Exhibit 10.2


 


	
   

   

   

   

   

   

   

   

   

   

   

   

   

  LAND
  COURT

  	
  REGULAR
  SYSTEM

  
	
   

  
	
  Return By Mail  o  Pick-Up 
  o  To: 

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  WELLS FARGO BANK, NATIONAL ASSOCIATION

  	
   

  	
   

  
	
  Real Estate Group (AU
  #13161)

  	
   

  	
   

  
	
  11601 Wilshire Boulevard,
  17th Floor

  	
   

  	
   

  
	
  Los Angeles, CA 90025

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Attn: Karen Whitehead

  	
   

  	
   

  
	
  Loan
  No. 105088

  	
   

  	
   

  
	
   

  
	
  TITLE OF DOCUMENT:

  	
   

  	
   

  
	
  FEE
  AND LEASEHOLD MORTGAGE WITH ABSOLUTE ASSIGNMENT OF LEASES 

  AND
  RENTS, SECURITY AGREEMENT AND FIXTURE FILING

  
	
   

  
	
  PARTIES TO DOCUMENT:

  
	
   

  	
   

  	
   

  
	
  MORTGAGOR:

  	
   

  	
  MAUI LAND & PINEAPPLE
  COMPANY, INC., a Hawaii corporation, and KAPALUA LAND COMPANY, LTD., a Hawaii
  corporation

  
	
   

  	
   

  	
   

  
	
  MORTGAGEE:

  	
   

  	
  WELLS FARGO BANK, N.A., a
  national banking association, as 

  “Administrative Agent” on
  behalf of all current and future lenders under 

  the Loan Agreement defined
  in Section 2.1 below

  
	
   

  	
   

  	
  11601 Wilshire Boulevard,
  17th Floor

  
	
   

  	
   

  	
  Los Angeles, CA 90025

  
	
   

  
	
  TAX MAP KEY(S):

  	
   

  	
  Maui 4-2-1-42

  	
  (This document consists of
  ____ pages.)

  
	
   

  	
   

  	
  Maui 4-2-4-24, 35, 36
  & 43

  
	
   

  	
   

  	
  Maui 4-2-5-37, 39, 44, 45,
  47 & 49

  
	
   

  	
   

  	
  Maui 4-3-1-6 & 8

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
								



 


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THIS MORTGAGE SECURES NOTES WHICH
PROVIDE FOR A VARIABLE INTEREST RATE


 


FEE AND LEASEHOLD MORTGAGE WITH
ABSOLUTE ASSIGNMENT OF LEASES 


AND RENTS, SECURITY AGREEMENT AND
FIXTURE FILING


 


 


THE PARTIES TO THIS FEE AND LEASEHOLD MORTGAGE WITH ABSOLUTE ASSIGNMENT
OF LEASES AND RENTS, SECURITY AGREEMENT AND FIXTURE FILING (“Mortgage”), made
as of November 13, 2007, are MAUI LAND & PINEAPPLE
COMPANY, INC., a Hawaii corporation (“MLP Mortgagor”), whose address
is 120 Kane Street, Kahului, Maui County, HI 96733, and KAPALUA LAND
COMPANY, LTD., a Hawaii
corporation (“KLC Mortgagor”), whose address is 120 Kane Street, Kahului, Maui
County, HI 96733 (MLP Mortgagor and KLC Mortgagor are collectively referred to
as “Mortgagor”), for the benefit of WELLS FARGO BANK, N.A., a national banking
association, as “Administrative Agent” on behalf of all current and future
lenders under the Loan Agreement defined in Section 2.1 below
(“Mortgagee”), whose address is 11601 Wilshire Boulevard, 17th
Floor, Los Angeles, California 90025.


 


ARTICLE 1.  MORTGAGE


 


1.1                        GRANT. 
For the purposes of and upon the terms and conditions in this Mortgage,
Mortgagor, for valuable consideration, the receipt of which is hereby
acknowledged, Mortgagor does hereby irrevocably mortgage, grant, bargain, sell,
pledge, assign, warrant, transfer and convey to Mortgagee, and its successors
and assigns, the following property, rights, interests and estates now owned,
or hereafter acquired by Mortgagor (collectively, the “Subject Property”):


 


(a)                        Land.  The real
property described in Exhibit A attached hereto and made a part hereof
(the “Fee Land”);


(b)                       Ground Lease.  All right, title and interest in, to and
under that certain The Plantation Course Lease, dated May 7, 1992, between MLP
Mortgagor, as lessor, and KLC Mortgagor, as lessee, and recorded in the Bureau
of Conveyances of the State of Hawaii as Document No. 92-079742, which lease
was amended by instrument dated December 4, 1995 and recorded in said Bureau as
Document No. 95-166080, the lessee’s interest under which (as to an undivided
4/10ths interest) was assigned to MLP Mortgagor by instrument dated
December 19, 1995 and recorded in said Bureau as Document No. 96-000274 (as
amended, assigned, restated, replaced, supplemented or otherwise modified from
time to time, the “Ground Lease” ), and the leasehold estate created thereby in
the real property or air rights leased thereby, being more particularly
described in Exhibit A attached hereto and made a part hereof (the “Leasehold
Land”, and together with the Fee Land, collectively, the “Land”), together with
all buildings, structures, fixtures, additions, enlargements, extensions,
modifications, repairs and replacements now or hereafter erected on the Leasehold
Land and together with all appurtenances including, but not limited to
(i) extension, renewal, modification and option rights and all of the
estate and right of Mortgagor of, in, and to the Leasehold Land under and by
virtue of the Ground Lease, (ii) all credits to and deposits of Mortgagor under
the Ground Lease and all other options, privileges and rights granted and
demised to Mortgagor under the Ground Lease and (iii) all the right or
privilege of Mortgagor to terminate, cancel, surrender or merge the Ground
Lease;


(c)                        Additional Land. 
All additional lands, estates and development rights hereafter acquired
by Mortgagor for use in connection with the Land and the development of the
Land and all additional lands and estates therein which may, from time to time,
by supplemental mortgage or otherwise be expressly made subject to the lien of
this Mortgage;


 


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(d)                       Improvements. 
The buildings, structures, fixtures, additions, enlargements,
extensions, modifications, repairs, replacements and improvements now or
hereafter erected or located on the Land (collectively, the “Improvements”);


(e)                        Easements.  All
easements, rights-of-way or use, rights, strips and gores of land, streets,
ways, alleys, passages, sewer rights, water, water courses, water rights and
powers, air rights and development rights, all minerals, oil, gas and other
hydrocarbon substances, and all estates, rights, titles, interests, privileges,
liberties, servitudes, tenements, hereditaments and appurtenances of any nature
whatsoever, in any way now or hereafter belonging, relating or pertaining to
the Land and the Improvements and the reversions and remainders, and all land
lying in the bed of any street, road or avenue, opened or proposed, in front of
or adjoining the Land, to the center line thereof and all the estates, rights,
titles, interests, rights of dower, rights of curtesy, property, possession,
claim and demand whatsoever, both at law and in equity, of Mortgagor of, in and
to the Land and the Improvements and every part and parcel thereof, with the
appurtenances thereto;


(f)                          Equipment.  All “equipment,”
as such term is defined in Article 9 of the Uniform Commercial Code (as
hereinafter defined), now owned or hereafter acquired by Mortgagor, which is
used at or in connection with the Improvements or the Land or is located
thereon or therein (including, but not limited to, all machinery, equipment,
furnishings, and electronic data-processing and other office equipment now
owned or hereafter acquired by Mortgagor and any and all additions,
substitutions and replacements of any of the foregoing), together with all
attachments, components, parts, equipment and accessories installed thereon or
affixed thereto (collectively, the “Equipment”).  Notwithstanding the foregoing, the Equipment
shall not include any property belonging to tenants under leases or guests or
invitees at the Subject Property except to the extent that Mortgagor shall have
any right or interest therein;


(g)                       Fixtures.  All Equipment
now owned, or the ownership of which is hereafter acquired, by Mortgagor which
is so related to the Land and Improvements forming part of the Subject Property
that it is deemed fixtures or real property under the law of the particular
state in which the Equipment is located, including, without limitation, all
building or construction materials intended for construction, reconstruction,
alteration or repair of or installation on the Subject Property, construction
equipment, appliances, machinery, plant equipment, fittings, apparatuses,
fixtures and other items now or hereafter attached to, installed in or used in
connection with (temporarily or permanently) any of the Improvements or the
Land, including, but not limited to, engines, devices for the operation of
pumps, pipes, plumbing, call and sprinkler systems, fire extinguishing
apparatuses and equipment, heating, ventilating, incinerating, electrical, air
conditioning and air cooling equipment and systems, gas and electric machinery,
appurtenances and equipment, pollution control equipment, security systems,
disposals, dishwashers, refrigerators and ranges, recreational equipment and
facilities of all kinds, and water, gas, electrical, storm and sanitary sewer
facilities, utility lines and equipment (whether owned individually or jointly
with others, and, if owned jointly, to the extent of Mortgagor’s interest
therein) and all other utilities whether or not situated in easements, all
water tanks, water supply, water power sites, fuel stations, fuel tanks, fuel
supply, and all other structures, together with all accessions, appurtenances,
additions, replacements, betterments and substitutions for any of the foregoing
and the proceeds thereof (collectively, the “Fixtures”).  Notwithstanding the foregoing, “Fixtures”
shall not include any property which tenants are entitled to remove pursuant to
leases except to the extent that Mortgagor shall have any right or interest
therein;


(h)                       Personal Property. 
All furniture, furnishings, objects of art, machinery, goods, tools,
supplies, appliances, (including, but not limited to, beds, bureaus,
chiffoniers, chests,


 


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                                      chairs, desks, lamps, mirrors, bookcases,
tables, rugs, carpeting, drapes, draperies, curtains, shades, venetian blinds,
screens, paintings, hangings, pictures, divans, couches, luggage carts, luggage
racks, stools, sofas, chinaware, linens, pillows, blankets, glassware,
foodcarts, cookware, dry cleaning facilities, dining room wagons, keys or other
entry systems, icemakers, radios, television sets, intercom and paging
equipment, electric and electronic equipment, dictating equipment, private
telephone systems, medical equipment, potted plants, heating, lighting and
plumbing fixtures, fire prevention and extinguishing apparatus, cooling and
air-conditioning systems, elevators, escalators, fittings, plants, apparatus,
stoves, ranges, refrigerators, laundry machines, tools, machinery, engines,
dynamos, motors, boilers, incinerators, switchboards, conduits, compressors,
vacuum cleaning systems, floor cleaning, waxing and polishing equipment, call
systems, brackets, electrical signs, bulbs, bells, ash and fuel, conveyors,
cabinets, lockers, shelving, spotlighting equipment, dishwashers, garbage
disposals, washers and dryers), contract rights, franchises, licenses,
certificates and permits, and all other customary hotel equipment and personal
property of any kind or character whatsoever as defined in and subject to the
provisions of the Uniform Commercial Code, whether tangible or intangible,
other than Fixtures, which are now or hereafter owned by Mortgagor and which
are located within or about the Land and the Improvements, together with all
accessories, replacements and substitutions thereto or therefor and the proceeds
thereof (collectively, the “Personal Property”), and the right, title and
interest of Mortgagor in and to any of the Personal Property which may be
subject to any security interests, as defined in the Uniform Commercial Code,
as adopted and enacted by the state or states where any of the Subject Property
is located (the “Uniform Commercial Code”), superior in lien to the lien of
this Mortgage and all proceeds and products of the above.  Notwithstanding the foregoing, the Personal
Property shall not include any property belonging to tenants under Leases or
guests or invitees at the Subject Property except to the extent that Mortgagor
shall have any right or interest therein;


(i)                           Leases and Rents. 
All leases, subleases or subsubleases, lettings, licenses, concessions
or other agreements (whether written or oral), pursuant to which any person or
party is granted a possessory interest in, or right to use or occupy all or any
portion of the Land and the Improvements, and every modification, amendment or
other agreement relating to such leases, subleases, subsubleases, or other
agreements entered into in connection with such leases, subleases,
subsubleases, or other agreements and every guarantee of the performance and
observance of the covenants, conditions and agreements to be performed and
observed by the other party thereto, heretofore or hereafter entered into
(collectively, the “Leases”), whether before or after the filing by or against
Mortgagor of any petition for relief under 11 U.S.C. §101 et seq., as the
same may be amended from time to time (the “Bankruptcy Code”) and all right,
title and interest of Mortgagor, its successors and assigns therein and
thereunder, including, without limitation, cash or securities deposited
thereunder to secure the performance by the lessees of their obligations
thereunder and all rents, additional rents, revenues, issues and profits
arising from the Leases and renewals thereof together with all rents, rent
equivalents, income, fees, receivables, accounts, profits, (including, but not
limited to, all oil and gas or other mineral royalties and bonuses), charges
for services rendered and any and all payment and consideration of whatever
form or nature received by Mortgagor or its agents or employees from any and
all sources relating to the use, enjoyment and occupancy of the Subject
Property, including, without limitation, all revenues and credit card receipts
collected from guest rooms, restaurants, room service, bars, meeting rooms,
banquet rooms and recreational facilities, all receivables, customer
obligations, installment payment obligations and other obligations now existing
or hereafter arising or created out of the sale, lease, sublease, license,
concession or other grant of the right of the use and occupancy of property or
rendering of services 


 


 


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                                      by Mortgagor or any operator or manager
of the hotel or the commercial space located in the Improvements or acquired
from others (including, without limitation, from the rental of any office
space, retail space, guest rooms or other space, halls, stores, and offices,
and deposits securing reservations of such space), license, lease, sublease and
concession fees and rentals, health club membership fees, food and beverage wholesale
and retail sales, service charges, vending machine sales and proceeds, movie
rentals, telephone service, if any, from business interruption or other loss of
income insurance from the Land and the Improvements whether paid or accrued
before or after the filing by or against Mortgagor of any petition for relief
under the Bankruptcy Code (collectively, the “Rents”) and all proceeds from the
sale or other disposition of the Leases and the right to receive and apply the
Rents to the payment of the Secured Obligations;


(j)                           Condemnation Awards. 
All awards or payments, including interest thereon, which may heretofore
and hereafter be made with respect to the Subject Property, whether from the
exercise of the right of eminent domain (including, but not limited to, any
transfer made in lieu of or in anticipation of the exercise of the right), or
for a change of grade, or for any other injury to or decrease in the value of
the Subject Property;


(k)                        Insurance Proceeds. 
All proceeds in respect of the Subject Property under any insurance
policies covering the Subject Property, including, without limitation, the
right to receive and apply the proceeds of any insurance, judgments, or
settlements made in lieu thereof, for damage to the Subject Property;


(l)                           Tax Certiorari. 
All refunds, rebates or credits in connection with reduction in real
estate taxes and assessments charged against the Subject Property as a result
of tax certiorari or any applications or proceedings for reduction;


(m)                     Conversion.  All proceeds
of the conversion, voluntary or involuntary, of any of the foregoing including,
without limitation, proceeds of insurance and condemnation awards, into cash or
liquidation claims;


(n)                       Rights.  The right, in
the name and on behalf of Mortgagor, to appear in and defend any action or
proceeding brought with respect to the Subject Property and to commence any
action or proceeding to protect the interest of Mortgagee in the Subject
Property;


(o)                       Agreements.  All
agreements, contracts, certificates, instruments, franchises, permits, licenses
(including, without limitation, liquor licenses, if any, to the extent
permitted by applicable law), plans, specifications and other documents, now or
hereafter entered into, and all rights therein and thereto, respecting or pertaining
to the use, occupation, construction, management or operation of the Land and
any part thereof and any Improvements or any business or activity conducted on
the Land and any part thereof and all right, title and interest of Mortgagor
therein and thereunder, including, without limitation, the right, upon the
happening of any Default hereunder, to receive and collect any sums payable to
Mortgagor thereunder;


(p)                       Trademarks.  All
tradenames, trademarks, servicemarks and logos that are used exclusively in
connection with the operation of the Subject Property, which is intended to
exclude from the Subject Property, without limitation, all tradenames,
trademarks, servicemarks and logos incorporating the words Kapalua, Maui
Pineapple or Maui Gold, or using in any form either the butterfly or
pineapple logos, and variations thereof, and all copyrights, goodwill,
books and records and any other general intangibles relating to or used in
connection with the operation of the Subject Property;


 


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(q)                       Accounts.  All reserves,
escrows and deposit accounts maintained by Mortgagor that are exclusively
related to the operation of the Subject Property, and all cash, checks, drafts,
certificates, securities, investment property, financial assets, instruments
and other property held from time to time in such deposit accounts that are
exclusively related to the operation of the Subject Property, and all proceeds,
products, distributions or dividends or substitutions thereon and thereof; and


(r)                          Other Rights. 
Any and all other rights of Mortgagor in and to the items set forth in
Subsections (a) through (q) above, and all interest or estate which Mortgagor
may hereafter acquire in the property described above, and all additions and
accretions thereto, and the proceeds of any of the foregoing.  The listing of specific rights or property
shall not be interpreted as a limit of general terms.


ARTICLE
2.  OBLIGATIONS SECURED


 


2.1                        OBLIGATIONS SECURED. 
Mortgagor makes this Mortgage for the purpose of securing the following
obligations (“Secured Obligations”):


 


(a)                        Payment to Mortgagee of all sums at any
time owing under those certain Promissory Notes (“Notes”) of even date
herewith, in the aggregate principal amount of NINETY MILLION AND NO/100
DOLLARS ($90,000,000.00), executed by MLP Mortgagor, as borrower, and payable
to the order of a Lender (as defined under that certain Loan Agreement (“Loan
Agreement”) of even date herewith, by and between MLP Mortgagor, as borrower,
and various lenders); and


 


(b)                       Payment and performance of all covenants
and obligations of Mortgagor under this Mortgage; and


 


(c)                        Payment and performance of all covenants
and obligations on the part of MLP Mortgagor under that the Loan Agreement; and


 


(d)                       Payment and performance of all covenants
and obligations, if any, of any rider attached as an Exhibit to this Mortgage;
and


 


(e)                        Payment and performance of all future
advances and other obligations that the then record owner of all or part of the
Subject Property may agree to pay and/or perform (whether as principal, surety
or guarantor) for the benefit of Mortgagee, when such future advance or
obligation is evidenced by a writing which recites that it is secured by this
Mortgage; and Mortgagor hereby acknowledges and agrees that this Mortgage is given
to secure advances that may be made by Mortgagee and obligations that may be
incurred by Mortgagor in addition and subsequent to the advances evidenced by
the Notes; provided, however, that the aggregate principal amount
of future advances outstanding at any time shall not exceed $10,000,000.00 and
not being a commitment by Mortgagee to make future advances and provided
further that the aggregate amount of principal indebtedness secured by this
Mortgage in all events shall not exceed $100,000,000.00; and


 


(f)                          Payment and performance of all covenants
and obligations of Mortgagor under any interest rate swap agreement, or other
interest rate agreement executed by and between Mortgagor and Mortgagee, which
agreement is evidenced by a writing which recites that it is secured by this
Mortgage; and


 


(g)                       All modifications, extensions and
renewals of any of the obligations secured hereby, however evidenced,
including, without limitation: (i) modifications of the required principal
payment dates or interest payment dates or both, as the case may be, deferring
or accelerating payment dates wholly or partly; or (ii) modifications, 


 


 


6

















 


extensions or renewals at
a different rate of interest whether or not in the case of a note, the
modification, extension or renewal is evidenced by a new or additional
promissory note or notes.


 


2.2                        OBLIGATIONS. 
The term “obligations” is used herein in its broadest and most
comprehensive sense and shall be deemed to include, without limitation, all
interest and charges, prepayment charges (if any), late charges and loan fees
at any time accruing or assessed on any of the Secured Obligations.


 


2.3                        INCORPORATION. 
All terms of the Secured Obligations and the documents evidencing such
obligations are incorporated herein by this reference.  All persons who may have or acquire an
interest in the Subject Property shall be deemed to have notice of the terms of
the Secured Obligations and to have notice, if provided therein, that:  (a) the Notes or the Loan Agreement may
permit borrowing, repayment and re-borrowing so that repayments shall not
reduce the amounts of the Secured Obligations; and (b) the rate of interest on
one or more Secured Obligations may vary from time to time.


 


ARTICLE
3.  ASSIGNMENT OF LEASES AND RENTS


 


3.1                        ASSIGNMENT. 
Mortgagor absolutely and irrevocably assigns to Mortgagee all of
Mortgagor’s right, title and interest in, to and under:  (a) all Leases of the Subject Property or any
portion thereof; and (b) the rents, revenue, income, issues, deposits and
profits of the Subject Property, including, without limitation, all amounts
payable and all rights and benefits accruing to Mortgagor under the Leases (“Payments”).
The term “Leases” shall also include all guarantees of and security for the
lessees’ performance thereunder, and all amendments, extensions, renewals or
modifications thereto which are permitted hereunder. This is a present and
absolute assignment, not an assignment for security purposes only, and
Mortgagee’s right to the Leases and Payments is not contingent upon, and may be
exercised without possession of, the Subject Property.


 


3.2                        GRANT OF LICENSE. 
Mortgagee confers upon Mortgagor a revocable license (“License”) to
collect and retain the Payments as they become due and payable, until the
occurrence of a Default. Upon a Default, the License shall be automatically
revoked and Mortgagee may collect and apply the Payments pursuant to that
certain Section entitled Application of Other Sums without notice and
without taking possession of the Subject Property.  Mortgagor hereby irrevocably authorizes and
directs the lessees under the Leases to rely upon and comply with any notice or
demand by Mortgagee for the payment to Mortgagee of any rental or other sums
which may at any time become due under the Leases, or for the performance of
any of the lessees’ undertakings under the Leases, and the lessees shall have
no right or duty to inquire as to whether any Default has actually occurred or
is then existing hereunder.  Mortgagor
hereby relieves the lessees from any liability to Mortgagor by reason of
relying upon and complying with any such notice or demand by Mortgagee.


 


3.3                        EFFECT OF ASSIGNMENT. 
The foregoing irrevocable assignment shall not cause Mortgagee to be:
(a) a mortgagee in possession; (b) responsible or liable for the control, care,
management or repair of the Subject Property or for performing any of the
terms, agreements, undertakings, obligations, representations, warranties,
covenants and conditions of the Leases; or (c) responsible or liable for any
waste committed on the Subject Property by the lessees under any of the Leases
or any other parties; for any dangerous or defective condition of the Subject
Property; or for any negligence in the management, upkeep, repair or control of
the Subject Property resulting in loss or injury or death to any lessee,
licensee, employee, invitee or other person. Mortgagee shall not directly or
indirectly be liable to Mortgagor or any other person as a consequence of: (i)
the exercise or failure to exercise by Mortgagee, or any of their respective
employees, agents, contractors or subcontractors, any of the rights, remedies
or powers granted to Mortgagee hereunder; or 


 


 


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(ii) the failure or
refusal of Mortgagee to perform or discharge any obligation, duty or liability
of Mortgagor arising under the Leases.


 


3.4                        REPRESENTATIONS AND
WARRANTIES.  Mortgagor represents and warrants that:  (a) the Schedule of Leases attached
hereto as Schedule 1 is, as of the date hereof, a true, accurate and
complete list of all Leases; (b) all existing Leases are in full force and
effect and are enforceable in accordance with their respective terms except as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws of general application relating to
or affecting the rights and remedies of creditors and by general equitable
principles, regardless of whether such enforceability is considered in a
proceeding in equity or at law, and, to Mortgagor’s knowledge, no breach or
default, or event which would constitute a breach or default after notice or
the passage of time, or both, exists under any existing Leases on the part of
any party; (c) no rent or other payment under any existing Lease has been paid
by any lessee for more than one (1) month in advance; and (d) none of the
lessor’s interests under any of the Leases has been transferred or assigned.


 


3.5                        COVENANTS. Mortgagor covenants and agrees at
Mortgagor’s sole cost and expense to: (a) perform in all material respects the
obligations of lessor contained in the Leases and enforce by all available
remedies performance in all material respects by the lessees of the obligations
of the lessees contained in the Leases; (b) give Mortgagee prompt written
notice when Mortgagor learns of any default which occurs with respect to any of
the Leases, whether the default be that of the lessee or of the lessor; (c)
deliver to Mortgagee fully executed, counterpart original(s) of each and every
Lease if requested to do so; and (e) execute and record such additional
assignments of any Lease or specific subordinations (or subordination,
attornment and non-disturbance agreements executed by the lessor and lessee) of
any Lease to this Mortgage, in form and substance reasonably acceptable to
Mortgagee, as Mortgagee may request. 
Mortgagor shall not, without Mortgagee’s prior written consent (which
shall be given or withheld within 20 days of Mortgagor’s written request
therefore and delivery of all information relating thereto as Mortgagee may
reasonably request) or as otherwise permitted by any provision of the Loan
Agreement: (i) enter into any Leases after the date hereof except for Permitted
Leases (as defined in the Loan Agreement); (ii) execute any other assignment
relating to any of the Leases; (iii) discount any rent or other sums due under
the Leases or collect the same in advance, other than to collect rentals one
(1) month in advance of the time when it becomes due; (iv) terminate, modify or
amend any of the terms of the Leases other than Permitted Leases or in any
manner release or discharge the lessees from any obligations thereunder; (v)
consent to any assignment or subletting by any lessee; or (vi) subordinate or
agree to subordinate any of the Leases to any other mortgage or
encumbrance.  Any such attempted action
in violation of the provisions of this Section shall be null and void. Without
in any way limiting the requirement of Mortgagee’s consent hereunder, any sums
received by Mortgagor in consideration of any termination (or the release or
discharge of any lessee) modification or amendment of any Lease shall be
applied to reduce the outstanding Secured Obligations and any such sums
received by Mortgagor shall be held in trust by Mortgagor for such purpose.


 


3.6                        ESTOPPEL CERTIFICATES. 
Within thirty (30) days after written request by Mortgagee, Mortgagor
shall use its reasonable efforts to obtain and deliver to Mortgagee and to any
party designated by Mortgagee estoppel certificates executed by Mortgagor and
by each of the lessees, in recordable form, certifying (if such be the
case):  (a) that the foregoing assignment
and the Leases are in full force and effect; (b) the date of each lessee’s most
recent payment of rent; (c) that there are no defenses or offsets outstanding,
or stating those claimed by Mortgagor or lessees under the foregoing assignment
or the Leases, as the case may be; and (d) any other information reasonably
requested by Mortgagee.


 


 


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ARTICLE
4.  SECURITY AGREEMENT AND FIXTURE FILING


 


4.1                        SECURITY INTEREST. 
Mortgagor hereby grants and assigns to Mortgagee as of the “Effective
Date” (defined in the Loan Agreement) a security interest, to secure payment
and performance of all of the Secured Obligations, in all of the following
described personal property in which Mortgagor now or at any time hereafter has
any interest (collectively, the “Collateral”):


 


All goods, building and other materials, supplies,
inventory, work in process, equipment, machinery, fixtures, furniture,
furnishings, signs and other personal property and embedded software included
therein and supporting information, wherever situated, which are or are to be
incorporated into, used in connection with, or appropriated for use on (i) the
Land described on Exhibit A attached hereto and incorporated by
reference herein or (ii) any existing or future improvements on the Land;
together with all rents and security deposits derived from the Subject
Property; all inventory, accounts, cash receipts, deposit accounts, accounts
receivable, contract rights, licenses, agreements, general intangibles, payment
intangibles, software, chattel paper (whether electronic or tangible),
instruments, documents, promissory notes, drafts, letters of credit, letter of
credit rights, supporting obligations, insurance policies, insurance and
condemnation awards and proceeds, proceeds of the sale of promissory notes, any
other rights to the payment of money, trade names, trademarks and service marks
arising from or related to the ownership, management, leasing, operation, sale
or disposition of the Subject Property; all development rights and credits, and
any and all permits, consents, approvals, licenses, authorizations and other
rights granted by, given by or obtained from, any governmental entity with
respect to the Subject Property; all water and water rights including, without
limitation, all of Mortgagor’s right, title and interest in and to that certain
Agreement for Water Delivery dated June 21, 2006, but effective as of January
1, 2006 between KLC Mortgagor and Maui Pineapple Company, Ltd., a Hawaii
corporation (as amended, assigned, restated, replaced, supplemented or
otherwise modified from time to time), wells
and well rights, canals and canal rights, ditches and ditch rights, springs and
spring rights, and reservoirs and reservoir rights appurtenant to or associated
with the Subject Property, whether decreed or undecreed, tributary,
non-tributary or not non-tributary, surface or underground or appropriated or
unappropriated, and all shares of stock in water, ditch, lateral and canal
companies, well permits and all other evidences of any of such rights; all
deposits or other security now or hereafter made with or given to utility
companies by Mortgagor with respect to the Subject Property; all advance
payments of insurance premiums made by Mortgagor with respect to the Subject
Property; all plans, drawings and specifications relating to the Subject Property;
all loan funds held by Mortgagee, whether or not disbursed; all funds deposited
with Mortgagee pursuant to any loan agreement; all reserves, deferred payments,
deposits, accounts, refunds, cost savings and payments of any kind related to
the Subject Property or any portion thereof; together with all personal
property described in Section 1.1 and any replacements and proceeds of, and
additions and accessions to, any of the foregoing; together with all books,
records and files relating to any of the foregoing.  Notwithstanding the foregoing,
Collateral shall not include (i) any tradenames, trademarks, servicemarks and
logos, unless they are used exclusively in connection with the operation
of the Subject Property, which is intended to exclude from the Collateral,
without limitation, all tradenames, trademarks, servicemarks and logos
incorporating the words Kapalua, Maui Pineapple or Maui Gold, or
using in any form either the butterfly or pineapple logos, and
variations thereof, or (ii) any deposit accounts unless they are comprised of
funds that are exclusively related to the operation of the Subject
Property.  For purposes of this
collateral description, the parties acknowledge that the terms “accounts” and “accounts
receivable” do not include “deposit accounts.”


 


 


9

















 


 


As to all of the above described personal property which
is or which hereafter becomes a “fixture” under applicable law, this Mortgage
constitutes a fixture filing under the Uniform Commercial Code, as amended or
recodified from time to time, and is acknowledged and agreed to be a “mortgage”
under the Uniform Commercial Code.


 


4.2                        REPRESENTATIONS AND
WARRANTIES.  Mortgagor represents and warrants that:
(a) Mortgagor has, or will have, good title to the Collateral; (b)
Mortgagor has not previously assigned or encumbered the Collateral, and no
financing statement covering any of the Collateral has been delivered to any
other person or entity; (c) Mortgagor’s principal place of business is located
at the address shown in that certain Section entitled Notices; and
(d) Mortgagor’s legal name is exactly as set forth on the first page of
this Mortgage and all of Mortgagor’s organizational documents or agreements
delivered to Mortgagee are complete and accurate in every respect.


 


4.3                        COVENANTS. 
Mortgagor agrees:  (a) to execute
and deliver such documents as Mortgagee deems reasonably necessary to create,
perfect and continue the security interests contemplated hereby; (b) not to
change its name, and as applicable, its chief executive office, its principal
residence or the jurisdiction in which it is organized and/or registered
without giving Mortgagee prior written notice thereof; (c) to cooperate with
Mortgagee in perfecting all security interests granted herein and in obtaining
such agreements from third parties as Mortgagee deems reasonably necessary,
proper or convenient in connection with the preservation, perfection or
enforcement of any of its rights hereunder; and (d) that Mortgagee is authorized
to file financing statements in the name of Mortgagor to perfect Mortgagee’s
security interest in the Collateral.


 


4.4                        RIGHTS OF MORTGAGEE. 
In addition to Mortgagee’s rights as a “Secured Party” under the Uniform
Commercial Code, Mortgagee may, but shall not be obligated to, at any time
without notice and at the expense of Mortgagor: (a) give notice to any person
of Mortgagee’s rights hereunder and enforce such rights at law or in equity;
(b) if Mortgagee has failed to do so after fifteen (15) days have elapsed after
written notice thereof has been given by Mortgagee to Mortgagor, insure,
protect, defend and preserve the Collateral or any rights or interests of
Mortgagee therein; (c) inspect the Collateral; and (d) endorse, collect and
receive any right to payment of money owing to Mortgagor under or from the
Collateral. Notwithstanding the above, in no event shall Mortgagee be deemed to
have accepted any property other than cash in satisfaction of any obligation of
Mortgagor to Mortgagee unless Mortgagee shall make an express written election
of said remedy under applicable law.


 


4.5                        RIGHTS OF MORTGAGEE ON
DEFAULT.  Upon the occurrence of a Default (hereinafter
defined) under this Mortgage, then in addition to all of Mortgagee’s rights as
a “Secured Party” under the Uniform Commercial Code or otherwise at law:


 


(a)                        Mortgagee may (i) upon written notice,
require Mortgagor to assemble any or all of the Collateral and make it
available to Mortgagee at a place designated by Mortgagee; (ii) without prior
notice, enter upon the Subject Property or other place where any of the
Collateral may be located and take possession of, collect, sell, lease, license
and dispose of any or all of the Collateral, and store the same at locations
acceptable to Mortgagee at Mortgagor’s expense; (iii) sell, assign and deliver
at any place or in any lawful manner all or any part of the Collateral and bid
and become the purchaser at any such sales;


 


(b)                       Mortgagee may, for the account of
Mortgagor and at Mortgagor’s expense: (i) operate, use, consume, sell or
dispose of the Collateral as Mortgagee deems appropriate for the purpose of
performing any or all of the Secured Obligations; (ii) enter into any
agreement, compromise, or settlement, including insurance claims, 


 


 


10

















 


 


which Mortgagee may deem
desirable or proper with respect to any of the Collateral; and (iii) endorse
and deliver evidences of title for, and receive, enforce and collect by legal
action or otherwise, all indebtedness and obligations now or hereafter owing to
Mortgagor in connection with or on account of any or all of the Collateral; and


 


(c)                        In disposing of Collateral hereunder,
Mortgagee may disclaim all warranties of title, possession, quiet enjoyment and
the like.  Any proceeds of any
disposition of any Collateral may be applied by Mortgagee to the payment of
expenses incurred by Mortgagee in connection with the foregoing, including
reasonable attorneys’ fees, and the balance of such proceeds may be applied by
Mortgagee toward the payment of the Secured Obligations in such order of
application as Mortgagee may from time to time elect.


 


Notwithstanding any other provision hereof, Mortgagee
shall not be deemed to have accepted any property other than cash in
satisfaction of any obligation of Mortgagor to Mortgagee unless Mortgagor shall
make an express written election of said remedy under applicable law.  Mortgagor agrees that Mortgagee shall have no
obligation to process or prepare any Collateral for sale or other disposition.


 


4.6                        POWER OF ATTORNEY. 
Mortgagor hereby irrevocably appoints Mortgagee as Mortgagor’s attorney-in-fact
(such agency being coupled with an interest), and as such attorney-in-fact
Mortgagee may, without the obligation to do so, in Mortgagee’s name, or in the
name of Mortgagor, prepare, execute and file or record financing statements,
continuation statements, applications for registration and like papers
necessary to create, perfect or preserve any of Mortgagee’s security interests
and rights in or to any of the Collateral, and, upon a Default hereunder, take
any other action required of Mortgagor; provided, however, that
Mortgagee as such attorney-in-fact shall be accountable only for
such funds as are actually received by Mortgagee.


 


4.7                        POSSESSION AND USE OF
COLLATERAL.  Except as otherwise provided in this Section
or the other Loan Documents (as defined in the Loan Agreement), so long as no
Default exists under this Mortgage or any of the Loan Documents, Mortgagor may
possess, use, move, transfer or dispose of any of the Collateral in the
ordinary course of Mortgagor’s business and in accordance with the Loan
Agreement.


 


ARTICLE 5. 
RIGHTS AND DUTIES OF THE PARTIES


 


5.1                        TITLE. 
Mortgagor represents and warrants that, except as disclosed to Mortgagee
in (a) in the preliminary title reports prepared by Title Guaranty of Hawaii,
Incorporated, for the Subject Property or (b) a writing which refers to this
warranty, Mortgagor lawfully holds and possesses fee simple or leasehold title
to the Subject Property without limitation on the right to encumber, and that
this Mortgage is a first and prior lien on the Subject Property.


 


5.2                        TAXES AND ASSESSMENTS. 
Subject to Mortgagor’s rights to contest payment of taxes as may be
provided in the Loan Agreement, Mortgagor shall pay prior to delinquency all
taxes, assessments, levies and charges imposed by any public or quasi-public
authority or utility company which are or which may become a lien upon or cause
a loss in value of the Subject Property or any interest therein.  Mortgagor shall also pay prior to delinquency
all taxes, assessments, levies and charges imposed by any public authority upon
Mortgagee by reason of its interest in any Secured Obligation or in the Subject
Property, or by reason of any payment made to Mortgagee pursuant to any Secured
Obligation; provided, however, Mortgagor shall have no obligation
to pay taxes which may be imposed from time to time upon Mortgagee and which
are measured by and imposed upon Mortgagee’s net income.


 


5.3                        TAX AND INSURANCE IMPOUNDS. 
At any time following the occurrence of a Default, at Mortgagee’s option
and upon its demand, Mortgagor, shall, until all Secured Obligations 


 


 


11

















 


have been paid in full,
pay to Mortgagee monthly, annually or as otherwise directed by Mortgagee an
amount estimated by Mortgagee to be equal to: (a) all taxes, assessments,
levies and charges imposed by any public or quasi-public authority or utility
company which are or may become a lien upon the Subject Property or Collateral
and will become due for the tax year during which such payment is so directed;
and (b) premiums for fire, hazard and insurance required or requested pursuant
to the Loan Documents when same are next due. If Mortgagee determines that any
amounts paid by Mortgagor are insufficient for the payment in full of such
taxes, assessments, levies, charges and/or insurance premiums, Mortgagee shall
notify Mortgagor of the increased amounts required to pay all amounts when due,
whereupon Mortgagor shall pay to Mortgagee within thirty (30) days thereafter
the additional amount as stated in Mortgagee’s notice. All sums so paid shall
not bear interest, except to the extent and in any minimum amount required by
law; and Mortgagee shall, unless Mortgagor is otherwise in Default hereunder or
under any Loan Document, apply said funds to the payment of, or at the sole
option of Mortgagee release said funds to Mortgagor for the application to and
payment of, such sums, taxes, assessments, levies, charges, and insurance
premiums. Upon Default by Mortgagor hereunder or under any Secured Obligation,
Mortgagee may apply all or any part of said sums to any Secured Obligation
and/or to cure such Default, in which event Mortgagor shall be required to
restore all amounts so applied, as well as to cure any other events or
conditions of Default not cured by such application.  Upon assignment of this Mortgage, Mortgagee
shall have the right to assign all amounts collected and in its possession to
its assignee whereupon Mortgagee shall be released from all liability with
respect thereto. Within ninety-five (95) days following full repayment of the
Secured Obligations (other than full repayment of the Secured Obligations as a
consequence of a foreclosure or conveyance in lieu of foreclosure of the liens
and security interests securing the Secured Obligations) or at such earlier
time as Mortgagee may elect, the balance of all amounts collected and in
Mortgagee’s possession shall be paid to Mortgagor and no other party shall have
any right or claim thereto.


 


5.4                        PERFORMANCE OF SECURED
OBLIGATIONS.  Mortgagor shall promptly pay and perform each
Secured Obligation when due.


 


5.5                        LIENS, ENCUMBRANCES AND
CHARGES.  Mortgagor shall immediately discharge any
lien (other than Permitted Liens (as defined in the Loan Agreement)) not
approved by Mortgagee in writing that has or may attain priority over this
Mortgage.  Subject to the provisions of
the Loan Agreement regarding mechanics’ liens (including, without limitation,
Section 7.11), Mortgagor shall pay when due all obligations secured by or which
may become liens and encumbrances which shall now or hereafter encumber or
appear to encumber all or any part of the Subject Property or Collateral, or
any interest therein, whether senior or subordinate hereto.


 


5.6                        DAMAGES; INSURANCE AND
CONDEMNATION PROCEEDS.


 


(a)                        The following (whether now existing or
hereafter arising) are all absolutely and irrevocably assigned by Mortgagor to
Mortgagee and, at the request of Mortgagee, shall be paid directly to
Mortgagee: (i) all awards of damages and all other compensation payable
directly or indirectly by reason of a condemnation or proposed condemnation for
public or private use affecting all or any part of, or any interest in, the
Subject Property or Collateral; (ii) all other claims and awards for damages
to, or decrease in value of, all or any part of, or any interest in, the
Subject Property or Collateral; (iii) all proceeds of any insurance policies
(whether or not expressly required by Mortgagee to be maintained by Mortgagor,
including, but not limited to, earthquake insurance and terrorism insurance, if
any) payable by reason of loss sustained to all or any part of the Subject
Property or Collateral; and (iv) all interest which may accrue on any of the
foregoing. Subject to applicable law and Section 5.6(b), and without regard to
any requirement contained in Subparagraph (d) of that certain Section entitled Maintenance
and Preservation of the Subject Property, 


 


 


12

















 


Mortgagee may at its
discretion apply all or any of the proceeds it receives to its expenses in
settling, prosecuting or defending any claim and may apply the balance to the
Secured Obligations in any order acceptable to Mortgagee.  Mortgagee may commence, appear in, defend or
prosecute any assigned claim or action and may adjust, compromise, settle and
collect all claims and awards assigned to Mortgagee; provided, however,
in no event shall Mortgagee be responsible for any failure to collect any claim
or award, regardless of the cause of the failure, including, without
limitation, any malfeasance or nonfeasance by Mortgagee or its employees or
agents.


 


(b)                       Notwithstanding Section 5.6 (a),
Mortgagee shall permit insurance or condemnation proceeds held by Mortgagee to
be used for repair or restoration but may condition such application upon
reasonable conditions, including, without limitation:  (i) the deposit with Mortgagee of such
additional funds which Mortgagee determines are needed to pay all costs of the
repair or restoration, (including, without limitation, taxes, financing
charges, insurance and rent during the repair period); (ii) the establishment
of an arrangement for lien releases and disbursement of funds acceptable to Mortgagee
(the arrangement contained in the Loan Agreement for obtaining lien releases
and disbursing loan funds shall be deemed reasonable with respect to
disbursement of insurance or condemnation proceeds); (iii) the delivery to
Mortgagee of plans and specifications for the work, a contract for the work
signed by a contractor reasonably acceptable to Mortgagee, a cost breakdown for
the work and a payment and performance bond for the work, all of which shall be
reasonably acceptable to Mortgagee; and (iv) the delivery to Mortgagee of
evidence reasonably acceptable to Mortgagee (aa) that after completion of the
work the income from the Subject Property will be sufficient to pay all
expenses and debt service for the Subject Property; (bb) of the continuation of
Leases reasonably acceptable to Mortgagee; (cc) that upon completion of the
work, the size, capacity and total value of the Subject Property will be at
least as great as it was before the damage or condemnation occurred; (dd) that
there has been no material adverse change in the financial condition or credit
of Mortgagor since the date of this Mortgage; and (ee) of the satisfaction of
any additional conditions that Mortgagee may reasonably establish to protect
its security. Mortgagor hereby acknowledges that the conditions described above
are reasonable, and, if such conditions have not been satisfied within thirty
(30) days of receipt by Mortgagee of such insurance or condemnation proceeds,
then Mortgagee may apply such insurance or condemnation proceeds to pay the
Secured Obligations in such order and amounts as Mortgagee in its sole
discretion may choose.


 


5.7                        MAINTENANCE AND
PRESERVATION OF THE SUBJECT PROPERTY.  Subject to
the provisions of the Loan Agreement, Mortgagor covenants: (a) to insure the
Subject Property and Collateral against such risks as Mortgagee may reasonably
require and, at Mortgagee’s request, to provide evidence of such insurance to
Mortgagee, and to comply with the requirements of any insurance companies
providing such insurance; (b) to keep the Subject Property and Collateral in
good condition and repair; (c) not to remove or demolish the Subject Property
or Collateral or any part thereof, (d) not to alter, restore or add to the
Subject Property or Collateral, except for any alteration, restoration or
addition (i) made in the ordinary course of business, (ii) permitted to be made
by the tenants pursuant to the terms of the Leases without the consent of
Mortgagor or required to be made by Mortgagor pursuant to the terms of the
Leases or (iii) which does not reduce the fair market value of the Subject
Property below its value immediately before such alteration, restoration or
addition; (e) not to initiate or acquiesce in any change in any zoning or other
land classification which affects the Subject Property without Mortgagee’s
prior written consent or as provided in the Loan Agreement; (f) to complete or
restore promptly and in good and workmanlike manner the Subject Property and
Collateral, or any part thereof which may be damaged or destroyed, without
regard to whether Mortgagee elects to require that insurance proceeds be 


 


 


13

















 


used to reduce the
Secured Obligations as provided in that certain Section entitled Damages;
Insurance and Condemnation Proceeds; (g) to comply in all material respects
with all laws, ordinances, regulations and standards, and all covenants,
conditions, restrictions and equitable servitudes, whether public or private,
of every kind and character which affect the Subject Property or Collateral and
pertain to acts committed or conditions existing thereon, including, without
limitation, any work, alteration, improvement or demolition mandated by such
laws, covenants or requirements; (f) not to commit or permit waste of the
Subject Property or Collateral; and (g) to do all other acts which from the
character or use of the Subject Property or Collateral may be reasonably
necessary to maintain and preserve its value.


 


5.8                        DEFENSE AND NOTICE OF
LOSSES, CLAIMS AND ACTIONS.  At Mortgagor’s
sole expense, Mortgagor shall protect, preserve and defend the Subject Property
and Collateral and title to and right of possession of the Subject Property and
Collateral, the security hereof and the rights and powers of Mortgagee
hereunder against all adverse claims. Mortgagor shall give Mortgagee prompt
notice in writing of the assertion of any claim, of the filing of any action or
proceeding, of the occurrence of any damage to the Subject Property or
Collateral and of any condemnation offer or action.


 


5.9                        ACTIONS BY MORTGAGEE. 
From time to time and without affecting the personal liability of any
person for payment of any indebtedness or performance of any obligations
secured hereby, Mortgagee, without liability therefor and without notice, may:  (a) release all or any part of the Subject
Property from this Mortgage; (b) consent to the making of any map or plat
thereof; and (c) join in any grant of easement thereon, any declaration of
covenants and restrictions, or any extension agreement or any agreement
subordinating the lien or charge of this Mortgage.


 


5.10                  DUE ON SALE OR ENCUMBRANCE. 
If the Subject Property or any interest therein shall, except as
expressly permitted under the Loan Agreement, be sold, transferred, mortgaged,
assigned, further encumbered or leased (except for Permitted Leases and
Permitted Liens), whether directly or indirectly, whether voluntarily,
involuntarily or by operation of law, without the prior written consent of
Mortgagee, THEN Mortgagee, in its sole discretion, may declare all
Secured Obligations immediately due and payable.


 


5.11                  RELEASES, EXTENSIONS,
MODIFICATIONS AND ADDITIONAL SECURITY.  Without
notice to or the consent, approval or agreement of any persons or entities
having any interest at any time in the Subject Property and Collateral or in
any manner obligated under the Secured Obligations (“Interested Parties”),
Mortgagee may, from time to time, release any person or entity from liability
for the payment or performance of any Secured Obligation, take any action or
make any agreement extending the maturity or otherwise altering the terms or
increasing the amount of any Secured Obligation, or accept additional security
or release all or a portion of the Subject Property and Collateral and other
security for the Secured Obligations. None of the foregoing actions shall
release or reduce the personal liability of any of said Interested Parties, or
release or impair the priority of the lien of and security interests created by
this Mortgage upon the Subject Property and Collateral.


 


5.12                  RELEASE OF ASSIGNMENT. 
When this Mortgage has been fully released, the last such release shall
operate as a reassignment of all future rents, issues and profits of the
Subject Property to the person or persons legally entitled thereto.


 


5.13                  SUBROGATION. 
Mortgagee shall be subrogated to the lien of all encumbrances, whether
released of record or not, paid in whole or in part by Mortgagee pursuant to
the Loan Documents or by the proceeds of any loan secured by this Mortgage.


 


5.14                  RIGHT OF INSPECTION. 
Mortgagee, its agents and employees, may enter the Subject Property at
any reasonable time (and prior to the occurrence and continuance of a Default, 


 


 


14

















 


upon reasonable notice), for the purpose of inspecting
the Subject Property and Collateral and ascertaining Mortgagor’s compliance
with the terms hereof


5.15                  ENVIRONMENTAL
REPRESENTATIONS, WARRANTIES AND COVENANTS; LENDER’S RIGHTS; ENVIRONMENTAL
INDEMNIFICATION.  The terms and provisions of Article 6
(Hazardous Materials) of the Loan Agreement are hereby fully incorporated
herein by reference.


 


ARTICLE 6. 
DEFAULT PROVISIONS


 


6.1                        DEFAULT. 
For all purposes hereof, the term “Default” shall mean (i) the existence
of any Default as defined in the Loan Agreement or (ii) the failure of
Mortgagor to perform any non-monetary obligation hereunder, or the failure to
be true in all material respects of any representation or warranty of Mortgagor
contained herein, and the continuance of such failure for ten (10) days after
notice, or within any longer grace period, if any, allowed in the Loan
Agreement for such failure.


 


6.2                        RIGHTS AND REMEDIES. 
At any time after Default, Mortgagee shall have all the following rights
and remedies, each of which may be pursued concurrently or otherwise, at such
time and in such order as Mortgagee may determine, in its sole discretion,
without impairing or otherwise affecting the other rights and remedies of
Mortgagee:


 


(a)                        With or without notice, to declare all Secured
Obligations immediately due and payable;


 


(b)                       With or without notice, and without
releasing Mortgagor from any Secured Obligation, and without becoming a
mortgagee in possession, to cure any breach or Default of Mortgagor and, in
connection therewith, to enter upon the Subject Property and do such acts and
things as Mortgagee deems necessary or desirable to protect the security
hereof, including, without limitation: (i) to appear in and defend any action
or proceeding purporting to affect the security of this Mortgage or the rights
or powers of Mortgagee under this Mortgage; (ii) to pay, purchase, contest or
compromise any encumbrance, charge, lien or claim of lien which, in the sole
judgment of Mortgagee, is or may be senior in priority to this Mortgage, the
judgment of Mortgagee being conclusive as between the parties hereto; (iii) to
obtain insurance; (iv) to pay any premiums or charges with respect to insurance
required to be carried under this Mortgage; or (v) to employ counsel,
accountants, contractors and other appropriate persons;


 


(c)                        To commence and maintain an action or
actions in any court of competent jurisdiction to foreclose this instrument or
to obtain specific enforcement of the covenants of Mortgagor hereunder, and
Mortgagor agrees that such covenants shall be specifically enforceable by
injunction or any other appropriate equitable remedy and that for the purposes
of any suit brought under this subparagraph, Mortgagor waives the defense of
laches and any applicable statute of limitations;


 


(d)                       To apply to a court of competent
jurisdiction for and obtain appointment of a receiver, trustee, liquidator or
conservator of the Subject Property as a matter of strict right without the
giving of notice to any other party and without regard to the adequacy of the
security for the repayment of the Secured Obligations, the existence of a
declaration that the Secured Obligations are immediately due and payable, or
the filing of a notice of default, and Mortgagor hereby consents to such
appointment;


 


(e)                        To enter upon, possess, manage and
operate the Subject Property or any part thereof, to take and possess all
documents, books, records, papers and accounts of Mortgagor or the then owner
of the Subject Property, to make, terminate, enforce or


 


 


15
















 


modify Leases of the
Subject Property upon such terms and conditions as Mortgagee deems proper, to
make repairs, alterations and improvements to the Subject Property as
necessary, in Mortgagee’s sole judgment, to protect or enhance the security
hereof;


 


(f)                          To resort to and realize upon the
security hereunder and any other security now or later held by Mortgagee
concurrently or successively and in one or several consolidated or independent
judicial actions or lawfully taken non-judicial proceedings, or both, and
to apply the proceeds received upon the Secured Obligations all in such order
and manner as Mortgagee determines in its sole discretion;


 


(g)                       Upon sale of the Subject Property at any
foreclosure sale, Mortgagee may credit bid (as determined by Mortgagee in its
sole and absolute discretion) all or any portion of the Secured Obligations. In
determining such credit bid, Mortgagee may, but is not obligated to, take into
account all or any of the following: (i) appraisals of the Subject Property as
such appraisals may be discounted or adjusted by Mortgagee in its sole and
absolute underwriting discretion; (ii) expenses and costs incurred by Mortgagee
with respect to the Subject Property prior to foreclosure; (iii) expenses and
costs which Mortgagee anticipates will be incurred with respect to the Subject
Property after foreclosure, but prior to resale, including, without limitation,
costs of structural reports and other due diligence, costs to carry the Subject
Property prior to resale, costs of resale (e.g. commissions, attorneys’ fees,
and taxes), costs of any hazardous materials clean-up and monitoring, costs of
deferred maintenance, repair, refurbishment and retrofit, costs of defending or
settling litigation affecting the Subject Property, and lost opportunity costs
(if any), including the time value of money during any anticipated holding
period by Mortgagee; (iv) declining trends in real property values generally
and with respect to properties similar to the Subject Property;
(v) anticipated discounts upon resale of the Subject Property as a
distressed or foreclosed property; (vi) the fact of additional collateral (if
any), for the Secured Obligations; and (vii) such other factors or
matters that Mortgagee (in its sole and absolute discretion) deems appropriate.  In regard to the above, Mortgagor
acknowledges and agrees that: (w) Mortgagee is not required to use any or all
of the foregoing factors to determine the amount of its credit bid; (x) this
Section does not impose upon Mortgagee any additional obligations that are not
imposed by law at the time the credit bid is made; (y) the amount of Mortgagee’s
credit bid need not have any relation to any loan-to-value ratios specified in
the Loan Documents or previously discussed between Mortgagor and Mortgagee; and
(z) Mortgagee’s credit bid may be (at Mortgagee’s sole and absolute discretion)
higher or lower than any appraised value of the Subject Property;


 


(h)                       Upon the completion of any foreclosure of
all or a portion of the Subject Property, subject to Section 2.17 of the Loan
Agreement, commence an action to recover any of the Secured Obligations that
remains unpaid or unsatisfied.


 


6.3                        JUDICIAL FORECLOSURE. 
Mortgagee may obtain a judicial decree foreclosing Mortgagor’s interest
in all or any part of the Subject Property.


 


6.4                        DEFICIENCY JUDGMENT. 
If permitted by applicable law, Mortgagee may obtain a judgment for any
deficiency remaining in the indebtedness due to Mortgagee after application of
all amounts received from the exercise of the rights provided in this
Section.  MLP Mortgagor, subject to
Section 2.17 of the Loan Agreement, shall be liable to Mortgagee for any
deficiency remaining owed.


 


6.5                        SALE OF THE PROPERTY. 
To the extent permitted by applicable law, Mortgagor hereby waives any
and all rights to have the Subject Property marshalled.  In exercising its rights 


 


 


16

















 


and remedies, Mortgagee
shall be free to sell all or any part of the Subject Property, together or
separately in one sale, or by separate sales. 
Mortgagee shall be entitled to bid at any public sale on all or any
portion of the Subject Property.


 


6.6                        NOTICE OF SALE. 
Mortgagee shall give Mortgagor reasonable notice of the time and place
of any public sale of the personal property or of the time after which any
private sale or other intended disposition of the personal property is to be
made.  Reasonable notice shall mean
notice that is at least ten (10) days before the time of the sale or disposition.


 


6.7                        ELECTION OF REMEDIES.  Election
by Mortgagee to pursue any remedy shall not exclude pursuit of any other
remedy, and an election to make expenditures or to take action or to perform an
obligation of the Mortgagor under this Mortgage, after Mortgagor’s failure to
perform, shall not affect Mortgagee’s right to declare a default and exercise
its remedies.  Except as otherwise
provided in Section 2.17 of the Loan Agreement, nothing under this Mortgage or
otherwise shall be construed so as to limit or restrict the rights and remedies
available to Mortgagee following event of Default, or in any way to limit or
restrict the rights and ability of Mortgagee to proceed directly against
Mortgagor and/or against any other co-maker, guarantor, surety, or endorser,
and/or to proceed against any other collateral, directly or indirectly securing
the indebtedness.


 


6.8                        APPLICATION OF FORECLOSURE
SALE PROCEEDS.  Except as may be otherwise required by
applicable law, after deducting all costs, including, without limitation, cost
of evidence of title and attorneys’ fees in connection with sale and costs and
expenses of sale and of any judicial proceeding wherein such sale may be made,
all proceeds of any foreclosure sale shall be applied: (a) to payment of all
sums expended by Mortgagee under the terms hereof and not then repaid, with
accrued interest at the rate of interest specified in the Notes to be
applicable on or after maturity or acceleration of the Notes; (b) to payment of
all other Secured Obligations; and (c) the remainder, if any, to the person or
persons legally entitled thereto.


 


6.9                        APPLICATION OF OTHER SUMS. 
All sums received by Mortgagee under that certain Section entitled Rights
and Remedies or that certain Section entitled Grant of License, less
all costs and expenses incurred by Mortgagee or any receiver under either of
said Sections, including, without limitation, attorneys’ fees, shall be applied
in payment of the Secured Obligations in such order as Mortgagee shall
determine in its sole discretion; provided, however, Mortgagee
shall have no liability for funds not actually received by Mortgagee.


 


6.10                  NO CURE OR WAIVER. 
Neither Mortgagee’s nor any receiver’s entry upon and taking possession
of all or any part of the Subject Property and Collateral, nor any collection
of rents, issues, profits, insurance proceeds, condemnation proceeds or
damages, other security or proceeds of other security, or other sums, nor the
application of any collected sum to any Secured Obligation, nor the exercise or
failure to exercise of any other right or remedy by Mortgagee or any receiver
shall cure or waive any breach, Default or notice of default under this
Mortgage, or nullify the effect of any notice of default or sale (unless all
Secured Obligations then due have been paid and performed and Mortgagor has
cured all other defaults), or impair the status of the security, or prejudice
Mortgagee in the exercise of any right or remedy, or be construed as an
affirmation by Mortgagee of any tenancy, lease or option or a subordination of
the lien of or security interest created by this Mortgage.


 


6.11                  PAYMENT OF COSTS, EXPENSES
AND ATTORNEYS’ FEES.  Mortgagor agrees to pay to
Mortgagee immediately and without demand all reasonable costs and expenses
incurred by Mortgagee pursuant to that certain Section entitled Rights and
Remedies (including, without limitation, court costs and attorneys’ fees,
whether incurred in litigation or not) with interest from the date of
expenditure until said sums have been paid at the rate of interest then
applicable to the principal balance of the Notes as specified therein or as
allowed by applicable law.


 


 


17

















 


 


6.12                  POWER TO FILE NOTICES AND
CURE DEFAULTS.  Mortgagor hereby irrevocably appoints
Mortgagee and its successors and assigns, as its attorney-in-fact, which
agency is coupled with an interest, (a) to execute and/or record any notices of
completion, cessation of labor, or any other notices that Mortgagee deems
appropriate to protect Mortgagee’s interest, (b) upon the issuance of a deed
pursuant to the foreclosure of the lien of this Mortgage or the delivery of a
deed in lieu of foreclosure, to execute all instruments of assignment or
further assurance with respect to the Subject Property and Collateral, Leases
and Payments in favor of the grantee of any such deed, as may be necessary or
desirable for such purpose, (c) to prepare, execute and file or record
financing statements, continuation statements, applications for registration
and like papers necessary to create, perfect or preserve Mortgagee’s security
interests and rights in or to any of the Subject Property and Collateral, and
(d) upon the occurrence of an event, act or omission which, with notice or
passage of time or both, would constitute a Default, Mortgagee may perform any
obligation of Mortgagor hereunder; provided, however, that: (i)
Mortgagee as such attorney-in-fact shall only be accountable for
such funds as are actually received by Mortgagee; and (ii) Mortgagee shall not
be liable to Mortgagor or any other person or entity for any failure to act
(whether such failure constitutes negligence) by Mortgagee under this Section.


 


6.13                  REMEDIES CUMULATIVE. All rights and remedies of Mortgagee
provided hereunder are cumulative and are in addition to all rights and remedies
provided by applicable law (including specifically that of foreclosure of this
Mortgage) or in this Mortgage or in any other agreements between Mortgagor and
Mortgagee.  No failure on the part of
Mortgagee to exercise any of its rights hereunder arising upon any Default
shall be construed to prejudice its rights upon the occurrence of any other or
subsequent Default.  No delay on the part
of Mortgagee in exercising any such rights shall be construed to preclude it from
the exercise thereof at any time while that Default is continuing.  Mortgagee may enforce any one or more
remedies or rights hereunder successively or concurrently.  By accepting payment or performance of any of
the Secured Obligations after its due date, Mortgagee shall not thereby waive the
agreement contained herein that time is of the essence, nor shall Mortgagee
waive either its right to require prompt payment or performance when due of the
remainder of the Secured Obligations or its right to consider the failure to so
pay or perform a Default.


 


ARTICLE
7.  STATE-SPECIFIC PROVISIONS


 


7.1                        PRINCIPAL OF CONSTRUCTION. 
In the event of any inconsistencies between the terms and conditions of
this Article 7 and the other terms and conditions of this Mortgage, the terms
and conditions of this Article 7 shall control and be binding.


7.2                        REMEDIES. 
Without limiting any other remedies available under this Mortgage, under
any of the other Loan Documents or under applicable law, following a Default
hereunder that is continuing, Mortgagee shall be entitled to exercise any
remedies available under Hawaii Revised Statutes Chapter 667, including,
without limitation, a power of sale foreclosure pursuant to such Chapter 667.


7.3                        INSURANCE. 
NOTICE IS HEREBY GIVEN BY MORTGAGEE TO MORTGAGOR THAT MORTGAGEE MAY NOT
CONDITION THE GRANTING OF THE LOAN SECURED BY THIS MORTGAGE ON MORTGAGOR
PROCURING ANY INSURANCE THAT MORTGAGOR IS REQUIRED TO OBTAIN UNDER THIS
MORTGAGE OR UNDER ANY OF THE OTHER LOAN DOCUMENTS FROM ANY SPECIFIC INSURANCE
COMPANY OR ASSOCIATION DESIGNATED BY MORTGAGEE.


7.4                        OTHER. 
This Mortgage shall be deemed to be and shall be construed as a mortgage
of real property as well as a security agreement, financing statement, fixture
filing and assignment 


 


 


18

















 


of leases and rents. 
Mortgagor is, for the purpose of this Mortgage, deemed to be the “debtor”,
and Mortgagee is deemed to be the “secured party”, as those terms are used in
the Uniform Commercial Code.  The
addresses of the secured party and the debtor, from which information
concerning the security agreement may be obtained, are set forth in the initial
paragraph of this Mortgage.


ARTICLE
8.  MISCELLANEOUS PROVISIONS


 


8.1                        ADDITIONAL PROVISIONS. 
The Loan Documents contain or incorporate by reference the entire
agreement of the parties with respect to matters contemplated herein and
supersede all prior negotiations.  The
Loan Documents grant further rights to Mortgagee and contain further agreements
and affirmative and negative covenants by Mortgagor which apply to this
Mortgage and to the Subject Property and Collateral and such further rights and
agreements are incorporated herein by this reference.


 


8.2                        MERGER. 
No merger shall occur as a result of Mortgagee’s acquiring any other
estate in, or any other lien on, the Subject Property unless Mortgagee consents
to a merger in writing.


 


8.3                        OBLIGATIONS OF MORTGAGOR,
JOINT AND SEVERAL.  If more than one person has
executed this Mortgage as “Mortgagor”, the obligations of all such persons
hereunder shall be joint and several.


 


8.4                        RESERVED.


 


8.5                        WAIVER OF MARSHALLING
RIGHTS.  Mortgagor, for itself and for all parties
claiming through or under Mortgagor, and for all parties who may acquire a lien
on or interest in the Subject Property and Collateral, hereby waives all rights
to have the Subject Property and Collateral and/or any other property which is
now or later may be security for any Secured Obligation (“Other Property”)
marshalled upon any foreclosure of the lien of this Mortgage or on a
foreclosure of any other lien or security interest against any security for any
of the Secured Obligations.  Mortgagee
shall have the right to sell, and any court in which foreclosure proceedings
may be brought shall have the right to order a sale of, the Subject Property
and any or all of the Collateral or Other Property as a whole or in separate
parcels, in any order that Mortgagee may designate.


 


8.6                        RULES OF CONSTRUCTION. 
When the identity of the parties or other circumstances make it
appropriate the masculine gender includes the feminine and/or neuter, and the
singular number includes the plural. The term “Subject Property” and “Collateral”
means all and any part of the Subject Property and Collateral, respectively,
and any interest in the Subject Property and Collateral, respectively.


 


8.7                        SUCCESSORS IN INTEREST. 
The terms, covenants, and conditions herein contained shall be binding
upon and inure to the benefit of the heirs, successors and assigns of the
parties hereto; provided, however, that this Section does not waive
or modify the provisions of that certain Section entitled Due on Sale or
Encumbrance.


 


8.8                        EXECUTION IN COUNTERPARTS. To facilitate execution, this document
may be executed in as many counterparts as may be convenient or required. It
shall not be necessary that the signature or acknowledgment of, or on behalf
of, each party, or that the signature of all persons required to bind any
party, or the acknowledgment of such party, appear on each counterpart.  All counterparts shall collectively
constitute a single document.  It shall
not be necessary in making proof of this document to produce or account for
more than a single counterpart containing the respective signatures of, or on
behalf of, and the respective acknowledgments of, each of the parties hereto.  Any signature or acknowledgment page to any
counterpart may be detached from such counterpart without impairing the legal
effect of


 


 


 


19
















the signatures or
acknowledgments thereon and thereafter attached to another counterpart
identical thereto except having attached to it additional signature or
acknowledgment pages.


 


8.9                        GOVERNING LAW. 
This Mortgage was negotiated in the State of California, the loan
secured hereby was made by Mortgagee and accepted by Mortgagor in the State of
California and the proceeds of the Notes delivered pursuant hereto were
disbursed from the State of California, which state the parties agree has a
substantial relationship to the parties and to the underlying transaction
embodied hereby, and in all respects, including, without limiting the
generality of the foregoing, matters of construction, validity and performance,
this Mortgage, the Notes, the Loan Agreement and the other Loan Documents and
the obligations arising hereunder and thereunder shall be governed by, and
construed in accordance with, the laws of the State of California applicable to
contracts made and performed in such state and any applicable law of the United
States of America, except that at all times the provisions for the creation,
perfection, and enforcement of the liens and security interests created
pursuant hereto and pursuant to the other Loan Documents shall be governed by
and construed according to the law of the state in which the applicable
individual property is located, it being understood that, to the fullest
extent permitted by the law of such state, the law of the State of California
shall govern the construction, validity and enforceability of all Loan
Documents and all of the obligations arising hereunder or thereunder.  To the fullest extent permitted by law,
Mortgagor hereby unconditionally and irrevocably waives any claim to assert
that the law of any other jurisdiction governs this Mortgage, the Notes, the
Loan Agreement and the other Loan Documents, and this Mortgage, the Notes, the
Loan Agreement and the other Loan Documents shall be governed by and construed
in accordance with the laws of the State of California.


 


8.10                  INCORPORATION.  Exhibits
A and B and Schedule 1, all as attached, are incorporated into this
Mortgage by this reference.


 


8.11                  NOTICES. All notices, demands or other
communications required or permitted to be given pursuant to the provisions of
this Mortgage shall be in writing and shall be considered as properly given if
delivered personally or sent by first class United States Postal Service mail,
postage prepaid, except that notice of Default may be sent by certified mail,
return receipt requested, or by Overnight Express Mail or by overnight
commercial courier service, charges prepaid. 
Notices so sent shall be effective three (3) days after mailing, if
mailed by first class mail, and otherwise upon receipt at the address set forth
below; provided, however, that non-receipt of any communication
as the result of any change of address of which the sending party was not
notified or as the result of a refusal to accept delivery shall be deemed
receipt of such communication.  For purposes
of notice, the address of the parties shall be:


 


	
  Mortgagor:

  	
  Maui Land & Pineapple Company, Inc.

  120 Kane Street

  Kahului, Maui County, HI 96733

   

  Kapalua Land Company, Ltd.

  120 Kane Street

  Kahului, Maui County, HI 96733

   

  
	
  Mortgagee:

  	
  Wells Fargo Bank, National Association

  Real
  Estate Group (AU #13161)

  11601
  Wilshire Boulevard, 17th Floor

  Los
  Angeles, CA  90025

  Loan
  No. 105088

   

  



 


 


20

















 


	
  With a copy to:

  	
  Wells Fargo Bank,
  National Association

  Los Angeles Loan
  Center

  2120 East Park Place,
  Suite 100

  El Segundo, CA  90245

  Attention: 
  Eva Lopez

  



 


Any party shall have the right to change its address for
notice hereunder to any other location within the United States by the giving
of thirty (30) days notice to the other party in the manner set forth hereinabove.  Mortgagor shall forward to Mortgagee, without
delay, any notices, letters or other communications delivered to the Subject
Property or to Mortgagor naming Mortgagee, “Lender” or the “Construction Lender”
or any similar designation as addressee, or which could reasonably be deemed to
affect the construction of the Improvements or the ability of Mortgagor to
perform its obligations to Mortgagee under the Notes or the Loan Agreement.


 


 


[**signature page follows**]


 


 


21

















 


IN WITNESS WHEREOF, Mortgagor has executed this Mortgage
as of the day and year set forth above.


 


	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “MORTGAGOR”

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  MAUI LAND & PINEAPPLE
  COMPANY, INC.,

  	
   

  
	
   

  	
  a Hawaii corporation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /S/ ROBERT I. WEBBER

  	
   

  
	
   

  	
   

  	
  Name: Robert I. Webber

  	
   

  
	
   

  	
   

  	
  Title: Chief Financial
  Officer

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /S/ FRED W. RICKERT

  	
   

  
	
   

  	
   

  	
  Name: Fred W. Rickert

  	
   

  
	
   

  	
   

  	
  Title: Vice President
  and Treasurer

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  KAPALUA LAND COMPANY, LTD.,

  	
   

  
	
   

  	
  a Hawaii corporation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /S/ ROBERT I. WEBBER

  	
   

  
	
   

  	
   

  	
  Name: Robert I. Webber

  	
   

  
	
   

  	
   

  	
  Title: Chief Financial
  Officer

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /S/ FRED W. RICKERT

  	
   

  
	
   

  	
   

  	
  Name: Fred W. Rickert

  	
   

  
	
   

  	
   

  	
  Title: Vice President
  and Treasurer

  	
   

  
						



 


 


(ALL
SIGNATURES MUST BE ACKNOWLEDGED


 


 


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