**Exhibit 4**

 

**REVOLVING LINE OF CREDIT LOANAGREEMENT**

 

ThisREVOLVING LINE OF CREDIT LOAN AGREEMENT (“Agreement”) is entered into as of September 1, 2005(the “Effective Date”) by and between AMERICAN AGCREDIT, FLCA, successor ininterest to Pacific Coast Farm Credit Services, ACA (“Lender”), and MAUI LAND &PINEAPPLE COMPANY, INC., a Hawaii corporation (“Borrower”).

 

Recitals

 

A.            Borrower and Lender are parties tothat certain Term Loan Agreement dated as of June 1, 1999 (as amended fromtime to time, the “Term Loan Agreement”), pursuant to which Lender converted apreviously advanced bridge loan to a term loan with multiple tranches in theaggregate principal amount of Fifteen Million Dollars ($15,000,000) (the “TermLoan”).

 

B.            Borrower has requested, and Lenderhas agreed, to amend and restate the Term Loan Agreement in its entirety toconvert the Term Loan into a revolving loan (“Loan”), on the terms andconditions set forth below.

 

Agreement

 

NOW,THEREFORE, in consideration of the premises and covenants set forth below, theparties hereby agree that the Term Loan Agreement is hereby amended andrestated in its entirety as follows effective from and after the EffectiveDate:

 

1.             Definitions and Rules ofConstruction.

 

(a)           Definitions. The followingterms used in this Agreement shall have the following meanings:

 

“Advance”shall have the meaning set forth in Section 3.

 

“Affiliate”shall mean, with respect to any Person, (i) each Person that, directly orindirectly, owns or controls, whether beneficially, or as a trustee, guardianor other fiduciary, ten percent (10%) or more of the Stock having ordinaryvoting power in the election of directors of such Person, (ii) each Personthat controls, is controlled by or is under common control with such Person orany Affiliate of such Person, or (iii) each of such Person’s officers,directors, joint venturers and partners. For the purpose of this definition, “control”of a Person shall mean the possession, directly or indirectly, of the power todirect or cause the direction of its management or policies, whether throughthe ownership of voting securities, by contract or otherwise.

 

“Agreement”shall mean this Revolving Line of Credit Loan Agreement, together with Exhibitsand Schedules attached hereto, and as hereafter amended, restated, modified, orsupplemented.

 

“ApplicableSpread” shall mean, (i) with respect to that portion of the Loan bearinginterest at the Base Rate, zero (0) basis points, and (ii) with respect toany Fixed Rate Tranche, one hundred sixty-five (165) basis points; providedthat the Applicable Spread may be adjusted pursuant to Section 4(d)(3).

 

“BaseRate” means the Prime Rate plus the Applicable Spread.

 

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“BusinessDay” shall mean any day that is not a Saturday, a Sunday, or a day on whichbanks are required or permitted to be closed in the State of California.

 

“CapitalExpenditures” shall mean, for any period, the aggregate of all expenditures(whether paid in cash or other consideration or accrued as a liability andincluding that portion of Capital Leases that is capitalized on the balancesheet of Borrower including in connection with a sale-leaseback transaction) byBorrower and its Subsidiaries for the acquisition or leasing of fixed or capitalassets or additions to equipment (including replacements, capitalized repairsand improvements during such period) which are required to be capitalized underGAAP on a consolidated balance sheet of Borrower and its Subsidiaries. CapitalExpenditures shall not include (i) the actual value received for existingequipment either traded-in at time of purchase of new equipment or sold in theordinary course of business (but only to the extent such equipment isreplaced), and (ii) expenditures made from insurance proceeds.

 

“CapitalLease” shall mean any lease of any property (whether real, personal or mixed)by Borrower or a Subsidiary as lessee that, in accordance with GAAP, eitherwould be required to be classified and accounted for as a capital lease on a balancesheet of Borrower or such Subsidiary or otherwise be disclosed as such in anote to such balance sheet.

 

“CashEquivalents” shall mean any of the following: (i) certificates of depositor other depository accounts with commercial banks organized under the laws ofthe United States or a state thereof, to the extent such certificates oraccounts are fully insured by the Federal Deposit Insurance Corporation; (ii) treasurybills, and other marketable obligations issued or fully guaranteed by, orbacked by the full faith and credit of, the United States and maturing not morethan one (1) year from the date of issuance; or (iii) open marketcommercial paper rated at least “A 1” or “P 1 “ or higher by a national creditrating agency and maturing not more than two hundred seventy (270 ) days fromthe date of issuance.

 

“ClosingDate” shall mean the date on which all of the conditions precedent described inSection 2 shall have been satisfied or waived by Lender, and the Loan hasbeen funded or applied by Lender to refinance the Term Loan.

 

“Collateral”shall mean all of the real property and interests in property described in Section 9,and all other property and interests in property that now or hereafter securethe payment of any of the Obligations.

 

“ConsolidatedEBIT” shall mean, for any period, for Borrower and its Subsidiaries on aconsolidated basis, the sum (without duplication) of: (a) Consolidated NetIncome; plus (b) the sum of (i) Federal, state, local, andforeign income taxes, and (ii) interest expense (including the interestportion of any capitalized lease obligations).

 

“ConsolidatedFunded Debt” shall mean, as at any date of determination, for Borrower and itsSubsidiaries on a consolidated basis, all indebtedness for borrowed moneyevidenced by notes, bonds, debentures, or similar evidences of indebtedness,and which by its term matures more than one year from, or is directly orindirectly renewable or extendible at such Person’s option under a revolvingcredit or similar agreement obligating the lender or lenders thereunder toextend credit over a period of more than one year from the date of

 

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creation thereof, and specifically including (i) capital leaseobligations, (ii) current maturities of long-term debt, (iii) revolvingcredit and short-term debt extendible beyond one year at the option of thedebtor, and (iv) the Obligations.

 

“ConsolidatedIndebtedness” shall mean, as at any date of determination, for Borrower and itsSubsidiaries on a consolidated basis, the sum (without duplication) of (i) allobligations for borrowed money or for the deferred purchase price of propertyor services (including the present value of capitalized lease obligations)which, in accordance with GAAP, would be included in determining totalliabilities as shown on the liability side of a balance sheet as of the date atwhich such indebtedness is to be determined; (ii) guarantees; and (iii) lettersof credit (other than letters of credit to support trade payables) andendorsements (other than of notes, bills, and checks presented to banks forcollection or deposit in the ordinary course of business), in each case tosupport obligations for borrowed money of others.

 

“ConsolidatedNet Income” shall mean, for any period, on a consolidated basis, the netincome, if any, of Borrower and its Subsidiaries, determined in accordance withGAAP.

 

“ConsolidatedNet Loss” shall mean, for any period, on a consolidated basis, the net loss, ifany, of Borrower and its Subsidiaries, determined in accordance with GAAP.

 

“ConsolidatedNet Worth” shall mean, as at any date of determination, on a consolidatedbasis, the gross book value of the assets of Borrower, minus the sum of (i) allreserves applicable thereto, and (ii) all liabilities of Borrower(including subordinated liabilities).

 

“ConsolidatedTotal Capitalization” shall mean, as at any date of determination, the sum of (i) ConsolidatedFunded Debt, plus (ii) Consolidated Net Worth.

 

“Default”shall mean the occurrence of any event or circumstance which, with the passageof time or the giving of notice or both, would become an Event of Default.

 

“DefaultRate” shall mean a rate of interest that is three percent (3.00%) higher thanthe rate otherwise applicable.

 

“DiscountedValue” shall mean, with respect to any Prepayment, the amount obtained bydiscounting all Remaining Scheduled Payments with respect to such Prepaymentfrom their respective scheduled due dates to the payment date with respect tosuch Prepayment, in accordance with accepted financial practice and at adiscount factor (applied on the same periodic basis as that on which interestis payable for such Prepayment) equal to the Reinvestment Yield with respect tosuch Prepayment.

 

“EnvironmentalLaws” shall mean all applicable federal, state, local and foreign laws,statutes, ordinances, codes, rules, standards and regulations, now or hereafterin effect, and any applicable judicial or administrative interpretationthereof, including any applicable judicial or administrative order, consentdecree, order or judgment, imposing liability or standards of conduct for orrelating to the regulation and protection of human health, safety, theenvironment and natural resources (including ambient air, surface water,groundwater, wetlands, land surface or subsurface strata, wildlife, aquaticspecies and vegetation). Environmental Laws include: the ComprehensiveEnvironmental Response,

 

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Compensation, and Liability Act of 1980 (42 U.S.C. §§ 9601 etseq.) (“CERCLA”); the Hazardous Materials Transportation Authorization Act of1994 (49 U.S.C. §§ 5 101 et seq.); the Federal Insecticide, Fungicide, andRodenticide Act (7 U.S.C. §§ 136 et seq.); the Solid Waste Disposal Act(42 U.S.C. §§ 6901 et seq.); the Toxic Substance Control Act (15 U.S.C. §§ 2601et seq.); the Clean Air Act (42 U.S.C. §§ 7401 et seq.); the Federal WaterPollution Control Act (33 U.S.C. §§ 1251 et seq.); the Occupational Safetyand Health Act (29 U.S.C. §§ 651 et seq.); the Safe Drinking Water Act (42U.S.C. §§ 300(f) et seq.); and any and all regulations promulgatedthereunder, and all analogous state, local and foreign counterparts orequivalents and any transfer of ownership notification or approval statutes.

 

“EnvironmentalLiabilities” shall mean, with respect to any Person, all liabilities,obligations, responsibilities, response, remedial and removal costs,investigation and feasibility study costs, capital costs, operation andmaintenance costs, losses, damages, punitive damages, property damages, naturalresource damages, consequential damages, treble damages, costs and expenses(including all fees, disbursements and expenses of counsel, experts andconsultants), fines, penalties, sanctions and interest incurred as a result ofor related to any claim, suit, action, investigation, proceeding or demand byany Person, whether based in contract, tort, implied or express warranty,strict liability, criminal or civil statute or common law, including anyarising under or related to any Environmental Laws, environmental permits, orin connection with any release or threatened release or presence of a HazardousMaterial whether on, at, in, under, from or about or in the vicinity of anyreal or personal property.

 

“Eventof Default” shall have the meaning assigned thereto in Section 13.

 

“FiscalQuarter” shall mean any of the quarterly accounting periods of Borrower.

 

“FiscalYear” shall mean the 12-month period of Borrower ending December 31 ofeach year. Subsequent changes of the fiscal year of Borrower shall not changethe term “Fiscal Year,” unless Lender shall consent in writing to such change.

 

“FixedRate” means, with respect to any portion of the Loan that Borrower elects atany time pursuant to Section 3(d) to convert to a fixed rate ofinterest based on the LIBOR Rate, the applicable LIBOR Rate as of the date ofsuch election plus a margin equal to the Applicable Spread.

 

“FixedRate Tranche” shall mean any one of the four interest rate components (eachsuch interest rate component being referred to individually as a “Fixed RateTranche,” and all such interest rate components being referred to collectivelyas the “Fixed Rate Tranches”) of the Loan established pursuant to Section 3,consisting of the Thirty Day Fixed Rate Tranche, the Three Month Fixed RateTranche, the Six Month Fixed Rate Tranche and the One Year Fixed Rate Tranche.

 

“GAAP”shall mean generally accepted accounting principles.

 

“Guarantor”shall mean any Person that has guaranteed to Lender all or any portion of theLoan.

 

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“GuarantyAgreement” shall mean any Continuing Guaranty or other agreement by which aGuarantor has guaranteed all or any portion of the Loan.

 

“HazardousMaterial” shall mean any substance, material or waste that is regulated by orforms the basis of liability now or hereafter under, any Environmental Laws,including any material or substance that is (a) defined as a “solid waste,”“hazardous waste,” “hazardous material,” “hazardous substance,” “extremelyhazardous waste,” “restricted hazardous waste,” “pollutant,” “contaminant,” “hazardousconstituent,” “special waste,” “toxic substance” or other similar term orphrase under any Environmental Laws, (b) petroleum or any fraction orby-product thereof, asbestos, polychlorinated biphenyls (PCBs), or anyradioactive substance.

 

“IndemnifiedPerson” shall mean all Persons indemnified by Borrower pursuant to Section 15.

 

“InterestCoverage Ratio” shall mean, as at any date of determination, the ratio ofConsolidated EBIT for any period to interest expense for such period.

 

“InterestDetermination Date” means the date, as designated by Borrower, on which aportion of the Loan shall begin to bear interest at a Fixed Rate.

 

“InterestPeriod” means, with respect to any portion of the Loan that Borrower elects tohave bear interest at a Fixed Rate, a period beginning on the InterestDetermination Date and ending, at Borrower’s election, either one (1) month,three (3) months, six (6) months, or twelve (12) months thereafter.

 

“Investments”shall mean all expenditures by Borrower and its Subsidiaries, other thanCapital Expenditures, made for the purpose of acquiring, increasing, orsupplementing equity interests of any nature in partnerships, joint ventures,corporations, trusts, associations, or other business entities, or in real orpersonal property of any kind and as reflected as investments in Borrower’sfinancial statements.

 

“LIBORRate” means, for any Interest Determination Date, the rate offered from time totime for U.S. Dollar deposits for the Interest Period selected, as quoted byTelerate News Service as of 11:00 A.M. London setting time (or, at Lender’soption, a comparable reference on the Reuters Screen LIBOR Page or suchother quotation service as may be chosen by Lender) on the first Eurodollarbusiness day of the Interest Period; provided, that if two or more ofsuch offered rates appear on Telerate (or on the Reuters Screen LIBOR Page oralternative service, as the case may be), the “LIBOR Rate” shall be highest ofthe two rates quoted.

 

“Lien”shall mean any mortgage or deed of trust, pledge, hypothecation, assignment,deposit arrangement, lien, charge, claim, security interest or encumbrance, orpreference, priority or other security agreement or preferential arrangement ofany kind or nature whatsoever (including any lease or title retentionagreement, any financing lease having substantially the same economic effect asany of the foregoing).

 

“Make-WholeAmount” shall mean, with respect to any Prepayment of any Fixed Rate Tranche,the amount, if any, by which the Discounted Value of the Remaining

 

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Scheduled Payments with respect to the Prepayment exceeds the amount ofsuch Prepayment; provided, that the Make-Whole Amount shall in no eventbe less than zero.

 

“MaterialAdverse Effect” shall mean a Material Adverse Effect with respect to (i) thebusiness, assets, operations, prospects, or financial or other condition ofBorrower or any Guarantor, (ii) Borrower’s ability to pay its obligationsto Lender under this Agreement, or (iii) Lender’s rights and remediesunder this Agreement or any Guaranty Agreement.

 

“MaturityDate” shall have the meaning set forth in Section 4.

 

“ModificationFee” shall have the meaning set forth in Section 2.

 

“Obligations”shall mean all loans, advances, debts, liabilities, and obligations, for theperformance of covenants, tasks or duties or for payment of monetary amounts(whether or not such performance is then required or contingent, or amounts areliquidated or determinable and whether or not allowed as a claim in anyproceeding referred to in Section 13(f)) owing by Borrower to Lender, andall covenants and duties regarding such amounts, of any kind or nature, presentor future, whether or not evidenced by any note, agreement or other instrument,arising under any of the Other Documents. This term includes the Loan, all principal, interest, fees, charges,expenses, attorneys’ fees and any other sum chargeable to Borrower under thisAgreement or any of the Other Documents.

 

“OneYear Fixed Rate Tranche” shall mean a Fixed Rate Tranche utilizing a fixed rateInterest Period of one year, established pursuant to Section 3.

 

“OtherDocuments” shall mean all of the documents listed in Exhibit A.

 

“PermittedEncumbrances” shall mean the following encumbrances: (i) Liens for taxesor assessments or other governmental charges or levies, either not yet due andpayable or to the extent that nonpayment thereof is permitted by the terms ofthis Agreement; (ii) pledges or deposits securing obligations underworkmen’s compensation, unemployment insurance, social security or publicliability laws or similar legislation; (iii) pledges or deposits securingbids, tenders, contracts (other than contracts for the payment of money) orleases to which Borrower or any Guarantor is a party as lessee made in theordinary course of business; (iv) workers’, mechanics’, suppliers’ orsimilar Liens arising in the ordinary course of business that are either notyet due and payable or that are being contested in good faith by appropriateproceedings and for which Borrower or any Guarantor has established adequatereserves; (v) carriers’, warehousemen’s, or other similar possessory Liensarising in the ordinary course of business; (vi) an attachment or judgmentLien, but only for a period of thirty (30) days following attachment of suchLien and such attachment or judgment lien shall cease to be a PermittedEncumbrance if the obligation that it secures has not been satisfied or bondedduring such thirty (30) day period; (vii) zoning restrictions, easements,licenses, or other restrictions on the use of real property or other minorirregularities in title (including leasehold title) thereto, so long as thesame do not materially impair the use, value, or marketability of such realproperty, leases or leasehold estates; (viii) Liens securing indebtednessowed by a Subsidiary to Borrower; (ix) security interests securingpurchase money indebtedness in capital assets, the acquisition of which ispermitted by this Agreement, and so long as the security interest does notencumber any asset other than the asset acquired; (x) any Lien listed as a

 

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Permitted Encumbrance on the Disclosure Schedule referred to in Exhibit A;(xi) the refinancing of the real property mortgages referred to in theDisclosure Schedule referred to in Exhibit A, provided that suchrefinancing covers the same property covered by the original mortgages, securesa principal amount not in excess of that secured by such mortgages on the dateof refinancing, and the terms of such refinancing have all been negotiated atarms length and are on fair market terms; and (xii) other Liens securingConsolidated Indebtedness not exceeding Fifteen Million Dollars ($15,000,000)in the aggregate outstanding at any time, so long as such other Liens do notattach to any of the Collateral.

 

“Person”shall mean any individual, sole proprietorship, partnership, joint venture,trust, unincorporated organization, association, corporation, limited liabilitycompany, institution, public benefit corporation, entity or government (whetherfederal, state, county, city, municipal or otherwise, including, without limitation,any instrumentality, division, agency, body or department thereof).

 

“Prepayment”shall mean a prepayment, prior to the Maturity Date, of all or any portion ofthe principal amount of the Loan.

 

“PrimeRate” means, on any given day, the “Prime” rate as published from time to timein the Eastern Edition of The Wall Street Journal, or the highest suchrate if more than one is shown, regardless of whether such rate is actuallycharged by any bank, or, in the event that The Wall Street Journalceases publication of such rate, in such other nationally recognized financialpublication of general circulation as Lender may, from time to time, designatein writing based on Lender’s reasonable determination that the rate sopublished is comparable to the “Prime” rate published in the Eastern Edition ofThe Wall Street Journal.

 

“ProcessingFee” shall have the meaning set forth in Section 5.

 

“ReinvestmentYield” shall mean, with respect to any Prepayment of any Fixed Rate Tranche,the yield to maturity implied by (i) the yields reported, as of 10:00 a.m.(New York City time) on the second Business Day preceding the payment date withrespect to such Prepayment, on the display designated as “Page PX 1 “ orother applicable “PX” page of the Bloomberg Financial Markets ServicesScreen (or such other display as may replace Page PX1 or such other page onthe Bloomberg Financial Markets Services Screen) for actively traded U.S.Treasury securities having a maturity equal to the Remaining Average Life ofsuch Prepayment as of such payment date, or (ii) if such yields are notreported as of such time or the yields reported as of such time are notascertainable, the Treasury Constant Maturity Series Yields reported, forthe latest date for which such yields have been so reported as of the secondBusiness Day preceding the payment date with respect to such Prepayment, inFederal Reserve Statistical Release H.15 (519) (or any comparable successorpublication) for actively traded U.S. Treasury securities having a constant maturityequal to the Remaining Average Life of such Prepayment as of such paymentdate.  Such implied yield will bedetermined, if necessary, by (a) converting U.S. Treasury bill quotationsto bond-equivalent yields in accordance with accepted financial practice and (b) interpolatinglinearly between (1) the actively traded U.S. Treasury security with thematurity closest to and greater than the Remaining Average Life and (2) theactively traded U.S. Treasury security with the maturity closest to and lessthan the Remaining Average Life.

 

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“RemainingAverage Life” shall mean, with respect to any Prepayment of any Fixed RateTranche, the number of years (calculated to the nearest one-twelfth year)obtained by: (i) multiplying (a) the principal component of eachRemaining Scheduled Payment covered by such Prepayment by (b) the numberof years (calculated to the nearest one-twelfth year) that will elapse betweenthe date of such Prepayment and the scheduled due date of such RemainingScheduled Payment; (ii) adding the products of each such calculation; and (iii) dividingthe resulting sum by the amount of such Prepayment.

 

“RemainingScheduled Payments” shall mean, with respect to any Prepayment of any FixedRate Tranche, all payments and interest that would be due after the date of thePrepayment and on or prior to the next Reset Date with respect to the principalprepaid if such Prepayment were not made; provided, that if such paymentdate is not a date on which interest payments are due to be made under theterms of this Agreement, then the amount of the next succeeding scheduledinterest payment will be reduced by the amount of interest accrued to suchpayment date and required to be paid on such payment date pursuant to thisAgreement.

 

“ResetDate” shall mean (i) with respect to the Three Year Fixed Rate Tranche, December 1,2005, (ii) with respect to a Fixed Rate Tranche, expiration of theapplicable Interest Rate Period, and (iii) with respect to all other portionsof the Loan, daily.

 

“RestrictedPayments” shall mean (i) dividends or other distributions or payments onaccount of or with respect to any capital stock of Borrower or of anyGuarantor, except distributions consisting of such stock or, in the case of aGuarantor, distributions or payments made to Borrower, (ii) the redemptionor acquisition of such stock or of warrants, rights, or other options topurchase such stock, except, in the case of a Guarantor, redemption oracquisition of stock held by Borrower, and (iii) any payment, repayment,redemption, retirement, repurchase or other acquisition, direct or indirect, byBorrower, any Guarantor or any Subsidiary of Borrower or any Guarantor of anyprincipal portion of any obligation or indebtedness that has been subordinatedto the indebtedness owed by Borrower to Lender.

 

“RevolvingLoan” means the revolving line of credit referred to in Section 3 of thisAgreement.

 

“SixMonth Fixed Rate Tranche” shall mean a Fixed Rate Tranche utilizing a fixedrate Interest Period of six months, established pursuant to Section 3.

 

“Stock”shall mean all shares, options, warrants, general or limited partnershipinterests, participations or other equivalents (regardless of how designated)of or in a corporation, partnership or equivalent entity whether voting ornonvoting, including, without limitation, common stock, preferred stock, or anyother “equity security” (as such term is defined in Rule 3a11-1 of theGeneral Rules and Regulations promulgated by the Securities and ExchangeCommission under the Securities Exchange Act of 1934, as amended).

 

“Subsidiary”shall mean, with respect to any Person, (i) any corporation of which anaggregate of more than fifty percent (50%) of the outstanding Stock havingordinary voting power to elect a majority of the board of directors of suchcorporation (irrespective of whether, at the time, Stock of any other class orclasses of such corporation shall have or might have voting power by reason ofthe happening of any contingency) is at the

 

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time, directly or indirectly, owned legally or beneficially by suchPerson and/or one or more Subsidiaries of such Person, or with respect to whichany such Person has the right to vote or designate the vote of fifty percent(50%) or more of such Stock whether by proxy, agreement, operation of law orotherwise and (ii) any partnership, trust, limited liability company, orother entity in which such Person and/or one or more Subsidiaries of suchPerson shall have an interest (whether in the form of voting or participationin profits or capital contribution) of more than fifty percent (50%) or ofwhich any such Person is a general partner or may exercise the powers of ageneral partner.

 

“TermLoan” shall mean the $15,000,000 term loan advanced by Lender to Borrowerpursuant to and in accordance with the Term Loan Agreement.  As of the Effective Date the outstandingprincipal balance of the Term Loan was Thirteen Million Five Hundred Thousand($13,500,000).

 

“Thirty-DayFixed Rate Tranche” shall mean a Fixed Rate Tranche utilizing a fixed rateInterest Period of thirty days, established pursuant to Section 3.

 

“ThreeMonth Fixed Rate Tranche” shall mean a Fixed Rate Tranche utilizing a fixedrate Interest Period of three months, established pursuant to Section 3.

 

“ThreeYear Fixed Rate Tranche” shall mean the Fixed Rate Tranche for Four MillionDollars ($4,000,000) previously established pursuant to Section 2 of theTerm Loan Agreement.

 

(b)           Rules of Construction.Unless otherwise specified, references in this Agreement to a Section,Subsection, clause, Exhibit, or Schedule refer to such Section,Subsection, clause, Exhibit, or Schedule as contained in this Agreement.The words “herein,” hereof,” and “hereunder” and other words of similar importrefer to this Agreement as a whole, including all Exhibits and Scheduleshereto, as the same may from time to time be amended, restated, modified orsupplemented. Wherever from the context it appears appropriate, each termstated in either the singular or plural shall include the singular and theplural. The words “including,” “includes,” and “include” shall be deemed to befollowed by the words “without limitation”; references to persons include theirrespective successors and assigns, to the extent permitted by the loandocuments executed in connection with this Agreement, or, in the case ofgovernmental persons, persons succeeding to the relevant functions of suchpersons; all references to statutes and related regulations shall include anyamendments of the same and any successor statutes and regulations; whenever anyprovision in this Agreement or any such loan document refers to the knowledge(or analogous phrase) of Borrower or any Affiliate of Borrower, such words areintended to signify that Borrower or such Affiliate has actual knowledge orawareness of a particular fact or circumstance of that Borrower or suchAffiliate, if it had exercised reasonable due diligence, would have known orbeen aware of such fact or circumstance.

 

2.             Conditions Precedent. Lender’sobligation to make any Advances under the Loan hereunder is subject to thefollowing conditions precedent:

 

(a)           Required Documents. Lendermust have received from Borrower either an executed original, or a facsimile ofthe signature page of an executed original, of this Agreement

 

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as well as all of the other documents (the “Other Documents”) listed inExhibit A, each of which must be satisfactory to Lender in its solediscretion.

 

(b)           INTENTIONALLY OMITTED  

 

(c)           Approvals. Lender shall havereceived evidence satisfactory to Lender that all consents and approvals whichare necessary for or required as a condition of the validity and enforceabilityof this Agreement and all documents and instruments contemplated hereby, havebeen obtained and are in full force and effect.

 

(d)           Event of Default. No Defaultor Event of Default shall have occurred and be continuing, and no default orevent of default shall have occurred and be continuing under this Agreement.

 

(e)           Loan Fees. Borrower shall havepaid to Lender the Modification Fee and the Processing Fee required by Section 5.

 

(f)            Continuing Guaranty Agreements.Borrower shall have delivered to Lender continuing guaranty agreements, in formand substance satisfactory to Lender, from the persons identified on Exhibit Apursuant to which such Persons guarantee to Lender all of Borrower’sobligations to Lender under this Agreement.

 

(g)           Title Insurance Endorsements.Borrower shall have caused Lender’s title insurer to issue to Lender, atBorrower’s expense, a revolving credit endorsement to Lender’s title insurancepolicy together with such other and additional endorsements as lender mayrequire.

 

3.             Conversion to Revolving Loan;Base Rate; Fixed Rate Tranches.

 

(a)           Loan Conversion. On the termsand conditions set forth in this Agreement, Lender agrees to make available,from time to time, until the Maturity Date, advances (each, an “Advance”, andcollectively, the “Revolving Loan”) to Borrower, so long as such advance shallnot cause the aggregate principal balance of the Loan to at any time exceedThirteen Million Five Hundred Thousand Dollars ($13,500,000).  The amount of any Advance shall be not lessthan Two Hundred Fifty Thousand Dollars ($250,000) and shall be in integralmultiples of Fifty Thousand Dollars ($50,000). When all conditions precedent set forth in Section 2 have beensatisfied, the Revolving Loan shall be used to refinance all obligations ofBorrower to Lender under the Term Loan other than those encompassed by theThree Year Fixed Rate Tranche.  On December 1,2005, the then outstanding balance of the Three Year Fixed Rate Tranche shallbe added to the outstanding balance of the Revolving Loan.

 

(b)           Revolving Nature of Loan. TheLoan is a revolving line of credit and Borrower may borrow, repay principal,and reborrow in accordance with the terms of this Agreement.  Borrower may request advances in amounts ofnot less than $250,000 per draw and in multiples of $50,000 by delivering toLender at its office located at  5560South Broadway, Eureka California a written request by no later than 11:00 a.m.PST on the day of the proposed disbursement. Advances will be disbursed via wire transfer of federal funds toBorrower’s account no. 61-058745 at Bank of Hawaii.

 

(c)           Base Rate. The Loan shall bearinterest at the Base Rate, unless Borrower elects to convert the interest rateto the Fixed Rate in accordance with the provisions of Section

 

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3(d).  Notwithstanding any otherprovision of this Agreement to the contrary, until but not including December 1,2005, the Three Year Fixed Rate Tranche shall bear interest at the fixed rateof 5.98% per annum.

 

(d)           Fixed Rate Options.

 

(1)           Fixed Rate Based on the LIBOR Rate.Borrower may, from time to time, elect to convert all or a portion of the Loanto a Fixed Rate based on the LIBOR Rate for the LIBOR Interest Period specifiedby Borrower; provided, that (i) at least three (3) BusinessDays prior to the proposed Interest Determination Date, Borrower has providedLender with written notice of such election, the requested InterestDetermination Date, and the amount of the Advances to be converted, (ii) atthe time of delivery of such written notice and upon the date of conversion, noDefault or Event of Default exists under this Agreement, (iii) at no timeshall there be more than six (6) outstanding tranches of the Loan bearinginterest at the LIBOR Fixed Rate, (iv) the last day of the Interest Periodchosen by Borrower shall not extend beyond the Maturity Date, and (v) theamount converted to the LIBOR Fixed Rate at any one time shall be not less thanFive Hundred Thousand Dollars ($500,000) and any amounts in excess thereofshall be in integral multiples of Fifty Thousand Dollars ($50,000).

 

(2)           Elections Are Irrevocable;Automatic Conversion to Base Rate if No Additional Fixed Rate Election. Anyelection by Borrower pursuant to this Section 3(d)(2) shall beirrevocable during the Interest Period selected by Borrower, and that portionof the Loan so converted shall bear interest at the applicable Fixed Rate untilthe expiration of the applicable Interest Period at which time, unless anotherFixed Rate has been duly elected by Borrower pursuant to this Section 3(d)(2),the interest rate for such portion of the Loan will automatically convert tothe Base Rate.

 

(e)           No Designation Upon Occurrence ofa Default or Event of Default. If a Default or Event of Default shall haveoccurred, then, during the continuance of such Default or Event of Default,Borrower shall have no right to designate the Fixed Rate for any portion of theLoan.  If an Event of Default shall haveoccurred and is continuing, any portion of the Loan bearing interest at theFixed Rate shall, at the end of the relevant Interest Period, convert to theDefault Rate calculated with reference to the Base Rate. If such Default orEvent of Default shall subsequently be cured, Borrower may thereafter designateInterest Periods in accordance with this Agreement.

 

(f)            Computation of Interest. Allcomputations of interest at the Fixed Rate shall be made by Lender on the basisof a three hundred sixty (360) day year for the actual number of days occurringin the period for which such interest is payable.  All computations of interest at the Base Rateshall be made by Lender on the basis of a three hundred sixty five (365) dayyear, in each case for the actual number of days occurring in the period forwhich such interest is payable.  Interestdetermined by reference to the Base Rate shall be determined on a daily basisfor use in calculating the interest that is payable for such day, and anychange in the Base Rate shall become effective on the day such changeoccurs.  Each determination by Lender ofan interest rate hereunder shall be conclusive and binding for all purposes,absent manifest error or bad faith.

 

(g)           Default Rate. Any overdueprincipal or interest with respect to any portion of the Loan, and the amountof any fees, costs, or expenses that Borrower is obligated to pay to

 

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Lender under this Agreement not paid when due, shall bear interest,payable on demand, for each day until paid at a rate per annum equal to the DefaultRate.  In addition, upon and after theoccurrence of an Event of Default and continuing until such Event of Defaulthas been cured or waived in writing by Lender in accordance with the terms ofthis Agreement, interest shall accrue on all obligations owed by Borrowerhereunder at the Default Rate.  Theinterest rate increase to the Default Rate shall take effect immediately uponthe occurrence of an Event of Default, without prior notice to Borrower.

 

(h)           Interest Not to Exceed MaximumLawful Rate. Notwithstanding anything to the contrary set forth in thisAgreement, if at any time until payment in full of all of obligations underthis Agreement, the rate of interest payable hereunder exceeds the highest rateof interest permissible under any law which a court of competent jurisdictionshall, in a final determination, deem applicable hereto (the “Maximum LawfulRate”), then in such event and so long as the Maximum Lawful Rate would be soexceeded, the rate of interest payable hereunder shall be equal to the MaximumLawful Rate; provided, that if at any time thereafter the rate of interestpayable hereunder is less than the Maximum Lawful Rate, Borrower shall continueto pay interest hereunder at the Maximum Lawful Rate until such time as thetotal interest received by Lender is equal to the total interest which Lenderwould have received had the interest rate payable hereunder been (but for theoperation of this Section 3(h) the interest rate payable since thedate of this Agreement. Thereafter, the interest rate payable hereunder shallbe the rate of interest set forth herein, unless and until the rate of interestagain exceeds the Maximum Lawful Rate, in which event this paragraph shallagain apply. In no event shall the total interest received by Lender pursuantto the terms hereof exceed the amount which Lender could lawfully have receivedhad the interest due hereunder been calculated for the full term hereof at theMaximum Lawful Rate. In the event the Maximum Lawful Rate is calculatedpursuant to this Section 3(h), such interest shall be calculated at adaily rate equal to the Maximum Lawful Rate divided by the number of days inthe year in which such calculation is made. In the event that a court ofcompetent jurisdiction, notwithstanding the provisions of this Section 3(h),shall make a final determination that Lender has received interest hereunder inexcess of the Maximum Lawful Rate, Lender shall, to the extent permitted byapplicable law, promptly apply such excess first to any interest due and notyet paid, then to the outstanding principal of the Loan (without premium orpenalty), and then to any other unpaid obligations owed by Borrower under thisAgreement and thereafter shall refund any excess to Borrower or as a court ofcompetent jurisdiction may otherwise order.

 

(i)            Additional Fixed Rate Provisions.If at any time Lender reasonably determines that for any reason adequate andreasonable means do not exist for ascertaining the LIBOR Rate or any otherindex hereunder or the LIBOR Rate or any such index generally becomesunavailable to Lender, Lender shall promptly give notice thereof to Borrowerand shall designate an alternative index that is reasonably comparable to theLIBOR Rate or such other index; provided, that Lender’s determination underthis Section 3(i) as to Borrower shall be in accordance with itstreatment of other borrowers under commercial loans generally. In the eventthat any law, treaty, rule, regulation, or determination of a court orgovernmental authority or any change therein or in the interpretation orapplication thereof or compliance by Lender or Lender with any request ordirective (whether or not having the force of law) from any central bank orgovernmental authority:

 

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(1)           shall subject Lender to any tax ofany kind whatsoever with respect to any LIBOR Rate, or change the basis oftaxation of payments to Lender of principal, interest or any other amountpayable under this Agreement (except for changes in the rate of tax on theoverall net income of Lender); or

 

(2)           shall impose, modify, or holdapplicable any reserve, special deposit, compulsory loan, or similarrequirement against assets held by, or deposits or other liabilities in or forthe account of, advances or loans by, or other credit extended by, or any otheracquisition of funds by, any office of Lender; or

 

(3)           shall impose on Lender any othercondition; and the result of any of the foregoing is to increase the cost toLender of making, renewing, or maintaining any portion of the Loan withinterest rates tied to the LIBOR Rate and/or to reduce any amount receivable byLender in connection therewith; then in any such case, Borrower shall pay toLender, immediately upon demand, such amount or amounts as may be necessary tocompensate Lender for any additional costs incurred by Lender and/or reductionsin amounts received by Lender which are attributable to LIBOR Rates madeavailable to Borrower hereunder. In determining which costs incurred by Lenderor reductions in amounts received by Lender are attributable to such LIBORRates, any reasonable allocation made by Lender among its operations shall beconclusive and binding upon Borrower; provided, that Lender’sdetermination under this Section 3(i)(3) as to Borrower is inaccordance with its treatment of other borrowers under commercial loansgenerally.

 

4.             Repayment Terms. 

 

(a)           Interest Only. Borrower shallpay interest on the Loan, in arrears, every three (3) months, commencingon September 1, 2005, and continuing on the first day of each December,March, June and September thereafter; provided,thatinterest accrued on the Loan but not otherwise due and payable at theexpiration of an Interest Period or on the Maturity Date shall become due andpayable on such expiration date or the Maturity Date, respectively.  If any installment of interest or any otheramount payable hereunder or under any Other Document becomes due and payable ona day other than a Business Day, the payment date for such payment shall be extendedto the next succeeding Business Day and, with respect to payments of principalor other payments that bear interest (other than interest first due on suchdate), interest thereon shall be payable at the then applicable rate duringsuch extension; provided, that if any installment of interest shallbecome due and payable on a Friday or Saturday, the payment date for suchpayment shall be the immediately preceding Business Day.

 

(b)           Maturity Date. If not soonerpaid, the Loan shall be due and payable in full on June 1, 2009 (the “MaturityDate”); provided, that if the Obligations shall become due and payablein accordance with Section 14 or any other provision of this Agreementprior to such date, then the Maturity Date shall be the date on which the Obligationsbecome due and payable.

 

(c)           Payments Due on Business Days.If any installment of interest or any other amount payable under any LoanDocument becomes due and payable on a day other than a Business Day, thepayment date for such payment shall be extended to the next succeeding BusinessDay and, with respect to payments of principal or other payments that bearinterest (other than interest first due on such date), interest thereon shallbe payable at the then applicable

 

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rate during such extension; provided, however, if any installment ofinterest at the Fixed Rate shall become due and payable on a Saturday, thepayment date for such payment shall be the preceding Business Day.

 

(d)           Interest Rates. 

 

(1)           Base Rate. The Loan shall bearinterest at the Base Rate, unless Borrower elects to convert the interest rateto a Fixed Rate in accordance with the provisions of Section 3(d).

 

(2)           Interest on Fixed Rate Tranches.Each Fixed Rate Tranche shall bear interest, from the Closing Date through thedate on which such Fixed Rate Tranche is paid in full, at a rate per annumequal to the sum of (i) the applicable LIBOR Rate for such Fixed RateTranche, plus (ii) the Applicable Spread for the Interest Period thenin effect for such Fixed Rate Tranche.

 

(3)           Adjustment in Applicable Spread.Commencing with the receipt of the quarterly financial statements of Borrowerfor the period ended June 30, 2005, and continuing quarterly thereafterwithin thirty (30) days after the end of each calendar quarter, the ApplicableSpreads for the Interest Period then in effect for each Fixed Rate Tranche andfor that portion of the Loan bearing interest at the Base Rate shall bedetermined, in the manner set forth below, to be the Applicable Spread for theInterest Period then in effect for such Fixed Rate Tranche or otherwise forthat portion of the Loan bearing interest at the Base Rate, based on Borrower’sConsolidated Funded Debt to Consolidated Net Worth Ratio, for the immediatelypreceding Fiscal Year:

 
| **Consolidated Funded Debt to  Consolidated  Net Worth Ratio Level** | ** ** | **Applicable Spread** | ** ** |
|----------------------------------------------------------------------|------------|-----------------------|------------|
| ** **                                                           | ** ** | **LIBOR FIXED RATE**  | ** ** | **BASE RATE** | ** ** |
| Less than or  equal to 0.25                                          |       | 140                   |       | 0 |   |
| Greater than  0.25 but less than or equal to 0.50                    |       | 165                   |       | 0 |   |
| Greater than 0.50  but less than or equal to 0.75                    |       | 190                   |       | 0 |   |
| Greater than  0.75 but less than or equal to 1.00                    |       | 215                   |       | 25 |   |
| Greater than  1.00                                                   |       | 240                   |       | 75 |   |

 

Notwithstanding anyprovision to the contrary: (i) the Applicable Spread for any Fixed RateTranche shall not adjust until the Reset Date for such Fixed Rate Trancheimmediately following Borrower’s delivery to Lender of the annual, auditedfinancial statements required pursuant to Section 11(g)(1) confirmingany such adjustment; (ii) if either (x) Borrower fails to deliver toLender, on a timely basis, the annual, audited financial statements requiredpursuant to Section 11(g)(1), and such failure is not waived by Lender, or(y) any other Default or Event of Default occurs and is continuing, then fromand after such failure or Default or Event of Default the Applicable Margin forinterest payable at the Base Rate and for each Fixed Rate Tranche shall be thatset forth in the row above entitled “Greater than 1.00;” and (iii) theApplicable Spread for any Fixed Rate Tranche shall not adjust retroactively forany Interest Period that has expired prior to such Reset Date.  The Applicable Spread shall not include anyprepayment surcharge that may be payable pursuant to Section 6(d).

 

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(4)           Calculation of Interest. Allcalculations of interest for any Fixed Rate Tranche shall be made by Lender onthe basis of a three hundred sixty (360) day year consisting of twelve (12)months of thirty (30) days per month. Each determination by Lender of aninterest rate hereunder shall be conclusive and binding for all purposes,absent manifest error or bad faith.

 

(5)           Default Rate. Any overdueprincipal or interest with respect to any portion of the Loan, and the amountof any fees, costs, or expenses that Borrower is obligated to pay to Lenderunder this Agreement not paid when due, shall bear interest, payable on demand,for each day until paid at a rate per annum equal to the Default Rate. Inaddition, upon and after the occurrence of an Event of Default and continuinguntil such Event of Default has been cured or waived in writing by Lender inaccordance with the terms of this Agreement, interest shall accrue on allobligations owed by Borrower to Lender hereunder at the Default Rate. Theinterest rate increase to the Default Rate shall take effect immediately uponthe occurrence of an Event of Default, without prior notice to Borrower.

 

(6)           Additional Fixed Rate Provisions.If at any time Lender reasonably determines that for any reason adequate andreasonable means do not exist for ascertaining the LIBOR Rate or any otherindex hereunder, or any such rate or index generally becomes unavailable toLender, Lender shall promptly give notice thereof to Borrower and shalldesignate an alternative index that is reasonably comparable to the LIBOR orsuch other index; provided,that Lender’s determination underthis Section 4(d)(6) as to Borrower shall be in accordance with itstreatment of other borrowers under commercial loans generally. In the event thatany law, treaty, rule, regulation, or determination of a court or governmentalauthority or any change therein or in the interpretation or application thereofor compliance by Lender with any request or directive (whether or not havingthe force of law) from any central bank or governmental authority:

 

(A)          shall subject Lender to any tax of anykind whatsoever with respect to any rate, or change the basis of taxation ofpayments to Lender of principal, interest or any other amount payable underthis Agreement (except for changes in the rate of tax on the overall net incomeof Lender); or

 

(B)           shall impose, modify, or holdapplicable any reserve, special deposit, compulsory loan, or similarrequirement against assets held by, or deposits or other liabilities in or forthe account of, advances or loans by, or other credit extended by, or any otheracquisition of funds by Lender; or

 

(C)           shall impose on Lender any othercondition; and the result of any of the foregoing is to increase the cost toLender of making, renewing, or maintaining any portion of the Loan withinterest rates tied to rate and/or to reduce any amount receivable by Lender inconnection therewith;

 

then in any such case,Borrower shall pay to Lender, immediately upon demand, such amount or amountsas may be necessary to compensate Lender for any additional costs incurred byLender and/or reductions in amounts received by Lender which are attributableto such rates made available to Borrower hereunder. In determining which costsincurred by Lender or reductions in amounts received by Lender are attributableto such rates, any reasonable allocation made by Lender among its operationsshall be conclusive and binding upon

 

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Borrower; provided, thatLender’s determination under this Section 4(d)(6) as to Borrower isin accordance with its treatment of other borrowers under commercial loansgenerally.

 

(e)           Unused Commitment Fee. Inconsideration of Lender remaining committed to fund the full amount of the Loanregardless of Borrower’s actual utilization of the entire commitment, Borrowershall pay to Lender a quarterly unused commitment fee (the “Unused CommitmentFee”) equal to quantity obtained by multiplying the average daily balance ofthe unfunded commitment during the quarter most recently ended by one quarterof one percent (0.25%) (the “Unused Commitment Fee Percentage”).  The Unused Commitment Fee shall be paid toLender on the first (1st) day of each calendar quarter, commencing on September 1,2005, with respect to the previous calendar quarter and on the Maturity Datewith respect to the period from the last full calendar quarter through theMaturity Date.  Commencing with thereceipt of the quarterly financial statements of Borrower for the period ended September 30,2005, and continuing quarterly thereafter within thirty (30) days after the endof each calendar quarter, the Unused Commitment Fee Percentage shall beadjusted, in the manner set forth below, to be equal to the percentage set forthin the table below, based on Borrower’s Consolidated Funded Debt toConsolidated Net Worth Ratio, for the immediately preceding Fiscal Year:

 
| **Consolidated  Funded Debt to Consolidated  Net Worth Ratio Level** | ** ** | **Unused Commitment Fee** | ** ** |
|----------------------------------------------------------------------|------------|---------------------------|------------|
| Less than or  equal to 0.25                                          |       | .25%                      |       |
| Greater than  0.25 but less than or equal to 0.50                    |       | .25%                      |       |
| Greater than  0.50 but less than or equal to 0.75                    |       | .30%                      |       |
| Greater than  0.75 but less than or equal to 1.00                    |       | .35%                      |       |
| Greater than  1.00                                                   |       | .40%                      |       |

 

5.             Modification and Processing Fees.In consideration of the execution and delivery of this Agreement by Lender,Borrower shall pay to Lender a loan modification fee of Thirteen Thousand FiveHundred Dollars ($13,575) (the “Modification Fee”), which Modification Fee isequal to one tenth of one percent (0.10%) of the revolving loan commitment madeavailable to Borrower by Lender, and a processing fee in the amount of TenThousand Dollars ($10,000).  TheModification Fee and the Processing Fee shall be due and payable upon theClosing Date.  The full amount of theModification Fee and Processing Fee shall be considered earned upon receipt andno portion of the either the Modification Fee or the Processing Fee shall berefundable to Borrower under any circumstances.

 

6.             Prepayments. 

 

(a)           Prepayment in Full of Loan.Borrower shall have the right at any time to make a voluntary Prepayment of theentire amount of the Loan and to terminate this Agreement upon at least thirty(30) Business Days prior notice to Lender and payment, in full, of the Loan andall interest, fees, reimbursable expenses, and other Obligations as of the dateof such Prepayment and, if such Prepayment does not occur on a date that is aReset Date for each Fixed Rate Tranche, the surcharge or surcharges describedin Section 6(d) shall apply.

 

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(b)           Prepayment of any Fixed RateTranche on Reset Date. Borrower shall have the right at any time to make avoluntary Prepayment of the entire amount or any portion of any Fixed RateTranche upon any Reset Date for such Fixed Rate Tranche, without premium orsurcharge, upon at least thirty (30) Business Days prior notice to Lender.  If such Prepayment is for the entire amountof such Fixed Rate Tranche, such Prepayment must include all accrued intereston such Fixed Rate Tranche as of the date of such Prepayment. Each such partialPrepayment of a Fixed Rate Tranche shall be applied in inverse order ofmaturity, and shall not result in an extension or other adjustment of theexisting amortization schedule for such Fixed Rate Tranche.

 

(c)           Partial Prepayment of Loan OtherThan on Reset Date. Borrower shall have the right at any time to make suchPrepayment of any portion of the Loan on any date other than a Reset Date forsuch portion, so long as Borrower provides at least five (5) Business Daysnotice to Lender and pays the surcharges calculated in accordance with Section 6(d).  Unless otherwise approved by Lender, in itsdiscretion, all such partial Prepayments shall be applied by Lender on a prorata basis to each Fixed Rate Tranche then outstanding in the same proportionas the principal balance of such Fixed Rate Tranche bears to the aggregateprincipal balance of the Loan then outstanding. Each such partial Prepayment of the Loan shall be applied in inverseorder of maturity to the Fixed Rate Tranches to which it is applied, and shallnot result in an extension or other adjustment of the existing amortization schedule forany Fixed Rate Tranche.

 

(d)           Prepayment Surcharges. Exceptto the extent otherwise provided in Sections 6(a) and (b), at the timethat Borrower makes a Prepayment, whether or not such Prepayment is voluntaryby or on behalf of Borrower and specifically including a prepayment occurringas the result of an acceleration of the Loan, Borrower shall simultaneously payto Lender a prepayment surcharge for each Fixed Rate Tranche of the Loan soprepaid determined as follows:

 

(1)           the prepayment surcharge applicableto a Prepayment of the One Month Fixed Rate Tranche or the Three Month Fixed RateTranche or the Six Month Fixed Rate Tranche or the One Year Fixed Rate Trancheshall be an amount equal to any loss of earnings through the next Reset Datefor such Fixed Rate Tranche, plus any other expense of Lender or itsparticipants incurred or projected by Lender as a result of such Prepayment, ineach case as reasonably determined by Lender; and

 

(2)           the prepayment surcharge applicableto a Prepayment of the Three Year Fixed Rate Tranche shall equal the Make-WholeAmount.

 

7.             Manner and Time of Payment.Borrower shall make all payments by wire transfer of immediately availablefunds as follows:

 
| To:              |   | US AgBank                |
|------------------|--------|--------------------------|
|             |   | Wichita, Kansas          |
|             |   |                     |
| ABA Routing No.: |   | 101104562A               |
| Account Number:  |   | 11575000                 |
| Account Name:    |   | American  AgCredit, FLCA |
| Reference:       |   | Loan #  0426195000       |
| Attention:       |   | Tina Anaya,  Accounting  |

 

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|        |   | P.O. Box  1120, Santa Rosa, CA 95492 |
|-------------|--------|-------------------------------------------|
|        |   | Tel: (707)  545-1200                      |
|        |   | Fax: (707)  545-4446                      |
| Tax ID No.: |   | 94-1160795                                |

 

(or to such other accountas Lender may designate by notice). Borrower shall give Lender telephonicnotice no later than 12:00 noon Pacific Time of its intent to make a wiretransfer. Wire transfers received after 2:00 p.m. Pacific Time shall becredited on the next Business Day.

 

8.             Capitalization.  Borrower agrees to make such investments inLender as Lender may from time to time require in accordance with Lender’sbylaws and capital plan. In connection with the foregoing, the Borrower herebyacknowledges receipt, prior to the execution of this document, of copies of thefollowing: Notice Regarding Your Required Investment in this Association, 2004Annual Report, and the Association’s Capitalization Plan and Bylaws.  All such investments and all other equitieswhich the Borrower may now own or hereafter acquire or be allocated in Lendershall be subject to a statutory first lien in favor of Lender to secure anyindebtedness of Borrower to Lender.

 

At theoption of Lender, any amounts borrowed to purchase capital stock orparticipation certificates, and any amounts repaid from redemption of suchstock or certificates, may be recorded as part of the loan accounting in thetransaction summary, or in a separate stock or loan account.

 

Acertificate will not be issued for capital stock or participation certificates,but ownership will be evidenced by the records of Lender. THE OWNERSHIP OF THECAPITAL STOCK OR PARTICIPATION CERTIFICATES WILL BE REGISTERED ON THE RECORDSOF LENDER AS FOLLOWS: MAUI LAND & PINEAPPLE COMPANY, INC., A HAWAIICORPORATION.

 

Borrowerhereby grants to Lender a security interest in and lien upon all capital stockand participation certificates as collateral for the Loan. Upon an Event ofDefault, Lender may but is not required to apply all or part of the proceedsfrom such capital stock or participation certificates against the Loan.

 

UNTILWRITTEN NOTICE OF REVOCATION IS RECEIVED BY LENDER, FRED RICKERT IS AUTHORIZEDTO VOTE FOR THE ABOVE-NAMED BORROWER AND IS AUTHORIZED TO REQUEST THECONVERSION FROM ONE CLASS TO ANOTHER OF ALL SHARES OF CAPITAL STOCK WHICH MAY BEREGISTERED IN THE NAME OF BORROWER.

 

Asrequired by Lender’s bylaws and the federal income tax law, Borrower agreesthat the amount of any distribution of patronage made by written notice ofallocation to Borrower after the date of this Agreement will be included in theBorrower’s gross income for the purpose of federal income tax for the year inwhich the notice is received.

 

Lenderhereby confirms that, as of the date of this Agreement, Borrower has made allinvestments in Lender currently required under its bylaws and capital plan.

 

9.             Collateral; No Subordination.The obligations of Borrower to Lender hereunder shall be secured as follows: (i) Lendershall have first priority Liens on Borrower’s fee interests in the realproperty located on the Island and County of Maui, State of Hawaii andidentified as

 

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Tax Map Key parcel numbers (2) 2-4-001-003, (2) 2-3-002-008, (2) 2-3-009-008,  and (2) 4-3-001-031; (ii) Lendershall have the lien referred to in Section 8 and any other liens providedby the Farm Credit Act; and (iii) Lender shall have, and Borrower herebygrants Lender a security interest in, all cash, accounts, securities,investment property, instruments, documents, or other property of Borrower thatis in Lender’s possession or under its control (the items described in clauses(i), (ii), and (iii) collectively, the “Collateral”). The obligations ofBorrower to Lender under this Agreement shall constitute senior indebtednessand are not subordinate in payment or priority to any other obligations ofBorrower.

 

10.           Representations and Warranties.Borrower represents and warrants to Lender that, except as may be set forth inthe disclosure schedule referred to in Exhibit A (the “DisclosureSchedule”) or in a subsequent written disclosure to Lender, each of thefollowing statements is true and correct on the date hereof and shall also betrue and correct on the date that Borrower requests the Loan and at all timesthereafter:

 

(a)           Corporate Existence; Compliancewith Law and Agreements. Borrower and each Guarantor: (i) arecorporations duly organized, validly existing and in good standing under thelaws of the State of Hawaii; (ii) are duly qualified as foreigncorporations and in good standing under the laws of each jurisdiction wheretheir ownership or lease of property or the conduct of their businesses requiresuch qualification (except for jurisdictions in which such failure to soqualify or to be in good standing would not have a Material Adverse Effect); (iii) havethe requisite corporate power and authority and the legal right to own, pledge,mortgage, or otherwise encumber and operate all real property that they own, tolease the real property they operate under lease, and to conduct theirbusinesses as now, heretofore, and proposed to be conducted; (iv) have allmaterial licenses, permits, consents, or approvals from or by, and have madeall material filings with, and have given all material notices to, allgovernmental authorities having jurisdiction, to the extent required for suchownership, operation, and conduct; (v) are in compliance with theirarticles or certificates of incorporation and by-laws; (vi) are incompliance with all applicable provisions of law where the failure to complywould have a Material Adverse Effect, and (vii) are not in default, and,to Borrower’s knowledge, no third party is in default, under or with respect toany contract, agreement, lease or other instrument to which Borrower or any Guarantoris a party which default in each case or in the aggregate would have a MaterialAdverse Effect.

 

(b)           Corporate Power; Authorization;Enforceable Obligations. The execution, delivery, and performance byBorrower of the Agreement, and any Other Documents to which Borrower is aparty, and by each Guarantor of such Guarantor’s Guaranty Agreement: (i) arewithin Borrower’s or such Guarantor’s corporate power; (ii) have been dulyauthorized by all necessary or proper corporate action; (iii) are not incontravention of any provision of Borrower’s or such Guarantor’s articles of orcertificate of incorporation or by-laws; (iv) will not violate any law orregulation, or any order or decree of any court or governmentalinstrumentality; (v) will not conflict with or result in the breach ortermination of, constitute a default under or accelerate any performancerequired by, any material indenture, mortgage, deed of trust, lease, agreementor other instrument to which Borrower or any Guarantor is a party or by whichBorrower or any Guarantor or any of Borrower’s or any Guarantor’s property isbound; (vi) will not result in the creation or imposition of any lien uponany of the property of Borrower or any Guarantor; and (vii) do not requirethe consent or approval of any governmental authority or any other Person,except

 

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for consents or approvals which have been duly obtained, made, orcomplied with. This Agreement constitutes a legal, valid, and binding obligationof Borrower enforceable against it in accordance with its terms except forgeneral principles of equity and the effect of bankruptcy, insolvency, andother laws affecting the rights of creditors generally.

 

(c)           Financial Statements andCondition; Disclosure. The current audited and unaudited financialstatements previously delivered by Borrower to Lender, and all financialstatements to be delivered by Borrower to Lender pursuant to Section 11(g) fairlypresent in all material respects the financial position of Borrower as of thedates specified in such financial statements, (i) have been prepared inaccordance with GAAP, consistently applied throughout the periods involvedexcept as set forth in the notes thereto (subject, in the case of any interimfinancial statements, to normal year-end adjustments), and (ii) do notcontain any untrue statement of a material fact or omit to state any materialfact necessary to make the statements therein not misleading in light of thecircumstances under which they were made. There has been no material adversechange in the financial condition, operations, business, properties orprospects of Borrower since the date of such financial statements exceptchanges that individually or in the aggregate could not reasonably be expectedto have a Material Adverse Effect. There is no fact or circumstance known toBorrower that could reasonably be expected to have a Material Adverse Effect.Borrower is solvent and will continue to be solvent after giving effect to thetransactions contemplated by this Agreement. There is no action, claim orproceeding now pending or, to Borrower’s knowledge, threatened against Borrowerbefore any court, board, commission, agency, or instrumentality of any federal,state, or local government or of any agency or subdivision thereof, or beforeany arbitrator or panel of arbitrators, which, if determined adversely, couldhave a Material Adverse Effect.

 

(d)           Taxes. Borrower and eachGuarantor have filed all tax returns that are required to have been filed inany jurisdiction and have paid all taxes shown to be due and payable on suchreturns and all other taxes and assessments levied upon it or its properties,assets, income or franchises, to the extent such taxes and assessments havebecome due and payable and before they have become delinquent, except for anytaxes and assessments (i) the amount of which is not individually or inthe aggregate material or (ii) the amount, applicability or validity ofwhich is currently being contested in good faith by appropriate proceedings andwith respect to which Borrower or such Guarantor has established adequatereserves in accordance with GAAP. Borrower knows of no basis for any other taxor assessment that could reasonably be expected to have a Material Adverse Effect.

 

(e)           Licenses; Permits; IntellectualProperty Rights. Borrower and each Guarantor own or possess all licenses,permits, franchises, authorizations, patents, copyrights, service marks,trademarks and trade names, or rights thereto, that individually or in theaggregate are necessary to the conduct of Borrower’s or such Guarantor’sbusiness, without known conflict with the rights of others. To the bestknowledge of Borrower, no product of Borrower or any Guarantor infringes in anymaterial respect any license, permit, franchise, authorization, patent,copyright, service mark, trademark and trade name or other right owned by anyother Person. To the best knowledge of Borrower, there is no material violationby any Person of any right of Borrower or Guarantor with respect to any patent,copyright, service mark, trademark and trade name or other right owned byBorrower or any Guarantor.

 

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(f)                                    LaborMatters. There are no strikes or other labor disputes against Borrower orany Guarantor that are pending or, to Borrower’s knowledge, threatened whichwould have a Material Adverse Effect. All payments due from Borrower or anyGuarantor on account of employee health and welfare insurance which would havea Material Adverse Effect if not paid have been paid or accrued as a liabilityon the books of Borrower or such Guarantor.

 

(g)                                 InvestmentCompany Act. Neither Borrower nor any Guarantor is an “investment company”or an “affiliated Person” of, or “promoter” or “principal underwriter” for, an “investmentcompany,” as such terms are defined in the Investment Company Act of 1940, asamended.

 

(h)                                 MarginRegulations. Neither Borrower nor any Guarantor owns any “margin security”,as that term is defined in Regulations G and U of the Board of Governors of theFederal Reserve System (the “Federal Reserve Board”).

 

(i)                                     ERISA.Each “Plan” (as defined below) is in compliance in all material respects withthe applicable provisions of ERISA and the Internal Revenue Code (“IRC”) andwith respect to each Plan, other than a Qualified Plan, all requiredcontributions and benefits have been paid in accordance with the provisions ofeach such Plan to the extent that the failure to pay any such contribution orbenefit would have a Material Adverse Effect. There are no pending or, toBorrower’s knowledge, threatened claims, actions or lawsuits (other than claimsfor benefits in the normal course), asserted or instituted against Borrower orany Guarantor or any Plan or its assets. Neither Borrower, any Guarantor, norany ERISA Affiliate of either has incurred or reasonably expects to incur anyWithdrawal Liability under Section 4201 of ERISA as a result of a completeor partial withdrawal from a Multiemployer Plan. Neither Borrower nor anyGuarantor has engaged in a prohibited transaction, as defined in Section 4975of the IRC or Section 406 of ERISA, in connection with any Plan, whichwould subject Borrower or such Guarantor (after giving effect to any exemption)to a material tax on prohibited transactions imposed by Section 4975 ofthe IRC or any other material liability. As used above, the term “Plan” shallmean, with respect to Borrower or any Guarantor or any ERISA Affiliate ofeither, at any time, an employee benefit plan, as defined in Section 3(3) ofERISA, which Borrower maintains, contributes to or has an obligation tocontribute to on behalf of participants who are or were employed by any ofthem. The terms “Qualified Plan” and “Multiemployer Plan” shall have themeaning given them in ERISA.

 

(j)                                     Brokers.No broker or finder acting on behalf of Borrower or any Guarantor brought aboutthe obtaining, making, or closing of the Loan and neither Borrower nor anyGuarantor nor Lender have any obligation to any Person in respect of any finder’sor brokerage fees in connection with the Loan.

 

(k)                                  EnvironmentalMatters. Except as set forth in the Disclosure Schedule, and except formatters that do not relate to any of the Collateral and do not, individually orin the aggregate, constitute a Material Adverse Effect, as of the date of thisAgreement: (i) all of Borrower’s real property is free of contaminationfrom any Hazardous Material except for such contamination that would notadversely impact the value or marketability of such real property and thatwould not result in Environmental Liabilities that could reasonably be expectedto exceed $100,000; (ii) Borrower has not caused or suffered to occur anyrelease of Hazardous Materials on, at, in, under, above, to, from or about anyof its real property; (iii) Borrower is and has been in compliance withall Environmental Laws, except for such noncompliance

 

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which would not result inEnvironmental Liabilities which could reasonably be expected to exceed$100,000; (iv) Borrower has obtained, and is in compliance with, allenvironmental permits required by Environmental Laws for the operations of itsrespective businesses as presently conducted or as proposed to be conducted,except where the failure to so obtain or comply with such environmental permitswould not result in Environmental Liabilities that could reasonably be expectedto exceed $100,000, and all such Environmental Permits are valid, uncontestedand in good standing; (v) Borrower is not involved in operations and doesnot know of any facts, circumstances or conditions, including any releases ofHazardous Materials, that are likely to result in any Environmental Liabilitiesof Borrower that could reasonably be expected to exceed $100,000, and Borrowerhas not permitted any current or former tenant or occupant of any of its realproperty to engage in any such operations; (vi) there is no litigationarising under or related to any Environmental Laws, environmental permits orHazardous Material that seeks damages, penalties, fines, costs or expenses inexcess of $50,000 or injunctive relief against, or that alleges criminalmisconduct by, Borrower; (vii) no notice has been received by Borroweridentifying it as a “potentially responsible party” or requesting informationunder CERCLA or analogous state statutes, and to the knowledge of Borrower,there are no facts, circumstances or conditions that may result in Borrower beingidentified as a “potentially responsible party” under CERCLA or analogous statestatutes; and (viii) Borrower has provided to Lender copies of allexisting, material environmental reports, reviews and audits and all writteninformation pertaining to actual or potential Environmental Liabilities, ineach case relating to Borrower.

 

11.                                 AffirmativeCovenants. Unless otherwise agreed to in writing by Lender, while thisAgreement is in effect whether or not any indebtedness is outstandinghereunder, Borrower agrees to, and, except with respect to the covenantcontained in Section 11(a), to cause each Guarantor to:

 

(a)                                  Eligibility.Maintain its status as an entity eligible to borrow from Lender.

 

(b)                                 CorporateExistence. Preserve and keep in full force its corporate status, existenceand good standing in the jurisdiction of its organization, its qualificationsto transact business in all places required by law, and all licenses,certificates, permits, authorizations, approvals and the like which are materialto the conduct of its business or required by law.

 

(c)                                  Compliancewith Laws. Comply in all material respects with all applicable federal,state, and local laws, rules, regulations, ordinances, codes, and orders(collectively “Laws”). Without limiting the foregoing, Borrower agrees tocomply in all material respects, and to cause all Guarantors and all Personsoccupying or present on any properties of Borrower or any Guarantor to socomply, with all Laws relating to environmental protection.

 

(d)                                 PropertyMaintenance. Maintain all of its property that is necessary to or useful inthe proper conduct of its business in good working condition, ordinary wear andtear excepted.

 

(e)                                  Booksand Records. Keep adequate records and books of account in which complete entrieswill be made in accordance with past practices.

 

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(f)                              Inspection.Permit Lender or its agents, during normal business hours or at such othertimes as the parties may agree, to examine Borrower’s or any Guarantor’sproperties, books, and records, and to discuss Borrower’s or any Guarantor’saffairs, finances, and accounts with its respective officers, directors,employees, and independent certified public accountants.

 

(g)                           Reportsand Notices. Furnish to Lender:

 

(1)                                  AnnualFinancial Statements. As soon as possible, but in no event later thanninety (90) days after the end of any Fiscal Year of Borrower occurring duringthe term hereof, annual financial statements of Borrower prepared in accordancewith GAAP consistently applied. Such financial statements shall: (i) beaudited by independent certified public accountants selected by Borrower andacceptable to Lender; (ii) be accompanied by a report of such accountantscontaining an opinion acceptable to Lender; (iii) be accompanied by acompliance certificate from Borrower’s chief financial officer, in the formattached hereto as Exhibit B, certifying that as of the date of suchfinancial statement there did not exist a Default or Event of Default under thisAgreement; (iv) be prepared in reasonable detail and in comparative form; (v) includea balance sheet, a statement of income, a statement of retained earnings, astatement of all cash flows and all notes and schedules relating thereto;

 

(2)                                  QuarterlyFinancial Statements. No later than sixty (60) days after the end of eachFiscal Quarter, internally prepared quarterly financial statements containingthe same information regularly generated by Borrower on its internal quarterlyfinancial statements and its quarterly filings with the Securities and ExchangeCommission on Form 10-Q, accompanied by a compliance certificate fromBorrower’s chief financial officer, in the form attached hereto as Exhibit B,certifying that as of the date of such financial statement there did not exista Default or Event of Default under this Agreement;

 

(3)                                  AnnualCapital Expenditures Budget. No later than November 30th ofeach year, Borrower’s capital expenditures budget for the forthcoming FiscalYear;

 

(4)                                  AnnualBudget and Three Year Plan. No later than thirty (30) days prior to thebeginning of each Fiscal Year, Borrower’s annual budget for the forthcomingFiscal Year and rolling three-year plan for the forthcoming three-year period;

 

(5)                                  Modificationsto Six Quarter Rolling Budget. No later than sixty (60) days after the endof each Fiscal Quarter, any modification or group of related modifications toBorrower’s capital expenditures budget, its annual budget, or its rolling sixquarter budget; if such modification or group of related modificationsincreases or decreases the expenditures or revenues described therein by OneMillion Dollars ($1,000,000) or more;

 

(6)                                  Noticeof Default. Promptly after becoming aware thereof, notice of the occurrenceof a Default or Event of Default;

 

(7)                                  TaxReturns. Within thirty (30) days after filing of such tax returns, a copyof such portions of every federal income tax return filed by Borrower as arenecessary to enable Lender to verify Borrower’s calculations and, if requestedby Lender, a signed copy of the entire tax return;

 

(8)                                  Noticeof Non-Environmental Litigation. Promptly after the commencement thereof,notice of the commencement of all actions, suits, or proceedings

 

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before any court,arbitrator, or governmental department, commission, board, bureau, agency, orinstrumentality affecting Borrower or any Guarantor which, if determinedadversely to Borrower or such Guarantor, could have a Material Adverse Effect;

 

(9)                                  Noticeof Environmental Litigation, Etc. Promptly after receipt thereof, notice ofthe receipt of all pleadings, orders, complaints, indictments, or any othercommunication alleging a condition that may require Borrower or Guarantor toundertake or to contribute to a cleanup or other response under environmentallaws, or which seeks penalties, damages, injunctive relief, or criminalsanctions related to alleged violations of such Laws, or which claims personalinjury or property damage to any Person as a result of environmental factors orconditions, in each case to the extent such communication relates to any of theCollateral or to matters that could reasonably be deemed to constitute aMaterial Adverse Effect; and

 

(10)                            OtherInformation. Such other information regarding the condition or operations,financial or otherwise, of Borrower or any Guarantor as Lender may, from timeto time, reasonably request.

 

(h)                           Insurance.At Borrower’s sole cost and expense, maintain, with financially sound andreputable insurers, insurance providing for the following types of coverages inat least the following amounts: (i) ”All Risk” physical damage insuranceon all of Borrower’s tangible real and personal property and assets, includingvolcanic activity (but not eruption) coverage; (ii) comprehensive generalliability insurance on an “occurrence basis” against claims for personalinjury, bodily injury and property damage with a minimum limit of One MillionDollars ($1,000,000) per occurrence and Two Million Dollars ($2,000,000) in theaggregate, which coverage shall include premises/operations, broad formcontractual liability, underground, explosion and collapse hazard, independentcontractors, broad form property coverage, products and completed operationsliability; (iii) with respect to worker’s compensation insurance, eitherself-insurance through reserves in excess of the minimum required amounts, orcommercial insurance within the applicable statutory limits, in either casewhich includes coverage for employee’s occupational disease and employer’sliability within such legal amounts or limits; (iv) automobile liabilityinsurance for all owned, non-owned or hired automobiles against claims forpersonal injury, bodily injury, and property damage with a minimum combinedsingle limit of One Million Dollars ($1,000,000) per occurrence; and (v) umbrellainsurance of Fifty Million Dollars ($50,000,000) per occurrence and FiftyMillion Dollars ($50,000,000) in the aggregate.

 

All ofsuch policies shall at all times remain in full force and effect and in formand with insurers recognized as adequate by Lender, and provide coverage ofsuch risks and for such amounts as are customarily maintained for businesses ofthe scope and size of Borrower’s and Guarantor’s and as otherwise acceptable toLender. Lender reserves the right at any time, upon a review of Borrower’s andGuarantors’ risk profile, to require additional forms and limits of insurance.Borrower shall, if requested by Lender, provide Lender with a report ofBorrower’s insurance broker concerning Borrower’s and Guarantors’ insurancepolicies.

 

12.                                 NegativeCovenants. Unless otherwise agreed to in writing by Lender, while thisAgreement is in effect, Borrower will not, and will not permit any Guarantorto:

 

(a)                                  Mergers,Acquisitions, Etc.

 

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(1)                                  Mergeor consolidate with any other entity, or commence operations under any othername.

 

(2)                                  Withoutthe prior, written consent of Lender, (i) acquire all or substantially allof the assets of any Person or entity, (ii) form or create any newSubsidiary or Affiliate, or (iii) enter into any business venture,including any joint venture, partnership, or limited liability company otherthan in the ordinary course of business, as conducted on the Closing Date; provided,that Lender’s consent to any of the foregoing shall not be unreasonablywithheld.

 

(b)                                 Transferof Assets. Sell, transfer, lease, or otherwise dispose of any of itsassets, except (i) in the ordinary course of Borrower’s or such Guarantor’sbusiness (including dispositions of real property, other than Collateral, heldfor investment), (ii) transactions outside the ordinary course of Borrower’sor such Guarantor’s business, but only to the extent that the aggregate amountof all assets involved in such transactions from and after the date of thisAgreement have a fair market value of less than Five Million Dollars($5,000,000), (iii) disposal of worn-out or obsolete assets, (iv) disposalof equipment that is being replaced by equipment having a similar value andserving a similar function, (v) transfers between Borrower and anyGuarantor or between any Guarantors of assets other than the Collateral, butonly to the extent that the aggregate amount of all assets involved in suchtransfers during any Fiscal Year have a fair marked value of less than OneMillion Dollars ($1,000,000), (vi) transfers to Subsidiaries of Borrowerthat are specifically identified on the Disclosure Schedule, and (vii) othertransfers, excluding transfers of Collateral, to the extent that the greater of(x) the aggregate book value of such transferred assets, or (y) the fair marketvalue of such transferred assets, is less than fifteen percent (15%) of thetotal book value of Borrower’s assets (net of reserves), on a consolidatedbasis; provided, that any transfer of assets under clause (vii) inexcess of such fifteen percent (15%) level is permitted if the proceeds of suchsale are used, within 180 days of such sale either (I) to acquire assets of asimilar type and of equal or greater value, or (II) to reduce ConsolidatedIndebtedness; and provided, further, that each such transaction referredto in clauses (i) through (vii) above shall be at arm’s length andfor fair market value.  Notwithstandingthe foregoing, the provisions of this Section 12(b) shall not applyto (A) the transfer of the land beneath the Kapalua Bay Hotel, theadjacent parking lot and the Kapalua Bay shops to a joint venture with MarriottInternational and Exclusive Resorts for the purpose of redeveloping theproperty, or (B) the transfer of any of the assets listed on Schedule 12(b) attachedhereto.

 

(c)                                  Changein Business. Engage in any business activities or operations substantiallydifferent from or unrelated to Borrower’s or such Guarantor’s present businessactivities or operations.

 

(d)                                 Liens.Create or permit any Lien on any Collateral except for Permitted Encumbrances.

 

(e)                                  CapitalExpenditures. Make Capital Expenditures in excess of Forty Million Dollars($40,000,000) in any given Fiscal Year commencing with Fiscal Year 2005.

 

(f)                                    Investments.Make any investment in or loan to any person, other than: (i) cash andCash Equivalents; (ii) loans to wholly-owned Subsidiaries; (iii) loansto employees, so long as any such loan in excess of Two Hundred Fifty ThousandDollars ($250,000) is disclosed

 

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to and approved byLender; (iv) loans to Affiliates, subject to the limitations set forth in Section 12(h);(v) existing investments set forth in the Disclosure Schedule; and (vi) Investmentsto acquire the assets of any Person, form or create any Subsidiary orAffiliate, or enter into any business venture, in each case that is related toBorrower’s core businesses as of the date of this Agreement.

 

(g)                                 RestrictedPayments. Make any Restricted Payments unless each and every one of thefollowing conditions has been fulfilled: (i) no Default or Event ofDefault then exists or has occurred within the twelve (12) month periodpreceding the making of such Restricted Payment, nor shall a Default or Eventof Default occur from the making of such Restricted Payment, (ii) theamount of the Restricted Payment, together with the aggregate amount of allother Restricted Payments made during any Fiscal Year, shall not exceed thelesser of (x) fifty percent (50%) of Borrower’s Consolidated Net Income for theimmediately preceding Fiscal Year, or (y) seventy-five percent (75%) ofBorrower’s Consolidated Net Cash Flow for such immediately preceding FiscalYear.

 

(h)           Transactionswith Affiliates. Enter into any transaction or arrangement with anyAffiliate, or permit any Subsidiary to enter into any transaction. orarrangement with any Affiliate of it (including the purchase from, sale to, orexchange of. property with, or the rendering of any service by or for anyAffiliate), that is not entered into in the ordinary course of business andupon fair and reasonable terms that are no less favorable to Borrower or suchSubsidiary than would be obtained in a comparable arms-length transaction witha Person not an Affiliate, other than (i) any transaction between Borrower andany Guarantor, or (ii) any transaction between Borrower and any Subsidiaryentered into in the ordinary course of Borrower’s business for interest-freeloans to Borrower as part of Borrower’s customary cash-management practices.

 

(i)                                     FinancialCovenants.

 

(1)                                  MinimumNet Worth. Borrower shall not permit its Consolidated  Net Worth, as of the last day of the FiscalQuarter ending June 30, 2005 to be less than the sum of Sixty Six MillionDollars ($66,000,000) and for each Fiscal Quarter thereafter,  to be less than the sum of (i) Sixty SixMillion Dollars ($66,000,000), plus fifty percent (50%) of the aggregate amount of Borrower’s ConsolidatedNet Income, to the extent positive, for Fiscal Year 2005 and each Fiscal Yearthereafter (on a cumulative basis).

 

(2)                                  FundedDebt to Capitalization. Borrower shall not permit Consolidated Funded Debtto exceed fifty-five percent(55%) of Consolidated Total Capitalization.

 

(3)                                  InterestCoverage Ratio. Borrower shall not permit its Interest Coverage Ratio to beless than 2.50:1 for any Fiscal Year

 

(j)                                     Indebtedness.Incur any Indebtedness if after such Indebtedness is incurred the aggregateamount of all such Indebtedness of the Borrower and its Subsidiaries shallexceed One Hundred Twenty-Two Million Dollars ($122,000,000).

 

13.                                 Eventsof Default. Each of the following shall constitute an “Event of Default”hereunder:

 

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(a)                                  PaymentDefault. Failure by Borrower to make any payment of principal or interestrequired to be made under this Agreement within three (3) days of the datewhen due, or failure to pay any other amount owed to Lender hereunder on thedate when due.

 

(b)                                 Representationsand Warranties. Any representation or warranty made by Borrower herein orin any agreement, certificate, or document related hereto or furnished inconnection herewith, or by any Guarantor in any Guaranty Agreement or in anyagreement, certificate, or document related to such Guaranty Agreement, shallprove to have been false or misleading in any material respect on or as of thedate made.

 

(c)                                  OtherCovenants and Agreements. Borrower fails to perform or comply with anycovenant or agreement contained in this Agreement (other than those referred toin Section 13(a)) or any Guarantor fails to perform or comply with anycovenant or agreement contained in any Guaranty Agreement; provided, that ifsuch failure is by its nature capable of being cured, then such failure shallnot become an Event of Default unless such failure remains uncured for fifteen(15) days.

 

(d)                                 OtherIndebtedness. Borrower or any Guarantor shall fail to pay when due anyConsolidated Indebtedness for borrowed money or any other event occurs which,under any agreement or instrument relating to such Consolidated Indebtedness,has the effect of accelerating or permitting the acceleration of suchConsolidated Indebtedness, whether or not such Consolidated Indebtedness isactually accelerated.

 

(e)                                  Judgments.A judgment, decree, or order for the payment of money in excess of One MillionDollars ($1,000,000) shall be rendered against Borrower or any Guarantor, theamount of which judgment, decree, or order is not subject to undisputed insurancecoverage, and either: (i) enforcement proceedings shall have beencommenced; or (ii) such judgment, decree, or order shall continueunsatisfied and in effect for a period of twenty (20) consecutive days withoutbeing vacated, discharged, satisfied, or stayed pending appeal.

 

(f)                                    Insolvency,Etc. Borrower or any Guarantor: (i) shall become insolvent or shallgenerally not, or shall be unable to, or shall admit in writing its inabilityto, pay its debts as they come due; or (ii) shall suspend its businessoperations or a material part thereof or make an assignment for the benefit ofcreditors; or (iii) shall apply for, consent to, or acquiesce in theappointment of a trustee, receiver, or custodian for it or any of its property;or (iv) shall commence or have commenced against it any proceeding underany bankruptcy, reorganization, arrangement, readjustment of debt, dissolution,or liquidation law or statute of any jurisdiction.

 

(g)                                 MaterialAdverse Change. Any material adverse change occurs, as reasonablydetermined by Lender, in Borrower’s ability to perform its obligations underthis Agreement.

 

14.                                 RemediesUpon Events of Default. Upon the occurrence of and during the continuanceof each and every Event of Default:

 

(a)                                  Terminationof Rights; Acceleration. Lender may, without notice to Borrower, declarethe entire unpaid principal balance under this Agreement, all accrued

 

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interest thereon and allother amounts payable under this Agreement, to be immediately due and payable.Upon such a declaration, the unpaid principal balance under this Agreement andall such other amounts shall become immediately due and payable, withoutprotest, presentment, demand, or further notice of any kind, all of which are herebyexpressly waived by Borrower.

 

(b)                                 Enforcement.Lender may proceed to protect, exercise, and enforce such rights and remediesagainst Borrower and against the Collateral as may be provided by thisAgreement, by any Guaranty Agreement, by any Other Document, or under law, eachand every one of such rights and remedies shall be cumulative and may beexercised from time to time, and no failure on the part of Lender to exercise,and no delay in exercising, any right or remedy shall operate as a waiver thereof,or the exercise of any other right. Without limiting the foregoing, Lender may,as provided in the Farm Credit Act of 1971, as amended, retire and cancel allor any portion of Borrower’s stock or other equities in Lender and apply theproceeds thereof against Borrower’s indebtedness to Lender. In addition, Lendermay hold, set off, sell, and/or apply against Borrower’s indebtedness any andall cash, accounts, securities, instruments, documents, or other property inLender’s possession or under its control. If, at the conclusion of anyforeclosure or collection of any Collateral, the proceeds of such foreclosureor collection are insufficient to pay and discharge the Obligations in full,then Borrower shall remain liable for the full amount of the remainingObligations, and Lender shall have all legal rights, remedies, and recourseagainst Borrower and any remaining Collateral for such remaining Obligations.

 

(c)                                  Applicationof Funds. All amounts received by Lender shall be applied to amounts owingunder this Agreement in such order and manner as Lender may in its solediscretion elect.

 

15.                                 Indemnity.Borrower shall indemnify and hold harmless each of Lender and its Affiliates,and each such Person’s respective officers, directors, employees, attorneys, agentsand representatives (each, an “Indemnified Person”), from and against any andall suits, actions, proceedings, claims, damages, losses, liabilities andexpenses (including reasonable attorneys’ fees and disbursements and othercosts of investigation or defense, including those incurred upon any appeal)that may be instituted or asserted against or incurred by any such IndemnifiedPerson as the result of credit having been extended, suspended or terminatedunder this Agreement and the other Loan Documents and the administration ofsuch credit, and in connection with or arising out of the transactionscontemplated hereunder and thereunder and any actions or failures to act inconnection therewith, including any and all Environmental Liabilities and legalcosts and expenses arising out of or incurred in connection with disputesbetween or among any parties to any of the Loan Documents (collectively, “IndemnifiedLiabilities”); provided, that Borrower shall not be liable for anyindemnification to an Indemnified Person to the extent that any such suit,action, proceeding, claim, damage, loss, liability or expense results solelyfrom that Indemnified Person’s gross negligence or willful misconduct, asfinally determined by a court of competent jurisdiction.

 

16.                                 CompleteAgreement; Amendments. This Agreement and all documents and instrumentscontemplated hereby are intended by the parties to be a complete and finalexpression of their agreement.  Noamendment, modification, or waiver of any provision hereof or thereof, nor anyconsent to any departure of Borrower herefrom or therefrom, shall be

 

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effective unless approvedby Lender and contained in a writing signed by or on behalf of Lender and thensuch waiver or consent shall be effective only in the specific instance and forthe specific purpose for which given. This Agreement amends and restates, in its entirety, the Term LoanAgreement.

 

17.                                 Counterparts;Effectiveness. This Agreement may be executed in any number of separatecounterparts, each or which shall collectively and separately constitute oneagreement. This Agreement shall become effective upon execution by each partyand delivery to the other parties of either an executed original of the signaturepages hereof or of a facsimile of such executed original of the signature pages hereof.

 

18.                                 ApplicableLaw. Except to the extent governed by applicable federal law, thisAgreement shall be governed and construed in accordance with the laws of theState of California, without reference to choice of law doctrine.

 

19.                                 MUTUALWAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEXFINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY ANEXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERALLAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIRDISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TOACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OFARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,SUIT, OR PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDERTHIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, OR TO RESOLVE ANY DISPUTE,WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, ARISING OUT OF, CONNECTEDWITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP BETWEEN THE PARTIES.

 

20.                                 Notices.All notices hereunder shall be in writing and shall be deemed to be duly givenupon delivery, if personally delivered, delivered by messenger service, or sentby telegram or facsimile transmission, or three (3) days after mailing ifsent by express, certified or registered mail, to the parties at the followingaddresses (or such other address for a party as shall be specified by likenotice):

 

If to Lender as follows:

 

American AgCredit, FLCA

5560 South Broadway

Eureka,CA 95503

Attn:Account Officer — Maui Land & Pineapple

FaxNo.: (707) 442-1268

 

and to

 

American AgCredit, FLCA

200 Concourse Blvd.

SantaRosa, CA 95403

P.O. Box1330

 

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SantaRosa, CA 95402

Attn:Account Officer — Maui Land & Pineapple

FaxNo.: (707) 545-7200

 

If to Borrower, asfollows;

 

MauiLand & Pineapple Company, Inc.

PO Box187

Kahului,Hawaii 96732-0187

Attn:Executive Vice President-Finance

FaxNo.: (808) 871-0953

 

21.                                 Costsand Expenses. Borrower shall pay all costs incurred by Lender, includingreasonable attorneys fees, in connection with the preparation for, negotiationof, and documentation of this Agreement, the Other Documents, and any GuarantyAgreement. If in the future Lender shall employ the services of legal counselor any other professional or any third party in connection with (i) anyrequest made by Borrower to Lender for a modification, amendment, waiver, orconsent in connection with this Agreement, any Other Document, or any GuarantyAgreement, (ii) rendering advice or other services to Lender regardingLender’s rights or obligations under this Agreement or any Other Document orany Guaranty Agreement, whether or not an Event of Default has occurred, (iii) representingthe interests of Lender in any judicial or nonjudicial action, suit orproceeding instituted by Lender or any other Person connected with or related toor with reference to the Loan or to reclaim, seek relief from a judicial orstatutory stay, sequester, protect, preserve or enforce Lender’s interests,then in such event Borrower promises to pay reasonable attorney’s fees andreasonable costs and expenses incurred by Lender and/or its attorney inconnection with the above-mentioned events. Such amounts shall be payable upondemand.

 

22.                                 Effectiveness;Severability. This Agreement shall continue in effect until allindebtedness and obligations of Borrower hereunder shall have been repaid andall commitments of Lender hereunder have terminated. Any provision of thisAgreement or of any instrument or document contemplated hereby which isprohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,be ineffective to the extent of such prohibition or unenforceability withoutinvalidating the remaining provisions hereof or thereof.

 

23.                                 Successorsand Assigns. This Agreement shall be binding upon and inure to the benefitof Borrower and Lender and their respective successors and assigns except thatBorrower may not assign or transfer its rights or obligations hereunder withoutthe prior written consent of Lender. Lender may assign all or any portion ofits obligations under this Agreement without prior notice to Borrower and suchassignment shall relieve Lender of any future obligations hereunder. Lender maygrant or sell participation interests in its interests under this Agreementwithout notice to Borrower.

 

INWITNESS WHEREOF, the parties have caused this Agreement to be executed by theirduly authorized officers as of the date shown above.

 

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BORROWER:

 

MAUI LAND &PINEAPPLE COMPANY, INC., a Hawaii corporation

 

 
| By:    | /S/  FRED W. RICKERT                    |   |
|--------|-----------------------------------------|--------|
| Title: | Vice  President/Chief Financial Officer |   |

 

 
| By:    | /S/  ADELE H. SUMIDA             |   |
|--------|----------------------------------|--------|
| Title: | Controller &  Secretary |   |

 

 

LENDER:

 

AMERICAN AGCREDIT, successor in interest to PacificCoast Farm Credit Services, ACA

 

 
| By:    | /S/  SEAN P. O’DAY                      |   |
|--------|----------------------------------------------|--------|
|   | Sean P. O’Day,  Regional Vice-President |   |

 

GUARANTORS:

 

The undersignedGuarantors hereby consent to, ratify and approve the terms, covenants,conditions and provisions of the foregoing Agreement and agree that theguaranty(ies) executed by them shall be extended to include the obligations ofthe Borrower under the Term Loan Agreement as amended and restated by thisAgreement.

 

KAPALUA LAND COMPANY,LTD., a Hawaii corporation

 

 
| By:    | /S/  FRED W. RICKERT                    |   |   | /S/  ADELE H. SUMIDA             |   |
|--------|-----------------------------------------|--------|--------|----------------------------------|--------|
| Title: | Vice  President/Chief Financial Officer |   |   | Controller &  Secretary |   |

 

 

MAUI PINEAPPLE COMPANY,LTD., a Hawaii corporation

 

 
| By:    | /S/  FRED W. RICKERT                    |   |   | /S/  ADELE H. SUMIDA             |   |
|--------|-----------------------------------------|--------|--------|----------------------------------|--------|
| Title: | Vice  President/Chief Financial Officer |   |   | Controller &  Secretary |   |

 

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