Exhibit 10.55


 


Execution Version


 


AMENDED AND RESTATED CONSTRUCTION LOAN AGREEMENT


 


for loans in the aggregate amount of up to


 


$354,455,968.31


 


MADE BY AND AMONG


 


KAPALUA BAY, LLC,

a Delaware limited liability company,

as Borrower,


 


CENTRAL PACIFIC BANK, 

as Agent


 


and


 


THE LENDERS PARTY HERETO,

as Lenders


 


Dated
as of February 11, 2009


 


“Residences
at Kapalua Bay”


 





















 


TABLE OF CONTENTS


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  I

  	
  INCORPORATION
  OF RECITALS AND EXHIBITS

  	
  3

  
	
   

  	
   

  	
   

  
	
  Section 1.1

  	
  Incorporation of Recitals.

  	
  3

  
	
   

  	
   

  	
   

  
	
  Section 1.2

  	
  Incorporation of Exhibits.

  	
  3

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  II

  	
  DEFINITIONS

  	
  3

  
	
   

  	
   

  	
   

  
	
  Section 2.1

  	
  Defined Terms.

  	
  3

  
	
   

  	
   

  	
   

  
	
  Section 2.2

  	
  Rules of Construction.

  	
  31

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  III

  	
  REPRESENTATIONS
  AND WARRANTIES

  	
  32

  
	
   

  	
   

  	
   

  
	
  Section 3.1

  	
  Representations and Warranties of
  Borrower.

  	
  32

  
	
   

  	
   

  	
   

  
	
  Section 3.2

  	
  Survival of Representations and
  Warranties.

  	
  38

  
	
   

  	
   

  	
   

  
	
  Section 3.3

  	
  Representations and Warranties of
  Lenders.

  	
  38

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  IV

  	
  EXCHANGE
  OF NOTES; LOANS AND LOAN DOCUMENTS

  	
  40

  
	
   

  	
   

  	
   

  
	
  Section 4.1

  	
  Exchange of Existing Notes.

  	
  40

  
	
   

  	
   

  	
   

  
	
  Section 4.2

  	
  Facility A Loans; Facility A
  Lenders’ Obligation to Disburse; Reduction of Facility A Commitment.

  	
  40

  
	
   

  	
   

  	
   

  
	
  Section 4.3

  	
  Facility B-1 Loans.

  	
  42

  
	
   

  	
   

  	
   

  
	
  Section 4.4

  	
  Facility B-2 Loans.

  	
  42

  
	
   

  	
   

  	
   

  
	
  Section 4.5

  	
  Facility C-1 Loans.

  	
  42

  
	
   

  	
   

  	
   

  
	
  Section 4.6

  	
  Facility C-2 Loans.

  	
  42

  
	
   

  	
   

  	
   

  
	
  Section 4.7

  	
  Closing Documents.

  	
  42

  
	
   

  	
   

  	
   

  
	
  Section 4.8

  	
  Term of the Loans.

  	
  43

  
	
   

  	
   

  	
   

  
	
  Section 4.9

  	
  Prepayments.

  	
  43

  



 


i





















	
  Section 4.10

  	
  Required Principal Payments.

  	
  43

  
	
   

  	
   

  	
   

  
	
  Section 4.11

  	
  Payments Generally.

  	
  44

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  V

  	
  INTEREST

  	
  45

  
	
   

  	
   

  	
   

  
	
  Section 5.1

  	
  Interest Rate.

  	
  45

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VI

  	
  COSTS
  OF MAINTAINING LOAN

  	
  47

  
	
   

  	
   

  	
   

  
	
  Section 6.1

  	
  Increased Costs and Capital
  Adequacy.

  	
  47

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VII

  	
  LOAN
  EXPENSE AND ADVANCES TO CURE DEFAULTS

  	
  48

  
	
   

  	
   

  	
   

  
	
  Section 7.1

  	
  Loan and Administration Expenses.

  	
  48

  
	
   

  	
   

  	
   

  
	
  Section 7.2

  	
  Brokerage Fees.

  	
  49

  
	
   

  	
   

  	
   

  
	
  Section 7.3

  	
  Right of Lenders to Make Advances
  to Cure Borrower’s Defaults.

  	
  49

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VIII

  	
  CONDITIONS
  PRECEDENT TO THE MAKING OF THE LOAN

  	
  49

  
	
   

  	
   

  	
   

  
	
  Section 8.1

  	
  Non-Construction Conditions
  Precedent.

  	
  49

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  IX

  	
  CONSTRUCTION
  CONDITIONS PRECEDENT FOR SUBSEQUENT ADVANCES UNDER THE FACILITY A COMMITMENT

  	
  54

  
	
   

  	
   

  	
   

  
	
  Section 9.1

  	
  Required Construction Documents.

  	
  54

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  X

  	
  CONSTRUCTION
  BUDGET; RESERVES; OPERATING BUDGET

  	
  55

  
	
   

  	
   

  	
   

  
	
  Section 10.1

  	
  Construction Budget.

  	
  55

  
	
   

  	
   

  	
   

  
	
  Section 10.2

  	
  Budget Line Items.

  	
  56

  
	
   

  	
   

  	
   

  
	
  Section 10.3

  	
  Contingency Reserve.

  	
  56

  
	
   

  	
   

  	
   

  
	
  Section 10.4

  	
  Interest Reserve and Facility A
  Loans to Pay Interest.

  	
  57

  
	
   

  	
   

  	
   

  
	
  Section 10.5

  	
  Tax and Insurance Reserve.

  	
  57

  



 


ii





















 


	
  ARTICLE
  XI

  	
  SUFFICIENCY
  OF LOANS

  	
  57

  
	
   

  	
   

  	
   

  
	
  Section 11.1

  	
  Loans In Balance.

  	
  57

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XII

  	
  CONSTRUCTION
  PAYOUT REQUIREMENTS

  	
  58

  
	
   

  	
   

  	
   

  
	
  Section 12.1

  	
  Documents to be Furnished for Each
  Disbursement.

  	
  58

  
	
   

  	
   

  	
   

  
	
  Section 12.2

  	
  Retainage.

  	
  59

  
	
   

  	
   

  	
   

  
	
  Section 12.3

  	
  Disbursements for Stored Materials.

  	
  59

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XIII

  	
  FINAL
  DISBURSEMENT FOR CONSTRUCTION COSTS; EXPENSE RESERVE

  	
  60

  
	
   

  	
   

  	
   

  
	
  Section 13.1

  	
  Final Disbursement for Construction
  Costs.

  	
  60

  
	
   

  	
   

  	
   

  
	
  Section 13.2

  	
  Retainage.

  	
  61

  
	
   

  	
   

  	
   

  
	
  Section 13.3

  	
  Expense Reserve.

  	
  62

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XIV

  	
  CONDOMINIUM
  COVENANTS

  	
  63

  
	
   

  	
   

  	
   

  
	
  Section 14.1

  	
  Contracts of Sale.

  	
  63

  
	
   

  	
   

  	
   

  
	
  Section 14.2

  	
  Residential Condominium.

  	
  64

  
	
   

  	
   

  	
   

  
	
  Section 14.3

  	
  Fractional Ownership Units.

  	
  65

  
	
   

  	
   

  	
   

  
	
  Section 14.4

  	
  Releases of Entire Units and
  Fractional Ownership Interests.

  	
  67

  
	
   

  	
   

  	
   

  
	
  Section 14.5

  	
  Releases of Facilities.

  	
  71

  
	
   

  	
   

  	
   

  
	
  Section 14.6

  	
  Breakage Costs.

  	
  72

  
	
   

  	
   

  	
   

  
	
  Section 14.7

  	
  Indemnification.

  	
  72

  
	
   

  	
   

  	
   

  
	
  Section 14.8

  	
  Expenses.

  	
  73

  
	
   

  	
   

  	
   

  
	
  Section 14.9

  	
  Establishment of Condominium
  Release Payment Account.

  	
  73

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XV

  	
  COVENANTS

  	
  73

  
	
   

  	
   

  	
   

  
	
  Section 15.1

  	
  Certain Covenants.

  	
  73

  



 


iii





















 


	
  Section 15.2

  	
  Insurance.

  	
  81

  
	
   

  	
   

  	
   

  
	
  Section 15.3

  	
  Special Purpose Covenants.

  	
  84

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XVI

  	
  CASUALTY
  AND CONDEMNATION

  	
  87

  
	
   

  	
   

  	
   

  
	
  Section 16.1

  	
  Election to Apply Proceeds to the
  Debt.

  	
  87

  
	
   

  	
   

  	
   

  
	
  Section 16.2

  	
  Borrower’s Obligation to Rebuild.

  	
  87

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XVII

  	
  TRANSFERS
  AND ASSIGNMENTS AND PARTICIPATIONS

  	
  88

  
	
   

  	
   

  	
   

  
	
  Section 17.1

  	
  Prohibition of Assignments and
  Transfers by Borrower.

  	
  88

  
	
   

  	
   

  	
   

  
	
  Section 17.2

  	
  Prohibition of Transfers in
  Violation of ERISA.

  	
  89

  
	
   

  	
   

  	
   

  
	
  Section 17.3

  	
  Successors and Assigns.

  	
  90

  
	
   

  	
   

  	
   

  
	
  Section 17.4

  	
  Lender Assignments and
  Participations.

  	
  90

  
	
   

  	
   

  	
   

  
	
  Section 17.5

  	
  Not a Security.

  	
  92

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XVIII

  	
  SERVICER

  	
  92

  
	
   

  	
   

  	
   

  
	
  Section 18.1

  	
  Servicer.

  	
  92

  
	
   

  	
   

  	
   

  
	
  Section 18.2

  	
  Servicer and Agent Fees.

  	
  92

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XIX

  	
  EVENTS
  OF DEFAULT

  	
  93

  
	
   

  	
   

  	
   

  
	
  Section 19.1

  	
  Events of Default.

  	
  93

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XX

  	
  LENDER’S
  REMEDIES IN EVENT OF DEFAULT

  	
  96

  
	
   

  	
   

  	
   

  
	
  Section 20.1

  	
  Remedies Conferred Upon Lender.

  	
  96

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XXI

  	
  INTERCREDITOR
  ARRANGEMENTS AND APPLICATION OF FUNDS

  	
  97

  
	
   

  	
   

  	
   

  
	
  Section 21.1

  	
  Application of Funds Other than
  Interest Payments.

  	
  97

  
	
   

  	
   

  	
   

  
	
  Section 21.2

  	
  Application of Interest Payments.

  	
  99

  
	
   

  	
   

  	
   

  
	
  Section 21.3

  	
  Prohibition on Contest or
  Interference.

  	
  100

  



 


iv





















 


	
  Section 21.4

  	
  Direction to the Agent to Enforce.

  	
  101

  
	
   

  	
   

  	
   

  
	
  Section 21.5

  	
  Bankruptcy Proceedings.

  	
  101

  
	
   

  	
   

  	
   

  
	
  Section 21.6

  	
  Other Rights as Creditors

  	
  104

  
	
   

  	
   

  	
   

  
	
  Section 21.7

  	
  Payment Over to the Agent.

  	
  104

  
	
   

  	
   

  	
   

  
	
  Section 21.8

  	
  No Duty to Subordinate Lenders.

  	
  104

  
	
   

  	
   

  	
   

  
	
  Section 21.9

  	
  Certain Waivers by Subordinate
  Lenders.

  	
  105

  
	
   

  	
   

  	
   

  
	
  Section 21.10

  	
  Certain Rights of Subordinate
  Lenders.

  	
  106

  
	
   

  	
   

  	
   

  
	
  Section 21.11

  	
  Obligations Unconditional.

  	
  106

  
	
   

  	
   

  	
   

  
	
  Section 21.12

  	
  Actions Upon Breach.

  	
  106

  
	
   

  	
   

  	
   

  
	
  Section 21.13

  	
  Purchase Right.

  	
  107

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XXII

  	
  AGENCY

  	
  107

  
	
   

  	
   

  	
   

  
	
  Section 22.1

  	
  Appointment and Authority.

  	
  107

  
	
   

  	
   

  	
   

  
	
  Section 22.2

  	
  Rights as a Lender.

  	
  108

  
	
   

  	
   

  	
   

  
	
  Section 22.3

  	
  Exculpatory Provisions.

  	
  109

  
	
   

  	
   

  	
   

  
	
  Section 22.4

  	
  Reliance by Agent.

  	
  110

  
	
   

  	
   

  	
   

  
	
  Section 22.5

  	
  Delegation of Duties.

  	
  110

  
	
   

  	
   

  	
   

  
	
  Section 22.6

  	
  Resignation of Agent.

  	
  110

  
	
   

  	
   

  	
   

  
	
  Section 22.7

  	
  Removal of Agent.

  	
  111

  
	
   

  	
   

  	
   

  
	
  Section 22.8

  	
  Non-Reliance on Agent and Other
  Lenders.

  	
  111

  
	
   

  	
   

  	
   

  
	
  Section 22.9

  	
  Indemnification of Agent.

  	
  111

  
	
   

  	
   

  	
   

  
	
  Section 22.10

  	
  Delivery of Notices to Lenders.

  	
  112

  
	
   

  	
   

  	
   

  
	
  Section 22.11

  	
  Borrower’s Dealings With Agent.

  	
  112

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XXIII

  	
  GENERAL
  PROVISIONS

  	
  113

  
	
   

  	
   

  	
   

  
	
  Section 23.1

  	
  Captions.

  	
  113

  



 


v





















 


	
  Section 23.2

  	
  Modification; Waiver.

  	
  113

  
	
   

  	
   

  	
   

  
	
  Section 23.3

  	
  Governing Law.

  	
  115

  
	
   

  	
   

  	
   

  
	
  Section 23.4

  	
  Acquiescence Not to Constitute
  Waiver of Lenders’ Requirements.

  	
  115

  
	
   

  	
   

  	
   

  
	
  Section 23.5

  	
  Disclaimer by Lenders and the
  Agent.

  	
  115

  
	
   

  	
   

  	
   

  
	
  Section 23.6

  	
  Partial Invalidity; Severability.

  	
  116

  
	
   

  	
   

  	
   

  
	
  Section 23.7

  	
  Definitions Include Amendments.

  	
  116

  
	
   

  	
   

  	
   

  
	
  Section 23.8

  	
  Execution in Counterparts.

  	
  117

  
	
   

  	
   

  	
   

  
	
  Section 23.9

  	
  Entire Agreement; Replacing
  Original Construction Loan Agreement.

  	
  117

  
	
   

  	
   

  	
   

  
	
  Section 23.10

  	
  Waiver of Damages.

  	
  117

  
	
   

  	
   

  	
   

  
	
  Section 23.11

  	
  Jurisdiction.

  	
  117

  
	
   

  	
   

  	
   

  
	
  Section 23.12

  	
  Set-Offs; Adjustments.

  	
  118

  
	
   

  	
   

  	
   

  
	
  Section 23.13

  	
  Authorized Representative.

  	
  119

  
	
   

  	
   

  	
   

  
	
  Section 23.14

  	
  Non-Recourse Provisions.

  	
  119

  
	
   

  	
   

  	
   

  
	
  Section 23.15

  	
  Sole Discretion of Lenders and
  Agent and Deemed Consent.

  	
  119

  
	
   

  	
   

  	
   

  
	
  Section 23.16

  	
  Conflict; Construction of
  Documents: Reliance.

  	
  120

  
	
   

  	
   

  	
   

  
	
  Section 23.17

  	
  Defaulting Lender.

  	
  120

  
	
   

  	
   

  	
   

  
	
  Section 23.18

  	
  Waiver of Lender Defaults.

  	
  122

  
	
   

  	
   

  	
   

  
	
  Section 23.19

  	
  USA PATRIOT Act Notice.

  	
  122

  
	
   

  	
   

  	
   

  
	
  Section 23.20

  	
  Time is of the Essence.

  	
  122

  
	
   

  	
   

  	
   

  
	
  Section 23.21

  	
  Replacement of Certain Lenders.

  	
  122

  
	
   

  	
   

  	
   

  
	
  Section 23.22

  	
  Termination of Co-Lending
  Agreement.

  	
  123

  
	
   

  	
   

  	
   

  
	
  Section 23.23

  	
  No Merger of Interest.

  	
  123

  
	
   

  	
   

  	
   

  
	
  Section 23.24

  	
  LBHI’s Consent to Amendment to
  Borrower’s Limited Liability Company Agreement.

  	
  124

  
	
   

  	
   

  	
   

  
	
  Section 23.25

  	
  Draw #29.

  	
  124

  



 


vi





















 


	
  ARTICLE
  XXIV

  	
  NOTICES

  	
  124

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XXV

  	
  WAIVER
  OF JURY TRIAL

  	
  125

  



 


EXHIBITS
AND SCHEDULES TO LOAN AGREEMENT


 


	
  Exhibit A-1

  	
  Legal Description of
  Development Land

  
	
  Exhibit A-2

  	
  Legal Description of Spa
  Land

  
	
  Exhibit B

  	
  Entitlements

  
	
  Exhibit C

  	
  Permitted Exceptions

  
	
  Exhibit D

  	
  Form of Requisitions

  
	
  Exhibit E

  	
  Existing Plans and
  Specifications

  
	
  Exhibit F

  	
  Borrower Ownership
  Structure Chart

  
	
  Exhibit G

  	
  Construction Budget

  
	
  Exhibit H

  	
  Construction Schedule

  
	
  Exhibit I

  	
  Form of Architect’s Certificate

  
	
  Exhibit J

  	
  Form of Assignment and
  Assumption Agreement

  
	
  Exhibit K-1

  	
  Form of Facility A
  Note

  
	
  Exhibit K-2

  	
  Form of Facility B-1
  Note

  
	
  Exhibit K-3

  	
  Form of Facility B-2
  Note

  
	
  Exhibit K-4

  	
  Form of Facility C-1
  Note

  
	
  Exhibit K-5

  	
  Form of Facility C-2 Note

  
	
  Exhibit L

  	
  Permitted Managers

  
	
  Exhibit M

  	
  Qualified Transferee

  
	
   

  	
   

  
	
  Schedule A

  	
  Release Prices

  
	
  Schedule B

  	
  Agreements with Affiliates

  
	
  Schedule C

  	
  Leases

  
	
  Schedule D

  	
  Lenders, Commitments, Initial Restructuring Funding
  Date Loan Amounts and Outstanding Notes

  
	
   

  	
   

  
	
  Schedule E

  	
  Loan Documents

  
	
  Schedule F

  	
  Initial Restructuring Loan and Use of Proceeds

  
	
  Schedule G

  	
  Notices to Lenders

  



 


vii


















AMENDED AND
RESTATED CONSTRUCTION LOAN AGREEMENT


 


Project commonly known as


 


“Residences at Kapalua Bay”


 


THIS AMENDED AND RESTATED CONSTRUCTION LOAN AGREEMENT
(this “Agreement”) is made as of February 11, 2009, by and among
KAPALUA BAY, LLC (the “Borrower”), CENTRAL PACIFIC BANK, in its capacity
as agent for the Lenders (the “Agent”), and the lenders party hereto
(the “Lenders”).


 


RECITALS


 


A.                                   Borrower is the fee owner of that certain
tract of land located in Lahaina, Maui, Hawaii, and being more fully described
in Exhibit A-1 attached hereto (the “Development Land”).


 


B.                                     Borrower is the owner of a leasehold
interest in that certain tract of land located in Lahaina, Maui, Hawaii, and
being more fully described in Exhibit A-2 attached hereto (the “Spa
Land”; and collectively with the Development Land, the “Land”).


 


C.                                     Borrower is developing a residential
development on the Development Land and has submitted the Development Land to a
condominium property and fractional ownership regime which includes for-sale Residential
Condominium Units and Fractional Ownership Units.  The Spa Land is being developed as a Spa for
the benefit of the guests and residents of the Project.  (The Land, the Spa and the other Improvements
and the Personal Property (each as hereinafter defined) located thereon are
collectively sometimes referred to as the “Project”).


 


D.                                    Lehman Brothers Holdings Inc., a Delaware
corporation (“LBHI”), as lender, and Borrower, as borrower, entered into
a Construction Loan Agreement, dated as of July 14, 2006, as amended from
time to time (the “Original Construction Loan Agreement”), pursuant to
which LBHI agreed to make a loan to Borrower in the aggregate amount of up to
$370,000,000 to finance in part the construction of the Project.


 


E.                                      LBHI and Borrower entered into a Note
Splitter and Reaffirmation Agreement (the “Note Splitter Agreement”),
dated as of January 26, 2007, pursuant to which the original note
delivered by Borrower pursuant to the Original Construction Loan Agreement was
split, divided and apportioned into the following six separate promissory notes
delivered by Borrower to LBHI: (i) the Amended, Severed and Restated
Promissory Note (Note A-1) in the principal amount of $30,000,000 (the “Split
Note A-1”), (ii) the Amended, Severed and Restated Promissory Note
(Note A-2) in the principal amount of $25,000,000 (the “Split Note A-2”);
(iii) the Amended, Severed and Restated Promissory Note (Note A-3)
in the principal amount of $25,000,000 (the “Split Note A-3”); (iv) the
Amended, Severed and Restated Promissory Note (Note A-4) in the principal 


 


1

















 


amount
of $15,000,000 (the “Split Note A-4”); (v) Amended, Severed and
Restated Promissory Note (Note A-5) in the principal amount of $255,000,000
(the “Split Note A-5” and together with Note A-1, Note A-2, Note A-3 and
Note A-4, collectively, the “Split A Notes”); and (vi) the Amended,
Severed and Restated Promissory Note (Note B) in the principal amount of
$20,000,000 (the “Split Note B”, and collectively with the Split A
Notes, the “Split Notes”).


 


F.                                      In connection with entering into the Note
Splitter Agreement, Borrower, LBHI and certain other parties thereto amended
the Original Loan Agreement and certain other documents pursuant to the First
Amendment and the First Amendment to Recorded Loan Documents (each as defined
below).


 


G.                                     Pursuant to Assignment and Assumption
Agreements, each dated February 1, 2007, LBHI subsequently assigned the
Split Note A-1 to Central Pacific Bank (“Central Pacific”), the Split
Note A-2 to Landesbank Baden-Württemberg (“LBBW”), and the Split Note
A-3 to Deutsche Hypothekenbank (Actien-Gesellschaft) (“Deutsche Hypo”).  LBHI retained the Split Note A-4, the Split
Note A-5 and the Split Note B.  Swedbank
AB (publ), New York Branch (“Swedbank”), subsequently became the
assignee and successor-in-interest to the Split Note B.  LBHI, Central Pacific, LBBW, Deutsche Hypo
and Swedbank are collectively referred to as the “Split Note Holders”.


 


H.                                    Pursuant to the Co-Lending Agreement, dated
as of February 1, 2007, as amended from time to time (the “Co-Lending
Agreement”), among LBHI, as agent, and the Split Note Holders, the Split
Note Holders appointed LBHI as agent for the Split Note Holders (in such
capacity, the “Prior Agent”).


 


I.                                         Pursuant to a Master Assignment and
Assumption and Modification Agreement (the “Master Assignment Agreement”),
dated as of the date hereof, among the Prior Agent, the Split Note Holders, the
Lenders and Borrower, the Split Note Holders assigned their outstanding loans
and a portion of their then remaining funding commitments under the Original
Construction Loan Agreement to the Lenders and the remaining portion of the
unfunded commitment of the Split Note Holders under the Original Construction
Loan Agreement were cancelled.


 


J.                                        Pursuant to a letter agreement (the “Successor
Agent Agreement”), dated as of the date hereof, among Borrower, the Split
Note Holders, the Lenders, the Prior Agent, as resigning agent, and Central
Pacific, as successor agent for the Lenders (in such capacity, the “Successor
Agent”), (i) the Prior Agent resigned as agent for the Lenders, (ii) Central
Pacific was appointed the successor agent for the Lenders and (iii) the
Prior Agent assigned to the Successor Agent its rights and privileges as agent
under the Co-Lending Agreement and the Loan Documents.


 


K.                                    The parties hereto desire to amend and
restate the Original Construction Loan Agreement to, among other things,
split the loan and commitment under the Original Construction Loan Agreement
into multiple Loan Facilities in the manner hereinafter set forth and to modify
certain other provisions of the Original Construction Loan Agreement.


 


2

















 


NOW, THEREFORE, in
consideration of the mutual covenants and agreements herein contained, the
parties hereto agree as follows:


 


ARTICLE I

INCORPORATION OF RECITALS AND EXHIBITS


 


Section 1.1                                      Incorporation of Recitals.


 


The foregoing preambles and all other recitals set
forth herein are made a part hereof by this reference.


 


Section 1.2                                      Incorporation of Exhibits.


 


The Exhibits to this Agreement are incorporated in
this Agreement and expressly made a part hereof by this reference.


 


ARTICLE II

DEFINITIONS


 


Section 2.1                                      Defined Terms.


 


The following terms as used herein shall have the
following meanings:


 


Additional Equity Requirement: 
The requirement that Borrower contribute up to Four Million Three
Hundred Twenty Thousand Four Hundred Thirty-Eight and 49/100 Dollars
($4,320,438.49) of equity to the Project pursuant to Section 12.1(l).  The Additional Equity Requirement shall not
include equity provided by Borrower to keep the Loans In Balance, the
Contingency Reserve, or sums provided by any Guarantor under the Completion
Guaranty.


 


Adjusted LIBOR Rate:  A rate per annum equal to the LIBOR Rate
(determined as herein set forth) plus:


 


(i)                                     with respect to the Facility A Notes,
five hundred (500) basis points (5.00%);


 


(ii)                                  with respect to the Facility B-1 Notes,
one hundred seventy (170) basis points (1.70%);


 


(iii)                               with respect to the Facility B-2 Notes, one hundred
seventy (170) basis points (1.70%);


 


3

















 


(iv)                              with respect to the Facility C-1 Notes,
one hundred seventy (170) basis points (1.70%); and


 


(v)                                 with respect to the Facility C-2 Notes,
one thousand ninety-five (1095) basis points (10.95%).


 


Adjusted Prime Rate:  A rate per
annum equal to the sum of (a) the Prime Rate Margin and (b) the
greater of (i) the Prime Rate and (ii) one percent (1%) in
excess of the Federal Funds Effective Rate. 
Any change in the Adjusted Prime Rate shall be effective immediately
from and after a change in the Prime Rate (or the Federal Funds Effective Rate,
as applicable).


 


Affected Lender: As defined in
Section 23.21.


 


Affiliate:  With respect
to a specified Person, any Person which, directly or indirectly, through one or
more intermediaries, Controls or is Controlled by or is under common Control
with such Person, including, without limitation, any limited liability company
in which such Person is a member.


 


Agent: As defined in
the opening paragraph of this Agreement.


 


Agent’s Consultant:  An
independent consulting architect, inspector, and/or engineer designated by the
Required Lenders in their sole discretion.


 


Agent’s Depository Bank: The bank then acting as the Agent hereunder or any
other bank reasonably acceptable to the Agent.


 


Agreement:  This Amended
and Restated Construction Loan Agreement.


 


Applicable Rate:  A rate per
annum equal to either the Adjusted LIBOR Rate or the Adjusted Prime Rate, as
determined in accordance with the provisions of Article V hereof.


 


Appraisal:  An
MAI-certified appraisal of the Project, performed, at Borrower’s expense, in
accordance with FIRREA and the Agent’s appraisal requirements by an appraiser
selected and retained by the Agent.


 


Architect:  WCIT
Architecture, or such other licensed, reputable architect as Borrower selects
and the Required Lenders, acting reasonably, approve.  In making the determination as to whether to
approve an architect other than WCIT Architecture, the Required Lenders may
take into account any prior dealings they or the other Lenders may have had
with the proposed architect.


 


Architect’s Agreement:  That certain
Agreement dated December 10, 2004, by and between Borrower and Architect,
for the design of the Improvements, as same may be amended from time to time,
subject to the Required Lenders’ reasonable prior approval.


 


4

















 


Architect’s Certificate:  A certificate
by Architect, substantially in the form attached hereto as Exhibit I,
in favor of the Agent to the effect that the Project complies with Laws, and as
to such other matters as the Agent shall reasonably require.


 


Assignment and Assumption Agreement: 
An Assignment and Assumption Agreement entered into by a Lender pursuant
to Section 17.4 substantially in the form of Exhibit J.


 


Assignment of Leases and Rents: 
The Assignment of Leases and Rents, dated July 14, 2006, by
Borrower in favor of the Agent (as successor to LBHI).


 


Assignment of Purchase Contracts: 
The Assignment of Purchase Contracts, dated as of July 14, 2006, by
Borrower in favor of the Agent (as successor to LBHI), assigning all of
Borrower’s rights under Contracts of Sale and Contract Deposits in connection
with a sale of any Unit or any portion of the Project, in existence as of the
Original Effective Date, and subsequent thereto.


 


Authorized Representative: 
Ryan Churchill and/or Adele Sumida.


 


Available Contract Deposit: 
A Contract Deposit that is permitted and available to be applied to Hard
Costs and Soft Costs in accordance with applicable Laws, the applicable
Contract of Sale, and against which there are no pending or threatened claims,
actions, proceedings.


 


Available Funds: As defined in
Section 11.1.


 


Bankruptcy Code:  Title 11
of the United States Code, entitled “Bankruptcy”, as now or hereafter in
effect, or any successor thereto or any other present or future bankruptcy or
insolvency statute.


 


Bankruptcy Proceeding:  With respect
to any Person, (i) any voluntary or involuntary case or proceeding, (ii) any
other reorganization or bankruptcy case or proceeding, or any administration,
receivership, liquidation, reorganization or other similar case or proceeding
with respect to such Person or a material portion of its assets, (iii) any
liquidation, dissolution, reorganization or winding up, whether voluntary or
involuntary and whether or not involving insolvency or bankruptcy, or (iv) any
assignment for the benefit of creditors or any marshalling of assets and
liabilities, in each case commenced and maintained under the Bankruptcy Code or
any other applicable law.


 


Beach Club CA:  As defined in
the Condominium Documents.


 


5

















 


Bond:  Collectively, (i) the
Performance Bond, dated November 21, 2006, issued by Federal Insurance
Company, Fidelity and Deposit Company of Maryland, Travelers Casualty and
Surety Company of America and Zurich American Insurance Company in connection
with the Project and in the amount of $303,385,364, and (ii) the Payment
Bond, dated November 21, 2006, issued by Federal Insurance Company,
Fidelity and Deposit Company of Maryland, Travelers Casualty and Surety Company
of America and Zurich American Insurance Company in connection with the Project
and in the amount of $303,385,364, with a rider to the Performance Bond and the
Payment Bond naming the Agent as an additional obligee thereunder.


 


Borrower:  As defined in
the opening paragraph of this Agreement.


 


Breakage Costs:  As defined in
Section 5.1(g).


 


Budget Line Item(s):  As defined in
Section 10.2(a).


 


Business Day:  Any day other
than a Saturday, Sunday or day on which banks are required or authorized to be
closed in New York, New York, Stuttgart, Germany or Honolulu, Hawaii, provided
that when used in connection with Loans bearing interest at the LIBOR Rate, the
term “Business Day” shall mean LIBOR Business Day.


 


Cause:  Any of the following:  (a) fraud, gross negligence or willful misconduct
by the Agent, (b) the commencement of any proceeding, under any Bankruptcy
Code or similar laws in any applicable jurisdiction with respect to the Agent, (c) any
material breach or default by Agent under this Agreement which continues for
fifteen (15) days after written notice to the Agent or (d) the Agent is a
Defaulting Lender.


 


Central Pacific:  As defined in the Recitals to this Agreement.


 


Certificate of Occupancy: 
A temporary or permanent certificate issued by the appropriate
Governmental Authority certifying that a Unit or Units, as constructed, may be
legally occupied.


 


Change Order:  Any change in
the Plans and Specifications (other than minor field changes involving no extra
cost).


 


Co-Lending Agreement:  As defined in
the recitals to the Agreement.


 


Collateral: 
All property, real or personal, subject to any lien or security interest
or other encumbrance created under the Loan Documents.


 


Completion Date:  December 31, 2009.


 


Completion Guaranty:  The
Completion Guaranty, dated as July 14, 2006, by Guarantor in favor of the
Agent (as successor to the LBHI).


 


6

















 


Condominium Act: 
Chapter 514A, Hawaii Revised Statutes, as amended.


 


Condominium Declaration:  The
condominium declaration creating the Residential Condominium.


 


Condominium Deposit Account: 
A deposit account opened and maintained by Borrower with First American
Title Insurance Company, to be utilized in the manner set forth in Section 14.1(b) hereof.


 


Condominium Documents:  All
documents, as required by the Condominium Act and otherwise, relating to the
submission of the Condominium Project and the Units to be located on the two
fee simple parcels, Tax Map Key Nos. (2) 4-2-4-28 and 29 to the provisions
of said Condominium Act or to the regulation, operation, administration or sale
thereof after such submission, including, but not limited to, a declaration of
condominium, offering circular, articles of incorporation, if applicable,
by-laws and rules and regulations of a condominium association, management
agreement, plats and the contracts of sale and deed forms to be used in
connection with the sale of Units.


 


Condominium Project:  The “Kapalua
Bay Condominium” project, created by the Declaration of Condominium Property
Regime dated April 18, 2006, recorded in the Bureau of Conveyances of the
State of Hawaii as Document No. 2006-083256.


 


Condominium Release Payment Account: 
A deposit account opened and maintained by Borrower with Agent’s
Depository Bank, on behalf of the Agent, to be utilized in the manner set forth
in Sections 14.4(a)(viii) and 14.4(b)(viii) hereof.


 


Construction:  The
construction of the Improvements in accordance with the Plans and
Specifications.


 


Construction Budget:  A budget for
the Project, satisfactory to the Lenders, specifying the categories of all costs
and expenses to be incurred by Borrower in connection with the Project prior to
the completion of the Construction, including Hard Costs and Soft Costs,
together with the changes or modifications thereto hereafter made in accordance
with the terms of this Agreement.  The
Construction Budget in effect as of the date hereof, which has been reviewed
and approved by the Lenders, is annexed hereto as Exhibit G.


 


Construction Commencement Date:  October 31,
2006.


 


Construction Contracts:  All contracts
between General Contractor and third parties for the design, engineering and
construction of the Project.


 


Construction Contracts Effectiveness Schedule: 
Construction Contracts (including for the Spa Improvements) representing
100% of all costs anticipated in the General Contract shall be in effect on the
Effective Date.


 


7

















 


Construction Schedule:  A schedule,
reasonably satisfactory to the Lenders, establishing a timetable for completion
of the Construction, showing, on a monthly basis, the anticipated progress of
the Construction, and confirming that the Improvements can be completed on or
before the Completion Date, as same may be amended from time to time, subject
to the Required Lenders’ approval.  The
initial approved Construction Schedule is attached hereto as Exhibit H.


 


Contingency Reserve:  As defined in
Section 10.3.


 


Contract Deposit:  A deposit
(including a reservation deposit) or down payment under a Contract of Sale.


 


Contract of Sale:  An executed
contract of purchase and sale pursuant to which Borrower agrees to sell any
Unit (or any part thereof, including interval, fractional ownership interests)
(collectively, “Contracts of Sale”).


 


Control:  As such term
is used with respect to any Person, including the correlative meanings of the
terms “controlled by” and “under common control with”, the possession, directly
or indirectly, of the power to direct or cause the direction of the management
policies of such Person, whether through the ownership of voting securities, by
contract or otherwise.


 


Debt:  The
outstanding principal balance of the Notes from time to time, together with all
accrued and unpaid interest thereon, and all other sums now or hereafter due
under the Loan Documents.


 


Default or default:  Any event,
circumstance or condition, which, if it were to continue uncured, would, with
notice or lapse of time or both, constitute an Event of Default.


 


Default Rate:  A rate per
annum equal to five hundred (500) basis points in excess of the Applicable
Rate, but not at any time in excess of the highest rate permitted by law.


 


Defaulting Lender:  As defined in Section 23.17(a).


 


Deficiency Deposit:  As such term
is defined in Section 11.1.


 


Determination Date:  With respect
to any Interest Period, the day which is two (2) LIBOR Business Days prior
to the day on which such Interest Period commences.


 


Deutsche Hypo:  As defined in the Recitals to this Agreement.


 


Development Documents:  As defined in
Section 8.1(t).


 


Development Items:  As defined in
Section 8.1(s).


 


8

















 


Development Land:  As defined in
the Recitals.


 


Development Obligations: As defined in Section 8.1(u).


 


Development Property:  Collectively,
the Development Land and the Improvements thereon.


 


Discharge of Negative Pledge
Agreement:  That
certain Cancellation and Termination of Negative Pledge Agreement, dated as of
the Effective Date, between Borrower and Nordic/PCL.


 


Draw #29:  The requisition, dated January 7, 2009,
delivered under the Original Loan Agreement for an advance in the amount of
$14,037,758.08


 


Effective Date:  The date
hereof.


 


Eligibility
Requirements:   With respect to any Person, that such Person (i) has
total assets (in name or under management) in excess of $600,000,000 and (except
with respect to a pension advisory firm or similar fiduciary) capital/statutory
surplus or shareholder’s equity of $250,000,000 and (ii) is engaged in the
business of making or owning commercial real estate loans (or interests in
commercial real estate loans) or operating commercial mortgage properties.


 


Enforcement Action:  Any judicial
or non-judicial foreclosure proceeding, the exercise of any power of sale, the
sale by advertisement, the taking of a deed or assignment in lieu of
foreclosure, the obtaining of a receiver, the pursuit of any deficiency
judgment, acquisition of any Collateral, any sale of any Collateral (other than
the sale of Units in the ordinary course of business), or the taking of any
other enforcement action against any Collateral.


 


Engineers:  Any
electrical, civil, structural, mechanical, plumbing and other engineers engaged
by Borrower to perform material engineering services for the Project.


 


Entitlements:  As defined in
Section 15.1(a) and shall include: the Special Management Area Use
Permit, Shoreline Setback Variance and Planned Development Approval.


 


Environmental Indemnity:  The
Environmental Indemnity Agreement dated as of July 14, 2006 by Borrower
and Guarantor in favor of the Agent (as successor to LBHI).


 


Environmental Proceedings: 
Any environmental proceedings, whether civil (including actions by
private parties), criminal, or administrative proceedings, relating to the
Project.


 


9

















 


Environmental Report:  Collectively (i) the
Phase I Environmental Site Assessment for the Kapalua Bay Hotel, dated May 5,
2006, prepared by Clayton Group Services, Inc. and (ii) the Limited
Phase II Investigation, dated June 19, 2006, prepared by Clayton Group
Services, Inc. with respect to the former laundry room at the Kapalua Bay
Hotel.


 


ER Purchase Agreement:  As defined in
Section 8.1(z).


 


ERISA:  The Employee
Retirement Income Security Act of 1974, as amended, and the regulations
promulgated thereunder from time to time.


 


Event of Default:  As such term
is defined in Article XIX.


 


Expense Reserve:  An amount
equal to the sum of (i) the projected amount of real property taxes
payable by Borrower with respect to the Project for the three-month period
immediately succeeding the disbursement of the final Facility A Loan pursuant
to Section 13.1, (ii) the projected amount of Insurance
Premiums payable by Borrower for the Project for the three-month period
immediately succeeding the disbursement of the final Facility A Loan pursuant
to Section 13.1, (iii) the projected amount of interest
payable by Borrower on the Loans for the three-month period immediately
succeeding the disbursement of the final Facility A Loan pursuant to Section 13.1,
(iv) without duplication of any of the foregoing, the projected amount of
common maintenance fees and vacation owner association fees payable by Borrower
with respect to Units and Fractional Ownership Interests not then conveyed to
third party purchasers for the three-month period immediately succeeding the
disbursement of the final Facility A Loan pursuant to Section 13.1,
and (v) the projected amount of Servicing Fees payable to the Servicer for
the three-month period immediately succeeding the disbursement of the final
Facility A Loan pursuant to Section 13.1; provided that such
amount may be reduced pursuant to Section 13.3(b).


 


Expense Reserve Account:  A deposit
account opened and maintained by the Agent with Agent’s Depository Bank, in the
name or under “control”
(as defined in the Uniform Commercial Code of the applicable State) of the
Agent, pursuant to Section 13.3(a).


 


Expense Reserve Items:  The items described in clauses (i) through
(v) in the definition of Expense Reserve above.


 


Exclusive Resorts:  Exclusive
Resorts, LLC, a Delaware limited liability company.


 


Facility:  Shall mean
each of (i) the Spa and Borrower’s leasehold interest in the Spa Land; (ii) the
Beach Club CA; and (iii) the Kapalua General Store (collectively, the “Facilities”).


 


10

















 


Facility A Commitment:  As to any Facility A Lender, the obligation
of such Facility A Lender to make a Facility A Loan to the Borrower hereunder
in a principal amount not to exceed the amount set forth under the heading “Facility
A Commitment” opposite such Lender’s name on Schedule D, or, as the case
may be, in the Assignment and Assumption Agreement pursuant to which such
Facility A Lender became a party hereto, as the same may be changed from time
to time pursuant to the terms hereof.


 


Facility A Commitment Amount:  $120,078,665.54, as such amount may be
reduced pursuant to Section 4.2(j).


 


Facility A Excess Proceeds Account: 
A deposit account opened and maintained by the Agent with Agent’s
Depository Bank, or so long as TriMont is the Servicer at a bank designated by
TriMont and acceptable to the Agent, in either case in the name or under “control”
(as defined in the Uniform Commercial Code of the applicable State) of the
Agent, to be utilized in the manner set forth in Section 4.10(b).


 


Facility A Lenders:  The Persons listed on Schedule D under
the heading “Facility A Lenders” and any other Person that shall acquire
Facility A Loans and/or a Facility A Commitment pursuant to an Assignment and
Assumption Agreement, other than any such Person that ceases to be a party
hereto pursuant to an Assignment and Assumption Agreement.


 


Facility A Loans:  Loans made by the Facility A Lenders under
its Facility A Commitment pursuant to Section 4.2.


 


Facility A Maturity Date:  February 11, 2010, or such earlier date
on which the principal payment of the Facility A Notes become due and payable
as therein or herein provided, whether at such stated maturity date, by
acceleration or otherwise.


 


Facility A Notes:  The promissory notes of Borrower payable to
the Facility A Lenders in substantially the form of Exhibit K-1,
evidencing the indebtedness of Borrower to the Facility A Lenders resulting
from advances made by the Facility A Lenders.


 


Facility A Obligations:  The portion of the Debt owing to the Facility A
Lenders.


 


Facility A Pro Rata Share:  With respect to a Facility A Lender, a
percentage equal to a fraction the numerator of which is such Facility A Lender’s
Facility A Commitment and the denominator of which is the Facility A Commitment
Amount (or if the Facility A Commitments have terminated or expired, the
Facility A Pro Rata Share shall be determined based upon such Facility A Lender’s
share of the outstanding principal amount of the Facility A Loans).


 


Facility B Lenders:  The Facility B-1 Lenders and the Facility B-2
Lenders.


 


11

















 


Facility B Loans:  The Facility B-1 Loans and the Facility B-2
Loans.


 


Facility B Obligations:  The portion
of the Debt owing to the Facility B Lenders.


 


Facility B/C Maturity Date:  August 1,
2011, or such earlier date on which the final payment of the principal of the
Facility B Notes and Facility C Notes becomes due and payable as therein or
herein provided, whether at such stated maturity, by acceleration or otherwise.


 


Facility B-1 Lenders:  The Persons
listed on Schedule D under the heading “Facility B-1 Lenders” and any
other Person that shall acquire Facility B-1 Loans pursuant to an Assignment
and Assumption Agreement, other than any such Person that ceases to be a party
hereto pursuant to an Assignment and Assumption Agreement.


 


Facility B-1 Loans:  The loans
outstanding under the Facility B-1 Notes.


 


Facility B-1 Notes:  The
promissory notes of Borrower payable to the Facility B-1 Lenders, in
substantially the form of Exhibit K-2, evidencing the indebtedness
of Borrower to the Facility B-1 Lenders resulting from loans made by the
Facility B-1 Lenders.


 


Facility B-1 Obligations: 
The portion of the Debt owing to the Facility B-1 Lenders.


 


Facility B-1 Pro Rata Share: 
With respect to a Facility B-1 Lender, a percentage equal to a fraction
the numerator of which is such Facility B-1 Lender’s principal amount of the
Facility B-1 Loans and the denominator of which is the aggregate outstanding
principal amount of Facility B-1 Loans of all Facility B-1 Lenders.


 


Facility B-2 Lenders:  The Persons
listed on Schedule D under the heading “Facility B-2 Lenders” and any
other Person that shall acquire Facility B-2 Loans pursuant to an Assignment
and Assumption Agreement, other than any such Person that ceases to be a party
hereto pursuant to an Assignment and Assumption Agreement.


 


Facility B-2 Loans:  The loans
outstanding under the Facility B-2 Notes.


 


Facility B-2 Notes:  The
promissory notes of Borrower payable to the Facility B-2 Lenders, in substantially
the form of Exhibit K-3, evidencing the indebtedness of Borrower to
the Facility B-2 Lenders resulting from loans made by the Facility B-2 Lenders.


 


Facility B-2 Obligations: 
The portion of the Debt owing to the Facility B-2 Lenders.


 


12






 










 


Facility B-2 Pro Rata Share: 
With respect to a Facility B-2 Lender, a percentage equal to a fraction
the numerator of which is such Facility B-2 Lender’s principal amount of the
Facility B-2 Loans and the denominator of which is the aggregate outstanding
principal amount of Facility B-2 Loans of all Facility B-2 Lenders.


 


Facility C Lenders:  The Facility
C-1 Lenders and the Facility C-2 Lenders.


 


Facility C Loans:  The Facility
C-1 Loans and Facility C-2 Loans.


 


Facility C Obligations:  The Debt
owing to the Facility C Lenders.


 


Facility C-1 Lenders:  The Persons
listed on Schedule D under the heading “Facility C-1 Lenders” and any
other Person that shall acquire Facility C-1 Loans pursuant to an Assignment
and Assumption Agreement, other than any such Person that ceases to be a party
hereto pursuant to an Assignment and Assumption Agreement


 


Facility C-1 Loans:  The loans
outstanding under the Facility C-1 Notes.


 


Facility C-1 Notes:  The
promissory notes of Borrower payable to the Facility C-1 Lenders, in
substantially the form of Exhibit K-4, evidencing the indebtedness
of Borrower to the Facility C-1 Lenders resulting from loans made by the
Facility C-1 Lenders.


 


Facility C-1 Obligations: 
The portion of the Debt owing to the Facility C-1 Lenders.


 


Facility C-1 Pro Rata Share: 
With respect to a Facility C-1 Lender, a percentage equal to a fraction
the numerator of which is such Facility C-1 Lender’s principal amount of the
Facility C-1 Loans and the denominator of which is the aggregate outstanding
principal amount of Facility C-1 Loans of all Facility C-1 Lenders.


 


Facility C-2 Lenders:  The Persons
listed on Schedule D under the heading “Facility C-2 Lenders” and any
other Person that shall acquire Facility C-2 Loans pursuant to an Assignment
and Assumption Agreement, other than any such Person that ceases to be a party
hereto pursuant to an Assignment and Assumption Agreement.


 


Facility C-2 Loans:  The loans
outstanding under the Facility C-2 Notes.


 


Facility C-2 Notes:  The
promissory notes of Borrower payable to the Facility C-2 Lenders, in
substantially the form of Exhibit K-5, evidencing the indebtedness
of Borrower to the Facility C-2 Lenders resulting from loans made by the
Facility C-2 Lenders.


 


Facility C-2 Obligations: 
The portion of the Debt owing to the Facility C-2 Lenders.


 


13

















 


Facility C-2 Pro Rata Share: 
With respect to a Facility C-2 Lender, a percentage equal to a fraction
the numerator of which is such Facility C-2 Lender’s principal amount of the
Facility C-2 Loans and the denominator of which is the aggregate outstanding
principal amount of Facility C-2 Loans of all Facility C-2 Lenders.


 


Federal Funds Effective Rate: 
For any day, the rate per annum (rounded upward to the nearest one
one-hundredth of one percent (1/100 of 1%)) announced by the Federal Reserve
Bank of New York on such day as being the weighted average of the rates on
overnight federal funds transactions arranged by federal funds brokers on the
previous trading day, as computed and announced by such Federal Reserve Bank in
substantially the same manner as such Federal Reserve Bank computes and
announces the weighted average it refers to as the “Federal Funds Effective
Rate.”


 


FIRREA:  The Financial
Institutions Reform, Recovery And Enforcement Act of 1989, as amended from time
to time.


 


First Amendment:  That certain First Omnibus Amendment to Construction
Loan Documents, dated as of January 26, 2007, between Borrower and LBHI.


 


First Amendment to Recorded
Loan Documents:  That
certain First Amendment to Recorded Loan Documents, dated as of January 26,
2007, between Borrower and LBHI.


 


Fitch:  Fitch, Inc.


 


Force Majeure Delays:  Delays due to
strike, governmental restrictions, unavailability or shortage of labor and/or materials,
enemy or terrorist action, hurricane, civil commotion, fire or other causes
beyond the control of Borrower, provided, however, that (i) the aggregate
of all such time periods shall not exceed one hundred fifty (150) days,
and an additional one hundred twenty (120) days permitted with respect to
a tropical storm or hurricane and (ii) neither the failure of Borrower to
qualify for an advance hereunder nor the lack of Borrower’s own funds shall
constitute a Force Majeure Delay.  In no
event shall Force Majeure Delays be deemed to extend the Completion Date beyond
the Facility A Maturity Date.


 


Fractional Ownership Act: 
Chapter 514E, Hawaii Revised Statutes, as amended.


 


Fractional Ownership Declaration: 
The Kapalua Bay Vacation Ownership Project Declaration of Covenants,
Conditions and Restrictions creating the Fractional Ownership Units.


 


Fractional Ownership Documents: 
All documents, as required by the Fractional Ownership Act relating to
the registration of the Fractional Ownership Units and to the regulations,
operation and administration or sale thereof after such registration,
including, but not limited to, a disclosure statement, declaration of
covenants, conditions and 


 


14

















 


restrictions, contract
with the plan manager, articles of incorporation and by-laws of the fractional
ownership association, rules and regulations for the fractional ownership
plan, and form of sales contract and apartment deed to be used in connection
with the sale of the Fractional Ownership Units.


 


Fractional Ownership Interest: 
A fraction of ownership interest in a Fractional Ownership Unit and the
corresponding use rights associated therewith.


 


Fractional Ownership Units: 
The 62 fractional ownership units operated as a “Ritz-Carlton Club” to
be sold in 1/12 intervals identified in the Condominium Documents as “Club
Units” which have been submitted to a timeshare plan pursuant to the Fractional
Ownership Act, together with the undivided percentage ownership interests in the
common elements of the condominium project.


 


General Contract:  That certain
Contract between Owner and Contractor, dated October 31, 2006, between
Borrower and Nordic/PCL, or in the case of a General Contractor other than
Nordic/PCL, a guaranteed maximum price general contract, between Borrower and
General Contractor, for the construction of the Improvements, in such form as
the Required Lenders shall approve in their sole discretion, as same may be
amended from time to time.  Such general
contract shall require completion of the Improvements prior to the Completion
Date.


 


General Contractor:  Nordic/PCL
Construction or such other licensed, reputable general contractor as Borrower
selects and the Required Lenders, acting reasonably, approve.  In making the determination as to whether to
approve a general contractor other than Nordic/PCL Construction, the Required
Lenders may take into account any prior dealings they or the other Lenders may
have had with such proposed general contractor.


 


Governmental Approvals:  All consents,
licenses, permits, and other authorizations or approvals required from any
Governmental Authority for the Construction, including, without limitation, the
Entitlements and Permits.


 


Governmental Authority:  Any federal,
state, county or municipal governmental authority, agency, department,
commission, board, bureau or instrumentality having jurisdiction over the
Project.


 


Gross Sales Price:  The purchase
price for each Unit, as well as special assessments (including any items
contained in the Construction Budget referenced as “Hospitality Start-Up
Recovery”), amounts allocable to personal property, and all amounts paid for
extras and the like.


 


Ground Lease:  That certain
Ground Lease dated August 31, 2004, by and between Maui Land & Pineapple
Company, Inc., a Hawaii corporation, as ground lessor, and Borrower, as
ground lessee, as amended by the Ground Lessor Consent, Estoppel Certificate
and Amendment.


 


15

















 


Ground Lessor Consent, Estoppel Certificate and
Amendment:  That certain Ground Lessor Consent, Estoppel
Certificate and Amendment dated as of July 14, 2006 by and among Maui Land &
Pineapple Company, Inc, as ground lessor under the Ground Lease, Borrower, as
ground lessee, and the Agent (as successor to LBHI).


 


Guaranties: Collectively,
the Recourse Guaranty, the Completion Guaranty and the Environmental Indemnity.


 


Guarantor:  Each of Maui
Land & Pineapple Company, Inc., a Hawaii corporation; The
Ritz-Carlton Development Company, Inc., a Delaware corporation; and
Exclusive Resorts Development Company, LLC, a Delaware limited liability
company, severally.


 


Hard Costs:  All costs for
labor, materials or equipment supplied to or incorporated in the Project.


 


Hazardous Material:  Any hazardous
or toxic material, substance or waste (including, without limitation, gasoline,
petroleum, asbestos-containing materials and radioactive materials) which is
regulated under any Law of any Governmental Authority, including: (i) any “hazardous
substance” as defined in the Comprehensive Environmental Response, Compensation
and Liability Act, 42 U.S.C.A. § 9601(14), or any so called “superfund” or “superlien”
Law, including the judicial interpretation thereof; (ii) any “pollutant or
contaminant” as defined in 42 U.S.C.A. § 9601(33); (iii) any material now
defined as “hazardous waste” pursuant to 40 C.F.R.  Part 260; (iv) any petroleum,
including crude oil or any fraction thereof; (v) natural gas, natural gas
liquids, liquefied natural gas, or synthetic gas usable for fuel; (vi) any
“hazardous chemical” as defined pursuant to 29 C.F.R.  Part 1910; and (vii) any other
toxic substance or contaminant that is subject to any other Law or other past
or present requirement of any Governmental Authority.


 


Improvements:  Improvements
for the Project as more particularly described in the Plans and Specifications,
which consist generally of a mixed use condominium development consisting of (i) 84
(unbranded) whole ownership Residential Condominium Units (28 of which shall be
purchased by Exclusive Resorts, its Affiliates and their permitted assigns), (ii) 62
fractional ownership units operated as a “Ritz-Carlton Club” to be sold in 1/12
intervals under a fractional ownership plan in accordance with the Fractional
Ownership Act, (iii) the Facilities and improvements and amenities
contemplated to be located thereon, and (iv) certain additional common
facilities, amenities, appurtenances, fixtures, equipment, entry and exit
areas, parking areas and other areas for the benefit of the Condominium
Project, including the Fractional Ownership Units.


 


In Balance:  As defined in
Section 11.1.


 


Indemnified Party:  As defined in
Section 15.1(t).


 


16

















 


Independent Director:  As defined in
Section 15.3(p).


 


Initial Restructuring
Funding Date:  February 11,
2009.


 


Initial Restructuring Loan:  The Facility A Loans to be made on the
Initial Restructuring Funding Date in the amount of $27,202,476.88.


 


Institutional Lender:  Any one or
more of the following other entities, provided that for any such other entity
to qualify as an Institutional Lender hereunder, such other entity, together
with its affiliates, must have total assets of at least One Billion and 00/100
Dollars ($1,000,000,000.00) and stockholders’ equity or net worth of at least
Two Hundred Fifty Million and 00/100 Dollars ($250,000,000.00) (or, in either
case, the equivalent thereof in a foreign currency) as of the date the loan is
made: a savings bank, a savings and loan association, a commercial bank or
trust company, an insurance company subject to regulation by any governmental
authority or body, a real estate investment trust, a union, a governmental or
secular employees’ welfare, benefit, pension or retirement fund, a pension fund
property unit trust (whether authorized or unauthorized), an investment company
or trust, a merchant or investment bank or any other entity generally viewed as
an institutional lender.  In each of the
foregoing cases, such affiliate or other entity shall constitute an
Institutional Lender whether (1) acting for itself or (2) as trustee,
as a general partner of a partnership, in a fiduciary, management or advisory
capacity or, in the case of a bank, as agent bank, for any number of lenders,
so long as in the case of clause (2) the day-to-day management
decisions relating to the loan are either exercised by or recommended by such
Institutional Lender and, during the life of the loan, such Institutional
Lender shall only be removed from its applicable capacity as described in clause (2).  Notwithstanding the first sentence of this
paragraph, a real estate investment trust that invests primarily in mortgage
loans and investment securities, is taxed as a real estate investment trust
and, if unaffiliated, has total assets of at least Six Hundred Fifty Million
and 00/100 Dollars ($650,000,000.00) and a net worth of at least One Hundred
Million and 00/100 Dollars ($100,000,000.00), shall qualify as an Institutional
Lender despite its failure to meet the total asset and net worth tests set
forth in such first sentence.


 


Insurance Escrow Fund:  As defined in
Section 15.1(l).


 


Insurance Premiums:  As defined in
Section 15.2(b).


 


Interest Period:  A period of
one month, two months or three months, or, to the extent deposits with such
maturities are available to the Lenders, six months, commencing on the first
calendar day of the month as selected by Borrower in accordance with Section 5.1(c) and
ending on the first calendar day of the month that is one month, two months, three
months or six months thereafter, as the case may be; provided, however,
that  no Interest Period may extend beyond the Facility A Maturity Date,
with respect to Facility A Loans, or the Facility B/C Maturity Date, with
respect to Facility B Loans and Facility C Loans.  The initial Interest Period for the Initial 


 


17

















 


Restructuring Loan shall
commence on the Initial Restructuring Funding Date and end on March 1,
2009, and (i) the last Interest Period for Facility A Loans shall commence
on the day following the expiration of the last full calendar month occurring
during the term of the Facility A Loans and end on the Facility A Maturity Date
and (ii) the last Interest Period for Facility B Loans and Facility
C Loans shall commence on the date following the expiration of the last full
calendar month occurring during the term of the Facility B Loans and Facility C
Loans and end on the Facility B/C Maturity Date.


 


Interest Reserve:  As defined in
Section 10.4.


 


Internal Revenue Code:  The Internal
Revenue Code of 1986, as amended from time to time.


 


Issued Entitlements:  As defined in
Section 15.1(a) and shall include the Special Management Area
Use Permit, Shoreline Setback Variance and the Planned Development Approval,
which provide the right to construct the Project.


 


Kapalua General Store:  As defined in
the Condominium Documents.


 


Keep Whole Letters:  Those certain
“Keep Whole Letters” by each of ML&P, Exclusive Resorts and MII,
respectively, each dated July 14, 2006 concerning the funding of their
respective Affiliates in order to meet their funding requirements under the
Guaranties contemplated hereunder and to enable such Affiliates to comply with
their equity obligations under the Limited Liability Operating Agreement of
Member.


 


Land:  As such term
is defined in the Recitals to this Agreement.


 


Laws:  All federal,
state and local laws, statutes, codes, ordinances, orders, rules and
regulations.


 


LBBW:  As defined in the Recitals to this Agreement.


 


LBHI:  As defined in the Recitals to this Agreement.


 


Leases:  All leases,
licenses and occupancy agreements (including any licenses for parking spaces or
storage spaces) affecting the Project or any part thereof now or hereafter
existing.


 


Lenders:  The Facility A Lenders, the Facility B
Lenders and the Facility C Lenders.


 


LIBOR Business Day:  A Business
Day on which dealings in U.S. dollars are conducted in the London interbank
market.


 


18

















 


LIBOR Rate:  For any Interest
Period, the rate (expressed as a percentage per annum and rounded upward, if
necessary, to the next nearest 1/1000 of 1%) for deposits in U.S. dollars, for
(subject to the LIBOR Rate Election) a one-month period, that appears on Telerate Page 3750 (or
the successor thereto) as of 11:00 a.m., London time, on the related
Determination Date.  If such rate does
not appear on Telerate Page 3750 as of 11:00 a.m., London time, on
such Determination Date, LIBOR shall be the arithmetic mean of the offered rates
(expressed as a percentage per annum) for deposits in U.S. dollars for the
number of days of the applicable Interest Period that appear on the Reuters
Screen Libor Page as of 11:00 a.m., London time, on such
Determination Date, if at least two such offered rates so appear.  If fewer than two such offered rates appear
on the Reuters Screen Libor Page as of 11:00 a.m., London time, on
such Determination Date, the Agent shall request the principal London office of
any four major reference banks in the London interbank market selected by the
Agent to provide such bank’s offered quotation (expressed as a percentage per
annum) to prime banks in the London interbank market for deposits in U.S.
dollars for the number of days of the applicable Interest Period as of 11:00 a.m.,
London time, on such Determination Date for the amounts of not less than U.S.
$1,000,000.  If at least two such offered
quotations are so provided, LIBOR shall be the arithmetic mean of such
quotations.  If fewer than two such
quotations are so provided, the Agent shall request any three major banks in
New York City selected by the Agent to provide such bank’s rate (expressed as a
percentage per annum) for loans in U.S. dollars to leading European banks for
the number of days of the applicable Interest Period as of approximately 11:00 a.m.,
New York City time on the applicable Determination Date for amounts of not less
than U.S. $1,000,000.  If at least two
such rates are so provided, LIBOR shall be the arithmetic mean of such rates.  LIBOR shall be determined by the Agent, which
determination shall be binding and conclusive absent manifest error.


 


LIBOR Rate Election:  As defined in
Section 5.1(c).


 


Lien:  Any mortgage,
deed of trust, lien, pledge, hypothecation, assignment, security interest, or
any other encumbrance, charge or transfer of, on or affecting the Property, or
any portion thereof, or Borrower, including, without limitation, any
conditional sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, the filing of
any financing statement, and mechanic’s, materialmen’s and other similar liens
and encumbrances against the Project or any portion thereof or Borrower.


 


Loan Documents:  Collectively,
this Agreement, the documents and instruments listed on Schedule E and
all other documents and instruments entered into by Borrower and/or Guarantor
from time to time which evidence or secure the Debt.


 


Loan Facility:  When used in reference to any Loans, refers
to whether such Loans are Facility A Loans, Facility B-1 Loans, Facility B-2
Loans, Facility C-1 Loans or Facility C-2 Loans.


 


Loans: The Facility
A Loans, the Facility B-1 Loans, the Facility B-2 Loans, the Facility C-1 Loans
and the Facility C-2 Loans.


 


19

















 


Loan-to-Value Ratio:  The ratio
obtained by dividing the outstanding principal balance due on the Loans by the
fair market value of the Project, as determined by an Appraisal.


 


Major Contract:  A
Construction Contract which provides for a contract price equal to or greater
than Two Million Five Hundred Thousand and 00/100 Dollars ($2,500,000.00).


 


Marketing Agreements:  Collectively,
(i) Marketing and Sales Services Agreement, dated August 31, 2004,
between Borrower and Ritz-Carlton; (ii) Marketing and Sales Services
Agreement, dated June 19, 2006, by and between Borrower, Ritz-Carlton and
ML&P; and (iii) Marketing and Sales Services Agreement, dated June 19,
2006, by and between Borrower and Kapalua Realty Company, Ltd., a Hawaii
corporation.


 


Master Assignment Agreement:  As defined in the Recitals to this Agreement.


 


Material Adverse Change or material adverse change: 
If, in the Lenders’ reasonable determination, the business prospects,
operations or financial condition of a Person or property has changed from and
after the Effective Date in a manner which actually impairs the value of the
security for the Loans, prevent timely repayment of the Loans or otherwise
prevent the applicable Person from timely performing any of its obligations
under the Loan Documents.


 


Member:  Kapalua Bay
Holdings, LLC, a Delaware limited liability company.


 


MH Kapalua:  MH Kapalua
Venture, LLC, a Delaware limited liability company.


 


MH Kapalua Keep Whole Letters: 
Collectively, (i) the “Keep Whole Letter” by MH Kapalua, dated the
Effective Date, concerning the funding of Borrower in order for Borrower to
meet its equity funding obligations under Section 12.1(l) and (ii) the
“Keep Whole Letter” by MH Kapalua, dated the Effective Date, concerning the
funding of Borrower in order for Borrower to comply with its mandatory
prepayment obligation under Section 14.4(c).


 


MII:  Marriott
International, Inc., a Delaware corporation.


 


MII Keep Whole Letters:  Collectively,
(i) the “Keep Whole Letter” by MII, dated the Effective Date, concerning
the funding of MH Kapalua in order for MH Kapalua (x) to satisfy its
funding requirements under its Facility A Commitment and (y) to provide
funds to Borrower to enable Borrower to meet its equity funding obligations
under Section 12.1(l) and (ii) the “Keep Whole Letter” by
MII, dated the Effective Date, concerning the funding of MH Kapalua (x) in
order for MH Kapalua to make the loan under the ER Purchase Agreement and (y) if
such loan is not made, to enable MH Kapalua to provide necessary funds to
Borrower to prepay the Facility A Loans in an amount not less than $19,741,850.


 


20

















 


MII/MLP Affiliate:  As defined in
the definition of Permitted Transfers below.


 


ML&P:  Maui Land &
Pineapple Company, Inc., a Hawaii corporation.


 


ML&P Agreements:  Collectively,
that certain: (i) Agreement of Purchase and Sale dated as of June 19,
2006, between Borrower and ML&P (the “Spa Agreement”) for the
purchase by ML&P of the Spa Land and Spa; (ii) Agreement of Purchase
and Sale dated as of June 19, 2006, between Borrower and ML&P (the “Beach
Club Agreement”) for the purchase by ML&P of the Beach Club CA (as
defined in the Condominium Documents); and (iii) Agreement of Purchase and
Sale dated as of June 19, 2006, between Borrower and ML&P (the “General
Store Agreement”) for the purchase by ML&P of the Kapalua General Store
(as defined in the Condominium Documents).


 


ML&P Consent Agreement: 
That certain Consent to Assignment of Agreements dated as of July 14,
2006, by ML&P.


 


Moody’s:  Moody’s
Investors Service, Inc.


 


Mortgage:  The Fee and
Leasehold Mortgage, Security Agreement and Fixture Filing, dated as of July 14,
2006, by Borrower in favor of the Agent (as successor to LBHI) securing the
payment of the Debt and constituting a first priority mortgage lien against the
Project.


 


Mortgaged
Property: That certain real
property owned and leased, as the case may be, by Borrower known as the “Residences
at Kapalua Bay” located in Maui, Hawaii, as more particularly described in the
Mortgage.


 


Net
Lease Payments:  Lease payments received by the Borrower under
a Permitted Lease, less (i) common maintenance fees, (ii) vacation
owner association fees. (iii) to the extent not included in items (i) or
(ii), real property taxes and (iv) brokerage fees and commissions incurred
by Borrower with respect to the Unit subject to such Permitted Lease.


 


Net Sale Proceeds:  In respect of
the sale of a Unit or a Fractional Ownership Interest, the Gross Sales Price,
less Transaction Costs and any portion of the Contract Deposit related to a
particular Unit or Fractional Ownership Interest that was utilized in
accordance with applicable Laws and the Loan Documents to develop the
applicable Unit, as determined by the Required Lenders acting reasonably.


 


Nordic/PCL:  Nordic/PCL, a Hawaii JV.


 


21

















 


Notes: The Facility
A Notes, the Facility B-1 Notes, the Facility B-2 Notes, the Facility C-1 Notes
and the Facility C-2 Notes.


 


OFAC:  Office of
Foreign Asset Control of the Department of the Treasury of the United States of
America.


 


Office:  Department of
Commerce and Consumer Affairs in Hawaii and the Bureau of Conveyances of the
State of Hawaii, as the case may be.


 


Operating Account:  A deposit
account opened and maintained by Borrower with The Bank of Hawaii (or such
other bank reasonably acceptable to the Agent), on behalf of the Agent, to be
utilized in the manner set forth in Section 4.2(i).


 


Original Construction Budget: The construction budget delivered in
connection with the Original Loan Agreement as modified from time to time prior
to the Effective Date.


 


Original Construction Loan
Agreement:  The
Construction Loan Agreement, dated as of July 14, 2006, between Borrower
and LBHI, as amended by the First Amendment and by the Master Assignment
Agreement.


 


Original Effective Date:  July 14, 2006.


 


Original Equity Requirement: 
The requirement that Borrower contribute One Hundred Thirty One Million
Two Hundred Sixty Thousand and 00/100 Dollars ($131,260,000) of equity to the
Project under the terms of the Original Construction Loan Agreement.


 


Original Loan:  The loans made under the Original
Construction Loan Agreement, including the loans assigned to MH Kapalua under the
Master Assignment Agreement and the $10,000,000 loan made by MH Kapalua to
Borrower under the Original Construction Loan Agreement and as set forth in the
Master Assignment Agreement.


 


Outstanding Entitlements: 
As defined in Section 15.1(a).


 


Patriot Act: United States Patriot Act (Title III of Pub. L.
107-56 (signed into law October 26, 2001), as may be amended from time to
time.


 


Payment Date:  The first
(1st) day of each calendar month or, if such day is not a Business Day,
the immediately succeeding Business Day.


 


PDP:  As defined in
Section 8.1(f).


 


Permits:  An
administrative approval by a government agency that the Project complies with
law and Entitlements, which allow the Project to proceed with certain specific
scopes of work; which includes any building permit, excavation permit,
foundation permit, environmental permit, utility permit, or other permit
required in respect of the Construction or the Project.


 


22

















 


Permitted Exceptions:  The matters listed
on Exhibit C annexed hereto.


 


Permitted Fund Manager:  Any Person that on the date of determination
is (i) one of the entities listed on Exhibit L or any other
nationally-recognized manager of investment funds investing in debt or equity
interests relating to commercial real estate, (ii) investing through a
fund with committed capital of at least $250,000,000 and (iii) not subject
to any bankruptcy, insolvency or similar proceeding.


 


Permitted Investments:  Direct obligations of, or obligations the principal
of and interest on which are unconditionally guaranteed by, the United States,
with maturities set forth in Section 13.3(d).


 


Permitted
Lease:  A lease entered into between Borrower, as
lessor, and a third party, as lessee, pursuant to which Borrower leases to such
lessee (i) a Fractional Ownership Unit subject to the following
conditions:  (A) such lease shall
have a term of not more than six months; (B) the rent payable under such
lease to Borrower shall not be less than the fair market rental rate as
reasonably determined by Borrower; and
(C) when such lease is entered into no more than twenty-five (25)
Fractional Ownership Units shall be subject to the terms of a Permitted Lease,
or (ii) a Residential Condominium Unit pursuant to the consent of the
Lenders or pursuant to a leasing plan approved by the Lenders.


 


Permitted Transfers:  The following
transfers shall be deemed “Permitted Transfers” and Borrower shall not be
required to obtain any Lender’s prior written consent to such transfers: (i) a
transfer made in accordance with the buy-sell provisions of the Member’s
Limited Liability Company Agreement as in effect on the date hereof; (ii) a
transfer of direct or indirect interests in Member or in any entity owning a
direct or indirect interest in Member; provided the transferee shall be a
MII/MLP Affiliate; (iii) a transfer of direct or indirect interests in
Member or in any entity owning a direct or indirect interest in Member in
connection with a public offering or a “privatization,” including, without
limitation, interests in ML&P or MII in connection with a publicly traded
stock or any public offering of equity ownership interests; and (iv) a
one-time transfer of the managing member interest in Borrower to an entity that
is a MII/MLP Affiliate or to another Person provided that the other Person has
financial capability and creditworthiness comparable to the financial
capability and creditworthiness of Member, as reasonably determined by the
Required Lenders and each Rating Agency (if applicable).  For purposes hereof, the term “MII/MLP
Affiliate” shall mean an entity in which MII and/or ML&P manages,
directly or indirectly, the affairs and decisions of the MII/MLP Affiliate,
including, without limitation, the day-to-day and major management and operations
decisions.


 


23

















 


Person:  Any
individual, corporation, partnership, joint venture, limited liability company,
estate, trust, unincorporated association, any federal, state, county or
municipal government or any bureau, department or agency thereof and any
fiduciary acting in such capacity on behalf of any of the foregoing.


 


Personal Property:  All personal
property, fixtures and equipment required or beneficial for the operation of
the Land or the Improvements.


 


Plans and Specifications: 
The sets of design plans and specifications for the Project prepared by
the Architect and its consultants that have been reviewed and approved by the
Lenders, and on which the Construction Contract is based.  The term also includes (a) any material
modification of any of those plans, maps, sketches, diagrams, surveys,
drawings, specifications or lists of materials that LBHI (prior to the
Effective Date) or the Lenders (from and after the Effective Date) has
previously reviewed and approved if the modification is in writing and is
initialed by LBHI (prior to the Effective Date) or the Lenders (after the
Effective Date) and the Borrower or the Architect, and (b) any plans,
maps, sketches, diagrams, surveys, drawings, specifications or lists of
materials to be utilized for development of the Project that are created
subsequent to the Effective Date that have been reviewed and approved by the
Lenders.


 


Pledge and Security
Agreement:  Pledge and
Security Agreement, dated as of June 14, 2006, by Member in favor of the
Agent (as successor to LBHI).


 


Pledge of Accounts, Security Agreement and Rights to
Payment:  That certain Pledge of Accounts, Security
Agreement and Rights to Payment dated as of July 14, 2006 by and between
Borrower, as debtor, and the Agent (as successor to  LBHI).


 


Policy:  As defined in
Section 15.2(b).


 


Prepayment Proceeds:  The sum of (i) funds
received by the Agent pursuant to Sections 14.4(a)(viii), 14.4(b)(viii) and
14.5(e) and (ii) Net Lease Payments.


 


Price Protection Letter:  The letter
agreement between Exclusive Resorts and the Agent (as successor to LBHI), dated
July 14, 2006, relating to the rights of the Agent (as successor to LBHI)
to foreclose on certain Units subject to the ER Purchase Agreement.


 


Prime Rate:  The interest
rate per annum publicly announced by Citibank, N.A. in New York City as its
base rate, as such rate shall change from time to time.  If Citibank, N.A. ceases to announce a base
rate, “Prime Rate” shall mean the interest rate per annum published in The Wall Street Journal from time to time as the “Prime Rate”.  If more than one “Prime Rate” is published in
The Wall Street Journal for a day, the
average of such “Prime Rates” shall be used, and such average shall be rounded
up to the nearest one-eighth of one percent (0.125%).  If The Wall Street Journal
ceases to publish a “Prime Rate”, the Agent shall select an equivalent
publication that publishes a “Prime Rate”, and if a “Prime Rate” is no longer
generally published or is limited, regulated or administered by a governmental
or quasi-governmental body, then the Agent shall select a comparable interest
rate index.


 


24

















 


Prime Rate Margin:  In respect of
each portion of the Loans bearing interest at an Adjusted Prime Rate, the
difference (expressed as the number of basis points) between (a) the
Adjusted LIBOR Rate on the date the Adjusted LIBOR Rate was last applicable to
such portion of the Loans and (b) the Prime Rate on the date that the
Adjusted LIBOR Rate was last applicable to the Loans.


 


Prior Agent:  As defined in the Recitals to this Agreement.


 


Pro Rata Interest:  With respect
to any individual Lender, a percentage equal to a fraction the numerator of
which is such Lender’s share of the outstanding principal amount of all Loans
and the denominator of which is the aggregate outstanding principal amount of
all Loans.


 


Proceeding:  As defined in
Section 23.11.


 


Proceeds:  As defined in
Section 16.1(a).


 


Prohibited
Person:  Any Person:


 


(i)            listed in the annex to, or who is
otherwise subject to the provisions of, Executive Order No. 13224 on
Terrorist Financing, effective September 24, 2001, and relating to
Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten
to Commit, or Support Terrorism (the “Executive Order”);


 


(ii)           that is owned or controlled by, or
acting for or on behalf of, any person or entity that is listed in the annex
to, or is otherwise subject to the provisions, of the Executive Order;


 


(iii)          with whom a Person is prohibited from
dealing or otherwise engaging in any transaction by any terrorism or money
laundering Law, including the Executive Order;


 


(iv)          who commits, threatens or conspires to
commit or supports “terrorism” as defined in the Executive Order;


 


(v)           that is named as a “specially
designated national and blocked person” on the most current list published by
the U.S. Treasury Department Office of Foreign Assets Control at its official
website or at any replacement website or other replacement official publication
of such list; or


 


(vi)          who is an Affiliate of a Person listed
in clauses (i)-(v) above.


 


25














 


Project:  The
collective reference to (i) the Land, (ii) the Facilities, (iii) the
Improvements and (iv) the Personal Property, excluding such portion of the
Project that has been released pursuant to the terms of this Agreement.


 


Protective
Advance: All sums expended by one or
more Lenders pursuant to Sections 7.3, 15.1(g), 15.1(k) and
15.2(f).


 


Public Report:  Condominium
Public Report of Kapalua Bay Condominium prepared by Borrower and designated
Registration No. 5900.


 


PUD:  As defined in
Section 8.1(f).


 


Qualified Transferee: A Person that
is not a Prohibited Person for purposes of the Patriot Act and that is one or
more of the following:


 


(A)          a
real estate investment trust, bank, saving and loan association, investment
bank, insurance company, trust company, commercial credit corporation, pension
plan, pension fund or pension advisory firm, mutual fund, government entity or
plan, provided that any such Person referred to in this clause (A) satisfies
the Eligibility Requirements,


 


(B)           an
investment company, money management firm or “qualified institutional buyer”
within the meaning of Rule 144A under the Securities Act 1933, as amended,
or an institutional “accredited investor” within the meaning of Regulation D
under the Securities Act of 1933, as amended, provided that any such Person
referred to in this clause (B) satisfies the Eligibility Requirements;


 


(C)           an
institution substantially similar to any of the foregoing entities described in
clauses (A) or (B) that satisfies the Eligibility Requirements;


 


(D)          any
entity Controlled by any of the entities described in clauses (A) or (C);


 


(E)           an
investment fund, limited liability company, limited partnership or general
partnership where a Permitted Fund Manager or an entity that is otherwise a
Qualified Transferee under clauses (A), (B), (C) or (D) of this
definition acts as the general partner, managing member or fund manager and at
least 50% of the equity interests in such investment vehicle are owned,
directly or indirectly, by one or more entities that are otherwise Qualified
Transferees under clauses (A), (B), (C) or (D) of this definition;


 


(F)           any
entity listed on Exhibit L attached hereto;


 


(G)           any
entity listed on Exhibit M attached hereto; or


 


26

















 


(H)          any
Affiliate of a Person described in subparagraphs (A) — (G).


 


Qualifying Contract of Sale: 
A legally enforceable Contract of Sale between Borrower and an
unaffiliated third-party purchaser for the sale and purchase of an individual
Unit.  Each Qualifying Contract of Sale
must (i) require the payment upon execution of a Contract Deposit equal to
no less than ten percent (10%) of the Purchase Price, (ii) require
the payment of a Gross Sales Price which will yield Net Sale Proceeds not less
the applicable Release Price, (iii) be expressly subordinate to the lien
of the Mortgage, (iv) comply with the requirements of Section 14.1(a) hereof,
(v) comply with all Laws and (vi) be subject to no contingencies, so
that, other than by reason of a default by Borrower thereunder, the purchaser
thereunder may not rescind the same without forfeiting its Contract
Deposit.  A Qualifying Contract of Sale
may be assigned by such a purchaser to a third-party purchaser who is not an Affiliate
of Borrower, Guarantor, Member, ML&P, MII, an MII/MLP Affiliate or
otherwise under the Control of any such entity.


 


Rating Agencies:  Each of
S&P, Moody’s and Fitch or any other nationally recognized statistical
rating agency which has been approved by the Required Lenders.


 


Recourse Guaranty:  The Guaranty,
dated as of July 14, 2006, by Guarantor in favor of Lender, pursuant to
which Guarantor guarantees to the Agent (as successor to  LBHI) the payment of the Recourse
Obligations.


 


Recourse Obligations:  As defined in
the Notes.


 


Related Parties:  As defined in
Section 15.3(d).


 


Release Payment:  Any payment
required to be made under Section 14.4(a)(viii), 14.4(b)(viii) or
Section 14.5(e) (such payments shall collectively be referred
to as “Release Payments”).


 


Release Price:  In respect of
each Unit and each Facility, the amount set forth on Schedule A
attached hereto.


 


Replacement Lender: As defined in
Section 23.21.


 


Required Lenders:  Subject to
the last sentence of this definition, (i) until the Facility A Obligations
have been paid in full, the Facility A Lenders (excluding all Facility A
Lenders that are Defaulting Lenders) holding at least sixty-six and two-thirds
percent (66 2/3%) of the aggregate unpaid principal amount of the Facility A
Loans then outstanding; (ii) from and after the date that the Facility A
Obligations have been paid in full, the Facility B Lenders (excluding all
Facility B Lenders that are Defaulting Lenders) holding at least sixty-six and
two-thirds percent (66 2/3%) of the aggregate unpaid principal amount of the
Facility B Loans then outstanding; and (iii) from and after the date that
the Facility B Obligations have been paid in full, the Facility C Lenders 


 


27

















 


(excluding all Facility C
Lenders that are Defaulting Lenders) holding at least sixty-six and two-thirds
percent (66 2/3%) of the aggregate unpaid principal amount of the Facility C
Loans then outstanding; provided that (x) if clause (ii) above
should apply and an Event of Default has occurred and is continuing, then the
term “Required Lenders” shall mean the Facility B-1 Lenders
(excluding all Facility B-1 Lenders that are Defaulting Lenders) holding at
least sixty-six and two-thirds percent (66 2/3%) of the aggregate unpaid
principal amount of the Facility B-1 Loans then outstanding, and (y) if clause (iii) above should
apply and an Event of Default has occurred and is continuing, then the term “Required
Lenders” shall mean the Facility C-1 Lenders (excluding all Facility C-1
Lenders that are Defaulting Lenders) holding at least sixty-six and two-thirds
percent (66 2/3%) of the aggregate unpaid principal amount of the Facility C-1
Loans then outstanding.  The Facility A Commitment and the Loans
held by MH Kapalua shall be excluded in determining Required Lenders.


 


Requisition:  A
requisition, in the form of Exhibit D annexed hereto, for
disbursement of Facility A Loans under the Facility A Commitment.


 


Reserve Percentage:  For any
Interest Period, that percentage which is specified on the Determination Date
by the Board of Governors of the Federal Reserve System (or any successor) or
any other governmental authority with jurisdiction over the applicable Lender
for determining the maximum reserve requirement (including, but not limited to,
any marginal reserve requirement) for the holder of the applicable Note with
respect to liabilities constituting or including Eurocurrency liabilities in an
amount equal to that portion of the Loans affected by such Interest Period and
with a maturity equal to such Interest Period.


 


Residential Condominium:  As defined in
Section 14.2(a).


 


Residential Condominium Unit: 
Each individual condominium unit (including, but not limited to, any
appurtenant interest in the common elements) in the Residential Property
created by the submission thereof to the provisions of the Condominium Act (all
such condominium units shall be referred to collectively as the “Residential
Condominium Units”).


 


Residential Property:  That portion
of the Development Land designated in the Plans and Specifications for the
Residential Condominium and the Improvements to be constructed thereon.


 


Ritz-Carlton:  The
Ritz-Carlton Development Company, Inc., a Delaware corporation.


 


Ritz-Carlton Consent Agreement: 
That certain Consent to Assignment of Agreements dated as July 14,
2006, by Ritz-Carlton.


 


S&P:  Standard &
Poor’s Ratings Group, a division of McGraw-Hill, Inc.


 


28

















 


Second Omnibus Amendment to
Construction Loan Documents:  The Second Omnibus Amendment to Construction
Loan Documents, dated as of the Effective Date, among the Lenders, the Agent,
Borrower and Guarantors.


 


Second Omnibus Amendment to
Recorded Construction Loan Documents:  The Second Omnibus Amendment to Recorded
Construction Loan Documents, dated as of the Effective Date, among the Lenders,
the Agent, Borrower and ML&P.


 


Senior Lender:  A Lender
other than a Subordinate Lender.


 


Servicer:  As defined in
Section 18.1.


 


Servicing Agreement:  As defined in
Section 18.1.


 


Servicing Fees:  As defined in
Section 18.1.


 


Servicing Standard:  The servicing and administration of the Loans
or the management of the Mortgaged Property, as applicable, by the Agent for
the benefit of the Lenders and in accordance with applicable law, the terms of
the Loan Documents and this Agreement and in the same manner in which, and with
the same care, skill, prudence and diligence with which it administers mortgage
loans for its own account, giving due consideration to customary and usual
standards of practice of prudent institutional commercial lenders servicing
their own loans, and with a view towards the best interests of the Lenders as a
collective whole (subject to the relative priority rights of the Lenders as set
forth in this Agreement), but without regard to (i) any relationship that
Agent, or any Affiliate of Agent, may have with Borrower or any Affiliate of
the Borrower or any other parties to this Agreement or the Loan Documents; (ii) the
existence of any subordinate or mezzanine loan that Agent, or any Affiliate of
Agent, may service, hold or have an interest in; (iii) the ownership of
the Loans or any interest or participation therein, or any equity interest in
the Mortgaged Property, as applicable, by the Agent or any Affiliate of Agent,
as applicable; and (iv) the sufficiency of any compensation for its
services hereunder and/or the Agent’s election to make any Protective Advances
pursuant to the terms of this Agreement or its incurrence of any expenses.


 


Soft Costs:  All costs, other than Hard Costs, to be incurred
in respect of the Project prior to completion of Construction, including,
without limitation, sales and marketing costs and expenses, architects’ fees,
engineers’ fees, interest on the Notes, real estate taxes, insurance premiums
and bond fees.


 


Spa:  The
improvements and amenities intended to be constructed on the Spa Land.


 


Spa Land:  As such term
is defined in the Recitals to this Agreement.


 


SPC Party: As defined in Section 15.3(o).


 


29

















 


Split Note Holders:  As defined in
the Recitals to this Agreement.


 


Split Notes:  As defined in
the Recitals to this Agreement.


 


State: 
The State of Hawaii.


 


Stipulation Order:  As defined in
Section 8.1(dd).


 


Subcontractor:  Any party
furnishing labor, services or materials to the Project under a Construction
Contract.


 


Subordinate Lender:  So long as
any Facility A Commitment remains in effect or any Facility A Obligation
remains unpaid, each Facility B-1 Lender, Facility B-2 Lender, Facility C-1
Lender and Facility C-2 Lender; and thereafter so long as any Facility B-1
Obligation remains unpaid, each Facility B-2 Lender, Facility C-1 Lender and
Facility C-2 Lender; and thereafter so long as any Facility B-2 Obligation
remains unpaid, each Facility C-1 Lender and Facility C-2 Lender; and
thereafter so long as any Facility C-1 Obligation remains unpaid, each Facility
C-2 Lender.


 


Successor Agent:  As defined in
the Recitals to this Agreement.


 


Successor Agent Agreement:  As defined in the Recitals to this Agreement.


 


Swedbank:  As defined in the Recitals to this Agreement.


 


Tax and Insurance Escrow Fund: 
As defined in Section 15.1(l).


 


Tax and Insurance Reserve: 
As defined in Section 10.5.


 


Tax Escrow Fund:  As defined in
Section 15.1(l).


 


Termination Agreement:  The Termination Agreement, dated as of the
Effective Date, among Borrower, Holdings, Nordic/PCL and the other parties
thereto terminating: (i) the Forbearance Agreement dated as of October 24,
2008 between Borrower and Nordic/PCL, (ii) the Indemnification Agreement
dated as of October 24, 2008 between Borrower and Nordic/PCL and (iii) the
Security and Subordination Agreement dated as of October 24, 2008 by
Holdings,  and the other parties thereto
in favor of Nordic/PCL.


 


Title Insurer:  First
American Title Insurance Company and Fidelity Title Insurance
Company:


 


Title Policy:  An ALTA
Mortgagee’s Loan Title Insurance Policy, issued by Title Insurer, insuring the
first lien priority of the Mortgage, subject only to the Permitted Exceptions,
and otherwise in form satisfactory to the Lenders.


 


30

















 


Transaction Costs:  Out-of-pocket
costs payable by Borrower in respect of a sale of a Unit or Fractional
Ownership Interest, including brokerage fees, sales commissions, royalty fees,
any fees payable to Ritz-Carlton (excluding if payable to Ritz-Carlton any
items contained in the Construction Budget referenced as “Hospitality Start-Up
Recovery”), any fees payable to Kapalua Realty Company, Ltd., membership
deposits for the Kapalua Club payable to Kapalua Land Company, Ltd. (all such
fees paid to Affiliates as expressly provided in the Affiliate Agreements
referenced in Schedule B and as in effect as of the date hereof),
and customary closing costs (whether customarily payable by either seller or
purchaser) not to exceed in the aggregate two percent of the Gross Sales Price
of the Unit or Fractional Ownership Interest. 
In addition to the foregoing, Transaction Costs shall also include any
additional costs not referred to above if such costs are approved by (x) the
Lenders if the total transaction costs exceed ten percent (10%) of the Gross
Sales Price for such Unit, or (y) the Required Lenders if the total
Transaction Costs are less than or equal to ten percent (10%) of the Gross
Sales Price for such Unit.


 


Transfer:  Any sale,
transfer, lease, conveyance, alienation, pledge, assignment, mortgage,
encumbrance, hypothecation or other disposition of (i) all or any portion
of the Project, (ii) all or any portion of Borrower’s right, title and
interest (legal or equitable) in and to the Project or (iii) any interest
in Borrower or any Controlling interest in any member in Borrower and which is
not a Permitted Transfer. 
Notwithstanding the foregoing, the sale of any Unit or Facility in
accordance with the terms of Article XIV hereof shall not
constitute Transfers hereunder.


 


TriMont: As defined in
Section 5.1(c).


 


Unit:  Any
individual condominium unit created at the Project, including, without
limitation, Residential Condominium Unit or Fractional Ownership Unit (all such
condominium units shall collectively be referred to as the “Units”).


 


Section 2.2             Rules of Construction.


 


The definitions of terms herein shall apply equally to
the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms.  The words “include”, “includes” and “including”
shall be deemed to be followed by the phrase “without limitation”.  The word “will” shall be construed to have
the same meaning and effect as the word “shall”.  Unless the context requires otherwise (a) any
definition of or reference to any agreement, instrument or other document
herein shall be construed as referring to such agreement, instrument or other
document as from time to time amended, supplemented or otherwise modified
(subject to any restrictions on such amendments, supplements or modifications
set forth herein), (b) any reference herein to any Person shall be
construed to include such Person’s successors and assigns (subject to any
restrictions on such assignments set forth herein), (c) the words “herein”,
“hereof” and “hereunder”, and words of similar import shall be construed to
refer to this Agreement in 


 


31

















 


its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Schedules and Exhibits shall be construed to refer to Articles and
Sections of, and Schedules and Exhibits to, this Agreement, (e) the words “asset”
and “property” shall be construed to have the same meaning and effect and to
refer to any and all tangible and intangible assets and properties, and (f) any
reference to any law, rule or regulation shall be construed to mean that law,
rule or regulation as amended and in effect from time to time.  Each covenant in this Agreement shall be
given independent effect, and the fact that any act or omission may be
permitted by one covenant and prohibited or restricted by any other covenant
(whether or not dealing with the same or similar events) shall not be construed
as creating any ambiguity, conflict or other basis to consider any matter other
than the express terms hereof in determining the meaning or construction of
such covenants and the enforcement thereof in accordance with their respective
terms.


 


ARTICLE III

REPRESENTATIONS AND WARRANTIES


 


Section 3.1             Representations and
Warranties of Borrower.


 


To induce the Agent and the Lenders to execute this
Agreement and perform their obligations hereunder, Borrower hereby represents
and warrants to the Agent and the Lenders as of the Effective Date (and as of
each date of a Requisition and disbursement of Loans, with updates of such
facts and circumstances that are reasonably necessary to include in such
Requisition to render the representations set forth therein true and correct in
all material respects) as follows:


 


(a)               Borrower has good and marketable
fee simple title to the Development Land free and clear of all liens,
encumbrances and charges whatsoever, except for the Permitted Exceptions and
such other liens, encumbrances and charges that have been disclosed to, and
approved by, the Lenders prior to the Effective Date or shall be discharged in
full or bonded over in a manner satisfactory to the Lenders on or prior to the
Effective Date.  Borrower has the right
to mortgage, grant, bargain, sell, pledge, assign, warrant, transfer and convey
the Development Land.


 


(b)               Borrower has good and marketable
leasehold title to the Spa Land, pursuant to the Ground Lease, free and clear
of all liens, encumbrances and changes whatsoever, except for the Permitted
Exceptions and such other liens, encumbrances and charges that have been
disclosed to, and approved by, the Lenders prior to the Effective Date or shall
be discharged in full or bonded over in a manner satisfactory to the Lenders on
or prior to the Effective Date.  Borrower
has the right to mortgage its leasehold estate in the Spa Land.  The certified copy of the Ground Lease
provided to the Lenders by Borrower is true, correct and complete in all
respects.  The Ground Lease is in full
force and effect and has not been amended, except as amended by the Ground
Lessor Consent, Estoppel Certificate and Amendment.  All rents, additional rents and other sums
due and payable under the Ground Lease have been paid in full.  Neither Borrower, as ground lessee under the
Ground Lease, nor ground lessor under the Ground Lease has received or given
any notice of a default under the Ground Lease which has not been cured.


 


32

















 


(c)               Except as otherwise disclosed in
writing by Borrower to the Lenders, no material litigation or proceedings are
pending, or, to the best of Borrower’s knowledge, threatened, against Borrower,
Guarantor, Member or the Project or any portion thereof.  There are no pending, or, to Borrower’s
knowledge, threatened, Environmental Proceedings in respect of the Project or
any portion thereof.


 


(d)               Borrower, Guarantor and Member
have or will upon request provide the Lenders with complete financial
statements that reflect a fair and accurate view of their respective financial
conditions.  Borrower has no contingent
liabilities, other than those related to its ownership of the Land and its
preparation for the development of the Project. 
Member has no contingent obligations other than capital funding
obligations to Borrower.


 


(e)               Borrower is and always has been a
duly organized and validly existing limited liability company, duly organized
under the laws of the State of Delaware. 
Member is and always has been a duly organized and validly existing
limited liability company, duly organized under the laws of the State of
Delaware.  Borrower has full power and
authority to execute, deliver and perform all Loan Documents to which it is a
party, and such execution, delivery and performance have been duly authorized
by all requisite action on the part of Borrower.


 


(f)                The Project is not encumbered or
subject to any capital leases, liens or judgments, other than, with respect to
Borrower, liens for real estate taxes which are not yet due and such other
liens, encumbrances and charges that have been disclosed to, and approved by,
the Lenders prior to the Effective Date or shall be discharged in full or
bonded over in a manner satisfactory to the Lenders on or prior to the
Effective Date.


 


(g)               To the best knowledge of the
Borrower and Member, each of Borrower and Member is in compliance with all Laws
applicable to it and has obtained all permits required for it to operate as a
limited liability company.


 


(h)               Neither Borrower nor Member is
involved in any dispute with any taxing authority.  Neither Borrower nor Member is in default of
any obligation to pay taxes to any taxing authority.


 


(i)                Borrower has never owned any
property, other than the Land, and has never engaged in any business, other
than the ownership of the Land, operation of the hotel previously located on
the Land, and preparation for the development of the Project.  Member has never owned any property, other
than its interest in Borrower, and has never engaged in any business, other
than business incidental to its ownership of an interest in, and as member of,
Borrower.


 


33

















 


(j)                To the knowledge of Borrower, no
consent, approval or authorization of or declaration, registration or filing
with any Governmental Authority or nongovernmental Person, including any
creditor, partner, or member of Borrower or Guarantor, is required in
connection with the execution, delivery and performance of this Agreement or
any of the Loan Documents, other than such consents, approvals or
authorizations which have been obtained, and the recordation of the Mortgage
and the Assignment of Leases and Rents and the filing of UCC financing
statements.


 


(k)               The execution, delivery and
performance of this Agreement, the execution and payment of the Notes and the
granting of the Mortgage and other security interests under the other Loan
Documents will not constitute a breach or default under any other agreement to
which Borrower, Member or any Guarantor is a party or may be bound, or a
violation of any law or court order which may affect the Project.


 


(l)                To the knowledge of Borrower,
after giving effect to the funding of the Initial Restructuring Loan there is
no default under this Agreement, any of the other Loan Documents, or any other
document or instrument to which Borrower is bound, nor any condition which,
after notice or the passage of time or both, would constitute a default or an Event
of Default under said documents.


 


(m)              Borrower has no knowledge of and
has not received written notice of any pending or threatened, condemnation or
eminent domain proceedings in respect of the Land or any part thereof.


 


(n)               As of the date hereof, the
amounts set forth in the Construction Budget represent a full and complete
itemization by category of all costs, expenses and fees which Borrower
reasonably expects to pay or reasonably anticipates becoming obligated to pay
to complete the Construction.


 


(o)               To the knowledge of Borrower,
neither the construction of the Improvements nor the use of the Project when
completed will violate (i) any Laws (including, without limitation, zoning
ordinances, building codes, land use and environmental laws and laws relating
to the disabled) or (ii) any restrictions, covenants or conditions of
record or agreements affecting the Project. 
Neither the zoning authorizations, approvals or variances nor any other
right to construct or to use the Project is to any extent dependent upon or
related to any real estate other than the Land. 
All Governmental Approvals required for the Construction in accordance
with the Plans and Specifications have been obtained or will be obtained prior
to the commencement of Construction, and, to the knowledge of Borrower, all
Laws relating to the Construction and operation of the Improvements have been
complied with.  To the extent such
Governmental Approvals have been issued or obtained, as the date hereof,
Borrower has delivered true, complete and correct copies of same to the Agent.


 


34

















 


(p)               Except for retainage amounts and
amounts disclosed to the Lenders prior to the date hereof and which shall be
paid in full from the proceeds of the Initial Restructuring Loan, all costs and
expenses incurred for any and all labor, materials, supplies and equipment used
in the development of the Project or the construction or demolition of any
improvement on the Land have been paid in full as of the date hereof or will be
paid in full from proceeds of the Loans.


 


(q)               The Project will have adequate
water, gas and electrical supply, storm and sanitary sewerage facilities, other
required public utilities, fire and police protection, and means of access
between the Project and public streets.


 


(r)                Except as shown on the Survey
submitted to the Agent in connection with the Loans, no portion of the Project
and no building or any other portion of the Improvements is located in an area
identified by the Secretary of Housing and Urban Development or any successor
thereto as an area having special flood hazards pursuant to the National Flood
Insurance Act of 1968 or the Flood Disaster Protection Act of 1973, as amended,
or any successor law, or, if located within any such area, Borrower has
obtained and will maintain the insurance prescribed in Section 15.2
hereof.


 


(s)               Borrower has dealt with no broker
or finder in connection with this Agreement or the Loans.


 


(t)                All financial statements and
other information previously furnished by both Borrower and Guarantor in
connection with the Loans are true, complete and correct in all material
respects and fairly present the financial conditions of the subjects thereof as
of the respective dates thereof and do not fail to state any material fact
necessary to make such statements or information not misleading, and no
Material Adverse Change with respect to Borrower or Guarantor has occurred
since the respective dates of such statements and information.  Neither Borrower nor Guarantor has any
material liability, contingent or otherwise, not disclosed in such financial
statements.


 


(u)               Borrower and Guarantor are
solvent, and no bankruptcy, reorganization, insolvency or similar proceeding
under any state or federal law with respect to Borrower or Guarantor or any
Affiliate thereof has been initiated.


 


(v)               Except as disclosed in the
Environmental Report: (i) the Project is free of Hazardous Material and is
in compliance with all Laws; (ii) neither Borrower nor, to the best
knowledge of Borrower, any other Person, has ever caused or permitted any
Hazardous Material to be placed, held, located or disposed of on, under, at or
in a manner to affect the Project and the Project has never been used (whether
by Borrower or, to the best knowledge of Borrower, by any other Person) for any
activities involving, directly or indirectly, the use, generation, treatment,
storage, transportation, or disposal of any Hazardous Material; and (iii) there
are no underground tanks, vessels, or similar facilities for the storage or
containment of Hazardous Materials of any sort on, under or affecting the
Project.


 


35

















 


(w)              The Development Land and Spa Land
are each taxed separately without regard to any other property and for all
purposes the Development Land and Spa Land may be mortgaged, conveyed and
otherwise dealt with as an independent parcel.


 


(x)               There are no Leases, subleases or
other arrangements for occupancy of space within the Project, and no person or
entity has any possessory interest in, or right to occupy, the Project or any
portion thereof, except for the leases and month-to-month rental agreements
listed on Schedule C attached hereto and pursuant to Qualifying
Contracts of Sale entered into prior to or after the date hereof.


 


(y)               Except pursuant to the ML&P
Agreements, the ER Purchase Agreement, and Qualifying Contracts of Sale
currently in effect and that will be entered into after the date hereof,
neither the Project nor any portion thereof is subject to any purchase option,
buy-sell right (except as provided in the limited liability company agreement
of Member), right of first refusal, right of first offer or other similar right
to acquire same.


 


(z)               Upon completion of the
Construction, no building or other improvement will encroach upon any property
line, building line, setback line, side yard line or any recorded or visible
easement.


 


(aa)             The Loans are not being made for
the purpose of purchasing or carrying “margin stock” within the meaning of
Regulation G, T, U or X issued by the Board of Governors of the Federal Reserve
System, and Borrower agrees to execute all instruments necessary to comply with
all the requirements of Regulation U of the Federal Reserve System.


 


(bb)            The Loans evidenced by the Notes are
solely for the business purpose of Borrower, and is not for personal, family,
household or agricultural purposes.


 


(cc)             No portion of the Project has been
or, to the knowledge of Borrower, will be purchased with proceeds of any
illegal activity.


 


(dd)            Borrower is not a party in interest
to any plan defined or regulated under ERISA, and the assets of Borrower are
not “plan assets” of any employee benefit plan covered by ERISA or Section 4975
of the Internal Revenue Code.


 


(ee)             Borrower is not a “foreign person”
within the meaning of Section 1445 or 7701 of the Internal Revenue Code.


 


(ff)              Neither Borrower, Member,
Guarantor nor any Person holding a direct or indirect interest in Borrower is
(or will be) a person with whom the Agent or any Lender is restricted from
doing business under OFAC (including Persons named on OFAC’s Specially
Designated and Blocked Persons list) or under any statute, executive order
(including the September 24, 2001, Executive Order Blocking Property and 


 


36

















 


Prohibiting Transactions
With Persons Who Commit, Threaten to Commit, or Support Terrorism), or other
governmental action and is not intentionally or with knowledge, and shall not
intentionally or with knowledge engage in any dealings or transactions or
otherwise be associated with such Persons. 
In addition, Borrower hereby agrees to provide the Agent with any
additional information that the Agent or any Lender deems reasonably necessary
from time to time in order to ensure compliance with all Laws concerning money
laundering and similar activities.


 


(gg)            Borrower has disclosed to the
Lenders all material facts regarding the Project and Borrower and has not
failed to disclose any material fact that could cause any representation or
warranty made herein to be materially misleading.


 


(hh)            Each of the representations and
warranties made by Guarantor herein or in any of the other Loan Documents is
true, complete and correct in all material respects.


 


(ii)               Borrower possesses all franchises,
patents, copyrights, trademarks, trade names, servicemarks, licenses and
permits, and rights in respect of the foregoing, adequate for the conduct of
Borrower’s businesses substantially as now conducted and to be conducted at the
Project without conflict with any rights of others.


 


(jj)               A true and correct organizational
chart outlining the percentage of ownership and capital structure of Borrower
and the direct and indirect owners of Borrower is attached hereto as Exhibit F.


 


(kk)             Borrower has delivered to the Agent
true, correct and complete copies of the ER Purchase Agreement and the ML&P
Agreements.  Each such agreement is in
full force and effect and has not been amended. 
Borrower, Exclusive Resorts and ML&P have not received or given any
notice of a default under such agreements which has not been cured.  Attached hereto as Schedule B is
a complete list of all agreements entered into by, between or among Borrower
and any Affiliate of ML&P, Exclusive Resorts, LLC, a Delaware limited
liability company, MII and MII/MLP Affiliate. 
Amendments to the ER Purchase Agreement and any individual purchase
agreements entered into pursuant thereto may be amended as permitted by Section 15.1(l).


 


(ll)               Borrower has satisfied the
Original Equity Requirement.


 


(mm)           Borrower represents that to the best
of its knowledge, it is in compliance with all of the requirements of state,
local and municipal requirements for the construction of the Project, including
but not limited to, the requirements of the State of Hawaii Department of Land
and Natural Resources (Historical Preservation Division).


 


(nn)            All proceeds from the
Original Loan have been applied solely to pay for Hard Costs and Soft Costs set
forth in the Construction Budget.


 


37














(oo)            Prior to the consummation of the
transactions contemplated by the Master Assignment Agreement, the Split Note
Holders have funded, and the Borrower acknowledges having received, under the
Original Loan Agreement the total amount of advances equal to the sum of
$228,764,578.58.


 


Section 3.2                                      Survival of
Representations and Warranties.


 


Borrower agrees that all of the representations and
warranties set forth in Section 3.1 and elsewhere in this Agreement
are true as of the Effective Date and, except for matters which have been
disclosed by Borrower in writing, will be true at all times thereafter.  Each request for a disbursement under the
Loan Documents shall constitute a reaffirmation of such representations and warranties,
as deemed modified in accordance with the disclosures made and approved as
aforesaid, as of the date of such request. 
In addition, Borrower shall be deemed to have reaffirmed such
representations and warranties as of the date on which Facility A Loans are
made to fund interest due on the Loans pursuant to the second sentence of Section 4.2(e).  It shall be a condition precedent to the
making of each disbursement of a Facility A Loan that each of said
representations and warranties is true and correct as of the date of such
requested disbursement, except as aforesaid. 
In addition, at the Agent’s request, Borrower shall reaffirm such
representations and warranties in writing prior to each disbursement hereunder;
subject to updating same to include those facts and circumstances that are reasonably
necessary to include to render the representations true and correct in all
material respects.  In the event that a
representation and/or warranty made by Borrower on the Effective Date is
updated such that a material adverse fact is disclosed to the Agent or any
Lender then the Facility A Lenders shall be permitted to withhold disbursement
of an advance under the Facility A Commitment until the fact or circumstance no
longer exists or the Required Lenders otherwise waive same.


 


Section 3.3                                      Representations
and Warranties of Lenders.


 


Each Lender (other than LBHI) hereby represents and
warrants to each other Lender, the Agent, Borrower and each Guarantor as of the
Effective Date as follows, and LBHI hereby represents and warrants to each
other Lender, the Agent, Borrower and each Guarantor as of the Effective Date
as to the following, other than those matters set forth in paragraphs (b),
(c), (d) and (f) below:


 


(a)               In the case of each Lender other
than LBHI that it is duly authorized by all requisite corporate or other
requisite actions to enter into and perform the terms of this Agreement and
each other Loan Document to which it is a party, and in the case of LBHI that
the individual executing this Agreement and each other Loan Document to which
LBHI is a party on behalf of LBHI is duly authorized to execute such agreements
on behalf of LBHI.


 


(b)               It is the legal and beneficial
owner of its Loans and that such interest is free and clear of any liens or
security interests.


 


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(c)               Immediately prior to the exchange
thereof pursuant to Section 4.1, it was the legal and beneficial
owner of the portion of the Original Loan evidenced by the promissory notes
issued to it under the Original Construction Loan Agreement and the Co-Lending
Agreement and that immediately prior to the exchange thereof pursuant to Section 4.1
such interest was free and clear of any liens or security interest.


 


(d)               The execution and delivery of
this Agreement and the performance of its obligations hereunder will not
violate, breach or conflict with its organizational documents or any agreement,
contract, document or instrument to which it is a party.


 


(e)               There is no litigation or
governmental proceeding pending, or to the best of its knowledge, threatened,
which, if determined adversely to such Lender, would materially adversely
affect the enforceability of this Agreement or any other Loan Document.


 


(f)                No approval, authorization,
order, license or consent of, or registration or filing with, any Governmental
Authority or other Person is required in connection with the execution and
delivery of this Agreement by it or the performance of its obligations
hereunder, except those which have been obtained.


 


(g)               It is, and, upon its execution
and delivery of this Agreement and its performance hereunder, shall continue to
be (1) in compliance with any and all applicable licensing requirements of
the state where the Mortgaged Property is located, if any such requirements are
applicable to such Lender, and (2) either (i) organized under the
laws of such state or (ii) qualified to do business in such state or (iii) to
the best of its knowledge, not required to qualify to do business in such
state.


 


(h)               Neither the execution nor
delivery of this Agreement, or the other Loan Documents or any subsequent
Assignment and Assumption Agreement nor the exercise of any remedy or
enforcement of any right with respect thereto will constitute a prohibited
transaction within the meaning of section 406 of the Employee Retirement Income
Security Act of 1974, as amended, or section 4975 of the Internal Revenue Code
of 1986, as amended, for which an exemption is not available, and if such
execution, delivery, purchase, exercise or enforcement constitutes such a prohibited
transaction, it will cooperate with the Department of Labor, Internal Revenue
Service and other affected parties in obtaining an exemption therefor.


 


(i)                To such Lender’s knowledge,
after giving effect to the making of the Initial Restructuring Loan, no Event
of Default exists.


 


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ARTICLE IV

EXCHANGE OF NOTES; LOANS AND LOAN DOCUMENTS


 


Section 4.1                                      Exchange of
Existing Notes.


 


Each Lender agrees to
surrender on the Initial Restructuring Funding Date to the Borrower the
promissory notes issued to it under the Original Construction Loan Agreement
and in exchange for the cancellation of such promissory notes (without
extinguishing the indebtedness evidenced thereby) Borrower shall issue to each
Lender on the Initial Restructuring Funding Date the Notes set forth on Schedule D.  As of the Initial Restructuring Funding Date
(and after giving effect to the making of the Initial Restructuring Loan), the
principal amount outstanding under each Note held by the Lenders is set forth
on Schedule D.  As of the
Initial Restructuring Funding Date, all promissory notes issued under the
Original Construction Loan Agreement are deemed cancelled as of such date.


 


Section 4.2                                      Facility A
Loans; Facility A Lenders’ Obligation to Disburse; Reduction of Facility A
Commitment.


 


(a)               Subject to the terms, provisions
and conditions of this Agreement and the other Loan Documents, Borrower agrees
to borrow from the Facility A Lenders and each Facility A Lender agrees to make
Facility A Loans to Borrower, for the purposes and subject to all of the terms,
provisions and conditions contained in this Agreement.  In no event shall a Facility A Lender make
Facility A Loans in an amount in excess of its Facility A Commitment or after
the Facility A Maturity Date.


 


(b)               The Facility A Loans shall be
made to Borrower on the terms and conditions hereinafter set forth.  The Facility A Loans will bear interest at
the rate or rates, and will be repaid, as set forth in this Agreement and in
the Facility A Notes.  Borrower shall use
the proceeds of the Facility A Loans solely for the purposes specified herein.


 


(c)               The aggregate amount of the
Facility A Loans of any Facility A Lender shall not exceed the Facility A
Commitment of such Facility A Lender.  The Facility A Commitment and Facility A Loans
are not revolving in nature, and amounts repaid may not be subsequently
readvanced.


 


(d)               Provided that Borrower satisfies
the conditions to the making of Facility A Loans set forth in Article VIII
hereof, the Facility A Lenders shall disburse the Initial Restructuring Loan to
Borrower on the Initial Restructuring Funding Date.  Borrower shall use the Initial Restructuring
Loan as set forth on Schedule F.


 


(e)               Except as set forth in the
immediately succeeding sentence, provided that Borrower satisfies the
conditions to the making of Facility A Loans set forth in Articles  VIII,
IX, XII and XIII hereof, the Facility A Lenders shall
disburse Facility A Loans (other than the Initial Restructuring Loan as
provided for in Section 4.2(d)) approximately ten (10) days
after Borrower’s satisfaction of such conditions.  So long as (i) the
Facility A Commitments have not been terminated or fully utilized and (ii) there
shall exist no Default of which Borrower has received notice from the Agent, or
any Lender or Event of Default, then the Facility A Lenders shall make Facility
A Loans on 


 


40

















 


each Payment Date in an
amount equal to interest due on the Loans on such Payment Date, and the
delivery of a Requisition by Borrower shall not be required for the making of
such Facility A Loans.  On each day on
which Facility A Loans are made to pay interest due on the Loans pursuant to
the immediately preceding sentence, Borrower shall make an equity contribution
in accordance with Section 12.1(l) as if such Facility A Loans
were funded pursuant to a Requisition delivered in accordance with Section 12.1(l).


 


(f)                After the disbursement of the
Initial Restructuring Loan and subject to the second sentence of Section 4.2(j),
each Facility A Lender shall make successive disbursements under its Facility A
Commitment to Borrower, but not more than once per calendar month, provided
that (i) there shall then exist no Default or Event of Default, (ii) no
Material Adverse Change shall have occurred with respect to Borrower, Guarantor
or the Project, (iii) the Loans remain In Balance, (iv) all required
Governmental Approvals are in full force and effect as needed for the
then-current stage of Construction, and (iv) Borrower satisfies the
conditions to the disbursement of the Facility A Loans set forth in Articles VIII,
IX, X, XII and XIII hereof, as applicable.  All advances of Facility A
Loans made by the Facility A Lenders to Borrower shall be advanced ratably
among the Facility A Lenders based on the amount of each Facility A Lender’s
Facility A Pro Rata Share.


 


(g)               To the extent that the Facility A
Lenders may have acquiesced in noncompliance with any requirements precedent to
the disbursement of a Facility A Loan, such acquiescence shall not constitute a
waiver by the Facility A Lenders, and the Facility A Lenders may at any time
after such acquiescence require Borrower to comply with all such requirements.


 


(h)               Each Facility A Lender shall
make each Facility A Loan to be made by it hereunder on the proposed date
thereof by wire transfer of immediately available funds to the account of the
Agent.


 


(i)                Borrower authorizes the Agent to
disburse the Facility A Loan proceeds by crediting the Operating Account; provided,
however, that the Agent shall not be obligated to use such method.


 


(j)                If pursuant to Section 4.10(b) Prepayment
Proceeds are deposited into the Facility A Excess Proceeds Account, then on the
date on which such deposit is made the Facility A Commitments shall be
permanently reduced by the amount of such deposit, with such reduction being
made pro rata among the Facility A Lenders’ Facility A Commitments.  If amounts are on deposit in the Facility A
Excess Proceeds Account, then, subject to satisfying all other conditions of
this Agreement for making of additional Facility A Loans, such funds shall be
applied fully to fund amounts set forth in any subsequent Requisition and any
interest due on any Payment Date that would otherwise be paid from proceeds of
Facility A Loans, before utilizing the unfunded balance of the Facility A
Commitment.


 


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Section 4.3                                      Facility B-1
Loans.


 


As of the Initial
Restructuring Funding Date, the aggregate outstanding principal amount of the
Facility B-1 Loans is $27,966,385.63. 
The Facility B-1 Loans will bear interest at the rate or rates, and will
be repaid, as set forth in this Agreement and in the Facility B-1 Notes.  The Facility B-1 Loans are not revolving in nature,
and amounts repaid may not be subsequently readvanced.


 


Section 4.4                                      Facility B-2
Loans.


 


As of the Initial
Restructuring Funding Date, the aggregate outstanding principal amount of the
Facility B-2 Loans is $4,041,441.55.  The
Facility B-2 Loans will bear interest at the rate or rates, and will be repaid,
as set forth in this Agreement and in the Facility B-2 Notes.  The Facility B-2 Loans are not revolving in
nature, and amounts repaid may not be subsequently readvanced.


 


Section 4.5                                      Facility C-1 Loans.


 


As of the Initial
Restructuring Funding Date, the aggregate outstanding principal amount of the
Facility C-1 Loans is $191,430,583.52. 
The Facility C-1 Loans will bear interest at the rate or rates, and will
be repaid, as set forth in this Agreement and in the Facility C-1 Notes.  The Facility C-1 Loans are not revolving in
nature, and amounts repaid may not be subsequently readvanced.


 


Section 4.6                                      Facility C-2
Loans.


 


As of the Initial
Restructuring Funding Date, the aggregate outstanding principal amount of the
Facility C-2 Loans is $10,938,892.07. 
The Facility C-2 Loans will bear interest at the rate or rates, and will
be repaid, as set forth in this Agreement and in the Facility C-2 Notes.  The Facility C-2 Loans are not revolving in
nature, and amounts repaid may not be subsequently readvanced.


 


Section 4.7                                      Closing
Documents.


 


On the Effective Date, Borrower shall execute and
deliver (and cause any party thereto other than Borrower, the Agent or Lenders
to execute and deliver) to the Agent the following:


 


(a)               The Notes;


 


(b)               Second Omnibus Amendment to
Construction Loan Documents;


 


(c)               Second Omnibus Amendment to
Recorded Construction Loan Documents;


 


(d)               MII Keep Whole Letters;


 


42

















 


(e)               MH Kapalua Keep Whole Letters;


 


(f)                The Successor Agent Agreement;


 


(g)               The Master Assignment Agreement;


 


(h)               Termination Agreement;


 


(i)                Discharge of Negative Pledge
Agreement; and


 


(j)                Such other documents,
instruments or certificates as the Agent or its counsel may reasonably require,
including such documents as the Agent in its sole discretion deems necessary or
appropriate to effectuate the terms and conditions of this Agreement and the
Loan Documents and to comply with Laws.


 


Section 4.8                                      Term of the
Loans.


 


(a)               All Facility A Obligations shall
be due and payable in full on the Facility A Maturity Date.


 


(b)               All Facility B Obligations
and all Facility C Obligations shall be due and payable in full on the Facility
B/C Maturity Date.


 


Section 4.9                                      Prepayments.


 


Except as provided in Section 4.10,
Borrower may prepay the Loans in whole only upon not less than thirty
(30) days’ written notice to the Agent and the Lenders.  No such prepayment of the Loans shall be
permitted unless the same is accompanied by (i) all interest accrued on
the Loans through the date of prepayment, (ii) Breakage Costs incurred by
the Lenders as a result of the prepayment, and (iii) reasonable attorneys’
fees incurred by the Lenders as a result of the prepayment.  A prepayment notice may be rescinded or
withdrawn by Borrower provided that such rescission notice is delivered to the
Agent at least five (5) days prior to the prepayment date and Borrower
shall pay all of the Agent’s and the Lenders’ actual costs and expenses
(including reasonable attorneys’ fees and expenses) incurred in connection with
such rescission.  All prepayments under
this Section 4.9 shall be applied in accordance with Section 21.1.


 


Section 4.10                                Required
Principal Payments.


 


(a)               Borrower shall make payments on
account of the principal amount of the Loans upon the release of the lien of
the Mortgage in respect of a Unit or a Facility, as provided in Sections 14.4(a)(viii),
14.4(b)(viii), 14.4(c) and 14.5(e), subject to Section 4.10(b) below.


 


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(b)               Upon receipt thereof, the Agent
shall apply the Prepayment Proceeds to repay the Debt owed to the Facility A
Lenders pursuant to Section 21.1. 
If the Prepayment Proceeds are greater than the Facility A Obligations
so prepaid, then such excess amount shall be deposited by the Agent into the
Facility A Excess Proceeds Account. 
Pursuant to Section 4.2(j), funds on deposit in the Facility
A Excess Prepayment Proceeds Account shall be utilized fully to fund amounts
that would otherwise be funded from proceeds of Facility A Loans before any new
Facility A Loans are made by the Facility A Lenders.  If the portion of the Debt owed to the
Facility A Lenders has been paid in full and the Facility A Commitments have
expired or have been terminated or upon the Notes being declared due and
payable pursuant to Section 20.1(c), the Agent shall apply the
Prepayment Proceeds to repay the outstanding Debt in accordance with Section 21.1.


 


(c)               On the Facility A Maturity Date,
Borrower shall pay the entire amount of the Facility A Obligations.


 


(d)               On the Facility B/C Maturity
Date, Borrower shall pay the entire amount of each of the Facility B
Obligations and the Facility C Obligations.


 


Section 4.11                                Payments
Generally.


 


(a)               All payments (whether of principal
or interest) shall be deemed credited to Borrower’s account only if received by
2:00 p.m. (New York time) on a Business Day; otherwise, such payment shall
be deemed received on the next Business Day.


 


(b)               Each Facility A Lender will make
the amount of each of its  Facility A
Loans, and the Borrower will make available the applicable amount of its
Additional Equity Requirement, available to the Agent (or the Servicer, as the
case may be) prior to 2:00 p.m. (New York time) on the Business Day on
which such Facility A Loan is to be made hereunder, and the Agent (or the
Servicer, as the case may be) shall make the funds so received from the
Facility A Lenders and the Additional Equity Requirement available to Borrower
on such date; provided that if such funds are received by the Agent (or the
Servicer, as the case may be) after such time, then such funds shall be made
available to Borrower no later than 12:00 p.m. (New York time) on the
immediately succeeding Business Day. 
Notwithstanding anything to the contrary in this Agreement (i) interest
will accrue on such Facility A Lender’s Facility A Loans from the date such
Lender’s funds are received by the Agent (or Servicer, as the case may be) if
received by 2:00 p.m. (New York time) on the required date, and if such
funds are  received on such Business Day
after such time then interest shall accrue thereon from the immediately
succeeding Business Day, or if such funds are not received on such Business Day
then interest shall accrue thereon only after such funds have been received by
the Agent (or the Servicer, as the case may be) and made available to the
Borrower, and (ii) the interest payments payable to the Facility A Lenders
under Sections 21.1 and 21.2 shall be adjusted, if necessary, to take into
account accrual of interest on a funding by a Facility A Lender of its Facility
A Loan commencing on a date other than the date on which such Facility A Loan
was required to be made hereunder.


 


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ARTICLE V

INTEREST


 


Section 5.1                                      Interest Rate.


 


(a)               Interest shall accrue on the
Loans at the Applicable Rate.  Subject to
the provisions hereinafter set forth, the Applicable Rate shall be the Adjusted
LIBOR Rate.


 


(b)               Interest in arrears at the
Applicable Rate shall be payable on each Payment Date.


 


(c)               As long as no Event of Default
has occurred and is continuing, Borrower may elect from time to time (each, a “LIBOR
Rate Election”), but no more frequently than once in any calendar month, to
have the Adjusted LIBOR Rate apply to any portion of the principal amount of
the Loans (including any disbursement of Facility A Loans about to be made) by
giving the Servicer irrevocable written notice of such election designating the
Interest Period for which such LIBOR Rate Election is to apply. For so long as
TriMont Real Estate Advisors, Inc. (“TriMont”) is the Servicer,
such written notice shall be given to TriMont at its Atlanta office by no later
than 5:00 P.M. New York time at least four (4) LIBOR Business Days
prior to the date on which the applicable Interest Period will commence.  If a LIBOR Rate Election is then in effect
with respect to any portion of the Loans, then the Adjusted LIBOR Rate with
respect to any additional Facility A Loan made during the applicable Interest
Period then in effect shall be the Adjusted LIBOR Rate then in effect with
respect to such Interest Period.  In no event may
Borrower elect an Interest Period with respect to the Facility A Loans which
extends beyond the Facility A Maturity Date or an Interest Period with respect
to Facility B Loans or Facility C Loans which extends beyond the Facility B/C
Maturity Date.  Notwithstanding
anything to the contrary, (i) except with respect to Facility A Loans
funded solely to fund a Requisition or to pay interest on the Loans, the LIBOR
Rate Election may be exercised from time to time only as to a minimum aggregate
amount of $53,000,000, and (ii) in no event shall more than seven (7) Interest
Periods be in effect at any time for the Loans. 
If Borrower does not select an Interest Period at least four (4) LIBOR
Business Days prior to the last day of the applicable Interest Period, then the
Applicable Rate for such amount following the end of such Interest Period shall
be based on a thirty (30) day Interest Period.


 


(d)               If the Agent determines (in the
case of clauses (i), (iii) and (iv) below) or receives notice
from any Lender (in the case of clause (ii) below) (which
determination by the Agent or such Lender shall be conclusive and binding upon
Borrower, absent manifest error) (i) that dollar deposits in respect of
any portion of the Loans bearing interest at the Adjusted LIBOR Rate are not
generally available at such time in the London Interbank market, (ii) that
the rate at which such deposits are being offered will not adequately and
fairly reflect the cost to such Lender of maintaining a LIBOR Rate on such
portion of the Loans or of funding the same due to circumstances 


 


45

















 


affecting the London
interbank market generally, (iii) that reasonable means do not exist for
ascertaining a LIBOR Rate or (iv) that an Adjusted LIBOR Rate would be in
excess of the maximum interest rate which Borrower may by law pay, then, in any
such event, the Agent shall so notify Borrower and the Lenders and all portions
of the Loans bearing interest at the Adjusted LIBOR Rate that are so affected
shall, as of the date of such notification with respect to an event described
in clauses (ii) or (iv) above, or as of the expiration of the
Applicable Rate Interest Period with respect to an event described in
clauses (i) or (iii) above, bear interest at the Adjusted Prime
Rate until such time as the situations described above are no longer in effect.


 


(e)               If the introduction of (or any
change in) any Law, regulation or treaty, or in the interpretation thereof by
any Governmental Authority charged with the administration or interpretation
thereof, shall make it unlawful for any Lender to maintain the Applicable Rate
at an Adjusted LIBOR Rate with respect to its Loans or any portion thereof, or
to fund its Loans or any portion thereof in dollars in the London interbank
market, then (i) such Lender shall notify Borrower and the Agent that such
Lender is no longer able to maintain the Applicable Rate at an Adjusted LIBOR
Rate, (ii) the Applicable Rate shall automatically be converted to the
Adjusted Prime Rate and (iii) Borrower shall pay to such Lender the amount
of Breakage Costs (if any) incurred by such Lender in connection with such
conversion.  Such Lender shall use
reasonable efforts to avoid incurring any Breakage Costs but shall have no
liability if any Breakage Costs are incurred. Thereafter, interest shall accrue
on such Loans or the applicable portion thereof at the Adjusted Prime Rate
until such time as the situation described herein is no longer in effect.


 


(f)                Interest on the outstanding
principal balance of Loans made under a Loan Facility shall be calculated by
multiplying (i) the actual number of days elapsed in the period for which
the calculation is being made by (ii) a daily rate applicable to such
Loans based on a three hundred sixty (360) day year by (iii) the
outstanding principal balance of such Loans.


 


(g)               Borrower shall indemnify each
Lender and hold each Lender harmless from any loss or expense which such Lender
sustains or incurs as a consequence of (i) any default by Borrower in
payment of the principal of or interest on any portion of its Loans bearing
interest at an Adjusted LIBOR Rate, including, without limitation, any such loss
or expense arising from interest or fees payable by such Lender to lenders of
funds obtained by it in order to maintain such portion of its Loans at an
Adjusted LIBOR Rate, (ii) any prepayment (whether voluntary or mandatory)
of any portion of the Loans bearing interest at an Adjusted LIBOR Rate on a day
that (A) is not the Payment Date immediately following the last day of
an Interest Period with respect thereto or (B) is the Payment Date
immediately following the last day of an Interest Period with respect thereto
if Borrower did not give the prior written notice of such prepayment required
pursuant to the terms of this Agreement, including, without
limitation, such loss or expense arising from interest or fees payable by such
Lender to lenders of funds obtained 


 


46

















 


by it in order to maintain
such portion of its Loans at an Adjusted LIBOR Rate and (iii) the
conversion (for any reason whatsoever, whether voluntary or involuntary) of the
Applicable Rate from an Adjusted LIBOR Rate to the Adjusted Prime Rate with
respect to any portion of the Loans on a date other than the Payment Date
immediately following the last day of an Interest Period, including, without
limitation, such loss or expenses arising from interest or fees payable by such
Lender to lenders of funds obtained by it in order to maintain such portion of
its Loans at an Adjusted LIBOR Rate (the amounts referred to in
clauses (i), (ii) and (iii) are herein referred to collectively
as the “Breakage Costs”). This provision shall survive payment of the
Notes in full and the satisfaction of all other obligations of Borrower under
this Agreement and the other Loan Documents. Each Lender shall make reasonable
efforts to avoid incurring any Breakage Costs in connection with the
application of the Release Prices in reduction of the Debt.


 


(h)               The outstanding principal balance
of the Loans shall bear interest at the Default Rate at any time during which
an Event of Default exists.


 


ARTICLE VI

COSTS OF MAINTAINING LOAN


 


Section 6.1             Increased Costs and Capital
Adequacy.


 


(a)               Borrower recognizes that the cost
to the Lenders of maintaining the Loans or any portion thereof may fluctuate
and Borrower agrees to pay each Lender additional amounts to compensate such Lender
for any increase in costs incurred in maintaining its Loans or any portion
thereof or for the reduction of any amounts received or receivable from
Borrower as a result of:


 


(i)         any change after the date hereof in any
Law, regulation or treaty, or in the interpretation or administration thereof,
or by any domestic or foreign court, (x) changing the basis of taxation of
payments under this Agreement to such Lender (other than taxes imposed on all
or any portion of the overall net income or receipts of such Lender), (y) imposing,
modifying or applying any reserve, special deposit or similar requirement
against assets of, deposits with or for the account of, credit extended by, or
any other acquisition of funds for loans by such Lender or (z) imposing on
such Lender, or the London interbank market generally, any other condition
affecting its Loans, provided that the result of the foregoing is to increase
the cost to such Lender of maintaining its Loans or any portion thereof or to
reduce the amount of any sum received or receivable from Borrower by such
Lender under the Loan Documents; or


 


(ii)        the maintenance by such Lender of
reserves in accordance with reserve requirements promulgated by the Board of
Governors of the Federal Reserve System of the United States with respect to “Eurocurrency
Liabilities” of a similar term to that of its Loans (without duplication for
reserves already accounted for in the calculation of a LIBOR Rate pursuant to
the terms hereof).


 


47

















 


(b)               If the application of any Law,
rule, regulation or guideline adopted or arising out of the report of the Basle
Committee on Banking Regulations and Supervisory Practices entitled “International
Convergence of Capital Measurement and Capital Standards”, or the adoption
after the date hereof of any other Law, rule, regulation or guideline regarding
capital adequacy, or any change after the date hereof in any of the foregoing,
or in the interpretation or administration thereof by any domestic or foreign
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender with any
request or directive regarding capital adequacy (whether or not having the
force of law) of any such Governmental Authority, central bank or comparable
agency, has the effect of reducing the rate of return on such Lender’s capital
to a level below that which such Lender would have achieved but for such
application, adoption, change or compliance (taking into consideration the
policies of such Lender with respect to capital adequacy), then, from time to
time Borrower shall pay to such Lender such additional amounts as will
compensate such Lender for such reduction with respect to any portion of such Lender’s
Loans outstanding.


 


(c)               Any amount payable by Borrower
under subsection (a) or subsection (b) of this Section 6.1
shall be paid within five (5) days of receipt by Borrower of a certificate
signed by an authorized officer of a Lender setting forth the amount due and
the basis for the determination of such amount, which statement shall be
conclusive and binding upon Borrower, absent manifest error.


 


ARTICLE VII

LOAN EXPENSE AND ADVANCES TO CURE DEFAULTS


 


Section 7.1                                      Loan and
Administration Expenses.


 


Borrower shall reimburse
the Agent, from time to time upon five (5) days’ demand therefor, for
reasonable, out-of-pocket expenses incurred by the Agent in connection with the
administration of the Loans (excluding the Agent’s general overhead expenses),
including all amounts payable pursuant to Sections 7.2 and 7.3
hereof and any and all other fees owing to the Agent pursuant to the Loan
Documents, and also including, without limitation, all recording, filing and
registration fees and charges, mortgage or documentary taxes, insurance
premiums, title insurance premiums and other charges of the Title Insurer,
survey fees and charges, cost of certified copies of instruments, cost of
premiums on surety company bonds and the Title Policy, charges of Title Insurer
or other escrowee for administering disbursements, all fees and disbursements
of  Agent’s Consultant, all fees and
disbursements of servicer, appraisal fees, syndication fees, insurance
consultant’s fees, environmental consultant’s fees, travel related expenses and
all costs and expenses incurred by the Agent or Servicer in connection with the
determination of whether or not Borrower has performed the obligations
undertaken by Borrower hereunder or has satisfied any conditions precedent to
the obligations of the Lenders hereunder. Further, if any Default or Event of
Default 


 


48

















 


occurs or if the
Loans or any portion thereof are not paid in full when and as due, Borrower
shall pay to the Agent and the Lenders upon five (5) days’ demand
therefor, all costs and expenses of the Agent and the Lenders (including,
without limitation, reasonable attorneys’ fees and court costs) incurred in
attempting to enforce payment of the Loans or to realize upon the security
therefor. Borrower agrees to pay the Agent’s fees and disbursements incurred in
connection with title updates and title endorsements ordered by the Agent (a) in
connection with each disbursement of Facility A Loan proceeds, (b) to be
ordered every six (6) months if construction ceases and (c) after
completion of construction every six (6) months thereafter throughout the
term of the Loans, or more often if an Event of Default has occurred or if
required by examiners.


 


Section 7.2                                      Brokerage Fees.


 


Borrower
shall pay all brokerage, finder or similar fees or commissions payable in
connection with the transactions contemplated hereby and shall indemnify and
hold each Indemnified Party harmless against all claims, liabilities, costs and
expenses (including attorneys’ fees and expenses) incurred in relation to any
claim by any broker, finder or similar person claiming that they represented
Borrower; provided however, that as an inducement to
Borrower to make the foregoing undertaking, the Agent and each Lender represent
and warrant to Borrower with respect to itself that it has not dealt with any
broker, finder or similar person in connection with the Loans.


 


Section 7.3                                      Right of
Lenders to Make Advances to Cure Borrower’s Defaults.


 


If Borrower fails to
perform any of Borrower’s covenants, agreements or obligations contained in
this Agreement or any of the other Loan Documents (after the expiration of
applicable grace periods, except in the event of an emergency or other exigent
circumstances), any Lender may (but shall not be required to), after written
notice to Borrower and the Agent and after the expiration of any applicable
cure periods, perform any of such covenants, agreements and obligations, and
any amounts expended by such Lender in so doing shall be added to the Debt owed
to such Lender and bear interest at the Default Rate.


 


ARTICLE VIII

CONDITIONS PRECEDENT

TO THE MAKING OF THE LOAN


 


Section 8.1                                      Non-Construction
Conditions Precedent.


 


The Facility A Lenders’ obligation to fund the Initial
Restructuring Loan and thereafter to make any further disbursements of Facility
A Loans and the Facility B Lenders’ and Facility C Lenders’ willingness to
enter into this Agreement are conditioned upon Borrower’s delivery, performance
and satisfaction of the following conditions precedent in form and substance
satisfactory to the Agent, or waiver of any such condition precedent by the
Lenders:


 


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(a)               Borrower shall have furnished
duly executed copies of the documents listed in Section 4.7;


 


(b)               There shall exist no Default of
which Borrower has received notice from the Agent or any Lender or Event of
Default;


 


(c)               Borrower shall have furnished the
Agent with evidence that all taxes then due and payable, including without
limitation, real estate taxes, with respect to the Property have been paid or
will be paid as of the Effective Date;


 


(d)               Borrower shall have furnished to
the Agent the Title Policy with an appropriate endorsement to the Agent,
together with legible copies of all title exception documents cited in the
Title Policy and all other legal documents affecting the Project or the use
thereof;


 


(e)               Borrower shall have furnished to
the Agent or to the Prior Agent an ALTA/ACSM Land Title Survey of the Project
and any and all existing plats regarding the Project;


 


(f)                Borrower shall have furnished
the Agent or the Prior Agent with evidence of zoning or a copy of the final
approved Planned Unit Development (“PUD”) map, preliminary
development plan (“PDP”) or other development plan for the Project
permitting the construction of the Improvements and containing all use or
building conditions or restrictions affecting the Project and approved by the
appropriate Governmental Authority, and all amendments and changes thereto
since the Original Effective Date;


 


(g)               Borrower shall have furnished to
the Agent or to the Prior Agent certified copies of the Issued Entitlements and
all other Governmental Approvals and Permits required for the Project and
issued after the Original Effective Date;


 


(h)               Borrower shall have furnished the
Agent or the Prior Agent with policies or binders evidencing that Borrower has
obtained and maintains insurance coverage in respect of Borrower and the
Project in accordance with the provisions of Section 15.2 below,
and paid all Insurance Premiums in respect thereof;


 


(i)                All of the representations of
Borrower and Guarantor set forth in the Loan Documents shall be true and
correct in all material respects;


 


(j)                Borrower shall have furnished
the Agent and the Lenders with an opinion(s) from counsel to Borrower, in
form and substance reasonably satisfactory to the Agent and the Lenders;


 


50














 


(k)               Borrower shall have furnished the
Agent or the Prior Agent with a zoning report from PBR Hawaii as to violations
and zoning, and use of property and other non-zoning land use permits;


 


(l)                Borrower shall have furnished
the Agent with current, federal tax lien and UCC searches in respect of
Borrower, Member and Guarantor;


 


(m)              Borrower shall have furnished the
Lenders with current annual financial statements of Member and Guarantor, each
in form satisfactory to the Lenders and each certified as being true, complete
and correct by the party to which it relates;


 


(n)               Borrower shall have furnished the
Agent with proof satisfactory to the Agent of its authority, formation and good
standing in the state of its formation and qualification in the State of Hawaii;


 


(o)               Borrower shall have furnished the
Agent with (i) certified copies of all action taken by Borrower, Member
and any other principal of Borrower to authorize the execution, delivery and
performance, in accordance with its terms, of this Agreement, the Notes, each
of the other Loan Documents entered into to consummate the transactions
contemplated herein on the Effective Date and any other documents required or
contemplated hereunder or thereunder to which it is a party; (ii) a
certificate of incumbency with respect to the representatives of each Borrower,
Member and any other principal of Borrower authorized and directed to execute
and deliver each such Loan Document to which it is a party; (iii) certificates
of good standing for Borrower, Member and any other principal of Borrower from
the appropriate authority in their jurisdictions of formation, and (iv) certified
copies of all organizational documents, including, without limitation,
formation and corporate governance documents, for Borrower, Member and any
other principal of Borrower;


 


(p)               Guarantor shall have furnished
the Agent with (i) a certificate of incumbency with respect to the
representatives of each Guarantor authorized and directed to execute and
deliver each of the documents set forth in Section 4.7 to which it
is a party; and (ii) certificates of good standing for Guarantor from the
appropriate authority in each of their jurisdictions of formation;


 


(q)               Borrower shall have furnished the
Agent or the Prior Agent with evidence of the availability to the Improvements
of all utilities utilized or to be utilized at the Project in compliance with
the requirements of the Plans and Specifications. Such evidence may be in the
form of letters from utility companies or local authorities, that (a) telephone
service, cable, telecommunications, electric power, natural gas, storm sewer,
sanitary sewer and water facilities are available to the Project; (b) such
utilities are adequate to serve the Project and exist at the boundary of the
Project; and (c) no conditions exist to affect Borrower’s right to connect
into and have unlimited use of such utilities except for the payment of a
normal connection charge and except for the payment of subsequent charges for
such services to the utility supplier;


 


51

















 


(r)                the Lenders shall have reviewed
and approved the Environmental Report;


 


(s)               Borrower shall have furnished the
Agent or the Prior Agent with copies of all engineering reports, land planning
maps, or plats, soils tests, environmental reports, surveys prepared for the
orderly planning of the Improvements, marketing materials and brochures,
building permits or licenses, utility taps or supply agreements, governmental
or private agreements, indemnities, waivers, rights to reimbursements,
abatements or benefits of whatsoever nature regarding the Property, to the
extent assignable, and other documents prepared and existing for the
construction of the Improvements, available on the Effective Date, with
subsequent submissions to the Agent of reports and studies not required to be
available on the Effective Date, if requested by the Agent (collectively, the “Development
Items”);


 


(t)                Borrower shall have furnished
the Agent or the Prior Agent with copies of any agreements, existing or
proposed, with any Governmental Authority, in the nature of a subdivider’s
agreement, public improvements agreement, or annexation agreement affecting the
development of the Project or requiring cash equivalent collateral, or imposing
building restrictions in lieu of collateral, as a condition to development of
the Project (collectively, the “Development Documents”);


 


(u)               Borrower shall have furnished the
Agent or the Prior Agent with evidence that any obligations regarding
development in connection with the Project arising under the Development
Documents or agreements with providers of utility services or governmental
regulations which could become a lien against the Property or a restriction
against the issuance of building permits or certificates of occupancy for the
Improvements (collectively, the “Development Obligations”) have been or
will be satisfied or performance of the Development Obligations has been or
will be secured by adequate financial security such as bonds, letters of credit
or certificates of deposit pursuant to the agreements creating the Development
Obligations or the requirements of the utility provider;


 


(v)               Borrower shall have furnished to
the Agent or the Prior Agent a fully executed Ground Lessor Consent, Estoppel
Certificate and Amendment;


 


(w)              Borrower shall have furnished to
the Agent or the Prior Agent fully executed copies of all amendments to the
Marketing Agreements;


 


(x)               Borrower shall have furnished the
Agent or the Prior Agent with copies of all amendments to the Condominium
Documents and Fractional Ownership Documents;


 


(y)               Borrower shall have furnished the
Agent or the Prior Agent with fully executed copies of all Contracts of Sale
existing as of the Effective Date;


 


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(z)               Borrower shall have furnished the
Agent or the Prior Agent with a fully executed copy of that certain ER
Residences Agreement (the “ER Purchase Agreement”) dated August 31,
2004, by and between Borrower and Exclusive Resorts, as amended by that certain
First Amendment dated June 28, 2006 and that certain Omnibus Amendment to
ER Agreements dated as of February 11, 2009, including all fully executed
copies of Contracts of Sale executed by Borrower and Exclusive Resorts (or its
permitted assigns) in connection therewith;


 


(aa)             Borrower shall have furnished the
Agent or the Prior Agent with fully-executed copies of the ML&P Agreements;


 


(bb)            The Agent shall have received
evidence satisfactory to it that the Operating Account has been established;


 


(cc)             Borrower shall have paid, or will
pay at closing, its own expenses and fees incurred in connection with the
Loans, and all of the Agent’s and, subject to an agreement between the Lenders
and Borrower, the Lenders’ charges incurred in connection with the making of
the Loans, including but not limited to attorneys’ fees and charges, title fees
and charges, construction, environmental and engineering consultant’s fees and
charges, appraisal costs, surveys, recording and filing fees and taxes;


 


(dd)            The Agent shall have received (in
form and substance satisfactory to the Lenders) an order (the “Stipulation
Order”) of the United States Bankruptcy Court for the Southern District of
New York having jurisdiction over the Chapter 11 bankruptcy cases of LBHI, et
al., entered after a final hearing approving the Stipulation, Agreement and
Order, dated January 28, 2009, among Borrower, LBHI, Central Pacific,
Deutsche Hypo, LBBW and Swedbank.


 


(ee)             UCC amendments assigning the
security interest granted to LBHI under the Loan Document to the Agent;


 


(ff)              Such UCC financing statements or
amendments thereto as Agent determines are advisable or necessary to perfect or
notify third parties of the security interests created by the Loan Documents;


 


(gg)            MH Kapalua shall have satisfied its
funding obligation under Section 5.1 of the Master Assignment Agreement;


 


(hh)            Swedbank shall have received the
payment described in Section 6.1 of the Master Assignment Agreement; and


 


(ii)               All documents and legal matters
in connection with the transactions contemplated by this Agreement shall be
satisfactory in form and substance to the Agent and the Lenders.


 


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ARTICLE IX

CONSTRUCTION CONDITIONS PRECEDENT FOR SUBSEQUENT ADVANCES UNDER THE FACILITY A
COMMITMENT


 


Section 9.1                                      Required
Construction Documents.


 


Borrower shall obtain as a condition for the
disbursement of any Facility A Loan to be made under the Facility A Commitment
the Agent’s approval of each of the following items:


 


(a)               Confirmation that Issued
Entitlements are still in place and in effect. Confirmation shall amount to an
affidavit by Borrower that no action has been undertaken which jeopardizes
Entitlements;


 


(b)               Fully executed copies of: (i) the
General Contract, including pertaining to the Spa; (ii) those Construction
Contracts then required to comply with the Construction Contracts Effectiveness
Schedule or with respect to which any Construction is then being performed; (iii) the
Architect’s Agreement and (iv) all contracts with Engineers;


 


(c)               A schedule of values, including a
trade payment breakdown, setting forth a description of all Construction
Contracts;


 


(d)               All Permits then required for
that portion of the Construction for which funds will be disbursed; as funds
are requested for additional portions of the Construction Borrower shall
provide Permits for same;


 


(e)               The Plans and Specifications;


 


(f)                Fully paid Bonds, with a rider
thereto naming the Agent as an additional obligee thereunder, guaranteeing the
obligations of General Contractor under the General Contract and the
Subcontractors under the Major Contracts;


 


(g)               A report from Agent’s Consultant
which contains an analysis of the Plans and Specifications, the Construction
Budget, the Construction Schedule, the General Contract and all Construction
Contracts. Such report shall contain (i) an analysis demonstrating the
adequacy of the Construction Budget to complete the Project and (ii) a
confirmation that the Construction Schedule is realistic. Agent’s Consultant shall
monitor construction of the Project and shall visit the Project at least one (1) time
in connection with each disbursement request, and shall certify as to amount of
construction costs for all requested advances;


 


(h)               The Architect’s Certificate,
executed by the Architect;


 


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(i)                Consents from the Architect, and
other Persons reasonably specified by the Agent to the collateral assignment by
Borrower to the Agent of construction documents, including, without limitation,
the General Contract, the Architect’s Agreement, contracts with Engineers,
Plans and Specifications, all permits, licenses and approvals (to the extent
assignable under applicable law) in respect of the Project, any other
Development Item and any Development Document;


 


(j)                Borrower’s certification that
all Contract Deposits utilized to date for Hard Costs and Soft Costs constitute
Available Contract Deposits and have been utilized or will be utilized in
conjunction with the requested advance;


 


(k)               An engineer’s report prepared and
certified by a qualified engineer acceptable to the Agent, showing locations
and results of all borings, together with recommendations for the design of the
foundations of the Improvements and certifying in a manner satisfactory to the
Agent the adequacy of the existing soils condition, indicating that the Plans
and Specifications for construction of the Improvements are satisfactory in
view of the condition of the soil;


 


(l)                Copies of marketing brochures or
materials regarding the Project;


 


(m)              An opinion in form and substance
reasonably satisfactory to the Agent from Borrower’s independent counsel that
the Fractional Ownership Documents recorded in the Office with respect to the
Fractional Ownership Units are sufficient to subject the Fractional Ownership
Units to a fractional ownership regime in compliance with the laws of the State
of Hawaii (“Fractional Ownership Opinion”), which Fractional Ownership
Opinion shall be delivered prior to the initial partial release of any Unit;


 


(n)               The form of Purchase Contract to
be used by Borrower in the sale of the Fractional Ownership Interest, the
Fractional Ownership Units and the Residential Condominium Units; and


 


(o)               Such other materials and
documents as the Agent may reasonably require with respect to the Construction.


 


ARTICLE X

CONSTRUCTION BUDGET; RESERVES; OPERATING BUDGET


 


Section 10.1                                Construction
Budget.


 


Disbursements of the Facility A Loans shall be
governed by the Construction Budget. The Construction Budget shall include, in
addition to the Budget Line Items described in Section 10.2 below,
the Contingency Reserve and the Interest Reserve.  Subject to the proviso to the penultimate
sentence of this Section 10.1, Borrower shall not modify the
Construction Budget without first obtaining the Required Lenders’ prior written
consent thereto. Borrower may reallocate funds among Budget Line Items in the 


 


55

















 


Construction Budget as
are reasonably necessary for the Construction of the Improvements in Borrower’s
judgment, provided that without the Lenders’ prior consent (a) funds may
only be moved to or from any particular Budget Line Item once per Budget Line
Item and (b) any individual Budget Line Item shall not be reduced by more
than five percent (5%); provided, however, that no such reallocation or
modification to the Construction Budget shall be made which reduces the Budget
Line Item for interest payable on the Notes without the prior consent of all
Lenders. Borrower shall not otherwise modify the Construction Budget.


 


Section 10.2                                Budget Line
Items.


 


(a)               The Construction Budget shall
include as line items (“Budget Line Items”) all Hard Costs and Soft
Costs. All Facility A Loan proceeds disbursed by Facility A Lenders shall be
used only for the Budget Line Items for which such proceeds were disbursed.


 


(b)               The Facility A Lenders shall not
be obligated to disburse any amount for any category of costs set forth as a
Budget Line Item which is greater than the amount set forth for such category
in the applicable Budget Line Item. Borrower shall pay as they become due all
amounts set forth in the Construction Budget with respect to costs to be paid
for by Borrower. If any Budget Line Item shall be (i) completed without
the expenditure of all amounts in the Construction Budget allocated to such
Budget Line Item or (ii) with regard to unfinished Budget Line Items, to
the extent Borrower can demonstrate to the satisfaction of the Agent that
savings in the particular Budget Line Item exist that do not result from either
the Interest Reserve or the Contingency Reserve and such potential savings do
not result in an increase to the Construction Budget, then Borrower may
reallocate savings, provided that: (x) Borrower shall have submitted to
the Lenders a revised Construction Budget reflecting the reallocation of Budget
Line Items; and (y) no Budget Line Item for Hard Costs shall be
reallocated to pay any Budget Line Item for Soft Costs until Borrower has paid
all Hard Costs and completed the Improvements.


 


Section 10.3                                Contingency
Reserve.


 


The Construction Budget shall contain a Budget Line
Item for additional, unforeseen costs and expenses (the “Contingency Reserve”).
Borrower may from time to time request that the Required Lenders permit the
reallocation of portions of the Contingency Reserve to pay costs of the Project
for which amounts remaining in any Budget Line Item are insufficient. Borrower
agrees that the decision with respect to utilizing portions of the Contingency
Reserve in order to keep the Loans “In Balance” shall be made by the Required
Lenders in their reasonable discretion, and that the Required Lenders may
require Borrower to make a Deficiency Deposit even if funds remain in the
Contingency Reserve.


 


56

















 


Section 10.4                                Interest
Reserve and Facility A Loans to Pay Interest.


 


The Construction Budget shall contain a Budget Line
Item for payment of interest due in respect of the Loans (the “Interest
Reserve”). Pursuant to Section 4.2(e), the Facility A Lenders
shall make Facility A Loans to pay accrued interest on the Notes, and Borrower
hereby authorizes the Agent from time to time to disburse such Facility A Loan
proceeds to pay all such accrued interest regardless of whether Borrower shall
have specifically requested disbursement of such amount. Any such disbursement,
if made, shall be added to the outstanding principal balance of the Facility A
Notes and shall, when disbursed, bear interest at the Applicable Rate.


 


Section 10.5                                Tax and
Insurance Reserve.


 


The Construction Budget shall contain Budget Line
Items for payment of real estate taxes and Insurance Premiums (the “Tax and
Insurance Reserve”). Borrower hereby authorizes the Agent from time to
time, for the mutual convenience of the Lenders and Borrower, to disburse
Facility A Loan proceeds to pay real estate taxes and Insurance Premiums, to
the extent then due and payable, regardless of whether Borrower shall have
specifically requested disbursement of such amount. Any such disbursement, if
made, shall be added to the outstanding principal balance of the Facility A
Notes and shall, when disbursed, bear interest at the Applicable Rate. The
authorization hereby granted, however, shall not obligate Facility A Lenders to
make disbursements of the Facility A Loans for real estate taxes and Insurance
Premiums, unless Borrower requests, and qualifies for, disbursement of the
portion of the Construction Budget allocated therefor.


 


ARTICLE XI

SUFFICIENCY OF LOANS


 


Section 11.1                                Loans In
Balance.


 


Anything contained in this Agreement to the contrary
notwithstanding, until substantial completion of the Improvements in accordance
with the Plans and Specifications (except for the completion of punch-list
items) the Loans shall at all times be “In Balance”, on a Budget Line Item
basis and in the aggregate. A Budget Line Item shall be deemed to be “In
Balance” only if the Required Lenders, in their reasonable discretion,
determine that the amount of such Budget Line Item is sufficient for its intended
purpose. The Loans shall be deemed to be “In Balance” in the aggregate
only when the total of the undisbursed portion of the Facility A Commitment,
plus the portion of the Additional Equity Requirement remaining to be invested,
plus the undisbursed balance of Available Contract Deposits, plus Deficiency
Deposits previously made by Borrower, plus the amount on deposit in the
Facility A Excess Proceeds Account, less the Contingency Reserve (such total
being the “Available Funds”), equals or exceeds the aggregate of: (i) the
costs required to complete the Construction in accordance with the Plans and
Specifications and the Construction Budget through substantial completion; (ii) the
amounts to be paid as retainages to persons who have supplied labor or materials
to the Project; (iii) amounts required to be refunded or otherwise paid to
any contract vendee under a Contract of Sale; and (iv) all other Hard
Costs and Soft Costs not yet paid 


 


57

















 


for in connection with
the Project, as such costs and amounts described in clauses (i) through
(iv) above may be estimated and/or approved in writing by the Agent from
time to time (such costs and amounts in (i) through (iv) being the “Outstanding
Loan Costs”). If, in the Agent’s reasonable determination, either any
Budget Line Item is insufficient for such purpose or the aggregate amount of
the Available Funds is less than Outstanding Loan Costs, then Borrower shall,
within fifteen (15) days after written request by the Agent (with
simultaneous copies of such written request sent to Guarantors and the
Lenders), deposit the deficiency with the Agent (a “Deficiency Deposit”).
The Deficiency Deposit shall first be exhausted before any further disbursement
of Facility A Loan proceeds shall be made. Any Deficiency Deposit remaining
after a particular Budget Line Item or the Loans, as the case may be, are back “In
Balance” shall be returned to Borrower. Facility A Lenders shall not be
obligated to make any Facility A Loan disbursements if and for as long as the
Loans are not “In Balance”.  Notwithstanding
the foregoing, Borrower shall not be obligated to make a Deficiency Deposit if
at any time the Loan is not “In Balance” as a result of a failure of a Facility
A Lender to fund its Facility A Pro Rata Share of a Facility A Loan in
accordance with the terms of this Agreement and so long as Borrower has funded
such Defaulting Lender’s Facility A Pro Rata Share of such Facility A Loan.


 


ARTICLE XII

CONSTRUCTION PAYOUT REQUIREMENTS


 


Section 12.1                                Documents to be
Furnished for Each Disbursement.


 


As a condition precedent
to the making of a Facility A Loan by the Facility A Lender (other than
Facility A Loans made solely to fund interest due on the Loans in accordance
with Section 4.2(e)), Borrower shall furnish or cause to be
furnished to the Agent the following documents covering such Facility A Loan,
in form and substance satisfactory to the Agent:


 


(a)               A Requisition,
duly executed by an Authorized Representative;


 


(b)               An AIA form of cost
certification, executed by the General Contractor, as to all Hard Costs
included within the request for disbursement;


 


(c)               An Architect’s Certificate with
respect to the Improvements completed included within the request for
disbursement;


 


(d)               Such invoices, contracts or other
information as the Agent may require to evidence that Borrower has incurred all
costs covered by the request for disbursement;


 


(e)               An executed, acknowledged lien
waiver from General Contractor in respect of all Hard Costs covered by the
prior disbursement of the Facility A Loans;


 


58

















 


(f)                Paid receipts or other proof of
payment of all Soft Costs covered by the prior disbursement of the Facility A
Loans;


 


(g)               An endorsement to the Title
Policy though the date of the disbursement, confirming the first priority lien
position of the Mortgage, subject only to the Permitted Exceptions;


 


(h)               Copies of any Change Orders
executed since the date of the last disbursement;


 


(i)                Copies of all Construction
Contracts which have been executed since the last disbursement;


 


(j)                All Permits and all other
Governmental Approvals then required in respect of the Construction, all of
which must be assigned to the Agent (to the extent permitted under applicable
law) as security for the Debt;


 


(k)               Copies of Contracts of Sale which
have been executed since the last disbursement, all of which must be assigned
to the Agent as security for the Debt;


 


(l)                Evidence that Borrower has made
or shall simultaneously make an equity contribution for payment of expenses
included in the Construction Budget in an amount equal to 3.4730% of the
aggregate Facility A Loans to be disbursed pursuant to the applicable submitted
Requisition, up to the aggregate amount of the Additional Equity Requirement;
and


 


(m)              Such other instruments, documents
and information as the Agent or Title Insurer may reasonably request.


 


Section 12.2                                Retainage.


 


Disbursement of proceeds of Facility A Loans for
payment to the General Contractor will be consistent with the retainage
provisions to be included in the General Contract. The retainage provisions of
the General Contract may be written to allow reduction of retainage at fifty
percent (50%) completion of the entire work covered by the General Contract
so long as at no point during the course of construction is the retainage less
than five percent (5%) of the value of the work completed, except in the
case of those components of the work which are one hundred percent
(100%) complete, in which case retainage related to such fully completed
work can be released.


 


Section 12.3                                Disbursements
for Stored Materials.


 


Any requests for disbursements which in whole or in
part relate to materials, equipment or furnishings which Borrower owns and
which are not incorporated into the Improvements as of the date of the request
for disbursement, but are to be temporarily 


 


59

















 


stored at the Project or
off-site, shall be made in an aggregate amount not to exceed $5,000,000 at any
time, unless the Required Lenders consent, in their sole discretion, to a
greater amount. Any such request must be accompanied by evidence satisfactory
to the Required Lenders that (i) such stored materials and the storage
facility are included within the coverage of the Policies, (ii) the
ownership of such materials is vested in Borrower free of any liens and claims
of third parties, (iii) such materials are properly insured and protected
against theft or damage, (iv) unless the Required Lenders have waived such
requirement in writing, Agent’s Consultant has viewed and inspected the stored
materials, and (v) in the opinion of Agent’s Consultant, the stored
materials are physically secured and can be incorporated into the Project
within three hundred sixty (360) days. The Agent may require separate
Uniform Commercial Code financing statements to cover any such stored
materials.


 


ARTICLE XIII

FINAL DISBURSEMENT FOR CONSTRUCTION COSTS; EXPENSE RESERVE


 


Section 13.1                                Final
Disbursement for Construction Costs.


 


The Facility A Lenders
will make the final Facility A Loan to Borrower for costs of Construction
(including retainages) when the following conditions have been satisfied,
provided that all other conditions in this Agreement for disbursements have
also been satisfied:


 


(a)               There shall exist no Default or
Event of Default.


 


(b)               The Improvements have been
completed in substantial accordance with the Plans and Specifications, free and
clear of Liens, and are ready for occupancy;


 


(c)               Borrower shall have furnished the
Agent with copies of all licenses and permits required by Governmental
Authorities for the occupancy of the Improvements, including, without
limitation, Certificates of Occupancy in respect of all of the Units;


 


(d)               Borrower shall have furnished the
Agent with final conditional or unconditional lien waivers, executed and
acknowledged by General Contractor, Architect and all Subcontractors;


 


(e)               The Agent shall have received an
affidavit, on AIA Form G706 or equivalent, of payment of debts and claims
executed by the General Contractor;


 


(f)                Borrower shall have furnished
the Agent with a certificate from the Architect stating that (i) the
Improvements have been substantially completed in accordance with the Plans and
Specifications, and (ii) the Improvements, as so substantially completed,
comply with all Laws;


 


60

















 


(g)               The Agent shall have received a
certificate from Agent’s Consultant for the sole benefit of the Agent and the
Lenders that the Improvements have been completed substantially in accordance
with the Plans and Specifications;


 


(h)               The Agent shall have received and
approved an ALTA Endorsement 100 and such other title insurance endorsements as
it may require to the Title Policy insuring that the Improvements have been
completed free of mechanics’ liens encumbering all or any portion of the
Project;


 


(i)                At the request of the Agent,
Borrower will make available to the Agent a complete set of red-lined “as built”
plans for the Improvements, as completed;


 


(j)                There shall be no statutory
Liens filed of record or notice of intent to file such a Lien delivered to
Borrower or the Agent for labor or material arising out of the construction of
the Improvements; unless, if there are any such Liens, Borrower shall have made
arrangements reasonably satisfactory to the Required Lenders for the
disposition or bonding thereof pursuant to Section 15.1(g);


 


(k)               At the Agent’s request, the Agent
shall have received the final list of personal property pursuant to Section 15.1(n);


 


(l)                The Agent shall have received,
at Borrower’s expense, a current, certified ALTA “as-built” improvement survey,
locating all property lines, building set back lines, easements and the
Improvements, parking spaces, and such other matters as shall be required by
Lender; and


 


(m)              The Agent shall have
received all agreements, instruments and documents (including control
agreements, if necessary, and opinions of counsel), in form and substance
reasonably satisfactory to the Agent, evidencing that the Agent has a first
priority perfected security interest in the Expense Reserve Account.


 


If Borrower fails to comply with and satisfy any of
the final disbursement conditions contained in this Section 13.1 on
or before the Completion Date, such failure shall constitute an Event of
Default hereunder.


 


Section 13.2                                Retainage.


 


Notwithstanding the provisions of Section 13.1
above, the making of any Facility A Loans to fund the disbursement of the
retainage that has not been released pursuant to Section 12.2 shall
be subject to the retention of such sums as Agent’s Consultant shall determine
are necessary to assure full completion of punch-list items. Upon the
completion of such punch-list items, the Facility A Lenders shall make
additional Facility A Loans to Borrower to fund such retainage.


 


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Section 13.3                                Expense Reserve.


 


(a)               Prior to the making of the final
Facility A Loan to Borrower, Borrower shall cause the Expense Reserve Account
to have been established and an amount equal to the Expense Reserve shall have
been deposited into the Expense Reserve Account from (i) proceeds from
Facility A Loans and an equity contribution by Borrower made in accordance with
Section 12.1(l), or (ii) funds from Borrower (or a combination
of (i) and (ii)).


 


(b)               Once established and funded
pursuant to Section 13.3(a), the Expense Reserve shall be
maintained until the Debt has been paid in full; provided, however,
that upon closing of the sale of Units to Exclusive Resorts under the terms of
the ER Purchase Agreement Borrower may deliver to the Agent projections with
respect to the Expense Reserve Items for the three-month period immediately
following such sale.  If such projections,
which shall be in form and substance reasonably satisfactory to the Lenders,
show that the aggregate amount of Expense Reserve Items for such three-month
period is less than the amount on deposit in the Expense Reserve Account, then
the Agent shall withdraw the difference from the Expense Reserve Account and
remit such funds to Borrower.  From and
after such date, the Expense Reserve required to be maintained hereunder shall
equal such reduced amount.


 


(c)               If Borrower fails to pay when due
any of the Expense Reserve Items, the Agent may (and shall at the direction of
the Required Lenders) upon not less than two (2) Business Days’ notice to
Borrower from the Agent or any Lender withdraw funds in the Expense Reserve
Account up to an amount equal to the Expense Reserve to make such payment; provided
that so long as the Notes have not been declared due and payable pursuant to Section 20.1,
the Required Lenders shall not direct the Agent to withdraw funds from the
Expense Reserve Account to pay interest on the Notes unless the amount to be
withdrawn is  at least equal to the
lesser of (i) an amount sufficient to pay accrued and unpaid interest then
due on all Notes or (ii) the remaining amount of the Expense Reserve then
available in the Expense Reserve Account; provided further that any such
withdrawal to pay interest on the Notes shall be applied pursuant to Section 21.2.  If any withdrawal is made, the Agent shall
notify Borrower of such withdrawal, and within fifteen (15) Business Days of
receipt of such notice Borrower shall deposit into the Expense Reserve Account
the amount of such withdrawal.


 


(d)               The Agent is hereby authorized
and directed with respect to all sums of money and other property and all
proceeds thereof held in the Expense Reserve Account to invest in, reinvest or
otherwise liquidate Permitted Investments in accordance with instructions of
Borrower; provided that no more than fifty percent (50%) of the amount
of funds held in the Expense Reserve Account may be invested in Permitted
Investments with maturities greater than thirty (30) days from the date of
investment and no funds in the Expense Reserve Account shall be invested in
Permitted Investments with a maturity greater than one hundred eighty (180)
days from the date of investment; provided, further, that upon
the occurrence and during the continuance of an Event of Default or after
Borrower’s failure to pay when due any Expense Reserve Item Borrower 


 


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shall not have the right to
provide the Agent any such investment instructions.  If on the last Business Day of each calendar
month the aggregate amount of cash plus the fair market value of Permitted
Investments in the Expense Reserve Account exceeds the amount of the Expense
Reserve then the Agent shall cause an amount of cash (including cash proceeds
from the sale, liquidation or redemption of any Permitted Investments in the
Expense Reserve Account) equal to such excess amount (calculated as of the date
of withdrawal), less any penalty or charge applicable to the sale, liquidation
or redemption of the Permitted Investment in connection therewith, to be
withdrawn from the Expense Reserve Account and paid to Borrower.  In addition if on the last Business Day of
each calendar month the aggregate amount of cash plus the fair market value of
Permitted Investments in the Expense Reserve Account is less than the amount of
the Expense Reserve then the Agent shall notify the Borrower of such deficiency
and within fifteen (15) Business Days of such notice Borrower shall deposit
funds into the Expense Reserve Account equal to such deficiency.  The Agent shall not be liable for any loss
resulting from any investment in any Permitted Investments or the sale,
liquidation or redemption thereof as contemplated by this Section 13.3(c).


 


(e)               If thirty (30) or more days have
elapsed since the date on which the principal amount of the Notes has been
declared due and payable pursuant to Section 20.1, the Agent may
(and shall at the direction of the Required Lenders) apply amounts in the
Expense Reserve Account up to an amount equal to the Expense Reserve to the
payment of the Debt in accordance with Section 21.1.  Upon payment in full of the Debt, all amounts
in the Expense Reserve Account shall be immediately transferred by the Agent to
Borrower.


 


ARTICLE XIV

CONDOMINIUM COVENANTS


 


Section 14.1                                Contracts of
Sale.


 


(a)               Borrower shall not enter into any
Contracts of Sale, other than Qualifying Contracts of Sale. Unless Borrower has
theretofore obtained the Lenders’ prior written consent thereto, Borrower may
not enter into Contracts of Sale with Guarantor, or Affiliates of Borrower or
Guarantor. Notwithstanding the previous sentence, the Lenders hereby consent to
the sale of Units pursuant to the ER Purchase Agreement and the Lenders’
consent shall not be required with respect to immaterial amendments to the form
Contract of Sale previously approved by the Lenders for sale of each individual
Unit to be sold under the ER Purchase Agreement, to conform to the ER Purchase
Agreement, provided that no amendment shall be made to the sale price set forth
in the ER Purchase Agreement in effect on the date hereof. Lenders shall not
unreasonably withhold such consent, provided that the applicable Contract of
Sale (i) satisfies the requirements of the definition of “Qualifying
Contract of Sale” contained herein and (ii) is otherwise on an arm’s
length, commercially reasonable basis. All Contracts of Sale entered into by
Borrower after the Original Effective Date shall be 


 


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covered by the Assignment of
Purchase Contracts and, in each case, if required by the Agent, by a separate
assignment in form and substance similar to the Assignment of Purchase
Contracts.  Notwithstanding anything to
the contrary in this Agreement, the Lenders hereby consent to the sale of Units
pursuant to the ER Purchase Agreement and any individual purchase agreements
entered into pursuant to the ER Purchase Agreement so long as the purchaser
under each such individual agreement is Exclusive Resorts or any of its
Affiliates.


 


(b)               All Contract Deposits shall be
deposited and held in the Condominium Deposit Account until such time as (i) a
purchaser becomes entitled to the refund thereof in accordance with the terms
of its Contract of Sale or (ii) the closing occurs under a Contract of
Sale, whereupon the Contract Deposit shall be applied on account of the payment
required under Section 14.4(a)(viii) or Section 14.4(b)(viii),
as applicable.  If (x) a purchaser
defaults under a Contract of Sale and (y) the Contract Deposit is paid to
Borrower, Borrower shall pay such Contract Deposit to the Agent, for
application to the Debt in accordance with Section 21.1.
Notwithstanding the above, Borrower shall first apply the Available Contract
Deposits towards funding the Construction pursuant to the Construction Budget,
provided that: (i) Borrower has duly complied with all applicable laws
pertaining to the use of such Contract Deposits for construction costs and
delivers to the Agent Borrower’s certification as to such compliance in
accordance with Section 9.1(j), (ii) Borrower has duly
complied with Article IX of this Agreement, and (iii) no Event
of Default has occurred and is continuing.


 


Section 14.2                                Residential
Condominium.


 


(a)               Borrower has submitted the Development
Property to the provisions of the Condominium Act and will satisfy all of the
requirements thereof and of any other applicable law or restriction necessary
to create a valid residential condominium regime in respect of the Residential
Property (the “Residential Condominium”), provided that the form and
substance of the Condominium Documents including, without limitation, the
Residential Condominium Unit designations, descriptions, floor plans, sale
prices and proposed form of Contract of Sale for the Residential Condominium
Units, as well as the description of common elements and breakdown of common
interests appurtenant to each Residential Condominium Unit, shall be subject to
the written approval of the Lenders prior to such submission; provided
that if the sale price for any Residential Condominium Unit set forth in the
Condominium Documents is lower than the Release Price for such Residential
Condominium Unit and such difference is less than ten percent (10%) of such
Release Price then the approval of the Required Lenders shall be required with
respect to such sale prices.


 


(b)               From and after the creation of
the Residential Condominium, Borrower shall observe and perform the following
covenants:


 


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(i)         Borrower shall pay all common charges
and other assessments as required by the Condominium Documents in respect of
unsold Residential Condominium Units and shall promptly upon demand exhibit to
the Agent receipts for all such payments;


 


(ii)        Borrower shall not, without first
obtaining the Lenders’ prior written consent (which consent, except for item
(4), shall not be unreasonably withheld): (1) vote for or consent to any
modification of, amendment to or relaxation in the enforcement of any provision
of the Condominium Documents; (2) in the event of damage to or destruction
of the Residential Property, vote in opposition to a motion to repair, restore
or rebuild; (3) partition or subdivide any Residential Condominium Unit;
or (4) consent to the termination of the Residential Condominium;


 


(iii)       Borrower shall fully and faithfully
observe, keep and perform, in all material respects, each and every
requirement, condition, covenant, agreement and provisions under the
Condominium Act and the Condominium Documents on the part of Borrower to be
observed, kept and performed. Borrower shall promptly deliver to the Agent a
copy of any notice of default received by Borrower with respect to any
obligation of Borrower under the provisions of the Condominium Documents or the
Condominium Act;


 


(iv)      Borrower shall promptly submit to the
Agent copies of executed Contracts of Sale, notices of cancellation of
Contracts of Sale, and monthly reports in writing specifying the number and
type of Residential Condominium Units sold, Residential Condominium Unit
designation, purchase price for each Residential Condominium Unit, name and
address of the purchasers, number of Residential Condominium Units closed
during the preceding month, and any other information relevant to the sales
program reasonably requested by the Agent from time to time; and


 


(v)       Except for Permitted Leases, Borrower
shall not rent or lease any Residential Condominium Unit or other portions of
the Residential Property, without the Lenders’ prior written consent.


 


Section 14.3                                Fractional
Ownership Units.


 


(a)               Borrower acknowledges that it has
submitted the Fractional Ownership Units to the provisions of the Fractional
Ownership Act and agrees that it will satisfy all of the requirements thereof
and of any other applicable law or restriction necessary to create a valid
fractional ownership regime in respect of the Fractional Ownership Units,
provided that the form and substance of the Fractional Ownership Documents
including, without limitation, the Fractional Ownership Unit designations, sale
prices and proposed form of Contract of Sale for Fractional Ownership Interests
and the Fractional Ownership Units, and breakdown of common interests
appurtenant to each Fractional Ownership Unit, shall be subject to the written
approval of the Lenders prior to such submission; provided that if the
sale price for any Fractional Ownership Unit set 


 


65

















 


forth in the Fractional
Ownership Documents is lower than the Release Price for such Fractional
Ownership Unit and such difference is less than ten percent (10%) of such
Release Price then the approval of the Required Lenders shall be required with
respect to such sale prices.


 


(b)               Provided that no Event of Default
exists, the Agent shall (i) consent to the execution and recording of the
Fractional Ownership Declaration, (ii) take such other actions as shall be
reasonably necessary to effectively transfer the lien of the Mortgage from the
Project to the Fractional Ownership Interests and the Fractional Ownership
Units created and covered by the Fractional Ownership Declaration, together
with their respective proportionate shares of common elements, and (iii) execute
and deliver such reasonable instrument as shall be required to subordinate the
lien of the Mortgage to the Fractional Ownership Declaration; provided that
Borrower satisfies the following conditions:


 


(i)         Borrower shall have verified that the
Fractional Ownership Documents have been approved by any Governmental Authority
from whom approval is required, and Borrower shall have furnished the Agent
with executed counterparts of the Fractional Ownership Documents;


 


(ii)        Borrower shall deliver to the Agent the
Fractional Ownership Opinion with respect to the Fractional Ownership;


 


(iii)       Title Insurer shall have agreed, in
writing, to insure that, upon the creation of the Fractional Ownership Units,
the Mortgage shall constitute a first priority mortgage lien in respect of each
of the condominium units created thereby;


 


(iv)      Borrower shall deliver to the Agent an
assignment of Special Declarant’s Rights under the Fractional Ownership
Documents in the form approved by the Agent; and


 


(v)       Borrower shall have furnished the Agent
with the form of Contract of Sale for Fractional Ownership Interests and the
Fractional Ownership Units and a summary of any material changes made to
executed Contracts of Sale, and a written report specifying the number of
Fractional Ownership Interests and Fractional Ownership Units sold, the
Fractional Ownership Unit designation, purchase price for each Fractional
Ownership Interest and Fractional Ownership Unit, name and address of the
purchasers, number of Fractional Ownership Units and Fractional Ownership
Interests closed during the preceding reporting period (it being acknowledged
that Borrower utilizes a 13-period reporting cycle annually), and any other
information relevant to the sales program reasonably requested by the Agent
from time to time (the “Fractional Sales Report”); and


 


(c)               Borrower shall record and/or file
the Fractional Ownership Documents in the Office.


 


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(d)               From and after the creation of
the Fractional Ownership Units, Borrower shall observe and perform the
following covenants:


 


(i)         Borrower shall pay all common charges
and other assessments as required by the Fractional Ownership Documents in
respect of unsold Fractional Ownership Interests and Fractional Ownership Units
and shall promptly upon demand exhibit to the Agent receipts for all such
payments;


 


(ii)        Borrower shall not, without first
obtaining the Lenders’ prior written consent, (1) vote for or consent to
any modification of, amendment to or relaxation in the enforcement of any
provision of the Fractional Ownership Documents; (2) in the event of
damage to or destruction of the Residential Property, vote in opposition to a
motion to repair, restore or rebuild; (3) partition or subdivide any
Fractional Ownership Unit or Fractional Ownership Interest in intervals less
than one-twelfth (l/12th); or (4) consent
to the termination of the Fractional Ownership Interests;


 


(iii)       Borrower shall fully and faithfully
observe, keep and perform, in all material respects, each and every
requirement, condition, covenant, agreement and provisions under the Fractional
Ownership Act and the Fractional Ownership Documents on the part of Borrower to
be observed, kept and performed. Borrower shall promptly deliver to the Agent a
copy of any notice of default received by Borrower with respect to any
obligation of Borrower under the provisions of the Fractional Ownership
Documents or the Fractional Ownership Act;


 


(iv)      Borrower shall promptly submit to the
Agent a Fractional Sales Report monthly; and


 


(v)       except pursuant to a Permitted Lease,
Borrower shall not rent or lease any Fractional Ownership Unit or other
portions of the Residential Property, without the Lenders prior written
consent.


 


Section 14.4                                Releases of
Entire Units and Fractional Ownership Interests.


 


(a)               Provided no Event of Default has
occurred and is then continuing, the Agent agrees to release entire individual
Units from the lien of the Mortgage in accordance with and subject to all of
the following terms, provisions and conditions applicable to such Unit
concurrently with the satisfaction of the following:


 


(i)         The applicable condominium declaration,
and all amendments thereto required by Laws, has been filed in the Office;


 


(ii)        The Unit to be released is a separate
tax lot and is not required to be included within the Project, for purposes of
any governmental rule or necessary or appropriate to satisfy or facilitate
the requirements or terms of any agreement;


 


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(iii)       Construction of the Unit to be released
shall be complete and a Certificate of Occupancy shall have been issued by the
appropriate Governmental Authority for such Unit;


 


(iv)      The Unit and the remaining portion of the
Project and the release of the Unit and the conveyance shall be in compliance
with all applicable zoning, land use and other governmental rules and
regulations of all governmental authorities;


 


(v)       The condominium association governing the
applicable Unit has been properly formed and established;


 


(vi)      The applicable condominium association
shall have furnished to the Agent at no cost or expense to the Agent, the
insurance policy or policies which comply in all respects with the requirements
set forth in Section 15.2 of this Agreement naming the Agent, said
condominium association, and purchasers of each Unit, as their respective
interests may appear, as the insureds, provided that the interest of the
Agent shall not include any Unit that is being released or has previously been
released pursuant to this Section 14.4(a);


 


(vii)     The Unit to be released is being sold
pursuant to a Qualifying Contract of Sale or a Contract of Sale entered into
pursuant to the ER Purchase Agreement;


 


(viii)    Borrower shall have deposited in the
Condominium Release Payment Account, concurrently with the delivery of the
release, immediately available funds in an amount equal to the greater of (i) the
Net Sale Proceeds in respect of the Unit and (ii) the amount which is 100%
of the Release Price of such Unit, for application to the Debt in accordance
with Section 21.1;


 


(ix)       Borrower shall have furnished the Agent
with a written request for a partial release, accompanied by (i) a release
document prepared by Borrower at Borrower’s expense, in form and content
satisfactory to the Agent, (ii) a schedule containing a list of those
Units previously released by the Agent and those Units remaining to be released
and (iii) a photocopy of the final signed closing statement with respect
to the sale of the applicable Unit;


 


(x)        Borrower pays the Agent all recording
charges and out-of-pocket costs and expenses of the Agent, including, without
limitation, reasonable, out-of-pocket attorneys’ fees, in connection with any
such release (the Agent’s out-of-pocket costs and expenses not to exceed $300
per release that is requested and further provided that the Agent will endeavor
to cause the Servicer to include such fees, costs and expenses within its
Servicing Fees); and


 


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(xi)       Releases of Units shall not affect or
impair the lien of the Mortgage and the Agent’s lien and security interests
created by the other Loan Documents as to Units not theretofore released or the
remaining portion of the Project, and said liens and security interests shall
continue in full force and effect as to the unreleased Units.


 


(b)               Provided no Event of Default has
occurred and is then continuing, the Agent agrees to release Fractional
Ownership Interests from the lien of the Mortgage in accordance with and
subject to all of the following terms, provisions and conditions applicable to
such Fractional Ownership Interest and the applicable Fractional Ownership Unit
concurrently with the satisfaction of the following:


 


(i)         The applicable condominium and
fractional ownership declarations, and all amendments thereto required by Law,
have been filed in the Office;


 


(ii)        The Fractional Ownership Interest to be
released is not required to be included within the Project, for purposes of any
governmental rule or necessary or appropriate to satisfy or facilitate the
requirements or terms of any agreement;


 


(iii)       Construction of the relevant Fractional
Ownership Unit to which such Fractional Ownership Interest relates shall be
complete and a Certificate of Occupancy shall have been issued by the
appropriate Governmental Authority for such Fractional Ownership Unit;


 


(iv)      The relevant Fractional Ownership Unit,
the Fractional Ownership Interest and the remaining portion of the Project and
the release of the Fractional Ownership Interest and the conveyance shall be in
compliance with all applicable zoning, land use and other governmental rules and
regulations of all governmental authorities;


 


(v)       The condominium and fractional ownership
interest associations governing the applicable Fractional Ownership Unit have
been properly formed and established;


 


(vi)      The applicable condominium and fractional
ownership interest associations shall have furnished to the Agent at no cost or
expense to the Agent, the insurance policy or policies which comply in all
respects with the requirements set forth in Section 15.2 of this
Agreement naming the Agent, said condominium association, and purchasers of
each Fractional Ownership Interest, as their respective interests may appear,
as the insureds, provided that the interest of the Agent shall not
include any Fractional Ownership Interest that is being released or has
previously been released pursuant to this Section 14.4(b);


 


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(vii)     The Fractional Ownership Interest to be
released is being sold pursuant to a Qualifying Contract of Sale;


 


(viii)    Borrower shall have deposited in the
Condominium Release Payment Account, concurrently with the delivery of the
release, immediately available funds in an amount equal to the greater of (i) the
Net Sale Proceeds in respect of the Fractional Ownership Interest and (ii) the
amount which is 100% of the Release Price of such Fractional Ownership Interest,
for application to the Debt in accordance with Section 21.1;


 


(ix)       Borrower shall have furnished the Agent
with a written request for a partial release, accompanied by (i) a release
document prepared by Borrower at Borrower’s expense, in form and content
satisfactory to the Agent, (ii) a schedule containing a list of those
Fractional Ownership Interest previously released by the Agent and those
Fractional Ownership Interests remaining to be released and (iii) a
photocopy of the final signed closing statement with respect to the sale of the
applicable Fractional Ownership Interest;


 


(x)        Borrower pays the Agent all recording
charges and out-of-pocket costs and expenses of the Agent, including, without
limitation, reasonable, out-of-pocket attorneys’ fees, in connection with any
such release (the Agent’s out-of-pocket costs and expenses not to exceed $300
per release that is requested and further provided that the Agent will endeavor
to cause the Servicer to include such fees, costs and expenses within its Servicing
Fees); and


 


(xi)       Releases of Fractional Ownership Interest
shall not affect or impair the lien of the Mortgage and the Agent’s lien and
security interests created by the other Loan Documents as to Fractional
Ownership Interests not theretofore released or the remaining portion of the
Project, and said liens and security interests shall continue in full force and
effect as to the unreleased Fractional Ownership Interests.


 


(c)               If the purchaser under the ER
Purchase Agreement purchases the 10 designated Units pursuant to Section 7(c)(i) of
the Omnibus Amendment to ER Agreements (as described in the definition of “ER Purchase
Agreement”), such Units shall be released from the lien of the Mortgage pursuant
to Section 14.4(a), and concurrently with the delivery of such
release Borrower shall deposit into the Condominium Release Payment Account
$19,741,850 in immediately available funds for application to the Debt in
accordance with Section 21.1 and upon receipt of such deposit, provided
no Event of Default has occurred and is then continuing, Agent agrees to
release the remaining five “Exhibit A Units” (as defined in such Omnibus
Amendment to ER Agreements); provided that it shall be a condition of such
release, and Borrower hereby agrees, that such five “Exhibit A Units” may
not be sold or transferred to any Person until such time as the Facility A
Obligations have been paid in full, except that any one or more of such five “Exhibit A
Units” may be sold or transferred (i) to a third party purchaser on the
following conditions: (A) the Borrower deposits into the Condominium 


 


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Release Payment
Account immediately available funds for application to the Debt in accordance
with Section 21.1 in an amount equal to the greater of (1) the
minimum release price for such Unit on Schedule A or (2) the minimum
release price for the exchange Unit described in clause (B) of this
sentence and (B) in exchange for the payment described in clause (A) of
this sentence, another Unit designated by Borrower shall be released from the
lien of the Mortgage, subject to the sale and transfer restrictions otherwise
applicable to the “Exhibit A Units”, or (ii) to MII or any of its
directly or indirectly wholly-owned subsidiaries or a trust established by MII
or its affiliates for use as part of its time share program, so long as MII and
such transferee agree in writing for the benefit of the Agent and the Lenders
that such Unit or Units may not be sold or transferred to any Person until such
time as the Facility A Obligations have been paid in full, except pursuant to
clause (i) of this sentence.


 


Section 14.5                                Releases of
Facilities.


 


Provided no Event of Default has occurred and is then
continuing, the Agent agrees to release a Facility from the lien of the
Mortgage in accordance with and subject to all of the following terms,
provisions and conditions applicable to such Facility;


 


(a)               The Facility to be released is a
separate tax lot and is not required to be included within the Project, for
purposes of any governmental rule or necessary or appropriate to satisfy
or facilitate the requirements or terms of any agreement. Borrower shall have
submitted to the Agent proof reasonably satisfactory to the Agent that
following the release of a Facility, the Project shall continue to have
available to it all necessary utility and other services for the use, occupancy
and operation of the Project and same shall continue to have adequate,
unimpeded and unencumbered access for pedestrian and vehicular ingress and
egress onto adjacent public roads, including, without limitation, any necessary
cross-easements for access, parking, and utilities;


 


(b)               Construction of the Facility to
be released shall be substantially complete;


 


(c)               Each Facility and the remaining
portion of the Project and the release of Facility and the conveyance shall be
in compliance with all applicable zoning, land use and other governmental rules and
regulations of all governmental authorities;


 


(d)               The Facility to be released is
being sold pursuant to the ML&P Agreements;


 


(e)               Borrower shall have deposited to
an account designated by the Agent, prior to the delivery of the release,
immediately available funds in an amount equal to the greater of (i) the
Net Sale Proceeds in respect of the Facility and (ii) the amount which is
100% of the Release Price of such Facility, for application to the Debt in
accordance with Section 21.1;


 


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(f)                Borrower shall have furnished
the Agent with a written request for a partial release, accompanied by (i) a
release document prepared by Borrower at Borrower’s expense, in form and
content reasonably satisfactory to the Agent, (ii) a schedule containing a
list of those Facilities previously released by the Agent and those Facilities
remaining to be released and (iii) a photocopy of the final signed closing
statement with respect to the sale of the applicable Facility;


 


(g)               Borrower pays the Agent all
reasonable out-of-pocket costs and expenses of the Agent, including, without
limitation, reasonable, out-of-pocket attorneys’ fees, in connection with any
such release;


 


(h)               The Release of the Facility shall
not affect or impair the lien of the Mortgage and the Agent’s lien and security
interests created by the other Loan Documents as to Units and Facilities not
theretofore released or the remaining portion of the Project, and said liens
and security interests shall continue in full force and effect as to the
unreleased Units and Facilities; and


 


(i)                Borrower and ML&P shall have
executed a “Facilities Operations and Standards Agreement” (pursuant to Section 8.3(a)(5) of
the Spa Agreement) reasonably acceptable to the Agent and shall have delivered
a true and correct copy of same to the Agent.


 


Section 14.6                                Breakage Costs.


 


Borrower may, in its written request for a partial
release of the lien of the Mortgage, request that the Agent apply all or any
portion of a Release Price to the Debt, to the extent possible (but in any
event consistent with Section 21.1), in such a manner as to avoid
the imposition of Breakage Costs on Borrower. In such event, (i) Agent
shall apply Release Prices to the Debt as Interest Periods expire, in such a
manner as to avoid the imposition of Breakage Costs and (ii) interest
shall accrue on such amounts at the Adjusted LIBOR Rate until such time as
amounts are applied to the Debt as aforesaid.


 


Section 14.7                                Indemnification.


 


Borrower hereby agrees to indemnify, defend, and hold
each Indemnified Party harmless against and from (a) any and all liability,
loss, damage and expense (including, without limitation, reasonable attorneys’
fees) which it may incur or which may be asserted under or in connection with
this Agreement or the Condominium Documents, except to the extent due to such
Person’s gross negligence or willful misconduct, and (b) any and all
claims and demands whatsoever which may be incurred by or asserted against the
Agent or the applicable Lender by reason of any alleged obligations or
undertakings on its part to perform or discharge any of the terms, covenants
and conditions contained therein, except to the extent due to the Agent’s or
the applicable Lender’s gross negligence or willful misconduct. The foregoing
indemnification shall survive the payment of the Debt.


 


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Section 14.8                                Expenses.


 


Borrower shall pay promptly upon demand all expenses,
including, without limitation, reasonable attorneys’ fees and expenses,
incurred by the Agent and any Lender in connection with (i) its review of,
and consent to, any of the Condominium Documents, (ii) its subordination
of the lien of the Mortgage to any of the Condominium Documents, (iii) the
delivery of partial releases and (iv) any other matter contemplated by
this Article XIV.


 


Section 14.9                                Establishment
of Condominium Release Payment Account.


 


Borrower agrees to established the Condominium Release
Payment Account prior to the first date on which the Agent is required to
release any Unit, Fractional Ownership Interest or Facility from the lien of
the Mortgage pursuant to Section 14.4 or 14.5, as
applicable.  In connection with the
establishment of the Condominium Release Payment Account, Borrower shall
deliver to the Agent all agreements, instruments and documents (including
control agreements, if necessary, and opinions of counsel), in form and
substance reasonably satisfactory to the Agent, evidencing that the Agent has a
first priority perfected security interest in the Condominium Release Payment
Account.


 


ARTICLE XV

COVENANTS


 


Section 15.1                                Certain
Covenants.


 


(a)               Zoning/Entitlements.  Borrower represents, warrants and covenants
to the Agent and the Lenders that (1) the Project is duly and validly
zoned for all of its intended uses, (2) except as specifically set forth
on Exhibit B attached hereto and made a part hereof (the “Outstanding
Entitlements”), all necessary permits, certificates, licenses, approvals,
authorizations, variances and other land use, zoning and subdivision
entitlements in order to complete the Project (the “Issued Entitlements”,
together with the Outstanding Entitlements, sometimes collectively referred to
herein as the “Entitlements”) exist as of the Original Effective Date,
are in full force and effect, and are not subject to revocation, suspension,
forfeiture or modification; (3) Borrower is in full compliance with all
requirements of the Issued Entitlements and is entitled to all rights and
privileges thereunder; (4) Borrower shall obtain all Outstanding
Entitlements within the specified time periods set forth in Exhibit B
and shall deliver to the Agent true and complete copies of all Outstanding
Entitlements within five (5) Business Days following the issuance of any
such Outstanding Entitlements; (5) Borrower shall at all times, maintain
the Entitlements in full force and effect throughout the entire term of the
Loans; (6) Borrower shall not agree to any modification or to any
termination of the Entitlements without the express prior written consent of
the Lenders; and (7) Borrower has delivered to the Agent true and complete
copies, including all filed or executed amendments thereto, of the Issued
Entitlements. Borrower hereby assigns to the Agent as additional security for
the payment in full of the Debt and the observance and performance by Borrower
of the terms, covenants and provisions of the Loan Documents all right, title
and interest which Borrower may have or may hereafter acquire in and to the
Entitlements.


 


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(b)               Governmental Approvals.  Borrower shall maintain the Governmental
Approvals in connection with the Plans and Specifications and for the Project
in full force and effect throughout the terms of the Loans and to the extent
such Governmental Approvals have not been issued or obtained, Borrower shall (i) take
all steps necessary to have such Governmental Approvals issued by or obtained
from the appropriate Governmental Authorities within time periods consistent
with a construction project of this nature and satisfactory to the Required
Lenders in the exercise of the Required Lenders’ reasonable discretion, and (ii) deliver
copies of such Governmental Approvals to the Agent and maintain such
Governmental Approvals in full force and effect throughout the entire term of
the Loans.


 


(c)               Plans and Specifications.  Borrower has submitted a true and complete
copy of the Existing Plans and Specifications to the Agent and the Agent has
approved the Plans and Specifications.  A
description of the Plans and Specifications approved by the Agent is attached
here to as Exhibit E.  The
Agent shall, without additional cost or expense, have the use of the Plans and
Specifications upon the occurrence beyond any applicable notice and cure period
of an Event of Default under the Loan Documents. Upon notice to Borrower, the
Agent, Agent’s Consultant and their respective agents and employees, shall have
the right of entry and access to the entire Project in connection with their
review of the Plans and Specifications or any other aspect of the Project.


 


(d)               Construction of the Improvements.  Borrower commenced Construction on or before
the Construction Commencement Date. 
Borrower shall continue to perform the Construction in a good and
workmanlike manner with materials of high quality and in substantial accordance
with the Plans and Specifications. Borrower shall prosecute the Construction
with due diligence and continuity in accordance with the Construction Schedule
and shall substantially complete the Construction before the Completion
Date.  All work performed in connection
with the Property shall comply with all Laws and all Governmental Approvals.


 


(e)               Change Orders.  No changes will be made in the Plans and
Specifications without the prior written approval of the Lenders, which shall
not be unreasonably withheld after the Lenders’ initial approval of the final
Plans and Specifications; provided, however, that Borrower may
make changes to the Plans and Specifications without the Lenders’ consent if (i) Borrower
notifies the Agent in writing of such change within five (5) Business Days
thereafter; (ii) Borrower obtains the approval of all parties whose
approval is required, including sureties and Governmental Authorities; (iii) the
structural integrity of the Improvements is not impaired; (iv) no material
change in architectural appearance is effected; (v) the performance of the



 


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mechanical,
electrical, and life safety systems of the Improvements is not adversely
affected; and (vi) the cost of or reduction resulting from such change (x) does
not exceed $250,000 and (y) when added to all other changes which have not
been approved by the Agent in writing, the resulting aggregate cost or
reduction does not exceed $5,000,000. Changes in the scope of Construction or
to any Construction Contract shall be documented with a Change Order on the AIA
Form G701.


 


(f)                Inspections.  Borrower will cooperate with the Agent in
arranging for inspections by the Agent, the Lenders and/or Agent’s Consultant
of the progress of the Construction from time to time including an examination
of (i) the Improvements, (ii) all materials to be used in the
Construction, (iii) all plans and shop drawings which are or may be kept
at the Construction site, (iv) any contracts, bills of sale, statements,
receipts or vouchers in connection with the Improvements, (v) all work
done, labor performed or materials furnished in and about the Improvements, (vi) all
books, contracts and records with respect to the Improvements and (vii) any
other documents relating to the Improvements or the Construction. Borrower
shall cooperate with Agent’s Consultant to enable it to perform its
functions.  Borrower shall, upon the
Agent’s or Agent’s Consultant’s request, correct any defect in the Construction
or any failure of the Construction to comply with the Plans and Specifications.


 


(g)               Liens.  Borrower will not suffer or permit any
construction lien claims to be filed or otherwise asserted against the Project
or any funds due to the General Contractor, and will promptly discharge the
same in case of the filing of any claims for lien or proceedings for the
enforcement thereof, provided, however, that Borrower may contest
in good faith and with reasonable diligence the validity of any such lien or
claim, provided that Borrower posts a statutory lien bond which removes such
lien from title to the Project within thirty (30) days after Borrower’s
receipt of written notice thereof. The Facility A Lenders will not be required
to make any further disbursements of the proceeds of the Facility A Loans until
any construction lien claims have been removed (by payment or by posting a
bond) and the Agent may, at its option, restrict disbursements to reserve
sufficient sums to pay 150% of the lien. If Borrower shall fail timely to (i) discharge
any such lien or (ii) post a statutory lien bond, any Lender may, at its
election (but shall not be required to), procure the release and discharge of
such lien and any judgment or decree thereon and, further, may in its sole
discretion, settle or compromise the same, or may furnish such security or
indemnity as Title Insurer shall require to insure such Lender against the
enforcement thereof, and any amounts so expended by such Lender shall be added
to the Debt. In settling, compromising or discharging any claims for lien, such
Lender shall not be required to inquire into the validity or amount of any such
claim.


 


(h)               Construction Contracts.  Borrower shall promptly comply in all
material respects with all provisions of the Construction Contracts which
require approval or action by Borrower in a timely manner to insure completion
of the Improvements within the Construction Schedule and in all events by the
Completion 


 


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Date. Borrower
shall not materially modify or terminate the General Contract or any of the
Major Contracts without the prior written approval of the Lenders, which
approval shall not be unreasonably withheld. Promptly following its execution
or modification thereof, Borrower shall furnish the Agent with a copy of each
Construction Contract or modification thereof. Promptly following its receipt
thereof, Borrower shall furnish the Agent with a copy of any material notice
received or delivered by Borrower in respect of the Construction Contracts,
including, without limitation, any notice of default.


 


(i)                Subsequent Development
Matters.  Borrower shall not,
subsequent to the Effective Date, enter into easements, covenants or agreements
regarding or affecting title to the Land or the Project or the zoning, subdivision
or land use classification of the Land without the prior written consent of the
Lenders, which consent shall not be unreasonably withheld with respect to
easements, covenants and agreements reasonably required to effect the
development of the Project for the uses intended by this Agreement.


 


(j)                Certificate of Occupancy.  Borrower shall obtain a Certificate of
Occupancy for all of the Units by no later than December 31, 2009.


 


(k)               Payment of Taxes.  Borrower shall pay all real estate taxes and
assessments and charges of every kind upon the Project before the same become
delinquent, provided, however, that Borrower may pay such tax under protest or
to otherwise contest any such tax or assessment, but only if (i) such
contest has the effect of preventing the collection of such taxes so contested
and also of preventing the sale or forfeiture of the Project or any part
thereof or any interest therein, (ii) Borrower has notified the Agent of
Borrower’s intent to contest such taxes, and (iii) Borrower has deposited
security for the payment of contested taxes in form and amount satisfactory to
the Required Lenders. If Borrower fails to commence such contest or, having
commenced to contest the same, thereafter fails to prosecute such contest in
good faith or with due diligence, or, upon adverse conclusion of any such
contest, shall fail to pay such tax, assessment or charge, the Agent or any
Lender may, at its election (but shall not be required to), pay and discharge
any such tax, assessment or charge, and any interest or penalty thereon, and
any amounts so expended in excess of any security posted by Borrower shall be
added to the Debt. Borrower shall furnish the Agent with evidence that taxes
are paid at least ten (10) days prior to the last date for payment of such
taxes and before imposition of any penalty or accrual of interest.
Notwithstanding the foregoing, the Agent shall not assert a default for failure
to pay real estate taxes, provided that (x) there exists no Event of
Default and (y) adequate funds for the payment of real estate taxes exist
in the Tax Escrow Fund.


 


(l)                Tax and Insurance Escrow Fund.  From and after substantial completion of the
Improvements, in the event the unadvanced portion of the Facility A Commitment
is insufficient for payment of real estate taxes and Insurance Premiums, then
upon request by the Agent Borrower shall pay to the Agent on each Payment Date 


 


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(i) one-twelfth
(1/12) of an amount which would be sufficient to pay the real estate taxes
payable, or estimated by the Agent to be payable, during the ensuing twelve
(12) months (the “Tax Escrow Fund”) and (ii) one-twelfth
(1/12) of the Insurance Premiums payable, or estimated by Lender to be
payable, during the ensuring twelve months (the “Insurance Escrow Fund”,
and, together with the Tax Escrow Fund, the “Tax and Insurance Escrow Fund”).
Notwithstanding the foregoing, the Agent shall advance such amounts from the
undisbursed balance of the Tax and Insurance Reserve in accordance with the
provisions of Section 10.5 hereof, provided that (i) no Event
of Default exists, (ii) no dispute exists in respect of amounts to be
disbursed for the payment of real estate taxes or Insurance Premiums and (iii) the
line items in respect of real estate taxes and Insurance Premiums set forth in
the Construction Budget are in balance. The Tax and Insurance Escrow Fund, the
Servicing Fees and the monthly installments of interest payable under the Notes
shall be added together and shall be paid as an aggregate sum by Borrower to
the Agent. Borrower hereby pledges to the Agent any and all monies now or
hereafter deposited in the Tax and Insurance Escrow Fund as additional security
for the payment of the Debt. The Agent will apply (i) the Insurance Escrow
Fund to insurance premiums required to be paid by Borrower pursuant to Section 15.2
hereof and (ii) the Tax Escrow Fund to real estate taxes required to be
paid by Borrower under Section 15.1(k) hereof. If at any time
the Tax and Insurance Escrow Fund is not sufficient to pay real estate taxes or
insurance premiums, Borrower shall pay to the Agent, within ten (10) days
after written demand, the Agent’s estimate of the amount required to remedy the
deficiency. Upon the occurrence of an Event of Default, the Agent may (and
shall at the direction of the Required Lenders) apply any sums then comprising
the Tax and Insurance Escrow Fund to the payment of the Debt in accordance with
Section 21.1.  Until expended
or applied as above provided, any amounts in the Tax and Insurance Escrow Fund
shall constitute additional security for the Debt. To the extent permitted by
applicable law, the Tax and Insurance Escrow Fund shall not constitute a trust
fund and may be commingled with other monies held by the Agent. No earnings or
interest on the Tax and Insurance Escrow Fund shall be payable to Borrower.


 


(m)              Management Agreements.  Borrower shall not retain any property
manager or enter into any management agreement with respect to the management
or operation on any portion of the Project without the Lenders’ prior written
consent.


 


(n)               Personal Property.  Except as hereinafter provided, Borrower
shall keep all Personal Property incorporated in the Project free of all liens,
encumbrances and security interests, other than the liens, encumbrances and
security interests in favor of the Agent created by the Loan Documents. Prior
to completion of the Improvements, Borrower shall provide to the Agent, when
requested but no more frequently than quarterly, an inventory of the Personal
Property and shall execute such financing statements as may be reasonably
required by the Agent to perfect the Agent’s security interest on the same. No
Personal Property shall be purchased or installed in the Improvements by
Borrower under any security agreement, conditional sales contract or other
agreement wherein the seller reserves a security interest in, or the right to
remove or to repossess, such items or to consider them personal property after
their incorporation into the Improvements, except for capital leases approved
by the Required Lenders.


 


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(o)               Leases.  Without the prior written consent of the
Lenders, Borrower shall not (i) enter into any lease of all or any portion
of the Project, except for a Permitted Lease, (ii) materially modify any
lease of any portion of the Project or (iii) accept any rental payment in
advance of one month of its due date. Borrower shall provide the Agent with a
copy of the fully executed original of all leases promptly following their
execution. Borrower shall deposit all security deposits under leases in a
segregated account with a financial institution reasonably acceptable to the
Agent. At the Agent’s request, Borrower shall cause tenants to execute subordination,
non-disturbance and attornment agreements reasonably satisfactory to the Agent.
The Agent reserves the right (exercisable only at the direction of the Lenders)
to subordinate the lien of the Mortgage to any lease.


 


(p)               Certain Agreements.  Without the prior written consent of the
Lenders, Borrower shall not modify or terminate (i) any of the ML&P
Agreements, (ii) any of the Marketing Agreements, (iii) the Ground
Lease, (iv) the ER Purchase Agreement, (v) the Ritz-Carlton Consent
Agreement, (vi) the ML&P Consent Agreement, (vii) any of the
Development Documents, or (viii) the Condominium Documents. Borrower shall
timely observe and perform all of its obligations under the foregoing
agreements. Promptly after receipt thereof, Borrower shall furnish the Agent
with a copy of any material notice received or delivered by Borrower under any
of the foregoing agreements, including, without limitation, any notice of
default. The execution of a Contract of Sale for an individual Unit to be
purchased by Exclusive Resorts under the ER Purchase Agreement shall not be
deemed such a modification or termination as contemplated under this Section 15.1(p);
provided that the purchase price for such Unit is the same as set forth in the
ER Purchase Agreement. Notwithstanding anything to the contrary in this
Agreement, the Agent and the Lenders acknowledge that (x) the Borrower and
Exclusive Resorts have the right to modify the ER Purchase Agreement and
individual purchase agreements entered into pursuant thereto prior to the initial
execution of the individual purchase agreements without the Lenders’ consent
provided that such changes are not inconsistent with the First Amendment to the
ER Purchase Agreement between the parties dated June 28, 2006, that the
purchase prices identified therein are not modified and further provided that
this Section shall not be deemed to waive the Lenders’ consent rights to
any amendment negotiated after the individual agreements are signed, and (y) Borrower
may make modifications or amendments to the aforementioned agreements without
the Lenders’ consent provided that such amendments or modifications will solely
affect portions of the Property that are to be released by the Agent pursuant
to this Agreement from and after the effective date of such release.


 


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(q)               Appraisals.  The Agent may obtain a new or updated
Appraisal of the Project from time to time. Borrower shall cooperate with the
Agent in this regard. Notwithstanding the foregoing, the Agent shall not obtain
a new or updated Appraisal more than once in any twelve (12) month period,
unless either (i) an Event of Default exists or (ii) such Appraisal
is then required under the terms of this Agreement. Borrower shall reimburse
the Agent upon demand for the cost of any Appraisal obtained by the Agent in
accordance with the terms of this Section 15.1(q).


 


(r)                Furnishing Information.  Borrower shall deliver or cause to be
delivered to the Agent, (1) within one hundred twenty (120) days
after the end of each calendar year, with respect to Borrower and Guarantor, an
annual financial statement, in a form satisfactory to the Agent, audited by an
independent, certified public accountant (or with respect to Exclusive Resorts
and Exclusive Resorts Development Company, LLC only, certified by an authorized
officer of Exclusive Resorts and Exclusive Resorts Development Company, LLC); (2) within
sixty (60) days after the end of each calendar quarter, with respect to
Borrower, a quarterly financial statement, in a form satisfactory to the Agent;
and (3) within thirty (30) days after the end of each reporting
period of Borrower (it being understood that Borrower has a 13 period reporting
cycle annually), with respect to Borrower, a monthly financial statement, in a
form satisfactory to the Agent, together with a list of existing Permitted
Leases and the Net Lease Payments received by Borrower during such reporting
period. Within ten (10) days after request by the Agent, Borrower shall
deliver to the Agent the most recently filed annual Federal Income Tax Returns
with respect to Borrower and Guarantor. Borrower and Guarantor shall provide
such additional financial information as the Agent reasonably requires. Upon
reasonable advance notice from the Agent, Borrower shall permit the Agent, the
Lenders or their representatives to review all of Borrower’s books and records
regarding the development and operation of the Project.


 


(s)               Lost Note.  Upon a Lender’s delivery to Borrower of an
affidavit to such effect, Borrower shall, if its Note is mutilated, destroyed,
lost or stolen, deliver to such Lender, in substitution therefor, a new note
containing the same terms and conditions.


 


(t)                Indemnification.  Borrower shall indemnify the Agent, each
Lender and any party owning an interest in any Loan and their respective
officers, directors, employees and consultants (each, an “Indemnified Party”)
and defend and hold each Indemnified Party harmless from and against all
claims, injury, damage, loss and liability, cost and expense (including
reasonable attorneys’ fees and expenses and court costs) of any and every kind
to any persons or property by reason of (i) the Construction; (ii) the
operation or maintenance of the Project; (iii) any breach of
representation or warranty, default or Event of Default; or (iv) any other
matter arising in connection with the Loans or the Project. No Indemnified
Party shall be entitled to be indemnified against its own gross negligence or
willful misconduct. The foregoing indemnification shall survive repayment of
the Debt.


 


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(u)               Compliance With Laws.  Borrower shall comply with all Laws
applicable to the Project.


 


(v)               Furnishing Reports.  Upon the Agent’s request, Borrower shall
provide the Agent with copies of all inspections, reports, test results and
other information received by Borrower which in any way relate to the Project
or any part thereof.


 


(w)              Furnishing Notices.  Borrower shall provide the Agent with copies
of all material notices pertaining to the Project received by Borrower from any
purchaser under any Contract of Sale, Governmental Authority, insurance company
or tenant within seven (7) days after such notice is received.


 


(x)               Correction of Defects.  Within five (5) days after Borrower
acquires knowledge of or receives notice of a defect in the Improvements or any
departure from the Plans and Specifications, or any other requirement of this
Agreement, Borrower will proceed with diligence to correct all such defects and
departures.


 


(y)               Hold Disbursements in Trust.  Borrower shall receive and hold in trust for
the sole benefit of the Lenders (and not for the benefit of any other person,
including, but not limited to, contractors or any subcontractors) all advances
made hereunder directly to Borrower, for the purpose of paying costs of the
Construction in accordance with the Construction Budget. Borrower shall use the
proceeds of the Loans solely for the payment of costs specified in the
Construction Budget. Borrower will pay all other costs, expenses and fees
relating to the acquisition, equipping, use and operation of the Project.


 


(z)               Alterations.  Without the prior written consent of the
Lenders, Borrower shall not make any material alterations to the Project (other
than completion of the Construction in accordance with the Plans and
Specifications).


 


(aa)             Cash Distributions.  Borrower shall not make any distributions to
partners, members or shareholders of Borrower.


 


(bb)            Affiliate Contracts.  Borrower shall not enter into any contracts
or agreements after the date hereof with any Guarantor, Member, MII, or MLP/MII
Affiliate or any Affiliate of any of the foregoing without the Required Lenders’
prior written consent.


 


(cc)             Security Interest and Perfection
Matters Relating to the Facility A Excess Proceeds Account.  Promptly after the Agent’s request therefor,
Borrower agrees to deliver to the Agent all agreements, instruments
and documents (including control agreements, if necessary, and opinions of
counsel), in form and substance reasonably satisfactory to the Agent,
evidencing that the Agent has a first priority perfected security interest in
the Facility A Excess Proceeds Account.


 


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Section 15.2                                Insurance.


 


(a)               Borrower shall
obtain and maintain, or cause to be maintained, insurance for Borrower and the
Project as follows:


 


(i)         comprehensive all risk insurance on the
Improvements and the Personal Property, including contingent liability from
Operation of Building Laws, Demolition Costs and Increased Cost of Construction
Endorsements, in each case (A) in an amount equal to one hundred percent
(100%) of the “Full Replacement Cost,” which for purposes of this
Agreement shall mean actual replacement value (exclusive of costs of
excavations, foundations, underground utilities and footings) with a waiver of
depreciation, but the amount shall in no event be less than the outstanding
principal balance of the Loans; (B) containing an agreed amount
endorsement with respect to the Improvements and Personal Property waiving all
coinsurance provisions; (C) permitting no deductible in excess of $50,000;
and (D) containing an “Ordinance or Law Coverage” or “Enforcement”
endorsement if any of the Improvements or the use of the Project shall at any
time constitute legal non-conforming structures or uses. In addition, Borrower
shall obtain: (y) if any portion of the Improvements is currently or at
any time in the future located in a federally designated “special flood hazard
area”, flood hazard insurance in an amount equal to the lesser of (1) the
outstanding principal balance of the Loans or (2) the maximum amount of
such insurance available under the National Flood Insurance Act of 1968, the
Flood Disaster Protection Act of 1973 or the National Flood Insurance Reform
Act of 1994, as each may be amended or such greater amount as the Required
Lenders shall require; and (z) earthquake insurance in amounts and in form
and substance satisfactory to the Required Lenders in the event the Project is
located in an area with a high degree of seismic activity;


 


(ii)        commercial general liability insurance
against claims for personal injury, bodily injury, death or property damage
occurring upon, in or about the Project, such insurance (A) to be on the
so-called “occurrence” form with a combined limit, of not less than $2,000,000,
(B) to continue at not less than the aforesaid limit until required to be
changed by the Required Lenders in writing by reason of changed economic
conditions making such protection inadequate; and (C) to cover at least
the following hazards: (1) premises and operations; (2) products and
completed operations on an “if any” basis; (3) independent contractors; (4) blanket
contractual liability for all legal contracts; and (5) contractual
liability covering the indemnities contained in Loan Agreement;


 


(iii)       the insurance provided for in subsection (i) above
written in a so called builder’s risk completed value form (1) on a
non-reporting basis, (2) against all risks insured against pursuant to
subsection (i) above, (3) including all building material stored
at the designated site (including on-site and off-site storage at specific
locations), (4) including all Soft Costs, (5) including permission to
occupy the Improvements and (5) with an agreed amount endorsement waiving
coinsurance provisions.


 


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(iv)      workers’ compensation, subject to the
statutory limits of the State, and employer’s liability insurance with a limit
of at least $1,000,000 per accident and per disease per employee, and
$1,000,000 per accident and per disease in the aggregate in respect of any work
or operations on or about the Project, or in connection with the Project or its
operation (if applicable);


 


(v)       comprehensive boiler and machinery
insurance, if applicable, in amounts as shall be reasonably required by the
Agent on terms consistent with the commercial property insurance policy
required under subsection (i) above;


 


(vi)      umbrella liability insurance in an amount
not less than $100,000,000, with the primary $1,000,000 on an occurrence basis
and the excess $100,000,000 on an aggregate basis, on terms consistent with the
commercial general liability insurance policy required under subsection (ii) above;


 


(vii)     motor vehicle liability coverage for all
owned and non-owned vehicles, including rented and leased vehicles containing
minimum limits per occurrence, including umbrella coverage, of $101,000,000;


 


(viii)    insurance for loss resulting from perils and
acts of terrorism on terms (including amounts) consistent with the insurance
required under subsections (i), (ii), (iii), (v) and
(vi) above (subject to a deductible that is satisfactory to the
Required Lenders) at all times during the term of the Loans; and


 


(ix)       marina operations insurance, at such time
as operations at any marina shall commence, including; (A) liability
insurance arising from loss or damage to private pleasure craft and small
commercial watercraft; and (B) bodily injury and property damage
liability;


 


(x)        all-risk marine cargo insurance on an
annual basis covering cargo worldwide in the event of physical loss or damage
from external causes in the amount of not less than 110% of the C.I.F. value,
such insurance to include: (A) while cargo is in the normal course of
transit from the point of origin; (B) marine business interruption
insurance; (C) processing of cargo in foreign countries; (D) on-site
and off-site storage at specific locations; and (E) exhibition coverage;


 


(xi)       upon thirty (30) days’ written
notice from the Agent, such other reasonable insurance, in such reasonable
amounts, as the Required Lenders from time to time may reasonably request
against such other insurable hazards which at the time are commonly insured
against for property similar to the Project located in or around Kapalua,
Hawaii.


 


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(b)               All insurance provided for in Section 15.2(a) hereof
shall be obtained under valid and enforceable policies (collectively, the “Policies”
or in the singular, the “Policy”), and shall be subject to the approval
of the Required Lenders as to insurance companies, amounts, deductibles, loss
payees and insureds.  The Policies shall
be issued by financially sound and responsible insurance companies authorized
to do business in the State and having a claims paying ability rating of “A” or
better by S&P or “A2” or better by Moody’s. The Policies described in Section 15.2(a) (other
than those strictly limited to liability protection) shall designate the Agent
as loss payee. Not less than ten (10) days prior to the expiration dates
of the Policies theretofore furnished to the Agent, certificates of insurance
evidencing the renewal of the Policies, accompanied by evidence satisfactory to
the Agent of payment of the premiums thereunder (the “Insurance Premiums”),
shall be delivered by Borrower to the Agent.


 


(c)               Any blanket insurance Policy
shall specifically allocate to the Project the amount of coverage from time to
time required hereunder and shall otherwise provide the same protection as
would a separate Policy insuring only the Project in compliance with the
provisions of Section 15.2(a) hereof.


 


(d)               All Policies of insurance
provided for by Section 15.2(a) hereof, except for the Policy
referred to in Section 15.2(a)(iv) hereof, shall name Borrower as the
insured and the Agent as the additional insured, as its interests may appear,
and in the case of property damage, boiler and machinery, flood and earthquake
insurance, shall contain a so-called New York standard non-contributing
mortgagee clause (or its equivalent) in favor of the Agent providing that
the loss thereunder shall be payable to the Agent.


 


(e)               All Policies of insurance
provided for in Section 15.2(a) hereof shall contain clauses
or endorsements to the effect that;


 


(i)         no act or negligence of Borrower, or
anyone acting for Borrower, or of any tenant or other occupant of the Project,
or failure to comply with the provisions of any Policy, which might otherwise
result in a forfeiture of the insurance or any part thereof, shall in any way
affect the validity or enforceability of the insurance insofar as the Agent is
concerned;


 


(ii)        the Policy shall not be materially
changed (other than to increase the coverage provided thereby) or canceled
without at least thirty (30) days’ prior written notice to the Agent and
any other party named therein as an additional insured;


 


(iii)       the issuers thereof shall give written
notice to the Agent if the Policy has not been renewed fifteen (15) days
prior to its expiration; and


 


(iv)      the Agent shall not be liable for any
Insurance Premiums thereon or subject to any assessments thereunder.


 


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(f)                If at any time the Agent is not
in receipt of written evidence that all insurance required hereunder is in full
force and effect, the Agent or any Lender shall have the right, without notice
to Borrower, to take such action as the Agent or such Lender deems necessary to
protect its interest in the Project, including, without limitation, the
obtaining of such insurance coverage as the Agent or any Lender in its sole
discretion deems appropriate. All Insurance Premiums incurred by the Agent and
any Lender in connection with such action or in obtaining such insurance and
keeping it in effect shall be paid by Borrower to the Agent or the applicable
Lenders upon demand and, until paid, shall be secured by the Mortgage and shall
bear interest at the Default Rate.


 


(g)               The Borrower may obtain the insurance
required hereunder from any insurance company of the Borrower’s choice that is
acceptable to the Required Lenders, which acceptance shall not be unreasonably
withheld. The Required Lenders’ nonacceptance of an insurer shall not be deemed
unreasonable if it is based upon reasonable standards, uniformly applied,
relating to the extent of coverage required and the financial soundness and
services of the insurer. Such standards shall not discriminate against any
particular insurer nor shall such standards call for rejection of an insurance
contract because the contract contains coverage in addition to that required
under this Agreement.


 


Section 15.3                                Special Purpose
Covenants.


 


(a)               The purpose for which Borrower is
organized is and shall be limited solely to (i) owning, developing,
holding, constructing, selling, leasing, transferring, exchanging, operating
and managing the Project, (ii) entering into this Agreement and the other
Loan Documents and (iii) transacting any business that is incident,
necessary and appropriate to accomplish the foregoing.


 


(b)               Except for the hotel previously
operated on the Development Land, Borrower has not owned, does not own and will
not own any asset or property other than (i) the Project and (ii) incidental
personal property necessary for and used or to be used in connection with the
ownership or operation of the Project.


 


(c)               Borrower has not engaged in and
will not engage in any business other than the ownership, construction,
development, management and operation of the Project.


 


(d)               Borrower has not entered and will
not enter into any contract or agreement with any Affiliate of Borrower, any
constituent party of Borrower, any Guarantor of the obligations of Borrower or
any Affiliate of any constituent party, owner or guarantor (collectively, the “Related
Parties”), except upon terms and conditions that are intrinsically fair,
commercially reasonable and substantially similar to those that would be
available on an arms-length basis with third parties not so affiliated with
Borrower or such Related Parties and at all times subject to the prior written
consent of the Required Lenders. The ML&P Agreements, Marketing Agreements
and ER Purchase Agreements are hereby approved by the Lenders.


 


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(e)               Except for the Loans, Borrower
shall neither incur nor guarantee any indebtedness (whether personal or
non-recourse, secured or unsecured) other than customary trade payables
contemplated by the Construction Budget, aged not in excess of sixty
(60) days, and unsecured loans from members of Borrower that are
subordinate to the Loans.


 


(f)                Borrower has not made and will
not make any loans or advances to any Person and shall not acquire obligations
or securities of any Related Party.


 


(g)               Borrower is and will remain
solvent and Borrower will pay its debts and liabilities (including, as
applicable, shared personnel and overhead expenses) from its assets as the same
shall become due.


 


(h)               Borrower has done or caused to be
done and will do all things necessary to observe organizational formalities and
preserve its existence, and Borrower will not, nor will Borrower permit any
Related Party to, amend, modify or otherwise change the partnership
certificate, partnership agreement, articles of incorporation and bylaws,
operating agreement, trust or other organizational documents of Borrower or
such Related Party without the prior written consent of the Required Lenders.


 


(i)                Borrower has maintained and will
maintain all of its books, records, financial statements and bank accounts
separate from those of any other Person and Borrower’s assets will not be
listed as assets on the financial statement of any other Person. Borrower has
filed and will file its own tax returns and will not file a consolidated federal
income tax return with any other Person. Borrower shall maintain its books,
records, resolutions and agreements as official records.


 


(j)                Borrower will be, and at all
times will hold itself out to the public as, a legal entity separate and
distinct from any other Person (including any Affiliate or other Related
Party), shall correct any known misunderstanding regarding its status as a
separate entity, shall conduct business in its own name, shall not identify
itself or any of its Affiliates as a division or part of the other and shall
maintain and utilize separate stationery, invoices and checks.


 


(k)               Borrower will maintain adequate
capital for the normal obligations reasonably foreseeable in a business of its
size and character and in light of its contemplated business operations.


 


(l)                Neither Borrower nor any Related
Party will seek the dissolution, winding up, liquidation, consolidation or
merger in whole or in part of Borrower, or the sale of material assets of
Borrower.


 


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(m)              Borrower has not commingled and
will not commingle its assets with those of any other Person and will hold all
of its assets in its own name.


 


(n)               Borrower has not guaranteed and
will not guarantee or become obligated for the debts of any other Person and
does not and will not hold itself out as being responsible for the debts or
obligations of any other Person.


 


(o)               If Borrower is a limited
partnership or a limited liability company, at least one (1) general
partner or member, or if Borrower is a general partnership at least one (1) general
partner (each, an “SPC Party”) shall be a corporation or limited
liability company whose sole asset is its interest in Borrower. Each SPC Party
will at all times comply, and will cause Borrower to comply, with each of the
representations, warranties, and covenants contained in this Section 15.3
as if such representation, warranty or covenant was made directly by such SPC
Party. Upon the withdrawal or the disassociation of the SPC Party from Borrower,
Borrower shall immediately appoint a new member whose organizational documents
are substantially similar to those of the SPC Party.


 


(p)               Borrower shall at all times cause
there to be at least one (1) duly appointed member or manager (“Independent
Director”) of Borrower (if Borrower is a corporation or a single member
Delaware limited liability company) reasonably satisfactory to the Agent who is
not at the time of initial appointment, has not been at any time during the
preceding five (5) years and shall not be while serving as an Independent
Director: (i) a stockholder, director (other than as an Independent
Director), officer, employee, partner, attorney or counsel of Borrower or any
Affiliate of Borrower; (ii) a customer, supplier or other Person who
derives any of its purchases or revenues from its activities with Borrower or
any Affiliate of Borrower; (iii) a Person controlling or under common
control with any such stockholder, partner, customer, supplier or other Person;
or (iv) a member of the immediate family of any such stockholder,
director, officer, employee, partner, customer, supplier or other Person.


 


(q)               Borrower shall not cause or
permit the SPC Party or its members and/or managers to take any action which,
under the terms of any of its organizational documents requires the vote of any
SPC Party of Borrower unless at the time of such action there shall be at least
one (1) member of the board of directors who is an Independent Director.


 


(r)                Borrower shall allocate fairly
and reasonably any overhead expenses that are shared with an Affiliate,
including paying for office space and services performed by any employee of an
Affiliate or Related Party.


 


(s)               Borrower shall not pledge its
assets for the benefit of any other Person other than with respect to the Loan.


 


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(t)                Borrower shall maintain a
sufficient number of employees in light of its contemplated business operations
and pay the salaries of its own employees from its own funds.


 


ARTICLE XVI

CASUALTY AND CONDEMNATION


 


Section 16.1                                Election to
Apply Proceeds to the Debt.


 


(a)               Subject to the provisions of Section 16.1(b) below,
if the Lenders so elect in their sole discretion, all proceeds of insurance or
condemnation (individually and collectively referred to as “Proceeds”),
after deduction of all expenses of collection and settlement, including
attorneys’ and adjusters’ fees and charges, shall be applied to the Debt in
accordance with Section 21.1.


 


(b)               Notwithstanding anything in Section 16.1(a) to
the contrary, in the event of any casualty to the Improvements or any
condemnation of part of the Project, the Lenders agree to make the Proceeds
available for restoration of the Improvements if (i) no Event of Default
exists that will not be cured upon Borrower’s commencement of restoration, (ii) all
Proceeds are deposited with the Agent, (iii) in the Lenders’ reasonable
judgment, the amount of Proceeds available for restoration of the Improvements
(together with undisbursed portion of the Facility A Commitment, if any,
allocated for the cost of the Construction and any sums or other security
acceptable to the Lenders deposited with the Agent by Borrower for such
purpose) are sufficient to pay the full and complete costs of such restoration,
(iv) in the Lenders’ reasonable determination, the Project can be restored
to an architecturally and economically viable project in compliance with
applicable Laws, (v) Guarantor reaffirms the Completion Guaranty in
writing, (vi) in the Lenders’ reasonable determination, such restoration
is likely to be completed no later than the Facility A Maturity Date, (vii) in
the Lenders’ reasonable judgment, any operating deficits, including all
payments of interest and principal due hereunder, that shall be incurred by
reason of the casualty or condemnation shall be covered by the Proceeds, the
insurance coverage referred to in Section 15.2(a)(i) above,
and other funds of Borrower or Facility A Loan proceeds that are available to
be disbursed for construction costs in accordance with the Construction Budget,
and (viii) in the Lenders’ reasonable judgment, following the restoration
of the Project, the Loan to Value Ratio shall not exceed 60%.


 


Section 16.2                                Borrower’s
Obligation to Rebuild.


 


(a)               If the Lenders do not elect (or
do not have the right) to apply the Proceeds to the Debt, as provided in Section 16.1
above, Borrower shall:


 


(i)         Proceed with diligence to make
settlement with insurers or Governmental Authorities and cause the Proceeds to
be deposited with the Agent;


 


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(ii)        In the event of any delay in making
settlement with insurers or Governmental Authorities or effecting collection of
the Proceeds, deposit with the Agent such amount as the Required Lenders
reasonably deems appropriate to insure the timely completion of Construction as
aforesaid;


 


(iii)       If the Proceeds and the undisbursed
portion of the Facility A Commitment are insufficient to maintain the Loans In
Balance as calculated pursuant to Section 11.1, promptly make a
Deficiency Deposit pursuant to Section 11.1 as necessary to place
the Loans In Balance; and


 


(iv)      Promptly proceed with the resumption of
Construction of the Improvements, including the repair of all damage resulting
from such fire, condemnation or other cause and restoration to its former
condition.


 


(b)               Any request by Borrower for a
disbursement by the Agent of Proceeds and funds deposited by Borrower shall be
treated by the Agent as if such request were for an advance of the a Facility A
Loan hereunder, and the disbursement thereof shall be conditioned upon Borrower’s
compliance with and satisfaction of the same conditions precedent as would be
applicable under this Agreement for an advance of a Facility A Loan.


 


(c)               Notwithstanding the foregoing,
the Borrower may, at Borrower’s option, elect to prepay the Loans without any
penalty after a Casualty or Condemnation in lieu of restoring the Property, and
in such case the proceeds of such prepayment shall be applied in accordance
with Section 21.1.


 


ARTICLE XVII

TRANSFERS AND ASSIGNMENTS AND PARTICIPATIONS


 


Section 17.1                                Prohibition of
Assignments and Transfers by Borrower.


 


(a)               Borrower shall
not assign its rights under this Agreement and any purported assignment shall
be void.  Except as provided in Section 17.1(b) below
or in connection with a Permitted Transfer, without the prior written consent
of the Lenders (which consent may be withheld by the Lenders in their sole
discretion), Borrower shall not suffer or permit (a) any change in the
management (whether direct or indirect) of the Project or of Borrower or (b) any
Transfer. The Lenders’ consent if given in connection with any transfer request
shall not be deemed to be a waiver of the Lenders’ right to require such
consent in the future. Any sale, conveyance, alienation, mortgage, encumbrance,
pledge or transfer of the Project made in contravention of this Agreement shall
be null and void and of no force or effect.


 


(b)               In connection with any corporate
equity or debt financing made by an Institutional Lender for the benefit of any
of Maui Land & Pineapple Company, Inc., Exclusive Resorts and MII
(each, a “Principal”), Principal shall have the right to 


 


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pledge its
respective limited liability company interests in MLP KB Partner LLC, a Hawaii
limited liability company, ER Kapalua Investors Fund, LLC, a Delaware limited
liability company, and MH Kapalua Venture, LLC, a Delaware limited liability
company, as security for such financing; provided, however, that
in each such instance, (A) there shall then exist no Default or Event of
Default under this Agreement or any of the other Loan Documents; (B) the
lender, and any subsequent holder of the note under such loan, must be an
Institutional Lender; (C) Principal shall provide the Agent with (i) no
less than thirty (30) days’ prior written notice of such financing, (ii) copies
of all such financing documents and instruments, and (iii) a “non-consolidation
opinion” reasonably satisfactory to the Agent.


 


(c)               Borrower covenants and agrees
that, as a condition to any Permitted Transfer, (A) there shall then exist
no Default or Event of Default under this Agreement or any of the other Loan
Documents; (B) Borrower shall provide the Agent with thirty (30) days’
prior written notice of such Permitted Transfer; (C) Borrower shall
provide the Agent all documents and statements as may be reasonably requested
by the Agent in connection with such Permitted Transfer and evidence confirming
that such transaction complies with the requirements of a Permitted Transfer
and (D) Borrower shall provide updated opinions, including
non-consolidation opinions, in form and substance and delivered by counsel
reasonably acceptable to the Agent, as may be reasonably required by the Agent.
Borrower’s failure to comply with the terms of this Section shall
constitute an “Event of Default” hereunder.


 


Section 17.2                                Prohibition of
Transfers in Violation of ERISA.


 


In addition to the prohibitions set forth in Section 17.1
above, Borrower shall not assign, sell, pledge, encumber, transfer, hypothecate
or otherwise dispose of its interest or rights in this Agreement or in the
Project, or attempt to do any of the foregoing or suffer any of the foregoing,
nor shall any party owning a direct or indirect interest in Borrower assign,
sell, pledge, mortgage, encumber, transfer, hypothecate or otherwise dispose of
any of its rights or interest (direct or indirect) in Borrower, attempt to do
any of the foregoing or suffer any of the foregoing, if such action would cause
any portion of the Loans, or the exercise of any of the Agent’s or any Lender’s
rights in connection therewith, to constitute a prohibited transaction under
ERISA or the Internal Revenue Code or otherwise result in any Lender being deemed
in violation of any applicable provision of ERISA. Borrower agrees to indemnify
and hold each Indemnified Party free and harmless from and against all losses,
costs (including attorneys’ fees and expenses), taxes, damages (including
consequential damages) and expenses such Indemnified Party may suffer by reason
of the investigation, defense and settlement of claims and in obtaining any
prohibited transaction exemption under ERISA necessary or desirable in such
Indemnified Party’s sole judgment or by reason of a breach of the foregoing
prohibitions. The foregoing indemnification shall be a recourse obligation of
Borrower and shall survive repayment of the Notes, notwithstanding any
limitations on recourse contained herein or in any of the Loan Documents.


 


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Section 17.3                                Successors and
Assigns.


 


Subject to the foregoing restrictions on transfer and
assignment contained in this Article XVII, this Agreement shall
inure to the benefit of and shall be binding on the parties hereto and their
respective successors and permitted assigns.


 


Section 17.4                                Lender
Assignments and Participations.


 


(a)               Each Lender may transfer or
assign its interest in its Loans and, in the case of the Facility A Lenders,
its Facility A Commitment by assignment in accordance with and subject to the
terms and conditions of this Agreement, provided that any transfer by
assignment of less than a Lender’s entire interest in the Loans shall be in a
minimum amount of $5,000,000 and provided further, that with respect to each
Lender, if no Event of Default exists, any such transfer to any Person that is
not an existing Lender or an Affiliate of an existing Lender shall be either (i) to
a Qualified Transferee or (ii) subject to prior written approval of the
Required Lenders, which approval shall not be unreasonably withheld,
conditioned or delayed; provided, however, that so long as an
Event of Default exists no such approval pursuant to this clause (ii) shall
be required.


 


(b)               The assigning Lender will give
notice of such assignment to the Agent, and the Agent will give notice of such
assignment to the other Lenders and Borrower. Upon the effectiveness of any
such assignment (and after notice to, and (to the extent required pursuant to
the terms hereof), with the consent of the Required Lenders, if applicable) the
assignee shall become a “Lender” for all purposes of this Agreement and to Loan
Documents and, to the extent of such assignment, the assigning Lender shall be
relieved of its obligations hereunder to the extent of the Loans being
assigned, and in connection therewith, the Agent is authorized to amend Schedule D
of this Agreement (if necessary) to reflect the Facility A Commitments of each
of the Lenders to take into account such assignment. In connection with such
assignment, the Agent agrees upon notice of such assignment and the surrender
of the appropriate Note to the Agent by the assigning Lender, it will promptly
cause Borrower to provide to the assigning Lender and to the assignee separate
promissory notes in the amount of their respective interests substantially in
the form of the original Note being assigned (but with notation thereon that it
is given in substitution for and replacement of the original Note or any
replacement notes thereof). By executing and delivering an Assignment and
Assumption Agreement in accordance with this Section 17.4(b), the
assigning Lender thereunder and the assignee thereunder shall be deemed to
confirm to and agree with each other and the other parties hereto as follows: (i) such
assigning Lender warrants that it is the legal and beneficial owner of the
interest being assigned thereby free and clear of any adverse claim; (ii) except
as set forth in clause (i) above, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement, any of the other Loan Documents or any other instrument or document
furnished pursuant hereto or thereto, or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this 


 


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Agreement, any of
the other Loan Documents or any other instrument or document furnished pursuant
hereto or thereto or the financial condition of the Borrower or the performance
or observance by the Borrower of any of its obligations under the Loan
Documents or any other instrument or document furnished pursuant hereto or
thereto; (iii) such assignee represents and warrants that it is legally
authorized to enter into such assignment agreement; (iv) such assignee
confirms that it has received a copy of this Agreement, the other Loan
Documents and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into such assignment
agreement; (v) such assignee will independently and without reliance upon
the Agent, such assigning Lender or any other Lender, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement and the Loan Documents; (vi) such assignee appoints and
authorizes the Agent to take such action on its behalf and to exercise such
powers under this Agreement or the Loan Documents as are delegated to the Agent
by the terms hereof or thereof, together with such powers as are reasonably
incidental thereto; and (vii) such assignee agrees that it will perform in
accordance with their terms all the obligations of this Agreement and the other
Loan Documents and the Servicing Agreement which by the terms are required to
be performed by it as a Lender.


 


(i)         Each assignment under this Section 17.4
shall be evidenced by an Assignment and Assumption Agreement executed by the
assigning Lender and the assignee.  The
Agent shall maintain a copy of each Assignment and Assumption Agreement
delivered to and accepted by it and shall record in its records the names and
address of each Lender and, if applicable, its Facility A Commitment.  No assignment shall be effective until (i) the
Agent shall have received a fully executed copy of the Assignment and
Assumption Agreement, (ii) satisfaction of the requirements set forth in Section 17.4(a) and
(iii) receipt by the Agent from the assigning Lender or the assignee of a
process and recordation fee of $3,500.


 


(ii)        Upon receipt of an Assignment and
Assumption Agreement executed by an assigning Lender and an assignee, the Agent
shall, if such Assignment and Assumption Agreement has been properly completed
and consented to if required herein, accept such Assignment and Assumption
Agreement, and record the information contained therein in its records.


 


(c)               Each Lender may grant a
participation interest in its interest in its Loans and in and to its rights
and obligations under the Loan Documents in accordance with and subject to the
terms and conditions of this Agreement without the consent of the Agent or any
other Lender; provided, however, that (i) such Lender
provides written notice of any such participation to the Agent, (ii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of its obligations under this Agreement, (iii) the Agent, the
Borrower and the other Lenders shall continue to deal solely and directly with
such Lender in connection with such Lender’s rights and obligations under this
Agreement and with regard to any and all payments to be made under this
Agreement, and (iv) the holder of any such participation shall not be
entitled to voting rights under this Agreement.


 


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Section 17.5                                Not a Security.


 


The Notes shall not be deemed to be securities within
the meaning of the Securities Act of 1933 or the Securities Exchange Act of
1934. Each Lender acknowledges that it is (i) (a) a substantial,
sophisticated investor having such knowledge and experience in financial and
business matters, and, in particular, in such matters related to securities
similar to the Notes, such that it is capable of evaluating the merits and
risks of investment in the Notes, (b) able to bear the economic risks of
such an investment and (c) an “accredited investor” within the meaning of Rule 501(a) promulgated
pursuant to Securities Act of 1933; or (ii) a “qualified institutional
buyer” as defined in Rule 144A under the Securities Act of 1933.


 


ARTICLE XVIII

SERVICER


 


Section 18.1                                Servicer.


 


At the option of the
Agent, the Loans may be serviced by a servicer or trustee (the “Servicer”)
selected by the Agent and the Agent may delegate all or any portion of its
responsibilities under this Agreement and the other Loan Documents to the
Servicer pursuant to a servicing agreement (the “Servicing Agreement”)
between the Agent and Servicer. Borrower shall not be responsible for any
reasonable set-up fees or any other initial costs relating to or arising under
the Servicing Agreement. Thereafter, Borrower shall pay the monthly servicing
fees payable under the Servicing Agreement (“Servicing Fees”). Servicing
Fees, along with the Tax and Insurance Escrow Fund, shall be added together
with monthly installments of interest payable under the Notes and paid as an
aggregate sum by Borrower to the Agent, on behalf of the party entitled
thereto, on each Payment Date. Borrower shall further reimburse the Agent upon
demand for reasonable out-of-pocket costs and expenses incurred by Servicer in (i) reviewing
Borrower’s requisitions for advances of Facility A Loans, (ii) reviewing
proposed Leases and subordination, non-disturbance and attornment agreements, (iii) conducting
inspections of the Project, (iv) applying the provisions of this Agreement
to any casualty or condemnation proceeding affecting the Project, (v) responding
to any Default or Event of Default or (vi) otherwise incurred in
connection with this Agreement and the other Loan Documents, including, without
limitation, in connection with the administration of the Loans.


 


Section 18.2                                Servicer and
Agent Fees.


 


Borrower shall pay, monthly, all fees to the Servicer
(or to the Agent if there is no Servicer) in respect of servicing the Loan in
the amount of twelve and three tenths (12.3) basis points per annum on the
outstanding principal amount of the Loans.  Such fees shall 


 


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be added to the interest payment due on the Loans on each Payment
Date.  In addition, Borrower shall pay all of Servicer’s and
the Agent’s out-of-pocket costs and expenses (including, without limitation,
legal fees) incurred in connection with its review of any construction advances
or draws, change orders, construction progress reports, leases, subordination
and non-disturbance agreements, property and construction inspections, casualty
or condemnation matters or loan defaults.


 


ARTICLE XIX

EVENTS OF DEFAULT


 


Section 19.1                                Events of
Default.


 


The occurrence of any one or more of the following
shall constitute an “Event of Default” as said term is used herein:


 


(a)               Failure of Borrower: (i) to
make any principal or interest payment when due, (ii) to observe or
perform any of the other covenants or conditions by Borrower to be performed
under the terms of this Agreement or any other Loan Document concerning the
payment of money within ten (10) days after notice, or (iii) for a
period of thirty (30) days after written notice from the Agent, to observe
or perform any non-monetary covenant or condition contained in this Agreement
or any other Loan Documents; provided that if any such failure concerning a
non-monetary covenant or condition is susceptible to cure and cannot reasonably
be cured within said thirty (30) day period, then Borrower shall have an
additional sixty (60) day period to cure such failure and no Event of
Default shall be deemed to exist hereunder so long as Borrower commences such
cure within the initial thirty (30) day period and diligently and in good
faith pursues such cure to completion within such resulting ninety
(90) day period from the date of the Agent’s notice; and provided further
that if a different notice or grace period is specified under any other
subsection of this Section 19.1 with respect to a particular
breach, or if another subsection of this Section 19.1 applies to a
particular breach and does not expressly provide for a notice or grace period,
the specific provision shall control;


 


(b)               The disapproval by the Agent or
Agent’s Consultant at any time of any construction work due to such work being
defective or deviating from the approved Plans and Specifications, and failure
of Borrower to cause the same to be corrected to the reasonable satisfaction of
the Required Lenders within the cure period provided in Section 19.1(a)(ii) above;


 


(c)               A delay or discontinuance in the
Construction for a period of fifteen (15) days for reasons within the
control of Borrower, or up to seventy-five (75) days if occasioned by
Force Majeure Delays, provided that the aggregate of all such time periods
shall not exceed one hundred fifty (150) days, and an additional one
hundred twenty (120) days permitted with respect to a tropical storm or
hurricane;


 


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(d)               If Borrower fails to complete the
Construction in substantial accordance with the Plans and Specifications on or
before the Completion Date;


 


(e)               If Borrower fails to satisfy the
final disbursement conditions under Article XIII on or before the
Completion Date;


 


(f)                If Borrower defaults, beyond any
applicable notice or cure period, under the General Contract, the Architect’s
Agreement, any Major Contract, any of the Marketing Agreements, any of the
ML&P Agreements, the Ground Lease, or the ER Purchase Agreement;


 


(g)               The bankruptcy or insolvency of
the General Contractor and failure of Borrower to procure a contract with a new
contractor reasonably satisfactory to the Required Lenders within ninety
(90) days from the occurrence of such bankruptcy or insolvency;


 


(h)               Any Transfer or other disposition
in violation of Sections 17.1 or 17.2;


 


(i)                If any warranty, representation,
statement, report or certificate made now or hereafter by Borrower or Guarantor
is untrue or incorrect in any material respect at the time made or, subject to
the provisions of Section 3.2 hereof, deemed remade;


 


(j)                Borrower or Guarantor shall
commence a voluntary case concerning Borrower or Guarantor under the Bankruptcy
Code; or an involuntary proceeding is commenced against Borrower or Guarantor
under the Bankruptcy Code and relief is ordered against the applicable party,
or the petition is controverted but not dismissed or stayed within sixty
(60) days after the commencement of the case, or a custodian (as defined
in the Bankruptcy Code) is appointed for or takes charge of all or
substantially all of the property of Borrower or Guarantor; or Borrower or
Guarantor commence any other proceedings under any reorganization, arrangement,
readjustment of debt, relief of debtors, dissolution, insolvency or liquidation
or similar Law of any jurisdiction whether now or hereafter in effect relating
to Borrower or Guarantor; or there is commenced against Borrower or Guarantor
any such proceeding which remains undismissed or unstayed for a period of sixty
(60) days; or Borrower or Guarantor fails to controvert in a timely manner
any such case under the Bankruptcy Code or any such proceeding, or any order of
relief or other order approving any such case or proceeding is entered; or
Borrower or Guarantor by any act or failure to act indicates its consent to,
approval of, or acquiescence in any such case or proceeding or the appointment
of any custodian or the like of or for it for any substantial part of its
property or suffers any such appointment to continue undischarged or unstayed
for a period of sixty (60) days;


 


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(k)               Borrower or Guarantor shall make
an assignment for the benefit of creditors, or shall admit in writing its
inability to pay its debts generally as they become due, or shall consent to
the appointment of a receiver or trustee or liquidator of all of its property
or the major part thereof or if all or a substantial part of the assets of
Borrower or Guarantor are attached, seized, subjected to a writ or distress
warrant, or are levied upon, or come into the possession of any receiver,
trustee, custodian or assignee for the benefit of creditors;


 


(l)                Any court enjoins Borrower from
performing Construction, and such injunction is not removed for a period of
twenty (20) days;


 


(m)              Borrower fails to make any
Deficiency Deposit with the Agent within the time and in the manner required by
Article XI hereof;


 


(n)               One or more final, unappealable
judgments are entered (i) against Borrower in amounts aggregating in
excess of $500,000; (ii) against Exclusive Resorts Development Company,
LLC in amounts aggregating in excess of $250,000; (iii) against ML&P
or Ritz-Carlton in amounts aggregating in excess of $2,500,000 and said
judgments are not satisfied, stayed or bonded over within thirty (30) days
after entry;


 


(o)               If Borrower or Guarantor shall
fail to pay any debt owed by it or is in default (beyond any applicable notice,
cure or grace period) under any Loan Document with the Agent and such failure
or default continues after any applicable grace period specified in the
instrument or agreement relating thereto;


 


(p)               If a Material Adverse Change
occurs with respect to Borrower, the Project or Guarantor; or


 


(q)               The occurrence of any other event
or circumstance denominated as an Event of Default in this Agreement or under
any of the other Loan Documents and the expiration of any applicable grace or
cure periods, if any, specified for such Event of Default herein or therein, as
the case may be;


 


(r)                The Stipulation Order shall be
stayed, amended, modified, reversed or vacated without the consent of the
Lenders; provided, however, that if the only effect thereof is to
prevent LBHI from funding its Facility A Pro Rata Share of any Facility A Loan
then no Event of Default shall have occurred pursuant to this paragraph (r) so
long as Borrower funds an amount at least equal to the portion of such Facility
A Loan not funded by LBHI; or


 


(s)               Failure of Borrower to deposit
funds into the Expense Reserve Account in accordance with Section 13.3(c).


 


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ARTICLE XX

LENDER’S REMEDIES IN EVENT OF DEFAULT


 


Section 20.1                                Remedies
Conferred Upon Lender.


 


Upon the occurrence of any Event of Default, (i) in
the case of paragraphs (a), (c), (d), (e) and (f) below, the Agent
may (and shall at the direction of the Required Lenders), and (ii) in the
case of paragraph (b) below, the Required Lenders may, pursue any one or
more of the following remedies concurrently or successively, it being the
intent hereof that none of such remedies shall be to the exclusion of any
other:


 


(a)               Take possession of the Project
and complete the Construction in accordance with the Plans and Specifications
and do anything which is necessary or appropriate in its sole judgment to
fulfill the obligations of Borrower under this Agreement and the other Loan
Documents, including either the right to avail itself of and procure
performance of existing contracts or let any contracts with the same
contractors or others. Without restricting the generality of the foregoing and
for the purposes aforesaid, Borrower hereby appoints and constitutes the Agent
its lawful attorney in fact with full power of substitution in the Project to
complete the Construction in the name of Borrower; to use unadvanced funds
remaining under the Facility A Commitment or which may be reserved, escrowed or
set aside for any purposes hereunder at any time, or to advance funds in excess
of the face amount of the Note, to complete the Construction; to make changes
in the Plans and Specifications which shall be necessary or desirable to
complete the Construction in substantially the manner contemplated by the Plans
and Specifications; to retain or employ new general contractors,
subcontractors, architects, engineers and inspectors as shall be required for
said purposes; to pay, settle or compromise all existing bills and claims which
are, or which may become, liens against the Project; to execute all
applications and certificates in the name of Borrower, prosecute and defend all
actions or proceedings in connection with the Improvements or Project; to take
action and require such performance as it deems necessary under the Bond(s) and
to make settlements and compromises with the surety thereunder, and in
connection therewith, to execute instruments of release and satisfaction; and
to do any and every act which Borrower might do in its own behalf, it being
understood and agreed that this power of attorney shall be a power coupled with
an interest and cannot be revoked;


 


(b)               Withhold further disbursement of
the proceeds of the Loan and/or terminate the Facility A Lender’s obligations
to make further disbursements under the Facility A Commitment;


 


(c)               Declare the
Notes to be immediately due and payable;


 


(d)               Sell Units pursuant to Contracts
of Sale;


 


(e)               Exercise all of Borrower’s rights
under the Condominium Documents; and


 


(f)                Exercise or pursue any other
remedy or cause of action permitted under this Agreement or any other Loan
Documents, or conferred upon the Agent by Law.


 


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ARTICLE XXI

INTERCREDITOR ARRANGEMENTS AND APPLICATION OF FUNDS


 


Section 21.1                                Application of
Funds Other than Interest Payments.


 


All amounts tendered by
or collected from the Borrower or any other Person (including amounts received
by any Servicer) or otherwise available for payment of the Loans (excluding
amounts representing interest payments on the Loans made anytime prior to the
day on which the Notes have been declared due and payable pursuant to Section 20.1,
which shall be applied pursuant to Section 21.2), whether received
in the form of scheduled payments, foreclosure proceeds, funds received as a
result of taking any Enforcement Action, proceeds from the sale of the
Mortgaged Property, proceeds under title, hazard or other insurance policies or
awards or settlements in respect of condemnation proceedings or similar
exercise of the power of eminent domain (other than proceeds, awards or
settlements that are required to be applied to the restoration or repair of the
Mortgaged Property or released to the Borrower in accordance with the Loan
Documents) or otherwise, shall be applied in the following order of priority:


 


first, to the payment (in such priority and proportion as
the Agent shall elect in its sole discretion) of all reasonable legal fees and
expenses, indemnities and other reasonable costs and expenses or other
liabilities of any kind incurred by the Agent or any Servicer in accordance
with the terms of the Loan Documents (including reimbursement of any Lender of
any amounts previously advanced by such Lender to the Agent or the Servicer for
the payment of any such fees, costs and expenses) and then due and payable to
the Agent or such Servicer in accordance with the terms of the Loan Documents,
except for Protective Advances; provided, however, that nothing
contained herein is intended to relieve the Borrower or any Guarantor of its
duties to pay such fees, costs, expenses and liabilities in accordance with the
terms of the Loan Documents;


 


second, to the payment (without duplication of amounts paid
under clause first above, and for application in such priority and
proportion as the Agent shall elect in its sole discretion) of any fees and
expenses then due and payable to the Agent or such Servicer in accordance with
the terms of the Loan Documents (including reimbursement of any Lender of any
amounts previously advanced or paid by such Lender to the Agent or the Servicer
for the payment of any such fees or expenses); provided, however,
that nothing contained herein is intended to relieve the Borrower or any
Guarantor of its duties to pay such fees and expenses in accordance with the
terms of the Loan Documents;


 


third, to the applicable Lenders to reimburse the amount of
any Protective Advances, and accrued and unpaid interest thereon, made in accordance
with the terms of the Loan Documents, in the same order and priority in which
such Protective Advances were made (and if more than one Lender made a
Protective Advance with respect to a particular covenant, agreement or
obligation of Borrower, ratably among such Lenders);


 


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fourth, ratably to the Facility A Lenders to pay all accrued
and unpaid interest then due and payable to the Facility A Lenders, pro rata in
proportion to their respective Facility A Pro Rata Share;


 


fifth, ratably to the Facility A Lenders to repay the
outstanding principal of the Facility A Loans, pro rata in proportion to their
respective Facility A Pro Rata Share;


 


sixth, ratably to the Facility A Lenders to repay all other
amounts then due and owing to the Facility A Lenders under the terms of the
Loan Documents in connection with the Facility A Loans, pro rata in proportion
to their respective Facility A Pro Rata Share, or if such amounts are not due
to all Facility A Lenders ratably to the applicable Facility A Lenders;


 


seventh, in the case of Prepayment Proceeds, if such
Prepayment Proceeds are required to be deposited into the Facility A Excess
Proceeds Account pursuant to Section 4.10(b), deposit such Prepayment Proceeds
into the Facility A Excess Proceeds Account;


 


eight, ratably to the Facility B-1 Lenders to pay all
accrued and unpaid interest then due and payable to the Facility B-1 Lenders,
pro rata in proportion to their respective Facility B-1 Pro Rata Share;


 


ninth, ratably to the Facility B-1 Lenders to repay the
outstanding principal of the Facility B-1 Loans, pro rata in proportion to
their respective Facility B-1 Pro Rata Share;


 


tenth, ratably to the Facility B-1 Lenders to repay all
other amounts then due and owing to the Facility B-1 Lenders under the terms of
the Loan Documents in connection with the Facility B-1 Loans, pro rata in
proportion to their respective Facility B-1 Pro Rata Share, or if such amounts
are not due to all Facility B-1 Lenders ratably to the applicable Facility B-1
Lenders;


 


eleventh, ratably to the Facility B-2 Lenders to pay all
accrued and unpaid interest then due and payable to the Facility B-2 Lenders,
pro rata in proportion to their respective Facility B-2 Pro Rata Share;


 


twelfth, ratably to the Facility B-2 Lenders to repay the
outstanding principal of the Facility B-2 Loans, pro rata in proportion to
their respective Facility B-2 Pro Rata Share;


 


thirteenth, ratably to the Facility B-2 Lenders to repay all
other amounts then due and owing to the Facility B-2 Lenders under the terms of
the Loan Documents in connection with the Facility B-2 Loans, pro rata in
proportion to their respective Facility B-2 Pro Rata Share, or if such amounts
are not due to all Facility B-2 Lenders ratably to the applicable Facility B-2
Lenders;


 


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fourteenth, ratably to the Facility C-1 Lenders to pay all
accrued and unpaid interest then due and payable to the Facility C-1 Lenders,
pro rata in proportion to their respective Facility C-1 Pro Rata Share;


 


fifteenth, ratably to the Facility C-1 Lenders to repay the
outstanding principal of the Facility C-1 Loans, pro rata in proportion to
their respective Facility C-1 Pro Rata Share;


 


sixteenth, ratably to the Facility C-1 Lenders to repay all
other amounts then due and owing to the Facility C-1 Lenders under the terms of
the Loan Documents in connection with the Facility C-1 Loans, pro rata in
proportion to their respective Facility C-1 Pro Rata Share, or if such amounts
are not due to all Facility C-1 Lenders ratably to the applicable Facility C-1
Lenders;


 


seventeenth, ratably to the Facility C-2 Lenders to pay all
accrued and unpaid interest then due and payable to the Facility C-2 Lenders,
pro rata in proportion to their respective Facility C-2 Pro Rata Share;


 


eighteenth, ratably to the Facility C-2 Lenders to repay the
outstanding principal of the Facility C-2 Loans, pro rata in proportion to
their respective Facility C-2 Pro Rata Share;


 


nineteenth, ratably to the Facility C-2 Lenders to repay all
other amounts then due and owing to the Facility C-2 Lenders under the terms of
the Loan Documents in connection with the Facility C-2 Loans, pro rata in
proportion to their respective Facility C-2 Pro Rata Share, or if such amounts
are not due to all Facility C-2 Lenders ratably to the applicable Facility C-2
Lenders;


 


twentieth, any surplus remaining after the payment
in full of all obligations owing to the Agent, the Servicer and the Lenders in
connection with the Loan Documents, to the Borrower or as a court of competent
jurisdiction may direct.


 


Section 21.2           Application of Interest
Payments.


 


All amounts tendered by or collected from Borrower or
any other Person representing interest payments on the Loans made anytime prior
to the day on which the Notes have been declared due and payable pursuant to Section 20.1,
including interest paid from the proceeds of any Facility A Loans, shall be
applied in the following order of priority:


 


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first, ratably to the Facility A Lenders to pay all accrued
and unpaid interest then due and payable to the Facility A Lenders, pro rata in
proportion to their respective Facility A Pro Rata Share;


 


second, ratably to the Facility B-1 Lenders to pay all
accrued and unpaid interest then due and payable to the Facility B-1 Lenders,
pro rata in proportion to their respective Facility B-1 Pro Rata Share;


 


third, ratably to the Facility B-2 Lenders to pay all
accrued and unpaid interest then due and payable to the Facility B-2 Lenders,
pro rata in proportion to their respective Facility B-2 Pro Rata Share;


 


fourth, ratably to the Facility C-1 Lenders to pay all
accrued and unpaid interest then due and payable to the Facility C-1 Lenders,
pro rata in proportion to their respective Facility C-1 Pro Rata Share;


 


fifth, ratably to the Facility C-2 Lenders to pay all
accrued and unpaid interest then due and payable to the Facility C-2 Lenders,
pro rata in proportion to their respective Facility C-2 Pro Rata Share; and


 


sixth, any surplus remaining after the payment
of the foregoing shall be applied in accordance with Section 21.1.


 


Section 21.3                                Prohibition on
Contest or Interference.


 


Subject to Section 21.10, each Subordinate
Lender, for itself and its successors and assigns, agrees that it shall not,
and hereby waives:


 


(a)               any right to, contest or support
any other Person in contesting the priority, validity or enforceability of this
Agreement or any other Loan Document or the interest of the Agent in the
Collateral, in any manner whatsoever, including in any Enforcement Action or
Bankruptcy Proceeding;


 


(b)               any right to, take any action
that would directly hinder, obstruct or delay any exercise of remedies under
this Agreement or any other Loan Document, including any sale, lease, exchange,
transfer or other disposition of any of the Mortgaged Property or any other
security subject to any Loan Document, whether by foreclosure or otherwise;


 


(c)               any and all rights it may have as
a junior or subordinate secured creditor or otherwise to object to the manner
in which the Agent seeks or is instructed or directed by the Required Lenders
to seek to enforce any of the Mortgaged Property or any other security subject
to any Loan Document, to collect any amount owing to the Agent, any Servicer or
any Lender, or to exercise any other right, remedy or power under or with
respect to this Agreement or any other Loan Document, regardless of whether any
action or failure to act by or on behalf of any Senior Lender is adverse to or
adversely affects the interest of any Subordinate Lender.


 


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Section 21.4                                Direction to
the Agent to Enforce.


 


Subject to Section 21.10:


 


(a)               Each Subordinate Lender agrees
that it shall not contest, protest or object to (i) any foreclosure
proceeding commenced by, or any other exercise of remedies relating to the
Collateral by the Agent in accordance with this Agreement and the other Loan
Documents, or (ii) any forbearance by the Senior Lenders in causing the
Agent to commence any such proceeding or exercise any such remedy.  The Senior Lenders shall have the exclusive
right to direct and instruct the Agent in accordance with the terms of this Agreement
with respect to exercise and enforcement of rights, remedies and powers with
respect to the Loan Documents and the Collateral and with respect to
determinations regarding release, disposition or restrictions with respect to
the Collateral, in each case without consent of any Subordinate Lender.


 


(b)               The Lenders hereby acknowledge
and agree that, except as otherwise expressly provided in this Agreement, no
covenant, agreement or other provision of any of the Loan Documents shall be
deemed to restrict in any way the rights of the Senior Lenders or the
Subordinate Lenders with respect to the Collateral and the Loan Documents.


 


(c)               The Subordinate Lenders agree
that they shall take such actions as the Agent, at the direction of Senior
Lenders constituting Required Lenders, may reasonably request in connection
with the exercise or enforcement of any right, remedy or power under or with
respect to the Loan Documents.


 


(d)               In the event of any dispute or
conflicting written instructions or direction received by the Agent from the
Senior Lenders and the Subordinate Lenders with respect to the Collateral, the
Debt, this Agreement or any of the other Loan Documents, the Agent shall act
upon such written instruction or direction received from the Senior Lenders
constituting Required Lenders and shall be fully protected in doing so.


 


Section 21.5                                Bankruptcy
Proceedings.


 


Subject to Section 21.10:


 


(a)               Filing of Motions.  Until the Debt owed to the Senior Lenders has
been paid in full and any remaining Facility A Loan Commitments have been
terminated, the Subordinate Lenders agree that no Subordinate Lender shall, in
or in connection with any Bankruptcy Proceeding, file any pleadings or motions,
take any position at any hearing or proceeding of any nature, or otherwise take
any action whatsoever, in each case in respect of Borrower, any Guarantor or
any of the Collateral, 


 


101

















 


including with
respect to the determination of any Liens or claims held by the Agent or any
Senior Lender (including the validity and enforceability thereof) or the value
of any claims of such parties under Section 506(a) of the Bankruptcy
Code or otherwise; provided
that the Subordinate Lenders may file a proof of claim in a Bankruptcy
Proceeding subject to the limitations contained in this Agreement and only if
consistent with the terms and the limitations on the Subordinate Lenders
imposed hereby.


 


(b)               Financing Matters.  If
Borrower or any Guarantor becomes subject to any Bankruptcy Proceeding, and if
the Senior Lenders constituting Required Lenders, directly or through the
Agent, desire to consent (or not object) to the sale, use or lease of cash or
other collateral under the Bankruptcy Code or to provide financing to Borrower
or such Guarantor under the Bankruptcy Code or to consent (or not object) to
the provision of such financing by any third party (a “DIP Financing”),
then the Subordinate Lenders agree that each Subordinate Lender (i) will
be deemed to have consented to, will raise no objection to, nor support any
other Person objecting to, the sale, use or lease of such cash or other
collateral or to such DIP Financing, (ii) other than in accordance with Section 21.5(d),
will not request or accept any form of adequate protection or any other relief
in connection with the sale, use or lease of such cash or other collateral or
such DIP Financing, (iii) will subordinate (and will be deemed hereunder
to have subordinated) the Debt of such Subordinate Lenders and their respective
interests in the Loan Documents (A) to such DIP Financing with the same
terms and conditions as the Senior Lenders and their respective interests in
the Loan Documents are subordinated thereto (and such subordination will not
alter in any manner the terms of this Agreement), (B) to any adequate
protection provided to the Senior Lenders and (C) to any “carve-out” for
professional and United States Trustee fees agreed to by the Senior Lenders
constituting Required Lenders, and (D) agrees that notice received five (5) calendar
days prior to any hearing seeking entry of an order approving such usage of
cash collateral or approving such financing shall be adequate notice.


 


(c)               Relief From the Automatic Stay.  The Subordinate Lenders agree that none of
them will seek relief from the automatic stay or from any other stay in any
Bankruptcy Proceeding or take any action in derogation thereof, in each case in
respect of Borrower, any Guarantor or any Collateral, without the prior written
consent of the Senior Lenders constituting Required Lenders.


 


(d)               Adequate Protection.  The Subordinate Lenders agree that none of
them shall object, contest, or support any other Person objecting to or
contesting, (i) any request by the Agent or any Senior Lender for adequate
protection or (ii) any objection by the Agent or Senior Lenders constituting
Required Lenders to any motion, relief, action or proceeding based on a claim
of a lack of adequate protection or (iii) the payment of interest, fees,
expenses or other amounts to the Agent or any Senior Lender under
section 506(b) or 506(c) of the Bankruptcy Code or
otherwise, in each case with respect to Borrower or any Guarantor.  Notwithstanding anything contained in this Section 21.5,
in any Bankruptcy Proceeding involving Borrower or any Guarantor, the
Subordinate Lenders may seek, support, accept or retain adequate protection
only if the Senior Lenders constituting Required Lenders do not object to the
adequate protection being provided to the Agent or the Senior Lenders.


 


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(e)               Asset Dispositions in a
Bankruptcy Proceeding.  No
Subordinate Lender shall, in any Bankruptcy Proceeding or otherwise, oppose any
sale or disposition of any assets of Borrower or any Guarantor or any
Collateral that is supported by the Senior Lenders constituting Required
Lenders or by the Agent at the direction of the Senior Lenders constituting
Required Lenders, and the Subordinate Lenders will be deemed to have consented
under Section 363 of the Bankruptcy Code (and otherwise) to any sale
supported by the Agent or the Senior Lenders constituting Required Lenders and
to have released the interest of the Subordinate Lenders in such assets.


 


(f)                No Waivers.  Nothing contained herein shall prohibit or in
any way limit the Agent or the Senior Lenders from objecting in any Bankruptcy
Proceeding with respect to Borrower or any Guarantor or otherwise to any action
taken by any Subordinate Lender, including the seeking by any Subordinate
Lender of adequate protection or the assertion by any Subordinate Lender of any
of its rights and remedies under the Loan Documents or otherwise with respect
to Borrower or any Guarantor or the Collateral.


 


(g)               Plans of Reorganization.  No Subordinate Lender shall support or vote
in favor of any plan of reorganization (and each shall vote and shall be deemed
to have voted to reject any plan of reorganization) of Borrower or any
Guarantor unless such plan (i) pays off, in cash in full, all obligations
owing to the Senior Lenders under the Loan Documents or (ii) is accepted
by the Senior Lenders.  To the extent
that any Subordinate Lender attempts to vote or votes in favor of any such plan
or reorganization in a manner inconsistent with this Section 21.5(g),
such Subordinate Lender irrevocably agrees that the Agent or any Senior Lender
may be, and may be deemed, an “authorized agent” of such party under Bankruptcy
Rules 3018(c) and 9010, authorized and entitled to submit a
superseding ballot on behalf of such Subordinate Lender that is consistent with
this Agreement.


 


(h)               Other Matters.  To the extent that any Subordinate Lender has
or acquires rights under Section 363 or Section 364 of the Bankruptcy
Code with respect to any of the Collateral, such Subordinate Lender agrees not
to assert any of such rights without the prior written consent of the Senior
Lenders constituting Required Lenders; provided  that if requested by the Agent or
the Senior Lenders constituting Required Lenders, the Subordinate Lenders shall
timely exercise such rights in the manner requested by the Agent or such Senior
Lenders, including any rights to payments in respect of such rights.


 


(i)                Effectiveness in Bankruptcy
Proceedings.  This Agreement, which
the parties hereto expressly acknowledge is a “subordination agreement” under
section 510(a) of the Bankruptcy Code, shall be effective before and
after the commencement of a Bankruptcy Proceeding.  All references in this Agreement to Borrower
or any Guarantor shall include Borrower or such Guarantor as a
debtor-in-possession and any receiver or trustee for Borrower or such Guarantor
in any Bankruptcy Proceeding.


 


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Section 21.6                                Other Rights as
Creditors


 


(a)               Nothing in this Article XXI
shall prohibit receipt by any Subordinate Lender of the required payments to be
made with respect to the portion of the Debt owed to such Subordinate Lender
pursuant to the terms of this Agreement (including Section 21.1).  Without the prior consent of the Senior
Lenders constituting Required Lenders, no Lender shall seek to obtain a
judgment claim in respect of any of the Debt or any of the Collateral.  If, however, in violation of the immediately
preceding sentence any Subordinate Lender becomes a judgment lien creditor in
respect of any of the Debt or any of the Collateral, such Subordinate Lender
shall forthwith assign such judgment lien to the Agent to be held, enforced,
collected and applied by the Agent in accordance with the terms and provisions
of this Agreement.


 


(b)               The Lenders shall not acquire or
hold any Lien on any of the assets of Borrower or any Guarantor except under
this Agreement and the other Loan Documents. 
If any Lender shall nonetheless, and in breach of this Agreement,
acquire or hold any Lien on any of such assets of Borrower or any Guarantor,
then such Lender shall (i) be deemed to hold such Lien for the benefit of
the Agent as security for the Debt and shall assign such Lien to the Agent to
be held, enforced, collected and applied by the Agent in accordance with the
terms and provisions of this Agreement or (ii) release such Lien if so
requested by the Senior Lenders constituting Required Lenders.


 


Section 21.7                                Payment Over to
the Agent.


 


Subject to the provisions of Section 23.12, any
payment of any portion of the Debt or any proceeds of the Collateral received
by any Lender in any manner, whether or not in contravention of this Agreement
or the other Loan Documents, shall be segregated and held in trust and
forthwith paid over to the Agent in the same form as received, with any
necessary endorsements or as a court of competent jurisdiction may otherwise
direct, for application by the Agent in accordance with the terms and
provisions of this Agreement.


 


Section 21.8                                No Duty to
Subordinate Lenders.


 


Subject to Section 21.10:


 


(a)               None of the Senior Lenders shall
have any duty or responsibility to any Subordinate Lender in respect of any
exercising or failing to exercise any right under this Agreement, and shall not
be required to take into account the interests of any Subordinate Lender or the
effect on such interests or the portion of the Debt owed to the 


 


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Subordinate
Lenders in exercising or failing to exercise any right under this
Agreement.  Without limiting the
foregoing, each Subordinate Lender hereby (i) waives all rights to any
fiduciary duty, duty of care owing to it by the Senior Lenders or other
standard of conduct applicable to the Senior Lenders, and all rights to claim a
violation of such duties or standards, (ii) acknowledges and agrees that
in connection with any disposition of the Collateral the Senior Lenders
constituting Required Lenders may accept a purchase price for the Collateral or
any portion thereof in their sole discretion, including, without limitation, a
purchase price for less than the aggregate amount of the Debt and that such
purchase price may result in the Subordinate Lenders receiving no proceeds of
such disposition and (iii) waives all rights to claim a violation of any
law in connection with the disposition of the Collateral.


 


(b)               Other than any reliance on the
terms of this Agreement, each Subordinate Lender (i) acknowledges that it
has independently and without reliance on any Senior Lender, and based on
documents and information deemed by it to be appropriate, made its own credit
analysis and decision to enter into and be bound by the terms of this
Agreement, and (ii) agrees that it will continue to make its own credit
decisions without reliance on any Senior Lender.


 


Section 21.9                                Certain Waivers
by Subordinate Lenders.


 


Subject to Section 21.10:


 


(a)               No right of any Senior Lender to
enforce any provision of this Agreement or any other Loan Document shall at any
time in any way be prejudiced or impaired by any act or failure to act on the
part of Borrower, any Guarantor or any of their Affiliates, or by any act or
failure to act by any Senior Lender, or by any noncompliance by any Person
(other than a Senior Lender) with the terms, provisions and covenants of this
Agreement or any of the other Loan Documents, regardless of any knowledge thereof
which any Senior Lender may have or be otherwise charged with.


 


(b)               The Subordinate Lenders also
agree that the Senior Lenders shall have no liability to any Subordinate
Lender, and the Subordinate Lenders hereby waive any claim against any Senior
Lender, arising out of any and all actions which the Senior Lenders may take or
permit or omit to take with respect to (i) the Loan Documents or (ii) the
collection of the Debt, in accordance with this Agreement.


 


(c)               Until the portion of the Debt
owing to the Senior Lenders has been paid in full, the Subordinate Lenders
agree not to assert and hereby waive, to the fullest extent permitted by law,
any right to demand, request, plead or otherwise assert or otherwise claim the
benefit of, any marshalling, appraisal, valuation or other similar right that
may otherwise be available under applicable law with respect to the Collateral
or any other similar rights a junior secured creditor may have under applicable
law with respect to the Collateral.


 


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(d)               The Subordinate Lenders agree not
to make any judicial or non-judicial claim or demand or commence any judicial
or non-judicial proceeding against Borrower, any Guarantor or any of the
Collateral seeking payment or damages or other relief by way or specific
performance, injunction or otherwise, other than filing a proof of claim or the
equivalent against Borrower or any Guarantor pursuant to Section 21.5(a).


 


Section 21.10                          Certain Rights
of Subordinate Lenders.


 


Nothing contained in this Article XXI
shall limit or restrict the rights of each Subordinate Lender to object to any
actual or proposed action by the Agent or any Senior Lender (i) that would
be contrary to the terms of this Agreement or any of the other Loan Documents, (ii) that
would violate applicable law or (iii) that would constitute gross
negligence or willful misconduct by the Agent.


 


Section 21.11                          Obligations
Unconditional.


 


All rights, interests,
agreements and obligations of the Senior Lenders and the Subordinate Lenders,
respectively, under this Article XXI shall remain in full force and
effect irrespective of:


 


(a)               any lack of validity or
enforceability of any Loan Document;


 


(b)               any change in the time, manner or
place of payment of, or in any other terms of, all or any of the Debt, or any
amendment or waiver or other modification, including any increase in the amount
thereof, whether by course of conduct or otherwise, of the terms of any Loan
Document;


 


(c)               any exchange of any security
interest in any Collateral or any other collateral, or any amendment, waiver or
other modification, whether in writing or by course of conduct or otherwise, of
all or any of the Debt or any guarantee thereof;


 


(d)               the commencement of any
Bankruptcy Proceeding in respect of Borrower, any Guarantor or any of their
Affiliates, whether or not an obligor or guarantor, in respect of the Debt; or


 


(e)               any other circumstances which
otherwise might constitute a defense available to, or a discharge of, Borrower,
any Guarantor or any of their Affiliates, whether or not an obligor or
guarantor, in respect of the Debt in respect of this Agreement and the other
Loan Documents.


 


Section 21.12         Actions Upon Breach.


 


(a)               If any Subordinate Lender,
contrary to this Agreement, commences or participates in any action or
proceeding against Borrower, any Guarantor or the Collateral, Senior Lenders
constituting Required Lenders may interpose this Agreement as a defense or
dilatory plea and may intervene and interpose such defense or plea in the name
of the Senior Lenders or in the name of the Agent.


 


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(b)               Should any Subordinate Lender,
contrary to this Article XXI, take or attempt to take, any action
with respect to Borrower, any Guarantor or the Collateral or fail to take any
action required by this Article XXI, the Senior Lenders
constituting Required Lenders may obtain relief against such Subordinate Lender
by injunction, specific performance or other appropriate legal or equitable
relief, it being understood and agreed that (i) the Senior Lenders’
damages may at that time be difficult to ascertain and may be irreparable, and (ii) each
Subordinate Lender waives any defense that any Senior Lender cannot demonstrate
damage or be made whole by the award of damages.


 


Section 21.13                          Purchase Right.


 


Without prejudice to the
enforcement of the remedies by or at the direction of the Senior Lenders, the
Senior Lenders agree that at any time after (a) acceleration of the Loans
in accordance with the terms of this Agreement, (b) the commencement of a
Bankruptcy Proceeding or (c) an Event of Default and the commencement of
Enforcement Action in respect thereof (each, a “Purchase Event”), within
120 days of such Purchase Event, one or more of the Subordinate Lenders may
request, and the Senior Lenders hereby offer the Subordinate Lenders the
option, to purchase all, but not less than all, of the aggregate amount of then
outstanding Debt owing to the Senior Lenders at par, plus accrued and unpaid
interest and fees, in each case without warranty or representation or recourse
(except for representations and warranties required to be made by assigning
Senior Lenders pursuant to the relevant Assignment and Assumption
Agreement.  If such right is exercised,
the parties shall close such transaction promptly after the exercise but in any
event within ten Business Days of the request pursuant to documentation
mutually acceptable to the assigning Senior Lenders and purchasing Subordinate
Lenders.   If Subordinate Lenders of different
Facilities exercise such right, the Subordinate Lenders ranking most senior in
priority shall be entitled to exercise such right.  If none of the Subordinate Lenders exercise
such right, the Senior Lenders shall have no further obligations pursuant to
this Section 21.13 for such Purchase Event and may take any further action
in their sole discretion in accordance with this Agreement.


 


ARTICLE XXII

AGENCY


 


Section 22.1                                Appointment and
Authority.


 


(a)               Each of the Lenders hereby
irrevocably appoints Central Pacific to act on its behalf as the Agent to
administer the Loans and to take action or cause such actions to be taken on
its behalf with respect to the Loan Documents under the provisions of this
Agreement, the other Loan Documents and the Servicing Standards and authorizes
the Agent to take such actions on its behalf and to exercise such powers as are
delegated 


 


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to the Agent by the terms hereof or thereof, together with such actions
and powers as are reasonably incidental thereto.  The Agent hereby confirms its acceptance of
such appointment.  The Agent shall carry
out its administrative duties to the Lenders in accordance with the applicable
terms of this Agreement, the other Loan Documents and the Servicing
Standard.  The relationship between the
Agent and each Lender is a contractual relationship only, and the Agent shall
not have any duties or responsibilities (except those expressly set forth in
this Agreement and the other Loan Documents). 
The provisions of this Article are solely for the benefit of the
Agent and the Lenders, and neither Borrower nor Guarantor shall have rights as
a third party beneficiary of any of such provisions.


 


(b)               The Agent hereby represents and
warrants to the Lenders as of the date hereof:


 


(i)         The Agent has all necessary banking
power and authority to perform all its obligations with respect to this
Agreement, the Loan Agreement and the other Loan Documents;


 


(ii)        Neither the execution and delivery of
this Agreement nor performance by the Agent thereunder by the Agent will
conflict with or result in a breach of any of the provisions of, or constitute
a default under the organizational documents of the Agent, as amended, or any
agreement, mortgage, indenture or other instrument to which the Agent is a
party, or result in the violation of any law, rule, regulation, order, judgment
or decree to which the Agent is subject;


 


(iii)       There is no litigation or governmental
proceeding pending, or to the best of the Agent’s knowledge, threatened which,
if determined adversely to the Agent, would adversely affect the enforceability
of this Agreement against the Agent, or any other document or instrument
executed in connection herewith; and


 


(iv)      It is (1) in compliance with any and
all applicable licensing requirements of the state where the Mortgaged Property
is located, if any such requirements are applicable to the Agent, and (2) either
(i) organized under the laws of such state, (ii) qualified to do
business in such state or (iii) to the best of its knowledge, not required
to qualify to do business in such state.


 


Section 22.2                                Rights as a
Lender.


 


The Person serving as the Agent hereunder shall have
the same rights and powers in its capacity as a Lender as any other Lender and
may exercise the same as though it were not the Agent and the term “Lender” or “Lenders”
shall, unless otherwise expressly indicated or unless the context otherwise
requires, include the Person serving as the Agent hereunder in its individual
capacity.  Such Person and its Affiliates
may accept deposits from, lend money to, act as the financial advisor or in any
other advisory capacity for and generally engage in any kind of business with
Borrower or any subsidiary or other Affiliate thereof as if such Person were
not the Agent hereunder and without any duty to account therefor to the
Lenders.


 


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Section 22.3                                Exculpatory
Provisions.


 


The Agent shall not have any duties or obligations
except those expressly set forth herein and in the other Loan Documents.  Without limiting the generality of the
foregoing, the Agent:


 


(a)               shall not be subject to any
fiduciary or other implied duties, regardless of whether a Default or Event of
Default has occurred and is continuing;


 


(b)               shall not have any duty to take
any discretionary action or exercise any discretionary powers, except
discretionary rights and powers expressly contemplated hereby or by the other
Loan Documents that the Agent is required to exercise as directed in writing by
the Required Lenders (or such other number or percentage of the Lenders as
shall be expressly provided for herein or in the other Loan Documents), provided
that the Agent shall not be required to take any action that, in its opinion or
the opinion of its counsel, may expose the Agent to liability or that is
contrary to any Loan Document or applicable law; and


 


(c)               shall not, except as expressly
set forth herein and in the other Loan Documents, have any duty to disclose,
and shall not be liable for the failure to disclose, any information relating
to the Borrower or any of its Affiliates that is communicated to or obtained by
the Person serving as the Agent or any of its Affiliates in any capacity unless
such information is received in its capacity as Agent hereunder.


 


The Agent shall not be liable for any action
taken or not taken by it (i) with the consent or at the request of the
Required Lenders (or such other number or percentage of the Lenders as shall be
necessary, or as the Agent shall believe in good faith shall be necessary,
under the circumstances as provided in Section 23.2 and Article XX)
or (ii) in the absence of its own gross negligence or willful
misconduct.  The Agent shall be deemed
not to have knowledge of any Default or Event of Default unless and until
notice describing such Default or Event of Default is given to the Agent by
Borrower or a Lender.


 


The Agent shall not be responsible for or have any
duty to ascertain or inquire into (i) any statement, warranty or
representation made in or in connection with this Agreement or any other Loan
Document, (ii) the contents of any certificate, report or other document
delivered hereunder or thereunder or in connection herewith or therewith, (iii) the
performance or observance of any of the covenants, agreements or other terms or
conditions set forth herein or therein or the occurrence of any Default, (iv) the
validity, enforceability, effectiveness or genuineness of this Agreement, any
other Loan Document or any other agreement, instrument or document or (v) the
satisfaction of any condition set forth in Articles VIII and IX
or elsewhere herein, other than to confirm receipt of items expressly required
to be delivered to the Agent.


 


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Section 22.4                                Reliance by
Agent.


 


The Agent shall be entitled to rely upon, and shall
not incur any liability for relying upon, any notice, request, certificate,
consent, statement, instrument, document or other writing (including any
electronic message, Internet or intranet website posting or other distribution)
believed by it to be genuine and to have been signed, sent or otherwise
authenticated by the proper Person.  The
Agent also may rely upon any statement made to it orally or by telephone and
believed by it to have been made by the proper Person, and shall not incur any
liability for relying thereon.  In
determining compliance with any condition hereunder to the making of a Loan,
that by its terms must be fulfilled to the satisfaction of a Lender, the Agent
may presume that such condition is satisfactory to such Lender unless the Agent
shall have received notice to the contrary from such Lender prior to the making
of such Loan.  The Agent may consult with
legal counsel (who may be counsel for the Borrower), independent accountants
and other experts selected by it, and shall not be liable for any action taken
or not taken by it in accordance with the advice of any such counsel,
accountants or experts.


 


Section 22.5                                Delegation of
Duties.


 


The Agent may perform any and all of its duties and
exercise its rights and powers hereunder or under any other Loan Document by or
through any one or more sub-agents appointed by the Agent.  The Agent and any such sub-agent may perform
any and all of its duties and exercise its rights and powers by or through
their respective Related Parties.  Each
such sub-agent and the Related Parties of the Agent and each such sub-agent
shall be entitled to the benefits of all provisions of this Article XXII
and Sections 14.7 and 14.8 (as though such sub-agents were the “Agent”
under the Loan Documents) as if set forth in full herein with respect
thereto.  Other than with respect to
TriMont and any successor Servicer, the Agent shall be solely responsible for
the payment of any fees or other compensation due to any third party it engages
to service the Loans in excess of the amounts paid by Borrower therefor.


 


Section 22.6                                Resignation of
Agent.


 


The Agent may at any time give notice of its
resignation to the Lenders and Borrower. 
Upon receipt of any such notice of resignation, the Lenders shall have
the right, in consultation with Borrower, to appoint a successor.  If no such successor shall have been so
appointed by the Lenders and shall have accepted such appointment within sixty
(60) days after the retiring Agent gives notice of its resignation, then
the retiring Agent may on behalf of the Lenders, appoint a successor Agent
meeting the qualifications set forth above provided that if the Agent shall
notify Borrower and the Lenders that no qualifying Person has accepted such
appointment, then such resignation shall nonetheless become effective in
accordance with such notice and (1) the retiring 


 


110

















 


Agent shall be
discharged from its duties and obligations hereunder and under the other Loan
Documents (except that in the case of any collateral security held by the Agent
on behalf of the under any of the Loan Documents, the retiring Agent shall
continue to hold such collateral security until such time as a successor Agent
is appointed) and (2) all payments, communications and determinations
provided to be made by, to or through the Agent shall instead be made by or to
each Lender directly, until such time as the Lenders appoint a successor Agent
as provided for above in this paragraph. 
Upon the acceptance of a successor’s appointment as Agent hereunder,
such successor shall succeed to and become vested with all of the rights,
powers, privileges and duties of the retiring (or retired) Agent, and the
retiring Agent shall be discharged from all of its duties and obligations
hereunder or under the other Loan Documents (if not already discharged
therefrom as provided above in this paragraph). 
The fees payable by Borrower to a successor Agent shall be the same as
those payable to its predecessor unless otherwise agreed between Borrower and
such successor.  After the retiring Agent’s
resignation hereunder and under the other Loan Documents, the provisions of
this Article and Sections 14.7 and 14.8 shall continue
in effect for the benefit of such retiring Agent, its sub-agents and their
respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while the retiring Agent was acting as Agent.


 


Section 22.7                                Removal of Agent.


 


The Agent may be removed as the Agent hereunder
pursuant to Section 23.17(c). 
The Lenders shall have the right to remove the Agent if Cause occurs,
provided that for this purpose if any Lender is Agent or is an Affiliate of
Agent, such Lender shall be excluded in determining which Lender’s constitute
the Lenders.


 


Section 22.8                                Non-Reliance on
Agent and Other Lenders.


 


Each Lender acknowledges that it has, independently
and without reliance upon the Agent or any other Lender or any of their Related
Parties and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement.  Each Lender also acknowledges
that it will, independently and without reliance upon the Agent or any other
Lender or any of their Related Parties and based on such documents and
information as it shall from time to time deem appropriate, continue to make
its own decisions in taking or not taking action under or based upon this
Agreement, any other Loan Document or any related agreement or any document
furnished hereunder or thereunder.


 


Section 22.9                                Indemnification
of Agent.


 


Each Lender agrees to indemnify, defend, reimburse and
hold the Agent, the Servicer and their respective officers, directors,
employees and consultants harmless (to the extent not reimbursed by Borrower or
any Guarantor), in accordance with such Lender’s Pro Rata Interest, for any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, and reasonable costs, expenses or disbursements 


 


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which may be
imposed on, incurred by, or asserted against the Agent, as agent, or the
Servicer in any way relating to or arising out of the Loans, or any action
taken or omitted by the Agent under this Agreement or the other Loan Documents
or the Servicer under the Servicing Agreement and shall make payment with
respect thereto within ten (10) Business Days of a request therefor by the
Agent or Servicer, provided that the Lenders shall not be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from, related to
or arising from the breach of the this Agreement by the Agent (or with respect
to the Servicer, breach of the Servicing Agreement by the Servicer) or from the
gross negligence or willful misconduct of the Agent or the Servicer, as the
case may be, as determined by a final judgment of a court of competent
jurisdiction.  The Agent shall be
entitled to deduct from any payments to be made to the Lenders under this
Agreement, and to retain, amounts due the Agent as reimbursement hereunder
provided that the Agent shall have first delivered to the Lenders thirty (30)
days prior written notice of such amounts and the circumstances giving rise
thereto, and the Lenders have not paid such amounts.  The Agent shall make commercially reasonable
attempts to collect such amounts from Borrower and the Guarantors.  If the Agent receives payment of any amount
referred to in this Section 22.9 from the Borrower or any third
party after a Lender has reimbursed the Agent for such amount, the Agent shall
promptly return the amount of the reimbursement to such Lender.  Any loss, cost, liability or expense
occasioned solely by the conduct of any one of the Lenders shall be borne
solely by such party causing such loss, cost, liability or expense and such
party shall indemnify, defend and hold the other Lenders harmless against any
and all such losses, costs and liabilities and expenses (including, but not
limited to, reasonable attorneys’ fees, costs and expenses) sustained or
incurred by the other Lenders as a result thereof.


 


Section 22.10                          Delivery of
Notices to Lenders.


 


If the Agent receives any notices, requests or other
written information from Borrower, the Agent shall (or cause the Servicer to)
promptly, but in any event within one (1) Business Day after receipt
thereof, deliver a copy of such notice, request or information to the Lenders.


 


Section 22.11                          Borrower’s
Dealings With Agent.


 


Notwithstanding any provision herein to the contrary, (i) if
Borrower is required to deliver any notice or information to one or more
Lenders, it shall satisfy such obligation by delivering such notice or information
to the Agent, and (ii) if Borrower is required to obtain the consent or
approval from one or more Lenders, it shall deal directly with the Agent who
will coordinate obtaining such consent or approval from the Lenders.


 


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ARTICLE XXIII

GENERAL PROVISIONS


 


Section 23.1                                Captions.


 


The captions and headings of various Articles,
Sections and subsections of this Agreement and Exhibits pertaining hereto are
for convenience only and are not to be considered as defining or limiting in
any way the scope or intent of the provisions hereof.


 


Section 23.2                                Modification;
Waiver.


 


No amendment or waiver of any provision of this
Agreement, the Notes, the Mortgage or the other Loan Documents, nor consent to
any departure by the Borrower therefrom, shall in any event be effective unless
the same shall be in writing and signed by the Borrower and the Required
Lenders (other than Defaulting Lenders), and then such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given; provided, however, that no amendment, waiver or
consent shall, unless in writing and signed by Borrower and all the Lenders do
any of the following:


 


(i)         change or modify the interest rate
provisions set forth in the Loan Documents;


 


(ii)        increase or decrease the principal
amount of any of the Loans, except for Protective Advances;


 


(iii)       alter the Facility A Commitments of any
Lender;


 


(iv)      extend the Facility A Maturity Date or the
Facility B/C Maturity Date;


 


(v)       amend or modify, or waive compliance
with, ARTICLE XXI or this Section 23.2;


 


(vi)      forgive the payment of principal of, or
interest on (other than interest at the Default Rate), any Loan or the payment
of any other sum or fee due under the Loan Documents to which the Lenders are
entitled; provided, however, if any Lender is entitled to any
additional amounts described in this Agreement, any such Lender may forgive the
payment of such sums only due to such Lender without requiring the consent of
the other Lenders;


 


(vii)     postpone any date for payment of principal
of, or interest on (other than interest at the Default Rate), the Loans or the
payment of any other sum or fee due under the Loan Documents to which the
Lenders are entitled;


 


(viii)    amend or modify the definition of “Required
Lenders”,  “Pro Rata Interest”, “Servicing Standard”, “Material
Adverse Change” or “Net Sales Proceeds”;


 


(ix)       enter into, or modify any agreement
subordinating any of the Notes to any indebtedness;


 


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(x)        permit or consent to any Transfer or
voluntary or involuntary sale or transfer of all or any portion of the
Mortgaged Property or permit any subordinate financing or additional financing
of all or any portion of the Mortgaged Property except as expressly permitted
under the Loan Documents;


 


(xi)       consent to any material change in the use
of the Mortgaged Property;


 


(xii)      deliver a written waiver of any claim
against Borrower or any Guarantor; or


 


(xiii)     release all or any portion of the Mortgaged
Property or Loan Documents (including guaranties, pledges, required equity
contributions, and recourse obligations) for the Loan except as expressly
permitted by this Agreement or other Loan Documents or modify any terms with
respect to the conditions of release of the Mortgaged Property or Loan
Documents (including guaranties, pledges, required equity contributions and
recourse obligations) in any respect or release Borrower, Guarantors or any
other credit support party or any other Persons liable under any of the Loan
Documents from any obligation under the Loan Documents;


 


(xiv)     reduce the Release Price with respect to
any Unit by more than ten  percent (10)%;


 


(xv)      amend or modify the terms of the Special
Management Area Use Permit, the Shoreline Setback Variance or the  Planned Development Approval obtained for the
Construction of the Project;


 


(xvi)     amend or modify, or waive compliance with, Section 11.1
or Section 22.1.


 


Notwithstanding anything
to the contrary herein, (x) no Defaulting Lender shall have any right to
approve or disapprove any amendment, waiver or consent hereunder, except with
regard to those matters described in clauses (i) through (ix) above
if such Defaulting Lender is affected thereby, (y) no agreement shall
amend, modify or otherwise affect the rights or duties of the Agent hereunder
or under any other Loan Document without the prior written consent of the Agent
and (z) so long as MH Kapalua is a Lender it shall not have any right to
approve or disapprove any amendment, waiver or consent hereunder, except with
regard to those matters described in clauses (i), (iii), (iv),
(v), (vi), (vii) and (ix) if it is affected
thereby.


 


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Section 23.3                                Governing Law.


 


THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW
YORK, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE
PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY. IN ALL RESPECTS,
INCLUDING, WITHOUT LIMITATION, MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE,
THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN SUCH STATE AND APPLICABLE LAW OF THE UNITED
STATES OF AMERICA. TO THE FULLEST EXTENT PERMITTED BY LAW, BORROWER HEREBY
UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY
OTHER JURISDICTION GOVERNS THIS AGREEMENT, AND THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT
TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW, BUT WITHOUT
REGARD TO ANY OTHER CONFLICTS OF LAW PROVISIONS THEREOF.  NOTWITHSTANDING THE FOREGOING, PROVISIONS IN
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS WITH RESPECT TO THE CREATION,
PERFECTION, PRIORITY, ENFORCEMENT AND FORECLOSURE OF THE LIENS AND SECURITY
INTERESTS CREATED HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE
LAW OF THE STATE IN WHICH THE PROJECT IS LOCATED.


 


Section 23.4                                Acquiescence
Not to Constitute Waiver of Lenders’ Requirements.


 


Each and every covenant and condition for the benefit
of the Lenders contained in this Agreement may be waived pursuant to Section 23.2,
provided, however, that to the extent that the Lenders may have
acquiesced in any noncompliance with any construction or nonconstruction
conditions precedent to the Initial Restructuring Loan or to any subsequent
disbursement of Facility A Loan proceeds, such acquiescence shall not be deemed
to constitute a waiver by the Lenders of such requirements with respect to any
future disbursements of Facility A Loan proceeds.


 


Section 23.5                                Disclaimer by
Lenders and the Agent.


 


This Agreement is made for the sole benefit of
Borrower, the Agent and the Lenders, and no other Person shall have any
benefits, rights or remedies under or by reason of this Agreement, or by reason
of any actions taken by any Lender or the Agent pursuant to this Agreement.
Neither the Agent nor any Lender shall be liable to any contractors, subcontractors,
supplier, architect, engineer, tenant or other party for labor or services
performed or materials supplied in connection with the Construction. Neither
the Agent nor any Lender shall be liable for any debts or claims accruing in
favor of any such parties against Borrower or others or against the Project. No
Lender, by making any Loans or taking any action pursuant to any of the Loan
Documents, shall be deemed a partner or a joint venturer with Borrower or
fiduciary of Borrower. No payment of funds directly to a contractor or
subcontractor or provider of services shall be deemed to create any third party
beneficiary status or recognition of same by any Lender. Without limiting the
generality of the foregoing:


 


115

















 


(i)         neither any Lender nor the Agent shall
have any liability, obligation or responsibility whatsoever with respect to the
Construction. Any inspections of the Construction made by or through any Lender
or the Agent are for purposes of administration of the Loans only and neither
Borrower nor any third party is entitled to rely upon the same with respect to
the quality, adequacy or suitability of materials or workmanship, conformity to
the Plans and Specifications, state of completion or otherwise; and


 


(ii)        neither any Lender nor the Agent
undertakes or assumes any responsibility or duty to Borrower to select, review,
inspect, supervise, pass judgment upon or inform Borrower of any matter in
connection with the Project, including matters relating to the quality,
adequacy or suitability of: (x) the Plans and Specifications, (y) architects,
contractors, subcontractors and material suppliers employed or utilized in
connection with the Construction, or the workmanship of or the materials used
by any of them or (z) the progress or course of Construction and its
conformity or nonconformity with the Plans and Specifications; Borrower shall
rely entirely upon its own judgment with respect to such matters, and any
review, inspection, supervision, exercise of judgment or supply of information
to Borrower by the Agent or any Lender in connection with such matters is for
the protection of the Agent or such Lender only, and neither Borrower nor any
third party is entitled to rely thereon.


 


Section 23.6                                Partial
Invalidity; Severability.


 


If any of the provisions of this Agreement, or the
application thereof to any person, party or circumstances, shall, to any
extent, be invalid or unenforceable, the remainder of this Agreement, or the
application of such provision or provisions to persons, parties or
circumstances other than those as to whom or which it is held invalid or
unenforceable, shall not be affected thereby, and every provision of this
Agreement shall be valid and enforceable to the fullest extent permitted by
law.


 


Section 23.7                                Definitions
Include Amendments.


 


Definitions contained in this Agreement which identify
documents, including, but not limited to, the Loan Documents, shall be deemed
to include all amendments and supplements to such documents to and from the
date hereof, and all future amendments, modifications, and supplements thereto
entered into from time to time to satisfy the requirements of this Agreement or
otherwise with the consent of the Required Lenders or the Lenders, as the case
may be, subject to Section 23.2. Reference to this Agreement
contained in any of the foregoing documents shall be deemed to include all
amendments and supplements to this Agreement.


 


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Section 23.8                                Execution in
Counterparts.


 


This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.  Delivery of an executed counterpart of a
signature page of this Agreement by facsimile or electronic transmission
of a PDF file shall be effective delivery of a manually executed counterpart of
this Agreement.


 


Section 23.9                                Entire Agreement;
Replacing Original Construction Loan Agreement.


 


This Agreement, taken together with all of the other
Loan Documents and all certificates and other documents delivered by Borrower
to the Agent and the Lenders, embody the entire agreement and supersede all
prior agreements, written or oral, relating to the subject matter hereof.  This Agreement replaces and supersedes the
Original Construction Loan Agreement, as amended through the Effective Date, in
its entirety.  The Notes evidence, in the
aggregate, the same outstanding principal indebtedness evidenced by the
promissory note issued under the Original Construction Loan Agreement, and
subsequently by the Split Notes and do not create any new or further
indebtedness.  Nothing contained in this
Agreement, the Notes or the other Loan Documents (other than the reduction of
the Split Notes pursuant to the Master Assignment Agreement) shall be deemed to
extinguish or increase the indebtedness evidenced by, or as a novation of, the
promissory note issued under the Original Construction Loan Agreement or the
Split Notes.


 


Section 23.10                          Waiver of
Damages.


 


In no event shall the Agent or any Lender be liable to
Borrower for punitive, exemplary or consequential damages, including, without
limitation, lost profits, whatever the nature of a breach by the Agent or such
Lender of its obligations under this Agreement or any of the Loan Documents,
and Borrower for itself and its Guarantor waives all claims for punitive,
exemplary or consequential damages.


 


Section 23.11         Jurisdiction.


 


TO THE GREATEST EXTENT PERMITTED BY LAW, BORROWER
HEREBY WAIVES ANY AND ALL RIGHTS TO REQUIRE MARSHALLING OF ASSETS BY THE AGENT.
WITH RESPECT TO ANY SUIT, ACTION OR PROCEEDINGS RELATING TO THIS AGREEMENT
(EACH, A “PROCEEDING”), BORROWER IRREVOCABLY (A) SUBMITS TO THE
NON-EXCLUSIVE JURISDICTION OF THE CIRCUIT COURT OF THE SECOND CIRCUIT, STATE OF
HAWAII, THE FEDERAL DISTRICT COURT FOR THE DISTRICT OF HAWAII, OR ANY FEDERAL
OR STATE COURT SITTING IN NEW YORK COUNTY, NEW YORK, AND (B) WAIVES ANY
OBJECTION WHICH IT MAY HAVE AT ANY TIME TO THE LAYING OF VENUE OF ANY
PROCEEDING BROUGHT IN ANY SUCH COURT, WAIVES ANY CLAIM THAT ANY PROCEEDING HAS
BEEN 


 


117

















 


BROUGHT IN AN
INCONVENIENT FORUM AND FURTHER WAIVES THE RIGHT TO OBJECT, WITH RESPECT TO SUCH
PROCEEDING, THAT SUCH COURT DOES NOT HAVE JURISDICTION OVER SUCH PARTY. NOTHING
IN THIS AGREEMENT SHALL PRECLUDE THE AGENT OR ANY LENDER FROM BRINGING A
PROCEEDING IN ANY OTHER JURISDICTION NOR WILL THE BRINGING OF A PROCEEDING IN
ANY ONE OR MORE JURISDICTIONS PRECLUDE THE BRINGING OF A PROCEEDING IN ANY
OTHER JURISDICTION. BORROWER FURTHER AGREES AND CONSENTS THAT, IN ADDITION TO
ANY METHODS OF SERVICE OF PROCESS PROVIDED FOR UNDER APPLICABLE LAW, ALL SERVICE
OF PROCESS IN ANY PROCEEDING IN THE CIRCUIT COURT OF THE SECOND CIRCUIT, STATE
OF HAWAII, THE FEDERAL DISTRICT COURT FOR THE DISTRICT OF HAWAII, OR ANY
FEDERAL OR STATE COURT SITTING IN NEW YORK COUNTY, NEW YORK, MAY BE MADE
BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO BORROWER
AT THE ADDRESS INDICATED BELOW, AND SERVICE SO MADE SHALL BE COMPLETE UPON
RECEIPT; EXCEPT THAT IF BORROWER SHALL REFUSE TO ACCEPT DELIVERY, SERVICE SHALL
BE DEEMED COMPLETE FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO MAILED.


 


Section 23.12                          Set-Offs;
Adjustments.


 


(a)               After the occurrence and during
the continuance of an Event of Default, Borrower hereby irrevocably authorizes
and directs each Lender from time to time to charge Borrower’s accounts and
deposits with such Lender (or its Affiliates), and to pay over to the Agent an
amount equal to any amounts from time to time due and payable to such Lender
hereunder, under its Note(s) or under any other Loan Document. Borrower
hereby grants to the Agent a security interest in and to all such accounts and
deposits maintained by Borrower with Lender (or its Affiliates).


 


(b)               Except to the extent this
Agreement expressly provides for payments to be allocated to a particular
Lender, if any Lender (a “Benefitted Lender”) shall receive any payment
of all or any portion of the Debt owing to such Benefitted Lender, or receives
any collateral in respect thereof (whether voluntarily or involuntarily, by set
off, pursuant to events or proceedings of the nature referred to in Section 19.1(j),
or otherwise), in a greater proportion than such Benefitted Lender would be
entitled to under Section 21.1, such Benefitted Lender shall
purchase for cash from each other applicable Lender a participating interest in
such portion of the Debt owing to such other Lender as shall be necessary to
cause such other Lender to receive the amount of such payment received by the
Benefitted Lender that such other Lender would have received if such payment
had been received in cash by the Agent and applied in accordance with Section 21.1;
provided, however, that if all or any portion of such excess
payment or benefits is thereafter recovered from such Benefitted Lender, such
purchase shall be rescinded, and the purchase price and benefits returned, to
the extent of such recovery, but without interest.


 


118

















 


Section 23.13                          Authorized
Representative.


 


The Authorized Representative shall deal with the
Agent and each Lender on behalf of Borrower in respect of any and all matters
in connection with this Agreement, the other Loan Documents, and the Loans. The
Authorized Representative shall have the power, in his or her discretion, to
give and receive all notices, monies, approvals, and other documents and
instruments, and to take any other action on behalf of Borrower. All actions by
the Authorized Representative shall be final and binding on Borrower. The Agent
and each Lender may rely on the authority given to the Authorized
Representative until actual receipt by the Agent and each Lender of a duly
authorized resolution depriving such Authorized Representative of his
authority. No more than one person shall serve as Authorized Representative at
any given time.


 


Section 23.14                          Non-Recourse
Provisions.


 


The provisions of Article IX of the Notes
pertaining to the personal liability of Borrower and its members, officers,
directors and employees are hereby incorporated herein by reference.


 


Section 23.15                          Sole Discretion
of Lenders and Agent and Deemed Consent.


 


Wherever pursuant to this Agreement (a) the
Lenders, the Required Lenders or the Agent exercise any right given to it to
approve, disapprove or consent, (b) any arrangement or term is to be
satisfactory to the Agent, the Required Lenders or the Lenders, or (c) any
other decision or determination is to be made by the Agent, the Required
Lenders or the Lenders, the decision of the Agent, the Required Lenders or the
Lenders to approve, disapprove or consent, all decisions that arrangements or
terms are satisfactory or not satisfactory and all other decisions and
determinations made by the Agent, the Required Lenders or the Lenders, shall be
in the sole and absolute discretion of the Agent, the Required Lenders or the
Lenders, as applicable, and shall be final and conclusive, except as may be
otherwise expressly and specifically provided herein, and any such decision or
determination to be made in “the sole discretion of the Agent”, “the sole
discretion of the Required Lenders” or “the sole discretion of the Lenders” or
in or at “Lender’s sole discretion”, “the Agent’s sole discretion” or “the
Required Lender’s sole discretion” under this Agreement shall be deemed to be
in the sole and absolute discretion of the Agent, the Required Lenders or the
Lenders, as applicable, and shall be final and conclusive.


 


If the consent or approval of a Lender is required
under this Agreement such consent shall be deemed given by such Lender if such
Lender fails to object to the matter for which its consent or approval is
sought within twenty-one (21) days of a written 


 


119

















 


request by Borrower for
such consent (such twenty-one (21)  day period, the “21-Day Period”)
or fails to notify Borrower and the Agent within such 21-Day Period that it
requires additional information reasonably necessary for such Lender to make an
informed decision; provided, that if within such 21-Day Period a Lender
has notified the Agent and Borrower that the approval, consent or action is
required by a court, Governmental Authority, creditor’s committee or other
entity or body having jurisdiction over such Lender (collective, a “Third-Party
Approval”) and that such 21-Day Period is not sufficient time for such
Lender to obtain such Third-Party Approval, then the failure of such Lender to
object to such matter within such 21-Day Period shall not be deemed to
constitute such Lender’s consent thereto.


 


Section 23.16                          Conflict;
Construction of Documents: Reliance.


 


In the event of any conflict between the provisions of
this Agreement and any of the other Loan Documents, the provisions of this
Agreement shall control. The parties hereto acknowledge that they were
represented by competent counsel in connection with the negotiation, drafting
and execution of the Loan Documents and that such Loan Documents shall not be
subject to the principle of construing their meaning against the party which
drafted same. Borrower acknowledges that, with respect to the Loans, Borrower
shall rely solely on its own judgment and advisors in entering into the Loans
without relying in any manner on any statements, representations or
recommendations of the Lenders or any parent, subsidiary or Affiliate of any
Lender. No Lender shall be subject to any limitation whatsoever in the exercise
of any rights or remedies available to it under any of the Loan Documents or
any other agreements or instruments which govern the Loans by virtue of the
ownership by it or any parent, subsidiary or Affiliate of any Lenders of any
equity interest any of them may acquire in Borrower, and Borrower hereby
irrevocably waives the right to raise any defense or take any action on the
basis of the foregoing with respect to any Lender’s or the Agent’s exercise of
any such rights or remedies. Borrower acknowledges that the Lenders engage in
the business of real estate financings and other real estate transactions and
investments which may be viewed as adverse to or competitive with the business
of Borrower or its Affiliates.


 


Section 23.17                          Defaulting
Lender.


 


(a)               If for any reason, any Lender
fails or refuses to abide by its obligations under the Loan Agreement the other
Loan Documents and such failure continues five (5) days after written
notice from the Agent (or if the Agent, as a Lender, is the one refusing or
failing to abide by its obligations, from any other Lender) of such failure
(provided that no such written notice and opportunity to cure shall be
applicable to the extent that it may, in any way, prejudice or adversely affect
the rights or remedies of Agent under the Loan Agreement or any of the other
Loan Documents) (each a “Defaulting Lender”),  then, in addition to the rights and remedies that may be
available to Borrower, the Agent and the other Lenders at law and in equity,
such Defaulting Lender’s right to participate in the administration of the
Loans and the Loan Documents, including without limitation, any rights to
consent to or direct any action or inaction of the Agent shall be suspended
during the pendency of such failure or refusal.


 


120

















 


(b)               If for any reason any Defaulting
Lender fails to make timely payment of any amount required to be paid by it
hereunder or under the Loan Documents, in addition to other rights and remedies
which the Agent or Borrower may have under Section 23.17(a) hereof
or otherwise, the Agent, on behalf of all Lenders, shall be entitled (i) to
collect interest from the Defaulting Lender for the period from (and including)
the date on which the payment was due until (but excluding) the date on which
the payment is made at the Prime Rate, (ii) pursuant to Section 23.17(d) hereof,
to withhold or set off, and to apply to the payment of the defaulted amount and
any related interest, any amounts to be paid to the Defaulting Lender under this
Agreement, and (iii) to bring an action or suit against the Defaulting
Lender in a court of competent jurisdiction to recover the defaulted amount and
any related interest.


 


(c)               If the Agent is a Defaulting
Lender, the Lenders (other than the Agent as a Lender hereunder) holding one
hundred percent (100%) of the outstanding principal balance of the Notes shall
have the immediate right to terminate the Agent as Agent hereunder and appoint
a successor Agent.  Until such time as
such successor Agent has accepted such appointment, the Agent shall take no
action other than upon the consent or direction of the Required Lenders or, if
such action requires the consent or direction of all of the Lenders, upon the
consent or direction of all of the Lenders, subject to the terms hereof,
including Section 23.2.


 


(d)               If any Defaulting Lender is a
Facility A Lender and shall fail to make any Facility A Loan required under the
Loan Agreement, the other Facility A Lenders shall have the right to fund such
Facility A Loan on behalf of the Defaulting Lender (and if more than one
Facility A Lender desires to fund such Facility A Loan, then the funding shall
be made in accordance with their respective Facility A Pro Rata Share
recalculated for the purposes hereof to exclude the Defaulting Lender).  All Facility A Obligations owing to a
Defaulting Lender hereunder shall he subordinated in right of payment, as
provided in the following sentence, to the prior payment in full of all
principal of, interest on and fees relating to the Facility A Loan funded by
the Facility A Lenders in connection with any such Facility A Loan in which the
Defaulting Lender has not funded its Facility A Pro Rata Share (or has
otherwise failed or refused to abide by its obligations under this Agreement or
the other Loan Documents and such failure or refusal has a material adverse
affect on the Lenders, the Tranche A Loans or Borrower) (such principal,
interest and fees being referred to as “Default Loans”  for the purposes of this Section 23.17(d)).  Each Default Loan shall accrue interest at
the Prime Rate. All amounts paid by Borrower and otherwise due to be applied to
the Facility A Obligations owing to such Defaulting Lender pursuant to the
terms hereof shall be distributed by the Agent to the Facility A Lenders
holding Default Loans in accordance with the respective balances of the
outstanding 


 


121

















 


Default Loans until all
Default Loans have been paid in full.  At
that point, the “Defaulting Lender” shall no longer be deemed a Defaulting
Lender . This provision governs only the relationship among the Agent, each
Defaulting Lender and the other Facility A Lenders; nothing hereunder shall limit the obligation of Borrower to repay all
Facility A Loans in accordance with the terms of this Agreement.  The provisions of this Section 23.17(d) apply and be effective regardless of
whether an Event of Default occurs, and notwithstanding (i) any other
provision of this Agreement to the contrary, (ii) any instruction of
Borrower as to its desired application of payments or (iii) the suspension
of such Defaulting Lender’s rights to vote on matters which are subject to the
consent or approval of the Facility A Lenders or all Lenders.


 


Section 23.18                          Waiver of
Lender Defaults.


 


Borrower, for itself, its Affiliates, successors and
assigns, hereby expressly waive and release any defenses, rights of set-off,
claims or counterclaims of whatever nature it may have against the Lenders, or
any of them, arising from or relating to the failure of any Lender to fund an
advance under the Original Construction Loan Agreement, the Split Notes or the
Co-Lending Agreement prior to the Effective Date.


 


Section 23.19                          USA PATRIOT Act
Notice.


 


Each Lender that is subject
to the Patriot Act and the Agent (for itself and not on behalf of any Lender)
hereby notifies the Borrower that pursuant to the requirements of the Patriot
Act it is required to obtain, verify and record information that identifies the
Borrower, which information includes the name and address of the Borrower and
other information that will allow such Lender or the Agent, as applicable, to
identify the Borrower in accordance with the Patriot Act.


 


Section 23.20                          Time is of the
Essence.


 


Time is of the essence under this Agreement.


 


Section 23.21                          Replacement of
Certain Lenders.


 


In the event a Lender (an “Affected Lender”)
shall be a Defaulting Lender or shall 
failed or refused to consent by the relevant time to any amendment,
waiver, supplement, restatement, discharge or termination of any provision of
this Agreement when requested by Borrower or the Agent and with respect to
which (A) the consent of each affected Lender is required under Section 23.2
and (B) each other affected Lender has so consented then, in any such
case, Borrower or the Agent may make written demand on such Affected Lender
(with a copy to the Agent in the case of a demand by Borrower and a copy to
Borrower in the case of a demand by the Agent) for the Affected Lender to
assign, and such Affected Lender shall use commercially reasonable efforts to
assign, pursuant to one or more duly executed Assignment and Assumption
Agreements ten (10) Business Days after the date of such demand, to one or
more financial institutions that 


 


122

















 


comply with the
provisions of Section 17.4 which Borrower or the Agent, as the case
may be, shall have engaged for such purpose (a “Replacement Lender”),
all of such Affected Lender’s rights and obligations under this Agreement and
the other Loan Documents (including, without limitation, all Loans owing to it
and, in the case of any Facility A Lender, its Facility A Commitment) in
accordance with Section 17.4. 
The Agent agrees, upon the occurrence of such events with respect to an
Affected Lender and upon the written request of Borrower, to use its reasonable
efforts to obtain the commitments from one or more financial institutions to
act as a Replacement Lender.  The Agent
is authorized to execute one or more Assignment and Assumption Agreements as
attorney-in-fact for any Affected Lender failing to execute and deliver the
same within ten (10) Business Days after the date of such demand.  Further, with respect to such assignment, the
Affected Lender shall have concurrently received, in cash, all amounts due and
owing to the Affected Lender hereunder or under any other Loan Document,
including, without limitation, the aggregate outstanding principal amount of
the Loans owed to such Lender, together with accrued interest thereon through
the date of such assignment; provided that upon such Affected Lender’s
replacement, such Affected Lender shall cease to be a party hereto but shall
continue to be entitled to the benefits of Sections 5.1(g), 6.1, 7.2,
14.7, 15.1(t) and 17.2, (and each other provision of
this Agreement or the other Loan Documents whereby Borrower or agrees to
reimburse or indemnify the Lenders), and shall continue to be obligated under Section 22.9
for such amounts, obligations and liabilities as are due and payable up to and
including (but not after) the date such Affected Lender is replaced pursuant
hereto.


 


Section 23.22                          Termination of
Co-Lending Agreement.


 


The terms and provisions of the Co-Lending Agreement
are hereby superseded in all respects by the terms of this Agreement, and the
Lenders hereby agree that as of the Effective Date the Co-Lending Agreement is
hereby, and shall be without need of further action by any of the parties
hereto, irrevocably terminated, canceled and of no further force or effect,
except any provision of the Co-Lending Agreement which by the express terms
thereof survives the termination thereof.


 


Section 23.23                          No Merger of
Interest.


 


Borrower and MH Kapalua acknowledge and agree that it
has requested the other parties hereto to enter into this Agreement and that it
is Borrower’s and MH Kapalua’s intention that there shall be no merger of
interests in the Mortgaged Property by reason of the fact that MH Kapalua may
at any time acquire, own or hold, directly or indirectly, in whole or in part (a) more
than one interest in the Mortgaged Property and (b) one or more Notes and
a Lien or an interest in the Mortgage or any other Loan Document constitute a
Lien, on the Mortgaged Property.


 


123

















 


Section 23.24                          LBHI’s Consent to
Amendment to Borrower’s Limited Liability Company Agreement.


 


By executing this Agreement,
LBHI hereby consents to the amendments to Borrower’s Limited Liability Company
Agreement as set forth in the First Amendment to Amended and Restated Liability
Company Agreement of Kapalua Bay , LLC, dated on or about the date hereof.


 


Section 23.25                          Draw #29.


 


The parties hereto acknowledge and agree that
notwithstanding the terms thereof, Draw #29 and all documents delivered in
connection therewith shall be deemed to be a Requisition delivered under this
Agreement.


 


ARTICLE XXIV

NOTICES


 


Any notice, demand, request or other communication
which any party hereto may be required or may desire to give hereunder shall be
in writing and shall be deemed to have been properly given (a) if hand
delivered, when delivered, (b) if mailed by United States Certified Mail
(postage prepaid, return receipt requested), three Business Days after mailing (c) if
by Federal Express or other reliable overnight courier service, on the next
Business Day after delivered to such courier service or (d) if by
telecopier on the day of transmission so long as copy is sent on the same day
by overnight courier as set forth below:


 


If to Borrower:


 


Kapalua
Bay, LLC

c/o Maui Land & Pineapple Company, Inc.

120 Kane Street

Kapalua, Maui, Hawaii 69732

Attention: Ryan Churchill

Telecopy: (808) 669-5454

Telephone: (808) 877-1667


 


With a copy to:


 


DLA
Piper LLP (US)


555
Mission Street


Suite 2400


San
Francisco, California  94105


Attention:
Stephen A. Cowan


Telecopy:
(415)659-7500


Telephone:
(415) 615-6000


 


and


 


124

















 


Teel &
Roeper, LLP

ICW Plaza at Torrey Reserve

11455 El Camino Real, Suite 300

San Diego, CA 92130

Attention: Dean E. Roeper, Esq.

Telecopy: (858) 794-2909

Telephone: (858) 794-2900


 


If to the Agent:


 


Central Pacific Bank, as Agent

220 South King Street, Suite 2000

Honolulu, Hawaii 96813

Attention: Ryan M. Harada

Telecopy: (808) 544-0719

Telephone: (808) 544-0714


 


With a copy to:


 


TriMont
Real Estate Advisors, Inc.

Monarch Tower

3424 Peachtree Road NE, Suite 2200

Atlanta, Georgia 30326

Attention: Nancy A. Wilson

Telecopy: (404) 582-8759

Telephone: (404) 954-5284


 


If to a Lender:


 


At the
address set forth on Schedule G or in the Assignment and Assumption
Agreement pursuant to which such Person became a Lender;


 


or at such other address as the party to be
served with notice may have furnished in writing to the party seeking or
desiring to serve notice as a place for the service of notice.


 


ARTICLE XXV

WAIVER OF JURY TRIAL


 


BORROWER, THE AGENT AND EACH LENDER WAIVE ANY RIGHT TO
A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS
UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS OR RELATING THERETO OR
ARISING FROM THE LENDING RELATIONSHIP WHICH IS THE SUBJECT OF THIS AGREEMENT
AND AGREE 


 


125

















 


THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED
BEFORE A COURT AND NOT BEFORE A JURY.


 


[remainder of page intentionally
left blank; signature pages follow]


 


 


126














 


IN WITNESS WHEREOF, this Agreement has been executed
by the undersigned as of the date first set forth above.


 




	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  KAPALUA
  BAY, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Kapalua
  Bay Holdings, LLC,

  its
  Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  MLP
  KB Partner LLC,

  its
  Managing Member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  Maui
  Land & Pineapple Company, Inc.,

  its
  Managing Member

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Adele H. Sumida

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
  Adele H. Sumida

  
	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
  Controller &
  Secretary

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Randall H. Endo

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
  Randall H. Endo

  
	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
  Vice President

  






 


 


127

















 




	
   

  	
  AGENT:

  
	
   

  	
   

  
	
   

  	
  CENTRAL
  PACIFIC BANK, as Agent

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Ryan M. Harada

  
	
   

  	
   

  	
  Name:

  	
  Ryan
  M. Harada

  
	
   

  	
   

  	
  Title:

  	
  Executive
  Vice President

  






 


 


128

















 




	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
  LEHMAN
  BROTHERS HOLDINGS INC., as debtor and debtor in possession in its
  Chapter 11 case in the United States Bankruptcy Court for the Southern
  District of New York

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gerald D.
  Pietroforte

  
	
   

  	
  Name:

  	
  Gerald D. Pietroforte

  
	
   

  	
  Title:

  	
  Authorized Signatory

  






 


 


129

















 




	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
  CENTRAL PACIFIC BANK

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Ryan M. Harada

  
	
   

  	
  Name:

  	
  Ryan M. Harada

  
	
   

  	
  Title:

  	
  Executive Vice President

  






 


 


130

















 




	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
  DEUTSCHE HYPOTHEKENBANK (ACTIENGESELLSCHAFT)

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Dirk Wilke

  
	
   

  	
  Name:

  	
  Dirk Wilke

  
	
   

  	
  Title:

  	
  authorized officer

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Michael Muller

  
	
   

  	
  Name:

  	
  Michael Muller

  
	
   

  	
  Title:

  	
  authorized officer

  






 


 


131

















 




	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
  LANDESBANK BADEN-WÜRTTEMBERG
  (successor-in-interest to Landesbank Sachsen Girozentrale)

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Dietmar Wilhelm

  
	
   

  	
  Name:

  	
  Dietmar Wilhelm

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Nicole Schumacher

  
	
   

  	
  Name:

  	
  Nicole Schumacher

  
	
   

  	
  Title:

  	
  Assistant Vice President

  






 


 


132

















 




	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
  SWEDBANK AB (PUBL), NEW YORK BRANCH

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  John Matthews

  
	
   

  	
  Name:

  	
  John Matthews

  
	
   

  	
  Title:

  	
  General Manager

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Donald Weiss

  
	
   

  	
  Name:

  	
  Donald Weiss

  
	
   

  	
  Title:

  	
  Vice President

  






 


 


133

















 




	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
  MH KAPALUA VENTURE, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Marriott Two Flags, LP, its sole member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Marriott Ownership Resorts, Inc., its general
  partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ William J. Tennis

  
	
   

  	
   

  	
   

  	
  Name:

  	
  William
  J. Tennis

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice
  President

  






 


 


134