Exhibit 10.91


 


AMENDED
AND RESTATED LOAN AGREEMENT


 


by
and between


 


U.S. BANK NATIONAL ASSOCIATION, a national banking association, and
EAST-WEST BANK, a California banking corporation,


 


“Banks”
or “Lenders,”


 


U.S. BANK NATIONAL ASSOCIATION, a national banking association, “Agent,”


 


and


 


KENNEDY-WILSON,
INC., a Delaware corporation,


 


“Borrower”


 


Dated
as of June 5, 2008


 

















 


TABLE OF CONTENTS


 


	
   

  	
  Page

  
	
  DEFINITIONS
  AND CONSTRUCTION

  	
  1

  
	
   

  	
  1.1

  	
  Definitions

  	
  1

  
	
   

  	
  1.2

  	
  Accounting
  Terms

  	
  10

  
	
   

  	
  1.3

  	
  Code

  	
  10

  
	
   

  	
  1.4

  	
  Construction

  	
  10

  
	
   

  	
  1.5

  	
  Schedules
  and Exhibits

  	
  11

  
	
  2.
  LOAN AND TERMS OF PAYMENT

  	
  11

  
	
   

  	
  2.1

  	
  Revolving
  Advances

  	
  11

  
	
   

  	
  2.2

  	
  Interest
  Rates, Payments, and Calculations

  	
  11

  
	
   

  	
  2.3

  	
  Crediting
  Payments; Application of Collections

  	
  13

  
	
   

  	
  2.4

  	
  Designated
  Account

  	
  14

  
	
   

  	
  2.5

  	
  Maintenance
  of Loan Accounts; Statements of Obligations

  	
  14

  
	
   

  	
  2.6

  	
  Fees,
  Costs, and Charges

  	
  14

  
	
  3.

  	
  CONDITIONS; TERM OF AGREEMENT

  	
  15

  
	
   

  	
  3.1

  	
  Conditions
  Precedent to the Initial Advance

  	
  15

  
	
   

  	
  3.2

  	
  Conditions
  Precedent to all Advances

  	
  16

  
	
   

  	
  3.3

  	
  [Intentionally
  Omitted.]

  	
  17

  
	
   

  	
  3.4

  	
  Term

  	
  17

  
	
   

  	
  3.5

  	
  Early
  Termination by Borrower

  	
  17

  
	
  4.

  	
  RIGHT OF INSPECTION

  	
  17

  
	
  5.

  	
  REPRESENTATIONS AND WARRANTIES

  	
  17

  
	
   

  	
  5.1

  	
  No
  Encumbrances

  	
  17

  
	
   

  	
  5.2

  	
  Equipment

  	
  17

  
	
   

  	
  5.3

  	
  Intentionally
  Omitted

  	
  18

  
	
   

  	
  5.4

  	
  Schedule
  of Indebtedness

  	
  18

  
	
   

  	
  5.5

  	
  Location
  of Chief Executive Office; FEIN

  	
  18

  
	
   

  	
  5.6

  	
  Due
  Organization and Qualification; Subsidiaries

  	
  18

  
	
   

  	
  5.7

  	
  Due
  Authorization; No Conflict

  	
  18

  
	
   

  	
  5.8

  	
  Litigation

  	
  19

  
	
   

  	
  5.9

  	
  No
  Material Adverse Change

  	
  19

  
	
   

  	
  5.10

  	
  Solvency

  	
  19

  
	
   

  	
  5.11

  	
  Employee
  Benefits

  	
  19

  
	
   

  	
  5.12

  	
  Maximum
  Balance Sheet Leverage

  	
  20

  
	
   

  	
  5.13

  	
  Minimum
  Rent Adjusted Fixed Charge Coverage Ratio

  	
  20

  
	
  6.

  	
  AFFIRMATIVE COVENANTS

  	
  20

  
	
   

  	
  6.1

  	
  Accounting
  System

  	
  20

  
	
   

  	
  6.2

  	
  Financial
  Covenants

  	
  20

  
	
   

  	
  6.3

  	
  Financial
  Statements, Reports, Certificates

  	
  20

  



 

















 


	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
  6.4

  	
  Chairman;
  CEO

  	
  22

  
	
   

  	
  6.5

  	
  Title
  to Equipment

  	
  22

  
	
   

  	
  6.6

  	
  Maintenance
  of Equipment

  	
  22

  
	
   

  	
  6.7

  	
  Taxes

  	
  22

  
	
   

  	
  6.8

  	
  Insurance

  	
  22

  
	
   

  	
  6.9

  	
  No
  Setoffs or Counterclaims

  	
  23

  
	
   

  	
  6.10

  	
  Dispositions
  at Fair Market Consideration

  	
  23

  
	
   

  	
  6.11

  	
  CompliancewithLaws

  	
  23

  
	
   

  	
  6.12

  	
  Employee
  Benefits

  	
  23

  
	
   

  	
  6.13

  	
  Compliance
  with Leases

  	
  24

  
	
  7.
  NEGATIVE COVENANTS

  	
  24

  
	
   

  	
  7.1

  	
  Indebtedness

  	
  24

  
	
   

  	
  7.2

  	
  Liens

  	
  25

  
	
   

  	
  7.3

  	
  Restrictions
  on Fundamental Changes

  	
  25

  
	
   

  	
  7.4

  	
  Disposal
  of Assets

  	
  25

  
	
   

  	
  7.5

  	
  Change
  Name

  	
  25

  
	
   

  	
  7.6

  	
  Guaranty

  	
  25

  
	
   

  	
  7.7

  	
  Nature
  of Business

  	
  25

  
	
   

  	
  7.8

  	
  Prepayments
  and Amendments

  	
  25

  
	
   

  	
  7.9

  	
  Change
  of Control

  	
  26

  
	
   

  	
  7.10

  	
  Intentionally
  Omitted

  	
  26

  
	
   

  	
  7.11

  	
  Accounting
  Methods

  	
  26

  
	
   

  	
  7.12

  	
  Investments

  	
  26

  
	
   

  	
  7.13

  	
  Transactions
  with Affiliates

  	
  26

  
	
   

  	
  7.14

  	
  Suspension

  	
  26

  
	
   

  	
  7.15

  	
  Intentionally
  Omitted

  	
  26

  
	
   

  	
  7.16

  	
  Use
  of Proceeds

  	
  27

  
	
   

  	
  7.17

  	
  Change
  in Location of Chief Executive Office Equipment with Bailees

  	
  27

  
	
   

  	
  7.18

  	
  Intentionally
  Omitted

  	
  27

  
	
   

  	
  7.19

  	
  Intentionally
  Omitted

  	
  27

  
	
   

  	
  7.20

  	
  Downstreaming
  of Funds

  	
  27

  
	
   

  	
  7.21

  	
  Excessive
  Acquisitions

  	
  27

  
	
   

  	
  7.22

  	
  Intentionally
  Omitted

  	
  27

  
	
   

  	
  7,23

  	
  Dividends

  	
  27

  
	
   

  	
  7.24

  	
  Stock
  Repurchases

  	
  27

  
	
  8.

  	
  EVENTS OF DEFAULT

  	
  27

  
	
   

  	
  8.1

  	
  Failure
  to Make Payment

  	
  28

  
	
   

  	
  8.2

  	
  Failure
  to Perform

  	
  28

  
	
   

  	
  8.3

  	
  Material
  Adverse Change

  	
  28

  
	
   

  	
  8.4

  	
  Attachment
  or Other Process

  	
  28

  



 

















 


	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
  8.5

  	
  Insolvency
  Proceeding by Borrower

  	
  28

  
	
   

  	
  8.6

  	
  Insolvency
  Proceeding Against Borrower

  	
  28

  
	
   

  	
  8.7

  	
  Injunction
  or Other Process

  	
  28

  
	
   

  	
  8.8

  	
  Lien
  or Other Process

  	
  28

  
	
   

  	
  8.9

  	
  Judgment
  or Claim, Lien

  	
  28

  
	
   

  	
  8.10

  	
  Defaults
  in Material Agreement

  	
  28

  
	
   

  	
  8.11

  	
  Payment
  on Subordinated Indebtedness

  	
  29

  
	
   

  	
  8.12

  	
  Misstatements
  and Misrepresentations

  	
  29

  
	
   

  	
  8.13

  	
  Other
  Events of Default

  	
  29

  
	
   

  	
  8.14

  	
  Cure
  Period, Notice to Cure

  	
  29

  
	
  9.

  	
  BANKS
  RIGHTS AND REMEDIES

  	
  30

  
	
   

  	
  9.1

  	
  Rights
  and Remedies

  	
  30

  
	
   

  	
  9.2

  	
  Remedies
  Cumulative

  	
  31

  
	
   

  	
  10.

  	
  TAXES
  AND EXPENSES

  	
  31

  
	
   

  	
  11.

  	
  WAIVERS; INDEMNIFICATION

  	
  31

  
	
   

  	
  11.1

  	
  Demand; Protest; etc

  	
  31

  
	
   

  	
  11.2

  	
  Intentionally
  Omitted

  	
  31

  
	
   

  	
  11.3

  	
  Jndeninification

  	
  31

  
	
  12.

  	
  NOTICES

  	
  32

  
	
  13.

  	
  CHOICE
  OF LAW AND VENUE; JURY TRIAL WAIVER

  	
  33

  
	
  14.

  	
  DESTRUCTION
  OF BOflOWERS DOCUMENTS

  	
  34

  
	
  15.

  	
  AGENCY
  AND GOVERNANCE PROVISIONS

  	
  34

  
	
   

  	
  15.1

  	
  Actions

  	
  34

  
	
   

  	
  15.2

  	
  Exculpation

  	
  34

  
	
   

  	
  15.3

  	
  Successors

  	
  35

  
	
   

  	
  15.4

  	
  Other
  Transactions by U.S. Bank

  	
  35

  
	
   

  	
  15.5

  	
  Independent
  Credit Decision

  	
  35

  
	
   

  	
  15.6

  	
  Copies

  	
  35

  
	
   

  	
  15.7

  	
  Payments
  to be Made to Agent

  	
  36

  
	
   

  	
  15.8

  	
  Reimbursement
  by Lenders

  	
  36

  
	
   

  	
  15.9

  	
  Collateral
  and Guarantees Held by Agent

  	
  36

  
	
   

  	
  15.10

  	
  Lenders’
  Commitments Independent

  	
  36

  
	
   

  	
  15.11

  	
  Borrower
  to deal with Agent

  	
  37

  
	
   

  	
  15.12

  	
  Loans
  to be Funded Through Agent

  	
  37

  
	
  16.

  	
  ASSIGNMENTS
  AND PARTICIPATIONS

  	
  38

  
	
   

  	
  16.1

  	
  Assignments

  	
  38

  
	
   

  	
  16.2

  	
  Participations

  	
  39

  
	
  17.

  	
  GENERAL
  PROVISIONS

  	
  39

  



 

















 


	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
  17.1

  	
  Effectiveness

  	
  39

  
	
   

  	
  17.2

  	
  Successors
  and Assigns

  	
  39

  
	
   

  	
  17.3

  	
  SectionHeadings

  	
  39

  
	
   

  	
  17.4

  	
  Interpretation

  	
  40

  
	
   

  	
  17.5

  	
  Severability
  of Provisions

  	
  40

  
	
   

  	
  17.6

  	
  Amendments
  in Writing

  	
  40

  
	
   

  	
  17.7

  	
  Counterparts;
  Telefacsimile Execution

  	
  40

  
	
   

  	
  17.8

  	
  Revival
  and Reinstatement of Obligations

  	
  40

  
	
   

  	
  17.9

  	
  Integration

  	
  40

  
	
   

  	
  17.10

  	
  Attomeys’
  Fees

  	
  40

  



 














 


AMENDED AND RESTATED LOAN AGREEMENT


 


THIS LOAN AGREEMENT (this “Agreement”), is entered into as of June 5,
2008, between U.S. BANK NATIONAL ASSOCIATION, a national banking association (“jj~
Bank”), with a place of business located at 633 W. Fifth Street, 30°’ Floor,
Los Angeles, California 90071 and EAST-WEST BANK, a California banking
corporation (“East-West Bank”), with its chief place of business located
at 135 N. Los Robles Ave., 2~ Floor, Pasadena, California 91101 (individually,
a “Bank” or a “Lender,” and collectively, “Banks” or “Lenders”),
U.S. BANK NATIONAL ASSOCIATION, a national banking association, as agent for
the Banks (“Agent”), and KENNEDY-WILSON, INC., a Delaware corporation (“Borrower’),
with its chief place of business located at 9601 Wilshire Boulevard, Suite 220,
Beverly Hills, California 90210. This Agreement amends and restates in its
entirety that certain Loan Agreement between Borrower and Banks dated June 13,
2002, as amended by that (i) Amendment Number One to Promissory Notes and
Loan Agreement dated December 30, 2002, (ii) First Amendment to Loan
Agreement dated March 30, 2004, (iii) Second Amendment to Loan
Agreement dated November 10, 2004, and (iv) Third Amendment to Loan
Agreement dated June 16, 2005.


 


The parties agree as follows:


 


1. DEFINITIONS AND CONSTRUCTION.


 


1.1                  Definitions.
As used in this Agreement, the following terms shall have the following
definitions:


 


“Account Debtor” means any Person who is or who may become
obligated under, with respect to, or on account of, an Account.


 


“Accounts” means all currently existing and hereafter arising
accounts (as that term is defined from time to time in the Code), contract
rights, and all other forms of obligations owing to Borrower, and any and all
credit insurance, guaranties, or security therefor, and specifically includes
all of Borrower’s rights to payments of every kind under all license agreements
under which Borrower is a licensor.


 


“Advances” has the meaning set forth in Section 2.1(a).


 

















 


“Affiliate” means, as applied to any Person, any other Person
who directly or indirectly controls, is controlled by, is under common control
with or is a director or officer of such Person. For purposes of this
definition, “control” means the possession, directly or indirectly, of the
power to vote 10% or more of the securities having ordinary voting power for
the election of directors or the direct or indirect power to direct the
management and policies of a Person.


 


“Agent” has the meaning set forth in Section 15.1.


 


“Agreement” has the meaning set forth in the preamble hereto.


 


“Asset Access Agreement” means a landlord
waiver, mortgagee waiver, acknowledgment agreement of any Person in possession
of, having a Lien upon, or having rights or interests in any asset of Borrower,
in each case, in form and substance satisfactory to Agent.


 


“Authorized Person” means any officer or other employee of
Borrower listed on Schedule A-1, as amended from time to time. Borrower
shall furnish, from time to time, a resolution of its Board of Directors, in a
form acceptable to Lenders, confirming its initial appointment of, and any
change in, such Authorized Persons.


 


“Bank” and “Banks” have the meaning set forth in the
preamble to this Agreement.


 


“Bankruptcy Code” means the United States Bankruptcy Code (11
U.S.C. § 101, et seq.), as amended, and any successor statute.


 


“Bank Expenses” means, without limitation, all: reasonable costs
or expenses required to be paid by Borrower under any of the Loan Documents
that are paid or incurred by Banks or by Agent; fees, charges, taxes, and
insurance premiums paid or incurred by Banks or by Agent in connection with
Banks’ transactions with Borrower, including, fees or charges for photocopying,
notarization, couriers and messengers, telecommunication, public record
searches (including tax lien, litigation, and UCC searches and including
searches with any Governmental Agencies, filing, recording, publication,
appraisals, costs and expenses incurred by Banks or by Agent in the
disbursement of funds to Borrower (by wire transfer or otherwise); charges paid
or incurred by Banks or by Agent resulting from the dishonor of checks; costs
and expenses paid orincurred by Banks or by Agent to correct any default or
enforce any provision of the Loan Documents; costs and expenses paid or
incurred by Banks or by Agent in examining Borrower’s Books; costs and expenses
of third party claims or any other suit paid or incurred by Banks or by Agent
in enforcing or defending the Loan Documents or in connection with the
transactions contemplated by the Loan Documents or Banks’ relationship with
Borrower and its Affiliates or Subsidiaries, and Banks’ or Agent’s reasonable
attorneys’ fees and expenses incurred in advising, structuring, drafting,
reviewing, administering, amending, terminating, enforcing, defending, or
concerning the Loan Documents (including attorneys’ fees and expenses incurred
in connection with a “workout,” a “restructuring,” or an Insolvency Proceeding
concerning Borrower or any guarantor of the Obligations), irrespective of
whether suit is brought. All Bank Expenses charged by Banks shall be deemed
reasonable in the absence of compelling circumstances to the contrary.


 


“Benefit Plan” means a “defined benefit plan” (as defined in Section 3(35)
of ERISA) for 


 


2

















 


which Borrower, any Subsidiary of Borrower, or any
ERISA Affiliate has been an “employer” (as defined in Section 3(5) of
ERISA) within the past six (6) years.


 


“Borrower” has the meaning set forth in the preamble to this
Agreement.


 


“Borrower’s Books” means all of Borrower’s books and records
including: ledgers; records indicating, summarizing, or evidencing Borrower’s
properties or assets or liabilities; all information relating to Borrower’s
business operations or financial condition; and all computer programs, disk,
tape, or other media files, printouts, runs, or other computer- prepared
information.


 


“Business Day” means any day that is not a
Saturday, Sunday, or other day on which national banks are authorized or
required to close in New York City or San Francisco, California, and if the
Business Day relates to a determination of the LIBOR Rate applicable to an
Advance under the credit facilities under this Agreement, it also means a day
on which dealings are carried on in the London interbank market.


 


“Change of Control” shall be deemed to have occurred at such
time as there is (a) any change in the Chief Executive Officer (currently
William McMorrow) of the Borrower, or (b) change of ownership (whether by
transfer of existing shares, issuance of new shares, or a combination, or
otherwise) of more than 50% in the aggregate of the common stock of the
Borrower.


 


“Closing Date” means the date all conditions precedent set forth
in Section 3.1 of this Agreement have been satisfied in Agent’s
sole determination.


 


“Code” means the California Uniform Commercial Code as it may be
amended from time to time.


 


“Collections” means all cash, checks, notes, instruments, and
other items of payment (including, insurance proceeds, proceeds of cash sales,
rental proceeds, and tax refunds).


 


“Commitment” means the agreement of each of the Lenders to
extend its Pro-Rata Share of the credit facilities called for under the terms
and conditions of this Agreement and, depending upon the context, all or
specified rights of such Lender in such credit facilities.


 


“Compliance Certificate” means a certificate substantially in
the form of Schedule 6.3 and delivered by the Chief Financial Officer of
Borrower to Agent.


 


“Daily Balance” means, with respect to each day during the term
of this Agreement, the amount of an Obligation owed at the end of such day.


 


“deems itself insecure” means that the Person deems itself
insecure in accordance with the provisions of Section 1208 of the Code.


 


“Default” means an event, condition, or default that, with the
giving of notice, the 


 


3

















 


passage of time, or both, would be an Event of
Default, except and then solely to the extent provided in Section 8.14.


 


“Advance Request Form and Disbursement Letter” means an
instructional letter in the form of Schedule 1.1-1 executed and
delivered by Borrower to Agent for each Advance, the form and substance of
which shall be satisfactory to Agent.


 


“Dollars or $”  means dollars
of the United States of America.


 


“EBITDA” means the net income of Borrower (excluding
extraordinary items), for the applicable period, plus all interest expense,
income tax expense, depreciation and amortization (including amortization of
any goodwill or other intangibles) for the period.


 


“Effective Tangible Net Worth” means
stockholders’ equity, less Intangible Assets.


 


“Equipment” means all of Borrower’s present and hereafter
acquired machinery, office and other equipment, furniture, furnishings,
fixtures, vehicles (including motor vehicles and trailers), and tools, and
goods, wherever located, and all attachments, accessories, accessions,
replacements, substitutions, additions, and improvements to any of the
foregoing.


 


“ERISA” means the Employee Retirement Income Security Act of
1974, 29 U.S.C. § 1000, et seq., amendments thereto, successor
statutes, and regulations or guidance promulgated thereunder.


 


“ERISA Affiliate” means (a) any corporation subject to
ERISA whose employees are treated as employed by the same employer as the
employees of Borrower under IRC Section 414(b), (b) any trade or
business subject to ERISA whose employees are treated as employed by the same
employer as the employees of Borrower under IRC Section 4 14(c), (c) solely
for purposes of Section 302 of ERISA and Section 412 of the IRC, any
organization subject to ERISA that is a member of an affiliated service group
of which Borrower is a member under IRC Section 4 14(m), or (d) solely
for purposes of Section 302 of ERISA and Section 412 of the IRC, any
party subject to ERISA that is a party to an arrangement with Borrower and
whose employees are aggregated with the employees of Borrower under IRC Section 4
14(o).


 


“ERISA Event” means (a) a Reportable Event with respect to
any Benefit Plan or Multiemployer Plan, (b) the withdrawal of Borrower,
any of its Subsidiaries or ERISA Affiliates from a Benefit Plan during a plan
year in which it was a “substantial employer” (as defined in Section 4001
(a)(2) of ERISA), (c) the providing of notice of intent to terminate
a Benefit Plan in a distress termination (as described in Section 404 1(c) of
ERISA), (d) the institution by the PBGC of proceedings to terminate a
Benefit Plan or Multiemployer Plan, (e) any event or condition (i) that
provides a basis under Section 4042(a)(1), (2), or (3) of ERISA for
the termination of, or the appointment of a trustee to administer, any Benefit
Plan or Multiemployer Plan, or (ii) that may result in termination of a
Multiemployer Plan pursuant to Section 4041A of ERISA, (f) the
partial or complete withdrawal within the meaning of Sections 4203 and 4205 of
ERISA, of Borrower, any of its Subsidiaries or ERISA Affiliates from a
Multiemployer Plan, or (g) providing any security to any Plan under Section 40l(a)(29)
of the IRC by Borrower or its 


 


4

















 


Subsidiaries or any of their ERISA Affiliates.


 


“Equity Infusion” shall mean and refer to Bank-funded investment
capital to be used by Borrower for investments and! or acquisitions.


 


“Event of Default” has the meaning set forth in Section 8.


 


“Facility A” means a credit facility in the maximum amount of
Twenty Five Million Dollars ($25,000,000), to be furnished to Borrower by Banks
under the terms of this Agreement for purposes of financing Borrower’s
acquisition of real property. In no event shall U.S. Bank be required to make
Advances totaling more than Twelve Million Five Hundred Thousand Dollars
($12,500,000) of such facility. In no event shall East-West Bank be required to
make Advances totaling more than Twelve Million Five Hundred Thousand Dollars
($12,500,0000) of such facility.


 


“Facility B” means a credit facility in the maximum amount of
Five Million Dollars ($5,000,000), to be furnished to Borrower by Banks under
the terms of this Agreement for purposes of providing working capital to
Borrower. In no event shall U.S. Bank be required to make Advances totaling
more than Two Million Five Hundred Thousand Dollars ($2,500,000) of such
facility. In no event shall East-West Bank be required to make Advances
totaling more than Two Million Five Hundred Thousand Dollars ($2,500,0000) of
such facility.


 


“FEIN” means Federal Employer Identification Number.


 


“GAAP” means generally accepted accounting principles as in
effect from time to time in the United States, consistently applied.


 


“General Intangibles” means all of Borrower’s present and future
general intangibles (as that term is defined from time to time in the Code),
payment intangibles and other personal property (including without limitation
contract rights, rights arising under common law, statutes, or regulations,
choses or things in action, goodwill, patents, trade names, trademarks, service
marks, copyrights, blueprints, drawings, purchase orders, customer lists,
monies due or recoverable from pension funds, rights to payment and other
rights under any royalty or licensing agreements, infringement claims,
software, computer programs, information contained on computer disks, tapes, or
other media, literature, reports, catalogs, deposit accounts, insurance premium
rebates, tax refunds, and tax refund claims), other than goods, Accounts, and
Negotiable Collateral as applicable.


 


“Governing Documents” means the certificate or articles of
incorporation, by-laws, operating agreement, partnership agreement, or other
organizational or governing documents of any Person.


 


“Governmental Authority” means any nation or government, any
state or other political subdivision thereof, and any entity exercising
executive, legislative, judicial, regulatory, or administrative functions of or
pertaining to government.


 


5

















 


“Indebtedness” means: (a) all obligations of Borrower for
borrowed money, (b) all obligations of Borrower evidenced by bonds, debentures,
notes, or other similar instruments and all reimbursement or other obligations
of Borrower in respect of letters of credit, bankers acceptances, interest rate
swaps, or other financial products, (e) all obligations of Borrower under
capital leases, (d) all obligations or liabilities of others secured by a
Lien on any property or asset of Borrower, irrespective of whether such
obligation or liability is assumed, and (e) any obligation of Borrower
guaranteeing or intended to guarantee (whether guaranteed, endorsed, co-made,
discounted, or sold with recourse to Borrower) any indebtedness, lease,
dividend, letter of credit, or other obligation of any other Person.


 


“Indenmified Liabilities” has the meaning set forth in Section 11.3.


 


“Indemnified Person” has the meaning set forth in Section 11.3.


 


“Insolvency Proceeding” means any proceeding commenced by or
against any Person under any provision of the Bankruptcy Code, Title 11, United
States Code, or under any other bankruptcy or insolvency law of any jurisdiction,
assignments for the benefit of creditors, formal or informal moratoria,
compositions, extensions generally with creditors, or proceedings seeking
reorganization, arrangement, or other similar relief.


 


“Intangible Assets” means, with respect to any Person, that
portion of the book value of all of such Person’s assets, net of amortization,
that would be treated as intangibles under GAAP, including, without limitation,
property management contracts, capitalized loan fees, and Affiliate or
stockholder loans.


 


“Investment Property” means all of Borrower’s presently existing
and hereafter acquired or arising investment property (as that term is defined
form time to time in the Code).


 


“IRC” means the Internal Revenue Code of 1986, as amended, and the regulations
thereunder.


 


“Lender” and “Lenders” have the meaning set forth in the preamble to this Agreement.


 


“LIBOR Notice” means the written notice from Borrower to Agent
indentifying the Advances that are to bear interest at the LIBOR Rate for the
Loan Period selected in the form set forth on Schedule 2.2 hereto, the
terms and conditions of which supplement and are made a part of this agreement.


 


“LIBOR Rate” means,
with respect to the Loan Period applicable to any Advance hereunder, the LIBOR
rate for such period quoted by Agent from Reuters Screen LIBOROI Page or
any successor thereto, adjusted for any reserve requirement and any subsequent
costs to Lenders arising from any change in government requirements. The LIBOR
Rate for the Loan Period for each such Advance shall be determined by Agent
prior to the first day of such Loan Period.


 


“LIBOR Rate Loan” has the meaning set forth in the Notes. No
more than five (5) 


 


6

















 


LIBOR Rate Loans may be outstanding at any one time.


 


“Lien” means any interest in property securing an obligation owed to,
or a claim by, any Person other than the owner of the property, whether such
interest shall be based on the common law, statute, or contract, whether such
interest shall be recorded or perfected, and whether such interest shall be
contingent upon the occurrence of some future event or events or the existence
of some future circumstance or circumstances, including the Lien or security
interest arising from a mortgage, deed of trust, encumbrance, pledge,
hypothecation, assignment, deposit arrangement, security agreement, adverse
claim or charge, conditional sale or trust receipt, or from a lease,
consignment, or bailment for security purposes.


 


“Loan Accounts” has the meaning set forth in Section 2.5.


 


“Loan Documents” means this Agreement, the Advance Request Form and
Disbursement Letter, any Note or Notes executed by Borrower and payable to
Banks, and any other agreement entered into, now or in the future, in
connection with this Agreement.


 


“Loan Period”
means the period commencing on the Advance date of the applicable LIBOR Rate
Loan and ending on the numerically corresponding day 1, 2, 3, 6, or 12 months thereafter
matching the interest rate term selected by the Borrower; provided, however, (a) if
any Loan Period would otherwise end on a day which is not a New York Banking
Day, then the Loan Period shall end on the next succeeding New York Banking Day
unless the next succeeding New York Banking Day falls in another calendar month,
in which case the Loan Period shall end on the immediately preceding New York
Banking Day; or (b) if any Loan Period begins on the last New York Banking
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of the Loan Period), then
the Loan Period shall end on the last New York Banking Day of the calendar
month at the end of such Loan Period.


 


“Loans” means the credit facilities to be extended by Lenders to
Borrower subject to the terms and conditions of this Agreement.


 


“Material Adverse Change” means (a) a material adverse
change in the business, prospects, operations, results of operations, assets,
liabilities or condition (financial or otherwise) of Borrower, or (b) the
material impairment of Borrower’s ability to perform its obligations under the
Loan Documents to which it is a party or of Banks to enforce the Obligations.


 


“Maturity Date” means July 1, 2011, unless extended in
writing by Banks in their sole discretion. The Maturity Date is the date on or
before which all obligations of Borrower under the credit facilities to be
furnished under this Agreement shall be paid in full, subject to the terms and
conditions of this Agreement.


 


“Maximum Balance Sheet Leverage” means total debt divided by
Effective Tangible Net Worth.


 


“Maximum Revolving Amount” means, in the case of Facility A,
Twenty Five Million 


 


7

















 


Dollars ($25,000,000), and in the case of Facility
B, Five Million Dollars ($5,000,000).


 


“Minimum Rent Adjusted Fixed Charge Coverage Ratio” means, as of
the end of the most recently concluded fiscal quarter of Borrower, and/or as of
any other date specified in this Agreement, as applicable, (i) EBITDA for
that portion of the fiscal year of Borrower then concluded, minus cash taxes,
cash dividends, cash used to repurchase corporate stock, and the higher of
un-financed capital expenditures or maintenance capital expenditures plus
rental/lease expense, divided by (ii) interest expense plus current
portion of long term debt (“CPLTD”) secured by any property held by Borrower in
excess of three (3) years (excluding those properties listed in Schedule
1.1-2) plus rental lease expense. CPLTD shall exclude balloon payments due
on real estate indebtedness of Borrower and lump sum principal payments
required by Facility A. (Borrower shall include in its financial statements, or
a side letter thereto, provided to Banks hereunder, in addition to all other
information required under this Agreement, information sufficiently detailed to
enable Banks to verify the financial elements described in this paragraph.)


 


“Multiemployer Plan” means a “multiemployer plan” (as defined in
Section 4001(a)(3) of ERISA) to which Borrower, any of its
Subsidiaries, or any ERISA Affiliate has contributed, or was obligated to
contribute, within the past six (6) years.


 


“New York Banking Day” means any day (other
than a Saturday or Sunday) on which commercial banks are open for business in
New York, New York.


 


“Note” or “Notes” means the promissory note or notes to be
executed by Borrower in favor of Lenders to evidence the indebtedness incurred
pursuant to this Agreement.


 


“Obligstions” means all loans, Advances, debts, principal,
interest (including any interest that, but for the provisions of the Bankruptcy
Code, would have accrued), liabilities (including all amounts charged to
Borrower’s Loan Accounts pursuant hereto), obligations, fees, charges, costs,
or Bank Expenses (including any fees or expenses that, but for the provisions
of the Bankruptcy Code, would have accrued), lease payments, guaranties,
covenants, and duties owing by Borrower to Banks of any kind and description
(whether pursuant to or evidenced by the Loan Documents or pursuant to any
other agreement between Banks and Borrower, and irrespective of whether for the
payment of money), whether direct or indirect, absolute or contingent, due or
to become due, now existing or hereafter arising, and including any debt,
liability, or obligation owing from Borrower to others that Banks may have
obtained by assignment or otherwise, and further including all interest not
paid when due and all Bank Expenses that Borrower is required to pay or
reimburse by the Loan Documents, by law, or otherwise.


 


“Participant” means any Person to which Banks or either of them
have at any time sold a participation interest in their or either of their
rights under the Loan Documents.


 


“PBGC” means the Pension Benefit Guaranty Corporation as defined
in Title IV of ERISA, or any successor thereto.


 


“Permitted Liens” means (a) Liens held by Banks or either
of them, (b) Liens for unpaid 


 


8

















 


taxes that either (i) are not yet due and
payable or (ii) are the subject of Permitted Protests, (c) Liens set
forth on Schedule P-1, (d) the interests of lessors under operating
leases and purchase money security interests so long as the Lien only attaches
to the asset purchased or acquired and only secures the purchase price of the
asset, (e) Liens arising by operation of law in favor of warehousemen,
landlords, carriers, mechanics, materialmen, laborers, or suppliers, incurred
in the ordinary course of business of Borrower and not in connection with the
borrowing of money, and which Liens either (i) are for sums not yet due
and payable, or (ii) are the subject of Permitted Protests, (f) Liens
arising from deposits made in connection with obtaining worker’s compensation
or other unemployment insurance, (g) Liens or deposits to secure
performance of bids, tenders, or leases (to the extent permitted under this
Agreement), incurred in the ordinary course of business of Borrower and not in
connection with the borrowing of money, (h) Liens arising by reason of
security for surety or appeal bonds in the ordinary course of business of
Borrower, and (i) Liens of or resulting from any judgment or award that
would not cause a Material Adverse Change and as to which the time for the
appeal or petition for rehearing of which has not yet expired, or in respect of
which Borrower is in good faith prosecuting an appeal or proceeding for a
review, and in respect of which a stay of execution pending such appeal or
proceeding for review has been secured.


 


“Permitted Protest”
means the right of Borrower to protest any Lien (other than any such Lien that
secures the Obligations), tax (other than payroll taxes or taxes that are the
subject of a United States federal tax Lien), or rental payment, provided that (a) a
reserve with respect to such obligation is established on the books of Borrower
in an amount that is reasonably satisfactory to Agent, (b) any such
protest is instituted and diligently prosecuted by Borrower in good faith, and (e) Agent
is satisfied that, while any such protest is pending, there will be no
impairment of the enforceability, validity, or priority of any of the Banks’
rights under or in connection with this Agreement.


 


“Person” means and
includes natural persons, corporations, limited liability companies, limited
partnerships, general partnerships, limited liability partnerships, joint
ventures, trusts, land trusts, business trusts, or other organizations,
irrespective of whether they are legal entities, and Governmental Authorities
and agencies and political subdivisions thereof means any employee benefit plan,
program, or arrangement maintained or contributed to by Borrower or with
respect to which it may incur liability.


 


“Prime Rate” means the rate of interest announced from time to
time by U.S. Bank National Association in New York, New York as its “prime
rate.” In the event the Prime Rate is changed from time to time hereafter, the
applicable rate of interest hereunder and under the Notes automatically and
immediately shall be increased or decreased by an amount equal to such change
in the Prime Rate.


 


“Prime Rate Loan” has the meaning given in the Notes.


 


“Pro-Rata Share” means each Lender’s percentage share of the
total credit to be extended pursuant to the Loan Documents. Initially, U.S.
Bank’s Pro-Rata Share is 50% and East-West Bank’s Pro-Rata Share is 50%.


 


9














 


“Reportable Event” means any of the events described in Section 4043(c) of
ERISA or the regulations thereunder other than a Reportable Event as to which
the provision of thirty (30) days’ notice to the PBGC is waived under
applicable regulations.


 


“Retiree Health Plan” means an “employee welfare benefit plan”
within the meaning of Section 3(1) of ERISA that provides benefits to
individuals after termination of their employment, other than as required by Section 601
of ERISA.


 


“Solvent” means, with
respect to any Person on a particular date, that on such date (a) at fair
valuations, all of the properties and assets of such Person are greater than
the sum of the debts, including contingent liabilities, of such Person, (b) the
present fair salable value of the properties and assets of such Person is not
less than the amount that will be required to pay the probable liability of
such Person on its debts as they become absolute and matured, (c) such
Person is able to realize upon its properties and assets and pay its debts and
other liabilities, contingent obligations, and other commitments as they mature
in the normal course of business, (d) such Person does not intend to, and
does not believe that it will, incur debts beyond such Person’s ability to pay
as such debts mature, and (e) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, for which
such Person’s properties and assets would constitute unreasonably small capital
after giving due consideration to the prevailing practices in the industry in
which such Person is engaged. In computing the amount of contingent liabilities
at any time, it is intended that such liabilities will be computed at the
amount that, in light of all the facts and circumstances existing at such time,
represents the amount that reasonably can be expected to become an actual or
matured liability.


 


“Subsidiary” of a Person means a corporation, partnership,
limited liability company, or other entity in which that Person directly or
indirectly owns or controls the shares of stock or other ownership interests
having ordinary voting power to elect a majority of the board of directors (or
appoint other comparable managers) of such corporation, partnership, limited
liability company, or other entity.


 


“Voidable Transfer” has the meaning set forth in Section 17.8.


 


1.2          Accounting Terms. All
accounting terms not specifically defined herein shall be construed in
accordance with GAAP. When used herein, the term “financial statements” shall include
the notes and schedules thereto. Whenever the term “Borrower” is used in
respect of a financial covenant or a related definition, it shall be understood
to mean Borrower on a consolidated basis unless the context clearly requires
otherwise.


 


1.3          Code. Any terms used
in this Agreement that are defined in the Code shall be construed and defined
as set forth in the Code, as it is amended from time to time, unless otherwise
defined herein.


 


1.4          Construction. Unless
the context of this Agreement clearly requires otherwise, references to the
plural include the singular, references to the singular include the plural, the
term “including” is not limiting, and the term “or” has, except where otherwise



 


10

















 


indicated, the inclusive meaning represented by the
phrase “and/or.” The words “hereof,” “herein,” “hereby,” “hereunder,” and
similar terms in this Agreement refer to this Agreement as a whole and not to
any particular provision of this Agreement. An Event of Default shall “continue”
or be “continuing” until such Event of Default has been waived in writing by
Agent. Section, subsection, clause, schedule, and exhibit references are to
this Agreement unless otherwise specified. Any reference in this Agreement or
in the Loan Documents to this Agreement or any of the Loan Documents shall
include all alterations, amendments, changes, extensions, modifications,
renewals, replacements, substitutions, and supplements, thereto and thereof, as
applicable.


 


1.5                              Schedules
and Exhibits. All of the schedules and exhibits attached to


 


this Agreement shall be deemed incorporated herein by reference


 


2. LOAN AND TERMS OF PAYMENT.


 


2.1                               Revolving
Advances.


 


(a)           From the Closing Date to the Maturity Date (unless
extended in writing by Banks in their sole discretion), subject to the terms
and conditions of this Agreement, Banks agree to make advances (“Advances”) to
Borrower in an amount outstanding not to exceed at any one time (i) the
Maximum Revolving Amount of Facility A, and (ii) the Maximum Revolving
Amount of Facility B, determined separately for each such Facility A and B. No
Advance, or combination of Advances under Facility A for one purpose or
property, shall exceed Five Million Dollars ($5,000,000). Advances shall be made
by the Borrower’s delivery to the Agent of an Advance Request Form and
Disbursement Letter not later than 11:00 a.m. (Los Angeles time) on the
Business Day before the date on which the Borrower requests the Advance.


 


(b)          Amounts borrowed
pursuant to this Section 2.1 may be repaid and, subject to the
terms and conditions of this Agreement, reborrowed at any time during the term
of this Agreement.


 


(c)           No Advance shall be
made in an amount less than One Hundred Thousand Dollars ($100,000).


 


2.2                             Interest Rates,
Payments, and Calculations.


 


(a)           Facility A Interest
Rate. Except as provided in clause (c) below, Advances under Facility A
shall bear interest on the Daily Balance at a per annum rate equal to Borrower’s
choice of(A) the sum of 0.50% plus
the Prime Rate, or (B) the sum of(a) 3.00% and (b) the one (1),
two (2), three (3), six (6) or twelve (12) month LIBOR Rate. Borrower
shall identify in writing, from time to time, which of such interest rates
Borrower desires to apply with respect to all or any portion of the Facility A
outstanding balance by completing and submitting to Agent a LIBOR Notice.


 


(b)          Facility B Interest
Rate. Except as provided in clause (e) below, 


 


11

















 


Advances under Facility B shall bear interest on the
Daily Balance at a per annum rate equal to Borrower’s choice of (A) the
Prime Rate, or (B) the sum of (a) 2.50%
and (b) the one (1), two (2), three (3), six (6) or twelve
(12) month LIBOR Rate. Borrower shall identify in writing, from time to time,
which of such interest rates Borrower desires to apply with respect to all or
any portion of the Facility B outstanding balance by completing and submitting
to Agent a LIBOR Notice.


 


(c)                              Default Rate.
Upon the occurrence and during the continuation of an Event of Default, all
Obligations shall bear interest on the Daily Balance at a per annum rate equal
to 5.00% above the Reference
Rate.


 


(d)                             Payments.


 


(i)                                 Interest
payable hereunder on each of Facility A and Facility B shall be due and
payable, in arrears, on the fifth (5th)
day of each calendar month during the term hereof Borrower hereby
authorizes Banks, at their option, without prior notice to Borrower, to charge
such interest, all Bank Expenses (as and when incurred), the fees and charges
provided for in Section 2.6 and elsewhere in this Agreement (as and
when accrued or incurred), and all other payments due under any Loan Document
to Borrower as an Advance under this Agreement, which amounts thereafter shall
accrue interest at the rate then applicable to Advances hereunder. Any interest
not paid when due shall be compounded and shall thereafter accrue interest at
the rate then applicable to Advances hereunder.


 


(ii)                              Advance Limits;
Principal Repayment. No Advance or combinations of Advances under
Facility A for one (1) purpose or property shall exceed the amount of Five
Million Dollars ($5,000,000) and shall be conditioned on and subject to a
repayment schedule (which includes the source and timing of such repayment)
mutually agreed upon by Borrower and Agent (the “Repayment Schedule”)
with respect to each Advance. Principal under the Facility A Note shall be
repaid on the earlier of:


 


(A)          The date required by
the applicable Repayment Schedule for each Advance;


 


(B)          Upon the closing of
any sale, refinance or Equity Infusion with respect to any asset purchased with
Facility A Advances in an amount equal to such Advances;


 


(C)          Twenty-four (24)
months after the date of each Advance made by Banks; or


 


(D)          The Maturity Date.


 


(iii)                           Without notice,
Borrower shall repay the entire principal balance of Facility B at least once
each calendar year and shall maintain such Facility B at a zero balance for at
least thirty (30) consecutive calendar days thereafter.


 


12

















 


(iv) Prepayment. If a LIBOR Rate Loan is prepaid prior to the end
of the Loan Period for such loan, whether voluntarily or because prepayment is
required due to the Note maturing or due to acceleration of the Note upon
default or otherwise, the Borrower agrees to pay all of the Bank Costs,
expenses and Interest Differential (as determined by the Agent) incurred as a
result of such prepayment. The term “Interest Differential” shall mean
that sum equal to the greater of zero or the financial loss incurred by the
Banks resulting from prepayment, calculated as the difference between the
amount of interest the Banks would have earned (from like investments in the
money markets, as determined by Agent, as of the first day of the LIBOR Rate
Loan) had prepayment not occurred and the interest the Banks will actually earn
(from like investments in the money markets as of the date of prepayment) as a
result of the redeployment of funds from the prepayment. Because of the
short-term nature of this facility, the Borrower agrees that the Interest
Differential shall not be discounted to its present value. Any prepayment of a
LIBOR Rate Loan shall be in an amount equal to the remaining entire principal
balance of such Loan.


 


(e)                                LIBOR Rate
Unavailable or Unascertainable. If for any reason (i) deposits are not
available to the Lenders in the relevant market or, (ii) by reasons of
circumstances affecting the relevant market, adequate and reasonable means do
not exist for ascertaining the LIBOR Rate, or (iii) it becomes unlawful or
impracticable to make or maintain Advances accruing interest at the LIBOR Rate,
or (iv) as a result of any change in law, the cost to any Lender of making
or maintaining Advances accruing at the LIBOR Rate is increased, or (v) at
any time that an Event of Default of exists, or (vi) an insufficient
number of days remain from the date the Advance is requested to be made or
continued until the Maturity Date to constitute a Loan Period, then in each
such ease, upon the Borrower’s receipt of notice thereof from the Agent, the
rate of interest thereafter applicable to outstanding Advances shall be, (x) with
respect to Facility A, the sum of 0.30% plus the Prime Rate, or (y) with
respect to Facility B, the Prime Rate.


 


(f)                             Computation.
All interest and fees chargeable under the Loan Documents shall be computed on
the basis of a three hundred sixty (360) day year for the actual number of days
elapsed.


 


(g)                          Intent to Limit
Charges to Maximum Lawful Rate. In no event shall the interest rate or rates
payable under this Agreement, plus any other amounts paid in connection
herewith, exceed the highest rate permissible under any law that a court of
competent jurisdiction shall, in a final determination, deem applicable.
Borrower and Banks, in executing and delivering this Agreement, intend legally
to agree upon the rate or rates of interest and manner of payment stated within
it; provided, however, that, anything contained herein to
the contrary notwithstanding, if said rate or rates of interest or manner of
payment exceeds the maximum allowable under applicable law, then, ipso facto as
of the date of this Agreement, Borrower is and shall be liable only for the
payment of such maximum as allowed by law, and all payment received from
Borrower in excess of such legal maximum, whenever received, shall be applied
to reduce the principal balance of the Obligations to the extent of such
excess.


 


2.3          Crediting Payments;
Application of Collections. The receipt of any payments by Banks from Borrower
shall be applied provisionally to reduce the Obligations 


 


13

















 


outstanding under Section 2.1, but shall
not be considered a payment on account unless such payment item is a wire
transfer of immediately available federal funds and is made to Banks in
accordance with wiring instructions issued by Banks to Borrower or unless and
until such payment is honored when presented for payment. Should any payment to
Banks not be honored when presented for payment, then Borrower shall be deemed
not to have made such payment, and interest shall be recalculated accordingly.
Anything to the contrary contained herein notwithstanding, any payment shall be
deemed received by Banks only if it is received by Agent on a Business Day on
or before (i) 11:00 a.m. (Los Angeles time) for regular payments or
deposits and (ii) 9:30 a.m. California time for payments or deposits
covering overdrafts. If any payment is received by Agent on a non-Business Day
or after the time specified on a Business Day, it shall be deemed to have been
received by Agent as of the opening of business on the immediately following
Business Day.


 


2.4                               Designated
Account. The Agent is authorized to make the Advances under this Agreement
based upon faxed or other written instructions received from anyone purporting
to be an Authorized Person, or without instructions if pursuant to Section 2.2(d).
Borrower agrees to establish and maintain an account with the Agent for the
purpose of receiving the proceeds of the Advances requested by Borrower and
made by the Agent hereunder. Unless otherwise agreed by the Agent and Borrower,
any Advance requested by Borrower and made by Banks hereunder shall be credited
to Borrower’s account with Agent.


 


2.5                                 Maintenance of
Loan Accounts; Statements of Obligations. Banks shall maintain accounts on
their books in the name of Borrower (the “Loan Accounts”) on which
Borrower will be charged with all Advances made by Banks to Borrower or for
Borrower’s account, including, accrued interest, Bank Expenses, and any other payment
Obligations of Borrower. In accordance with Section 2.3, the Loan
Accounts will be credited with all payments received by Banks from Borrower or
for Borrower’s account. Banks shall render statements regarding the Loan
Accounts to Borrower, including principal, interest, and fees, and including an
itemization of all charges and expenses constituting Bank Expenses owing, and
such statements shall be conclusively presumed to be correct and accurate and
constitute an account stated between Borrower and Banks absent manifest error
and unless, within thirty (30) days after receipt thereof by Borrower, Borrower
shall deliver to Banks written objection thereto describing the error or errors
claimed to be contained in any such statements.


 


2.6                               Fees, Costs,
and Charges. Borrower shall pay to the Agent the following fees:


 


(a)          Annual
Fee. On the Closing Date, and, beginning July 1, 2009 and annually
thereafter on July 1 of each succeeding year during the term of this
Agreement, a fee equal to 0.50% of the Maximum Revolving Amount on each of
Facility A and Facility B.


 


(b)          Financial
Examination, and Documentation Fees. (i) Banks’ out of pocket expenses for
each auditor or other personnel, whether employed by or an independent
contractor to Banks or either of them, plus out-of-pocket expenses for each
financial analysis and examination (i.e., audits or otherwise) of Borrower and
its Subsidiaries or Affiliates in connection therewith.


 


14

















 


(c)          Other
Costs and Charges. All Bank Expenses and other costs, fees, and charges of
every description payable by Borrower to Banks or either of them under this
Agreement.


 


3. CONDITIONS; TERM OF AGREEMENT.


 


3.1                               Conditions
Precedent to the Initial Advance. The obligation of Banks under this Agreement
is subject to the fulfillment, to the satisfaction of Banks and their counsel,
of each of the following conditions on or before July 1, 2008:


 


(a)                              Banks shall
have received each of the following documents, duly executed, and each such
document shall be in full force and effect:


 


(i)           this Agreement duly
executed by Borrower;


 


(ii)          the Advance Request Form and
Disbursement Letter;


 


(iii) any Notes required or provided by Banks for execution by
Borrower to document Facility A and/or Facility B; and


 


(iv) any other instruments required or provided by Banks for
execution by Borrower to document Facility A and/or Facility B.


 


(b)                             Banks shall
have received a certificate from an Authorized Person attesting to the
corporate authorization of Borrower authorizing the execution, delivery, and
performance of this Agreement and the other Loan Documents to which Borrower is
a party and authorizing specific individuals associated with and authorized by
Borrower to execute the same.


 


(c)                              Banks shall
have received copies of Borrower’s Governing Documents, as amended, modified,
or supplemented to the Closing Date, certified by an Authorized Person.


 


(d)                             Banks shall
have received a certificate of insurance, together with the endorsements
thereto, as are required by Section 6.8, the form and substance of
which shall be satisfactory to Banks and their counsel;


 


(e)                              Banks shall
have received satisfactory evidence that all tax returns required to be filed
by Borrower have been timely filed and all taxes upon Borrower or its
properties, assets, income, and franchises (including real property taxes and
payroll taxes) have been paid prior to delinquency, except such taxes that are
the subject of a Permitted Protest; such satisfactory evidence shall be
provided in the form of written certification by Borrower’s Chief Financial
Officer to the effect that the foregoing matters in this paragraph have been
fully satisfied, unless Banks in their discretion shall request further
evidence thereof


 


(f)                                  Borrower shall
have paid (i) the fees payable on the Closing Date 


 


15

















 


and (ii) all expenses of Banks incurred in
connection with the transactions contemplated by this Agreement, including
without limitation asset searches, credit reports, and the fees and expenses of
its outside counsel, as of the Closing Date;


 


(g)          all other documents
and legal matters in connection with the transactions contemplated by this
Agreement shall have been delivered, executed, or recorded and shall be in form
and substance satisfactory to Banks and their counsel;


 


(h)          Banks shall have
given, in their sole discretion, final credit approval of the credit facilities
set forth in this Agreement;


 


(i)            Banks shall have
been satisfied, in their sole discretion, with the results of a review of
Borrower’s most recent interim financial statement;


 


(i)            No adverse changes
in Borrower’s most recent interim financial statement, or in Borrower’s
profits, property, business prospects, or financial condition, shall have
occurred since the Banks’ review of Borrower’s most recent financial statement
for the period ending March 31, 2008;


 


(k)           Banks shall have
completed and been satisfied, in Banks’ sole discretion, with Borrower’s trade,
credit, and background cheeks, conducted by or for Banks, utilizing resources
and data bases selected by Banks;


 


(1)           Banks shall have
received the written opinion of counsel for Borrower, in form and substance
satisfactory to Banks; and


 


3.2                             Conditions
Precedent to all Advances. The following shall be conditions precedent to all
Advances hereunder:


 


(a)           the representations
and warranties contained in this Agreement and the other Loan Documents shall
be true and correct in all respects on and as of the date of each such Advance,
as though made on and as of such date (except to the extent that such
representations and warranties relate solely to an earlier date);


 


(b)          no Default or Event
of Default shall have occurred and be continuing on the date of such Advance,
nor shall either result from the making thereof;


 


(e)          no
injunction, writ, restraining order, or other order of any nature prohibiting,
directly or indirectly, the extending of such credit shall have been issued and
remain in force by any governmental authority against Borrower, Banks, or any
of their Affiliates;


 


(d)          no Change of Control
shall have occurred after the date of this Agreement; and


 


(e)          With
respect to Advances under Facility A, Borrower shall have furnished to Banks,
as and when required, such documentation as may be specified by Banks, by 


 


16

















 


notice given to Borrower, to be furnished in
connection with Advances, including without limitation the items set forth in Schedule
3.2.


 


3.3          Intentionally
Omitted.]


 


3.4          Term. This Agreement
shall become effective upon the execution and delivery hereof by Borrower and
Banks and shall continue in full force and effect for a term ending on the
Maturity Date, unless sooner terminated or extended in writing pursuant to the
terms hereof. The foregoing notwithstanding, Banks shall have the right to
terminate their obligations under this Agreement immediately and without notice
upon the occurrence and during the continuation of an Event of Default.


 


3.5          Early Termination by
Borrower. Borrower has the option, at any time, upon thirty (30) days’ prior
written notice to Banks, to terminate this Agreement by paying to Banks, in
cash, the Obligations in full.


 


4.                                  RIGHT OF
INSPECTION.


 


Banks (through any of their respective officers, employees, or agents)
shall have the right, at any time and from time to time, during of the term of
the transactions contemplated by this Agreement and/or at any time there is any
balance owed to Banks under or in connection with such transactions, upon not
less than 24 hours’ advance written notice, to inspect Borrower’s Books and to
check, test, and evaluate Borrower’s assets in order to verify Borrower’s
financial condition or the amount, quality, value, condition of, or any other
matter relating to, Borrower’s assets of every description.


 


5. REPRESENTATIONS AND WARRANTIES.


 


In
order to induce Banks to enter into this Agreement, Borrower makes the
following representations and warranties which shall be true, correct, and
complete in all respects as of the date hereof, and as of the Closing Date, and
as of the date of the making of each Advance, as though made on and as of such
date (except to the extent that such representations and warranties relate
solely to an earlier date) and such representations and warranties shall survive
the execution and delivery of this Agreement:


 


5.1          No Encumbrances.
Borrower has good and indefeasible title to or leasehold interest in, as the
case may be, its assets, free and clear of Liens except for Permitted Liens.


 


5.2          Equipment. All of the
Equipment is used or held for use in Borrower’s business and is fit for such
purposes.


 


17














 


5.3                               Intentionally
Omitted.


 


5.4                               Schedule of
Indebtedness. The Schedule of Indebtedness attached hereto as Schedule 5.4
contains a true, correct, and complete listing of Borrower’s unsecured
indebtedness and guarantees of unsecured indebtedness, including all secured
indebtedness and all guaranties of secured indebtedness for which the amount of
the debt exceeds the fair market value of the security property (i.e.,
partially secured indebtedness and guarantees of partially secured
indebtedness).


 


5.5                               Location of
Chief Executive Office; FEIN. The chief executive office of Borrower is located
at the address indicated in the preamble to this Agreement and Borrower’s FEIN
is 95-4364537.


 


5.6                               Due
Organization and Qualification; Subsidiaries.


 


(a)           Borrower is duly
organized and existing and in good standing under the laws of Delaware and is
qualified and licensed to do business in, and in good standing in, California
and all other states where such qualification and licensing is required andlor
where the failure to be so qualified or licensed reasonably could be expected
to cause a Material Adverse Change.


 


(b)          Set forth on Schedule
5.6, is a complete and accurate list of Borrower’s direct and indirect
Subsidiaries, showing: (i) the jurisdiction of their incorporation or
formation; (ii) the number of shares of each class of common and preferred
stock authorized for each of such Subsidiaries; and (iii) the number and
the percentage of the outstanding shares of each such class owned directly or
indirectly by Borrower. All of the outstanding capital stock or other capital
ownership interest of each such Subsidiary has been validly issued and is fully
paid and non-assessable.


 


(c)           Except as set forth
on Schedule 5.6, no capital stock (or any securities, instruments, warrants,
options, purchase rights, conversion or exchange rights, calls, commitments or
claims of any character convertible into or exercisable for capital stock) of
any direct or indirect Subsidiary of Borrower is subject to the issuance of any
security, instrument, warrant, option, purchase right, conversion or exchange
right, call, commitment or claim of any right, title, or interest therein or
thereto.


 


5.7                               Due
Authorization; No Conflict.


 


(a)           The execution,
delivery, and performance by Borrower of this Agreement and the Loan Documents
to which it is a party have been duly authorized by all necessary corporate
action.


 


(b)          The execution,
delivery, and performance by Borrower of this Agreement and the Loan Doeun1ents
to which it is a party do not and will not (i) violate any provision of
federal, state, or local law or regulation (including Regulations T, U, and X
of the Federal Reserve Board) applicable to Borrower, the Governing Documents
of Borrower, or any 


 


18

















 


order, judgment, or decree of any court or other
Governmental Authority binding on Borrower, (ii) conflict with, result in
a breach of; or constitute (with due notice or lapse of time or both) a default
under any material contractual obligation or material lease of Borrower, (iii) result
in or require the creation or imposition of any Lien of any nature whatsoever
upon any properties or assets of Borrower, other than Permitted Liens, or (iv) require
any approval of stockholders or any approval or consent of any Person under any
material contractual obligation of Borrower.


 


(e)           The execution,
delivery, and performance by Borrower of this Agreement and the Loan Documents
to which Borrower is a party do not and will not require any registration with,
consent, or approval of, or notice to, or other action with or by, any federal,
state, foreign, or other Governmental Authority or other Person.


 


(d)          This Agreement and
the Loan Documents to which Borrower is a party, and all other documents
contemplated hereby and thereby, when executed and delivered by Borrower will
be the legally valid and binding obligations of Borrower, enforceable against
Borrower in accordance with their respective terms, except as enforcement may
be limited by equitable principles or by bankruptcy, insolvency,
reorganization, moratorium, or similar laws relating to or limiting creditors’
rights generally.


 


5.8                               Litigation.
There are no actions or proceedings pending by or against Borrower or its
directors, officers, or senior executives before any court or administrative
agency and Borrower does not have knowledge or belief of any pending,
threatened, or imminent litigation, governmental investigations, or claims,
complaints, actions, or prosecutions involving Borrower, any of its partners or
any guarantor of the Obligations, except for: (a) ongoing collection
matters in which Borrower is the plaintiff; (b) matters disclosed on Schedule
5.8 and (c) matters arising after the date hereof that, if decided
adversely to Borrower, would not cause a Material Adverse Change.


 


5.9                               No Material
Adverse Change. All financial statements relating to Borrower that have been
delivered by Borrower to Banks have been prepared in accordance with GAAP
(except, in the case of unaudited financial statements, for the lack of
footnotes and being subject to year-end audit adjustments) and fairly present
Borrower’s financial condition as of the date thereof and Borrower’s results of
operations for the period then ended. There has not been a Material Adverse
Change with respect to Borrower since the date of the latest financial
statements submitted to Banks on or before the Closing Date.


 


5.10                         Solvency.
Borrower is Solvent. No transfer of property is being made by Borrower and no
obligation is being incurred by Borrower in connection with the transactions contemplated
by this Agreement or the other Loan Documents with the intent to hinder, delay,
or defraud either present or future creditors of Borrower.


 


5.11                         Employee
Benefits. None of Borrower, any of its Subsidiaries, or any of their ERISA
Affiliates maintains or contributes to any Benefit Plan, other than those
listed on Schedule 5.11. Borrower, each of its Subsidiaries and
each ERISA Affiliate have satisfied the minimum funding standards of ERISA and
the IRC with respect to each Benefit Plan to which it is obligated to
contribute. No ERISA Event has occurred nor has any other event occurred that 


 


19

















 


may result in an ERISA Event that reasonably could
be expected to result in a Material Adverse Change. None of Borrower or its
Subsidiaries, any ERISA Affiliate, or any fiduciary of any Plan is subject to
any direct or indirect liability with respect to any Plan under any applicable
law, treaty, rule, regulation, or agreement. None of Borrower or its
Subsidiaries or any ERISA Affiliate is required to provide security to any Plan
under Section 401(a)(29) of the IRC.


 


5.12                         Maximum Balance
Sheet Leverage. Borrower’s Maximum Balance Sheet Leverage was 0.97:1 as of December 31,2007.


 


5.13                         Minimum Rent
Adjusted Fixed Charge Coverage Ratio. Borrower’s Minimum Rent Adjusted Fixed
Charge Coverage Ratio was 2.74:1 as of December 31, 2007.


 


6. AFFIRMATIVE COVENANTS.


 


Borrower covenants and agrees that, so long as any credit hereunder shall
be available and until full and final payment of the Obligations, Borrower
shall do all of the following:


 


6.1                               Accounting
System. Maintain a standard and modem system of accounting that enables
Borrower to produce financial statements in accordance with GAAP, and maintain
records pertaining to the assets of Borrower and its Subsidiaries or Affiliates
that contain information as from time to time may be requested by Banks.
Borrower also shall keep a modern asset reporting system that shows all purchases,
additions, sales, and dispositions of Borrower’s assets.


 


6.2                               Financial
Covenants. Borrower shall at all times maintain the following financial
covenants:


 


(a)           Minimum Rent
Adjusted Fixed Charge Coverage Ratio. A Minimum Rent Adjusted Fixed Charge
Coverage Ratio of not less than 1.75:1, measured on a four (4) quarter
rolling average basis;


 


(b)          Minimum Liquidity.
The Borrower shall maintain cash, cash equivalents and marketable securities in
the aggregate amount of at least Seven Million Five Hundred Thousand dollars ($7,500,000), tested quarterly;


 


(c)           Maximum Balance
Sheet Leverage. Maximum Balance Sheet leverage not greater than 2.50:1,
measured at the end of each calendar quarter; and


 


(d)          Minimum Net Worth. As
determined in accordance with GAAP, Net Worth equal to or greater than Thirty
Million Dollars ($30,000,000), measured at the end of each calendar quarter.


 


6.3                                                                         Financial
Statements, Reports, Certificates. Deliver or cause to be delivered, to Banks: (a) as
soon as available, but in any event within ninety (90) days after the end of
each fiscal year of Borrower, consolidated and separate financial statements
including a balance sheet, income statement, and statement of cash flow of
Borrower and its Subsidiaries or 


 


20

















 


Affiliates during such period, prepared and audited
by a certified public accounting firm whose identity is approved in advance by
Banks; (b) as soon as available, but in any event within ninety (90) days
after the end of each fiscal quarter of Borrower, consolidated and separate
financial statements of Borrower and its Subsidiaries or Affiliates, prepared
by Borrower or by a certified public accountant firm whose identity is approved
in advance by Banks; (c) as soon as available, but in any event within
thirty (30) days prior to the commencement of each fiscal year of Borrower, an
annual financial projection for such succeeding fiscal year, including a
balance sheet, income statement, and statement of cash flow of Borrower and its
Subsidiaries, or Affiliates during such period, prepared by Borrower or by a
certified public accounting firm whose identity is approved in advance by
Banks; (d) as soon as available, but in any event within fifteen (15) days
after filing with the Securities Exchange Commission, copies of all filings
made by Borrower under the Securities Act of 1934 and the regulations and rules promulgated
thereunder, in electronic and paper form. Each of the items in subsections (a) through
(d), inclusive, above shall be accompanied by a certificate, without any
qualifications, by such accountants or by Borrower (as applicable to the each
document) to have been prepared in accordance with GAAP, together with a
certificate of such accountants addressed to Banks stating that such accountants
do not have knowledge of the existence of any Default or Event of Default. Such
audited financial statements shall include a balance sheet, profit and loss
statement, and statement of cash flow and, if prepared, such accountants’
letter to management. In addition to the financial statements referred to
above, Borrower agrees to deliver to Banks, within the specified time periods,
financial statements prepared on a consolidated basis so as to present Borrower
and each of Borrower’s Subsidiaries or Affiliates on a consolidated basis, and
each such related entity separately.


 


Each
quarter, together with the financial statements provided pursuant to this Section 6.3,
Borrower shall deliver to Banks a Compliance Certificate signed by its chief
financial officer to the effect that: (i) all financial statements
delivered or caused to be delivered to Banks hereunder have been prepared in
accordance with GAAP (except, in the case of unaudited financial statements,
for the lack of footnotes and being subject to year-end audit adjustments) and
fairly present the financial condition of Borrower, (ii) the
representations and warranties of Borrower contained in this Agreement and the
other Loan Documents are true and correct in all material respects on and as of
the date of such certificate, as though made on and as of such date (except to
the extent that such representations and warranties relate solely to an earlier
date), (iii) Borrower is in compliance at the end of such period with the
applicable financial covenants contained in Section 7.19 (and
demonstrating such compliance in reasonable detail), and (iv) on the date
of delivery of such certificate to Banks there does not exist any condition or
event that constitutes a Default or Event of Default (or, in the case of
clauses (i), (ii), or (iii), to the extent of any non-compliance, describing
such non-compliance as to which he or she may have knowledge and what action
Borrower has taken, is taking, or proposes to take with respect thereto).


 


Borrower shall have issued written instructions to its independent
certified public accountants authorizing them to communicate with Banks and to
release to Banks whatever financial information concerning Borrower that Banks
may request. Borrower hereby irrevocably authorizes and directs all auditors,
accountants, or other third parties to deliver to Banks, at Borrower’s expense,
copies of Borrower’s financial statements, papers related thereto, and other 


 


21

















 


accounting records of any nature in their
possession, and to disclose to Banks any information they may at any time have
regarding Borrower’s business affairs and financial conditions.


 


6.4                               Chairman; CEO.
William McMorrow shall at all times remain the Chairman of the Board and Chief
Executive Officer of Borrower.


 


6.5                               Title to
Equipment. Upon Banks’ request, Borrower immediately shall deliver to Banks,
properly endorsed, any and all evidences of ownership of, certificates of
title, or applications for title to any items of Equipment.


 


6.6                               Maintenance of
Equipment. Maintain the Equipment in good operating condition and repair
(ordinary wear and tear excepted), and make all necessary replacements thereto
so that the value and operating efficiency thereof shall at all times be
maintained and preserved. Other than those items of Equipment that constitute
fixtures on the Closing Date, Borrower shall not permit any item of Equipment
to become a fixture to real estate or an accession to other property, and such
Equipment shall at all times remain personal property.


 


6.7                               Taxes. Cause
all assessments and taxes, whether real, personal, or otherwise, due or payable
by, or imposed, levied, or assessed against, Borrower or any of its property to
be paid in full, before delinquency or before the expiration of any extension
period, except to the extent that the validity of such assessment or tax shall
be the subject of a Permitted Protest. Borrower shall make due and timely
payment or deposit of all such federal, state, and local taxes, assessments, or
contributions required of it by law, and will execute and deliver to Banks, on
demand, appropriate certificates attesting to the payment thereof or deposit
with respect thereto. Borrower will make timely payment or deposit of all tax
payments and withholding taxes required of it by applicable laws, including
those laws concerning F.I.C.A., F.U.T.A., state disability, and local, state,
and federal income taxes, and will, upon request, furnish Banks with proof
satisfactory to Banks indicating that Borrower has made such payments or
deposits.


 


6.8                               Insurance.


 


(a)           (i) At its
expense, keep the assets of Borrower and its Subsidiaries or Affiliates insured
against loss or damage by fire, theft, explosion, sprinklers, and all other
hazards and risks, and in such amounts, as are ordinarily insured against by
other owners in similar businesses. (ii) Borrower also shall maintain
business interruption, and product liability insurance relating to Borrower’s
ownership and use of such assets, as well as insurance against larceny,
embezzlement, and criminal misappropriation. (iii) Borrower shall also
maintain commercial general liability insurance with minimum limits of Ten
Million Dollars ($10,000,000) per occurrence and in the aggregate.


 


(b)          All such policies of
insurance shall be in such form, with such companies, with such deductibles or
retention amounts, and such endorsements, and in such amounts, as may be
reasonably satisfactory to Banks. All insurance required herein shall be
written by companies which are acceptable to Banks. Borrower shall deliver to
Banks certified copies of such policies of insurance, and all renewals and
replacements thereof, and evidence of 


 


22

















 


the payment of all premiums therefore.


 


6.9                               No Setoffs or
Counterclaims. Make payments hereunder and under the other Loan Documents by or
on behalf of Borrower without setoff or counterclaim and free and clear of, and
without deduction or withholding for or on account of, any federal, state, or local
taxes.


 


6.10                         Dispositions at
Fair Market Consideration. Sell or otherwise dispose of property of the
Borrower only for fair market consideration.


 


6.11                         Compliance with
Laws. Substantially comply with the requirements of all applicable laws, rules,
regulations, and orders of any governmental authority, including the Fair Labor
Standards Act and the Americans With Disabilities Act, other than laws, rules,
regulations, and orders the non-compliance with which, individually or in the
aggregate, would not have and could not reasonably be expected to cause a
Material Adverse Change.


 


6.12                         Employee
Benefits.


 


(a)          Deliver
to Banks: (i) promptly, and in any event within ten (10) Business
Days after Borrower or any of its Subsidiaries knows or has reason to know that
an ERISA Event has occurred that reasonably could be expected to result in a
Material Adverse Change, a written statement of the chief financial officer of
Borrower describing such ERISA Event and any action that is being taking with
respect thereto by Borrower, any such Subsidiary or ERJSA Affiliate, and any
action taken or threatened by the IRS, Department of Labor, or PBGC. Borrower
or such Subsidiary, as applicable, shall be deemed to know all facts known by
the administrator of any Benefit Plan of which it is the plan sponsor, (ii) promptly,
and in any event within three (3) Business Days after the filing thereof
with the IRS, a copy of each funding waiver request filed with respect to any
Benefit Plan and all communications received by Borrower, any of its
Subsidiaries or, to the knowledge of Borrower, any ERISA Affiliate with respect
to such request, and (iii) promptly, and in any event within three (3) Business
Days after receipt by Borrower, any of its Subsidiaries or, to the knowledge of
Borrower, any ERISA Affiliate, of the PBGC’s intention to terminate a Benefit
Plan or to have a trustee appointed to administer a Benefit Plan, copies of
each such notice.


 


(b)           Cause to be delivered to Banks, upon
Banks’ or either of their request, each of the following: (i) a copy of
each Plan (or, where any such plan is not in writing, complete description
thereof) (and if applicable, related trust agreements or other funding
instruments) and all amendments thereto, all written interpretations thereof
and written descriptions thereof that have been distributed to employees or
former employees of Borrower or its Subsidiaries; (ii) the most recent
determination letter issued by the IRS with respect to each Benefit Plan; (iii) for
the three (3) most recent plan years, annual reports on Form 5500 Series required to be filed
with any governmental agency for each Benefit Plan; (iv) all actuarial
reports prepared for the last three (3) plan years for each Benefit Plan; (v) a
listing of all Multiemployer Plans, with the aggregate amount of the most
recent annual contributions required to be made by Borrower or any ERISA
Affiliate to each such plan and copies of the collective bargaining agreements
requiring such contributions; (vi) any information that has been provided to



 


23

















 


Borrower or any ERISA Affiliate regarding
withdrawal liability under any Multiemployer Plan; and (vii) the aggregate
amount of the most recent annual payments made to former employees of Borrower
or its Subsidiaries under any Retiree Health Plan.


 


6.13                         Compliance with
Leases. Pay when due all rents and other amounts payable under any leases to
which Borrower is a party or by which Borrower’s properties and assets are
bound, unless such payments are the subject of a Permitted Protest. To the
extent that Borrower fails timely to make payment of such rents and other
amounts payable when due under its leases, Banks shall be entitled, in their
discretion, to reserve an amount equal to such unpaid amounts against Facility
A or Facility B.


 


7. NEGATIVE COVENANTS.


 


Borrower covenants and agrees that, so long as any credit hereunder
shall be available and until full and final payment of the Obligations,
Borrower will not do any of the following:


 


7.1                               Indebtedness.
Create, incur, assume, permit, guarantee, or otherwise become or remain,
directly or indirectly, liable with respect to any Indebtedness, except:


 


(a) Indebtedness evidenced by this
Agreement;


 


(b) Indebtedness set forth on Schedule
5.4


 


(c)          Indebtedness
fully secured by Permitted Liens or by Liens described in Section 7.2(u)


 


(d)          a
guarantee obligation in connection with an exchange permitted under Section 1031
of the IRC;


 


(e)          refinancings,
renewals, or extensions of Indebtedness permitted under clauses (b), (e), (f),
or (g) of this Section 7.1 (and continuance or renewal of any
Permitted Liens associated therewith) so long as: (i) the terms and
conditions of such refinancings, renewals, or extensions do not materially
impair the prospects of repayment of the Obligations by Borrower, (ii) to
the extent that the Indebtedness that is refinanced was subordinated in right
of payment to the Obligations, then the subordination terms and conditions of
the refinancing Indebtedness must be at least as favorable to Banks as those
applicable to the refinanced Indebtedness, and (iii) if and to the extent
any such refinancings, renewals or extensions are for assets acquired, sold,
refinanced, or funded by an Equity Infusion, the original amount of the Advance
corresponding to such asset shall be repaid to Lender concurrently with such
refinancing, extension or renewal;


 


(1)          non-recourse
debt incurred by Borrower as a portion of Borrower’s purchase price of (i) real
property, or (ii) pools of notes fully secured by liens on real property;
and(g) debt which is recourse to or guaranteed by Borrower, where such
debt is incurred or assumed by Borrower or Borrower’s Subsidiaries or
Affiliates and fully secured by (i) real property, or (ii) pools of
notes fully secured by liens on real property;


 


(g)          financing
or refinancing of any real property or pool of notes now 


 


24

















 


or hereafter owned by Borrower, and fully secured
thereby;


 


(h)         additional senior indebtedness up to One Million Dollars
($1,000,000), so long as all such additional senior indebtedness is for a term
which extends beyond the Maturity Date, provided, that all indebtedness
permitted by this paragraph shall satisfy all other applicable requirements of
this Agreement;


 


(i)          a guaranty of any indebtedness of any Person or Persons up
to One Million Dollars ($1,000,000) in the aggregate, provided, that all
guaranties permitted by this paragraph shall satisfy all other applicable
requirements of this Agreement; and


 


All indebtedness described in subsections (a) through (i) above
must also satisfy all other applicable requirements of this Agreement.


 


7.2          Liens. Create, incur,
or permit to exist, directly or indirectly, any Lien on or with respect to any
of its property or assets, of any kind, whether now owned or hereafter
acquired, or any income or profits therefrom, except for (i) Permitted
Liens (including Liens that are replacements of Permitted Liens to the extent
that the original Indebtedness is refinanced under Section 7.1(e) and
so long as the replacement Liens only encumber those assets or property that
secured the original Indebtedness), or (ii) Liens given to vendors or
lenders to enable Borrower to acquire real property or pools of notes secured
by real property after the date of this Agreement and fully secured exclusively
by the property so acquired.


 


7.3          Restrictions on
Fundamental Changes. Enter into any merger, consolidation, reorganization, or
recapitalization, or reclassify its capital stock, or liquidate, wind up, or
dissolve itself (or suffer any such event), or reincorporate in a different
jurisdiction or (except as otherwise provided in Section 7.4)
convey, sell, assign, lease, transfer, or otherwise dispose of, in a single
transaction or a series of transactions, all or any substantial part of its
property or assets.


 


7.4          Disposal of Assets.
Sell, lease, assign, transfer, or otherwise dispose of any of Borrower’s
properties or assets other than sales in the ordinary course of Borrower’s
business as currently conducted.


 


7.5          Change Name. Change
Borrower’s name, FEIN, corporate structure (within the meaning of the Code), or
identity.


 


7.6          Guaranty. Guaranty or
otherwise become in any way liable with respect to the obligations of any third
Person except (a) by endorsement of instruments or items of payment for
deposit to the account of Borrower or which are transmitted or turned over to
Banks, or (b) as permitted by Section 7.1.


 


7.7          Nature of Business.
Make any change in the principal nature of Borrower’s business.


 


7.8          Prepayments and
Amendments.


 


25

















 


(a)           Except in connection
with (i) a refinancing permitted by Section 7.1(e), or (ii) a
purchase (for investment or sale) of pools of notes secured by real property,
prepay, redeem, retire, defease, purchase, or otherwise acquire any
Indebtedness owing to any third Person, other than the Obligations in
accordance with this Agreement, and


 


(b)          Directly or
indirectly, amend, modify, alter, increase, or change, materially and
adversely, any of the terms or conditions of any agreement, instrument,
document, indenture, or other writing evidencing or concerning Indebtedness
permitted under Sections 7.1(b), (c), (d\ or (e).


 


7.9                               Change of
Control. Cause, permit, or suffer, directly or indirectly, any Change of
Control.


 


7.10                         Intentionally
Omitted.


 


7.11                         Accounting
Methods. Modify or change its method of accounting or enter into, modify, or
terminate any agreement currently existing, or at any time hereafter entered
into with any third party accounting firm or service bureau for the preparation
or storage of Borrower’s accounting records without said accounting firm or
service bureau agreeing to provide Banks information regarding the assets of
Borrower and its Subsidiaries or Affiliates or Borrower’s financial condition.
Borrower waives the right to assert a confidential relationship, if any, it may
have with any accounting firm or service bureau in connection with any
information requested by Banks pursuant to or in accordance with this
Agreement, and agrees that Banks may contact directly any such accounting firm
or service bureau in order to obtain such information.


 


7.12                         Investments.
Directly or indirectly make, acquire, or incur any liabilities (including
contingent obligations), other than those under this Agreement, for or in
connection with (a) the acquisition of the securities (whether debt or
equity) of, or other interests in, a Person, (b) loans, advances, capital
contributions, or transfers of property to a Person; provided, that such
loans, advances and capital contributions would be permitted so long as
immediately before and after each such loan, advance, or capital contribution
no Event of Default exists or results, or (c) the acquisition of all or
substantially all of the properties or assets of a Person.


 


7.13                         Transactions
with Affiliates. Directly or indirectly enter into or permit to exist any
material transaction with any Affiliate of Borrower except for transactions
that are in the ordinary course of Borrower’s business, upon fair and
reasonable terms, that are fully disclosed to Banks, and that are no less
favorable to Borrower than would be obtained in an arm’s length transaction
with a non-Affiliate.


 


7.14                         Suspension.
Suspend or go out of a substantial portion of its business.


 


7.15                         Intentionally
Omitted.


 


26

















 


7.16                         Use of
Proceeds. Use the proceeds of the Advances made hereunder for any purpose other
than (i) on the Closing Date, to pay sums due the Banks for transactional
costs and expenses under or in connection with this Agreement, and (ii) thereafter,
consistent with the terms and conditions hereof, in the case of Facility A, to
finance Borrower’s acquisition of real property or pools of notes secured by
real property, and in the case of Facility B, to provide working capital for
Borrower.


 


7.17                         Change in
Location of Chief Executive Office Equipment with Bailees. Relocate its chief
executive office to a new location without providing thirty (30) days’ prior
written notification thereof to Banks and so long as, at the time of such
written notification, Borrower also provides to Banks an Asset Access Agreement
with respect to such new location. The Equipment shall not at any time now or
hereafter be stored with a bailee, warehouseman, or similar party without Banks’
prior written consent.


 


7.18 Intentionally Omitted.


 


7.19 Intentionally Omitted.


 


7.20        Downstreaming of
Funds. Borrower shall not (i) pay, apply, transfer, disburse, credit, or
otherwise permit any portion of Facility A or Facility B nor (ii) make or
extend any loan or guaranty, to or for the benefit of Kennedy-Wilson Japan and
subsidiaries (including without limitation Kennedy-Wilson Japan Co., Ltd. and
Kennedy-Wilson Japan K.K.).


 


7.21        Excessive Acquisitions.
Borrower shall make no corporate acquisitions without the prior written consent
of Banks; provided, that any such acquisitions approved by Banks shall satisfy
all other applicable requirements of this Agreement.


 


7.22        Intentionally Omitted.


 


7.23        Dividends. Borrower
shall not declare or pay corporate dividends without the prior written consent
of Banks; provided that any corporate dividends approved by Banks shall satisfy
all other applicable requirements of this Agreement.


 


7.24        Stock Repurchases. Borrower
shall not purchase or repurchase any corporate stock of Borrower or Borrower’s
Subsidiaries or Affiliates, unless, at the time of any such repurchase (i) there
exists no Event of Default, (ii) Borrower is in strict compliance with all
covenants contained herein, (iii) Borrower demonstrates, to the reasonable
satisfaction of Bank, that Borrower shall remain in compliance with the
covenants contained herein for the twelve (12) months following such
repurchase, and (iv) Borrower provides the Agent with such updated
financial projections as the Agent shall reasonably require, which projections
shall be reasonably satisfactory to the Agent in all material respects.


 


8. EVENTS OF DEFAULT.


 


Any one or more of the following events shall constitute an event of
default (each, an “Event of  Default”) under this Agreement:


 


27














 


8.1                               Failure to Make
Payment. If Borrower fails to pay when due and payable, or when declared due
and payable, any portion of the Obligations (whether of principal, interest
(including any interest which, but for the provisions of the Bankruptcy Code,
would have accrued on such amounts), fees and charges due Banks, reimbursement
of Bank Expenses, or other amounts constituting Obligations);


 


8.2                               Failure to
Perform. If Borrower fails to perform, keep, or observe any material term,
provision, condition, covenant, or agreement contained in this Agreement, in
any of the Loan Documents, or in any other present or future agreement between
Borrower and Banks or either of them;


 


8.3                               Material
Adverse Change. If there is a Material Adverse Change;


 


8.4                               Attachment or
Other Process. If any material portion of Borrower’s properties or assets is
attached, seized, subjected to a writ or distress warrant, or is levied upon,
or comes into the possession of any third Person;


 


8.5                               Insolvency
Proceeding by Borrower. If an Insolvency Proceeding is commenced by Borrower;


 


8.6                               Insolvency
Proceeding Against Borrower. If an Insolvency Proceeding is commenced against
Borrower and any of the following events occur: (a) Borrower consents to
the institution of the Insolvency Proceeding against it; (b) the petition
commencing the Insolvency Proceeding is not timely controverted; (c) the
petition commencing the Insolvency Proceeding is not dismissed within forty
five (45) calendar days of the date of the filing thereof; provided,  however,
that, during the pendency of such period, Banks shall be relieved of their
obligation to extend credit hereunder; (d) an interim trustee is appointed
to take possession of all or a substantial portion of the properties or assets
of, or to operate all or any substantial portion of the business of, Borrower;
or (e) an order for relief shall have been issued or entered therein;


 


8.7                               Injunction or
Other Process. If Borrower is enjoined, restrained, or in any way prevented by
court order from continuing to conduct all or any material part of its business
affairs;


 


8.8                               Lien or Other
Process. If a notice of Lien, levy, or assessment is filed of record with
respect to any of Borrower’s properties or assets by the United States
Government, or any federal, state, local, or other Governmental Agency, or if
any taxes or debts owing at any time hereafter to any one or more of such
entities becomes a Lien, whether choate or otherwise, upon any of Borrower’s
properties or assets and the same is not paid on the payment due date thereof;


 


8.9                               Judgment or
Claim, Lien. If a judgment or other claim becomes a material Lien or
encumbrance upon any portion of Borrower’s properties or assets;


 


8.10                         Defaults in
Material Agreement. If there is a default in any material


 


28

















 


agreement to which Borrower is a party with
one or more third Persons and such default (a) occurs at the final
maturity of the obligations thereunder, or (b) results in a right by such
third Person(s), irrespective of whether exercised, to accelerate the maturity
of Borrower’s obligations thereunder;


 


8.11                         Payment on
Subordinated Indebtedness. If Borrower makes any payment on account of
Indebtedness that has been contractually subordinated in right of payment to
the payment of the Obligations, except to the extent such payment is permitted
by the terms of the subordination provisions applicable to such Indebtedness;
or


 


8.12                         Misstatements
and Misrepresentations. If any material misstatement or misrepresentation
exists now or hereafter in any warranty, representation, statement, or report
made to Banks by Borrower or any officer, employee, agent, or director of
Borrower, or if any such warranty or representation is withdrawn.


 


8.13                         Other Events of
Default. If an Event of Default as defined elsewhere in the Loan Documents
shall occur.


 


8.14                         Cure Period,
Notice to Cure.


 


(a)          Notwithstanding
anything contained in this Article 8 to the contrary, Banks shall
refrain from exercising their rights and remedies and an Event of Default shall
not be deemed to have occurred by reason of the occurrence of any of the events
set forth in Sections 8.3, 8.4, 8.7. 8.8. 8.9, or 8.10 if, within
fifteen (15) calendar days from the date thereof (the “Cure Period”),
the same is released, discharged, dismissed, bonded against or satisfied.


 


(b)          In addition, with
respect to an Event of Default set forth in Sections 8.3. 8.4. 8.7, or
8.8, and provided the Borrower has given Notice (“Notice of Occurrence”)
to Banks not later than three (3) Business Days after the occurrence of
one or more of the Events of Default set forth in those subsections, the Cure
Period shall begin on the date the Agent or the Banks, or either of them, gives
to the Borrower a Notice to cure such Event of Default (the “Notice to Cure”).
Provided, however, that if Borrower fails for any reason to give such Notice of
Occurrence within such three (3) Business Day period, no Notice to Cure
shall be required and the Agent or the Banks, or either of them, may pursue all
available remedies without Notice.


 


(c)           No Notice to Cure
shall be applicable or required with respect to an Event of Default under this
Agreement except as specified in Section 8.14(b), and shall
specifically not be required with respect to an Event of Default specified in Section 8.1.
8.2. 8.5, 8.6, 8.9, 8,10, 8.11, or 8.12.


 


(d)          No Cure Period shall
be applicable or required with respect to any Event of Default under this
Agreement except as specified in Section 8.6 or 8.I4(b\ and
shall specifically not be applicable or required with respect to an Event of
Default specified in Section 8.1, 8.2, 8.5. 8.6 (except as
specified therein), 8.11, or


 


(e)          Notwithstanding
any other provision of this Agreement, any Event 


 


29

















 


of Default specified in Section 8.1, 8.2.
8.4, 8.5. 8.6 (except as specified therein), or jfl shall conclusively be
deemed a material default.


 


(I)           With regard (i) the
date Notice to cure (“Notice to Cure Default”) is sent to Borrower by
Agent or Banks, or either of them, provided Borrower has given Notice (“Notice
of Occurrence”) to Banks not later than three (3) business days after
the occurrence of one or more of the events set forth in those subsections, the
fifteen (15) day period shall begin to run. In the event Borrower fails to give
such Notice of Occurrence within such three (3) day period, Agent and
Banks shall not be required to give Notice to Cure Default and may immediately
proceed with all available remedies.


 


9. BANKS’ RIGIITS AND REMEDIES.


 


9.1                               Rights and
Rcmedies. Upon the occurrence, and during the continuation, of an Event of
Default Banks may, at their or either of their election, without notice of such
election and without demand, do any one or more of the following, all of which
are authorized by Borrower:


 


(a)          Declare
all Obligations, whether evidenced by this Agreement, by any of the other Loan
Documents, or otherwise, immediately due and payable;


 


(b)          Cease making Advances
or extending credit to or for the benefit of Borrower under this Agreement,
under any of the Loan Documents, or under any other agreement between Borrower
and Banks;


 


(c)          Terminate
this Agreement and any of the other Loan Documents as to any future liability
or obligation of Banks, but without affecting Banks’ rights and without
affecting the Obligations;


 


(d)          Settle or adjust
disputes and claims directly with Account Debtors for amounts and upon tenns
which Banks considers advisable, and in such cases, Banks will credit Borrower’s
Loan Accounts with only the net amounts received by Banks in payment of such
disputed Accounts after deducting all Bank Expenses incurred or expended in
connection therewith;


 


(e)          Without
notice to or demand upon Borrower or any guarantor, make such payments and do
such acts as Banks considers necessary or reasonable to protect Banks’ rights.
Borrower agrees to make available for inspection, at any time during regular
business hours on a Business Day, by Banks or Banks’ designees any of the
assets of Borrower and its Subsidiaries or Affiliates. With respect to any of
Borrower’s owned or leased properties, Borrower hereby grants Banks a license
to enter into and inspect any such premises and to exercise any of Banks’
rights or remedies provided herein, at law, in equity, or otherwise; and


 


(1)          Without
notice to Borrower (such notice being expressly waived), and without
constituting a retention of any collateral in satisfaction of an obligation
(within the meaning of the Code), set off and apply to the Obligations any and
all (i) balances and deposits 


 


30

















 


of Borrower held by Banks, or (ii) indebtedness
at any time owing to or for the credit or the account of Borrower held by
Banks.


 


9.2                                 Remedies
Cumulative.      Banks’ rights and remedies under
this Agreement, the Loan Documents, and all other agreements shall be
emulative. Banks shall have all other rights and remedies not inconsistent
herewith as provided under the Code, by law, or in equity. No exercise by Banks
of any right or remedy shall be deemed an election, and no waiver by Banks of
any Event of Default shall be deemed a continuing waiver. No delay by Banks
shall constitute a waiver, election, or acquiescence by them.


 


10. TAXES AND EXPENSES.


 


If Borrower fails to pay any monies (whether taxes, assessments,
insurance premiums, or, in the case of leased properties or assets, rents or
other amounts payable under such leases) due to third Persons, or fails to make
any deposits or furnish any required proof of payment or deposit, all as
required under the terms of this Agreement, then, to the extent that Banks
determine that such failure by Borrower could result in a Material Adverse
Change, in its discretion and without prior notice to Borrower, Banks may do
any or all of the following: (a) make payment of the same or any part
thereof~ (b) set up such reserves in Borrower’s Loan Accounts as Banks or
either of them deem necessary to protect Banks from the exposure created by
such failure; or (c) obtain and maintain insurance policies of the type
described in Section 6.8, and take any action with respect to such
policies as Banks deem prudent. Any such amounts paid by Banks shall constitute
Bank Expenses. Any such payments made by Banks shall not constitute an
agreement by Banks to make similar payments in the future or a waiver by Banks
of any Event of Default under this Agreement. Banks need not inquire as to, or
contest the validity of, any such expense, tax, or Lien and the receipt of the
usual official notice for the payment thereof shall be conclusive evidence that
the same was validly due and owthg.


 


11. WAIVERS; INDEMNIFICATION,


 


11.1        Demand;
Protest; etc. Borrower waives demand, protest, notice of protest,
notice of default or dishonor, notice of payment and nonpayment, nonpayment at
maturity, release, compromise, settlement, extension, or renewal of accounts,
documents, instruments, chattel paper, and guarantees at any time held by Banks
on which Borrower may in any way be liable.


 


11.2        Intentionally Omitted.


 


11.3        Indemnification.
Borrower shall pay, indemnify, defend, and hold Banks, each Participant, and
each of their respective officers, directors, employees, counsel, agents, and
attorneys-in-fact (each, an “Indemnified Person”) harmless (to the
fullest extent permitted by law) from and against any and all claims, demands,
suits, actions, investigations, proceedings, and damages, and all reasonable
attorneys’ fees and disbursements and other costs and expenses actually
incurred in connection therewith (as and when they are incurred and
irrespective of whether suit is brought), at any time asserted against, imposed
upon, or incurred by any of them in connection with or as a result of or
related to the execution, delivery, enforcement, 


 


31

















 


performance, and administration of this
Agreement and any other Loan Documents or the transactions contemplated herein,
and with respect to any investigation, litigation, or proceeding related to
this Agreement, any other Loan Document, or the use of the proceeds of the
credit provided hereunder (irrespective of whether any Indemnified Person is a
party thereto), or any act, omission, event or circumstance in any manner
related thereto (all the foregoing, collectively, the “Indemnified
Liabilities”). Borrower shall have no obligation to any Indemnified Person
under this Section 11.3 with respect to any Indemnified Liability
that a court of competent jurisdiction finally determines to have resulted from
the gross negligence or willful misconduct of such Indemnified Person. This
provision shall survive the termination of this Agreement and the repayment of
the Obligations.


 


12. NOTICES.


 


Unless otherwise provided in this Agreement, all notices or demands by
any party relating to this Agreement or any other Loan Document shall be in
writing and (except for financial statements and other informational documents
which may be sent by first-class mail, postage prepaid) shall be personally
delivered or sent by registered or certified mail postage prepaid, return
receipt requested), overnight courier, or telefacsimile to Borrower or to
Banks, as the case may be, at its address set forth below:


 


	
  If to Borrower:

  	
   

  	
  KENNEDY-WILSON,
  INC.

  
	
   

  	
   

  	
  9601
  Wilshire Boulevard, Suite 220

  
	
   

  	
   

  	
  Beverly
  Hills, California 90210

  
	
   

  	
   

  	
  Attn:
  Freeman Lyle, EVP/CFO/Seeretary

  
	
   

  	
   

  	
  Fax
  No. (310) 887-6454

  
	
   

  	
   

  	
   

  
	
  with copies to:

  	
   

  	
  KULLK,
  GOTTESMAN & MOUTON, LLP

  
	
   

  	
   

  	
  15303
  Ventura Boulevard, Suite 1400

  
	
   

  	
   

  	
  Sherman
  Oaks, California 91403

  
	
   

  	
   

  	
  Attn:
  Kent Y. Mouton, Esq.

  
	
   

  	
   

  	
  Fax
  No. (310) 557-0224

  
	
   

  	
   

  	
   

  
	
  If to U.S. Bank:

  	
   

  	
  U.S.
  BANK NATIONAL ASSOCIATION

  
	
   

  	
   

  	
  633
  West 5th  Street

  
	
   

  	
   

  	
  30th Floor

  
	
   

  	
   

  	
  Los
  Angeles, California 90071

  
	
   

  	
   

  	
  Attn:
  Linda Morgan, Vice President

  
	
   

  	
   

  	
  Fax
  No. (213) 615-6792

  
	
   

  	
   

  	
   

  
	
  with copies to:

  	
   

  	
  RUTAN
  AND TUCKER LLP

  
	
   

  	
   

  	
  611 Anton Blvd., Suite 1400

  
	
   

  	
   

  	
  Costa Mesa, CA 92626

  
	
   

  	
   

  	
  Atm:
  Bob L. Hagle, Esq.

  
	
   

  	
   

  	
  Fax
  No. (714) 546-9035

  
	
   

  	
   

  	
   

  
	
  If to East-West Bank:

  	
   

  	
  EAST-WEST
  BANK

  
	
   

  	
   

  	
  135
  N. Los Robles Avenue

  
	
   

  	
   

  	
  2nd Floor

  
	
   

  	
   

  	
  Pasadena,
  CA 91101

  
	
   

  	
   

  	
  Atth: Kathy Kwan, Vice
  President

  
	
   

  	
   

  	
  Fax No. (626)
  817-8869

  



 


32

















 


	
  with copies to:

  	
   

  	
  NEVERS,
  PALAZZO, MADDUX & PACKARD

  
	
   

  	
   

  	
  3
  1248 Oak Crest Drive, Suite 100

  
	
   

  	
   

  	
  Westlake
  Village, California 91361

  
	
   

  	
   

  	
  Attn:
  Carisle Packard, Esq.

  
	
   

  	
   

  	
  Fax No.: (818) 879-9680

  



 


The parties hereto may change the address at which
they are to receive notices hereunder, by notice in writing in the foregoing
manner given to the other. All notices or demands sent in accordance with this Section 12
shall be deemed received on the earlier of the date of actual receipt or three (3) days
after the deposit thereof in the U.S. mail or, where applicable, two (2) days
after deposit with a nationally recognized overnight carrier, all with postage
and charges prepaid, or two (2) days after the latter of transmission by
telefacsimile with an electronic transmission receipt and deposit of a copy
into the U.S. mail by first class U.S. mail.


 


13.          CHOICE OF LAW AND VENUE; JURY TRIAL
WAIVER.


 


THE VALIDITY OF THIS AGREEMENT AND
THE OTHER LOAN  DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY
IN  ANOTHER LOAN DOCUMENT), THE
CONSTRUCTION, INTERPRETATION, AND  ENFORCEMENT
HEREOF AND  THEREOF, AND THE RIGHTS OF THE PARTIES  HERETO AND  THERETO WITH RESPECT TO ALL MATTERS ARISING
HEREUNDER OR THEREUNDER OR RELATED HERETO OR
THERETO SHALL BE  DETERMINED UNDER,
GOVERNED BY, AND CONSTRUED IN ACCORDANCE  WITH THE LAWS OF THE STATE OF CALIFORNIA. THE PARTIES HERETO  AGREE THAT ALL
ACTIONS OR PROCEEDINGS ARISING IN CONNECTION
WITH THIS AGREEMENT AND THE  OTHER LOAN
DOCUMENTS SHALL BE  TRIED AND
LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED  IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA OR,
AT THE SOLE  OPTION OF BANKS, IN
ANY OTHER COURT IN WHICH BANKS SHALL INITIATE  LEGAL OR EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT
MATTER  JURISDICTION OVER THE
MATTER IN CONTROVERSY. EACH OF BORROWER  AND BANKS WAIVES TO THE EXTENT PERMITTED UNDER APPLICABLE LAW,
ANY RIGHT EACH MAY HAVE TO ASSERT THE
DOCTRINE OF FORUM NON  CONVENIENS
OR TO OBJECT TO VENUE TO THE EXTENT ANY
PROCEEDING IS  BROUGHT IN ACCORDANCE WITH THIS SECTION 13.
BORROWER AND BANKS  HEREBY WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY
CLAIM  OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY  OF THE LOAN
DOCUMENTS OR ANY OF THE TRANSACTIONS
CONTEMPLATED THEREIN,  INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS,  AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH OF
BORROWER AND BANKS REPRESENTS THAT IT HAS
REVIEWED THIS WAIVER  AND  EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL  RIGHTS  FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE
EVENT OF  


 


33

















 


LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED
AS A WRITTEN  CONSENT TO A
TRIAL BY THE COURT.  


 


14.                                   DESTRUCTION OF BORROWER’S DOCUMENTS.


 


All documents, schedules,
invoices, agings, or other papers delivered to Banks may be destroyed or otherwise disposed of by
Banks one (1) year after they are
delivered to or received by Agent or
Banks, unless Borrower requests, in writing, the return of said documents,
schedules, or other papers and makes arrangements, at Borrower’s expense, for their return.


 


15.                              AGENCY AND GOVERNANCE PROVISIONS.


 


15.1         Actions. Each Lender hereby appoints
U.S. BANK NATIONAL ASSOCIATION as its Agent (in such capacity, together
with its successors and assigns, “Agent”) under and for purposes of this
Agreement and each other Loan Document. Each Lender authorizes Agent to act on
behalf of such Lender under this Agreement and each other Loan Document and, in
the absence of other written instructions from the Lenders received from time
to time by Agent (with respect to which Agent agrees that it will comply,
except as otherwise provided in this Article 15 or as otherwise
advised by counsel), to exercise such powers hereunder and thereunder as are
specifically delegated to or required of Agent by the term is hereof and
thereof, together with such powers as may reasonably be incidental thereto.
Each Lender hereby indenmifies (which indemnity shall survive any termination
of this Agreement) Agent, pro rata according to such Lender’s Pro-Rata Share,
from and against any all liabilities, obligations, losses, damages, claims,
costs or expenses of any kind or nature whatsoever which may at any time be
imposed on, incurred by, or asserted against, Agent in any way relating to or
arising out of this Agreement and any other Loan Document, including reasonable
attorneys’ fees, and as to which Agent is not reimbursed by Borrower; provided,
however, that no Lender shall be liable for the payment of any portion of
such liabilities, obligations, losses, damages, claims, costs or expenses which
are determined by a court of competent jurisdiction in a final proceeding to
have resulted solely from Agent’s gross negligence or willful misconduct. Agent
shall not be required to take any action hereunder, or under any other Loan
Document, or prosecute or defend any suit in respect of this Agreement or any
other Loan Document, unless it is indemnified hereunder to its satisfaction. If
any indemnity in favor of Agent shall be or become, in Agent’s determination,
inadequate, Agent may call for additional indemnification from the Lenders and
cease to do the acts indenmified against hereunder until such additional
indemnity is given.


 


15.2        Exculpation. Neither
Agent nor any of its directors, officers, employees, or agents shall be liable
to any Lender for any action taken or omitted to be taken by it under this
Agreement or any other Loan Document, or in connection herewith or therewith,
except for its own willful misconduct or gross negligence, nor responsible for
any recitals or warranties herein or therein, nor for the effectiveness,
enforceability, validity, or due execution of this Agreement or any other Loan
Document, nor for the creation, perfection, or priority of any Liens purported
to be created by any of the Loan Documents, or the validity, genuineness,
enforceability, existence, value, or sufficiency of any collateral security,
not to make any inquiry respecting the 


 


34

















 


performance by Borrower or any of its Subsidiaries or
Affiliates of their respective obligations under the Loan Documents. Any such
inquiry which may be made by Agent shall not obligate it to make any further
inquiry or to take  any action. Agent shall be entitled
to rely upon advice of counsel concerning legal matters and upon any notice,
consent, certificate, statement, or writing which Agent believes to be genuine
and to have been presented by a proper Person.


 


15.3        Successors. Agent may
resign as such at any time upon at least thirty (30) days’ prior notice to
Borrower and all Lenders. If Agent at any time shall resign, the Lenders may
appoint another Lender as a successor Agent which shall upon acceptance of such
appointment, thereupon become Agent hereunder. If no successor Agent shall have
been so appointed by the Lenders, and shall have accepted such appointment,
within thirty (30) days after the retiring Agent’s giving notice of
resignation, then the retiring Agent may, on behalf of the Lenders, appoint a
successor Agent, which shall be a Lender or a commercial banking institution
organized under the laws of the United States (or any State thereof) or a U.S.
branch or agency of a commercial banking institution, and having a combined
capital and surplus of at least Five Hundred Million Dollars ($500,000,000).
Upon the acceptance of any appointment as Agent hereunder by a successor Agent,
such successor Agent shall be entitled to receive from the retiring Agent such
documents of transfer and assignment as such successor Agent may reasonably
request, and shall thereupon succeed to and become vested with all rights,
powers, privileges and duties of the retiring Agent, and the retiring Agent
shall be discharged from its duties and obligations under this Agreement. After
any retiring Agent’s resignation hereunder as Agent, the provisions of this Article 15
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent under this Agreement.


 


15.4        Other
Transactions by U.S. Bank. U.S. Bank shall have the same
rights and powers with respect to (x) Facility
A and Facility B made by it or any of its Affiliates, and (y) the Notes
held by it or any of its Affiliates as any other Lender and may
exercise the same as if it were
not Agent. U.S. Bank and its
Affiliates may accept deposits from, lend money to, and generally engage in any
kind of business with Borrower, any of its Subsidiaries or any of their Affiliates as if U.S. Bank
were not Agent hereunder.


 


15.5        Independent
Credit Decision. Each Lender acknowledges that it has, independently of Agent
and each other Lender, and based on such Lender’s review of the financial information of
Borrower and its Subsidiaries and Affiliates, this Agreement, the other Loan
Documents (the terms and provisions of which being satisfactory to such Lender)
and such other documents, information and investigations as such Lender has
deemed appropriate, made its own credit decision in regard to Facility A and
Facility B. Each Lender also acknowledges that it will, independently of Agent
and each other Lender, and based on such other documents, information, and
investigations as it shall deem appropriate at any time, continue to make its
own credit decisions as to exercising or not exercising from time to time any
rights and privileges available to it under this Agreement or any other Loan
Document.


 


15.6        Copies.
Agent shall give prompt notice to each Lender of each notice or request
required or permitted to be given to Agent by Borrower pursuant to the terms of
this Agreement (unless concurrently delivered to the Lenders by Borrower).
Agent will distribute to each Lender each document or instrument received for
its account and copies of all other 


 


35

















 


communications received by Agent from Borrower for
distribution to the Lenders by Agent in accordance with the terms of this
Agreement.


 


15.7        Payments to be Made to
Agent. All payments of principal, interest, fees, costs, expenses, and other
amounts made by the Borrower pursuant to this Agreement and the other Loan Documents
shall be made by the Borrower to Agent, on behalf of the Lenders. Whenever
Agent receives any payment or prepayment from or on behalf of the Borrower pursuant
to this Agreement or any other Loan Document, Agent shall promptly pay over to
each Lender an amount equal to its Pro-Rata Share of such payment or repayment,
as the case may be. Any determination by Agent as to the allocation of any
payment or prepayment to a particular Loan, or to interest, principal, fees or
any other amount payable in respect of this Agreement or the other, Loan
Documents shall be final and conclusive absent manifest error.


 


15.8        Reimbursement by
Lenders. Each Lender shall on demand reimburse Agent for its Pro-Rata Share of
any and all costs, expenses and disbursements (other than normal overhead costs
and expenses) which Agent may incur or sustain in connection with the Loans or
any action which may be taken by Agent to administer or collect the same on
behalf of the Lenders and for which Agent is not otherwise reimbursed by the
Borrower, including, without limitation, all expenses incurred or sustained in
connection with the enforcement of rights or remedies against the Borrower, all
court costs, disbursements and accountants’ fees and disbursements, filing and
recording fees, title investigation and insurance charges, appraisal fees, and
expenses of special examinations and audits.


 


15.9       Collateral
and Guarantees Held by Agent. All collateral security mortgaged,
pledged, assigned, transferred, or in the possession of Agent and all
guarantees of the Borrower’s obligations under the Loan Documents which Agent
holds or which may hereafter come into its possession as collateral security
for or guarantees of the Loans shall be held by Agent in its own name for the
ratable benefit of the Lenders in accordance with their Pro-Rata Shares.
However, neither Agent (in its capacity as Agent) nor any Lender shall have any
interest in any property that may at any time be taken as collateral security
for any other loan or loans made to the Borrower by U.S. Bank, or in any
property now or hereafter in the possession or control of U.S. Bank which may
be or become collateral security for such loans by reason of the general
description contained in any general loan or collateral agreement or collateral
note held at any time by U.S. Bank, or by reason of any right or set-off,
counterclaim, banker’s lien, or otherwise, except that if such property or the
proceeds thereof are applied in reduction of any amounts outstanding under this
Agreement, the Notes, or any other Loan Document, then each Lender shall be
entitled to its Pro-Rata Share of such application.


 


15.10     Lenders’
Commitments Independent. All advances of loan funds under this Agreement
shall be made by the Lenders proportionately in accordance with their Pro-Rata
Shares, and no Lender shall be obligated to fund more than its Pro-Rata Share
of any requested Advance. All collateral security at any time mortgaged,
pledged, assigned, transferred, or in the possession of Agent and all guarantees
of the Borrower’s obligations under the Loan Documents which Agent at any time
holds as collateral security for or guarantees of the Loans shall be held by
Agent in its own name for the ratable benefit of the Lenders based upon their
respective Pro-Rata Shares. However, neither Agent (in its capacity as Agent)
nor any Lender shall have any 


 


36

















 


interest in any property that may be taken as
collateral security for any other loan or loans made to the Borrower by U.S.
Bank, or in any property now or hereafter in the possession or control of U.S.
Bank which may be or become collateral security for such loans by reason of the
general description contained in any general loan or collateral agreement or
collateral note held by U.S. Bank or by
reason of any right or set-off, counterclaim,
banker’s lien, or otherwise, except that if such property or
the proceeds thereof are applied in reduction of any amounts outstanding under
this Agreement, the Notes, or any other Loan Document, then each Lender shall
be entitled to its Pro-Rata Share of such application.


 


15.11      Borrower
to deal with Agent. Borrower shall deal
solely and directly with Agent, as Agent for the Lenders, for all purposes
under the Loan Documents and shall deliver all notices, communications,
and other information required or desired to be delivered under the Loan
Documents, and make all payments due thereunder, directly to Agent.


 


15.12      Loans to be Funded
Through Agent. Promptly upon receipt of notice of each proposed Advance of Loan
funds, the Agent shall notify each Lender of the date and amount of each such
Advance and each Pro-Rata Share thereof and provide each Lender with a copy of
the Advance Request Form and Disbursement Letter reflecting the Borrower’s
request for such Advance. Each Lender shall, on or before 10:00 a.m.
California time on the date of each such Advance, pay to the Agent, at its
office at 633 West 5th Street, 30th Floor, Los Angeles, California 90071, Account No. 6517339330,
Reference: Kennedy-Wilson, Inc., Attention: Linda
Morgan, Vice President, Telephone (213) 615-6683, its Pro-Rata Share thereof in
lawful money of the United States of America and in immediately available
funds. All Advances of Loan funds shall be made by the Lenders simultaneously
and proportionately in accordance with their respective Pro-Rata Shares, but
each Lender may, at its option, fulfill its Commitments with respect to any
LIBOR Rate portion of such Loans, if applicable, by causing a foreign branch or
Affiliate to make the requested Advance, provided that any exercise of that
option does not result in increased costs to the Borrower. Subject to the
satisfaction of the conditions specified in Article 3 hereof, Agent
shall make the proceeds of the Advance available to the Borrower on the
required funding date by causing an amount equal to such proceeds to be
credited to Borrower’s Account; it is understood, however, that the Agent shall
only be required to credit to the Borrower’s Account such proceeds of such
Advance as are actually received by it from the Lenders. Unless the Agent has
been notified by a Lender prior to the required funding date that such Lender
will not make its Pro-Rata Share of the applicable Advance available to the
Agent, the Agent may assume that the Lender has made its portion available on
the funding date, and the Agent may in reliance upon such assumption make a
corresponding amount available to the Borrower. No Lender shall be relieved of
its obligation to make its Pro-Rata Share of any requested Advance under this
Agreement available to the Agent by the failure of any other Lender to make its
Pro-Rata Share of that Advance available to the Agent. However, no Lender shall
be responsible for any such default by any other Lender; nor shall the
Commitment of any Lender be increased as a result of any such default by any
other Lender; nor shall the Agent be responsible for any such default by a
Lender. If and to the extent a Lender does not make its Pro-Rata Share of a
requested Advance available to the Agent, that Lender shall repay to the Agent,
on demand, the amount of its Pro-Rata Share of that Advance together with
interest thereon at the Federal Funds Effective Rate for each day from the date
the amount is made available to the Borrower until the date the amount is
repaid to the Agent, and the Agent may exercise any and


 


37














 


all voting rights otherwise accorded to that Lender
under this Agreement until all required payments are received by the Agent. If
a Lender so repays its Pro-Rata Share of that Advance to the Agent, the amount
so repaid shall constitute that Lender’s Pro-Rata Share of the Advance for all
purposes of this Agreement. “Federal Funds Effective Rate” means the
rate per annum equal to the Agent’s cost of obtaining overnight funds in the
New York Federal Funds Market, as in effect from time to time.


 


16.                           ASSIGNMENTS AND PARTICIPATIONS.


 


16.1        Assignments. Either Bank may at any time, with notice to Borrower and Agent,
assign and delegate to one or more commercial banks or other financial
institutions


reasonably acceptable to Agent (each Person to whom such assignment and
delegation is to be made, being hereinafter referred to as an “Assignee
Lender”), all or any fraction of such Bank’s Commitment (which assignment
and delegation shall be of a constant, and not a varying, percentage of all the
assigning Lender’s Commitment) (each Lender from whom such assignment and
delegation is to be made, being hereinafter referred to as an “Assignor
Lender”), but not less than an aggregate principal amount of Five Million
Dollars ($5,000,000) and an integral multiple of Five Hundred Thousand Dollars
($500,000) in excess thereof; provided,  however, that Borrower
and Agent shall be entitled to continue to deal solely and directly with such
Lender in connection with the interests so assigned and delegated to an
Assignee Lender until (a) written notice of such as assignment; and
delegation, together with payment instructions, addresses and related
information with respect to such Assignee Lender, shall have been given to
Borrower and Agent by such Lender and such Assignee Lender, and (b) Agent
shall have received a processing fee of Three Thousand Dollars ($3,000) from
such Lender or Assignee Lender and an executed assignment agreement in form and
substance satisfactory to Agent.


 


From and after the date that an assignment becomes effective as
provided in the preceding paragraph, (a) the Assignee Lender thereunder
shall be deemed automatically to have become a party hereto and to the extent
that rights and obligations hereunder have been assigned and delegated to such
Assignee Lender in connection with such assignment, shall have the rights and
obligations of a Lender hereunder and under the other Loan Documents, and (b) the
Assignor Lender, to the extent that rights and obligations hereunder have been
assigned and delegated by it in connection with such assignment, shall be
released from its obligations hereunder, and under the Loan Documents. Within
five (5) Business Days after its receipt of notice of such assignment and
associated documentation reasonably required by the Agent, Borrower shall
execute and deliver to Agent (for delivery to the relevant Assignee Lender) new
Notes (if requested by Agent in its sole discretion) evidencing such Assignee
Lender’s assigned Commitments and, if the Assignor Lender has retained any
portion of its Commitment hereunder, replacement Notes evidencing such Assignor
Lender’s retained portion of the Commitments (each such Note to be in exchange
for, but not in payment of, the Note then held by such Assignor Lender). Each
such replacement Note shall be dated the date of the predecessor Note. Accrued
interest on that part of the predecessor Note evidenced by the replacement
Note, and accrued fees, shall be paid as provided in the documentation
effecting the Assignment. Accrued interest on that part of the predecessor Note
shall be paid by the Agent, following its 


 


38

















 


receipt from the Borrower, to the Assignor Lender.
Accrued interest and accrued fees shall be paid at the same time or times
provided in the predecessor Note and in this Agreement. Any attempted
assignment and delegation not made in accordance with this Section 16.1
shall be null and void.


 


16.2                     Participations. Any Lender may at any time sell to one or more


commercial banks or other Persons (each of such commercial banks and
other Persons being herein called a “Participant”) participating
interests in any of its Commitment; provided, however, that:


 


(a)          no participation contemplated in this Section 16.2
shall relieve such Lender from its Commitment or its other obligations
hereunder or under any other Loan Document;


 


(b)          such Lender shall remain solely responsible for the
performance of its Commitment and such other obligations;


 


(c)          Borrower and Agent shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement and each of the other Loan Documents;


 


(d)          No Participant, unless such Participant is itself a Lender,
shall be entitled to require such Lender to take or refrain from taking any
action hereunder or under any other Loan Document.


 


17.                           GENERAL
PROVISIONS.


 


17.1       Effectiveness. This Agreement shall
be binding and deemed effective when executed by Borrower and Banks.


 


17.2                         Successors and
Assigns. This Agreement shall bind and inure to the benefit of the respective
successors and assigns of each of the parties; provided, however, that Borrower
may not assign this Agreement or any rights or duties hereunder without Agent’s
prior written consent and any prohibited assignment shall be absolutely void.
No consent to an assignment by Banks shall release Borrower from its
Obligations hereunder. Banks may assign this Agreement and its rights and
duties hereunder and no consent or approval by Borrower is required in
connection with any such assignment. Banks and each of them reserve the right
to sell, assign, transfer, negotiate, or grant participations in all or any
part of, or any interest in Banks’ rights and benefits hereunder. In connection
with any such assignment or participation, Banks may disclose to a prospective
or actual purchaser or participant all documents and information which Banks
now or hereafter may have relating to Borrower or Borrower’s business. To the
extent that Banks or either of them assign their rights and obligations
hereunder to a third Person, Banks thereafter shall be released from such
assigned obligations to Borrower and such assignment shall effect a novation
between Borrower and such third Person.


 


17.3                         Section Headings.
Headings and numbers have been set forth herein for convenience only. Unless
the contrary is compelled by the context, everything contained in each 


 


39

















 


section
applies equally to this entire Agreement.


 


17.4        Interpretation. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against Banks or Borrower,
whether under any rule of construction or otherwise. On the contrary, this
Agreement has been reviewed by all parties and shall be construed and interpreted
according to the ordinary meaning of the words used so as to fairly accomplish
the purposes and intentions of all parties hereto.


 


17.5        Severability of Provisions. Each provision of this Agreement
shall be severable from every other provision of this Agreement for the purpose
of determining the legal enforceability of any specific provision.


 


17.6       Amendments
in Writing. This Agreement can only be amended by a writing signed by both
Banks and Borrower.


 


17.7        Counterparts;
Telefacsimile Execution. This Agreement may be executed in any number of
counterparts and by different parties on separate counterparts, each of which,
when executed and delivered, shall be deemed to be an original, and all of
which, when taken together, shall constitute but one and the same Agreement.
Delivery of an executed counterpart of this Agreement by telefacsimile shall be
equally as effective as delivery of an original executed counterpart of this
Agreement. Any party delivering an executed counterpart of this Agreement by
telefacsimile also shall deliver an original executed counterpart of this
Agreement but the failure to deliver an original executed counterpart shall not
affect the validity, enforceability, and binding effect of this Agreement or of
any of the Loan Documents..


 


17.8       Revival
and Reinstatement of Obligations. If the incurrence or payment


of the Obligations by Borrower or any guarantor of the Obligations or
the transfer by either or both of such parties to Banks of any property of
either or both of such parties should for any reason subsequently be declared
to be void or voidable under any state or federal law relating to creditors’
rights, including provisions of the Bankruptcy Code relating to fraudulent
conveyances, preferences, and other voidable or recoverable payments of money
or transfers of property (collectively, a “Voidable Transfer”), and if
Banks are required to repay or restore, in whole or in part, any such Voidable
Transfer, or elects to do so upon the reasonable advice of their counsel, then,
as to any such Voidable Transfer, or the amount thereof that Banks or either of
them is required or elects to repay or restore, and as to all reasonable costs,
expenses, and attorneys’ fees of Banks related thereto, the liability of
Borrower or such guarantor automatically shall be revived, reinstated, and
restored and shall exist as though such Voidable Transfer had never been made.


 


17.9       Integration.
This Agreement, together with the other Loan Documents, reflects the entire
understanding of the parties with respect to the transactions
contemplated hereby and shall not be
contradicted or qualified by any other agreement, oral or written, before the date hereof


 


17.10     Attorneys’
Fees. If any action or proceeding, at law, in equity, or 


 


40

















 


otherwise, including any action for
declaratory relief, is brought by or on behalf of any party hereunder, or is
required by any court of competent jurisdiction, as the case may be, which is
in any manner related to this Agreement or any other Loan Document or its or
their breach, interpretation, or enforcement, the prevailing party in any final judgment or award shall be entitled to
recover from the non-prevailing party or parties to such and or proceeding the full amount of all reasonable
expenses, including all court costs and actual attorneys’ fees paid or incurred
in good faith (including, without limitation, fees incurred pursuant to Title
11, United States Code, by such prevailing party, in addition to any other
relief to which it may be entitled.


 


[SIGNATURE PAGE FOLLOWS]


 


41

















 


IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in Los Angeles, California.


 


	
   

  	
   

  	
  Borrower:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  KENNEDY-WILSON, INC.,

  
	
   

  	
   

  	
  /s/  William J.
  McMorrow

  
	
   

  	
   

  	
  /s/  Freeman Lyle, CFO

  
	
   

  	
   

  
	
   

  	
  U.S. BANK NATIONAL ASSOCIATION,

  
	
   

  	
  a national banking association

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Linda Morgan

  
	
   

  	
  Title:
  Vice President

  
	
   

  	
   

  
	
   

  	
   East-West
  Bank:

  
	
   

  	
   

  
	
   

  	
  EAST-WEST BANK,

  
	
   

  	
  a California corporation

  
	
   

  	
  By

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  Agent:

  
	
   

  	
   

  
	
   

  	
  U.S. BANK NATIONAL ASSOCIATION,

  
	
   

  	
  a national banking association

  
	
   

  	
  By

  	
  /s/ Linda Morgan

  
	
   

  	
  Title: Vice
  President

  
					



 


42














 


Schedule A-1


 


Authorized
Persons


 


	
  Name

  	
   

  	
  Title

  
	
   

  	
   

  	
   

  
	
  William J. McMorrow

  	
   

  	
  Chairman and Chief
  Executive Officer

  
	
  Freeman Lyle

  	
   

  	
  Executive Vice President,
  Chief Financial Officer, and Secretary

  



 

















 


Schedule P-1


 


Permitted Liens


None


 

















 


Schedule 1.1-1


 


Advance Request Form and Disbursement Letter


 


[SEE
ATTACHED]


 

















 


U.S. BANK


 


AD VANCE REQUEST FORM


 


(Advances made same day if request is’ received before 11:00 Am..
Monday through Friday, except holidays)


 


	
  BORROWER NAME:
  KENNEDY-WILSON, INC.

  	
  DATE:

  



 


	
  LOAN NUMBER

  	
   

  	
   

  	
  AMOUNT OF REQUEST:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ADVANCE

  	
   

  	
  PAYOFF

  	
  PAYDOWN

  	
   

  



 


IF ADVANCE ON ACQUISITION
FACILITY, PLEASE DETAIL:


 


PROJECT
NAME DESCRIPTION:
                  


 


ASSOCIATED
DEBT TERMS:
                  


 


MATURITY OF ADVANCE:
                  


(not to exceed time periods set forth in Loan Documents)


 


FUNDS DEPOSITED TO! TAKEN FROM:  TO BE DETERMINED


 


ACCOUNT NUMBER:  TO BE DETERMINED


 


PERSON
AUTHORIZING REQUEST: (signature)


 


FOR QUESTIONS REGARDING THIS REQUEST, PLEASE
CALL:


 


NAME:  FREEMAN 
LYLE, EVP/CFO/ SECRETARY  PHONE NUMBER: (310) 887-6453


 


COMMENTS:


 


REQUESTS
RECEIVED AFTER 11:00 A.AL 
WILL BE PROCESSED THE NEXT BUSINESS DAY.


PLEASE FAX
REQUEST TO: (213) 615-6792


ATTN: LINDA
MORGAN


 

















 


[Borrower’s letterhead]


 


DISBURSEMENT LETTER


 


U.S. Bank National
Association, as Agent


633 West 5th Street, 30th Floor


Los Angeles, California 90071


Attention: Linda Morgan


 


Re:                               Loan Agreement
dated as of June 5, 2008 among U.S. Bank National
Association and East-West Bank, U.S. Bank National
Association, as agent, and Kennedy-Wilson, Inc. (the “Loan Agreement”)


 


Dear Mr. Mitchell:


 


This is an ‘Advance Request Form and
Disbursement Letter” (as defined in the Loan Agreement). All capitalized
terms not otherwise defined are used in this Advance Request
Form and Disbursement Letter with the meanings given them in the Loan
Agreement.


 


Borrower requests an Advance
from Facility choose one: [A] [B] in the amount of $                                  .


 


Borrower certifies to the Banks as
follows with respect to the Advance requested above:


 


I.              The amount requested above, when
aggregated with all other Advances outstanding under Facility choose the
applicable Facility: [A] [B], does not exceed the amount available to be
advanced under the Loan Agreement;


 


2.             All of the representations and warranties contained in
the Loan Agreement and the other Loan Documents are true and correct in
all respects;


 


3.             No Default or Event of Default has occurred and is
continuing nor shall result from the making of the Advance requested above;


 


4.             All of the other conditions to
the Banks’ making the requested Advance set forth in the Loan Agreement have
been satisfied.


 


5.             If Borrower  has elected
that the Advance bear interest at an interest rate based on the LIBOR Rate,
Borrower has delivered to Agent an appropriately completed LIBOR Notice in the form of Schedule
2.2 to the Loan Agreement.


 

















 


6.             The repayment date for the requested Advance in
accordance with Section 2.2(d) of the Loan Agreement is                             .


 


	
   

  	
   

  	
  Very truly yours,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  KENNEDY-WILSON, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Authorized Officer

  



 

















 


Schedule
1.1-2


Excluded
Properties


None


 

















 


Schedule 2.2


LIBOR Notice


[SEE
ATTACHED]


 














 


Schedule 2.2


 


LIBOR NOTICE


 


	
  To:

  	
  U.S. Bank National
  Association

  
	
   

  	
  633 West 5th Street, 30Eh Floor

  
	
   

  	
  Los Angeles, California
  90071

  
	
   

  	
  Attn: Linda Morgan

  
	
   

  	
  Facsimile: (213) 615-6683

  



 


This LIBOR Notice is given pursuant to Section 2.2
of that certain Loan Agreement, dated as of June 5, 2008 (the “Agreement”),
between KENNEDY-WILSON, INC. (“Borrower”), EAST-WEST BANK and U.S. BANK
NATIONAL BANK (“Bank”). All initially capitalized terms used but not defined
in this Notice of Conversion or Continuation shall have the meanings assigned to
them in the Agreement.


 


In connection with the Advances, the undersigned hereby requests that
you:


 


1.            Convert $          
in principal amount of the Prime Rate Loans on                     200   ,
to a LIBOR Rate Loan with an Loan Period of               [1, 2 or 3] months and expiring on
                                , 200   
($500,000 minimum with incremental increases of $100,000 in excess thereof);


 


2.            Convert $              
in principal amount of LIBOR Rate Loans on the expiration of
the Loan Period applicable thereto, to a Prime Rate Loan;


 


3.            Continue as LIBOR
Rate Loans $                  
in principal amount of presently outstanding LIBOR Rate Loans
commencing on the expiration of the Loan Period applicable thereto, with a new
Loan Period of               [1, 2, 3, 6 or
12] months and expiring on                       ,
200   .


 


The undersigned certifies that, as of the date hereof:


 


(a)          the representations and warranties
of Borrower contained in the Agreement are true and correct on and
as of such date, except to the extent such representations and warranties
expressly relate solely to an earlier date;


 


(b)          no Event of Default
has occurred or is continuing;


 


(c)           after giving
effect to the continuation or conversion requested hereby, there
shall be no more than five (5) LIBOR Rate
Loans outstanding;


 


(d)          Borrower has
satisfied in all respects all conditions under the Agreement to be performed or
satisfied by it on or before such date.


 

















 


	
  Dated:
                          , 200   

  	
  KENNEDY-WILSON,
  INC.

  
	
   

  	
  By

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  



 

















 


Schedule 3.2


 


Documentation to Be Furnished to Banks in Connection with


Each Facility A or Facility B Advance


 


Document


 


1.             Advance
Request Form and Disbursement Letter, in the form attached as Schedule
1.1-1.


 


2.             Such
additional documentation as may from time to time be requested by Banks.


 

















 


Schedule 5.4


Schedule of Indebtedness


None.


 

















 


Schedule 5.6


Borrower Subsidiaries


 


Kennedy-Wilson, Inc.


K-W Properties


Kennedy-Wilson International


Kennedy-Wilson Properties, Ltd


Kennedy-Wilson Properties Ltd


Kennedy-Wilson Austin Inc.


Kennedy-Wilson International of New York Inc.


Kennedy Wilson Capital


Kennedy-Wilson Tech, Ltd


Techsource Services, Inc.


Kennedy-Wilson Properties Northwest, Ltd


Kennedy-Wilson Properties of Dallas


Kennedy-Wilson Florida Management Inc.


Kennedy-Wilson Nevada Management, Inc.


Kennedy-Wilson Ohio Management, Inc.


Kennedy-Wilson Pennsylvania Management, Inc.


Kennedy-Wilson Properties of Arizona Ltd.


Kennedy-Wilson Properties of Missouri Ltd.


Kennedy-Wilson Properties of Texas Ltd.


Kennedy-Wilson Virginia Management Inc.


Kennedy-Wilson Wisconsin Management, Inc.


KWP Financial, Inc.


KWP
Financial I


KWP
Financial II


KWP Financial IV


KWP Financial VI (formerly Falcon Crest)


KWP Servicer, LLC


KWP REO, LLC


KWP
Financial IX, Inc.


KWP Financial X, Inc. (formerly NLS 187
Corp)


KWP Financial XI LP, Inc.


KW Seattle Fund I, LLC


KWP Marina Club, LP


KWP Marina Club, UP, Inc.


KWP Marina Club Executives, LLC


K-W Santiago Inc.


KW Ravenswood LLC


KW Ravenswood Member LLC


KW Ravenswood Equity LLC


KW Ravenswood Executives LLC


KW/WDC Vista, LLC


 

















 


KW Vista Land Partners LLC


KW Vista Executives LLC


KW Napa LLC


KW Napa Equity LLC


KW Davis LLC


KW Davis Equity LLC


KW Davis Executives, LLC


KW Pinole LLC


KW Pinole Equity LLC


KW Pinole Executives, LLC


KW-MSK San Jose LLC


KW San Jose Member LLC


KW San Jose Executives, LLC


KW/WDC La
Mesa, LLC


KW La Mesa
Land Partners, LLC


Japan Ventures, LLC


Chipwell, LLC


Kennedy Wilson Overseas Investments, LLC


Kennedy Wilson Overseas Investments, Inc


KW
Multi-Family Management Group Ltd


Fairways 340,LLC


Fairways 340 Corp


Hokkaido Apartments LLC


1KW Hawaii Development LLC


KW Hawaii Executives LLC


KW/WDC Apartment
Portfolio LLC


KW/WDC
Portfolio Member LLC


KW/WDC Beaverton LLC


KW/WDC Norwalk LLC


KW/WDC Sacramento LLC


KW/WDC Vallejo LLC


KW/WDC
Executives LLC


KW-M5K Anaheim LLC


KW Anaheim Manager LLC


KW Anaheim Land Partners LLC


KW Anaheim
Executives LLC


KW Hidden
Creek, LLC


KW Western
Fund II, LLC


KW Western
Fund Manager, LLC


KW Western Fund Executives, LLC


KW Federal
Way, LLC


KW Federal Way Equity, LLC


1KW Federal Way Executives


Kenedix UP, LLC


KW/HFC Paramount, LP


 

















 


KW Paramount GP, LLC


KW/HFC Paramount, LLC


KW
Paramount Member, LLC


KW Paramount Investors, LLC


Dillingham Ranch Ama LLC


68-540 Farrington LLC


1KW
Dillingham Ama LLC


KW
Dillingham Ama Investors LLC


Mokuleia Water LLC


North Shores Water company LLC


Mokuleia Farmington shores, LLC


Mokuleia shores Holder LLC


Panako LLC


Kennedy Capital Trust I


KW Palisades Center, LLC


1KW Palisades Center Manager, LLC


1KW
Palisades Executives, LLC


KWI America Multifamily, LLC


KW America Multifamily Manager, LLC


1KW America Multifamily Executives, LLC


KW/WDC Westmoreland, LLC


KW/WDC West Campus, LLC


900 Fourth Avenue Property
LLC


KW Portfolio XI Manager, LLC


1KW Portfolio 900 Fourth Property Manager,
LLC


KW 900 Fourth Property Executives, LLC


Fifth and Madison LLC


KW Portfolio XII Manager, LLC


KW Portfolio Fifth and Madison
Property Manager, LLC


KW Fifth and Madison Property Executives, LLC


300 California Partners LLC


KW 300 California Manager LLC


KW 300 California LLC


1KW Fund II
300 California, LLC


KW
Portfolio XIII, LLC


KW Portfolio XIII Manager, LLC


KW Portfolio XIII Executives, LLC


KW - RAR3 Mill Creek, LLC


KW - RAR3 Mill Creek Manager, LLC


KW Mill
Creek Property Manager, LLC


1KW Mill Creek Executives, LLC


KW Fruitdale, LLC


KW Fruitdale Equity, LLC


KW Fruitdale Executives, LLC


 

















 


Glendora Partners


KW James Street, LLC


1KW James Street Manager, LLC


1KW James
Street Executives, LLC


KW Fund I - I Carlsbad,
General Partner LLC


KW Fund I - 1 Carlsbad, LP


KW Fund I - Hegenberger
General Partner LLC


1KW Fund I - Hegenberger LP


1KW Fund I - Fifth and
Madison, LLC


KW Fund I - 900 Fourth LLC


1KW Fund I - 300 California


KW Fund I - Baxter Way LLC (Formely 201
Figueroa)


KW Fund I - One Tech LLC


Kennedy-Wilson Property Services, Inc.


Kennedy-Wilson Property Equity, Inc.


Kennedy-Wilson Property Special Equity, Inc


KWI Property Fund I, LP


KWI Continental Building, General Partner LLC


KWI Briareroft Building, General Partner LLC


KWI Briarcroft Building, LP


KWI
Continental Building, LP


KWI Ashford Westchase Buildings General
Partner LLC


KWT Ashford Westchase Buildings, LP


1KW
Property Fund II LP


Kennedy-Wilson Property Services II, Inc.


Kennedy-Wilson Property Special Equity II, Inc.


Kennedy-Wilson Property Equity II, Inc.


1KW Fund II
Executives LLC


1KW Fund II
Howe CC LP


KW Fund II
Howe CC General Partner LLC


1860 Howe Avenue Corp


1KW Fund II - 1860 Howe LP


1KW Fund II - 1860 Howe General Partner
LLC


KW Fund II Metro Center General Partner


KW Fund II Metro Center LP


KW Fund II - 300 California LLC


KW Fund II -303 North Glenoaks, LLC


1KW Fund II - 333 North Glenoaks, LLC


1KW Fund II - 7060 Hollywood, LLC


1KW Fund IT - Burbank Executive Plaza, LLC


KW Fund II
Executives LLC


1KW Fund II - One Tech LLC


1KW Fund III - 333 North Glenoaks, LLC


 

















 


KW Fund III - Burbank Executive Plaza, LLC


KW Fund II- Baxter Way LLC


1KW Fund II- Palm desert LLC


1KW Fund III - 303 North Glenoaks, LLC


1KW Funds - Burbank Executive Plaza LLC


1KW Fund III-Woodstone, LLC


KW Fund III-Woodstone Manager, LLC


1KW Funds - 303 North Glenoaks, LLC


1KW Funds - 333 North Glenoaks, LLC


KW BASGF II Manager LLC


 

















 


Schedule 5.8


Litigation


None.


 

















 


Schedule  5.11


 


Benefit Plans


 


KENNEDY-WILSON. INC. 1992 INCENTIVE
AND NONSTATUTORY STOCK OPTION PLAN


 

















 


Schedule 6.3


Compliance Certificate


[To Be Furnished]


 














 


AMENDED AND RESTATED PROMISSORY NOTE


(Facility
A)


 


	
  June 5, 2008

  	
  Los Angeles,
  California

  	
  $25,000,000

  



 


FOR
VALUE RECEIVED, the sufficiency of which is hereby acknowledged, the
undersigned, KENNEDY-WILSON, INC., a Delaware corporation (“Maker” or “Borrower”),
having a place of business at 9601 Wilshire Boulevard, Suite 220, Beverly
Hills, California 90210, promises to pay to the order of U.S. BANK NATIONAL
ASSOCIATION, a national banking association, having a place of business at 633
West 5th Street, 30th Floor, Los Angeles, California 90071, and EAST-WEST BANK,
a California banking corporation, having a place of business at 135 N. Los
Robles Ave., 2nd Floor, Pasadena, California 91101,
(collectively, “Payees” or “Lenders”), the principal sum of Twenty Five
Million Dollars ($25,000,000), or so much of such sum as may from lime to time
be disbursed and unpaid, together with interest on the unpaid principal amount
of this Note from time to lime outstanding, and all other charges coming due
hereunder, in lawful money of the United States of America, as set forth
herein. This Note amends and restates in its entirety that Promissory Note
(Facility A) in the original principal amount of $25,000,000 dated June 13,
2002, executed by Maker to order of Payees, as amended by that Amendment Number
One to Promissory Notes and Loan Agreement dated December 20, 2002, and
that Amendment Number Two to Promissory Notes dated June 16, 2005.


 


1.                                          Interest;
Payments of Interest and Principal.


 


(a)                               Interest Rate
Options. Interest on each Advance hereunder shall accrue at one of the
following per annum rates selected by the Borrower (“n/a” indicates rate option
is not available): (i) upon notice to the Agent, 0.50% plus the Prime Rate
announced by the Agent from time to lime, as and when such rate changes (a “Prime
Rate Loan”); (ii) upon a minimum of two New York Banking Days’ prior
notice to the Agent, 3.00% plus the 1, 2, 3, 6 or 12 month LIBOR Rate, which
shall be the LIBOR Rate in effect two New York Banking Days prior to
commencement of the Advance (a “LIBOR Rate Loan”) or (iii) (n/a)
upon notice to the Agent, n/a % plus the rate, determined solely by the Agent,
at which the Agent would be able to borrow funds of comparable amounts in the
Money Markets for a 1, 2,3, 6 or 12 month period, adjusted for any reserve
requirement and any subsequent costs arising from a change in government
regulation (a ‘Money Market Rate Loan”). The term ‘Money Markets”
refers to one or more wholesale funding markets available to the Agent,
including negotiable certificates of deposit, commercial paper, Eurodollar
deposits, bank notes, federal funds, interest rate swaps or others. No LIBOR
Rate Loan or Money Market Rate Loan may extend beyond the maturity of this
Note. In any event, if the Loan Period for a LIBOR Rate Loan or Money Market
Rate Loan should happen to extend beyond the maturity of this Note, such loan
must be prepaid at the time this Note matures.


 


In
the event the Borrower does not timely select another interest rate option at
least two New York Banking Days before the end of the Loan Period for a LIBOR
Rate Loan or Money Market Rate Loan, the Agent may at any time after the end of
the Loan


 

















 


Period convert the LIBOR Rate Loan or Money Market Rate Loan to a Prime
Rate Loan, but until such conversion, the funds advanced under the LIBOR Rate
Loan or Money Market Rate Loan shall continue to accrue interest at the same
rate as the interest rate in effect for such LIBOR Rate Loan or Money Market
Rate Loan prior to the end of the Loan Period.


 


The
Agent’s internal records of applicable interest rates shall be determinative in
the absence of manifest error. Each LIBOR Rate Loan and each Money Market Rate
Loan shall be in a minimum principal amount of One Hundred Thousand Dollars ($100,000).


 


(b)                              Default
Interest Rate. Upon the occurrence and during the continuation of
an Event of Default, all Obligations shall bear interest on the Daily Balance
at a per annum rate equal to 5.00% above the Prime Rate.


 


(c)                               Payment
of Interest. Interest accruing hereunder shall be due and
payable as specified in the Loan Agreement.


 


(d)                              Principal
Repayment. Principal under this Note shall be repaid in the
amounts, on the dates, and in the manner specified in the Loan Agreement.


 


(e)                               Payment
on Maturity Date. If not previously paid, the entire unpaid
principal amount of this Note, together with all accrued interest, shall be due
and payable on or before July 1, 2011 (the “Maturity Date”).


 


(1)                               Crediting
Payments, Application of Collections. In no event shall any
payment be deemed received until actual receipt by the Agent. Payers may apply
any payments received by Payees on account of this Note in such order as Payees
determine in their sole and absolute discretion, irrespective of any notation,
memorandum, or other communication on or accompanying such payment specifying a
different application of such payment. The receipt of any payments by Payees
from Maker shall be applied provisionally to reduce the Obligations outstanding
under this Note but shall not be considered a payment on account unless such
payment item is a wire transfer of immediately available federal funds and is
made to Agent in accordance with wiring instructions issued by Agent to Maker
or unless and until such payment is honored when presented for payment. Should
any payment to Agent not be honored when presented for payment, then Maker
shall be deemed not to have made such payment, and interest shall be
recalculated accordingly. Anything to the contrary contained herein
notwithstanding, any payment shall be deemed received by Agent only if it is
received by Agent on a Business Day on or before 11:00 a.m. California
time If any payment is received by Agent on a non-Business Day or after 11:00 a.m.
California time on a Business Day, it shall be deemed to have been received by
Agent as of the opening of business on the immediately following Business Day.


 


(g)                              Prepayment. Upon not less
than two (2) business days’ notice to Agent, Maker shall have the right to
prepay amounts owing under this Note in an amount in each case of not less than
One Hundred Thousand Dollars ($100,000), subject to all other


 

















 


terms and conditions hereof
and of the Loan Agreement. If a LIBOR Rate Loan is prepaid prior to the end of
the Loan Period for such loan, whether voluntarily or because prepayment is
required due to the Note maturing or due to acceleration of the Note upon
default or otherwise, the Borrower agrees to pay all of the Bank Costs,
expenses and Interest Differential (as determined by the Agent) incurred as a
result of such prepayment.


 


2.                                   Late Charges. If any
installment of principal or interest due under this Note shall be overdue for
longer than ten (10) days, Maker shall pay to Agent a late charge of six (6) cents
for each dollar so overdue; provided, however, that no such late charge shall
be charged on the principal balance outstanding under this Note upon
acceleration or maturity. Maker acknowledges that late payment to Agent will
cause Payees to incur costs they would not have incurred, and to lose
opportunities they would not have lost, if payment had been made timely, the
exact amount of which would be difficult and impracticable to assess. The
parties further agree that proof of actual damages would be costly and
inconvenient. Such costs and damages include, without limitation, processing
and accounting charges, potential costs to be incurred as a result of Payees’
inability to meet their other commitments, and loss of opportunity. The parties
agree that such late charge represents a reasonable sum considering all of the
circumstances existing as of the date of this Note and represents a fair and
reasonable estimate of the costs that Payees will incur by reason of late
payments. Acceptance of any late charge shall not constitute a waiver of the
default with respect to the overdue amount, and shall not prevent Payees from
exercising any of the other rights and remedies available to Payees. All late
charges shall be due and payable immediately without demand.


 


3.                                   Events of Default. Any one or
more of the following events shall constitute an event of default (each, an “Event
of Default”) under this Note:


 


(a)                               If Maker fails
to pay when due and payable, or when declared due and payable, any portion of
Maker’s Obligations (whether of principal, interest (including any interest
which, but for the provisions of the Bankruptcy Code, would have accrued on
such amounts), fees and charges due Payees, reimbursement of Bank Expenses, or
other amounts constituting Obligations);


 


(b)                              If Maker falls
to perform, keep, or observe any term, provision, condition, covenant, or
agreement contained in this Agreement, in any of the Loan Documents, or in any
other present or fixture agreement between Maker and Payees or either of them.


 


(c)                               If there is a
Material Adverse Change;


 


(d)                              If any material
portion of Maker’s properties or assets is attached, seized, subjected to a
writ or distress warrant, or is levied upon, or comes into the possession of
any third Person;


 


(e)                               If an
Insolvency Proceeding is commenced by Maker;


 

















 


(f)                                 If an Insolvency
Proceeding is commenced against Maker and any of the following events occur: (a) Maker
consents to the institution of the Insolvency Proceeding against it; (b) the
petition commencing the Insolvency Proceeding is not timely controverted; (c) The
petition commencing the Insolvency Proceeding is not dismissed within forty
five (45) calendar days of the date of the filing thereof; provided. however,
that, during the pendency of such period, Payees and each of them shall be
relieved of theft obligation to extend credit hereunder; (d) an interim
trustee is appointed to take possession of all or a substantial portion of the
properties or assets of, or to operate all or any substantial portion of the
business of, Maker; or (e) an order for relief shall have been issued or
entered therein;


 


(g)                              If Maker is
enjoined, restrained, or in any way prevented by court order from continuing to
conduct all or any material part of its business affairs;


 


(h)                              If a notice of
Lien, levy, or assessment is filed of record with respect to any of Maker’s
properties or assets by the United States Government, or any federal, state,
local, or other Governmental Agency, or if any taxes or debts owing at any time
hereafter to any one or more of such entities becomes a Lien, whether choate or
otherwise, upon any of Maker’s properties or assets and the same is not paid on
the payment due date thereof,


 


(i)                                  If a judgment
or other claim becomes a Lien or encumbrance upon any portion of Maker’s
properties or assets;


 


(j)                                  If there is a
default in any material agreement to which Maker is a party with one or more
third Persons and such default (a) occurs at the final maturity of the
obligations thereunder, or (b) results in a right by such third Person(s),
irrespective of whether exercised, to accelerate the maturity of Maker’s
obligations thereunder;


 


(k)                               If Maker makes
any payment on account of Indebtedness that has been contractually subordinated
in right of payment to the payment of the Obligations, except to the extent
such payment is permitted by the terms of the subordination provisions
applicable to such Indebtedness;


 


(1)                               If any material
misstatement or misrepresentation exists now or hereafter in any warranty,
representation, statement, or report made to Payees by Maker or any officer,
employee, agent, or director of Maker, or if any such warranty or
representation is withdrawn; or.


 


(m)                            If an Event of
Default as defined elsewhere in the Loan Documents shall occur.


 


(n)                                 Notwithstanding anything
contained in this Section 3 to the contrary, Payees shall refrain from
exercising their rights and remedies and an Event of Default


 

















 


shall not be deemed to have occurred by
reason of the occurrence of any of the events set forth in subsections (c),
(d), (g), (h), (i), or U) above if, within fifteen (15) calendar days from the
date thereof, the same is released, discharged, dismissed, bonded against or
satisfied.


 


4.                                   Remedies.


 


(i)                                   On the
occurrence and during the continuance of any Event of Default, Payees may, at
their option:


 


(a)                              terminate their
or either of their obligation to disburse any amounts of the loan evidenced by
this Note not yet disbursed;


 


(b)                             collect
interest on the entire unpaid principal amount of this Note from time to time
outstanding at the Default Rate;


 


(c)                              declare all of
Maker’s Obligations under this Note immediately due and payable, without
notice, notice being expressly waived; and


 


(d)                             pursue any and
every others right, remedy, or power available to it under this Note or the
other Loan Documents or at law or in equity.


 


(ii)                                The rights,
remedies, and powers of Payees under and pursuant to this Note are cumulative
and concurrent, and may be pursued singly, successively, or together against
Maker, any endorser, guarantor, surety, accommodation party, if any, or person
liable or who may become liable hereunder, and any security given at any time
to secure the payment of Maker’s obligations, all at Payees’ sole discretion.
Payees may resort to any and every other right, remedy, or power available at
law or in equity without first exhausting the rights and remedies contained in
this Note, in Payees’ sole discretion,


 


(iii) Failure of Payees, for any period
of time or on more than one occasion, to exercise their option to accelerate
the Maturity Date shall not constitute a waiver of the right to exercise such
right at any time during the continued existence of any Event of Default or
with respect to any prior, concurrent, or subsequent Event of Default. Payees
shall not, by any other act or omission, be deemed to waive any of their rights
or remedies under this Note unless such waiver is
contained in a writing signed by Payees, and then only to the extent
specifically set forth in such writing. A waiver in connection with one event
shall not be construed as continuing or as a bar to or waiver of any right or
remedy in connection with any other prior, concurrent, or subsequent event.


 


5. Waivers and Consents. Maker and each
endorser, guarantor, surety, or accommodation party, if any, of this Note, and
each other person liable or who may become liable for any part of the
indebtedness evidenced by this Note, waives presentment for payment, demand,
notice of


 

















 


nonpayment, notice of dishonor, protest of any dishonor, notice of
protest and protest of this Note, and all other notices in connection with the
delivery, acceptance, performance, default, or enforcement of the payment of
this Note, and agree that their liability shall be unconditional and without
regard to the liability of any other person and shall not in any manner be
affected by any indulgence, extension of time, renewal, waiver, or modification
granted or consented to by Payees. Maker and each such endorser, guarantor,
surety, accommodation party, if any, and person liable or who may become liable
further consent to every indulgence, extension of time, renewal, waiver, or
modification that may be granted by Payees with respect to the payment or other
provisions of this Note, and to the release of any collateral given to secure
the payment of amounts owing under this Note, with or without substitution, and
agree that additional makers, endorsers, guarantor; sureties, or accommodation
parties, if any, may become parties to this Note without notice to Maker or any
other person and without affecting the liability of Maker or any such other
parties under this Note.


 


6.                                   Miscellaneous.


 


(a)                               Governing
Law; Venue, The laws of the State of California shall govern
all questions with respect to the construction of this Note and the rights and
liabilities Maker, Payees, and all endorsers, guarantor; sureties, and
accommodation parties, if any. Any suit at law or action in equity shall be
brought solely in a Court of competent jurisdiction situated in Los Angeles
County, California.


 


(b)                              Binding
on Successors. This Note shall inure to the benefit of, and shall
be binding upon, the successors and assigns of Maker, Payees, and all
endorsers, guarantors, sureties, and accommodation parties, if any.


 


(c)                               Attorney’s
Fees.


 


(i)                                   Maker shall
reimburse Payees for all reasonable attorneys’ fees, costs, and expenses
incurred by Payees in connection with the enforcement of Payees’ rights under
this Note. The foregoing fees, costs, and expenses include, without limitation,
those related to trial, appellate proceedings, out-of-court negotiations,
workouts, settlements, enforcement of rights under any state or federal
statute, intended or designed to protect or enforce Payees’ rights, including,
without limitation, those involving bankruptcy, insolvency, or other judicial
proceedings of every type, and the fees and expenses of any appraisers,
consultants, and expert witnesses retained or consulted by Payees in connection
with any such proceeding.


 


(ii)                 - Payees shall
be entitled to recover from Maker Payees’ attorneys’ fees, costs, and expenses
incurred in any post3idgment proceedings to collect and enforce the judgment.


 


(d)                              Joint and
Several Obligations; Survival. If Maker at any time
consists of more than one person, all Obligations of Maker shall be joint and
several and shall survive the merger of this Note into any judgment on this
Note.


 

















 


(e)                                     Entire
Agreement. This Note is subject to the terms of the Loan
Agreement. This Note, together with the Loan Agreement with which it is
executed, and the other Loan Documents referred to therein, constitutes the
entire agreement and understanding between the parties in respect of the
general subject matter hereof, and supersedes all prior or contemporaneous
agreements, understandings, and communications with respect to such subject
matter, whether oral or written.


 


(f)                                 Severability. If any term
or provision of this Note is finally determined by a Court of competent
jurisdiction to be invalid or unenforceable for any reason, such determination
shall not affect the validity or enforceability of any other term or provision,
or of the same term or provision as applied in a different circumstance, all of
which shall remain in effect except to the extent of such determination.


 


(g)                              Waiver. Waiver by
Payees of any term, covenant, or condition under this Note, shall be effective
or binding on Payees only if made in writing by Agent or Payees and
specifically setting forth the nature and extent of such waiver. No such waiver
shall be implied from any failure or delay by Payees to insist on strict
performance of, or to take action to enforce, any such term, covenant,
condition, or default. A waiver in connection with one event shall not
constitute or be construed as continuing or as a bar to or waiver of any right
or remedy in connection with any other prior, concurrent, or subsequent event.
This Note and all of the terms hereof may be amended only by an instrument in
writing signed by Maker and Payees.


 


(h)                              Construction
of Note. Maker and Payees are all financially
sophisticated parties, and each has had the opportunity to have its attorneys
participate in the negotiation and preparation of this Note. Accordingly, Maker
and Payees shall be deemed for all purposes to have mutually drafted and
prepared this Note and each and every provision thereof and no ambiguity shall
be resolved for or against either party based on which party drafted this Note
or any portion thereof. The masculine, feminine, and neuter genders, and the
singular and plural numbers, shall each include the other(s) when the
context so indicates. All monetary figures expressed in this Note as “$”or “Dollars” refer to Dollars of
the United States of America unless otherwise specified.


 


(i) Defined Terms. All terms which
appear in this Note with initial capital letters are defined as set forth in
this Note and, if not so defined, then as set forth in the Amended and Restated
Loan Agreement of even date herewith (“Loan Agreement”) entered into by
Maker, as “Borrower”, and Payees, as “Banks” or “Lenders”.


 


a)                                   Intent to Limit Charges to Maximum Lawful Rate. In no event
shall the interest rate or rates payable under this Note, plus any other
amounts paid in connection herewith, exceed the highest rate permissible under
any law that a court of competent jurisdiction shall, in a final determination,
deem applicable. Maker and Payees, in executing and delivering this Note,
intend legally to agree upon the rate or rates of interest and manner of
payment stated within it; provided, however, that, anything
contained herein to the contrary notwithstanding, if said rate or rates of
interest or manner of payment exceeds the maximum allowable under applicable
law, then, ipso facto as of the date of this Note, Maker is and shall be liable
only for the payment of such maximum as allowed by law, and payment received
from Maker in excess of such legal maximum, 


 

















 


whenever received, shall be
applied to reduce the principal balance of the Obligations to the extent of
such excess.


 


7. Choice of Law and Venue; JURY
TRIAL WAlVER. THE VALIDITY OF THIS NOTE AND THE OTHER LOAN DOCUMENTS
(UNLESS EXPRESSLY PROVIDED TO THE
CONTRARY IN ANOTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION,
AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER
OR THEREUNDER OR RELATE]) HERETO OR THERETO
SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA. THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS NOTE AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND
FEDERAL COURTS LOCATED IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA
OR, AT THE SOLE OPTION OF PAYEES, IN ANY OTHER COURT IN WHICH PAYEES SHALL
INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT MATTER
JURISDICTION OVER THE MATTER IN CONTROVERSY.
EACH OF MAKER AND PAYEES WAIVES
TO THE EXTENT PERMH17ED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE
DOCTRINE OF FORUM NON CONVENIENS OR TO
OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 7. MAKER AND PAYTEES
HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A WRY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR
ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND
ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH OF MAKER AND PAYEES REPRESENT THAT IT HAS REVIEWED THIS WAIVER
AND EACH KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A
COPY OF THIS NOTE MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL
BY THE COURT.


 


[SIGNATURE PAGE FOLLOWS]


 

















 


	
   

  	
  Maker:

  
	
   

  	
   

  
	
   

  	
  KENNEDY-WILSON,
  INC.,

  
	
   

  	
  a
  Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  William J. McMorrow

  
	
   

  	
   

  	
  Chairman

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Freeman Lyle

  
	
   

  	
   

  	
  Executive
  Vice President

  
	
   

  	
   

  	
  Chief
  Executive Officer, Secretary

  



 














 


AMENDED AND RESTATED
PROMISSORY NOTE


(Facility B)


 


	
  June 5, 2008

  	
  Los Angeles, California

  	
  $5,000,000

  



 


FOR
VALUE RECEIVED, the sufficiency of which is hereby acknowledged, the
undersigned, KENNEDY-WILSON, INC., a Delaware corporation (“Maker” or “Borrower”),
having a place of business at 9601 Wilshire Boulevard, Suite 220, Beverly
Hills, California 90210, promises to pay to the order of U.S. BANK NATIONAL
ASSOCIATION, a national banking association, having a place of business at 633
West 5th  Street, 30th
Floor, Los Angeles, California 90071, and EAST-WEST BANK, a California banking
corporation, having a place of business at 135 N. Los Robles Ave., 2nd Floor, Pasadena, California 91101,
(collectively, “Payees” or “Lenders”), the principal sum of Five Million
Dollars ($5,000,000), or so much of such sum as may from lime to time be
disbursed and unpaid, together with interest on the unpaid principal amount of
this Note from time to time outstanding, and all other charges coming due
hereunder, in lawful money of the United States of America, as set forth
herein. This Note amends and restates in its entirety that Promissory Note
(Facility B) in the original amount of $5,000,000 dated June 13, 2002,
executed by Maker to the order of Payees, as amended by that Amendment Number
One to Promissory Notes and Loan Agreement dated December 20, 2002, and
that Amendment Number Two to Promissory Notes dated June 16, 2005.


 


1.                                    Interest;
Payments of Interest and Principal.


 


(a)                               Interest Rate
Options. Interest on each Advance hereunder shall accrue at one of the
following per annum rates selected by the Borrower (“n/a” indicates rate option
is not available): (i) upon notice to the Agent, 0.00% plus the Prime Rate
announced by the Agent from time to time, as and when such rate changes (a “Prime
Rate Loan”); (ii) upon a minimum of two New York Banking Days’ prior
notice to the Agent, 2.50% plus the 1, 2, 3, 6 or 12 month LIBOR Rate, which
shall be the LIBOR Rate in effect two New York Banking Days prior to
commencement of the Advance (a “LIBOR Rate Loan’) or (iii) (n/a) upon
notice to the Bank, n/a % plus the rate, determined solely by the Bank, at
which the Bank would be able to borrow funds of comparable amounts in the Money
Markets for a 1, 2, 3, 6 or 12 month period, adjusted for any reserve
requirement and any subsequent costs arising from a change in government
regulation (a “Money Market Rate Loan”). The term “Money Markets”
refers to one or more wholesale funding markets available to the Bank,
including negotiable certificates of deposit, commercial paper, eurodollar
deposits, bank notes, federal funds, interest rate swaps or others. No LIBOR
Rate Loan or Money Market Rate Loan may extend beyond the maturity of this
Note. In any event, if the Loan Period for a LIBOR Rate Loan or Money Market
Rate Loan should happen to extend beyond the maturity of this Note, such loan
must be prepaid at the lime this Note matures.


 


In
the event the Borrower does not timely select another interest rate option at
least two New York Banking Days before the end of the Loan Period for a LIBOR
Rate Loan or Money Market Rate Loan, the Bank may at any time after the end of
the Loan Period convert the LIBOR Rate Loan or Money Market Rate Loan to a
Prime Rate Loan,


 

















 


but until such conversion, the funds advanced under
the LIBOR Rate Loan or Money Market Rate Loan shall continue to accrue interest
at the same rate as the interest rate in effect for suck LIBOR Rate Loan or
Money Market Rate Loan prior to the end of the Loan Period.


 


The Bank’s internal records
of applicable interest rates shall be determinative in the absence of manifest
error. Each LIBOR Rate Loan and each Money Market Rate Loan shall be in a
minimum principal amount of One Hundred Thousand Dollars ($100,000).


 


(b)                              Default
Interest Rate. Upon the occurrence and during the continuation of
an Event of Default, all Obligations shall bear interest on the Daily Balance
at a per annum rate equal to 5.00% above the Reference Rate, Each change in the
Reference Rate shall be effective as of the opening of business on the date
announced as the effective date of any change in the Reference Rate.


 


(c)                               Payment of
Interest. Interest accruing hereunder shall be due and
payable as specified in the Loan Agreement


 


(d)                              Principal
Payment. Principal under this Note shall be repaid in the amounts, on the
dates and in the manner specified in the Loan Agreement.


 


(e)                              Payment on
Maturity Date. If not previously paid, the entire unpaid  principal amount of this Note, together with all
accrued interest, shall be due and payable on or before July 1,2011 (the “Maturity
Date”).


 


(1)                               Crediting
Payments, Application of Collections. In no event shall any
payment be deemed received until actual receipt by the Agent. Payees may apply
any payments received by Payees on account of this Note in such order as Payees
determine in their sole and absolute discretion, irrespective of any notation,
memorandum, or other communication on or accompanying such payment specifying a
different application of such payment. The receipt of any payments by Payees
from Maker shall be applied provisionally to reduce the Obligations outstanding
under this Note but shall not be considered a payment on account unless such
payment item is a wire transfer of immediately available federal funds and is
made to Agent in accordance with wiring instructions issued by Agent to Maker
or unless and until such payment is honored when presented for payment. Should
any payment to Agent not be honored when presented for payment, then Maker
shall be deemed not to have made such payment, and interest shall be
recalculated accordingly. Anything to the contrary contained herein
notwithstanding, any payment shall be deemed received by Agent only if it is
received by Agent on a Business Day on or before 11:00 a.m. California lime.
If any payment is received by Agent on a non-Business Day or after 11:00 a.m.
California time on a Business Day, it shall be deemed to have been received by
Agent as of the opening of business on the immediately following Business Day.


 

















 


(g)                              Prepayment. Upon not less than two (2) business days’
notice to Agent, Maker shall have the right to prepay amounts owing under this
Note in an amount in each case of not less than One Hundred Thousand Dollars
($l00,000), subject to all other terms and conditions hereof and of the Loan
Agreement. If a LIBOR Rate Loan is prepaid prior to the end of the Loan Period
for such loan, whether voluntarily or because prepayment is required due to the
Note maturing or due to acceleration of this Note upon default or otherwise,
the Borrower agrees to pay all of the Banks costs, expenses and Interest
Differential (as determined by the Bank) incurred as a result of such
prepayment.


 


2.                                    Late Charges. If any
installment of principal or interest due under this Note shall be overdue for
longer than ten (10) days, Maker shall pay to Agent a late charge of six (6) cents
for each dollar so overdue; provided, however, that no such late charge shall
be charged on the principal balance outstanding under this Note upon
acceleration or maturity. Maker acknowledges that late payment to Agent will
cause Payees to incur costs they would not have incurred, and to lose
opportunities they would not have lost, if payment had been made timely, the
exact amount of which would be difficult and impracticable to assess, The
parties further agree that proof of actual damages would be
costly and inconvenient. Such costs and damages include, without limitation,
processing and accounting charges, potential costs to be incurred as a result
of Payees’ inability to meet their other commitments, and loss of opportunity.
The parties agree that such late charge represents a reasonable
sum considering all of the circumstances existing as of the date of this Note
and represents a fair and reasonable estimate of the costs that Payees will
incur by reason of late payments. Acceptance of any late charge shall not
constitute a waiver of the default with respect to the overdue amount, and
shall not prevent Payees from exercising any of the other rights and remedies
available to Payees. All late charges shall be due and payable immediately
without demand.


 


3.                                    Events of
Default. Any one or more of the following events shall constitute an event of
default (each, an “Event of Default”) under this
Note:


 


(a)                               If Maker fails
to pay when due and payable, or when declared due and payable, any portion of
Maker’ s Obligations (whether of principal, interest (including any interest
which, but for the provisions of the Bankruptcy Code, would have accrued on
such amounts), fees and charges due Payees, reimbursement of Bank Expenses, or
other amounts constituting Obligations);


 


(b)                              If Maker fails to perform, keep, or
observe any term, provision, condition, covenant, or agreement contained in
this Agreement, in any of the Loan Documents, or in any other present or future
agreement between Maker and Payees or either of them,


 


(c)                                If there is a
Material Adverse Change;


 


(d)                              If any material
portion of Maker’s properties or assets is attached, seized, subjected to a
writ or distress warrant, or is levied upon, or comes into the possession of
any third Person;


 

















 


(e)                               If an
Insolvency Proceeding is commenced by Maker;


 


(f)                                If an Insolvency Proceeding
is commenced against Maker and any of the following
events occur: (a) Maker consents to the institution of the Insolvency
Proceeding against it; (b) the petition commencing the Insolvency
Proceeding is not  timely
controverted; (c) the petition commencing the Insolvency Proceeding is not
dismissed within forty five (45) calendar days of the date of the filing
thereof; provided, however, that, during the pendency of such period,
Payees and each of them shall be relieved of their obligation to extend credit
hereunder; (d) an interim trustee is appointed to take possession of all
or a substantial portion of the properties or assets of, or to operate all or
any substantial portion of the business of, Maker; or (e) an order for
relief shall have been issued or entered therein;


 


(g)                              If Maker is
enjoined, restrained, or in any way prevented by court order from continuing to
conduct all or any material part of its business affairs;


 


(h)                              If a notice of
Lien, levy, or assessment is filed of record with respect to any of Maker’s
properties or assets by the United States Government, or any federal, state,
local, or other Governmental Agency, or if any taxes or debts owing at any time
hereafter to any one or more of such entities becomes a Lien, whether choate or
otherwise, upon any of Maker’s properties or assets and the same is not paid on
the payment due date thereof;


 


(i)                                  If a judgment
or other claim becomes a Lien or encumbrance upon any portion of Maker’s
properties or assets;


 


j)                                      If there is a
default in any material agreement to which Maker is a party with one or more
third Persons and such default (a) occurs at the final maturity of the
obligations thereunder, or (b) results in a right by such third Person(s),
irrespective of whether exercised, to accelerate the maturity of Maker’s
obligations thereunder;


 


(k)                               If Maker makes
any payment on account of Indebtedness that has been contractually subordinated
in right of payment to the payment of the Obligations, except to the extent
such payment is permitted by the terms of the subordination provisions
applicable to such Indebtedness;


 


(l)                                  If any material
misstatement or misrepresentation exists now or hereafter in any warranty,
representation, statement, or report made to Payees by Maker or any officer,
employee, agent, or director of Maker, or if any such warranty or
representation is withdrawn; or.


 


(m)                            If an Event of Default
as defined elsewhere in the Loan Documents shall occur.


 

















 


(n)                                 Notwithstanding
anything contained in this Section 3 to the contrary, Payees shall refrain
from exercising their rights and remedies and an Event of Default shall not be
deemed to have occurred by reason of the occurrence of any of the events set
forth in subsections (c), (d), (g), (h), (i), or j) above if, within fifteen
(15) calendar days from the date thereof, the same is released, discharged,
dismissed, bonded against or satisfied.


 


4.                                       Remedies.


 


i)                                         On the
occurrence and during the continuance of any Event of Default, Payees may, at
their option:


 


(a)                              terminate their or either of their obligation to
disburse any amounts of the loan evidenced by this Note not yet disbursed;


 


(b)                             collect interest on the entire unpaid principal
amount of this Note from time to time outstanding at the Default Rate;


 


(e)                              declare all of
Maker’s Obligations under this Note immediately due and payable, without
notice, notice being expressly waived; and


 


(d)                              pursue any and every others right,
remedy, or power available to it under this Note or the other Loan Documents or
at law or in equity.


 


(ii)                               The rights,
remedies, and powers of Payees under and pursuant to this Note are cumulative
and concurrent, and may be pursued singly, successively, or together against
Maker, any endorser, guarantor, surety, accommodation party, if any, or person
liable or who may become liable hereunder, and any security given at any time
to secure the payment of Maker’s obligations, all at Payees’ sole discretion.
Payees may resort to any and every other right, remedy, or power available at
law or in equity without first exhausting the rights and remedies contained in
this Note, in Payees’ sole discretion.


 


(iii) Failure of Payees, for any period of time or on more than
one occasion, to exercise their option to accelerate the Maturity Date shall
not constitute a waiver of the right to exercise such right at any time during
the continued existence of any Event of Default or with respect to any prior, concurrent, or
subsequent Event of Default. Payees shall not, by any other act or omission, be
deemed to waive any of their rights or remedies under this Note unless such
waiver is contained in a writing signed by Payees, and then only to the extent
specifically set forth in such writing. A waiver in connection with one event
shall not be construed as continuing or as a bar to or waiver of any right or
remedy in connection with any other prior, concurrent, or subsequent event.


 


5.                                    Waivers and Consents. Maker and
each endorser, guarantor, surety, or accommodation party, if any, of this Note,
and each other person liable or who may become


 

















 


liable
for any part of the indebtedness evidenced by this Note, waives presentment for
payment, demand, notice of nonpayment, notice of dishonor, protest of any
dishonor, notice of protest and protest of this Note, and all other notices in
connection with the delivery, acceptance, performance, default, or enforcement
of the payment of this Note, and agree that their liability shall be
unconditional and without regard to the liability of any other person and shall
not in any manner be affected by any indulgence, extension of time, renewal,
waiver, or modification granted or consented to by Payees. Maker and each such
endorser, guarantor, surety, accommodation party, if any, and person liable or
who may become liable further consent to every indulgence, extension of time,
renewal, waiver, or modification that may be granted by Payees with respect to
the payment or other provisions of this Note, and to the release of any collateral
given to secure the payment of amounts owing under this Note, with or without
substitution, and agree that additional makers, endorsers, guarantors,
sureties, or accommodation parties, if any, may become parties to this Note
without notice to Maker or any other person and without affecting the liability
of Maker or any such other parties under this Note.


 


6.                                   Miscellaneous.


 


(a)                               Governing
Laws; Venue. The laws of the State of California shall govern
all questions with respect to the construction of this Note and the rights and
liabilities Maker, Payees, and all endorsers, guarantors, sureties, and
accommodation parties, if any. Any suit at law or action in equity shall be
brought solely in a Court of competent jurisdiction situated in Los Angeles
County, California.


 


(b)                              Binding
on Successors. This Note shall inure to the benefit of; and shall
be binding upon, the successors and assigns of Maker, Payees, and all endorsers,  guarantors,
sureties, and accommodation parties, if any.


 


(c)                               Attorney’s
Fees.


 


(i)                                  Maker shall
reimburse Payees for all reasonable attorneys’ fees, costs, and expenses
incurred by Payees in connection with the enforcement of Payees’ rights under
this Note. The foregoing fees, costs, and expenses include, without limitation,
those related to trial, appellate proceedings, out-of-court negotiations,
workouts, settlements, enforcement of rights under any state or federal
statute, intended or designed to protect or enforce Payees’ rights, including,
without limitation, those involving bankruptcy, insolvency, or other judicial
proceedings of every type, and the fees and expenses of any appraisers,
consultants, and expert witnesses retained or consulted by Payees in connection
with any such proceeding.


 


(ii)                               Payees shall be
entitled to recover from Maker Payees’ attorneys’ fees, costs, and expenses
incurred in any post-judgment proceedings to collect and enforce the judgment.


 

















 


(d)                              Joint
and Several Obligations; Survival. If Maker at any time
consists of more than one person, all Obligations of Maker shall be joint and
several and shall survive the merger of this Note into any judgment on this
Note.


 


(e)                               Entire
Agreement. This Note is subject to the
terms of the Loan Agreement. This Note, together with the Loan Agreement with
which it is executed, and the other Loan Documents referred to therein,
constitutes the entire agreement and understanding between the parties in
respect of the general subject matter hereof, and supersedes all prior or
contemporaneous agreements, understandings, and communications with respect to
such subject matter, whether oral or written.


 


(f)                                 Severability. If any term
or provision of this Note is finally determined by a Court of competent
jurisdiction to be invalid or unenforceable for any reason, such determination
shall not affect the validity or enforceability of any other term or provision,
or of the same term or provision as applied in a different circumstance, all of
which shall remain in effect except to the extent of such determination.


 


(g)                              Waiver. Waiver by
Payees of any term, covenant, or condition under this Note, shall be effective
or binding on Payees only if made in writing by Agent or Payees and
specifically setting forth the nature and extent of such waiver.. No such
waiver shall be implied from any failure or delay by Payees to insist on strict
performance of, or to take action to enforce, any such term~ covenant,
condition, or default. A waiver in connection with one event shall not constitute
or be construed as continuing or as a bar to or waiver of any right or remedy
in connection with any other prior, concurrent, or subsequent event. This Note
and all of the terms hereof may be amended only by an instrument in writing
signed by Maker and Payees.


 


(h)    Construction of Note.
Maker and Payees are all financially sophisticated parties, and each has had
the opportunity to have its attorneys participate in the negotiation and
preparation of this Note. Accordingly, Maker and Payees shall be deemed for all
purposes to have mutually drafted and prepared this Note and each and every
provision thereof, and no ambiguity shall be resolved for or against either
party based on which party drafted this Note or any portion thereof The
masculine, feminine, and neuter genders, and the singular and plural numbers,
shall each include the other(s) when the context so indicates. All
monetary figures expressed in this Note as “$”
or “Dollars” refer to Dollars of the United States of America unless
otherwise specified.


 


(i)                                  Defined Terms. All terms which
appear in this Note with initial capital letters are defined as set forth in
this Note and, if not so defined, then as set forth in the Amended and Restated
Loan Agreement of even date herewith (“Loan Agreement”) entered into by
Maker, as “Borrower” and Payees as “Banks” or “Lenders”.


 


(j)                                  Intent
to Limit Charges to Maximum Lawful Rate. In no event shall the
interest rate or rates payable under this Note, plus any other amounts paid in
connection herewith, exceed the highest rate permissible under any law that a
court of competent jurisdiction shall, in a final determination, deem
applicable. Maker and Payees, in


 

















 


executing and delivering this Note, intend
legally to agree upon the rate or rates of interest and manner of payment
stated within it; provided, however, that, anything
contained herein to the contrary notwithstanding, if said rate or rates of
interest or manner of payment exceeds the maximum allowable under applicable
law, then, ipso facto as of the date of this Note, Maker is and shall be liable
only for the payment of such maximum as allowed by law, and payment received
from Maker in excess of such legal maximum, whenever received, shall be applied
to reduce the principal balance of the Obligations to the extent of such
excess.


 


7.                                   Choice of Law and Venue; JURY TRIAL
WAIVER. THE VALIDITY OF THIS NOTE AND THE OTHER LOAN
DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN
DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF ANDTHEREOF, AND THE RIGHTS OF THE  PARTIES HERETO AND THERETO
WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR


 


RELATED
HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA. THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH
THIS NOTE AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AN]) LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF LOS ANGELES, STATE OF  CALIFORNIA OR, AT THE SOLE OPTION OF PAYEES, IN ANY OTHER COURT IN WHICH PAYEES SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS
AND WHICH HAS SUBJECT MATTER JURISDICTION OVER THE MATTER IN CONTROVERSY. EACH OF MAKER AND PAYEES WAIVES TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT
EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CON VENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 7. MAKER AND PAYEES HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN,
INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL
OTHER COMMON LAW OR STATUTORY CLAIMS. EACH OF MAKER
AND PAYEES REPRESENT THAT IT HAS REVIEWED THIS WAIVER AND EACH
KNOWINGLY AND VOLUNTARILY
WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS NOTE MAY BE FILED AS A WRITTEN CONSENT
TO A TRIAL BY THE COURT.


 


[SIGNATURE
PAGE FOLLOWS]


 

















 


	
   

  	
  Maker:

  
	
   

  	
  KENNEDY-WILSON,
  INC.,

  
	
   

  	
  a
  Delaware corpopration

  
	
   

  	
  By:

  	
  /s/
  William J. McMorrow

  
	
   

  	
   

  	
  Chief
  Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Freeman Lyle

  
	
   

  	
   

  	
  Chief
  Financial Officer, and

  
	
   

  	
   

  	
  Secretary