**Exhibit 4**

 

**AMENDEDAND FOURTH RESTATED**

**REVOLVINGCREDIT AGREEMENT**

 

THIS AMENDED AND FOURTH RESTATED REVOLVINGCREDIT AGREEMENT (the “Amendment and Restatement”), dated as of May 17,2005, by and among MAUI LAND & PINEAPPLE COMPANY, INC., a Hawaiicorporation (the “Borrower”), BANK OF HAWAII, a Hawaii banking corporation (“BOH”),FIRST HAWAIIAN BANK, a Hawaii banking corporation (“FHB”), CENTRAL PACIFICBANK, a Hawaii banking corporation (“CPB”), AMERICAN AGCREDIT, PCA, acorporation or association organized and existing under the laws of the UnitedStates of America (“PCA”), (BOH, FHB, CPB and PCA are each sometimes called a “Lender”and collectively called the “Lenders”), and BANK OF HAWAII, as Agent for theLenders to the extent and in the manner provided hereinbelow and in the AgencyAgreement referred to below (in such capacity, the “Agent”).

 

WITNESSETH:

 

WHEREAS, the Borrower, BOH, FHB, CPB and BANKOF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION (“BOA”) (BOH, FHB, CPB andBOA, collectively, the “Original Lenders”) and the Agent entered into thatcertain Revolving and Term Loan Agreement, dated as of December 31, 1992(the “Original Loan Agreement”), which Original Loan Agreement established acredit facility (the “Credit Facility”) in favor of Borrower in the originalprincipal amount of $40,000,000.00;

 

WHEREAS, the Original Loan Agreement wasamended and supplemented by:  First LoanModification Agreement, dated as of March 1, 1993; letter agreements datedApril 30, 1993 and June 24, 1993; Second Loan Modification Agreement,dated September 8, 1993; Third Loan Modification Agreement, dated September 30,1993; Fourth Loan Modification Agreement, dated March 8, 1994; Fifth LoanModification Agreement, dated effective as of December 31, 1994; SixthLoan Modification Agreement, dated effective as of March 31, 1995; SeventhLoan Modification Agreement dated effective as of December 31, 1995; eachby and among the Borrower, the Original Lenders and the Agent;

 

WHEREAS, BOH, FHB and CPB acquired the interestsof BOA under the Original Loan Agreement, as amended, and the other “LoanDocuments” referred to therein;

 

WHEREAS, the Original Loan Agreement wasfurther amended by:  Amended and RestatedRevolving Credit and Term Loan Agreement dated December 4, 1996; letteragreement dated February 21, 1997; First Loan Modification Agreement datedDecember 31, 1997; Second Loan Modification Agreement dated March 17,1998; letter

 

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agreement dated November 13, 1998; Amended and Second RestatedRevolving Credit and Term Loan Agreement dated as of December 4, 1998;Loan Modification Agreement dated as of December 30, 1999; letteragreement dated February 9, 2000; Loan Modification Agreement dated June 30,2000; and Loan Modification Agreement effective as of December 11, 2000;Loan Modification effective as of June 30, 2001; Loan Modificationeffective as of September 30, 2001; each by and among Borrower, BOH, FHB,CPB and Agent and, in the case of said Loan Modification Agreement effective asof December 11, 2000 and June 30, 2001, KAPALUA LAND COMPANY, LTD., aHawaii corporation (“KLC”);

 

WHEREAS, PCA acquired interests in the CreditFacility;

 

WHEREAS, the Original Loan Agreement wasfurther amended by:  Amended and ThirdRestated Revolving Credit and Term Loan Agreement dated December 31,2001;  Loan Modification Agreement (December 2002)made as of December 31, 2002; Second Loan Modification Agreement (March 2003)dated as of March 21, 2003; Third Loan Modification Agreement dated as of August 11,2003; and Fourth Loan Modification Agreement dated as of December 31,2003, each by and among Borrower, Lenders, Agent and KLC; and by Lenders’Consent dated as of August 25, 2004, made by the Lenders;

 

WHEREAS, all references to the Original LoanAgreement shall hereinafter mean the Original Loan Agreement, as amended by thedocuments described in the foregoing Recitals;

 

WHEREAS, the Aggregate Loan Commitment (asdefined in the Original Loan Agreement) with respect to the Credit Facility is$15,000,000;

 

WHEREAS, the parties hereto wish to terminatethe provisions of the Original Loan Agreement relating to Term Loans and toincrease the Aggregate Loan Commitment with respect to the Credit Facility to$30,000,000;

 

WHEREAS, for their mutual convenience, theparties wish to restate the Original Loan Agreement to reflect their agreementsas of the date hereof with respect to the Credit Facility, subject to thesatisfaction of the conditions precedent set forth in Section 3.2 hereof,all as set forth in this Amendment and Restatement;

 

NOW, THEREFORE, in consideration of thepremises, the mutual covenants set forth herein and other good and valuableconsideration, the receipt and sufficiency of which are hereby acknowledged,the Borrower, the Lenders and the Agent hereby agree that effective on theEffective Date (as defined below), the terms and provisions of the OriginalLoan Agreement are amended and restated to read in their entirety as follows:

 

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**I.  Revolving Credit**

 

1.1                                 **In General.**

 

(a)                                  **Commitments.**  Subjectto the terms of the Loan Agreement, the Lenders hereby establish a creditfacility in favor of the Borrower (the “Credit Facility”) under which eachLender hereby severally agrees to extend credit to the Borrower, from time totime and at any time prior to the Expiry Date (the “Term”), by way of cashadvances and the issuance of standby letters of credit pursuant to Section 1.1(b).  Each extension of credit shall be in aprincipal amount equal to such Lender’s Individual Loan Commitment Percentageof the total extension of credit on any occasion; provided, however, that (1) theaggregate principal amount at any one time outstanding of all Revolving Loans,Swingline Loans and amounts available to be drawn under Letters of Credit shallnot exceed $30,000,000 (“the Aggregate Loan Commitment”), (2) no Lendershall be obligated to extend credit to the Borrower under the Credit Facilitywhich shall exceed, in the aggregate principal amount at any one timeoutstanding, such Lender’s Individual Loan Commitment, (3) each extensionof credit under the Credit Facility shall be made by the several Lendersratably, in a principal amount equal to such Lender’s Individual LoanCommitment Percentage of the total amount of credit to be extended on anyoccasion, (4) no Lender shall have any obligation or liability to theBorrower or any other Person as a result of the failure of another of theLenders to observe any of its obligations under the Loan Agreement, and (5) noLender (in its capacity as such) shall have any obligation or liability to theBorrower or any other Person as a result of the failure of the Agent to observeany of its obligations under the Loan Agreement or the Agency Agreement.

 

Duringthe Term the Borrower may obtain credit, repay without penalty or premium andobtain further credit under the Credit Facility, either the full amount of theAggregate Loan Commitment or any lesser sum, subject to the limitations setforth in Section 1.1(b).

 

(b)                                 **Drawings.**  TheBorrower may draw on the Credit Facility in the following manner:

 

(1)                                  Byobtaining a cash advance (a “Revolving Loan”), in an amount not less than$500,000 and in integral multiples of $100,000, which shall be a Base Rate Loanor a LIBOR Loan.

 

(2)                                  Byobtaining a loan from the Swingline Lender (a “Swingline Loan”) under the termsand conditions of Section 1.10, in an amount not less than $100,000 and inintegral multiples of $100,000, provided, however, that the maximum aggregateprincipal amount under all Swingline Loans (the “Swingline Outstandings”) shallnot exceed $2,000,000 at any one time. Revolving Loans and Swingline Loans are herein collectively called the “Loans”.

 

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(3)                                  Byobtaining the issuance of a nontransferable standby letter of credit (a “Letterof Credit”), with a maturity date not longer than one year after the issuancedate or the Expiry Date, whichever shall first occur; provided, however, thatthe aggregate amount available to be drawn under all pending Letters of Credit(the “Letter of Credit Liability”) shall not exceed $1,000,000 at any one time.

 

1.2                                 **Purpose.**  The proceedsof the Loans and the other extensions of credit under the Credit Facility shallbe used exclusively for general corporate purposes, including working capital.

 

1.3                                 **Security.**  The CreditFacility and the Loans and other extensions of credit shall be secured by lienson or security interests in the following collateral (“Collateral”), whichliens or security interests shall be of first priority unless otherwiseapproved by the Lenders:  the land andimprovements, situate at Kapalua, Maui, Hawaii, known as the Village GolfCourse, the Plantation Golf Course and the Bay Golf Course.  If the Lenders reasonably believe that the loanto value ratio with respect to the Collateral exceeds 65%, the Lenders mayrequire a reappraisal of the Collateral at the Borrower’s expense.  If the loan to value ratio exceeds 65%, theLenders shall be entitled to require additional security for the CreditFacility, reduce the Aggregate Loan Commitment, increase the interest ratesapplicable to the Loans, or pursue their remedies for an Event of Default underthis Agreement.

 

1.4                                 **Requests for Loans or Credit.**

 

(a)                                  **Notice of Loan/Conversion. **Subjectto the terms and conditions of this Agreement, the Borrower shall have theoption on any Business Day during the Term to obtain new Loans by delivering tothe Agent a written and completed “Notice of Loan/Conversion” in the form of **Exhibit A** attached hereto.  The Notice of Loan/Conversion must bereceived by the Agent (i) no later than noon (Hawaii Standard Time (“HST”))on the date two (2) Business Days prior to the proposed disbursement datein the case of a Base Rate Loan; (ii) no later than noon (HST) on the datethree (3) Business Days prior to the proposed disbursement date in thecase of a LIBOR Loan; or (iii) no later than 11 a. m. (HST) on theproposed disbursement date in the case of a Swingline Loan.

 

If the Borrower fails to timely notify the Agent of the Borrower’sselection of a new Interest Period prior to the expiration of any currentInterest Period, such LIBOR Loan will automatically be converted to a Base RateLoan upon expiration of the current Interest Period.

 

Unless otherwise directed in writing by the Borrower, all proceeds ofLoans shall be credited to the Borrower’s Deposit Account No. 61-058745,maintained with BOH.

 

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(b)                                 **Application for Letter of Credit**.  The Borrower shall request a Letter of Creditby completing BOH’s standard Standby Letter of Credit Application and Agreementand satisfying the requirements thereunder. BOH shall be the issuer of each Letter of Credit, but repayment of drawsunder the Letter of Credit shall be subject to the provisions of subsection 1.6(b)(2).  The current form of BOH’s standard StandbyLetter of Credit Application and Agreement is attached hereto as **Exhibit B**.

 

1.5                                 **Conversions of Base Rate Loans to LIBOR Loans.**  Subject to the terms and conditions in thisAgreement, the Borrower shall have the option on any Business Day (the “ConversionDate”) to convert all or a portion of the outstanding principal amount of aBase Rate Loan to a LIBOR Loan by giving the Agent a Notice of Loan/Conversionat the Payment Office no later than noon (Hawaii Standard Time) on the datethree (3) Business Days prior to the proposed Conversion Date; providedthat if an Event of Default is then in existence, the Borrower may not converta Base Rate Loan to a LIBOR Loan.  Althoughno repayment shall actually be required upon any conversion, the proceedsthereof shall, for bookkeeping purposes, be deemed to be applied directly torepay the outstanding principal amount of the Loans being converted.  If the Borrower fails to timely notify Agentof the Borrower’s selection of a new Interest Period prior to the expiration ofany current Interest Period for a LIBOR Loan, such LIBOR Loan willautomatically be converted to a Base Rate Loan upon expiration of the currentInterest Period.  A LIBOR Loan shall bein the minimum amount of $500,000 and in multiples of $100,000, with at mostfive (5) LIBOR Loans outstanding at any one time.

 

1.6                                 **Interest; Repayment.**

 

(a)                                  **Interest Rate.**

 

(1)                                  **Revolving Loans**.  TheBorrower agrees to pay interest on the outstanding principal balance of aRevolving Loan pursuant to the following interest rate options that theBorrower may select in accordance with the provisions of this Agreement:

 

(i)                                     TheBase Rate in effect from time to time; or

 

(ii)                                  LIBORplus the Applicable Margin.

 

The “Applicable Margin” shall be determinedbased on Borrower’s Funded Debt to Net Worth ratio as follows:

 

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| **Funded Debt/Net Worth**                         | ** ** | **Applicable Margin**  |
|---------------------------------------------------|------------|------------------------|
|                                              |       |                   |
| less than 0.25                                    |       | 1.50 percentage points |
|                                              |       |                   |
| equal to or greater than 0.25 but less than  0.50 |       | 1.75 percentage points |
|                                              |       |                   |
| equal to or greater than 0.50 but less than  0.75 |       | 2.00 percentage points |
|                                              |       |                   |
| equal to or greater than 0.75 but less than  1.00 |       | 2.25 percentage points |
|                                              |       |                   |
| equal to or greater than 1.00                     |       | 2.50 percentage points |

 

Any change in the Applicable Margin shalltake effect on the first day of the second fiscal quarter following the date asof which such Applicable Margin is determined. For example, the Applicable Margin effective on July 1, shall bebased on the Borrower’s Funded Debt to Net Worth ratio as of the fiscal quarterending March 31.

 

(2)                                  **Swingline Loans**.  TheBorrower agrees to pay interest on the outstanding principal balance of aSwingline Loan at the Base Rate in effect from time to time.

 

(3)                                  **Floating Interest Rates**. Any floating rate of interest will increase or decrease during the termof this Agreement if there is an increase or decrease in the rate to which thefloating rate is tied.  If the rate towhich the floating rate is tied is no longer available, the Agent will choose anew rate that is based on comparable information.

 

(4)                                  **Calculation of Interest**. Interest hereunder shall be computed, but not compounded, daily on thebasis of the rate of interest then in effect. A change in the Base Rate shall take effect on the date upon which achange in the Base Rate is announced and made effective by Bank of Hawaii, withor without notice to the Borrower.  Withrespect to any LIBOR Loan, interest will be calculated at a fixed rate for theapplicable interest Period.  Interest andfees hereunder shall be computed on the basis of the actual number of dayselapsed between payments and a 365-day year (or a 366-day year in leap years)in respect of any Base Rate Loan or a 360-day year in respect of any LIBORLoan.

 

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In no event shall the Borrower be obligatedto pay any amount under the Loan Agreement that exceeds the maximum amountallowable by law.  If any sum is collectedin excess of the applicable maximum amount allowable by law, the excesscollected shall, at the Agent’s discretion, be applied to reduce the principalbalance of the Loans or returned to the Borrower.

 

(b)                                 **Repayment.**

 

(1)                                  **Payment Schedule.** Borrower agrees to repay the Loans as follows:

 

(i)            TheBorrower agrees to make quarterly payments of all accrued interest on theoutstanding principal balance of each Base Rate Loan and each Swingline Loan onthe last day of each of March, June, September and December duringthe term of the Loan Agreement.

 

(ii)           TheBorrower agrees to pay interest on the unpaid principal amount of each LIBORLoan on the earlier of i) the last day of the Interest Period or ii) the lastday of each three-month interval occurring during the Interest Period.

 

(iii)          Onthe Expiry Date, the Borrower agrees to pay in full all principal and accruedinterest then outstanding under all Loans.

 

(2)                                  **Repayment of Letters of Credit.**  Any draw under a Letter of Credit must berepaid in full by the Borrower on the date such draw or payment is made.  In the event the Borrower shall fail to makesuch repayment, it shall automatically be made by a Base Rate Loan hereunderand the Borrower shall be deemed to have made a request for such a Base Rate Loanpursuant to Section 1.4 above.

 

(3)                                  **Currency, Place and Dates of Payments.**  No payment or prepayment of principal underany of the Notes shall be made without a concurrent payment or prepayment ofprincipal under the other Notes, and all principal amounts paid or prepaid onthe Notes shall be shared among the Lenders pro rata, in accordance with theirrespective Individual Loan Commitment Percentages.  Payments to be made under the Loan Agreementto the Lenders shall be made in United States money in immediately availablefunds at the Agent’s address stated below, or at such other place as the Agentshall have designated by written notice to the Borrower.  Any payment due on a day that is not aBusiness Day shall be made on the next succeeding

 

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Business Day andthe extension of time shall be included in the computation of interest.  Any payment received by the Agent after 11:00 a.m.shall not be credited until the next Business Day.

 

(4)                                  **Evidence of Making and Repayment of Loans.**  The Agent’s records evidencing the date ofdisbursement and principal amount of each Loan and the amounts of allrepayments of principal and payments of interest on each Loan shall constituteprima facie evidence of the making and repayment of such Loans and of thepayment of such interest.  However, theAgent’s making of erroneous notations in its records shall not affect theBorrower’s obligation to repay the outstanding balance of principal under aLoan, and accrued interest thereon, as provided in the Loan Agreement.

 

(5)                                  **Prepayments.**  TheBorrower may prepay any Base Rate Loan at any time without prepayment premiumsor fees, provided that any voluntary prepayment shall be in an amount not lessthan $250,000, and in integral multiples of $50,000.  The Borrower may also prepay any SwinglineLoan at any time without prepayment premiums or fees, provided that anyvoluntary prepayment shall be in an amount not less than $100,000, and inintegral multiples of $100,000.  Partialprepayments shall be applied against required payments of the most remotematurity, and will not extend the dates or change the amounts of subsequentinstallment payments.

 

(6)                                  **Application of Payments.** During the existence of an Event of Default, payments under the LoanAgreement may be applied by the Lenders to the indebtedness evidenced by theLoan Agreement in any manner the Majority of Interest of the Lenders deemsappropriate.  The priority of applicationelected by the Lenders on any one occasion shall not determine any suchelection in the future.  Provided that anEvent of Default shall not have occurred and be continuing, payments under theLoan Document shall be applied first to payment of sums, other than principalor interest, then payable by Borrower under the Loan Agreement, then to accruedinterest then due and payable and then to principal.

 

1.7                                 **Evidence of Indebtedness; Loan Documents.**  The Loans and Credit Facility are or are tobe evidenced and/or secured by the Loan Agreement, Amended and Restated MasterNotes, each in the form attached hereto as **Exhibit C**,payable to each Lender in the amount of such Lender’s Individual LoanCommitment (collectively the “Notes”), the Mortgage, the Additional SecurityMortgage, the Environmental Indemnification Agreement and all such otherdocuments as the Lenders and Agent may

 

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requirefrom time to time to effectuate the intent of the Loan Agreement, together withall renewals, extensions and modifications thereto (collectively the “LoanDocuments”).

 

1.8                                 **The Borrower’s Obligations.** The Borrower’s obligations to pay, observe and perform all indebtedness,liabilities, covenants and other obligations on the part of the Borrower to bepaid, observed and performed under the Loan Agreement and the remainder of theLoan Documents are herein collectively called the “Obligations”.

 

1.9                                 **Fees.**

 

(a)                                  **Commitment Fee.**  TheBorrower shall pay to the Agent for pro rata distribution to each Lender, acommitment fee on the average daily unutilized portion of the Aggregate LoanCommitment, computed at the rate of one-quarter of one percent (0.25%) perannum computed on the basis of the actual number of days elapsed over a year of365 or 366 days (as the actual case may be) and payable quarterly in arrears,as of the last day of each March, June, September and December duringthe Term, and on the Expiry Date.

 

(b)                                 **Commitment Increase Fee.** The Borrower shall pay to the Agent, on demand, for distribution to theLenders the following non-refundable fee: $30,000, of which $10,800 shall be payable to BOH, $7,200 shall bepayable to FHB, $4,800 shall be payable to CPB and $7,200 shall be payable toPCA.

 

(c)                                  **Agent’s Fee.**  For andin respect of the services of the Agent to be rendered with respect to theCredit Facility under the Loan Agreement and under the Agency Agreement, theBorrower agrees to pay to the Agent the fee established by separate agreementbetween Agent and Borrower.

 

(d)                                 **Letter of Credit Fee.** The commitment fee for the issuance of a Letter of Credit (the “L/C Fee”)shall be an amount equal to the Applicable Margin at the time of the issuanceof the Letter of Credit, multiplied by the aggregate amount available fordrawing under that Letter of Credit.  TheL/C Fee shall be paid quarterly in advance to the Agent, commencing on theissuance date, for pro rata distribution to the Lenders.  The L/C Fee shall be adjusted upon anyrenewal date to reflect the then Applicable Margin.  Other standard administrative fees for theissuance of the Letter of Credit shall be paid to BOH.

 

1.10                           **Swingline Loans.**

 

(a)                                  TheSwingline Lender shall from time to time during the Term make Swingline Loansto the Borrower in such amounts as the Borrower may request, provided thatafter giving effect to each such Swingline Loan, (A) SwinglineOutstandings shall not exceed $2,000,000, and (B) the aggregateoutstanding principal amount of all Revolving Loans and Swingline Loans plusthe Letter of Credit Liability shall not exceed

 

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theAggregate Loan Commitment.  The Borrowermay borrow, repay and reborrow Swingline Loans, provided that the principalamount of each Swingline Loan is an integral multiple of $100,000, eachprincipal repayment of a Swingline Loan shall be in an amount which is anintegral multiple of $100,000, and Swingline Outstandings shall not exceed$2,000,000 at any one time.

 

(b)                                 TheBorrower shall request a Swingline Loan in accordance with the provisions of Section 1.4(a) above.  Promptly after receipt of such request for aSwingline Loan, the Agent shall provide telephonic verification to theSwingline Lender that the requested Swingline Loan is in conformity with this Section 1.10.

 

(c)                                  ASwingline Loan shall bear interest at the Base Rate in effect from time to timeand may not be converted to a LIBOR Loan. The interest payable on the Swingline Loans shall be solely for theaccount of the Swingline Lender unless and until the Lenders fund their participationstherein pursuant to subsection (d) of this Section 1.10.

 

(d)                                 Uponthe making of a Swingline Loan, each Lender shall be deemed to have purchasedfrom the Swingline Lender a participation therein in an amount equal to thatLender’s Individual Loan Commitment Percentage times the amount of theSwingline Loan.  Upon demand made by theSwingline Lender, each Lender shall, according to such percentage, promptlyprovide to the Swingline Lender its purchase price therefor in an amount equalto its participation therein.  Theobligation of each Lender to so provide its purchase price to the SwinglineLender shall be absolute and unconditional and shall not be affected by theoccurrence of a default or an Event of Default. Each Lender that has provided to the Swingline Lender the purchase pricedue for its participation in the Swingline Loans shall thereupon acquire a prorata participation, to the extent of such payment in the claim of the SwinglineLender against the Borrower for principal and interest and shall share, inaccordance with that pro rata participation in any principal payment made bythe Borrower with respect to such claim and in any interest payment made by theBorrower (but only with respect to periods subsequent to the date such Lenderpaid the Swingline Lender its purchase price) with respect to such claim.

 

(e)                                  Inthe event that the Swingline Outstandings are equal to or greater than $500,000for five (5) consecutive Business Days, then on the next Business Day(unless the Borrower has made other arrangements acceptable to the SwinglineLender to reduce the Swingline Outstandings below $500,000), the Borrower shallrequest a Revolving Loan in an amount sufficient to reduce the SwinglineOutstandings below $500,000, which request shall meet all requirements for aRevolving Loan under this Loan Agreement. The Agent shall automatically provide the responsive funds from eachLender to the Swingline Lender, which the Swingline Lender shall then apply tothe Swingline Outstandings.  In the eventthat the Borrower fails to request a Revolving Loan as specified in Section 1.4,the Agent shall, without being required to notify or obtain the consent of theBorrower, cause funding to be made by the Lenders under their Individual

 

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LoanCommitments in amounts which are sufficient to reduce the SwinglineOutstandings as required above, and the Borrower shall be deemed to haverequested a Base Rate Loan.  The proceedsof such funding shall be paid directly to the Swingline Lender for applicationto the Swingline Outstandings.

 

**II.  FUNDING LOSS AND YIELD PROTECTION PROVISIONS**

 

2.1                                 **Prepayment; Repayment.** The Borrower may not prepay any LIBOR Loan in full or in part at anytime.  The Borrower is responsible formanaging the allocation of borrowings among the Types of Loans to avoidprepaying a LIBOR Loan to make a mandatory repayment of principal.  However, the Borrower may repay a LIBOR Loan,in whole or in part, on the last day of the applicable Interest Period, withoutprepayment premiums or fees, provided that the repayment shall be in an amountnot less than $250,000, and an integral multiple of $50,000.  If repayment of a LIBOR Loan occurs on anyday other than the last day of the applicable Interest Period, the Borrowershall be liable for the amounts set forth in Section 2.6 below.

 

2.2                                 **Change in Legality; Additional Costs to Lenders.**  If after the date of the Loan Agreement anychange in applicable law or regulation or in the interpretation oradministration thereof by any governmental authority charged with theinterpretation or administration thereof (whether or not having the force oflaw) shall, with respect to the Lenders, or any of them, (a) change thebasis of taxation of payments to the Lenders, or any of them, or the principal orinterest on the Loans under the Loan Agreement, (b) impose, modify or holdapplicable any fees, reserve requirements, special deposits or any costs to theLenders, or any of them, in respect of the Loans, or (c) cause a reductionin the amount of any sum received or receivable under the Loan Agreement; then,and in any such event, the Borrower shall pay to the Agent, on demand, fordistribution to such Lender(s), such additional amounts as will compensate suchLender(s) on an after-tax basis for such cost or reduction incurred; provided,however, that the Borrower shall not be obligated directly or indirectly to payfor federal or state income taxes measured or levied generally upon the netincome of any Lender.  The Lenders mayuse any reasonable method in calculating their additional costs under thisSection, which calculation shall be conclusive absent manifest error.

 

2.3                                 **Capital Requirements.** If the Lenders, or any of them, shall determine that compliance with anylaw, regulation or any guideline or request from any central bank or othergovernmental authority (whether or not having the force of law) would result inan increase in the amount of capital required or expected to be maintained bysuch Lender(s) or any corporation controlling such Lender(s), and that suchincrease is based upon the existence of such Lender’s commitment hereunder andother commitments of this type, then, and in any such event, the Borrower shallpay the Agent as an additional fee, from time to time on demand, fordistribution to such Lender(s), such amount(s) as such Lender(s) shalldetermine to be the amount(s) that will compensate it or them or such othercorporation for any reduction in the rate of return on

 

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suchcapital.  A certificate as to the amountof compensation, submitted to the Borrower by the affected Lender(s), shall beconclusive and binding for all purposes absent manifest error.

 

2.4                                 **Lack of Availability or Profitability of Eurodollar Deposits;Illegality.**  In the event thatany Lender shall have reasonably determined (which determination shall be finaland conclusive and binding upon all parties) that:

 

(a)                                  onany date for determining LIBOR for any Interest Period, by reason of any changeafter the date hereof affecting the interbank market or affecting the positionof such Lender in such market, adequate and fair means do not exist forascertaining the applicable interest rate by reference to LIBOR; or

 

(b)                                 atany time, by reason of (i) any change after the date of the Loan Agreementin any applicable law or governmental rule, regulation or order (or anyinterpretation thereof by any government authority or otherwise (provided that,in the case of an interpretation not by a governmental authority, such interpretationshall be made in good faith and shall have a reasonable basis) and includingthe introduction of any new law or governmental rule, regulation or order), tothe extent not provided for in clause (c) below, or (ii) in the caseof LIBOR Loans, other circumstances affecting such Lender or the interbankmarket or the position of such Lender in such market, LIBOR shall not representthe effective pricing to such Lender for funding or maintaining the affectedLIBOR Loan; or

 

(c)                                  atany time, by reason of the requirements of Regulation D or other officialreserve requirements, LIBOR shall not represent the effective pricing to suchLender for funding or maintaining the affected LIBOR Loan; or

 

(d)                                 atany time, the making or continuance of any LIBOR Loan has become unlawful orcompliance by such Lender in good faith with any law, governmental rule,regulation, guideline or order, or would cause severe hardship to such Lenderas a result of a contingency occurring after the date hereof which materiallyand adversely affects the interbank market;

 

then, and in any such event, such Lender shall on such date ofdetermination give notice (by telephone confirmed in writing) to the Agent andthe Borrower of such determination. Thereafter, in the case of clause (a), (b) or (c) above, (andwithout affecting Borrower’s obligations to pay interest on the Loans at therates set forth in Section 1.6 hereof) Borrower shall pay to the Agent forpayment to such Lender, upon written demand therefor, such additional amountsdeemed in good faith by such Lender to be material (in the form of an increasedrate of, or a different method of calculating, interest or otherwise as theAgent or such Lender in its discretion shall determine) as shall be required tocause such Lender to receive interest with respect to its affected LIBOR Loanat a rate per annum equal to the sum of (i) the applicable rate per annumdetermined in accordance

 

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with Section 1.6, hereinabove, plus (ii) the effectivepricing to such Lender to make or maintain such LIBOR Loan, and in the case ofclause (d), Borrower shall within five (5) Business Days prepay all LIBORLoans so affected, together with all accrued interest thereon but withoutpenalty for any costs, net losses or overhead pursuant to Section 2.6,subject to the provisions of Section 2.5 hereinbelow.  A certificate as to additional amounts owedto any Lender, shown in reasonable detail the basis for the calculationthereof, submitted to Borrower and the Agent by the Lender shall, absentmanifest error, be final, conclusive and binding upon all of the partieshereto.

 

2.5                                 **Borrower’s Right to Convert Loans.**  At any time that any of its Loans areaffected by the circumstances described in Section 2.4, the Borrower may (a) ifa LIBOR Loan has been requested but not implemented, cancel such Loan orconversion by giving the Agent notice thereof by telephone (confirmed inwriting) pursuant to Section 2.4 or (b) if the affected LIBOR Loan isthen outstanding, upon at least three (3) Business Days’ written notice tothe Agent, require the Lenders to convert such LIBOR Loan into a Base RateLoan.

 

2.6                                 **Funding Loss Indemnification.**  If the Borrower shall (a) pay or convertany LIBOR Loan on any day other than the last day of the applicable InterestPeriod (whether on account of a scheduled payment, an optional prepayment orconversion, a mandatory prepayment or conversion, a payment upon accelerationor otherwise); or (b) fail to borrow any LIBOR Loan after giving duenotice thereof to the Agent pursuant to Section 1.4, or (c) fail toconvert any Base Rate Loan into a LIBOR Loan after giving due notice thereof tothe Agent pursuant to Section 1.5, the Borrower shall reimburse theLenders and hold the Lenders harmless for all costs, net losses oradministrative overhead incurred as a result of such repayment, prepayment orfailure.  The Lenders may use anyreasonable method in calculating their loss under this Section, which calculationshall be binding and conclusive on the Borrower absent manifest error.

 

**III.  CONDITIONS PRECEDENT**

 

3.1                                 **Documents Required.** The Lenders shall have no obligations to make disbursements of Loans orextend credit pursuant to the provisions of the Loan Agreement, unless anduntil the Lenders (through the Agent) shall have received such executedoriginals or certified copies of each of the following instruments as theLenders (through the Agent) may have reasonably requested, in each case in formand substance acceptable to the Lenders and their respective legal counsel:

 

(a)                                  TheLoan Agreement, the Mortgage, the Additional Security Mortgage, UCC FinancingStatements describing the security interests created by the Mortgage andAdditional Security Mortgage, and the Environmental Indemnity Agreement;

 

(b)                                 TheAgency Agreement;

 

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(c)                                  Acertificate signed by the Borrower’s corporate secretary, certifying to theLenders and Agent:  (1) as to theadoption of Resolutions of the Borrower’s Board of Directors authorizing theexecution, delivery and performance of the Loan Documents and all otherdocuments to be delivered by the Borrower pursuant to the Loan Agreement; (2) asto the incumbency and signatures of the officers of the Borrower signing theLoan Documents, and each other document to be delivered by the Borrowerpursuant to this Loan Agreement; and (3) that the Articles ofIncorporation and By-Laws of the Borrower, true copies of which have beenattached to such certification, have not been amended since the date of suchdelivery;

 

(d)                                 Acertificate of the Director of Commerce and Consumer Affairs of the State ofHawaii, evidencing the good standing of the Borrower in the State of Hawaii;

 

(e)                                  Awritten opinion of independent counsel to the Borrower, addressed to theLenders, stating that:

 

(1)           TheBorrower and the Subsidiaries are corporations duly organized, validly existingand in good standing under the Laws of the State of Hawaii and are dulyqualified and in good standing as foreign corporations in all jurisdictionswherein the nature of their businesses or the properties owned by them makesuch qualification necessary;

 

(2)           TheBorrower has the corporate power and authority to execute and deliver the LoanDocuments, to borrow money hereunder, and to perform the Obligations;

 

(3)           Allcorporate action required to be taken by the Borrower to enter into thetransactions contemplated by the Loan Agreement has been duly taken, and allconsents and approvals of all Persons, necessary to the validity of the LoanDocuments, and each other document to be delivered by the Borrower hereunderhave been duly obtained, and the Loan Documents and such other documents do notconflict with any provision of the Articles of Incorporation or By-Laws of theBorrower, or of any applicable Laws or any other agreement binding upon theBorrower or its property of which such counsel has knowledge and the Borrower’sexecution, delivery and performance of the Loan Documents do not require theconsent or approval of any governmental body or regulatory authority;

 

(4)           TheLoan Documents and all other documents required to be delivered by the Borrowerpursuant to the provisions of the Loan Agreement have been duly executed by,and each is a valid and binding obligation of, the Borrower, enforceable inaccordance with its terms;

 

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(5)                                  KapaluaLand Company, Ltd. (“KLC”) has the corporate power and authority to execute anddeliver the Additional Security Mortgage, all corporate action required to betaken by KLC in respect of its execution and delivery of the AdditionalSecurity Mortgage has been duly taken, and the Additional Security Mortgage hasbeen duly executed and delivered by KLC and is a valid and binding obligationof KLC, enforceable in accordance with its terms; and

 

(f)                                    Evidencethat the Mortgage and Additional Security Mortgage have been recorded in theBureau of Conveyances of the State of Hawaii (and, if appropriate, filed in theoffice of the Assistant Registrar of the Land Court of Hawaii), that therelated UCC Financing Statements have been filed in said Bureau, and that theLenders hold a first mortgage lien on and first security interest in allproperties described in and purported to be encumbered by the Mortgage andAdditional Security Mortgage, subject to no liens or encumbrances other thanthose noted in (or authorized by) the Mortgage.

 

In addition to the foregoing conditionsprecedent, the following conditions shall have been satisfied:

 

(g)                                 Atthe time of the initial disbursement of Loan proceeds under the Loan Agreementand of each subsequent disbursement of Loan proceeds under the Loan Agreement:

 

(1)           NoEvent of Default under the Loan Agreement shall have occurred and becontinuing, and no event shall have occurred and be continuing that, with thegiving of notice or passage of time, or both, would become such an Event ofDefault;

 

(2)           TheAgent shall have received a request for such disbursement pursuant to Section 1.4of the Loan Agreement;

 

(3)           Therepresentations and warranties contained in Article IV of the LoanAgreement shall be true on and as of the date of such disbursement with thesame force and effect as if made on and as of such date;

 

(4)           TheLenders shall have remitted to the Agent the Lenders, respective pro ratashares of the disbursement then due; and

 

(5)           Alllegal matters incidental to such disbursement shall be satisfactory to theAgent’s counsel.

 

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The parties hereto acknowledge that the foregoing conditions precedentset forth in this Section 3.1 have heretofore been satisfied with respectto the initial disbursement of Loan proceeds.

 

3.2                                 **Conditions Precedent to Effective Date of Amendment and Restatement.**  Notwithstanding anything herein to thecontrary, the effectiveness of the amendment and restatement of the OriginalLoan Agreement in accordance with the terms of this Amendment and Restatement,is subject to the satisfaction of all of the following conditions, and on thedate of the satisfaction of such conditions (the “Effective Date”), theOriginal Loan Agreement shall be deemed amended and restated as set forthherein:

 

(a)                                  **Documents Required.** The Agent shall have received, in each case in form and substancesatisfactory to the Agent and the Lenders, such fully executed originals orcertified copies as the Agent and the Lenders may have requested of each of thefollowing, in each case as amended through the Effective Date:

 

(1)           **Loan Documents.**  ThisAmendment and Restatement and the Notes, each executed by the Borrower andcompleted in conformity with the provisions of this Amendment and Restatement,the Confirmations of Mortgage and the Agency Agreement;

 

(2)           **Consents and Authority.** Evidence that the Borrower has obtained all necessary and appropriateauthority, approvals and consents to execute, deliver and perform the terms of (i) thisAmendment and Restatement, the Notes, and the Confirmations of Mortgage(collectively called the “Amending Documents”) and (ii) the Loan Documents,as amended and restated by the Amending Documents, including, withoutlimitation, certified resolutions of the Borrower as to such authority;

 

(3)           **Opinion of Counsel.**  Awritten opinion of independent counsel to the Borrower, addressed to theLenders, stating that:

 

(i)            TheBorrower, KLC and Maui Pineapple Company, Ltd. are corporations duly organized,validly existing and in good standing under the Laws of the State of Hawaii andare duly qualified and in good standing as foreign corporations in all jurisdictionswherein the nature of their businesses or the properties owned by them makesuch qualification necessary;

 

(ii)           TheBorrower has the corporate power and authority to execute and deliver the LoanDocuments, to borrow money hereunder, and to perform the Obligations;

 

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(iii)          Allcorporate action required to be taken by the Borrower to enter into thetransactions contemplated by the Loan Agreement has been duly taken, and allconsents and approvals of all Persons, necessary to the validity of the LoanDocuments, and each other document to be delivered by the Borrower hereunderhave been duly obtained, and the Loan Documents and such other documents do notconflict with any provision of the Articles of Incorporation or By-Laws of theBorrower, or of any applicable Laws or any other agreement binding upon theBorrower or its property of which such counsel has knowledge and the Borrower’sexecution, delivery and performance of the Loan Documents do not require theconsent or approval of any governmental body or regulatory authority;

 

(iv)          TheLoan Documents and all other documents required to be delivered by the Borrowerpursuant to the provisions of the Loan Agreement have been duly executed by,and each is a valid and binding obligation of, the Borrower, enforceable inaccordance with its terms;

 

(v)           KLChas the corporate power and authority to execute and deliver the AdditionalSecurity Mortgage and the Confirmation of Mortgage to which KLC is a party, allcorporate action required to be taken by KLC in respect of its execution anddelivery of the Additional Security Mortgage has been duly taken and suchConfirmation of Mortgage, and the Additional Security Mortgage and suchConfirmation of Mortgage have been duly executed and delivered by KLC and is avalid and binding obligation of KLC, enforceable in accordance with theirterms;

 

(4)           **Title Insurance.**  AnALTA Form Lender’s Title Insurance Policy for not less than $30,000,000,assuring to the Lenders the validity and agreed-upon priority of the Mortgageand the Additional Security Mortgage. Such Title Insurance Policy may be subject to an exception for surveymatters;

 

(5)           **Fair Market Valuation Report**.  An internally prepared summary valuation ofthe real estate assets owned by the Borrower and its Subsidiaries,**prepared in a format and with a methodology acceptable tothe Lenders, including a breakdown of the value by real estate classificationfor those assets (the “Fair Market Valuation Report”) as of the fiscal yearended December 31, 2004; and

 

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(6)                                  **Tax Clearance Certificate**. A tax clearance certificate issued by the Department of Taxation of theState of Hawaii for each of the Borrower and KLC.

 

(b)                                 **Certain other Events.** On the Effective Date:

 

(1)                                  Noevent shall have occurred and be continuing that (i) constitutes an Eventof Default, or (ii) with the giving of notice or passage of time, or both,would constitute such an Event of Default.

 

(2)                                  Therepresentations and warranties contained in Article IV of the LoanAgreement shall be true on and as of the Effective Date with the same force andeffect as if made on the Effective Date, other than as previously disclosed tothe Agent with respect to the representations and warranties set forth inSections 4.6 and 4.9 hereof.

 

(3)                                  Nomaterial adverse change shall have occurred in the financial condition of theBorrower since the date of the most recent of the Borrower’s FinancialStatements submitted to the Agent.

 

(4)                                  Alllegal matters incidental to the closing shall be satisfactory to legal counselfor the Agent and each Lender.

 

(c)                                  **Interest and Other Charges.** On the Effective Date, the Borrower shall have paid to the Agent (1) thefees referred to in Sections 1.9(b) hereof, and (2) all sums ofaccrued interest and other fees and charges then outstanding under the LoanDocuments.

 

On the Effective Date, subject to the satisfaction of the foregoingconditions, the Original Loan Agreement shall be deemed amended and restated inaccordance with the provisions of this Amendment and Restatement, with theforce and effect below in accordance with Article X.

 

**IV.  Representations and Warranties**

 

To induce the Lenders to enter into thisAmendment and Restatement, the Borrower represents and warrants to the Lendersas follows, which representations and warranties shall survive the execution ofthis Amendment and Restatement and continue so long as the Borrower is indebtedto the Bank under the Loan Documents, and until payment in full of the CreditFacility and the extensions of credit thereunder.

 

4.1                                 **Organization.**  TheBorrower and the Subsidiaries are corporations duly organized, validly existingand in good standing under the Laws of the State of Hawaii; the Borrower andthe Subsidiaries have the lawful corporate power and adequate

 

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authority,rights and franchises to own or lease their respective properties and to engagein the businesses they each conduct, and each is duly qualified and in goodstanding as a foreign corporation in each jurisdiction, if any, wherein thenature of the business transacted by it or property owned by it makes suchqualification necessary.

 

4.2                                 **No Breach.**  Theexecution and performance of the Loan Documents will not immediately, or withthe passage of time or the giving of notice, or both:

 

(a)                                  Violatethe Articles of Incorporation or By-Laws of the Borrower, or violate any Lawsor breach or result in a default under any contract, agreement, or instrumentto which the Borrower or any Subsidiary is a party or by which the Borrower orany Subsidiary or its property is bound, or require the consent or approval ofany governmental office or official; or

 

(b)                                 Resultin the creation (or an obligation to create) or imposition of any securityinterest in, or lien or encumbrance on, any of the assets of the Borrower orany Subsidiary, other than the liens or security interests intended to becreated by the Mortgage and by the Additional Security Mortgage.

 

4.3                                 **Authorization.**  TheBorrower has the corporate power and authority to execute and deliver the LoanDocument and to incur and perform the obligations, and has taken all corporateaction necessary to authorize the execution, delivery, and performance of theLoan Documents.

 

4.4                                 **Regulatory Approval.** The Borrower’s execution, delivery and performance of the Loan Documentsdo not require the consent or approval of any governmental body or otherregulatory authority.

 

4.5                                 **Enforceability.**  TheLoan Agreement is, and the remainder of the Loan Documents when executed anddelivered will be, the legal, valid and binding obligations of the Borrower,and enforceable in accordance with their respective terms.

 

4.6                                 **Financial Statements.** All Financial Statements heretofore furnished by the Borrower to theLenders, including any schedules and notes pertaining thereto, were prepared inaccordance with generally accepted accounting principles consistently applied (“GAAP”),and fully and fairly presented the financial condition of the Borrower and itsSubsidiaries at the dates thereof and the results of operations for the periodscovered thereby, and as of the date of this Amendment and Restatement therehave been no material adverse changes in the consolidated financial conditionor business of the Borrower and its Subsidiaries from the date of the mostrecent Financial Statements furnished to the Lenders, except as disclosed byBorrower to Agent in writing.

 

4.7                                 **Taxes.**  Except asotherwise permitted by the Loan Agreement, the Borrower and its Subsidiarieshave filed all federal, state and local tax returns and other

 

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reportsthey were required by Laws to have filed prior to the date of this Amendmentand Restatement and which are material to the conduct of their respectivebusinesses, have paid or caused to be paid all taxes, assessments and othergovernmental charges that were due and payable prior to the date of thisAmendment and Restatement, and have made adequate provision for the payment ofsuch taxes, assessments or other charges accruing but not yet payable; and theBorrower has no knowledge of any deficiency or additional assessment in amaterially important amount in connection with any taxes, assessments orcharges not provided for on its books.

 

4.8                                 **Compliance with Law.** Except to the extent that the failure to comply would not materiallyinterfere with the conduct of the business of the Borrower or any Subsidiary orhave a materially adverse effect on the financial condition of the Borrower orany Subsidiary, the Borrower and its Subsidiaries have complied with allapplicable Laws in respect of:  (1) restrictions,specifications, or other requirements pertaining to products that the Borroweror any Subsidiary grows, manufactures or sells or to the services eachperforms; (2) the conduct of their respective businesses; and (3) theuse, maintenance, and operation of the real and personal properties owned orleased by them in the conduct of their respective businesses.

 

4.9                                 **Hazardous Materials.** There are no chemical substances, pollutants, contaminants or hazardousor toxic substances, materials or wastes (collectively, “hazardous materials”)at any premises owned, leased, operated, controlled or used by the Borrower orany of the Subsidiaries where such could reasonably be expected to have amaterially adverse effect on the operations or financial condition of theBorrower and the Subsidiaries or the Borrower’s ability to repay the Loans, andthe Borrower and the Subsidiaries do not manufacture, process, distribute, use,treat, store, dispose of, transport or handle hazardous materials in such amanner as to create expectations of such a materially adverse effect on theoperations or financial condition of the Borrower and the Subsidiaries or theBorrower’s ability to repay the Loans.

 

4.10                           **Subsidiaries.**  TheBorrower has no Subsidiaries other than those listed in **Exhibit D**,attached hereto.

 

4.11                           **Litigation.**  Nolitigation or other proceeding is pending or threatened against the Borrower orany of its Subsidiaries or any of their respective properties which ifdetermined adversely to the Borrower or any such Subsidiary, would have amaterially adverse effect on the Collateral or on the consolidated financial conditionor business prospects of the Borrower and its Subsidiaries, except as disclosedby Borrower to Agent in writing.

 

4.12                           **Margin Stock.**  Neitherthe execution of the Loan Agreement nor the Borrower’s use of proceeds of theLoans will constitute a violation of any of Regulations G, T and U of the Boardof Governors of the Federal Reserve System or any interpretations thereof orrulings thereunder.

 

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4.13                           **Ownership of Assets.** The Borrower and its Subsidiaries have good and marketable title to allof their respective assets, subject only to such exceptions or encumbrances asdo not materially adversely affect either the consolidated financial conditionsof the Borrower and its Subsidiaries as currently reflected in the FinancialStatements or the conduct of the businesses of the Borrower and itsSubsidiaries.

 

4.14                           **ERISA.**  All DefinedBenefit Pension Plans, as defined in the Employee Retirement Income SecurityAct of 1974, as amended (“ERISA”), of the Borrower and each Subsidiary meet theminimum funding standards of ERISA, and no Reportable Event or ProhibitedTransaction, as defined in ERISA, has occurred in respect of any such Plan.

 

4.15                           **Statements and Omissions.** No representation or warranty by the Borrower contained in the LoanAgreement or in any certificate or other document furnished by the Borrowerpursuant to the Loan Agreement contains any untrue statement of material factor omits to state a material fact necessary to make such representation orwarranty not misleading in light of the circumstances under which it was made.

 

4.16                           **Other Federal Regulations.** Neither the Borrower nor any Subsidiary is subject to provisions of theInvestment Company Act of 1940, provisions of the Public Utility HoldingCompany Act of 1935, provisions of the Interstate Commerce Act or provisions ofany other statute or regulation which restrict the execution or performance ofthis Loan Agreement or the Notes by the Borrower.

 

**V.  Affirmative Covenants**

 

For so long as the Aggregate Loan Commitmentor any of the Obligations remains outstanding, the Borrower will, unlessotherwise permitted by the Bank in writing:

 

5.1                                 **Payments.**  Punctuallypay when due all sums which may be due under the Loan Documents.

 

5.2                                 **Accounting Records.** Maintain accounting records and books for Borrower and the Subsidiaries,in accordance with GAAP, provide the Agent with access to such books andaccounting records at the Agent’s request during the Borrower’s normal businesshours and furnish to the Lenders (through the Agent) any information regardingthe business affairs and financial condition of Borrower and the Subsidiarieswithin a reasonable time after written request therefor.

 

5.3                                 **Financial Reporting.** Furnish the Lenders, through the Agent, with financial reports, inreasonable detail and form approved by the Agent, as follows:

 

(a)                                  Within60 days after the close of each quarterly accounting period in each fiscalyear:  (i) a consolidated statementof Net Worth and a consolidated statement of cash flow of the Borrower and theSubsidiaries for such quarterly period; (ii) a

 

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consolidatedincome statement of the Borrower and the Subsidiaries for such quarterlyperiod; (iii) a consolidated balance sheet of the Borrower and theSubsidiaries as of the end of such quarterly period; (iv) summaryschedules of income and cash flow for the Borrower’s resort division, pineappledivision, development division and any other existing or newly createddivisions; and (v) a consolidated statement of change in equity for theBorrower and the Subsidiaries for such quarterly period;

 

(b)                                 Within90 days after the close of each fiscal year: (i) a consolidated statement of Net Worth and**aconsolidated statement of cash flow of the Borrower and the Subsidiaries forsuch fiscal year; (ii) a consolidated income statement of the Borrower andthe Subsidiaries for such fiscal year; (iii) a consolidated balance sheetof the Borrower and the Subsidiaries as of the end of such fiscal year; (iv) aconsolidated statement of change in equity for the Borrower and theSubsidiaries for such fiscal year (all of the aforementioned financialstatements to be audited and certified to without qualification by independentcertified public accountants selected by the Borrower); (iv) summaryschedules of income and cash flow for the Borrower’s resort division, pineappledivision, development division and any other existing or newly createddivisions; and (v) a Fair Market Valuation Report as of the end of suchfiscal year; all of the foregoing including all supporting schedules andcomments;

 

(c)                                  ByNovember 30 of each year, copies of the Borrower’s (i) three yearconsolidated and consolidating operating forecast of revenue, income and cashflow for the Borrower’s resort division, pineapple division, developmentdivision and any other existing or newly created divisions, and (ii) threeyear proposed Capital Expenditures budget for each such division;

 

(d)                                 Promptlyafter the sending or making available or filing of the same, copies of allreports, proxy statements and financial statements that the Borrower sends ormakes available to its stockholders and all registration statements and reportsthat the Borrower files with the Securities and Exchange Commission or anysuccessor Person;

 

(e)                                  Withinten (10) days after approval by the Borrower’s board of directors, copiesof any strategic plan or update to a strategic plan; and

 

(f)                                    Fromtime to time such other information as the Bank may reasonably request.

 

Thefinancial statements required pursuant to clauses (a) and (b) shallbe accompanied by a compliance certificate from Borrower’s chief financialofficer, in the form attached as **Schedule 5.3**certifying (i) the financial ratios and other requirements referred to in Section 5.10,including a summary of changes made to the adjusted value on the Fair MarketValuation Report since the last reporting period, (ii) the representationsand warranties set forth in Article IV as being true and correct on and asof such date, and (iii) that no Event of Default has occurred or iscontinuing.

 

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5.4                                 **Existence.**  Preserveand maintain the legal existence of Borrower and the subsidiaries, and timelyfile all necessary and appropriate documents and exhibits and pay allappropriate fees and charges in connection therewith; provided, however, thatthe Borrower shall have the right to dissolve or liquidate such of itsSubsidiaries as its management may determine to dissolve or liquidate in theexercise of sound business judgment.

 

5.5                                 **Observance of Laws.** Conduct the business activities of Borrower and the Subsidiaries in anorderly, efficient and regular manner and in compliance with all requirementsof all applicable state, federal and local laws, rules and regulations.

 

5.6                                 **Insurance.**  Maintain,or cause to be maintained, commercial general liability insurance andcommercial property insurance on all assets owned or leased by Borrower, all insuch form and amounts as are consistent with industry practices.  The Borrower and its Subsidiaries may procureany such insurance from any insurance company or companies authorized to dobusiness in Hawaii.

 

5.7                                 **Facilities.**  Keep allof the Borrower’s and the Subsidiaries’ property and business premises in agood state of repair and condition, make all necessary repairs, renewals andreplacements thereto from time to time so that such property and businesspremises shall be fully and efficiently preserved and maintained, keep suchproperty and business premises free and clear of all liens, charges orencumbrances except those consented to by the Agent in writing and permit theLender’s authorized representatives to make reasonable inspections of theBorrower’s and the Subsidiaries’ property and business premises.

 

5.8                                 **Taxes and Other Liabilities.** Pay or cause to be paid when due, all taxes, assessments and charges orlevies imposed upon Borrower or the Subsidiaries or on any of their property orwhich any of them is required to withhold and pay over, except where contestedin good faith by appropriate proceedings with adequate reserves therefor havingbeen set aside on their books, and the Borrower will pay all governmentalcharges or taxes (except income, franchise or similar taxes) at any timepayable or ruled to be payable in respect of the existence, execution ordelivery of the Loan Agreement and the Notes by reason of any existing orhereafter enacted federal or state statute.

 

5.9                                 **Notice to the Bank.** Promptly give notice to the Agent, in reasonable detail, of (a) theoccurrence of any Event of Default or of any fact, condition or event that onlywith the giving of notice or passage of time, or both, could become such anEvent of Default, (b) any change in the name or organizational structureof the Borrower, (c) any uninsured loss through fire, theft, liability orproperty damage exceeding $500,000, (d) any pending or threatenedlitigation affecting the Borrower or any of the Collateral involving an amountexceeding $1,000,000, (e) any event which could have a material adverseeffect on the ability of the Borrower to continue its business operations inthe ordinary course, (f) any change in the Borrower’s principal place ofbusiness or

 

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jurisdictionof organization, and (g) the occurrence of any event in respect of which areport on Form 8-K should be filed by the Borrower with the Securities andExchange Commission.

 

5.10                           **Financial Condition.** Maintain the Borrower’s financial condition according to the followingstandards, in each such case determined in accordance with GAAP.  The Borrower will maintain as of the end ofeach fiscal quarter and will provide evidence of the same pursuant to Section 5.3hereof:

 

(a)                                  MinimumInterest Coverage Ratio of 2.50x; and

 

(b)                                 MinimumNet Worth of not less than $66,000,000.00, increasing annually by 50% of NetProfit (but not reduced by net losses) after December 31, 2004.

 

5.11                           **ERISA.** Fund or causeto be funded all Defined Benefit Pension Plans of Borrower and the Subsidiariesin accordance with no less than the minimum funding standards of ERISA; and (ii) promptlyadvise the Agent of the occurrence of any Reportable Event or ProhibitedTransaction in respect of any such Plan.

 

5.12                           **Disposition of Assets**. Dispose of assets only on an arms-length basis and on terms generallyreflecting market conditions for similar transactions.

 

**VI.  Negative Covenants**

 

For so long as the Aggregate Loan Commitmentor any Obligation remains outstanding, the Borrower will not, without the priorwritten consent of the Lenders, and will not, without the prior written consentof the Lenders, cause or suffer any Subsidiary to:

 

6.1                                 **Use of Funds.**  Use anyof the proceeds of the Loans for any purpose except as set forth in Section 1.2of this Agreement.

 

6.2                                 **Merger or Consolidation; Business.**  Enter into any merger, consolidation,reorganization or recapitalization, or reclassify its capital stock, or substantiallychange the nature of its business as now conducted, except that (1) anywholly-owned Subsidiary may merge with any other Subsidiary provided saidwholly-owned Subsidiary is the surviving entity, and (2) any Subsidiarymay merge with the Borrower provided the Borrower is the surviving entity.

 

6.3                                 **Sale of Assets.**  Sell,transfer, lease, convey, demolish or otherwise dispose of all or any materialpart of its assets, including advances to or investments in joint ventures, inexcess of an aggregate valuation of $40,000,000 based on the Fair MarketValuation Report, but excluding properties identified by the Borrower as “non-coreproperties” to be sold during the term of this Agreement as set forth in **Schedule 6.3**

 

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attachedhereto and excluding sales of inventory, subdivided lots and condominium unitsmade in the ordinary course of business.

 

6.4                                 **Distributions.** Declare or pay any dividends, or make any other payment or distributionon account of its capital stock, except that, subject to the satisfaction infull of the condition precedent that the Agent and Lenders shall have received,prior to any declaration or payment of cash dividends, the Borrower’s auditedannual financial statements for the fiscal year, the Borrower may declare andpay cash dividends for and in respect of any fiscal year of the Borrower, in anamount not to exceed 30% of its Net Profits for such fiscal year.

 

6.5                                 **Stock.**  Redeem,purchase or retire any of its capital stock.

 

6.6                                 **Margin Stock.** Directly or indirectly apply any part of the proceeds of any of theLoans to the purchasing or carrying of any “margin stock” within the meaning ofRegulation U of the Board of Governors of the Federal Reserve System, or anyregulations, interpretations or rulings thereunder.

 

6.7                                 **Other Indebtedness.** Incur, agree to incur, assume, or in any manner become liable in respectof any Indebtedness for Borrowed Money (recourse or nonrecourse) in addition tothe Borrower’s Indebtedness for Borrowed Money as of December 31, 2004 andthe indebtedness evidenced by the Notes and the Loan Agreement, excluding tradeobligations and accruals arising in the normal course of business; provided,however, that the Borrower and its Subsidiaries may incur, assume or becomeliable for up to $75,000,000 of additional Indebtedness for Borrowed Money forthe purpose of financing the Borrower’s real estate development activities.

 

6.8                                 **Encumbrances.** Hypothecate, pledge, mortgage, grant a security interest in or otherwiseencumber (or permit to be encumbered) any of its assets now owned or hereafteracquired, otherwise than in the ordinary course of the business of the Borroweror such Subsidiary (for purposes of this Section 6.8, encumbrancesincurred or created in the ordinary course of business shall be deemed toinclude (a) liens for taxes and governmental (or quasi-governmental)assessments or similar charges that are not yet due and payable, (b) pledgesor deposits to secure payment of workers’ compensation or to participate in anyfund established under workers’ compensation, unemployment insurance, pensionsor similar social security programs, (c) liens of mechanics, materialmen,warehousemen, carriers or other similar liens that are not yet due and payable,(d) good faith pledges or deposits made to secure performance of bids,tenders, contracts (other than for the repayment of borrowed money), leases,statutory obligations, or surety, appeal, indemnity, performance or similarbonds required in the ordinary course of business, not exceeding at any onetime outstanding $1,000,000 for all such pledges or deposits in the aggregatefor the Borrower and its Subsidiaries, (e) retained liens or securityinstruments of equipment lessors on equipment leased under equipment leasespermitted by the Loan Agreement, and (f) retained liens or securityinterests of

 

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equipmentvendors or equipment financing lenders with respect to equipment purchased ontime by the Borrower or its Subsidiaries.

 

**VII.  The Bank’s Rights Upon Default**

 

7.1                                 **Events of Default.** Each of the following events is an “Event of Default” under thisAgreement:

 

(a)                                  TheBorrower shall fail to pay when due any principal or interest or fee or othercharge payable under the Loan Agreement or any of the Notes and such failureshall continue for a period of five (5) Business Days.

 

(b)                                 TheBorrower or any Subsidiary shall fail to observe or perform any otherobligation to be observed or performed by it under the Loan Agreement, any ofthe Notes or other Loan Documents, and such failure shall continue for 30 daysafter:  (1) notice of such failurefrom the Agent; or (2) the Agent is notified of such failure or shouldhave been so notified pursuant to the provisions of Section 5.9 of theLoan Agreement, whichever is earlier.

 

(c)                                  Anyfinancial statement, other statement, representation, warranty or certificatemade or furnished by the Borrower or any Subsidiary to any of the Lenders orthe Agent in connection with the Loan Agreement, or as an inducement to theLenders or the Agent to enter into the Loan Agreement, or in any separatestatement or document delivered pursuant to the provisions of the LoanAgreement, shall be materially false, incorrect, or incomplete when made ordelivered.

 

(d)                                 TheBorrower or any Subsidiary shall admit its inability to pay its debts as theymature, or shall make an assignment for the benefit of any of its creditors.

 

(e)                                  Adecree or order for relief shall be entered by a court having jurisdiction inrespect of the Borrower or any Subsidiary in an involuntary case under thefederal Bankruptcy Code or any other applicable federal or state bankruptcy,insolvency or similar law, or a receiver, liquidator, assignee, custodian,trustee, sequestrator (or similar official) shall be appointed for the Borroweror any Subsidiary or for any substantial part of its property, and any suchdecree or order shall continue unstayed and in effect for a period of 60consecutive days.

 

(f)                                    TheBorrower or any Subsidiary shall commence a voluntary case under the federalBankruptcy Code or any other applicable federal or state bankruptcy, insolvencyor similar law, or the Borrower or any Subsidiary shall consent to theappointment of or taking possession by a receiver, liquidator, assignee,trustee, custodian, sequestrator (or other similar official) of the Borrower orany Subsidiary or any substantial part of its property.

 

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(g)                                 TheBorrower or any Subsidiary (i) shall have failed to pay at its stated duedate any Indebtedness for Borrowed Money in excess of $1,000,000 in theaggregate (other than indebtedness evidenced by the Notes) and such failureshall have continued beyond any applicable grace period, or (ii) shallhave failed to observe or perform any term, covenant or provision contained inany agreement or instrument (other than the Loan Agreement or the Notes) bywhich it is bound, evidencing or securing or otherwise relating to anyIndebtedness for Borrowed Money in excess of $1,000,000 in the aggregate, andthe effect thereof shall have been the acceleration of the maturity of saidindebtedness by the holder or holders thereof or of any obligations issued inrespect thereof or by a trustee or trustees acting on behalf of such holder orholders.

 

(h)                                 Afinal judgment which alone or with other outstanding final judgments againstthe Borrower or any Subsidiary exceeds $3,000,000 in the aggregate and (i) suchjudgment shall not be discharged or fully bonded against within 60 days, or (ii) within60 days after entry of such judgment, execution shall not be stayedpending appeal, or (iii) such judgment shall not be discharged within 60days after expiration of any such stay.

 

(i)                                     Borroweror any Subsidiary fails to pay when due any amount relating to any plangoverned by ERISA.

 

7.2                                 **The Bank’s Rights.**  Ifan Event of Default shall occur, the Bank shall have, in addition to any andall other rights and remedies, legal or equitable, available to the Bank underany and all of the Loan Documents or at law, the following additional rightsand remedies:

 

(a)                                  Theabsolute right to deny to the Borrower any further Loan or extension of credit(the Lender’s obligation to extend any further credit to the Borrower shallimmediately terminate);

 

(b)                                 Theright, at the option of the Lender, to declare, without notice, the entireprincipal amount and accrued interest for any Loan or extension of creditoutstanding under this Agreement, plus any fees and charges reasonably incurredby the Agent, and/or the Lender, under any of the Loan Documents, immediatelydue and payable;

 

(c)                                  Theright, at the option of the Lender, to charge interest on any principal amountoutstanding under this Agreement at the rate one and one-half (1.5%) percentagepoints above the otherwise applicable interest rate;

 

(d)                                 Theright to the ex parte appointment withoutbond of a receiver, without regard to the value of any Collateral or solvencyof any party liable for payment, observance or performance of the Obligationsand regardless of whether the Bank has an adequate remedy a law; and

 

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(e)                                  TheAgent and the Lenders may exercise any and all other rights and remedies, legalor equitable, available to the Agent and/or the Lenders under the Notes andunder any and all of the other Loan Documents or at law or in equity.

 

**VIII.  Miscellaneous**

 

8.1                                 **Further Assurance.** From time to time within five Business Days after the Bank’s demand, theBorrower will execute and deliver such additional documents and provide suchadditional information as may be reasonably requested by the Bank to carry outthe intent of this Loan Agreement.

 

8.2                                 **Appraisals.**  TheLenders reserve the right to obtain at the Borrower’s expense (and the Borroweragrees to pay all reasonable costs of) appraisals of the Mortgaged Properties,from any licensed or certified appraiser designated by the Lenders, from timeto time, whenever such appraisals may be (a) required by any law, rule orregulation applicable to the conduct of any Lender’s business, (b) requestedor directed by any governmental authority charged with the administration ofsuch law, rule or regulation or any Lender’s compliance therewith, whetheror not such request or direction has the force of law, or (c) whenreasonably deemed appropriate by the Lenders in their sole discretion(reappraisals referred to in this clause (c) shall not be required morefrequently than annually).

 

8.3                                 **Enforcement and Waiver by the Bank.**  The Lenders, or the Agent on behalf of theLenders, shall have the right at all times to enforce the provisions of theLoan Documents, as they may be amended from time to time, in strict accordancewith their respective terms, notwithstanding any conduct or custom on the partof any of the Lenders or the Agent in refraining from so doing at any time ortimes.  The failure of the Lenders or theAgent at any time or times to enforce their rights under such provisions,strictly in accordance with the same, shall not be construed as having createda custom in any way or manner contrary to specific provisions of the LoanDocuments or as having in any way or manner modified or waived the same.  No single or partial exercise of any right byany Lender or the Agent shall preclude the further or other exercisethereof.  All rights and remedies of theLenders and Agent are cumulative and concurrent and the exercise of one rightor remedy shall not be deemed a waiver or release of any other right or remedy.

 

8.4                                 **Expenses of the Lender and Agent.**  The Borrower will, on demand, reimburse tothe Agent all reasonable expenses, including the reasonable fees and expensesof legal counsel for the Agent, incurred by the Agent (whether as Agent orLender) in connection with the negotiation, preparation, administration,amendment, modification, waiver, and/or enforcement of the Loan Documents andthe collection or attempted collection of the indebtedness evidenced by theLoan Documents, or any of them including but not limited to bankruptcy orreorganization proceedings.  The Borrowerwill, on demand, reimburse to the Lenders all reasonable expenses, including

 

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thereasonable fees and expenses of legal counsel for the Lenders, incurred by anyof the Lenders in connection with the enforcement of the Loan Documents and thecollection or attempted collection of the indebtedness evidenced by the LoanDocuments, or any of them including but not limited to bankruptcy orreorganization proceedings.

 

8.5                                 **Notices.**

 

Any notices or consents required or permittedby this Loan Agreement or the other Loan Documents shall be in writing and maybe delivered in person or sent by United States mail or by telecopy and shallbe deemed delivered when delivered in person or when deposited in the UnitedStates mail, certified, postage pre-paid, return receipt requested, or whensent during normal business hours at the place of receipt and the receipt ofwhich is confirmed in writing if by telecopy, to the address of the parties asfollows, unless such address is changed by written notice hereunder:

 

(A)                              If to the Borrower:

MAUI LAND & PINEAPPLE COMPANY, INC.

ATTN:                      Mr. FredW. RickertVice President and Chief Financial Officer

120 Kane Street

Kahului, Hawaii  96732-2232

PHONE: (808) 877-3871; FAX:  (808) 871-0953

 

(B)                                If to the Lenders,in care of the Agent:

BANK OF HAWAII

ATTN:                      Mr. JohnMcKenna, Vice PresidentCorporate Banking Division

130 Merchant Street, 20th Floor

Honolulu, Hawaii  96813

PHONE: (808) 537-8560; FAX:  (808) 537-8301

 

8.6                                 **Waiver and Release by the Borrower.**  To the maximum extent permitted by applicablelaw, the Borrower (and each of them, if more than one):

 

(a)                                  Waivesnotice and opportunity to be heard, after acceleration of the indebtednessevidenced by the Loan Documents, before exercise by the Bank of the remedy ofsetoff or of any other remedy or procedure permitted by any applicable law orby any prior agreement with the Borrower, and, except where specificallyrequired by this Agreement or by any applicable law, notice of any other actiontaken by the Bank;

 

(b)                                 Waivespresentment, demand for payment, notice of dishonor, and any and all othernotices or demands in connection with the delivery, acceptance, performance, orenforcement of this Agreement, and consents to any extension of time (and evenmultiple extensions of time for longer than the original term), renewals,releases of any person or organization liable for the payment of theObligations under this Agreement, and waivers

 

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ormodifications or other indulgences that may be granted or consented to by theBank in respect of the Loans and other extensions of credit evidenced by thisAgreement; and

 

(c)                                  Releasesthe Bank and its officers, agents, and employees from all claims for loss ordamage caused by any act or omission on the part of any of them except willfulmisconduct.

 

8.7                                 **Disclosure of Information.** The Borrower consents to the Agent’s or any Lender’s disclosure to theother Lenders or the Agent of any information held by the disclosing entityfrom time to time, financial or otherwise, pertaining in any way to thecreditworthiness or other condition of the Borrower or any Subsidiary.  The Agent and Lenders agree that they shallmaintain confidentiality with regard to nonpublic information concerning theBorrower and Subsidiaries obtained from the Borrower, provided that the Agentand Lenders shall not be precluded from making disclosure regarding suchinformation:  (a) on a confidentialbasis, to their own respective counsel, accountants and other professionaladvisors, (b) in response to a subpoena or order of a court ofgovernmental agency, (c) on a confidential basis, to any entityparticipating or considering participating in any credit made under this LoanAgreement, (d) on a confidential basis to any guarantor or subordinatedlender with respect to this Loan Agreement or (e) as required by law orapplicable regulation.

 

8.8                                 **Applicable Law.**  Thesubstantive laws of the State of Hawaii shall govern the construction of thisAgreement and the Notes and the rights and remedies of the parties hereto andthereto.

 

8.9                                 **Binding Effect.**  ThisAgreement shall inure to the benefit of the parties hereto and their respectivesuccessors and permitted assigns, and shall be binding on the parties heretoand their respective successors and assigns.

 

8.10                           **Merger.**  ThisAgreement and the remainder of the Loan Documents constitute the full andcomplete agreement between the Bank and the Borrower with respect to the CreditFacility, and all prior oral and written agreements, commitments, andundertakings shall be deemed to have been merged into the Loan Documents andsuch prior oral and written agreements, commitments, and undertakings shallhave no further force or effect except to the extent expressly incorporated inthe Loan Documents.

 

8.11                           **Amendments; Consents.** No amendment, modification, supplement, termination, or waiver orforbearance of any provision of this Loan Agreement or any of the other LoanDocuments, and no consent to any departure by the Borrower therefrom, may inany event be effective unless in writing signed

 

(a)                                  bya Majority in Interest of the Lenders and the Agent, or

 

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(b)                                 byall of the Lenders and the Agent, in the case of any action that has the effectof:  increasing the Aggregate LoanCommitment; changing (except in accordance with the provisions of the LoanAgreement) the Applicable Margin or fees payable to Lenders under the LoanDocuments; altering the scheduled maturity or time of payment of principal,interest or fees payable under the Loan Documents; or modifying or releasingany collateral for the Loans,

 

and then only in the specific instance and for the specific purposegiven.

 

8.12                           **Assignments.**

 

(a)                                  TheBorrower shall have no right to assign any of its rights or obligations underthe Loan Documents without the prior written consent of the Lender.

 

(b)                                 Noneof the Lenders shall assign any of its rights or obligations under the Loan Documentswithout the prior written consent of the Borrower, which consent shall not beunreasonably withheld or delayed; provided, however, the foregoing provision tothe contrary notwithstanding, (a) any of the Lenders may sellparticipations in Loans made or to be made by it, to any entity affiliated withsuch Lender, without Borrower’s consent, so long as such Lender remainsprimarily obligated to the Borrower under this Loan Agreement and so long asthe Borrower shall not be obligated in any manner to deal directly with theaffiliated purchaser of such participation, and (b) any Lender maynegotiate, pledge, transfer or assign the Notes held by it (or the receivableevidenced thereby) to a Federal Reserve Bank or to any other agency orinstrumentality of the United States of America to support borrowings ofFederal funds by such Lender.

 

(c)                                  Subjectto the foregoing restrictions, the Borrower consents to each Lender’snegotiation, offer, and sale to third parties (“Participants”) of the CreditFacility or participating interests in the Credit Facility, to any and alldiscussions and agreements heretofore or hereafter made between each Lender andany Participant or prospective Participant regarding the interest rate, fees,and other terms and provisions applicable to the Credit Facility, and to eachLender’s disclosure to any Participant or prospective Participant, from time totime, of such financial and other information pertaining to the Borrower andthe Credit Facility as any Lender and such Participant or prospectiveParticipant may deem appropriate (whether public or non-public, confidential ornon-confidential, and including information relating to any insurance requiredto be carried by the Borrower and any financial or other information bearing onthe Borrower’s creditworthiness and the value of any collateral).  The Borrower acknowledges that the Lenders’disclosure of such information to any Participant or prospective Participantconstitutes an ordinary and necessary part of the process of effectuating andservicing the Credit Facility.

 

8.13                           **Severability.**  If anyprovision of any of the Loan Documents shall be held invalid under anyapplicable law, such invalidity shall not affect any other provision of

 

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theLoan Documents that can be given effect without the invalid provision, and, tothis end, the provisions of the Loan Documents are severable.

 

8.14                           **Release of Non-Golf Areas.** In view of the fact that the portion of the property subject to the Mortgageand the Additional Security Mortgage, commonly known as the Bay Golf Course (orthe Bay Course) and Village Golf Course (or the Village Course), has not beenduly subdivided so as to constitute one or more duly subdivided lots, the landdescriptions of the Bay Course and Village Course set forth or to be set forthin the Mortgage and Additional Security Mortgage (the “Mortgages”), includelands (“Excess Lands”) in excess of the lands commonly known to comprise theBay Course and Village Course.  TheLenders agree that the Borrower shall have the right to subdivide the landsinitially described in the Mortgages as comprising the Bay Course and VillageCourse, and to obtain releases of the Excess Lands from the liens of theMortgages, upon the following terms and conditions:  (a) the lot or lots to be released fromthe Mortgages, comprising the Excess Lands, as well as the lot or lots whichare to remain subject to the Mortgages following the release of the ExcessLands, shall have been designated as specific lots approved by all governmentalauthorities having jurisdiction over the subdivision thereof; (b) thecosts of subdivision and the costs of preparing the releases shall be borne bythe Borrower; (c) the form and content of each release shall be acceptableto the Lenders; (d) in connection with any such release, appropriateprovisions shall have been made for access to and from, and utility and similareasements for, any lot or lots not to be released from the Mortgages; and (e) therelease of the lot or lots shall not impair the use or operation of theCollateral, or the value of the Collateral such that the loan to value ratioshall exceed 55%.  Within thirty daysafter the Lenders’ declaration of an Event of Default and of their intention toforeclose the Mortgages, the Borrower shall commence, and thereafter diligentlypursue to completion, any subdivision necessary to accomplish the purposes ofthis Section 8.14, so as to enable the Lenders to foreclose the Mortgagesagainst all the Collateral, while releasing to the Borrower the ExcessLands.  In the event the Borrower shallnot commence such subdivision within said thirty-day period, or thereafterdiligently pursue the subdivision to completion, the Lenders shall be entitled,and are hereby appointed as the duly-appointed attorneys-in-fact of theBorrower (with full power of substitution), to commence and/or complete saidsubdivision at the Borrower’s expense. Said power of attorney is coupled with an interest and is irrevocable;provided, however, that the Lenders shall have no obligation to exercise theirrights under said power of attorney.

 

8.15                           **The Bank’s Right of Setoff; Security Interest in Accounts.**  Each Lender may set off obligations owed bythe Lender to the Borrower (such as balances in checking and savings accounts)against the Obligations, without first resorting to other Collateral, if anEvent of Default shall have occurred or shall have been declared or if any suchobligations owed by the Lender to the Borrower shall be seized or levied uponunder any legal process or under any claim of legal right.  To secure the Obligations, the Borrowergrants to the Agent or Lender a security interest in all checking, savings, andother deposit accounts now or hereafter maintained by the Borrower with theAgent or Lender.

 

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8.16                           **Time is of the Essence.** Time is of the essence under and in respect of this Agreement.

 

8.17                           **Joint and Several Liability.** If more than one Borrower has signed this Agreement, all Borrowers shallbe liable under this Agreement jointly, and each of them severally, for thepayment, observance, and performance of all of the Obligations.

 

8.18                           **Headings.**  Theheadings of the various provisions of this Agreement are inserted forconvenience of reference only and shall not affect the meaning or constructionof any provision.

 

8.19                           **Survival of Certain Payment Obligations.**  The obligations of the Borrower to indemnifythe Lenders against, and pay and reimburse to the Lenders, the costs andexpenses referred to in Section 8.4 of the Loan Agreement (a) shallsurvive the repayment of the Loans and termination of the Loan Agreement to theextent such losses, costs and expenses are specifically billed to the Borrowerwithin 60 days after full repayment of the Loans and termination of thisAgreement, and (b) shall not survive the repayment of the Loans andtermination of the Loan Agreement to the extent of any such costs or expenseswhich are not specifically billed to the Borrower within 60 days after fullrepayment of the Loans and termination of the Loan Agreement.

 

8.20                           **Counterparts.**  ThisAgreement may be executed in counterparts, each of which shall be an originalinstrument and all of which shall together constitute one and the sameagreement.

 

8.21                           **Dispute Resolution.** Any controversy or claim arising out of or relating to the LoanAgreement or any of the other Loan Documents shall, at the request of eitherparty, be decided by binding arbitration conducted in the State of Hawaii withouta judge or jury, under the applicable rules of the American ArbitrationAssociation or Dispute Prevention and Resolution, Inc. and in accordancewith Chapter 658A of the Hawaii Revised Statutes.  The arbitrator will apply any applicablestatute of limitations and will determine any controversy concerning whether anissue is arbitrable.  Judgment upon thearbitration award may be entered in any court having jurisdiction.  The prevailing party will be entitled torecover its reasonable attorneys’ fees and costs as determined by thearbitrator.  This agreement to arbitrateshall not limit or restrict the right, if any, of any party to exercise before,during or following any arbitration proceeding, with respect to any claim orcontroversy, self-help remedies such as setoff, to foreclose a mortgage or lienor other security interest in any Collateral judicially or by power of sale, orto obtain provisional or ancillary remedies such as injunctive relief from acourt having jurisdiction.  Either partymay seek those remedies without waiving its right to submit the controversy orclaim in question to arbitration.

 

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**IX.  Definitions**

 

9.1                                 **Additional Security Mortgage** means the Additional SecurityMortgage and Security Agreement dated March 1, 1993, made by KLC andrecorded in the Bureau of Conveyances of the State of Hawaii as Document No. 93-36900,as originally executed or thereafter modified.

 

9.2                                 **Agency Agreement** means the Agency Agreement dated as of March 1,1993, among Original Lenders and the Agent, authorizing the Agent to act asagent in respect of the Loans, as amended and restated by Amended and SecondRestated Agency Agreement dated December 31, 2001, by and among Lendersand Agent, as the same may be further amended from time to time.

 

9.3                                 **Aggregate Loan Commitment** shall have the meaning given in Section 1.1(a)

 

9.4                                 **Amending Documents** shall have the meaning given in Section 3.2(a)(2).

 

9.5                                 **Applicable Margin** shall have the meaning given in Section 1.6(a)(1).

 

9.6                                 **Base Rate** means the primary index rate established from timeto time by Bank of Hawaii in the ordinary course of its business and with dueconsideration of the money market, and published by intrabank memoranda for theguidance of its loan officers in pricing all of its loans which float with theBase Rate.

 

9.7                                 **Base Rate Loan** means any Loan for which interest iscalculated on the basis of the Base Rate.

 

9.8                                 **Business Day** means any day on which the main branch of Bankof Hawaii, in Honolulu, Hawaii, is open for business and, with respect to anyLIBOR Loan, a day on which the main branch of Bank of Hawaii, in Honolulu,Hawaii, and commercial banks in New York City are open for business.

 

9.9                                 **Capital Expenditures** means all expenditures that, in accordancewith GAAP, should be capitalized on the accounting records of the Borrower andits Subsidiaries.

 

9.10                           **Collateral** shall have the meaning given in Section 1.3.

 

9.11                           **Confirmations of Mortgage** means the confirmation of theMortgage of even date herewith by Borrower to the Lenders and the confirmationof the Additional Security Mortgage of even date herewith by KLC and theBorrower to the Lenders.

 

9.12                           **Conversion Date** shall have the meaning provided in Section 1.5.

 

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9.13                           **Credit Facility**shall have the meaning given in Section 1.1(a).

 

9.14                           **Effective Date** shall have the meaning assigned thereto in Section 3.2hereof.

 

9.15                           **Environmental Indemnification Agreement** means theEnvironmental Indemnification Agreement, dated March 1, 1993, made by theBorrower in favor of Original Lenders, as amended from time to time.

 

9.16                           **ERISA** shall have the meaning given in Section 4.14.

 

9.17                           **Event of Default** shall have the meaning given in Section 7.1.

 

9.18                           **Excess Lands**shall have the meaning given in Section 8.14.

 

9.19                           **Expiry Date** means April 30, 2008.

 

9.20                           **Fair Market Valuation Report** shall have the meaning given inSection 3.2(a)(5).

 

9.21                           **Financial Statements** means the consolidated balance sheetsof the Borrower and its Subsidiaries and consolidated statements of income andretained earnings of the Borrower and its Subsidiaries and other financialstatements (a) heretofore furnished to the Lenders, or any of them, and (b) tobe furnished to the Lenders pursuant to the provisions of this Loan Agreement.

 

9.22                           **Funded Debt** means all outstanding loans or lines of creditof the Borrower and the Subsidiaries, whether secured or unsecured, recourse ornonrecourse, plus all liabilities of the Borrower and the Subsidiaries underany and all guaranties, whether or not made in connection with loans or linesof credit.

 

9.23                           **GAAP** shall have the meaning given in Section 4.6.

 

9.24                           **Indebtedness for Borrowed Money** means any indebtedness orobligation or liability to repay borrowed monies, whether matured or unmatured,liquidated or unliquidated, direct or contingent, joint or several, including,without limitation, all such indebtedness guaranteed, directly or indirectly,in any manner, or endorsed (other than for collection or deposit in theordinary course of business) or discounted with recourse.

 

9.25                           **Individual Loan Commitment** means:

 

(a)                                  Inrespect of BOH, $10,800,000;

 

(b)                                 Inrespect of FHB, $7,200,000;

 

(c)                                  Inrespect of CPB, $4,800,000; and

 

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(d)                                 Inrespect of PCA, $7,200,000.

 

9.26                           **Individual Loan Commitment Percentage** means, in respect ofBOH, 36%; in respect of FHB 24%; in respect of CPB 16%; and in respect of PCA24%.

 

9.27                           **Interest Coverage Ratio** means the ratio of earnings beforeinterest and taxes (EBIT) to interest expense, calculated on the basis of theprior 4 fiscal quarters.

 

9.28                           **Interest Period** means the period commencing on the BusinessDay on which a LIBOR Loan is disbursed, rolled over or converted from anotherpricing option, and ending on the date one, two, three or six monthsthereafter, as selected by the Borrower in its Notice of Loan/Conversion inrespect of LIBOR Loans; provided that if such ending date is not a BusinessDay, such ending date shall be deemed to be the next succeeding Business Dayunless such next succeeding Business Day falls in a new calendar month, inwhich case the ending date shall be the next preceding Business Day.  No Interest Period for a LIBOR Loan shallextend beyond the Expiry Date.

 

9.29                           **Investments** means all expenditures by the Borrower and itsSubsidiaries, not reflected as Capital Expenditures in the FinancialStatements, made for the purpose of acquiring, increasing or supplementingequity interests of any nature in partnerships, joint ventures, corporations,trusts, associations or other business entities, or in real property of anykind, and reflected as Investments in the Financial Statements.

 

9.30                           **KLC** means Kapalua Land Company, Ltd.

 

9.31                           **L/C Fee** shall have the meaning given in Section 1.9(d).

 

9.32                           **Laws** means all ordinances, statutes, rules, regulations,orders, injunctions, writs or decrees of any government or politicalsubdivision or agency thereof, or any court or similar entity established byany thereof.

 

9.33                           **Lenders** is defined in the preamble of this Amendment andRestatement.

 

9.34                           **Letter of Credit** shall have the meaning given in Section 1.1(b)(3).

 

9.35                           **Letter of Credit****Liability**shallhave the meaning given in Section 1.1(b)(3).

 

9.36                           **LIBOR** means the reserve-adjusted rate of interest per annum,rounded upward if necessary, to the nearest four decimal places, at which U.S.dollar deposits in immediately available funds are offered to major banks inthe interbank market at 11:00 a.m. New York time three Business Days priorto the commencement of an Interest Period. The Bank shall establish LIBOR for each Interest Period based on offeredrates as reported by reporting services generally used by the Bank.  Rates are quoted based on both the InterestPeriod and the amount of Loan requested by the Borrower.  Such rate

 

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shallincorporate the following adjustment for any reserve requirements relative todollar deposits, placed on the Bank by any regulatory body:

 

| LIBOR (Reserve Adjusted) |   | =      |   | LIBOR  (Unadjusted)                 |
|--------------------------|--------|--------|--------|-------------------------------------|
|                     |   |   |   | (100% -  LIBOR Reserve Requirement) |

 

The Bank’s determination of LIBOR shall bebinding and conclusive upon the Borrower absent manifest error.

 

9.37                           **LIBOR Loan** means any Loan for which interest is calculatedon the basis of LIBOR.

 

9.38                           **LIBOR Reserve Requirement** means the then maximum effectiverate per annum (expressed as a percentage), as determined solely by the Bank,of reserve requirements imposed by any regulatory body (such as those pursuantto Regulation D of the Board of Governors of the Federal Reserve System) oneurocurrency liabilities of U.S. banks having a term to maturity equal to theapplicable Interest Period; and as adjusted by the Bank for changes orscheduled changes in such percentage during the applicable Interest Period.

 

9.39                           **Loan Agreement** means the Original Loan Agreement, as amendedaforesaid and by this Amendment and Restatement and any further amendments,modifications, extensions or renewals thereof.

 

9.40                           **Loans** means, collectively, the Revolving Loans and theSwingline Loans.

 

9.41                           **Loan Documents** shall have the meaning given in Section 1.7.

 

9.42                           **Majority in Interest of the Lenders** means Lenders holding66.67% of the aggregate principal amount of the Loans then outstanding hereunder(or if no Loans are at the time outstanding, Lenders having 66.67% of theAggregate Loan Commitment).

 

9.43                           **Mortgage** means, collectively, the Mortgage and SecurityAgreement dated March 1, 1993, made by the Borrower, as Mortgagor, infavor of the Lenders, as Mortgagees, recorded in said Bureau as Document No. 93-036896and that certain Mortgage and Security Agreement made by Borrower, asMortgagor, in favor of Lenders, as Mortgagees, recorded in said Bureau asDocument No. 93-036898, as the same were originally executed and asthereafter amended or modified.

 

9.44                           **Mortgages** means, collectively, the Mortgage and theAdditional Security Mortgage.

 

9.45                           **Net Profits** means, for any fiscal year, the consolidated,after-tax net profits of the Borrower and its Subsidiaries for such year,determined in accordance with GAAP.

 

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9.46                           **Net Worth** means the consolidated net worth of Borrower andthe Subsidiaries, as shown in their most recent Financial Statements, less anygoodwill or debt discounts carried as assets on such Financial Statements,trademarks, patents, copyrights, organizational expenses and other similarintangible items, exclusive of predevelopment costs which will be allocated tofuture projects.

 

9.47                           **Notes** shall have the meaning given in Section 1.7 andshall include any modifications, renewals or restatements thereof.

 

9.48                           **Notice of Loan/Conversion** shall mean a written notice in theform attached as **Exhibit A**.

 

9.49                           **Obligations** shall have the meaning given in Section 1.8.

 

9.50                           **Participants** shall have the meaning given in Section 8.12(c).

 

9.51                           **Payment Office** shall mean Bank of Hawaii, Corporate BankingDivision, 130 Merchant Street, 20th Floor, Honolulu Hawaii 96813.

 

9.52                           **Person** means any individual, corporation, partnership,association, joint-stock company, trust, limited liability company,unincorporated organization, joint venture, court or government or politicalsubdivision or agency thereof.

 

9.53                           **Revolving Loan** shall have the meaning given in Section 1.1(b)(1).

 

9.54                           **Subsidiary** means (i) any corporation of which more than50% of the outstanding voting securities having ordinary voting power to electa majority of the Board of Directors of such corporation shall, at the time ofdetermination, be owned directly or indirectly, by one or more Subsidiaries orby the Borrower; and (ii) any partnership, association, joint-stockcompany, trust, limited liability company, unincorporated organization, jointventure, or other legal entity in which more than 50% of the ownership interestshall, at the time of determination, be held, directly or indirectly, by one ormore Subsidiaries or by the Borrower.  Alist of the currently-existing Subsidiaries is attached hereto as **Exhibit D**.

 

9.55                           **Swingline Lender**means, when acting in such capacity, Bankof Hawaii, its successors and assigns.

 

9.56                           **Swingline Loans** means loans made by the Swingline Lender tothe Borrower pursuant to Section 1.10.

 

9.57                           **Swingline Outstandings** means, as of the date ofdetermination, the aggregate principal amount then outstanding under allSwingline Loans.

 

9.58                           **Term**shall have the meaning given in Section 1.1(a).

 

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9.59                           **Type of Loan** shall refer either to a Base Rate Loan or aLIBOR Loan, as defined herein.

 

**X.  Amendment and Restatement; Amendment of LoanDocuments**

 

10.1                           **Effect of Amendment.** On and as of the Effective Date, the Original Loan Agreement shall bedeemed amended and restated in its entirety by this Amendment and Restatement, whichshall supercede the terms and provisions of the Original Loan Agreement, aspreviously amended, with respect to all obligations from and after the date ofthis Amendment and Restatement and the other Loan Documents shall be deemedamended to conform to the amendments effected by this Amendment andRestatement.  The Borrower, the Lendersand the Agent acknowledge and agree that this Amendment and Restatementconstitutes only an amendment and restatement of the Original Loan Agreement,and in connection therewith, (1) nothing herein is intended, nor shall itbe construed, to constitute a refinancing of the indebtedness under theOriginal Loan Agreement, (2) all outstanding obligations under theOriginal Loan Agreement and the “Loan Documents” referred to therein, asamended, shall continue to be outstanding under this Amendment and Restatementand the Loan Documents referred to herein and (3) all Obligations owingfrom and after the Effective Date shall be paid, performed and observed inaccordance with the terms of this Amendment and Restatement and the other LoanDocuments, as so amended restated and as may be further amended from time totime.

 

10.2                           **Amendment of Loan Documents.** The Borrower, the Lenders and the Agent agree that from and after theEffective Date, all references to (1) the Original Loan Agreement(including, without limitation, references to “Revolving and Term LoanAgreement”, the “Loan Agreement” or “Agreement” or other defined terms) setforth in the Notes, the Mortgage, the Environmental Indemnity Agreement, theAdditional Security Mortgage and any other Loan Documents, as amended, shallmean the Original Loan Agreement, as amended and restated aforesaid and by thisAmendment and Restatement and as may be further amended from time to time, and (2) theNotes, or any of them, shall mean the Notes, as amended and restated as of theEffective Date, and (3) any of the other Loan Documents shall mean suchLoan Documents, as heretofore amended, as amended and restated by thisAmendment and Restatement and as may be further amended from time to time.

 

10.3                           **Confirmation of Loan Documents.**  In all other respects, the Loan Documents, asamended, remain in full force and effect and the provisions of the LoanDocuments including, without limitation, all promises, representations,warranties, covenants, and conditions, are ratified and confirmed as of thedate of this Amendment and Restatement by the parties hereto.

 

**IN WITNESS WHEREOF**,the Borrower, the Lenders and the Agent have duly executed this Amendment andRestatement, the execution of this Amendment and

 

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Restatement by the Borrower constituting (a) the personalcertification of the persons signing this Amendment and Restatement on behalfof the Borrower that, to the best of their knowledge, the representations andwarranties made in Article IV of the Loan Agreement are true and correctas of the date of this Amendment and Restatement, and (b) the undertakingof such persons and of the Borrower that each request for a disbursement ofLoan proceeds, made pursuant to Section 1.4 of the Loan Agreement, shallconstitute the Borrower’s affirmation and the personal affirmation on the partof the persons making such request that, to the best of their knowledge at thetime of the making of any such request, (i) the representations andwarranties stated in Article IV of the Loan Agreement are true andcorrect, (ii) no Event of Default under the Loan Agreement has occurredand is continuing, and (iii) no event has occurred and is continuing that,with the giving of notice or passage of time, or both, would become such anEvent of Default.

 
| MAUI LAND & PINEAPPLE |                                | BANK OF HAWAII       |
|--------------------------------|-------------------------------------|----------------------|
| COMPANY, INC.                  |                                |                 |
|                           |                                |                 |
|                           |                                | By                   | /S/ JOHN  MCKENNA |   |
| By                             | /S/ FRED W.  RICKERT                |                 |   |   | John McKenna |
|                           | Name: Fred W. Rickert               |                 |   | Its Vice President |
|                           | Its VP/ Chief Financial Officer     |                 |   |
|                           |                                | FIRST HAWAIIAN BANK  |
|                           |                                |                 |
| By                             | /S/ ADELE H.  SUMIDA                |                 |   |   |
|                           | Name: Adele H. Sumida               |                 | By |   /S/  KENNETH C. S. PAI |   |
|                           | Its Controller & Secretary |                 |   | Name: Kenneth C. S. Pai |
|                           |                                |                 | Its Senior Vice President |
|                           | (Borrower)                          |                 |
|                           |                                | CENTRAL PACIFIC BANK |
| BANK OF HAWAII                 |                                |                 |
|                           |                                |                 |
|                           |                                | By                   |  /S/  JOHN TAIRA |   |
|                           |                                |                 | Name: John Taira |
| By                             | /S/ JOHN  MCKENNA                   |                 |   |   | Its VP |
|                           | John McKenna                        |                 |   |
|                           | Its Vice President                  |                 | AMERICAN AGCREDIT, PCA |
|                           |                                |                 |
|                           | (Agent)                             |                 |
|                           |                                |                 |
|                           |                                | By                   | /S/ GARY VAN  SCHUYVER |   |
|                           |                                |                 | Name: Gary Van Schuyver |
|                           |                                |                 | Its Vice President |
|                           |                                |                 |   |
|                           |                                |                 | (Lenders) |   |
|                                |                                     |                      |  |  |  |  |  |  |  |  |  |  |

 

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