Teruya Brothers, Ltd. & Subsidiaries - Page 3

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          I.   Exchanges of Properties                                                
               In 1995, Teruya engaged in two separate real property                  
          exchange transactions, referred to herein as the Ocean Vista                
          transaction and the Royal Towers transaction.                               
               A.  Ocean Vista Transaction                                            
               Teruya owned a fee simple interest in Ocean Vista, a parcel            
          of land underlying the Ocean Vista Condominium complex in                   
          Honolulu, Hawaii.  Teruya’s ownership interest in Ocean Vista was           
          subject to a long-term ground lease held by Golden Century                  
          Investments Co. (Golden), which in turn was subject to a sublease           
          held by the Association of Apartment Owners of Ocean Vista (the             
               In March 1993, the Association inquired about buying                   
          Teruya’s fee simple interest in Ocean Vista.  Teruya responded              
          that its fee simple interest in Ocean Vista was not available.              
          Golden then proposed acquiring Ocean Vista as part of a like-kind           
          exchange.  In a letter of intent agreement, dated August 16,                
          1993, Golden agreed to purchase, and Teruya agreed to sell,                 
          Teruya’s interest in Ocean Vista for $1,468,500.  An amendment to           
          the letter of intent, dated November 2, 1993, states:  “It is               
          understood and agreed that Teruya’s obligation to sell Teruya’s             
          Interests to * * * [Golden] is conditioned upon Teruya                      
          consummating a [section] 1031 tax deferred exchange of Teruya’s             

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Last modified: May 25, 2011