P.5671,LC:Aw. 8521-13,Ap. I to O-D.Hueu; 31. 990 50' 290.00 feet along Remainder Lot 4 off'Wailmloa Village School Site Subdivision(File Plan 2038),being a portion of R.P.5671,L.C.Aw. 8521-B, Ap. 1 to G.D. Hueu; 32. 1430 35' 423.00 feet along Remainder Lot 4 of Waikoloa School.site Subdivi4 Me elan - 2038),being a portion of R.P.5671, L.C.Aw. 8521-13,Ap. l to G.D. Hueu; 33. 1270 05' 583.00 feet along Remainder Lot 4 of Waikoloa Exhibit" Page 4 C (- Village School Site Subdivision(File Plan 2038),being a portion of R.P.5671,L.C.Aw. 8521-B,Ap. 1 to G.D.Hueu; 34. 137° 50' 288.00 feet along Remainder Lot 4 of Waikoloa Village School Site Subdivision(File Plan 20381 being a portion of R.P.5671,L.C.Aw. 8521-B,Ap. l to Q.D.Hueu; of Waikoloa Development(File Plan l 172L being a portion of R.P.5671,L.CAw.8521-B,Ap. l to Q.D. Hueu,on a curve to the left with a radius of 5700.00 fed„the chord azimuth and distance being: 170° 20' 09.5" 404.29 feet; 36. Thence along Lot 5 of Waikoloa Development(File Plan 1172 being a portion of R.P.5671,L.C.Aw.8521-13,Ap. 1 to G.D. Hueu,on a curve to the right with a radius of 3800.00 feet,the chord azimuth and distance being. 1800 09' IO" 1560.55 feet; 37. 1920' 00' 07" 260.00 feet along Lot 5 of Wailmloa Development (File Plan 1172),being a portion of R.P. 5671,L.CAw.852 t-B,Ap. I to G.D.Hueu; 3 2520 25' 107.00 feet along Lot 3 of Waikoloa Lot 4 -- ------Subdiivision,(MI&P-las.1967.)being portion- of R.P.5671,L.C.Aw.8521-B,Ap. l to G.D. Hueu; 39. 2870 00' 422.00 feet along Lot 3 of Waikoloa Lot 4 Subdivision(File Plan 196A being a portion of R.P.5671,L.C.Aw.8521-B,Ap. 1 to G.D. Hueu; 40. 3240 40' 388.00 feet along Lot 3 of Waikoloa Lot 4 Subdivision(File Plan 1967),being a portion of R.P.5671,L.C.Aw.8521-B,Ap. t to G.D. Hueu; 41. 2640 10' 603.00 feet along Lot 3 of Waikoloa Lot 4 Subdivision(File Plan 1967),being a portion of R.P.5671,L.C.Aw.8521-B,Ap. I to G.D. Hueu; 42. 2980 40' 226.00 feet along Lot 3 of Waikoloa Lot 4 Exhibit"A" Page 5 Subdivision(File Plan 1%7),being a portion of R.P.5671,L.CAw.8521-B,Ap. l to G.D. Hueu; 43. 3160 55' 204.00 feet along Lot 3 of Waikoloa Lot 4 Subdivision(File Plan 1967),being a portion of RP.5671.L.C.Aw.8521-8,Ap. l to G.D. Hueu; 44. 285° 15' 521.00 feet along Lot 3 of Waikoloa Lot 4 Subdivision(File Plan 1%7),being a portion of R.P.5671,L.C.Aw.8521-B,Ap. 1 to G.D. Hucu; 45. 2650 50' 278.00_... _..,feet - Subdivi'sion(File Plan 1967),being a portion of RP.5671,L.C.Aw.8521-B,Ap. t to G.D. Hueu; 46. 289* 40' 186.00 feet along Lot 3 of Waikoloa Lot 4 Subdivision(File Plan 1%7),being a portion of R.P.5671,L.C.Aw.852 l-B,Ap. 1 to G.D. / Huen; ` 47. 3200 20' 361.00 feet along Lot 3 of Waikoloa Lot 4 Subdivision(File Plan 1967).being a portion of R.P.5671,L.C.Aw.8521-B,Ap. 1 to G.D. HUM; 48. 2770 50' 282.00 feet along Lot 3 of Waikoloa Lot 4 Subdivision(File Plan 1967),being a portion of R.P.5671,L.C.Aw.8521-13,Ap. t to G.D. Hueu; 49. 2990 30' 625.00 feet along Lot 3 of Waikoloa Lot 4 Subdivision(File Plan 1967),being a portion of R.P.5671,L. ... 50. 2280 20' 128.00 feet along Lot 3 of Waikoloa Lot 4 Subdivision(File Plan 1967).being a portion of R.P.5671,L.C.Aw. 8521-8.Ap. l to G.D. Hueu; 51. 2530 25' 729.80 feet along Lot 3 of Waikoloa Lot 4 Subdivision(File Plan 1967).being a portion of R.P.5671, L.C.Aw. 8521-8,Ap. l to G.D. Neu; 52. 220 47' 11" 523.47 feet along Lot 3 of Waikoloa Lot 4 Exhibit"A" Page 6 l Subdivision(File Plan 1967),being a portion of R.P.5671,L.CAw.8521-B,Ap. l to G.D. Hueu; 53. Thence along Lot 3 of Waikoloa Lot 4 Subdivision(Fik Plan 1967),being a portion of R.P.5671,L.C.Aw.8521-B,Ap. 1 to G.D.Hueu,on a curve to the left with a radius of 540.00 feet,the chord azimuth and distance being: 160 31' 47" 117.70 feet; 54. Thence along Lot 3 of Waikoloa Lot 4 Subdivision(File Plan 1967),being a portion of R.P.5671,L.C.Aw.8521-B,Ap. l to G.D.Hueu,on a curve to the right with a radius of 20.00 feet,the chord azimuth and distance being: 520 42' 42.5" 26.99 feet; 55. 50 09' 02" 60.00 feet along Lot 3 of Waikoloa Lot 4 Subdivision(File Plan 1967),being a portion of R.P.5671,L.C.Aw.8521-B,Ap. l to G.D. r Hum i� 56. Thence along Lot 3 of Waikoloa Lot 4 Subdivision(File Plan 1967),being a portion of R.P.5671,L.C.Aw.8521-B,Ap. 1 to G.D.Hueu,on a curve to the right with a radius of 20.00 feet,the chord azimuth and distance being: 3170 35' 21.5" 26.99 feet; 57. Thence along Lot 3 of Waikoloa Lot 4 Subdivision(File Plan 1967),being a portion of R.P.5671,LC.Aw.8521-B,Ap. l to G.D.Hueu,on a curve to the left with a radius of 540.00 feet,the chord azimuth and distance being: 3470 . 19' 57.5" 237.35 feet; 58. 3340 38' 14" 907.84.,_. [ems aloxtg Lot 3.9LWai&aloa Lot 4- _ —.-- Subdivision(File Plan 1967),being a portion of R.P.5671, L.C.Aw. 8521-B,Ap. i to G.D. Hueu; 59. Thence along Lot 3 of Waikoloa Lot 4 Subdivision(File Plan 1967),being a portion of R.P. 5671,L.C.Aw.8521-8,Ap. i to G.D. Hueu,on a curve to the right with a radius of 460.00 feet,the chord azimuth Exhibit"A" Page 7 i and distance being: 3480 53' 36.5" 226.56 feet; 60. 30 08' 59" 1075.09 feet along Lot 3 of Wa&oloa Lot 4 Subdivision(File Plan 1%7),being a portion of R.P.5671,L.C.Aw.8521-13,Ap. 1 to Q.D. Hueu; 61. Thence along Lot 5 of Kelarmu Subdivision,being a potion of R.P.5671,L.C.Aw. 8521-B,Ap. l to G.D.Hueu,on a curve to the right with a radius of 635.00 feet,the chord azimuth and distance being: 22° 33' 59" 422.19 feet; 62. 41° 58' 58" 100.00 feet along Lot 5 of Kekumu Subdivision, being a portion of R.P.5671,LC.Aw.8521- 8,Ap. 1 to Q.D.Hueu; 63. Thence along Lot,5 of Kabn u►S� jvisien i itiga pattiAn a£R.P_5671,L.GAar_-.. -- 8521-B,Ap. 1 to G.D.Hueu,on a curve to the left with a radius of 715.00 feet;the Cchord azimuth and distance being: �. 320 42' 14" 230.57 feet; 64. 230 25' 30" 915.02 feet along Lot 3 of Waikoloa Lot 4 Subdivision(File Plan 1967),being a portion of R.P.5671,L.C.Aw.8521-B,Ap. 1 to G.D. Hueu; 65. Thence along Remainder Lot 4 of Waikoloa Village School Site Subdivision(Fite Plan 2038 being a portion of R.P.5671, L.C.Aw.8521-B,Ap. I to G.D.Hueu,on a curve to the right with a radius of 20.00 feet,the chord azimuth and distance being: 680 25' 30" 28.28 feet to the point of beginning and containing an area of 268.029 acres,more or less. PARCEL SECOND: All of that certain parcel of land being a portion of Royal Patent 5671, Land Commission Award 852 I- B,Apana 1 to G.D.Hueu,being Lot 5 and a portion of Tax Key designation(3)6-8-002-026,and containing an area of 0.250 acre,more or less. Exhibit"A" Page 8 CMS✓ ITEM II: All of that certain parcel of land locatecrat Wiikoloa;goudi Koliila,blead of Ha ,State of Hawaii, described as follows: Lot 178.area 90,320 square feet,more or less,as shown on the map entitled"PANIOLO ESTATES", which said map was filed in the Bureau of Conveyances of the State of Hawaii as File Plan No.2076. ITEM III: All of that certain parcel of land located at Wafkoloa,South Kohala,Island of Hawaii,State of Hawaii, described as follows: Lot 179,area 374,729 square feet,more or less,as shown on the map entitled"PANIOLO ESTATES", which said map was filed in the Bureau of Conveyances of the State of Hawaii as File Plan No.2076. f NOTE: The fee interest is vested in HAWAII ISLAND HOUSING TRUST,a Hawaii nonprofit ll corporation by Deed recorded AUG 0 2 "M in the Bureau of Conveyances,State of Hawaii,as Document No. 2004.1417AO ( Exhibit"A" Page 9 i y R-679 STATE OF HAWAII BUREAU OF CONVEYANCES RECORDED APR 28, 2009 08:02 AM Doc No(s)2009-063813 �II!Ilil�l�lpialll��l!II�IIIII� /s/NICKI ANN THOMPSON REGISTRAR 20 1/1 Z12 LAND COURT _ Ci' REGULAR SYSTEM (AREA ABOVE RESERVED FOR RECORDING INFORMATION) After Recordation, Return by Rl Mail or 0 Pick-up (Phone #: ) FILL IN NAME AND ADDRESS BELOW: Nathan T. Natori, Esq. Natori Law Office LLLC 1003 Bishop Street, Suite 1360 Honolulu, Hawaii 96813 This document contains 16 pages_ TITLE OF DOCUMENT: rERNIINATION OF GROUND LEASE PARTIES TO DOCUMENT.! Lessor: HAWAII ISLAND HOUSING YRUST Five Waterfront Plaza 500 Ala Nloana Boulevard, Floor 4 Honolulu. Hawaii 96813 Lessee: WAIKOLOA kVORKFORCE HOUSING. Ll_C 67 Nanea Street Hilo. I(awai'i 96720 Affects Tax Map Keys: (3) 6-8-002-026, (3)6-8-030-178, and (3) 6-8-030-179 EXHIBIT "F" TERMINATION OF GROUND LEASE This Termination of Ground Lease ("Termination") is made as of the_22"d day of April , 2009 by and between Hawaii Island Housing Trust, a nonprofit corporation organized under the laws of the State of Hawaii ("Lessor") and Waikoloa WorklOrce I lousing LLC. a Hawaii limited liability company (-Lessee-). RECITALS WHEREAS, pursuant to that certain (;round Lease dated as of'July 26, 2006, by and between Lessor and Lessee (the "Ground Lease'*), the Lessor leased to the Lessee that certain real property consisting of approximately two hundred and seventy (270) acres located in the County of Ilawai`i, State of Hawaii, as more particularly described in Exhibit ":\" attached hereto (the"Project Land"); and WHEREAS. a Memorandum of Ground Lease was recorded on August 2, 2006. in the Bureau of Conveyances of the State of flawai'i as Document 2006-141242: and WHEREAS. the Ground Lease contemplated the development by Lessee of a residential project on the Project Land: and WHEREAS, Lessor and Lessee entered into a Development Financing Agreement dated as of June 12, 2008 (the"DFA") with the County of Hawaii (the "County-); and WHEREAS,an event of default has occurred under the DFA; and WHEREAS,pursuant to the terms of the DFA, the County has demanded that Lessor and Lessee return their respective interests in the Project Land to the County free and clear of all encumbrances, and WHEREAS, no subleases or mortgages other than those in favor of the County exist on the Project Land: and WHEREAS, lessor and Lessee now desire to terminate the Ground Lease; NOW THEREFORE, in consideration of the premises and for other good and valuable consideration.the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree as follows: I. Termination of the Lease. Lessor and Lessee hereby mutually terminate and cancel the Ground Lease, effective immediately. Lessee hereby releases to Lessor all right, title and interest in and to the Project Land. 2. Recordation. The parties shall promptly cause a copy of this Termination to be recorded in the Bureau of Conveyances of the State of I lawai'i. Lessor and Lessee shall additionally execute any and all documents and take any and all actions as may be required to accomplish the termination of the Ground Lease. 3. Counterparts. This Termination may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. 4. Applicable Law. This Termination shall be governed by and construed in accordance with the laws of the State of Hawai'i. IN WITNESS WHEREOF, Lessor and Lessee have executed this instrument as of the date first above written. LESSOR: WAIKOLOA WORKFORCE HOUSING I.LC, a liawai'i limited liability company By: /hd Peter L. Hendricks, Manager By: 1� � i�►� Patricia K. O'Toole, Manager By: 6) . �-- Michael B. Sumja, Manage 2 LESSEE: HAWAII ISLAND HOUSING TRUST, a Hawaii nonprofit corporation By: -- Peter L. E{endricks President and Director B y: V,, Patricia K. O'Toole Director By: -�. g Michael B. Sumja Director 3 STATE. OF HAWAI`l ) SS. COUNTY OF HAWAII ) On this 09`6 day of Nei�� , 2009, before me personally appeared Peter L. Hendricks, to me personally known, who, being by me duly sworn (or affirmed), did say that he is the Manager of WAIKOLOA WORKFORCE HOUSING, I.I.C. a Hawaii limited liability company and the Director and President of IIAWAI'I ISLAND IIOUSING TRUST, a Hawaii nonprofit corporation• and that he executed the foregoing instrument as his free act and deed on behalf of said entities,having been duly authorized to execute such instrument in the capacities shown. `�t,lluriN/i �.� S. "'e"/ NOTARY Notary Public. State of I lawai'i PUKC 1 - r CmrARL Na Print name rrir����� My commission expires: NOTARY CERTIFICATION Doc. Date: No.of Pages: Notary Name; Third ____Circuit Doc. Description: Termination of round Lease- j Nmvai'i Aland Noosing Trust and GYuikolou Wnrk- o Housrng, LL(_ r Cm1M► rcr Na --- -- ------- —------ r iH iM INotary Signature Date STATE OF HAWAII ) SS. COUNTY OF HAWAII ) On this .2-D"A day of Agr11 . 2009, before me personally appeared PA'FRICiA K. O'TOOLE,to me personally known, who, being by me duly sworn (or affirmed), did say that she is the Manager of WAIKOLOA WORKFORCE HOUSING, LLC.a flawai`i limited liability company and the Director of fIAW'Al'I ISLAND I IOUSING TRUST, a Hawaii nonprofit corporation and that she executed the foregoing instrument as her free act and deed on behalf of said entities, having been duly authorized to execute such instrument in the capacities shown. ,,��Illifl►f��' PtMuC = Notary Public, State of Hawaii cavil.ft oF Print name --- ._ My commission expires: NOTARY CERTIFICATION Doc. Date: o 1 A0 r-c\—___— _ ----- No. of Pages: f I_Jllf_d Circuit i Notary Name: _Zi�'�L)k f `` %killf/"/, ` S. F# -4i, i Doc. Description: Termination of Ground Lease_ �.,� ,�0 .• - •• � '.� ; Hawaii Island HousinLTrust and Waikoloa Work-_ 2 NOTARY PUKJC force Housing, LLC ewwft NWOF Notary Signature Date STATE OF HAWAII ) } SS. COUNTY OF HAWAI`l } On this 322 day of � c1 _. 2009, before the personally appeared MICIIAIa. B. SUM1A,to me personally known, who, being by me duly sworn (or affirmed), did say that he is the Manager of WAIKOLOA WORKFORCE HOUSING, LI,C, a Hawai'i limited liability company and the Director of HAWAII ISLAND I LOUSING -TRUST,a llawai`i nonprofit corporation and that he executed the foregoing instrument as his free act and deed on behalf of said entities, having been duly authorized to execute such instrument in the capacities shown. F'r JA NOTARY puaC = Notary Public. State of l Iawai`i ca ' ss��• � ____��—fit J— �_��y.�..�_. ---- ���'�;''�lrpF `��` Print name ;\,Iy commission expires: '�_ NOTARY CERTIFICATION l (� I Doc. Date: t_w No. of Pages: Third _.-Circuit N Notary Name: t>v\j,,, Doc. Description: Termination of Ground Lease _ `���00� s.Fed,�' f Ha►rai'i Island Housing Trust and Waikoloa Work- _ NOTARY ••'- - --- —-- - - _ ptj" rorce Housin f,'. LLC _ ----- _ Casa W Of 0 VO[ar Si nature Date —_Y_f�_ —------— _ ------ EXHIBIT"A" LEGAL DESCRIPTION ITEM 1: PARCEL FIRST: LOT 7 -----KEKUMU-SUBDIVISION - —_-- LAND SITUATED ON THE SOUTHERLY SIDE OF LOT 3 OF WAIKOLOA LOT 4 SUBDIVISION(FILE PLAN 1967) AT WAIKOLOA,SOUTH KOHALA, ISLAND OF HAWAII, HAWAII BEENG A PORTION OF ROYAL PATENT 5671, LAND COMMISSION AWARD 8521-8,APANA 1 TO G.D.HUEU Beginning at the Southeast comer of this parcel of land,being also on the South side of Lot 3 of Waikoloa Lot 4 Subdivision(File Plan 1967),said point of beginning referred to Government Survey Triangulation Station"PUU H[NAI"being 16,136.65 feet North and 3,929.57 feet West and thence running by azimuths measured clockwise from true South: 1. 1130 25' 30" 50.00 feet along Remainder Lot 4, Waikoloa Village School Site Subdivision(File Plan 2038),being a portion of R.P. 5671, L.C.Aw. 8521-B,Ap. 1 to G.D. Hueu; 2. Thence along Lot 112 of Paniolo Estates Subdivision(F.P. 2076),on a curve to the left with a radius of 20.00 feet,the _—chord azimuth and distance being: .-• - _ -- 2480 25' 30" 28.28 feet; 3. 203° 25' 30" 915.02 feet along Lots 112, l 1 r, 110, 109, 108, 107, 106, 105, 104, 103, 102, 101, 100,99 and 98 of Paniolo Estates Subdivision(F.P. 2076),being portions of R.P.5671, L.C.Aw. 8521-B,Ap. 1. to G.D. Hueu; 4. Thence along Lots 98,97, 96,95,94 and 93 of Paniolo Estates Subdivision(F.P. 2076),being portions of R.P. 5671, L.C.Aw. 3521-B, Ap. t to G.D. Hueu,on a curve to the right with a radius of 590,00 feet,the chord azimuth and distance being: Exhibit"A" Page l 218° 01' 33" 297.46 feet; 5. Thence along Lots 93,92,9 t,90 and 89 of Paniolo Estates Subdivision(F.P. 2076),being portions of R.P.5671, L.C.Aw. 8521-B,Ap. I to G.D.Hueu,on a curve to the left with a radius of 410.00 feet,the chord azimuth and distance being: 207° 53' 17.5" 343.15 feet; 6. 1830 08' 59" 420.00 feet along Lots 89 and 179 of Paniolo Estates Subdivision(F.P. 2076),being portions of R.P. 5671,L.C.Aw. 8521-B,Ap. I to G.D. Hueu; 7. Thence along Lot 179 of Paniolo Estates Subdivision(F.P.2076),being a portion --of R.P.5671,L-.C:Aw. 8521-B,--Ap. 1-to G.D. -- Hueu,on a curve to the left with a radius of 20.00 feet,the chord azimuth and distance being: 1380 08' 59" 28.28 feet; 8. 930 08' 59" 104.00 feet along Lot 179 of Paniolo Estates Subdivision(F.P.2076),being a portion of R.P.5671, L.C.Aw. 8521-B, Ap. I to G.D. Hueu; 9. Thence along Lot 179 of Paniolo Estates Subdivision(F.P.2076),being a portion of R.P. 5671,L.C.Aw.8521-B,Ap. 1 to G.D. Hueu,on a curve to the right with a radius of 525.00 feet,the chord azimuth and distance being: 1260 04' 29.5" 570.72 feet; l0. Thence along Lot 179 of Paniolo Estates Subdivision(F.P.2076),being a portion of R.P.5671, L.C.Aw. 8521-B,Ap. I to G.D. ----Hueu,.on a curve to the left with a radius-of. -- 20.00 feet,the chord azimuth and distance being: 1140 00' 28.28 feet; l 1. 690 00' 50.00 feet along Lot 179 of Paniolo Estates Subdivision(F.P. 2076),being a portion of R.P. 5671, L.C.Aw. 8521-B, Ap. I to G.D. Hueu; 12. "fhencc along Lot 179 of Paniolo Estates Subdivision(F.P. 2076), being a portion Exhibit"A" Page 2 of R.P. 5671,L.C.Aw. 8521-B,Ap. 1 to G.D. Hueu,on a curve to the left with a radius of 475.00 feet,the chord azimuth and distance being: 370 55' 32" 490.34 feet; 13. 960 5 l' 04" 50.00 feet along Lot 4 of Kekumu Subdivision, being a portion of R.P. 5671,L.C.Aw.8521- B,Ap. Vto G.D. Hueu; 14. Thence along Lot l of Kekumu Subdivision,being a portion of R.P.5671,L.C.Aw. 8521-B,Ap. l to G.D.Hueu,on a curve to the right with a radius of 525.00 feet,the chord azimuth and distance being: 2060 33' 49" 354.17 feet; 15. 11513 00' 298.02 feet along Lot l of Kekumu Subdivision, being a portion of R.P.5671, L.C.Aw. 8521- B,Ap. l to G.D.Hucu; 16 96' 30' 81.73 feet along Lot l of Kckurnu Subdivision, being a portion of R.P.5671, L.C.Aw.852I- B,Ap. I to G.D. Hueu; 17. 720 00' 222.23 feet along Lot t of Kekumu Subdivision, being a portion of R.P. 5671, L.C.Aw.8521- B,Ap. 1 to G.D.Hueu; 18. 880 00' 75.02 feet along Lot 3 of Kekumu Subdivision, being a portion of R.P. 5671, L.C.Aw. 8521- 8,Ap. I to G.D. Hueu; 19. 1170 00' 126.00 feet along Lot 3 of Kekumu Subdivision, being a portion of R.P. 5671,L.C.Aw.8521- B,Ap. t to G.D. Hueu; 20. 1220 30' 142.00 feet along Lot 3 of Kekumu Subdivision, being a portion of R-.P: 5671, L.C.Aw.8521- --" B.Ap. l to G.D. Hueu; 21. 90° 00' 1 50.00 feet along Lot 3 of Kekumu Subdivision, being a portion of R.P. 5671, L.C.Aw. 8521- B,Ap. 1 to G.D.Hueu; 22. 330 00' 16100 feet along Lot 3 of Kekumu Subdivision, being a portion of R.P.5671, L.C.Aw. 8521- B, Ap. l to G.D. Hueu; Exhibit"A" Page 3 23 70 00' 231.00 feet along Lot 3 of Kekumu Subdivision, being a portion of It.P. 567.1-,L_C.Aw.8521- -- �_..__. B,Ap_ l to G.D. Hueu; 24. 1200 00' 375.58 feet along Remainder Lot 4 of Waikoloa Village School Site Subdivision(File Plan 2038),being a portion of R.P.5671, L.C.Aw. 8521-B,Ap. 1 to G.D.Hueu; 25. 1110 55' 380.00 feet along Remainder Lot 4 of Waikoloa Village School Site Subdivision(File Plan 2038),being a portion of R.P. 5671, L.C.Aw. 8521-B,Ap. 1 to G.D. Hueu; 26. 550 20' 153.00 feet along Remainder Lot 4 of Waikoloa Village School Site Subdivision(File Plan 2038),being a portion of R.P.5671, L.C.Aw. 8521-R,Ap. l to G.D. Hucu; 27. 1 130 30' 200.00 feet along Remainder Lot 4 of Waikoloa Village School Site Subdivision(File Plan 2038),being a portion of R.P.567 t,L.C.Aw. 8521-B,Ap. 1 to G.D. Hueu; 28. 1690 30' 135-00 feet along Remainder Lot 4 of Waikoloa Village School Site Subdivision(File Plan 2038),being a portion of R.P.5671, L.C.Aw. 8521-B,Ap. t to G.D. Hueu; 29. 1300 15' 280.00 feet along Remainder Lot 4 of Waikoloa Village School Site Subdivision(File Plan 2038),being a portion of R.P. 5671, L.C.Aw. 8521-B,Ap. 1 to G.D. Hueu; 30. 650 15' 224.00 feet along Remainder Lot 4 of Waikoloa Village School Site Subdivision(File Plan 2038),being a portion of R.P.5671, L.C.Aw. 8521-B,Ap. I to G.D. Hueu; 3 l. 990 50' 290.00 feet along Remainder Lot 4 of Waikoloa Village School Site Subdivision(File Plan 2038),being a portion of R.P. 5671, L.C.Aw. 8521-B, Ap. 1 to G.D. Hueu; 32. 1430 35' 423.00 feet along Remainder Lot 4 of Waikoloa _ Village School Site Subdivisi-9n.(Fde Plan. 2038),being a portion of R.P. 5671, L.C.Aw. 8521-B, Ap. I to G.D, llueu; 33. 1270 05' 583.00 feet along Remainder Lot 4 of Waikoloa Exhibit"A" Page 4 \' Village School Site Subdivision(File Plan 2038),being a portion of R.P. 5671, L.C.Aw. 8521-B,Ap. I to G.D.Hueu; 34. 1370 50' 288.00 feet along Remainder Lot 4 of Waikoloa Village School Site Subdivision(File Plan 2038),being a portion of R-P.5671, L.C.Aw. 8521-B,Ap. t to G.D.Hueu; 35. Thcnce along Lot 5 of Waikoloa DevelopRment(File Plan 117852),bei App l tion of Hueu,on a curve to the left with a radius of 5700.00 feet, the chord azimuth and distance being: 1700 20' 09.5" 404.29 feet: 36. Thence along Lot 5 of Waikoloa Development 67(File Plan L.C.Aw. bean App Irto G.D. Hueu,on a curve to the right with a radius of 3800.00 feet, the chord azimuth and distance being: 1800 09' 10" 1560.55 feet; / 37. 192° 00' 07" 260.00 feet along Lot 5 of Waikoloa Development (File Plan l 172),being a portion of R.P. 5671, L.C.Aw.8521-B, Ap. l to G.D. Hucu; 38. 2520 25' 107.00 feet along Lot 3 of Waikoloa Lot 4 .._-_.Subdivision-(File.Plan 1967}-being*portion of R.P. 5671, L.C.Aw.8521-B,Ap. I to G.D. Hueu; 39 2870 00' 422,00 feet along Lot 3 of Waikoloa Lot 4 Subdivision(File Plan 1967),being a portion of R.P.5671,L.C.Aw. 8521-B, Ap. l to G.D. I{ucu; 40. 324° 40' 388.00 feet along Lot 3 of Waikoloa Lot 4 Subdivision(File Plan 1967),being a portion of R.P. 5671, L.C.Aw. 8521-B,Ap. t to G.D. Hucu; 41. 264° (0' G03 00 feet along Lot 3 of Waikoloa Lot 4 Subdivision(File Plan 1967),being a portion of R.P.5671, L.C.Aw. 8521-B, Ap. I to G.D. Hueu; 42 2980 40' 226.00 feet along Lot 3 of Waikoloa Lot 4 Exhibit"A" Page 5 ago Subdivision(File Plan 1967),being a portion of R-P.5671, L.C.Aw.8521-B.Ap. Ito G.D. Hucu; 43. 316° 55' 204.00 feet along Lot 3 of Waikoloa Lot 4 Subdivision(File Plan 1967),being a portion of R-P.5671,L.C.Aw. 8521-B,Ap. 1 to G.D. Hueu; 44. 2850 15' 521.00 feet along Lot 3 of Waikoloa Lot 4 Subdivision(File Plan 1967),being a portion of R.P.567 t.L.C.Aw. 8521-B,Ap. I to G.D. Hueu; 45. 2650 SO' 278_00 feet_alongLot3 of Waikoloa.Lot4._ ._... — Subdivision(File Plan 1967),being a portion of R.P. 5671,L.C.Aw. 8521-B.Ap. I to G.D. Hucu; 46. 2890 40' 186.00 feet along Lot 3 of Waikotoa Lot 4 Subdivision(File Plan 1967),being a portion of R.P.5671,L.C.Aw. 8521-B,Ap. I to G.D. Hueu; 47. 3200 20' 361.00 feet along Lot.3 of Waikoloa Lot 4 Subdivision(File Plan 1967),being a portion of R.P.5671,L.C.Aw. 852 1-B,Ap. I to G.D. Hueu; 48 2770 50' 282.00 feet along Lot 3 of Waikoloa Lot 4 Subdivision(File Plan 1967),being a portion of R.P.5671, L.C.Aw, 8521-B, Ap. 1 to G.D. Hueu; 49, 2990 30' 625.00 feet along Lot 3 of Waikoloa Lot 4 Subdivision(File Plan 1967),being a portion of R.P.5671, L.C.Aw. 8S21_B,Ap._ I to G.D. _Hueu; 50. 2280 20' 128.00 feet along Lot 3 of Waikoloa Lot 4 Subdivision(File Plan 1967),being a portion of R.P.5671, L.C.Aw. 8521-B, Ap. t to G.D. Hueu; 51. 2530 25' 729.30 feet along Lot 3 of Waikoloa Lot 4 Subdivision(File Plan 1967),being a portion of R.P. 5671, L.C.Aw. 8521-B.Ap. I to G.D. llueu; 52 220 47' 11 523.47 teet along Lot 3 of Waikoloa Lot 4 Exhibit"r\" Page 6 `II _ Subdivision(File Plan 1967),being a portion ofR-P.5671.L.CAw.8521-B,Ap. 1 to G.D. ffueu; 53. Thence along Lot 3 of Waikoloa.Lot 4 Subdivision(File Plan 1967),being a portion ofP-P.5671,L.C.Aw.8521-B,Ap. 1 to G.D. Hueu,on a curve to the tell with a radius of 540.00 feet,the chord azimuth and distance being: t 6° 31' 47" 117.70 feet; 54. Thence along Lot 3 of Waikoloa Lot 4 Subdivision(File Plan 1967),being a portion of R-P.5671, L.C. Aw.8521-B,Ap. I to G.D. Hueu,on a curve to the right with a radius of 20.00 feet,the chord azimuth and distance being: 526 42' 42.5" 26.99 feet; 55. 50 09' 02" 60.00 feet along Lot 3 of Waikoloa Lot 4 Subdivision(File Plan 1967),being a portion of R.P. 5671, L.C.Aw.8521-8,Ap. t to G.D. flueu; 56. Thence along Lot 3 of Waikoloa Lot 4 Subdivision(File Plan 1967), being a portion of R.P.5671, L.C.Aw.8521-B,Ap. t to G.D. Rucu,on a curve to the right with a radius of 20.00 feet,the chord azimuth and distance being: 317° 35' 21.5" 26.99 feet; 57. Thence along Lot 3 of Waikoloa Lot 4 Subdivision(File Plan 1967),being a portion of R.P. 5671, L.C.Aw. 8521-B,Ap. I to G.D. Hueu,on a curve to the left with a radius of 540.00 feet,the chord azimuth and distance being: 3470 19' 57.5" 237.35 feet; 58. 3340 38' 14" 907.84 fest_along Lot.3 of Watkoloa Lot 4 - Subdivision(tale Plan 1967).being a portion of R.P. 5671, L.C.Aw. 8521-B,Ap. I to G.D. Hueu; 59. Thence along Lot 3 of Waikoloa Lot 4 Subdivision(File Plan 1967), being a portion of R.P. 5671,L.0-Aw. 8521-B, Ap. I to G.D. Hueu,on a curve to the right with a radius of 460.00 feet, the chord azimuth Exhibit"A" Page 7 %W '%40 err `two and.distanee being: 3480 53' 36.5" 226.56 feet; 60. 30 08' 59" 1075.09 feet along Lot 3 of Waikoloa Lot 4 Subdivision(File Plan 1967),being a portion of R.P.5671, L.C.Aw.8521-8,Ap. I to G.D. Hueu; 61. Thence along Lot 5 of Kekumu Subdivision,being a pow G.D. Hueu,onla curve to 8521-B,Ap. the right with a radius of 635.00 feet,the chord azimuth and distance being: 220 33' 59" 422.19 feet; 62. 41" 58' 58" 700.00 along a portion of R.P.R.P5671SbeingL.C.Aw.8521- B,Ap. l to G.D.Hueu; 63. Thence along Lot 5 of Kek4mu_S4W'v14totb being a portion of R.P.5671,L.CAW.-- -- 8521-8,Ap. L to G.D. Hueu,on a curve to the left with a radius of 715.00 feet, the chord azimuth and distance being. 320 42' 14" 230.57 feet; 64. 230 25' 30" 9 t 5.02 feet along Lot 3 of Waikoloa Lot 4 Subdivision(File Plan 1967),being a portion of R.P.5671,L.C.Aw.8521-B,Ap. 1 to G.D. Hueu, 65. Thence along Remainder Lot 4 of Waikoloa Village School Site Subdivision(File Plan 2038),being a portion of R.P. 5671, L.C.Aw.8521-B,Ap. 1 to G.D.Hueu,on a curve to the right with a radius of 20.00 feet,the chord azimuth and distance being: 680 25' 30" 28.28 feet to the point of beginning and containing an area of 268.029 acres,more or less. PARCEL SECOND: All of that certain parcel of land being a portion of Royal Patent 5671. Land Commission Award 8521- B.Apana l to G.D. Hueu,being Lot 5 and a portion of Tax Key designation(3)6-8-002-026, and containing an area of 0.250 acre,more or less. Exhibit"A" Page 8 • � �is \ N FItEO OAf01/200a 01:34 PM BUSUMS Raptsiratbn DMsbn DEPT.OF COMA RCE AND CONSUMER AFFAIRS _ State atHawak ARTICLES OF ORGANIZATION N OF WAIKOLOA WORKFORCE HOUSING LLC The undersigned.for the purpose of forming a limited liability company under the laws of the State of Hawaii,does hereby make and execute these Articles of Organization. ARTICLE 1 NAME The name of this limited liability company is WAIKOLOA WORKFORCE HOUSING LLC referred to in these Articles of Organization as the"Company.,, ARTICLE If PIURPOSES The Company is organized to provide affordable workforce housing in the Waikolon area of Hawaii County primarily for persons employed in the tourism/hospitality sector and others err�loyed at Waikoloa Village. in furtherance of the purposes of Hawaii Island Housing Trust, the sole member of the Company. t, ARTICLE Ill INITIAL PRINCIPAL-OFFICE The mailing address of the initial principal office of the Company is: Five Waterfront Plaza,4th Floor 500 Ala Moana Boulevard Honolulu. Hawaii 96813. ARTICLE IV REGISTERED OFFICE AND AGENT FOR SERVICE OF PROCESS The name of the Company's initial agent for service of process and the street address of the Company's initial registered office in the State of Hawaii arc: 117530 D1 Hawaii Registered Legal Agent', Inc. a Hawaii corporation Five Waterfront Plaza, 4th Floor - 1 - EXHIBIT "G" 0 rn 0 500 Ala Moans Boulevard N Honolulu, Hawaii 96813 N S ARTICLE V N ORGANIZER The name and address of the organizer of the Company is: Shaun M. Mukai McConriston Miller Mukai MacKinnon LLP Five Waterfront Plaza.4° Floor 500 Ala Moans Boulevard Honolulu, HI 96813 ARTICLE VI DURATION NNJ At-Will Unless dissolved earlier in accordance with law, the period of duration of the Company is ARTICLE VII MEMBERS C 214688 D2 The sole member of the company is Hawaii Island Housing Trust, a Hawaii nonprofit corporation. ARTICLE VIII MANAGEMENT BY MANAGERS The Company will be managed by one or more managers as further provided in the Company's Operating Agreement. Except as authorized by the managers,no member is an agent of the Company or has the authority to make any contracts,enter into any transactions.or make any commitments on behalf of the Company. The number of initial managers is three(3). The names and addresses of the initial managers of the Company are as follows: Keith Kato John B. Ray 1000 Pauahi Street. #204 P.O. Box 1680 Hilo. Hawaii 96720 Kamuela. Hawaii 96743 Hans P.F.L'Orange P.O. Box 988 Kamuela. Hawaii 96743 2 - C O � N N O O Cf N ARTICLE IX LIABILITY OF M _Manta The members of the Company shall not be liable for the debts,obligations and liabilities of the Company. ARTICLE X RELATIONSHIP OF ARTICr ES OF ORGANIZATION AND OPERATING AGREEMENT If a provision of these Articles of Organization differs from a provision of the Company's Operating Agreement.then,to the extent allowed by law,the Operating Agreement will govern. ARTICLE XI LIMITATION OF LIABILITV 3 ` To the fullest extent permitted by the Hawaii Uniform Limited Liability Company Act and 1 other applicable law as the same exists or as may be amended,a manager of the Company shall not be personally liable to the Company or its members for monetary damages for breach offiduciary duty as a manager. If the Hawaii Uniform Limited Liability Company Act or other applicable law is amended after the filing of these Articles of Organization of which this article is a part to authorize action further eliminating or limiting the personal liability ofa manager.then the liability ofa managerofthe Company shall be eliminated or limited to the fullest extent permitted by the Hawaii Uniform Limited Liability Company Act and other applicable law.as so amended. Any repeal or modification of the foregoing paragraph by the members or any manager or managers of the Company shall not adversely affect any right or protection of a manager of the Company existing at the time of or increase the liability ofany manager of the Company with respect to any acts or omissions of such manager occurring prior to, such repeal or modification. ARTICLE XII INDEMNITY The Company shall, to the broadest and maximum extent permitted by Hawaii law,as the same exists from time to time. indemnify each person who was or is a party or is threatened to be made a parry to any threatened. pending or completed action. suit or proceeding, whether civil. criminal,administrative or investigative by reason of the fact that such person is or was a manager, member, officer, employee or agent of the Company, or is or was serving at the request of the 3 - I Company as a manager. member, officer, director, employee or agent of another limited liability c company,corporation,partnership,joint venture,trust or other enterprise,against expenses(including attorneys'fees),judgments,fines and amounts paid in settlement actually and reasonably incurred by N such person in connection with such action,suit or proceeding. In addition,the Company shall,to the o° broadest and maximum extent permitted by Hawaii law.as the same may exist from time to time.pay N to such person any and all expenses(including attorneys' rem)incurred in defending or settling any such action.suit or proceeding in advance of the final disposition of such action,suit or proceeding, upon receipt of an undertaking by or on behalf of such person. to repay such amount if it shall ultimately be determined by a final judgment or other final adjudication that such person is not entitled NNJ to be indemnified by the Company as authorized in this Article XII. Notwithstanding the foregoing provisions of this Article XII.the Company shall not indemnify any such person with respect to any of the following matters:(i)remuneration paid to such person if it shall be determined by a final judgment or other final adjudication that such remuneration was in violation of law;or(ii)actions brought about or contributed to by the dishonesty ofsuch person,ifs final judgment or other final adjudication adverse to such person establishes that acts of active and deliberate dishonesty were committed or attempted by such person with actual dishonest purpose and intent and were material to the adjudication;or(iii)actions based on or attributable to such person having gained any personal profit or advantage to which such person was not entitled,in the event that a final judgment or other final adjudication adverse to such person establishes that such person in fact gained such personal profit or other advantage to which such person was not entitled;or(iv) actions, suits,or proceedings(or a part thereof)initiated or prosecuted by such person against the Company, unless such action. suit. or proceeding was specifically authorized in writing by the manager of the Company.or if the manager of the Company is the subject of such indemnification, l then approval shall be by a majority in interest of the disinterested members of the Company.or(v) 3 any matter in respect of which a final decision by a court with competent jurisdiction shall determine o indemnification is unlawful. The rights to indemnification and to the advancement of expenses NNJ conferred in this Article XII shall not be exclusive of any other right which any person may have or hereafter acquire under any statute,these Articles of Organization,the Operating Agreement of the Company,by agreement.vote of a majority in interest of disinterested members of the Company or a NNJ disinterested Manager,or otherwise. Any repeal or modification of this Article XII by the Company or its members shall not adversely affect any righk protection,or indemnification of a person existing at the time of any acts or omissions of such person occurring prior to such repeal or modification. 4 - �i N I hereby certify,under the penalties set forth in the Hawaii Uniform Limited Liability Company Act,that I have read the above statements and that the same are true and correct. Signed this � � day of 1WRL I Oy N ''Organizer•• Sba . Muksl ' C - 5 - / NiDiv it HAWAII, LLC April 30, 2009 VIA CERTIFIED MAIL,RETURN RECEIPT REQUESTED Jeremy McComber Office of Housing and Community Development County of Hawaii 50 Wailuku Street Hilo,Hawai'i 96720 Re: Kamakoa at Waikoloa Dear Mr. McComber: By letter dated April 17,2009,we were advised by Craig Dougall, CEO of Waikoloa Workforce Housing, LLC ("WWH")that the development of the Kamakoa at Waikoloa project(the"Project")by WWH has been halted due to lack of funding and were notified to cease work on the Project and to submit our final work product and final invoices, along with a signed release form within 30 days of the date of the letter. The letter instructed us to submit all correspondence to you. We object to this notice for the reasons stated below. As you know,UniDev is the Owner's Representative for the Project pursuant to an Amended and Restated Development Services Agreement("Amended DSA") between UniDev and WWH dated as of February 8,2008. This agreement is a successor the original Development Services Agreement("DSA")dated as of March 2, 2006,between UniDev and the County of Hawai'i(the"County"). The DSA was assigned by the County to WWH as of July 26,2006. However,the Assignment and Assumption Agreement did not expressly relieve the County from future liability under the DSA,but instead merely had WWH indemnify the County from any claim, liability, loss or damage suffered or incurred as a result of any act or omission of the County or in connection with the contract prior to the date of the assignment. Un0ev1awai tU.0 Moreover, County officials were actively involved in the renegotiation of the DSA in 2008,which led to the Amended DSA. 1100 Alakea Street Suite 1550 We were copied on a notice dated February 6,2009, from the County to WWH and Hawai'i Island Housing Trust("HIHT")declaring WWH and HIHT to be in Honolulu,Hawaii 96813 default under the Development Financing Agreement dated June 12,2008 and the Phone: 808.536.1110 Amended and Restated Development Agreement dated July 15,2008 between the Faxmile: 808.536.1104 www.unidevllc.com DC:25555893 EXHIBIT "H" Jeremy McComber April 30, 2009 Page 2 HAWAII, LLC County,HINT and WWH. By letter dated March 16, 2009 to WWH and HIHT,the County exercised certain remedies by (1)electing to cease further disbursement of funds to WWH for the Project,(2)requiring HINT to convey the Project land back to the County, and(3)instructing WWH to notify vendors, service providers, consultants and contractors(a)to cease all work on the Project, (b)to turn over all completed work product to WWH and(c)to submit their final invoices together with a release. We understand from communication with Craig Dougall of WWH that the County further has terminated WWH's role with respect to the Project as of April 30, 2009. We also have reason to believe that the County has had de facto control over the Project and managed the Project on a day-to-day basis while using WWH as its agent, instrumentality or alter ego. Under all these circumstances, we view the County as a successor in interest to WWH under the Amended DSA,resuming its original position as Project owner and "Sponsor." As such,the County is bound by the Amended DSA,including its provisions regarding termination. Those provisions do not permit a termination of UniDev for convenience. Rather,under Section 10(a)(i)of Rider B of the Amended DSA,UniDev may be terminated only if it"substantially fails to perform under this Agreement,or acts in a negligent manner such that the duties required are not substantially fulfilled, or is so negligent as to jeopardize the completion of the Project." Under Section 10(c)(i)of Rider B, Sponsor may also terminate the Amended DSA"at the end of Construction Phase 1-A in the event that Sponsor and the County determine that Phase 1-A was not successful or that future Construction Phases have become infeasible for economic or financial reasons." There is no provision allowing the Sponsor to terminate the Amended DSA during Phase 1-A. Accordingly,UniDev considers the Amended DSA to be in full force and effect and stands ready,willing and able to perform under the contract as Owner's Representative with the County as the Project Owner. Based on a recent market study commissioned and paid for by UniDev,as well as construction cost estimates from Hawaiian Dredging, we continue to believe that the Project as contemplated in the Amended DSA remains feasible and would best serve the interests of the County. Lb0evHwai�tLLC However,we have been advised by WWH that the County may prefer to build 1100 Alakea Street a very different project to provide low-cost housing for low-income individuals with Suite 1550 minimal amenities,using a number of local developers without the services of UniDev. If the County proceeds in that way, it will nonetheless remain liable to xonololti,xawai; 96813 UniDev for all fees to which it would be entitled through the completion of Phase 1-A Phone: 808.536.1110 under the Amended DSA. Faxmile: 808.536.1104 www.unidevllc.com DC:2533589 3 Jeremy McComber April 30,2009 Page 3 � 1 HAWAII. LLC Accordingly, in response to the April 17 notice,we enclose herewith two invoices. The first is for unpaid fees earned for predevelopment services on Phase 1-A to date,predevelopment services on Phase 1-B through July 2008 when UniDev was told by WWH to cease work on that phase, and for development/construction services relating to horizontal construction for Phase 1-A. The second invoice is for a contract termination payment equal to the balance of the Development Fee(as defined in the Amended DSA)for the horizontal and vertical construction of Phase 1-A that would be earned if the Project continued through the completion of Phase 1-A. Of course, the second invoice is due and payable now only if the County decides to terminate the Amended DSA or UniDev's services thereunder. We reiterate that UniDev has demonstrated the viability of the Project and particularly Phase 1-A thereof,and we hope the County will decide to proceed with both the horizontal and vertical construction of Phase 1-A and the remainder of the Project as planned. We would appreciate being advised as soon as possible regarding the County's intentions for the Project and the future role of UniDev. Separately,we have requested an immediate decision as to whether the County wishes UniDev to continue to employ Mike Tobias to oversee construction work at the site. We also request prompt payment of the first invoice enclosed,whether or not the second one becomes due and payable immediately. Sincerely, )Jeffery A. Inter Enclosure cc: Myron P. Curzan Michael A.Lee,Esq. LTh DmHawai'i LW 1100 Makes Street Suite 1550 Honolult4 Hawaii 96813 Phone: 808.536.1110 Fexmile: 808.536.1104 www.unideviIc.com DC:2555589 3 INVOICE Inv.No: 1 Date.' 4/30/2009 TO: Waikolos Workforce Housing LLC 58 Kamehamehs Avenue Hilo,HI 98720 ATTN. Craig Dougall,Executive Director Copy To: Jeremy McComber County of HawsPi Office of Housing and Community Development 50 Weduku Drive Hilo,Howell,98720 Development/Construction Services for Phase 1•A Infrastructure Description Total Infrastructure Cost 40,000,000 Total Fee 1,500,000 3.76%of$40,000,000 Less Fee on Fee (54,217)3.75%of$1,500,000 Fee After Adjustments 1,445,783 $1,500,000-558,250.00 Less Prior Fee Paid (1,083,511)Amount Received at Closing Plus 9 months®$36,145 Plus Reimbursement for M.Tobias 43,764 February,March and April 2009,plus vacation pay of S5,786 Total Fee Due 408.026 1A PredevelopmentServIces Phase IAPredevelopmenf Services 50,000 March-08 Phase 1APredeveiopmentServices 50,000 Aprl-08 Phase IAPredevelopment Services 50,000 May-08 Phase IA Predevelopment Services 50,000 June-08 Phase IAPredevelopment Services 50,000 JuWa Phase IAPredevelopment Services 50,000 Augu3t-08 Phase IAPredevelopment Services 50,000 September-08 Phase I A Predevelopment Services 50,000 October-08 Phase IAPredevelopment Services 50,000 November-08 Phase 1A Predevelopment Services 50,000 Dacember-08 Phase IAPredevelopment Services 50,000 January-09 Phase IA Piedevelopment Services 50,000 February-09 Phase IAPredevelopmentServkes 50,000 March-09 Phase IA Predevelopment Services 50,000 Apol-09 Total Fee Due 700,000 18 Planning Services Phase 18 Planning Services 50,000 March-08 Phase 18 Planning Services 50,000 ApAL08 Phase 1S Planning Services 50,000 Maros Phase 18 Planning Services 50,000 June•08 Phase 18 Planning Services(UniDBV 50,000 July-08 was Instructed to cease work on Phase 18 at the end of July 2008) Total Fes Due 280,000 Outstanding Vendor Payments Arnold and Porter 28,381 Alston Hunt 520 Other Vendors Excludes Invoices Submitted Directly to County Total Fee Due 20,901 Total Du 1,384,928 j www.utiicievllc.com 7101 Wisconsin Avenue, Suite 1301 • Bethesda, MD 20814 • Phone (301) 656-7742 • Fax (301) 656-7764 lac INVOICE Inv. No: 2 Date: 4/30/2009 TO: Waikoloa Workforce Housing LLC 56 Kamehameha Avenue Hilo, HI 96720 ATTN: Craig Dougall, Executive Director Copy To: Jeremy McComber County of Hawaii Office of Housing and Community Development 50 Wailuku Drive Hilo, Hawaii, 96720 Development/Construction Services for Phase 1A Vertical Construction Phase 1A Vertical Total Fee 2,862,000 5.4% of$53,000,000 Less Fee on Fee (146,630) 5.4% of$2,862,000 Less Pro-Rata Share of Prior Confirmatory Fees (126,201) Less Phase 1A Predevelopment Fees (700,000) See Invoice#1 Total Fee Due 11889.169 Total Due 1,889,169 i I WWW.unidevllc.com 7101 Wisconsin Avenue, Suite 1301 • Bethesda, MD 20814 • Phone (301) 656-7742 • Fax (301) 656-7764 fir+' Viso May 1,2006 Mr.Jeffrey J. Kanne Managing Director of Real Estate NEB F Real Estate 900 Seventh Street NW Washington, DC 20001 Re: Waikoloa Workforce Housing Project. Waikoloa, Hawaii Dear Mr. Kanne: At your request,The Weitzman Group has performed an appraisal of the leasehold interest in the land on which the proposed Waikoloa Workforce Housing Project("Project") will be developed.The site consists of 270.11 acres and is located in Waikoloa Village on the Big Island of Hawaii. The site is owned by the County of Hawaii. Ownership of the site will be transferred to the Hawaii Island Housing Trust, a not-for-profit corporation organized by the County of Hawaii; Waikoloa Workforce Housing, LLC, a special purpose non-profit entity formed by the County to undertake the development of the Project,will enter into a long-term ground lease with the ownership entity. As proposed, the Waikoloa Workforce Housing Project will be a development of up to 1,200± units of affordable housing sponsored by the County of Hawaii. UniDev, LLC will act as the representative to Waikoloa Workforce Housing, LLC,and will oversee the development of the Project. The appraisal contained herein represents a complete appraisal in a summary report format. In the appraisal, we have provided the market value of the leasehold interest in the land, as of April 1, 2006. Conclusions and documentation contained herein are supplemented by information contained in our files which is available upon request. In our appraisal, we have considered only the Sales Comparison Approach to value, as the Income Capitalization Approach and the Cost Approach are not applicable in the valuation of vacant land. As part of our assignment, we have analyzed recent land sales in West Hawaii that are most comparable to the subject property. Based on the analysis presented in this report, we estimate that the market value of the leasehold interest in the vacant land on which the Waikoloa Workforce Housing Project will be developed, subject to the ground lease and predicated on the assumptions stated herein,as of April 1,2006, is: NINE MILLION FIVE HUNDRED THOUSAND DOLL-ARS ($9,500,000) EXHIBIT "1" 1 Mr. Jeffrey J. Kanne. May 1,2006 NEBF Real Estate Page 2 This appraisal report is written in conformance with the requirements of the Uniform Standards of Professional Appraisal Practice ("USPAP") adopted by the Appraisal Standards Board of the Appraisal Foundation. The valuation has also been conducted in conformity with and is subject to the Code of Professional Ethics and Standards of Professional Conduct of the Appraisal Institute. Our appraisal is further subject to the Basic Assumptions and Limiting Conditions and Certification Statement contained in Exhibits A and B,respectively. It has been a pleasure to be of service to you. Please do not hesitate to call if you have any questions in connection with this submission. Respectfully subnutted, THE WEITZMAN GROUP,INC. r aril.yn Kra �Weitz�man, A CRE, FRICS President 1'7 '7'1 Thomas M.Justi9(9kE,-M4CS Executive Vice fj#ident X Keith C.Gottlieb Senior Vice President I 1 LINCOLN S. T. ASHIDA 4478 Corporation Counsel KATHERINE A. GARSON 5748 Assistant Corporation Counsel LAUREEN L. MARTIN 5927 BROOKS L. BANCROFT 8201 JULIE K. MECKLENBURG 8755 Deputies Corporation Counsel 101 Aupuni Street, Suite 325 Hilo, Hawaii 96720 Telephone: (808) 961-8251 Facsimile: (808) 961-8622 E-mail: lmartinkco.hawaii.hi.us Attorneys for Plaintiff COUNTY OF HAWAII, a municipal corporation of the State of Hawaii IN THE CIRCUIT COURT OF THE THIRD CIRCUIT STATE OF HAWAII COUNTY OF HAWAII, a municipal CIVIL NO. 09-01-264K corporation of the State of Hawaii, (Other Civil Action) Plaintiff, VS. DECLARATION OF JEREMY MCCOMBER UNIDEV, LLC, A Delaware Limited Liability Company; UNIDEV HAWAII, LLC, A Delaware Limited Liability Company; JOHN DOES 1-50; JANE DOES 1-50; DOE PARTNERSHIPS 1-50; DOE CORPORATIONS 1-50; DOE NON- PROFIT ENTITIES 1-50; DOE LIMITED LIABILITY COMPANIES 1-50; DOE ENTITIES 1-50, Defendants. DECLARATION OF JEREMY MCCOMBER I, JEREMY MCCOMBER, declare as follows: EXHIBIT "J" 1. I am a Housing and Community Development Specialist employed with the Office of Housing and Community Development ("OHCD") for the County of Hawaii and have personal knowledge of the matter set forth herein. 2. I have worked for OHCD since 2000. 3. In my position a Housing and Community Development Specialist, I am familiar with the Waikoloa affordable housing'project in which UniDev was involved as well as the documents related to the project. 4. I am aware that in April 2009 the lease with WWH was terminated and the land was transferred back to the County of Hawaii. 5. After the land was transferred back to the County of Hawaii, the affordable housing project continued to move forward and work on the land continues. For example, the site work was completed for the first phase of the project which includes road improvements, sewer, electrical, water and line installation. Approximately five contracts are currently open for work to be done on the project. 6. The current plan for developing the land is for the County of Hawaii to sell individual lots and/or homes to qualified buyers. The buyers will be responsible for obtaining financing for the homes. 7. Exhibits "D' through "I" are true and accurate copies of the relevant pages of records kept by OHCD related to the project. They are records which were created in OHCD's regularly conducted activities and were created at or near the time of the events. 8. Exhibit "D" is a true and accurate copy of the relevant pages of the Development Financing Agreement entered into between the County of Hawai'i and WWH and HIHT on June 12, 2008. 2 %W V00 9. Exhibit "E" is a true and accurate copy of the relevant pages of the mortgage filed in favor of the County of Hawai'i and against WWH and HIHT. 10. Exhibit"F" is a true and accurate copy of the relevant pages of the termination of the ground lease. 11. Exhibit"G" is a true and accurate copy of the relevant pages of the articles of incorporation of WWH which shows HINT is the sole member. 12. Exhibit "H" is a true and accurate copy of the letter and attachments from Jeffrey Minter dated April 30, 2009. 13. Exhibit "I" is a true and accurate copy of the relevant pages of the appraisal done in 2006 of leasehold land which values the property at$9,500,000.00. I declare under penalty of perjury that the foregoing is true and correct. Dated: Hilo, Hawaii, April 14, 2010. J914EMY ACCOMBER 3 IN THE CIRCUIT COURT OF THE THIRD CIRCUIT STATE OF HAWAI`l COUNTY OF HAWAI`l, a municipal CIVIL NO. 09-01-264K corporation of the State of Hawai`i, (Other Civil Action) Plaintiff, VS. NOTICE OF MOTION UNIDEV, LLC, A Delaware Limited Liability Company; UNIDEV HAWAII, LLC, A Delaware Limited Liability Company; JOHN DOES 1-50; JANE DOES 1-50; DOE PARTNERSHIPS 1-50; DOE CORPORATIONS 1-50; DOE NON- PROFIT ENTITIES 1-50; DOE LIMITED LIABILITY COMPANIES 1-50; DOE ENTITIES 1-50, Defendants. NOTICE OF MOTION TO: PAUL ALSTON palstonaa,ahfi.com KURT S. FRITZ kfritz a,ahfi.com J. BLAINE ROGERS brogers n,ahfi.com 1001 Bishop Street, Ste. 1800 Honolulu, HI 96813 Attorneys for Defendants NOTICE IS HEREBY GIVEN that the foregoing Motion will be presented before the Honorable Elizabeth A. Strance, Judge of the above-entitled Court, in the Judge's courtroom located at 81-940 Halekii Street, Kealakekua, Hawaii, on Monday, May 24, 2010 at 11:30 a.m. or as soon thereafter as counsel may be heard. Dated: Hilo, Hawaii, April 15, 2010. By LAUREEN L. MARTIN Deputy Corporation Counsel Its attorney IN THE CIRCUIT COURT OF THE THIRD CIRCUIT STATE OF HAWAII COUNTY OF HAWAII, a municipal I CIVIL NO. 09-01-264K corporation of the State oFHawai`i (Other Civil .Action) Plaintiff, VS. CERTIFICATE OF SERVICE UNIDEV, LLC, A Delaware Limited Liability Company; UNIDEV HAWAII, LLC, A Delaware Limited Liability Company; JOHN DOES 1-50; JANE DOES 1-50; DOE PARTNERSHIPS 1-50; DOE CORPORATIONS 1-50; DOE NON- PROFIT ENTITIES 1-50; DOE LIMITED LIABILITY COMPANIES 1-50; DOE ENTITIES 1-50, Defendants. CERTIFICATE OF SERVICE I HEREBY CERTIFY that a copy of the foregoing document was served upon the following parties in the manner indicated on April 15, 2010: PAUL ALSTON (served via U.S. mail,postage prepaidl) KURT S. FRITZ J. BLAINE ROGERS 1001 Bishop Street, Ste. 1800 Honolulu, HI 96813 palston a,ahfi.com kfritz(cDahfi.com brogers(&ahfi.com Attorneys for Defendants L UREEN L. MARTIN Deputy Corporation Counsel