Document:

Exhibit 10.1

 

SECURITIES
PURCHASE AGREEMENT

 

SECURITIES
PURCHASE AGREEMENT (the “Agreement”), dated as of July 27, 2008, by and among  Maui Land & Pineapple Company, Inc.,
a Hawaiian corporation, with headquarters located at 120 Kane Street, P. O. Box
187, Kahului, Maui, Hawaii 96733-6687 (the “Company”),
and the investors listed on the Schedule of Buyers attached hereto
(individually, a “Buyer” and
collectively, the “Buyers”).

 

WHEREAS:

 

A.            The Company and each Buyer is
executing and delivering this Agreement in reliance upon the exemption from
securities registration afforded by Section 4(2) of the Securities
Act of 1933, as amended (the “1933 Act”),
and Rule 506 of Regulation D (“Regulation
D”) as promulgated by the United States Securities and Exchange Commission
(the “SEC”) under the 1933 Act.

 

B.            The Company has authorized a new
series of senior secured convertible notes of the Company, in the form attached
hereto as Exhibit A (the “Notes”), which
Notes shall be convertible into the Company’s common stock, no par value per
share (the “Common Stock”)
(as converted, the “Conversion Shares”),
in accordance with the terms of the Notes.

 

C.            Each Buyer wishes to purchase, and
the Company wishes to sell, upon the terms and conditions stated in this
Agreement, that aggregate principal amount of the Notes set forth opposite such
Buyer’s name in column (3) on the Schedule of Buyers attached hereto
(which aggregate amount for all Buyers shall be $40,000,000).

 

D.            Contemporaneously with the execution
and delivery of this Agreement, the parties hereto are executing and delivering
a Registration Rights Agreement, substantially in the form attached hereto as Exhibit B
(the “Registration Rights Agreement”),
pursuant to which the Company will agree to provide certain registration rights
with respect to the Registrable Securities (as defined in the Registration
Rights Agreement) under the 1933 Act and the rules and regulations
promulgated thereunder, and applicable state securities laws.

 

E.             The Notes and the Conversion Shares
collectively are referred to herein as the “Securities”.

 

F.             The Notes shall rank senior to all
outstanding and future indebtedness secured by the Real Property Collateral (as
defined in the Notes) of the Company and its Subsidiaries (as defined below) (other
than Permitted Secured Indebtedness (as defined in the Notes)) and, will be
secured by a security interest in certain assets of the Company and its
Subsidiaries, as evidenced by certain security documents, including without
limitation (i) the Collateral Account Agreement (as defined below), (ii) the
Mortgages (as defined below) and (iii) the guarantees of certain
Subsidiaries of the Company in the form attached hereto as Exhibit C
(as amended or modified from time to time in accordance with its terms, the “Guarantees” and, together with the Collateral Account
Agreement and the Mortgages and any ancillary documents related thereto,
collectively the “Security Documents”).

 

 

NOW,
THEREFORE, the Company and each Buyer hereby agree as
follows:

 

1.                                       PURCHASE AND SALE OF NOTES.

 

(a)           Purchase of Notes.  Subject to the satisfaction (or waiver) of
the conditions set forth in Sections 6 and 7 below, the Company shall issue and
sell to each Buyer, and each Buyer severally, but not jointly, agrees to
purchase from the Company on the Closing Date (as defined below), a principal
amount of Notes as is set forth opposite such Buyer’s name in column (3) on
the Schedule of Buyers (the “Closing”).

 

(b)           Closing.  The date and time of the Closing (the “Closing Date”) shall be 2:00 p.m., New
York City time, on the date hereof (or such later date as is mutually agreed to
by the Company and each Buyer) after notification of satisfaction (or waiver)
of the conditions to the Closing set forth in Sections 6 and 7 below at the
offices of Schulte Roth & Zabel LLP, 919 Third Avenue, New York, New
York 10022.

 

(c)           Purchase Price.  The aggregate purchase price for the Notes to
be purchased by each such Buyer at the Closing (the “Purchase Price”) shall be the amount set forth opposite each
Buyer’s name in column (4) of the Schedule of Buyers (less, in the case of
RCG PB, Ltd and RCG Enterprise, Ltd (collectively, the “RCG Entities”),
the amounts withheld pursuant to Section 4(g)).  Each Buyer shall pay $1,000 for each $1,000
of principal amount of Notes to be purchased by such Buyer at the Closing.

 

(d)           Form of
Payment.  On the Closing Date, (i) each
Buyer shall pay its respective Purchase Price (less, in the case of the RCG
Entities, the amounts withheld pursuant to Section 4(g)) to the Company
for the Notes to be issued and sold to such Buyer at the Closing by wire
transfer of immediately available funds in accordance with the Company’s
written wire instructions and (ii) the Company shall deliver to each Buyer
the Notes (allocated in the principal amounts as such Buyer shall request)
which such Buyer is then purchasing hereunder duly executed on behalf of the
Company and registered in the name of such Buyer or its designee.

 

2.                                       BUYER’S REPRESENTATIONS AND WARRANTIES.

 

Each Buyer,
severally and not jointly, represents and warrants with respect to only itself,
as of the date hereof and as of the Closing Date, that:

 

(a)           No Public Sale or
Distribution.  Such Buyer is (i) acquiring
the Notes with its own funds and (ii) upon conversion of the Notes will
acquire the Conversion Shares issuable upon conversion of the Notes, in each
case, for its own account and not with a view towards, or for resale in
connection with, the public sale or distribution thereof, except pursuant to
sales registered or exempted under the 1933 Act; provided, however,
that by making the representations herein, such Buyer does not agree to hold
any of the Securities for any minimum or other specific term and reserves the
right to dispose of the Securities at any time in accordance with or pursuant
to a registration statement or an exemption under the 1933 Act.  Such Buyer is acquiring the Securities
hereunder in the ordinary course of its business.  Such Buyer does not presently have any
agreement or understanding, directly or indirectly, with any Person to
distribute any of the Securities.  Such Buyer currently intends to
hold the Notes until conversion into Conversion Shares or until the Maturity
Date (as defined in the Notes); provided, that by making the foregoing representation,
such Buyer does not agree to hold the Notes for any minimum or other specific
term and reserves the right to dispose of the Notes at any time.

 

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(b)           Accredited
Investor Status.  Such Buyer is an “accredited
investor” as that term is defined in Rule 501(a) of Regulation D.

 

(c)           Reliance on
Exemptions.  Such Buyer understands
that the Securities are being offered and sold to it in reliance on specific
exemptions from the registration requirements of United States federal and
state securities laws and that the Company is relying in part upon the truth
and accuracy of, and such Buyer’s compliance with, the representations,
warranties, agreements, acknowledgments and understandings of such Buyer set
forth herein in order to determine the availability of such exemptions and the
eligibility of such Buyer to acquire the Securities.

 

(d)           Information.  Such Buyer and its advisors, if any, have
been furnished with all materials relating to the business, finances and
operations of the Company and materials relating to the offer and sale of the
Securities that have been requested by such Buyer.  Such Buyer and its advisors, if any, have
been afforded the opportunity to ask questions of the Company.  Neither such inquiries nor any other due
diligence investigations conducted by such Buyer or its advisors, if any, or
its representatives shall modify, amend or affect such Buyer’s right to rely on
the Company’s representations and warranties contained herein.  Such Buyer understands that its investment in
the Securities involves a high degree of risk.  Such
Buyer has sought such accounting, legal and tax advice as it has considered
necessary to make an informed investment decision with respect to its
acquisition of the Securities.

 

(e)           No Governmental
Review.  Such Buyer understands that
no United States federal or state agency or any other government or
governmental agency has passed on or made any recommendation or endorsement of
the Securities or the fairness or suitability of the investment in the
Securities nor have such authorities passed upon or endorsed the merits of the
offering of the Securities.

 

(f)            Transfer or
Resale.  Such Buyer understands that
except as provided in the Registration Rights Agreement: (i) the
Securities have not been and are not being registered under the 1933 Act or any
state securities laws, and may not be offered for sale, sold, assigned or
transferred unless (A) subsequently registered thereunder, (B) such
Buyer shall have delivered to the Company an opinion of counsel, in a generally
acceptable form, to the effect that such Securities to be sold, assigned or
transferred may be sold, assigned or transferred pursuant to an exemption from
such registration, or (C) such Buyer provides the Company with reasonable
assurance that such Securities can be sold, assigned or transferred pursuant to
Rule 144 or Rule 144A promulgated under the 1933 Act, as amended, (or
a successor rule thereto) (collectively, “Rule 144”); (ii) any sale of the Securities made in
reliance on Rule 144 may be made only in accordance with the terms of Rule 144
and further, if Rule 144 is not applicable, any resale of the Securities
under circumstances in which the seller (or the Person (as defined in Section 3(s))
through whom the sale is made) may be deemed to be an underwriter (as that term
is defined in the 1933 Act) may require compliance with some other exemption
under the 1933 Act or the rules and regulations of the SEC thereunder; and
(iii) neither the Company nor any other Person is under any obligation to
register the Securities under the 1933 Act or any state securities laws 

 

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or to comply
with the terms and conditions of any exemption thereunder.  Notwithstanding the foregoing, the Securities
may be pledged in connection with a bona fide margin account or other loan or
financing arrangement secured by the Securities and such pledge of Securities
shall not be deemed to be a transfer, sale or assignment of the Securities
hereunder, and no Buyer effecting a pledge of Securities shall be required to
provide the Company with any notice thereof or otherwise make any delivery to
the Company pursuant to this Agreement or any other Transaction Document (as
defined below), including, without limitation, this Section 2(f).

 

(g)           Legends.  Such Buyer understands that the certificates
or other instruments representing the Notes and, until such time as the resale
of the Conversion Shares have been registered under the 1933 Act as contemplated
by the Registration Rights Agreement, the stock certificates representing the
Conversion Shares, except as set forth below, shall bear any legend as required
by the “blue sky” laws of any state and a restrictive legend in substantially
the following form (and a stop-transfer order may be placed against transfer of
such stock certificates):

 

[NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE
SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN][THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN] REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR APPLICABLE
STATE SECURITIES LAWS.  THE SECURITIES MAY
NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE
OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
1933 ACT, OR (B) AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM,
THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT (II) UNLESS SOLD OR
TRANSFERRED TO A “QUALIFIED INSTITUTIONAL BUYER” WITHIN THE MEANING OF RULE
144A UNDER THE 1933 ACT OR (III) UNLESS
SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES
MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN
OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

 

The legend set forth above
shall be removed and the Company shall issue a certificate without such legend
to the holder of the Securities upon which it is stamped or issue to such
holder by electronic delivery at the applicable balance account at The
Depository Trust Company (“DTC”),
if, unless otherwise required by state securities laws, (i) such
Securities are registered for resale under the 1933 Act, (ii) in
connection with a sale, assignment or other transfer, such holder provides the
Company with an opinion of counsel, in a generally acceptable form, to the
effect that such sale, assignment or transfer of the Securities may be made
without registration under the applicable requirements of the 1933 Act, or (iii) such
holder provides the Company with reasonable assurance that the Securities (x) are
being (or have been) sold, assigned or transferred pursuant to Rule 144 or
Rule 144A or (y) can be sold, assigned or transferred pursuant to Rule 144
or Rule 144A without the requirement to be in compliance with Rule 144(c)(1) and
otherwise without restriction or limitation pursuant to Rule 144(c).  The Company shall be responsible for the fees
of its transfer agent and all DTC fees associated with such issuance.

 

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(h)           Validity; Enforcement.  This Agreement, the Registration Rights
Agreement and the Security Documents to which such Buyer is a party have been
duly and validly authorized, executed and delivered on behalf of such Buyer and
shall constitute the legal, valid and binding obligations of such Buyer
enforceable against such Buyer in accordance with their respective terms,
except as such enforceability may be limited by general principles of equity or
to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation
and other similar laws relating to, or affecting generally, the enforcement of
applicable creditors’ rights and remedies.

 

(i)            No Conflicts.  The execution, delivery and performance by
such Buyer of this Agreement and the Registration Rights Agreement and the
consummation by such Buyer of the transactions contemplated hereby and thereby
will not (i) result in a violation of the organizational documents of such
Buyer or (ii) conflict with, or constitute a default (or an event which
with notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of,
any agreement, indenture or instrument to which such Buyer is a party, or (iii) result
in a violation of any law, rule, regulation, order, judgment  or decree (including federal and state
securities laws) applicable to such Buyer, except in the case of clauses (ii) and
(iii) above, for such conflicts, defaults, rights or violations which
would not, individually or in the aggregate, reasonably be expected to have a
material adverse effect on the ability of such Buyer to perform its obligations
hereunder.

 

(j)            Transfer
Limitations.  Without the prior
written consent of the Company (which will not be unreasonably withheld or
delayed) each Buyer acknowledges and agrees that any Buyer’s Notes may not be
transferred in increments less than the lesser of (x) $500,000 and (y) the
amount then outstanding under such Notes (the “Minimum
Transfer Amount”).

 

(k)           Prohibited
Transactions.  Other than with
respect to this Agreement and the transactions contemplated herein, since the
time that such Buyer was first contacted by the Company or the Agents (as
defined below) regarding the investment contemplated hereby, neither the Buyer
nor any Affiliate (as defined by Rule 405 promulgated pursuant to the 1933
Act) of such Buyer which (x) had knowledge of the transactions
contemplated hereby, (y) has or shares discretion relating to such Buyer’s
investments or trading or information concerning such Buyer’s investments and (z) is
subject to such Buyer’s review or input concerning such Affiliate’s investments
or trading (collectively, “Trading Affiliates”)
has directly or indirectly, nor has any Person acting on behalf of or pursuant
to any understanding with such Buyer or Trading Affiliate, effected or agreed
to effect any transactions in the securities of the Company, or any
transactions involving or relating to securities of the Company, including any
derivative securities.  Such Buyer hereby
covenants and agrees not to, and shall cause its Trading Affiliates not to,
engage, directly or indirectly, in any transactions in the securities of the
Company, or any transactions involving or relating to the Company’s securities,
during the period from the date hereof until such time as (i) the
transactions contemplated by this Agreement are first publicly announced as
described in Section 4(i) hereof (provided the Company complies
therewith) or (ii) this Agreement is terminated in full pursuant to Section 8
hereof.

 

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(l)            Residency.  Such Buyer is a resident of that jurisdiction
specified below its address on the Schedule of Buyers.

 

(m)          Acknowledgements
Regarding Placement Agent. Such Buyer acknowledges to the Agent (as defined
below) that the Agent is acting as placement agent for the Securities being
offered hereby and will be compensated by the Company for acting in such
capacity.  Such Buyer further
acknowledges that the Agent has acted solely as placement agent in connection
with the offering of the Securities by the Company, that the information and
data provided to such Buyer in connection with the transactions contemplated
hereby have not been subjected to independent verification or investigation by
the Agent, and that the Agent makes no representation or warranty with respect
to the accuracy or completeness of such information, data or other related
disclosure material, nor shall the Agent or any of its directors, officers,
employees, representatives, controlling persons or agents be liable for any
loss or damages of any kind resulting from the use of such information, data or
related disclosure material except as set forth below.  Such Buyer further acknowledges that in
making its decision to enter into this Agreement and purchase the Securities,
it has not relied on information provided by the Agent but has conducted its
own investigation and has relied on its own examination of the Company and the
terms of, and consequences, of holding the Securities.  Such Buyer further acknowledges that the
provisions of this Section 2(m) are for the benefit of, and may be
enforced by, and only by, the Agent. 
Notwithstanding anything to the contrary set forth above, the foregoing
shall not be deemed to waive or limit such Buyer’s legal remedies as a result
of the willful misconduct or fraud of the Agent or any of its directors,
officers, employees, representatives, controlling persons or agents.

 

3.             REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

 

The Company represents and warrants to each of the Buyers that, as of
the date hereof and as of the Closing Date:

 

(a)           Organization and
Qualification.  Each of the Company
and its “Subsidiaries” (which for
purposes of this Agreement means any joint venture or any entity in which the
Company, directly or indirectly, owns 50% or more of the capital stock or an
equity or similar interest) are entities duly organized and validly existing in
good standing under the laws of the jurisdiction in which they are formed, and
have the requisite power and authorization to own their properties and to carry
on their business as now being conducted. 
Each of the Company and its Subsidiaries is duly qualified as a foreign
entity to do business and is in good standing in every jurisdiction in which
its ownership of property or the nature of the business conducted by it makes
such qualification necessary, except to the extent that the failure to be so
qualified or be in good standing would not reasonably be expected to have a
Material Adverse Effect.  As used in this
Agreement, “Material Adverse Effect”
means any material adverse effect on the business, properties, assets,
operations, results of operations, condition (financial or otherwise) or
prospects of the Company and its Subsidiaries, taken as a whole, or on the
transactions contemplated hereby or in the other Transaction Documents or by
the agreements and instruments to be entered into in connection herewith or
therewith, or on the authority or ability of the Company to perform its
obligations under the Transaction Documents (as defined below).  The Company has no Subsidiaries except as set
forth on Schedule 3(a).

 

6

 

(b)           Authorization;
Enforcement; Validity.  The Company
has the requisite power and authority to enter into and perform its obligations
under this Agreement, the Irrevocable Transfer Agent Instructions (as defined
below), the Registration Rights Agreement, the Notes, the Security Documents
and each of the other agreements entered into by the parties hereto in
connection with the transactions contemplated by this Agreement (collectively,
the “Transaction Documents”) and
to issue the Securities in accordance with the terms hereof and thereof.  The execution and delivery of the Transaction
Documents by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby, including, without limitation, the
issuance of the Notes, the reservation for issuance and the issuance of the
Conversion Shares issuable upon conversion of the Note and the granting of the
Mortgages, the Guarantees and the security interest in the Real Property
Collateral (as defined in the Notes) have been duly authorized by the Company’s
Board of Directors and no further consent or authorization is required by the
Company, its Board of Directors or its stockholders.  This Agreement and the other Transaction
Documents have been duly executed and delivered by the Company, and constitute
the legal, valid and binding obligations of the Company, enforceable against
the Company in accordance with their respective terms, except as such
enforceability may be limited by general principles of equity or applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally, the enforcement of applicable creditors’
rights and remedies.

 

(c)           Issuance of
Securities.  The issuance of the
Notes are duly authorized and, upon issuance, shall be free from all taxes,
liens and charges with respect to the issue thereof.  As of the Closing, a number of shares of
Common Stock shall have been duly authorized and reserved for issuance which
equals or exceeds 120% of the aggregate of the maximum number of shares of
Common Stock issuable upon conversion of the Notes (without taking into account
any limitations on the conversion of the Notes).  Upon conversion in accordance with the Notes,
the Conversion Shares will be validly issued, fully paid and nonassessable and
free from all preemptive or similar rights, taxes, liens and charges with
respect to the issue thereof, with the holders being entitled to all rights
accorded to a holder of Common Stock. Assuming the accuracy of the
representations and warranties of the Buyers contained herein, the offer and
issuance by the Company of the Securities is exempt from registration under the
1933 Act.

 

(d)           No Conflicts.  The execution, delivery and performance of
the Transaction Documents by the Company and the consummation by the Company of
the transactions contemplated hereby and thereby (including, without
limitation, the issuance of the Notes and the reservation for issuance and
issuance of the Conversion Shares) will not (i) result in a violation of
any certificate of incorporation, certificate of formation, any certificate of
designations or other constituent documents of the Company or any of its
Subsidiaries, any capital stock of the Company or any of its Subsidiaries or
bylaws of the Company or any of its Subsidiaries or (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any material agreement, indenture
or instrument to which the Company or any of its Subsidiaries is a party, or (iii) result
in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations and the rules and
regulations of The New York Stock Exchange (the “Principal
Market”) applicable to the Company or any of its Subsidiaries or by
which any property or asset of the Company or any of its Subsidiaries is bound
or affected.

 

7

 

(e)           Consents.  Except as set forth on Schedule 3(e),
neither the Company nor any of its Subsidiaries is required to obtain any
consent, authorization or order of, or make any filing or registration with,
any court, governmental agency or any regulatory or self-regulatory agency or
any other Person in order for it to execute, deliver or perform any of its
obligations under or contemplated by the Transaction Documents, in each case in
accordance with the terms hereof or thereof. 
All consents, authorizations, orders, filings and registrations which
the Company is required to obtain pursuant to the preceding sentence have been
obtained or effected on or prior to the Closing Date and the Company and its
Subsidiaries are unaware of any facts or circumstances that could reasonably be
expected to prevent the Company from obtaining or effecting any of the
registration, application or filings pursuant to the preceding sentence, except
for (i) the filing with the SEC of one or more Registration Statements in
accordance with the requirements of the Registration Rights Agreement, (ii) the
filing of a notice of sale of securities on Form D with the SEC under
Regulation D and any related state securities filings, and (iii) the 8-K
Filing pursuant to Section 4(i). 
The Company is not in violation of the listing requirements of the
Principal Market and has no knowledge of any facts that could reasonably be
expected to lead to delisting or suspension of the Common Stock in the
foreseeable future.  The issuance by the
Company of the Securities shall not have the effect of delisting or suspending
the Common Stock from the Principal Market.

 

(f)            Acknowledgment
Regarding Buyer’s Purchase of Securities. 
The Company acknowledges and agrees that each Buyer is acting individually
and solely in the capacity of an arm’s length purchaser with respect to the
Transaction Documents and the transactions contemplated hereby and thereby and
that no Buyer is (i) an officer or director of the Company or any of its
Subsidiaries, (ii) to the knowledge of the Company, an “affiliate” of the
Company or any of its Subsidiaries (as defined in Rule 144) or (iii) to
the knowledge of the Company, a “beneficial owner” of more than 10% of the
shares of Common Stock (as defined for purposes of Rule 13d-3 of the
Securities Exchange Act of 1934, as amended (the “1934 Act”)).  The
Company further acknowledges that no Buyer is acting as a financial advisor or
fiduciary of the Company or any of its Subsidiaries (or in any similar
capacity) with respect to the Transaction Documents and the transactions
contemplated hereby and thereby, and any advice given by a Buyer or any of its
representatives or agents in connection with the Transaction Documents and the
transactions contemplated hereby and thereby is merely incidental to such Buyer’s
purchase of the Securities.  The Company
further represents to each Buyer that the Company’s decision to enter into the
Transaction Documents has been based solely on the independent evaluation by
the Company and its representatives.

 

(g)           No General
Solicitation; Placement Agent’s Fees. 
Neither the Company, nor any of its Subsidiaries or affiliates, nor any
Person acting on its or their behalf, has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D) in
connection with the offer or sale of the Securities.  The Company shall be responsible for the
payment of any placement agent’s fees, financial advisory fees, or brokers’
commissions (other than for persons engaged by any Buyer or its investment
advisor) relating to or arising out of the transactions contemplated
hereby.  The Company shall pay, and hold
each Buyer harmless against, any liability, loss or expense (including, without
limitation, attorney’s fees and out-of-pocket expenses) arising in connection
with any such claim.  The Company
acknowledges that it has engaged Banc of America Securities as placement agent
(collectively, the “Agent”) in
connection with the sale of the Securities. 
Other than the Agent, neither the Company nor any of its Subsidiaries
has engaged any placement agent or other agent in connection with the sale of
the Securities.

 

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(h)           No Integrated
Offering.  None of the Company, its
Subsidiaries, any of their affiliates, and any Person acting on their behalf
has, directly or indirectly, made any offers or sales of any security or
solicited any offers to buy any security, under circumstances that would
require registration of any of the Securities under the 1933 Act, whether
through integration with prior offerings or otherwise, or cause this offering
of the Securities to require approval of stockholders of the Company for
purposes of the 1933 Act or any applicable stockholder approval provisions,
including, without limitation, under the rules and regulations of any
exchange or automated quotation system on which any of the securities of the
Company are listed or designated.  None
of the Company, its Subsidiaries, their affiliates and any Person acting on
their behalf will take any action or steps referred to in the preceding
sentence that would (i) require registration of any of the Securities
under the 1933 Act, (ii) cause the offering of the Securities to be
integrated with other offerings in violation of the 1933 Act or (iii) cause
the sale and issuance of the Securities to be subject to any stockholder
approval requirement, including, without limitation, under the rules and
regulations of any exchange or automated quotation system on which any of the securities
of the Company are listed or designated.

 

(i)            Dilutive Effect.  The Company understands and acknowledges that
the number of Conversion Shares issuable upon conversion of the Notes will
increase in certain circumstances.  The
Company further acknowledges that its obligation to issue the Conversion Shares
upon conversion of the Notes in accordance with this Agreement and the Notes  is absolute and unconditional regardless
of the dilutive effect that such issuance may have on the ownership interests of
other stockholders of the Company.

 

(j)            Application of
Takeover Protections; Rights Agreement. 
The Company and its Board of Directors have taken all necessary action,
if any, in order to render inapplicable any control share acquisition, business
combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Certificate of Incorporation
or the laws of the State of Hawaii which is or could become applicable to any
Buyer as a result of the transactions contemplated by this Agreement,
including, without limitation, the Company’s issuance of the Securities and any
Buyer’s ownership of the Securities.  The
Company and its Board of Directors have taken all necessary action, if any, in
order to render inapplicable any stockholder rights plan or similar arrangement
relating to accumulations of beneficial ownership of Common Stock or a change
in control of the Company.

 

(k)           SEC
Documents; Financial Statements. 
Except as set forth on Schedule 3(k), during the two (2) years
prior to the date hereof, the Company has timely filed all reports, schedules,
forms, statements and other documents required to be filed by it with the SEC
pursuant to the reporting requirements of the 1934 Act (all of the foregoing
filed prior to the date hereof or prior to the date of the Closing, and all
exhibits included therein and financial statements, notes and schedules thereto
and documents incorporated by reference therein being hereinafter referred to
as the “SEC Documents”).  The Company has made available to the Buyers
or their respective representatives true, correct and complete copies of the
SEC Documents not available on the EDGAR system.  As of their respective filing dates, the SEC
Documents complied in all material respects with the requirements of the 1934
Act and the rules 

 

9

 

and regulations of the SEC promulgated thereunder applicable to the SEC
Documents, and none of the SEC Documents, at the time they were filed with the
SEC, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.  As of their
respective filing dates, the financial statements of the Company included in
the SEC Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC
with respect thereto.  Such financial
statements have been prepared in accordance with generally accepted accounting
principles, consistently applied, during the periods involved (except (i) as
may be otherwise indicated in such financial statements or the notes thereto,
or (ii) in the case of unaudited interim statements, to the extent they
may exclude footnotes or may be condensed or summary statements) and fairly
present in all material respects the financial position of the Company as of
the dates thereof and the results of its operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments).

 

(l)            Absence of
Certain Changes.  Except as disclosed
in Schedule 3(l), since December 31, 2007, there has been no
material adverse change in the business, properties, operations, condition
(financial or otherwise), results of operations or prospects of the Company or
its Subsidiaries, taken as a whole.  Except
as disclosed in Schedule 3(l), since December 31, 2007, neither the
Company nor any of its Subsidiaries has (i) declared or paid any
dividends, (ii) sold any assets, individually or in the aggregate, in
excess of $2,500,000 outside of the ordinary course of business or (iii) had
capital expenditures, individually or in the aggregate, in excess of
$2,500,000.  Neither the Company nor any
of its Subsidiaries has taken any steps to seek protection pursuant to any
bankruptcy law nor does the Company have any knowledge or reason to believe
that its creditors intend to initiate involuntary bankruptcy proceedings or any
actual knowledge of any fact which would reasonably lead a creditor to do
so.  The Company and its Subsidiaries,
individually and on a consolidated basis, are not as of the date hereof, and
after giving effect to the transactions contemplated hereby to occur at the
Closing, will not be Insolvent (as defined below).  For purposes of this Section 3(l), “Insolvent” means, with respect to any
Person (as defined in Section 3(s)), (i) the present fair saleable
value of such Person’s assets is less than the amount required to pay such
Person’s total Indebtedness (as defined in Section 3(s)), (ii) such
Person is unable to pay its debts and liabilities, subordinated, contingent or
otherwise, as such debts and liabilities become absolute and matured, (iii) such
Person intends to incur or believes that it will incur debts that would be
beyond its ability to pay as such debts mature or (iv) such Person has
unreasonably small capital with which to conduct the business in which it is
engaged as such business is now conducted and is proposed to be conducted.

 

(m)          [Intentionally
Omitted]

 

(n)           Conduct of
Business; Regulatory Permits. 
Neither the Company nor its Subsidiaries is in violation of any term of or
in default under any certificate of designations of any outstanding series of
preferred stock of the Company, its Certificate of Incorporation or Bylaws or
their organizational charter or certificate of incorporation or bylaws,
respectively.  Neither the Company nor
any of its Subsidiaries is in violation of any judgment, decree or order or any
statute, ordinance, rule or regulation applicable to the Company or its
Subsidiaries, and neither the Company nor any of its Subsidiaries will conduct
its business in violation of any of the foregoing, except for possible
violations which could not, individually or in the aggregate, 

 

10

 

reasonably be
expected to have a Material Adverse Effect. 
Without limiting the generality of the foregoing, the Company is not in
violation of any of the rules, regulations or requirements of the Principal
Market and has no knowledge of any facts or circumstances that would reasonably
lead to delisting or suspension of the Common Stock by the Principal Market in
the foreseeable future.  During the two (2) years
prior to the date hereof, (i) the Common Stock has been designated for
quotation or listed on the Principal Market, (ii) trading in the Common
Stock has not been suspended by the SEC or the Principal Market and (iii) the
Company has received no communication, written or oral, from the SEC or the
Principal Market regarding the suspension or delisting of the Common Stock from
the Principal Market.  For purposes of
the foregoing sentence, “Principal Market” means the American Stock Exchange
prior to April 1, 2008 and the New York Stock Exchange on and after April 1,
2008.  The Company and its Subsidiaries
possess all certificates, authorizations and permits issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct their
respective businesses, except where the failure to possess such certificates,
authorizations or permits would not have, individually or in the aggregate, a
Material Adverse Effect, and neither the Company nor any such Subsidiary has
received any notice of proceedings relating to the revocation or modification
of any such certificate, authorization or permit.

 

(o)           Foreign
Corrupt Practices.  Neither the
Company nor any of its Subsidiaries nor any director, officer, agent, employee
or other Person acting on behalf of the Company or any of its Subsidiaries has,
in the course of its actions for, or on behalf of, the Company or any of its
Subsidiaries (i) used any corporate funds for any unlawful contribution,
gift, entertainment or other unlawful expenses relating to political activity; (ii) made
any direct or indirect unlawful payment to any foreign or domestic government
official or employee from corporate funds; (iii) violated or is in
violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977,
as amended; or (iv) made any unlawful bribe, rebate, payoff, influence
payment, kickback or other unlawful payment to any foreign or domestic
government official or employee.

 

(p)           Sarbanes-Oxley
Act.  The Company is in compliance
with any and all applicable requirements of the Sarbanes-Oxley Act of 2002 that
are effective as of the date hereof, and any and all applicable rules and
regulations promulgated by the SEC thereunder that are effective as of the date
hereof.

 

(q)           Transactions With
Affiliates.  Except as set forth on Schedule
3(q), none of the officers, directors or employees of the Company or any of
its Subsidiaries is presently a party to any transaction with the Company or
any of its Subsidiaries (other than for ordinary course services as employees,
officers or directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring payments to or from any
such officer, director or employee or, to the knowledge of the Company or any
of its Subsidiaries, any corporation, partnership, trust or other entity in
which any such officer, director, or employee has a substantial interest or is
an officer, director, trustee or partner.

 

11

 

(r)            Equity
Capitalization.  As of the date
hereof, the authorized capital stock of the Company consists of 23,000,000
shares of Common Stock, of which as of the date hereof, 8,175,095 shares are
issued and outstanding, 1,178,064 shares are reserved for issuance pursuant to
the Company’s stock option and purchase plans and 164,083 shares are reserved
for issuance pursuant to securities (other than the aforementioned options and
the Notes) exercisable or exchangeable for, or convertible into, shares of
Common Stock.  All of such outstanding
shares have been, or upon issuance will be, validly issued and are fully paid
and nonassessable.  Except as disclosed
in Schedule 3(r): (i) none of the Company’s capital stock is
subject to preemptive rights or any other similar rights or any liens or
encumbrances suffered or permitted by the Company; (ii) there are no
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, or exercisable or exchangeable for, any shares of capital
stock of the Company or any of its Subsidiaries, or contracts, commitments,
understandings or arrangements by which the Company or any of its Subsidiaries
is or may become bound to issue additional shares of capital stock of the
Company or any of its Subsidiaries or options, warrants, scrip, rights to subscribe
to, calls or commitments of any character whatsoever relating to, or securities
or rights convertible into, or exercisable or exchangeable for, any shares of
capital stock of the Company or any of its Subsidiaries; (iii) there are
no outstanding debt securities, notes, credit agreements, credit facilities or
other agreements, documents or instruments evidencing Indebtedness of the
Company or any of its Subsidiaries which are convertible into or exchangeable
for any shares of capital stock of the Company; (iv) there are no
agreements or arrangements under which the Company or any of its Subsidiaries
is obligated to register the sale of any of their securities under the 1933 Act
(except pursuant to the Registration Rights Agreement); (v) there are no
outstanding securities or instruments of the Company or any of its Subsidiaries
which contain any redemption or similar provisions (other than rights to
purchase shares of Common Stock of employees in accordance with Approved Stock
Plans (as defined in the Notes) and other agreements consistent with past
practices), and there are no contracts, commitments, understandings or
arrangements by which the Company or any of its Subsidiaries is or may become
bound to redeem a security of the Company or any of its Subsidiaries; (vi) there
are no securities or instruments containing anti-dilution or similar provisions
that will be triggered by the issuance of the Securities; and (vii) the
Company does not have any stock appreciation rights or “phantom stock” plans or
agreements or any similar plan or agreement. 
The Company has made available to the Buyers true, correct and complete
copies of the Company’s Articles of Association, as amended and as in effect on
the date hereof (the “Certificate of
Incorporation”), and the Company’s Bylaws, as amended and as in
effect on the date hereof (the “Bylaws”), and
the terms of all securities convertible into, or exercisable or exchangeable
for, shares of Common Stock and the material rights of the holders thereof in
respect thereto.

 

(s)           Indebtedness and
Other Contracts.  Except as disclosed
in Schedule 3(s), neither the Company nor any of its Subsidiaries (i) has
any outstanding Indebtedness (as defined below) in excess of $100,000 or by
which the Company or any of its Subsidiaries is or may become bound, (ii) is
a party to any contract, agreement or instrument, the violation of which, or
default under which, by the other party(ies) to such contract, agreement or
instrument could reasonably be expected to result in a Material Adverse Effect,
(iii) is in violation of any term of or in default under any contract,
agreement or instrument relating to any Indebtedness, except where such
violations and defaults would not result, individually or in the aggregate, in
a Material Adverse Effect, or (iv) is a party to any contract, agreement
or instrument relating to any Indebtedness, the performance of which, in the
judgment of the Company’s officers, has or is expected to have a Material
Adverse Effect.  Except as disclosed in Schedule
3(r), (i) there are no financing statements securing Indebtedness in
any material amounts, either singly or in the 

 

12

 

aggregate, filed in connection with the Company or any of its
Subsidiaries, excluding financing statements relating to capital lease
obligations or purchase money security interests disclosed in the SEC
Documents, and (ii) the Company and its Subsidiaries have no Indebtedness
or other obligations required to be disclosed in the SEC Documents but not so
disclosed in the SEC Documents, other than those incurred in the ordinary
course of the Company’s or any of its Subsidiaries’ respective businesses and
which, individually or in the aggregate, do not or would not have a Material
Adverse Effect.   For purposes of this
Agreement:  (x) “Indebtedness” of any Person means, without
duplication (A) all indebtedness for borrowed money, (B) all
obligations issued, undertaken or assumed as the deferred purchase price of
property or services, including, without limitation, “capital leases” in
accordance with United States generally accepted accounting principles (other
than trade payables entered into in the ordinary course of business), (C) all
reimbursement or payment obligations with respect to letters of credit, surety
bonds and other similar instruments, (D) all obligations evidenced by
notes, bonds, debentures or similar instruments, including obligations so
evidenced incurred in connection with the acquisition of property, assets or
businesses, (E) all indebtedness created or arising under any conditional
sale or other title retention agreement, or incurred as financing, in either
case with respect to any property or assets acquired with the proceeds of such
indebtedness (even though the rights and remedies of the seller or bank under
such agreement in the event of default are limited to repossession or sale of
such property), (F) all monetary obligations under any leasing or similar
arrangement which, in connection with generally accepted accounting principles,
consistently applied for the periods covered thereby, is classified as a
capital lease, (G) all indebtedness referred to in clauses (A) through
(F) above secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any mortgage, lien,
pledge, charge, security interest or other encumbrance upon or in any property
or assets (including accounts and contract rights) owned by any Person, even
though the Person which owns such assets or property has not assumed or become
liable for the payment of such indebtedness, and (H) all Contingent
Obligations in respect of indebtedness or obligations of others of the kinds
referred to in clauses (A) through (G) above; (y) “Contingent Obligation” means, as to any
Person, any direct or indirect liability, contingent or otherwise, of that
Person with respect to any indebtedness, lease, dividend or other obligation of
another Person if the primary purpose or intent of the Person incurring such
liability, or the primary effect thereof, is to provide assurance to the
obligee of such liability that such liability will be paid or discharged, or
that any agreements relating thereto will be complied with, or that the holders
of such liability will be protected (in whole or in part) against loss with
respect thereto; and (z) “Person”
means an individual, a limited liability company, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization and a
government or any department or agency thereof.

 

(t)            Absence of
Litigation.  There is no action,
suit, proceeding, inquiry or investigation before or by the Principal Market,
any court, public board, government agency, self-regulatory organization or
body pending or, to the knowledge of the Company, threatened against or
affecting the Company or any of its Subsidiaries, the Common Stock or any of
the Company’s Subsidiaries or any of the Company’s or its Subsidiaries’
officers or directors, whether of a civil or criminal nature or otherwise, that
could reasonably be expected to have a Material Adverse Effect.

 

13

 

(u)                                 Insurance.  The Company and each of its Subsidiaries are
insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as management of the Company believes to be
prudent and customary in the businesses in which the Company and its
Subsidiaries are engaged.  Neither the
Company nor any such Subsidiary has any reason to believe that it will not be
able to renew its existing insurance coverage as and when such coverage expires
or to obtain similar coverage from similar insurers as may be necessary to
continue its business at a cost that would not have a Material Adverse
Effect.  Notice is hereby given that the
Company is not required to obtain insurance from or through any particular
insurer, agent or broker as a condition to the purchase of the Notes.

 

(v)                                 Employee
Relations.

 

(i)                                     Except as
disclosed in Schedule 3(v), neither the Company nor any of its
Subsidiaries is a party to any collective bargaining agreement or employs any
member of a union.  The Company and its
Subsidiaries believe that their relations with their employees are good.  No executive officer of the Company or any of
its Subsidiaries (as defined in Rule 501(f) of the 1933 Act) has
notified the Company or any such Subsidiary that such officer intends to leave
the Company or any such Subsidiary or otherwise terminate such officer’s
employment with the Company or any such Subsidiary.  No executive officer of the Company or any of
its Subsidiaries is, or is now expected to be, in violation of any material
term of any employment contract, confidentiality, disclosure or proprietary
information agreement, non-competition agreement, or any other contract or
agreement or any restrictive covenant, and the continued employment of each
such executive officer does not subject the Company or any of its Subsidiaries
to any liability with respect to any of the foregoing matters.

 

(ii)                                  The Company and
its Subsidiaries are in compliance with all federal, state, local and foreign
laws and regulations respecting labor, employment and employment practices and
benefits, terms and conditions of employment and wages and hours, except where
failure to be in compliance would not, either individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect.

 

(iii)                               No pension or
other benefit plan of the Company is a “multiemployer plan” (as defined in Section 4001(a)(3) of
ERISA) and neither the Company, its Subsidiaries nor any member of their
Controlled Group has at any time sponsored or contributed to, or has or had any
liability or obligation in respect of, any multiemployer plan.

 

(iv)                              Except as
listed in Schedule 3(v)(iv), there are no (x) unfair labor practice
charges, (y) any material (class-wide, potential class-wide or significant
issues of Company policy) grievances or arbitrations, and/or (z) strikes
or work stoppages  pending or, to the knowledge of the Company, threatened
in writing by or on behalf of any employee or group of employees of the
Company.

 

(w)                               Title.  Except as disclosed in Schedule 3(w),
the Company and its Subsidiaries have good and marketable title in fee simple
to all real property and good and marketable title to all personal property
owned by them which is material to the business of the Company and its
Subsidiaries, in each case free and clear of all liens, encumbrances and
defects except such as do not materially affect the value of such property and
do not interfere with the use made and proposed to be made of such property by
the Company and any of its Subsidiaries. 
Any real property and facilities held under lease by the Company and any
of its Subsidiaries are held by them under valid, subsisting and enforceable
leases with such exceptions as are not material and do not interfere with the
use made and proposed to be made of such property and buildings by the Company
and its Subsidiaries.

 

14

 

(x)                                   Intellectual
Property Rights.  The Company
and its Subsidiaries own or possess adequate rights or licenses to use all trademarks,
trade names, service marks, service mark registrations, service names, original
works of authorship, patents, patent rights, copyrights, inventions, licenses,
approvals, governmental authorizations, trade secrets and other intellectual
property rights and all applications and registrations therefor (“Intellectual Property Rights”) necessary to conduct their
respective businesses as now conducted. 
None of the Company’s registered, or applied for, material Intellectual
Property Rights has expired or terminated or have been abandoned, or are
expected to expire or terminate or are expected to be abandoned, within three
years from the date of this Agreement. 
The Company does not have any knowledge of any infringement by the
Company or its Subsidiaries of Intellectual Property Rights of others which, if
the subject of an unfavorable decision, ruling or finding would have a Material
Adverse Effect.  There is no claim,
action or proceeding being made or brought, or to the knowledge of the Company
or its Subsidiaries, being threatened, against the Company or any of its
Subsidiaries regarding its Intellectual Property Rights.  Neither the Company nor any of its
Subsidiaries is aware of any facts or circumstances which might give rise to
any of the foregoing infringements or claims, actions or proceedings.  The Company and its Subsidiaries have taken
reasonable security measures to protect the secrecy, confidentiality and value
of all of their Intellectual Property Rights.

 

(y)                                 Environmental
Laws.  Except as set forth in Schedule
3(y), the Company and its Subsidiaries (i) are in compliance with any
and all Environmental Laws (as hereinafter defined), (ii) have received
all permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are in
compliance with all terms and conditions of any such permit, license or
approval where, in each of the foregoing clauses (i), (ii) and (iii), the
failure to so comply could be reasonably expected to have, individually or in
the aggregate, a Material Adverse Effect. 
The term “Environmental Laws”
means all federal, state, local or foreign laws relating to pollution or
protection of human health or the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata),
including, without limitation, the Federal
Insecticide, Fungicide, and Rodenticide Act (FIFRA) and other laws
relating to emissions, discharges, releases or threatened releases of chemicals,
pollutants, contaminants, or toxic or hazardous substances or wastes
(collectively, “Hazardous Materials”)  into the environment, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials, as well as all
authorizations, codes, decrees, demands or demand letters, injunctions,
judgments, licenses, notices or notice letters, orders, permits, plans or
regulations issued, entered, promulgated or approved thereunder.

 

(z)                                   Subsidiary
Rights.  The Company or one of its
Subsidiaries has the unrestricted right to vote, and (subject to limitations
imposed by applicable law) to receive dividends and distributions on, all
capital securities of its Subsidiaries as owned by the Company or such
Subsidiary.

 

15

 

(aa)                            Tax Status.  The Company and each of its Subsidiaries (i) has
made or filed all federal, foreign and state income and all other tax returns,
reports and declarations required by any jurisdiction to which it is subject, (ii) has
paid all taxes and other governmental assessments and charges that are material
in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and (iii) has set
aside on its books provision reasonably adequate for the payment of all taxes
for periods subsequent to the periods to which such returns, reports or
declarations apply.  There are no unpaid
taxes in any material amount claimed to be due by the taxing authority of any
jurisdiction, and the officers of the Company know of no basis for any such
claim.

 

(bb)                          Internal
Accounting and Disclosure Controls.  The Company and each of its Subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management’s general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in conformity
with generally accepted accounting principles and to maintain asset and
liability accountability, (iii) access to assets or incurrence of
liabilities is permitted only in accordance with management’s general or
specific authorization and (iv) the recorded accountability for assets and
liabilities is compared with the existing assets and liabilities at reasonable
intervals and appropriate action is taken with respect to any difference.  The Company maintains disclosure controls and
procedures (as such term is defined in Rule 13a-15 under the 1934 Act)
that are effective in ensuring that information required to be disclosed by the
Company in the reports that it files or submits under the 1934 Act is recorded,
processed, summarized and reported, within the time periods specified in the rules and
forms of the SEC, including, without limitation, controls and procedures
designed in to ensure that information required to be disclosed by the Company
in the reports that it files or submits under the 1934 Act is accumulated and
communicated to the Company’s management, including its principal executive
officer or officers and its principal financial officer or officers, as
appropriate, to allow timely decisions regarding required disclosure.  During the twelve months prior to the date
hereof neither the Company nor any of its Subsidiaries have received any notice
or correspondence from any accountant which has currently or previously been
engaged by the Company or any of its Subsidiaries relating to any material weakness
in any part of the system of internal accounting controls of the Company or any
of its Subsidiaries.

 

(cc)                            Ranking of Notes.  Except as set forth on Schedule 3(cc),
no Indebtedness of the Company is senior to or ranks pari passu with the Notes in right of payment, whether with
respect of payment of redemptions, interest, damages or upon liquidation or
dissolution or otherwise, other than Permitted Secured Indebtedness.

 

(dd)                          Off Balance
Sheet Arrangements.  There is no
transaction, arrangement, or other relationship between the Company and an
unconsolidated or other off balance sheet entity that is required to be
disclosed by the Company in its Exchange Act filings and is not so disclosed or
that otherwise would be reasonably likely to have a Material Adverse Effect.

 

(ee)                            Form S-3 Eligibility.  The Company is eligible to register the
Conversion Shares for resale by the Buyers using Form S-3 promulgated
under the 1933 Act.

 

16

 

(ff)                                Manipulation of
Price.  The Company has not, and to
its knowledge no one acting on its behalf has, (i) taken, directly or
indirectly, any action designed to cause or to result in the stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of any of the Securities, (ii) other than the Agent, sold, bid
for, purchased, or paid any compensation for soliciting purchases of, any of
the Securities, or (iii) paid or agreed to pay to any person any
compensation for soliciting another to purchase any other securities of the
Company.

 

(gg)                          Transfer Taxes.  On the Closing Date, all stock transfer or
other taxes (other than income or similar taxes) which are required to be paid
in connection with the sale and transfer of the Securities to be sold to each
Buyer hereunder will be, or will have been, fully paid or provided for by the
Company, and all laws imposing such taxes will be or will have been complied
with.

 

(hh)                          Investment
Company Status.  The Company
is not, and upon consummation of the sale of the Securities will not be, an “investment
company,” a company controlled by an “investment company” or an “affiliated
person” of, or “promoter” or “principal underwriter” for, an “investment
company” as such terms are defined in the Investment Company Act of  1940, as amended.

 

(ii)                                  Acknowledgement
Regarding Buyers’ Trading Activity.  It is understood and acknowledged by the
Company that, except as otherwise provided in Section 2(k) above, (i) none
of the Buyers have been asked to agree, nor has any Buyer agreed, to desist
from purchasing or selling, long and/or short, securities of the Company, or “derivative”
securities based on securities issued by the Company or to hold the Securities
for any specified term; (ii) any Buyer, and counter-parties in “derivative”
transactions to which any such Buyer is a party, directly or indirectly,
presently may have a “short” position in the Common Stock, and (iii) to
the knowledge of the Company, each Buyer shall not be deemed to have any
affiliation with or control over any arm’s length counter-party in any “derivative”
transaction.  The Company further
understands and acknowledges that, except as otherwise provided in Section 2(k) above,
one or more Buyers may engage in hedging and/or trading activities at various
times during the period that the Securities are outstanding, including, without
limitation, during the periods that the value of the Conversion Shares are
being determined and (b) such hedging and/or trading activities, if any,
can reduce the value of the existing stockholders’ equity interest in the
Company both at and after the time the hedging and/or trading activities are
being conducted.  The Company
acknowledges that such aforementioned hedging and/or trading activities do not
constitute a breach of this Agreement, the Notes or any of the documents
executed in connection herewith.

 

(jj)                                  Bank Holding
Company Act.  Neither the
Company nor any of its Subsidiaries or affiliates is subject to the Bank
Holding Company Act of 1956, as amended (the “BHCA”)
and to regulation by the Board of Governors of the Federal Reserve System (the “Federal Reserve”). 
Neither the Company nor any of its Subsidiaries or affiliates owns or
controls, directly or indirectly, five percent (5%) or more of the outstanding
shares of any class of voting securities or twenty-five percent (25%) or more
of the total equity of a bank or any entity that is subject to the BHCA and to
regulation by the Federal Reserve. 
Neither the Company nor any of its Subsidiaries or affiliates exercises
a controlling influence over the management or policies of a bank or any entity
that is subject to the BHCA and to regulation by the Federal Reserve.

 

17

 

(kk)                            Shell Company Status. The Company
is not, and has never been, an issuer identified in Rule 144(i)(1).

 

(ll)                                  Foreign Assets
Control Regulations.  The use of
proceeds from the sale of the Securities will not violate the Trading with the
Enemy Act (50 U.S.C. Section 1 et seq., as amended) (the “Trading with the Company Act”) or any of the foreign asset
control regulations of the United States Treasury Department (31CFR, Subtitle
B, Chapter V, as amended) (the “Foreign Assets Control
Regulations”) or any enabling legislation or executive order
relating thereto (which for the avoidance of doubt shall include, but shall not
be limited to (a) Executive Order 13224 of September 21, 2001
Blocking Property and Prohibiting Transactions With Persons Who Commit,
Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079(2001)) (the “Executive Order”) and (b) the Uniting and Strengthening
America by providing Appropriate Tools Required to Intercept and Obstruct
Terrorism Act of 2001 (Public Law 107-56)). Furthermore, neither the Company
nor any of its Subsidiaries or other affiliates (a) is or will become a “blocked
person” as described in the Executive Order, the Trading with the Enemy Act or
the Foreign Assets Control Regulations, or (b) engages or will engage in any
dealings or transactions, or otherwise associated, with any such “blocked
person”.

 

(mm)                      Public Utility
Holding Act.  None of the
Company nor any of its Subsidiaries is a “holding company”, or an “affiliate”
of a “holding company”, as such terms are defined in the Public Utility Holding
Act of 2005.

 

(nn)                          Federal Power
Act.  None of the Company nor any of
its Subsidiaries is subject to regulation as a “public utility” under the
Federal Power Act, as amended.

 

(oo)                          No Additional
Agreements.  The Company
does not have any agreement or understanding with any Buyer with respect to the
transactions contemplated by the Transaction Documents other than as specified
in the Transaction Documents.

 

(pp)                          Properties.

 

(i)                                     Except as noted
in Schedule 3(pp), none of the Properties (as defined below) are subject
to any material lease, sublease, license or similar agreement that grants to
any other Person any right to acquire, lease, use or occupy such Properties or
any part thereof.

 

(ii)                                  Neither the
Company nor any of its Subsidiaries has received, with respect to any Property,
any written notice of any default under any lease, restrictive covenant,
restriction or condition materially affecting any such Property and there has
not occurred any event that with the lapse of time or the giving of notice or
both would constitute such a default under any lease, restrictive covenant,
restriction or condition by the Company or any of its Subsidiaries or, to the
Company’s knowledge, any other party.

 

(iii)                               The Company has
not received any written notice of any (i) violations of building codes
and/or zoning ordinances or other governmental or regulatory laws affecting the
Properties, or (ii) existing, pending or threatened condemnation
proceedings or aboriginal rights title or treaty rights claims affecting the
Properties or the improvements situated thereon or (iii) existing, pending
or threatened zoning, building or other moratoria proceedings, restrictive
allocations or similar matters, in any case, which could reasonably be expected
to adversely affect use of the Properties or the improvements situated thereon
for their current use.

 

18

 

(iv)                              The Company is
the legal and beneficial owner of the Real Property Collateral (as defined in
the Notes).  MLP KB Partner, LLC, a
wholly-owned subsidiary of the Company, is the legal and beneficial owner of a
51% interest in Kapalua Bay Holdings, LLC and MLP RCK, LLC, a wholly owned
subsidiary of the Company, is the legal and beneficial owner of a 16% interest
in W2005 Kapalua / Gengate Hotel Holdings, LLC.

 

(qq)                          Disclosure.  The Company confirms that neither it nor any
other Person acting on its behalf has provided any of the Buyers or their
agents or counsel with any information that constitutes or could reasonably be
expected to constitute material, nonpublic information, other than the terms of
the transactions contemplated hereby, which shall be publicly disclosed
pursuant to Section 4(i), and other than information that will be publicly
disclosed prior to or concurrently with the disclosures made pursuant to Section 4(i).  The Company understands and confirms that
each of the Buyers will rely on the foregoing representations in effecting
transactions in securities of the Company. 
All written disclosure provided to the Buyers regarding the Company, or
any of its Subsidiaries, their business and the transactions contemplated
hereby in any Transaction Documents, including the disclosure schedules to this
Agreement, furnished by or on behalf of the Company is true and correct and
does not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading.  Each press release issued by the Company or
any of its Subsidiaries during the twelve (12) months preceding the date of
this Agreement did not at the time of release contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.  No event or circumstance has occurred or
information exists with respect to the Company or any of its Subsidiaries or
its or their business, properties, prospects, operations or financial
conditions, which, under applicable law, rule or regulation, requires
public disclosure or announcement by the Company but which has not been so
publicly announced or disclosed.  The
Company acknowledges and agrees that no Buyer makes or has made any
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in Section 2.

 

4.                                       COVENANTS.

 

(a)                                  Best Efforts.  Each party shall use its best efforts timely
to satisfy each of the covenants and the conditions to be satisfied by it as
provided in Sections 5, 6 and 7 of this Agreement.

 

19

 

(b)                                 Form D and
Blue Sky.  The Company
agrees to file a Form D with respect to the Securities as required under
Regulation D and to provide a copy thereof to each Buyer promptly after such
filing.  The Company, on or before the
Closing Date, shall take such action as the Company shall reasonably determine
is necessary in order to obtain an exemption for or to qualify the Securities
for sale to the Buyers at the Closing pursuant to this Agreement under
applicable securities or “Blue Sky” laws of the states of the United States (or
to obtain an exemption from such qualification), and shall provide evidence of
any such action so taken to the Buyers on or prior to the Closing Date.  The Company shall make all filings and
reports relating to the offer and sale of the Securities required under
applicable securities or “Blue Sky” laws of the states of the United States
following the Closing Date.

 

(c)                                  Reporting
Status.  Until the earlier of (i) the
date on which the Investors (as defined in the Registration Rights Agreement)
shall have sold all the Conversion Shares and none of the Notes are outstanding
and (ii) the date on which the Buyers may sell all of the Notes,
Conversion Shares without restriction pursuant to Rule 144 and without the
requirement to be in compliance with Rule 144(c)(1) (or any successor
thereto) promulgated under the 1933 Act (the “Reporting
Period”), the Company shall timely file all reports required to be
filed with the SEC pursuant to the 1934 Act, and the Company shall not
terminate its status as an issuer required to file reports under the 1934 Act
even if the 1934 Act or the rules and regulations thereunder would no
longer require or otherwise permit such termination, and the Company shall take
all actions necessary to maintain its eligibility to register the Conversion
Shares for resale by the Buyers on Form S-3.

 

(d)                                 Use of Proceeds.  The Company will use the proceeds from the
sale of the Securities for (i) the repayment of Indebtedness as set forth
on Schedule 4(d), (ii) the construction and development of the
Kapalua Beach Club, Kapalua Spa, and Mauka infrastructure and (iii) general
corporate purposes, including general and administrative expenses and not for (x) the
repayment of any other outstanding Indebtedness of the Company or any of its
Subsidiaries or (y) the redemption or repurchase of any of its or its
Subsidiaries’ equity securities.

 

(e)                                  Financial
Information.  The Company
agrees to send the following to each Investor (as defined in the Registration
Rights Agreement) during the Reporting Period (i) unless the following are
filed with the SEC through EDGAR and are available to the public through the
EDGAR system, within one (1) Business Day after the filing thereof with
the SEC, a copy of its Annual Reports on Form 10-K and Quarterly Reports
on Form 10-Q, any SEC filings including any interim reports or any consolidated
balance sheets, income statements, stockholders’ equity statements and/or cash
flow statements for any period other than annual, any Current Reports on Form 8-K
and any registration statements (other than on Form S-8) or amendments
filed pursuant to the 1933 Act, (ii) on the same day as the release
thereof, facsimile copies or e-mailed copies of all press releases issued by
the Company or any of its Subsidiaries, and (iii) copies of any notices
and other information made available or given to the stockholders of the
Company generally, contemporaneously with the making available or giving
thereof to the stockholders.  As used
herein, “Business Day” means any day other than
Saturday, Sunday or other day on which commercial banks in The City of New York
are authorized or required by law to remain closed.

 

20

 

(f)                                    Listing.  The Company shall, promptly following the
Closing, secure the listing of all of the Registrable Securities (as defined in
the Registration Rights Agreement) upon the 
Principal Market (subject to official notice of issuance) and shall
maintain such listing on the Principal Market or any Eligible Market of all
Registrable Securities from time to time issuable under the terms of the Transaction
Documents.  The Company shall maintain
the authorization for quotation of the Common Stock on the Principal Market or
any Eligible Market (as defined in the Notes). 
Neither the Company nor any of its Subsidiaries shall take any action
which would be reasonably expected to result in the delisting or suspension of
the Common Stock on the Principal Market. 
The Company shall pay all fees and expenses in connection with
satisfying its obligations under this Section 4(f).  Except as otherwise set forth in the
Transaction Documents, each party to this Agreement shall bear its own expenses
in connection with the sale of the Securities to the Buyers.

 

(g)                                 Fees.  The Company shall reimburse the RCG Entities  or their
designee(s) (in addition to any other expense amounts paid to any Buyer
prior to the date of this Agreement) for all reasonable costs and expenses,
incurred in connection with the transactions contemplated by the Transaction
Documents (including all reasonable legal fees and disbursements in connection
therewith, documentation and implementation of the transactions contemplated by
the Transaction Documents and due diligence in connection therewith), including
any amounts previously paid to any of the RCG Entities or any of their
affiliates in accordance with the term sheet with respect to the transactions
contemplated hereby, which amount incurred prior to the Closing Date, up to a
maximum reimbursement of $125,000 (split equally for each of the RCG Entities),
may be withheld by such Buyers from their Purchase Price at the Closing and
thereafter such other legal fees and expenses of the RCG Entities, not to
exceed $25,000 in the aggregate, incurred in connection with the Company’s
compliance with Section 4(s) below or with respect to the Security
Documents shall be paid promptly upon receipt of a written invoice from either
of the RCG Entities  or their legal counsel, but in no event later
than three (3) Business Days after such receipt.  The Company shall be responsible for the
payment of any placement agent’s fees, financial advisory fees, or broker’s
commissions (other than for Persons engaged by any Buyer) relating to or
arising out of the transactions contemplated hereby, including, without
limitation, any fees payable to the Agent. 
The Company shall pay, and hold each Buyer harmless against, any
liability, loss or expense (including, without limitation, reasonable attorney’s
fees and out-of-pocket expenses) arising in connection with any claim relating
to any such payment.

 

(h)                                 Pledge of
Securities.  The Company
acknowledges and agrees that the Securities may be pledged by an Investor in
connection with a bona fide margin agreement or other loan or financing
arrangement that is secured by the Securities. 
The pledge of Securities shall not be deemed to be a transfer, sale or
assignment of the Securities hereunder, and no Investor effecting a pledge of
Securities shall be required to provide the Company with any notice thereof or
otherwise make any delivery to the Company pursuant to this Agreement or any
other Transaction Document, including, without limitation, Section 2(f) of
this Agreement; provided that an Investor and its pledgee shall be required to
comply with the provisions of Section 2(f) of this Agreement in order
to effect a sale, transfer or assignment of Securities to such pledgee.  The Company hereby agrees to execute and
deliver such documentation as a pledgee of the Securities may reasonably
request in connection with a pledge of the Securities to such pledgee by an
Investor.

 

21

 

(i)                                     Disclosure of
Transactions and Other Material Information.  The Company
shall, on or before 8:30 a.m., New York City time, on July 28, 2008,
issue a press release and, on or before 8:30 a.m., New York City time, on July 29,
2008, file a Current Report on Form 8-K describing the terms of the
transactions contemplated by the Transaction Documents in the form required by
the 1934 Act, and attaching the material Transaction Documents (including,
without limitation, this Agreement, the form of Registration Rights Agreement,
the Form of Guarantee and the form of Note) as exhibits to such filing
(including all attachments, the “8-K Filing”).  The Company shall file a copy of the Security
Documents on a subsequent Form 8-K no later than four (4) Business
Days after the execution of such Security Documents.  From and after the filing of the 8-K Filing
with the SEC, no Buyer shall be in possession of any material, nonpublic
information received from the Company, any of its Subsidiaries or any of their
respective officers, directors, employees or agents, that is not disclosed in
the 8-K Filing.  The Company shall not,
and shall cause each of its Subsidiaries and its and each of their respective
officers, directors, employees and agents, not to, provide any Buyer with any
material, nonpublic information regarding the Company or any of its
Subsidiaries from and after the filing of the 8-K Filing with the SEC without
the prior express written consent of such Buyer.  If a Buyer has, or believes it has, received
any such material, nonpublic information regarding the Company or any of its
Subsidiaries from the Company, any of its Subsidiaries or any of their
respective officers, directors, affiliates or agents, it may provide the Company
with written notice thereof.  In the
event of the disclosure of any material nonpublic information, the Company
shall comply with its obligations under Regulation FD promulgated under the
1933 Act and the 1934 Act.  Subject to
the foregoing, neither the Company, its Subsidiaries nor any Buyer shall issue
any press releases or any other public statements with respect to the
transactions contemplated hereby; provided, however, that the Company shall be
entitled, without the prior approval of any Buyer, to make any press release or
other public disclosure with respect to such transactions (i) in
substantial conformity with the 8-K Filing and contemporaneously therewith and (ii) as
is required by applicable law and regulations (provided that in the case of
clause (i) each Buyer shall be consulted by the Company in connection with
any such press release or other public disclosure prior to its release).  Without the prior written consent of any
applicable Buyer, neither the Company nor any of its Subsidiaries or affiliates
shall disclose the name of such Buyer in any filing, announcement, release or
otherwise.

 

(j)                                     [Intentionally Omitted]

 

(k)                                  Additional Notes; Variable
Securities; Dilutive Issuances.  So long as any Buyer beneficially owns any
Notes, the Company will not issue any Notes (other than to the Buyers as
contemplated hereby) and the Company shall not issue any other securities that
would cause a breach or default under the Notes.  For so long as any Notes remain outstanding,
the Company shall not, in any manner, issue or sell any rights, warrants or
options to subscribe for or purchase Common Stock or directly or indirectly
convertible into or exchangeable or exercisable for Common Stock at a price
which varies or may vary with the market price of the Common Stock, including
by way of one or more reset(s) to any fixed price unless the conversion,
exchange or exercise price of any such security cannot be less than the then
applicable Conversion Price (as defined in the Notes) with respect to the
Common Stock into which any Note is convertible.  Notwithstanding anything herein to the
contrary, for so long as any Notes remain outstanding, the Company shall not
take any action if the effect of such action would be to cause the number of
Conversion Shares issuable upon conversion of the Notes (without respect to any
limitation of conversion set forth therein) to exceed the Exchange Cap (as
defined in the Notes), unless or until the Company shall have obtained the
approval of the stockholders of the Company (the “Stockholder
Approval”) for the issuance of all of the Securities as described in
the Transaction Documents in accordance with applicable law and the rules and
regulations of the Principal Market, including without limitation, New York
Stock Exchange Rule 312.03(c).

 

22

 

(l)                                     Corporate Existence.  So long as any Buyer beneficially owns any
Securities, the Company shall not be party to any Fundamental Transaction (as
defined in the Notes) unless the Company is in compliance with the applicable
provisions governing Fundamental Transactions set forth in the Notes.

 

(m)                               Reservation of Shares.  So long as any Buyer owns any Securities, the
Company shall take all action necessary to at all times have authorized, and
reserved for the purpose of issuance, no less than 120% of the sum of the
number of shares of Common Stock (the “Required Reserved Amount)
issuable upon conversion of the Notes pursuant to the terms of the Notes
(without taking into account any limitations on the conversion of the
Notes).  If at any time the number of
shares of Common Stock authorized and reserved for issuance (“Authorized and Reserved Shares”) is not
sufficient to meet the Required Reserved Amount, the Company will promptly take
all corporate action necessary to authorize and reserve a sufficient number of
shares, including, without limitation, calling a special meeting of
stockholders to authorize additional shares to meet the Company’s obligations
under this Section 4(m), in the case of an insufficient number of
authorized shares, obtain stockholder approval of an increase in such
authorized number of shares, and voting the management shares of the Company in
favor of an increase in the authorized shares of the Company to ensure that the
number of authorized shares is sufficient to meet the Required Reserved Amount.

 

(n)                                 Conduct of Business.  The business of the Company and its
Subsidiaries shall not be conducted in violation of any law, ordinance or
regulation of any governmental entity, except where such violations would not
result, either individually or in the aggregate, in a Material Adverse Effect.

 

(o)                                 Additional
Issuances of Securities.

 

(i)                                     For purposes of
this Section 4(o), the following definitions shall apply.

 

(2)                                   “Convertible Securities” means any stock or securities (other
than Options) convertible into or exercisable or exchangeable for shares of
Common Stock.

 

(3)                                   “Options” means any rights, warrants or
options to subscribe for or purchase shares of Common Stock or Convertible
Securities.

 

(4)                                   “Common Stock Equivalents” means, collectively, Options and
Convertible Securities.

 

23

 

(ii)                                  From the date
hereof until the later of (x) ninety (90) calendar days after the date
hereof and (y) the date that is thirty (30) Trading Days (as defined in
the Notes) following the Initial Effective Date (as defined in the Registration
Rights Agreement) (the “Trigger Date”),
the Company will not, directly or indirectly, file any registration statement
with the SEC other than the Registration Statement (as defined in the
Registration Rights Agreement).  From the
date hereof until the Trigger Date, the Company will not, directly or
indirectly, offer, sell, grant any option to purchase, or otherwise dispose of
(or announce any offer, sale, grant or any option to purchase or other
disposition of) any of its or its Subsidiaries’ equity or equity equivalent
securities, including without limitation any debt, preferred stock or other
instrument or security that is, at any time during its life and under any
circumstances, convertible into or exchangeable or exercisable for shares of Common Stock or Common Stock Equivalents (any such
offer, sale, grant, disposition or announcement being referred to as a “Subsequent Placement”).

 

(iii)                               From the date
hereof until the second anniversary of the Closing Date, the Company will not,
directly or indirectly, effect any Subsequent Placement unless the Company
complies with this Section 4(o)(iii). 
The Company may enter into a Subsequent Placement Agreement (as defined
below) and close a Subsequent Placement prior to complying with this Section 4(o)(iii) so
long as the Company publicly announces entering into any such Subsequent
Placement Agreement in a manner compliant with Regulation FD and delivers the
Offer Notice (as defined below) to each Buyer within one Business Day
thereafter.

 

(2)                                  The Company shall deliver to
each Buyer an irrevocable  written notice
(the “Offer Notice”) of any
proposed or intended issuance or sale or exchange (the “Offer”) of the securities being offered
(the “Offered Securities”) in a
Subsequent Placement, which Offer Notice shall (w) identify and describe
the Offered Securities, (x) describe the price and other terms upon which
they are to be issued, sold or exchanged, and the number or amount of the
Offered Securities to be issued, sold or exchanged, (y) identify the
persons or entities (if known) to which or with which the Offered Securities
are to be offered, issued, sold or exchanged and (z) offer to issue and
sell to or exchange with such Buyers at least thirty percent (30%) of the
Offered Securities, allocated among such Buyers (a) based on such Buyer’s
pro rata portion of the aggregate principal amount of Notes purchased hereunder (the “Basic
Amount”), and (b) with respect to each Buyer that elects to
purchase its Basic Amount, any additional portion of the Offered Securities
attributable to the Basic Amounts of other Buyers as such Buyer shall indicate
it will purchase or acquire should the other Buyers subscribe for less than
their Basic Amounts (the “Undersubscription
Amount”), which process shall be repeated until the Buyers shall
have an opportunity to subscribe for any remaining Undersubscription Amount.

 

(3)                                  To accept an Offer, in whole
or in part, such Buyer must deliver a written notice to the Company prior to
the end of the fifth (5th) Business Day after such Buyer’s receipt
of the Offer Notice (the “Offer Period”),
setting forth the portion of such Buyer’s Basic Amount that such Buyer elects
to purchase and, if such Buyer shall elect to purchase all of its Basic Amount,
the Undersubscription Amount, if any, that such Buyer elects to purchase (in
either case, the “Notice of Acceptance”).  If the Basic Amounts subscribed for by all Buyers
are less than the total of all of the Basic Amounts, then each Buyer who has
set forth an Undersubscription Amount in its Notice of Acceptance shall be
entitled to purchase, in addition to the Basic Amounts subscribed for, the
Undersubscription Amount it has subscribed for; provided, however,
that if the 

 

24

 

Undersubscription Amounts subscribed for exceed the difference between
the total of all the Basic Amounts and the Basic Amounts subscribed for (the “Available Undersubscription Amount”), each
Buyer who has subscribed for any Undersubscription Amount shall be entitled to
purchase only that portion of the Available Undersubscription Amount as the
Basic Amount of such Buyer bears to the total Basic Amounts of all Buyers that
have subscribed for Undersubscription Amounts, subject to rounding by the
Company to the extent its deems reasonably necessary.  Notwithstanding the foregoing, if the Company
desires to modify or amend the terms and conditions of the Offer prior to the
expiration of the Offer Period, the Company may deliver to the Buyers a new
Offer Notice and the Offer Period shall expire on the fifth (5th)
Business Day after such Buyer’s receipt of such new Offer Notice.

 

(4)                                  The Company shall have ten (10) Business
Days from the expiration of the Offer Period above (i) to offer, issue,
sell or exchange all or any part of such Offered Securities as to which a
Notice of Acceptance has not been given by the Buyers (the “Refused Securities”) pursuant to a
definitive agreement(s) (the “Subsequent Placement
Agreement”), but only to the offerees described in the Offer Notice
(if so described therein) and only upon terms and conditions (including,
without limitation, unit prices and interest rates) that are not more favorable
to the acquiring person or persons or less favorable to the Company than those
set forth in the Offer Notice and (ii) to publicly announce (a) the
execution of such Subsequent Placement Agreement, and (b) either (x) the
consummation of the transactions contemplated by such Subsequent Placement
Agreement or (y) the termination of such Subsequent Placement Agreement,
which shall be filed with the SEC on a Current Report on Form 8-K with
such Subsequent Placement Agreement and any material documents contemplated
therein filed as exhibits thereto.

 

(5)                                  In the event the Company
shall propose to sell less than all the Refused Securities (any such sale to be
in the manner and on the terms specified in Section 4(o)(iii)(3) above),
then each Buyer may, at its sole option and in its sole discretion, not later
than two (2) Business Days following notice from the Company of such
reduced amount, reduce the number or amount of the Offered Securities specified
in its Notice of Acceptance to an amount that shall be not less than the number
or amount of the Offered Securities that such Buyer elected to purchase
pursuant to Section 4(o)(iii)(2) above multiplied by a fraction, (i) the
numerator of which shall be the number or amount of Offered Securities the Company
actually proposes to issue, sell or exchange (including Offered Securities to
be issued or sold to Buyers pursuant to Section 4(o)(iii)(3) above
prior to such reduction) and (ii) the denominator of which shall be the
original amount of the Offered Securities. 
In the event that any Buyer so elects to reduce the number or amount of
Offered Securities specified in its Notice of Acceptance, the Company may not
issue, sell or exchange more than the reduced number or amount of the Offered
Securities unless and until such securities have again been offered to the
Buyers in accordance with Section 4(o)(iii)(1) above.

 

25

 

(6)                                  Upon the closing of the
issuance, sale or exchange of all or less than all of the Refused Securities,
the Buyers shall acquire from the Company, and the Company shall issue to the
Buyers, the number or amount of Offered Securities specified in the Notices of
Acceptance, as reduced pursuant to Section 4(o)(iii)(4) above if the
Buyers have so elected, upon the terms and conditions specified in the
Offer.  The purchase by the Buyers of any
Offered Securities is subject in all cases to the preparation, execution and
delivery by the Company and the Buyers of a purchase agreement relating to such
Offered Securities reasonably satisfactory in form and substance to the Buyers
and their respective counsel.

 

(7)                                  Any Offered Securities not
acquired by the Buyers or other persons in accordance with Section 4(o)(iii)(3) above
may not be issued, sold or exchanged until they are again offered to the Buyers
under the procedures specified in this Agreement.

 

(8)                                  The Company and the Buyers
agree that if any Buyer elects to participate in the Offer, (x) neither
the Subsequent Placement Agreement with respect to such Offer nor any other
transaction documents related thereto (collectively, the “Subsequent
Placement Documents”) shall include any term or provisions whereby
any Buyer shall be required to agree to any restrictions in trading as to any
securities of the Company owned by such Buyer prior to such Subsequent
Placement (other than such restrictions on trading similar in all material
respects to the restrictions on trading set forth in Section 2(k) above),
and (y) such Buyer shall be entitled to registration rights in such
Subsequent Placement Documents similar in all material respects to the
registration rights contained in the Registration Rights Agreement.

 

(9)                                  Notwithstanding anything to
the contrary in this Section 4(o) and unless otherwise agreed to by the
Buyers, the Company shall either confirm in writing to the Buyers that the
transaction with respect to the Subsequent Placement has been abandoned or
shall publicly disclose its intention to issue the Offered Securities, in
either case in such a manner such that the Buyers will not be in possession of
material non-public information, by the fifteenth (15th) Business
Day following delivery of the Offer Notice. 
If by the fifteenth (15th) Business Day following delivery of
the Offer Notice no public disclosure regarding a transaction with respect to
the Offered Securities has been made, and no notice regarding the abandonment
of such transaction has been received by the Buyers, such transaction shall be
deemed to have been abandoned and the Buyers shall not be deemed to be in
possession of any material, non-public information with respect to the
Company.  Should the Company decide to
pursue such transaction with respect to the Offered Securities, the Company
shall provide each Buyer with another Offer Notice and each Buyer will again
have the right of participation set forth in this Section 4(o)(iii).  The Company shall not be permitted to deliver
more than one such Offer Notice to the Buyers in any sixty (60) day period,
excluding Offer Notices delivered to notify Buyers of any material
modifications or amendments to a prior Offer Notice.

 

(iv)                              The
restrictions contained in subsections (ii) and (iii) of this Section 4(o) shall
not apply in connection with the issuance of any Excluded Securities (as
defined in the Notes).

 

26

 

(p)                                 Collateral Agent.  Each Buyer hereby (a) appoints Ramius
Advisors, LLC, as the collateral agent hereunder, under the Notes and under the
other Security Documents (in such capacity, the “Collateral Agent”), and (b) authorizes the Collateral
Agent (and its officers, directors, employees and agents) to take such action
on such Buyer’s behalf in accordance with the terms hereof and thereof.  The Collateral Agent shall not have, by
reason hereof or any of the other Transaction Documents, a fiduciary relationship
in respect of any Buyer.  Neither the
Collateral Agent nor any of its officers, directors, employees and agents shall
have any liability to any Buyer for any action taken or omitted to be taken in
connection hereof or any other Transaction Document except to the extent caused
by its own gross negligence or willful misconduct, and each Buyer agrees to
defend, protect, indemnify and hold harmless the Collateral Agent and all of
its officers, directors, employees and agents (collectively, the “Indemnitees”) from and against any losses,
damages, liabilities, obligations, penalties, actions, judgments, suits, fees,
costs and expenses (including, without limitation, reasonable attorneys’ fees,
costs and expenses) incurred by such Indemnitee, whether direct, indirect or
consequential, arising from or in connection with the performance by such
Indemnitee of the duties and obligations of Collateral Agent pursuant hereto or
any of the Transaction Documents.  The
Collateral Agent shall not be required to exercise any discretion or take any
action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions
of at least 60% of the aggregate principal amount of the then outstanding Notes
(the “Required Holders”), and such
instructions shall be binding upon all holders of Notes; provided, however,
that the Collateral Agent shall not be required to take any action which, in
the reasonable opinion of the Agent, exposes the Agent to liability or which is
contrary to this Agreement or any other Transaction Document or applicable
law.  The Collateral Agent shall be
entitled to rely upon any written notices, statements, certificates, orders or
other documents or any telephone message believed by it in good faith to be
genuine and correct and to have been signed, sent or made by the proper Person,
and with respect to all matters pertaining to this Agreement or any of the
other Transaction Documents and its duties hereunder or thereunder, upon advice
of counsel selected by it.

 

(q)                                 Successor
Collateral Agent.

 

(i)                                             The Collateral
Agent may resign from the performance of all its functions and duties hereunder
and under the other Transaction Documents at any time by giving at least thirty
(30) Business Days’ prior written notice to the Company and each holder of
Notes.  Such resignation shall take
effect upon the acceptance by a successor Collateral Agent of appointment
pursuant to clauses (ii) and (iii) below or as otherwise provided
below.

 

(ii)                                          Upon any such
notice of resignation, the Required Holders of the Notes then outstanding shall
appoint a successor collateral agent. 
Upon the acceptance of any appointment as collateral agent hereunder by
a successor agent, such successor collateral agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
collateral agent, and the Collateral Agent shall be discharged from its duties
and obligations under this Agreement and the other Transaction Documents.  After the Collateral Agent’s resignation
hereunder as the collateral agent, the provisions of this Section 4(s) shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was the Collateral Agent under this Agreement and the other Transaction
Documents.

 

27

 

(iii)                                       If a successor
collateral agent shall not have been so appointed within said thirty (30)
Business Day period, the Collateral Agent shall then appoint a successor collateral
agent who shall serve as the collateral agent until such time, if any, as the
Required Holders of the Notes then outstanding appoint a successor collateral
agent as provided above.

 

(r)                                    Public
Information.  At any time
during the period commencing on the six (6) month anniversary of the
Closing Date and ending at such time that all of the Securities can be sold
without the requirement to be in compliance with Rule 144(c)(1) and
otherwise without restriction or limitation pursuant to Rule 144(c), including,
if applicable, Rule 144(i), if a registration statement is not available
for the resale of all of the Securities and the Company shall fail for any
reason to satisfy the current public information requirement under Rule 144
(a “Public Information Failure”) then, as
partial relief for the damages to any holder of Securities by reason of any
such delay in or reduction of its ability to sell the Securities (which remedy
shall not be exclusive of any other remedies available at law or in equity),
the Company shall pay to each such holder an amount in cash equal to one
percent (1.0%) of the aggregate Purchase Price of such holder’s Securities on
every thirtieth day (pro rated for periods totaling less than thirty days)
after a Public Information Failure until the earlier of (i) the date such
Public Information Failure is cured and (ii) such time that such public
information is no longer required pursuant to Rule 144.  The payments to which a holder shall be
entitled pursuant to this Section 4(r) are referred to herein as “Public
Information Failure Payments.”  Public
Information Failure Payments shall be paid on the earlier of (I) the last
day of the calendar month during which such Public Information Failure Payments
are incurred and (II) the third Business Day after the event or failure
giving rise to the Public Information Failure Payments is cured.  In the event the Company fails to make Public
Information Failure Payments in a timely manner, such Public Information
Failure Payments shall bear interest at the rate of 1.5% per month (prorated
for partial months) until paid in full.

 

(s)                                  Post-Closing
Covenants.   Unless the
dates set forth below are extended with the written consent of the Collateral
Agent:

 

(i)                                             Within 30 days
following the Closing Date, the Company shall have entered into a collateral
account security agreement (the “Collateral Account
Agreement”, and such blocked account, the “Collateral
Account”), in form and substance reasonably satisfactory to the
Collateral Agent with the Company and a commercial banking institution that is
a member of the Federal Reserve System and has a combined capital and surplus
and undivided profits of not less than $250,000,000 (the “Collateral
Account Bank”), which is reasonably satisfactory to the Collateral
Agent.

 

(ii)                                          Within 60 days
following the Closing Date, the Company shall duly execute and deliver
mortgages (the “Mortgages”) covering each of the
real property described in Column (1)(A) of Schedule I attached to
the Notes (the “Properties”), in
form and substance reasonably satisfactory to the Collateral Agent and shall
have paid any mortgage, transfer and/or other recording taxes related thereto,
unless the failure to obtain the Mortgage with respect to Central Resort
Property is not attributable to the actions or inactions of the Company, in
which case, such period shall be extended for a reasonable period of time not
to exceed 30 days.

 

28

 

(iii)                                       Within 60 days
following the Closing Date, the Company shall have delivered evidence to each
Buyer that each of the Mortgages shall have been filed of record, in the
applicable real property records of such applicable jurisdiction set forth in
each such Mortgage and covering the Properties, unless the failure to deliver
such evidence with respect to Central Resort Property is not attributable to
the actions or inactions of the Company, in which case, such period shall be
extended for a reasonable period of time not to exceed 30 days.

 

(iv)                                      Concurrently
with the delivery of the Mortgages, the Company shall cause to be delivered to
the Collateral Agent an opinion of the Company’s outside Hawaii counsel in form
and substance reasonably satisfactory to the Collateral Agent.

 

(v)                                         Within 60 days
following the Closing Date, the Company shall have delivered to the Collateral
Agent an ALTA mortgagee title insurance policy (the “Mortgage Policy”) (or, if such Property is in a state which
does not permit the issuance of such ALTA policy, such form as shall be
permitted in such state and reasonably acceptable to the Collateral Agent),
issued by First American Title or another title insurance company satisfactory
to the Collateral Agent (the “Title Insurance
Company”) with respect to each of the Properties, in an amount
satisfactory to the Collateral Agent with respect to each such Property, which
amount shall not exceed the fair market value for such Property, or in the
aggregate for all Properties, the aggregate principal amount of the Notes,
assuring the Collateral Agent that each of the Mortgages create a valid and
enforceable mortgage lien subject only to Permitted Liens (as defined in the
Notes) on such Property, free and clear of all defects and encumbrances other
than Permitted Liens (as defined in the Notes) and those which are usual and
customary or permitted by the Collateral Agent in its reasonable discretion,
which Mortgage Policy shall be in form and substance reasonably satisfactory to
the Collateral Agent and containing such endorsements as shall be reasonably
satisfactory to the Collateral Agent and for any other matters that the
Collateral Agent may reasonably request, and providing affirmative insurance as
the Collateral Agent may reasonably request, all of the foregoing in form and
substance reasonably satisfactory to the Collateral Agent.  In the event the Collateral Agent reasonably
requests the deletion of any standard or printed exceptions, the Company shall
provide customary affidavits, and other similar instruments as are reasonably
required by the Title Insurance Company for the deletion of any standard or
printed exceptions, in any title insurance policies issued pursuant
thereto.  Without limiting the foregoing,
the Company agrees to execute and deliver to the Title Insurance Company such
agreements, assurances and indemnities as may be required by the Title
Insurance Company to issue the Mortgage Policy without any exception for
unrecorded leases and matters arising from or affecting the same and with
specific coverage against priority of mechanic’s liens.

 

(vi)                                      Within 30 days
following the Closing Date, the Company shall have delivered to the Collateral
Agent a zoning report on each of the Properties, from the Planning and Zoning
Resource Corporation, in a form reasonably satisfactory to the Collateral Agent
and confirming that the State land use classifications, development/general
plan designations, and zoning classification for each of the Properties is as
shown on Schedule I.

 

29

 

(vii)                                   Within five
days following the Closing Date, the Company shall have provided to the
Collateral Agent copies from its files of all contracts and documents affecting
each of the Properties that are in the Company’s possession.

 

(viii)                                Within 45 days
following the Closing Date, the Company shall have obtained and delivered to
the Collateral Agent a current survey for the Company’s headquarters in
Kahului, Hawaii and for the Merriman’s restaurant parcel, all certified to the
Title Insurance Company and the Collateral Agent and their successors and
assigns, in form and content reasonably satisfactory to the Collateral Agent
and prepared by a professional and properly licensed land surveyor reasonably
satisfactory to the Collateral Agent in accordance with the Accuracy Standards
for ALTA/ACSM Land Title Surveys as adopted by ALTA, American Congress on
Surveying & Mapping and National Society of Professional Surveyors in
2005.  Such surveys shall reflect the
same legal description contained in the Mortgage Policy and shall include,
among other things, a metes and bounds description of the real property
comprising part of each of the Properties reasonably satisfactory to the
Collateral Agent.  The surveyor’s seal
shall be affixed to such survey and the surveyor shall provide a certification
for such survey in form and substance reasonably acceptable to the Collateral
Agent.  Within 60 days following the
Closing Date, unless the Title Insurance Company deletes all survey exceptions
from the title insurance policy, the Company shall have obtained and delivered
to the Collateral Agent an aerial survey for all Properties (other than for the
Company’s headquarters in Kahului, Hawaii and for the Merrimac restaurant
parcel), all certified to the Title Insurance Company and the Collateral Agent
and their successors and assigns, in form and content reasonably satisfactory
to the Collateral Agent and prepared by a professional and properly licensed
land surveyor reasonably satisfactory to the Collateral Agent in accordance
with the Accuracy Standards for ALTA/ACSM Land Title Surveys as adopted by
ALTA, American Congress on Surveying & Mapping and National Society of
Professional Surveyors in 2005, subject to modification as provided in Item 15
from Table A to such Accuracy Standards if and to the extent acceptable to
Collateral Agent. Notwithstanding the foregoing, if the failure to deliver the
aerial surveys is not attributable to the actions or inactions of the Company,
the 60 day period may be extended by the Company for a reasonable period of
time not to exceed 30 days.

 

(ix)                                        Within 60 days
following the Closing Date, the Company shall obtained and delivered to the
Collateral Agent evidence that the Collateral Agent has been named (i) as
an additional insured, as its interests may appear, under all general liability
insurance policies applicable to the Properties and (ii) as a loss payee,
as its interest may appear, under all casualty insurance policies applicable to
the Properties.

 

(x)                                           Within ten days
following the Closing Date, in accordance with the terms of the Security
Documents, the Company shall have delivered to the Collateral Agent appropriate
financing statements on Form UCC-1 to be duly filed in such office or
offices as may be necessary or, in the opinion of the Collateral Agent,
desirable to perfect the liens and/or security interests purported to be
created by each Security Document.

 

30

 

(xi)                                        Within ten days
following the Closing Date the Company shall have delivered or caused to be
delivered to each Buyer (i) true copies of UCC search results, listing all
effective financing statements which name as debtor the Company or any of its
Subsidiaries filed in the prior five years to perfect an interest in any assets
thereof, together with copies of such financing statements, none of which,
except as otherwise agreed in writing by the Buyers, shall cover any of the
Real Property Collateral (as defined in the Notes) other than Permitted Liens
(as defined in the Notes) and the results of searches for any tax lien and
judgment lien filed against such Person or its property, which results, except
as otherwise agreed to in writing by the Buyers shall not show any such Liens
(as defined in the Security Documents) other than Permitted Liens; and (ii) a
perfection certificate, a form of which may be delivered by the Collateral
Agent at or prior to Closing, duly completed and executed by the Company and
each of its Subsidiaries, in form and substance satisfactory to the Buyers.

 

(xii)                                     Notwithstanding
anything herein to the contrary, all premiums, fees, costs and expenses in
connection with the Company’s compliance with this Section 4(s),
including fees charged by the Title Insurance Company for any such title
reports, title insurance policies and surveys, shall be borne wholly by the
Company.

 

(xiii)                                  Within ten days
of the Closing Date, the Company shall have delivered copies of any
archeological studies, reports or the like that the Company has obtained with
respect to the Properties or any portion thereof.

 

(t)                                    Closing
Documents.  As soon as
practicable following the Closing, the Company agrees to deliver, or cause to
be delivered, to each Buyer and Schulte Roth & Zabel LLP a complete
closing set of the Transaction Documents, Securities and any other document reasonably
required to be delivered to any party pursuant to Section 7 hereof or
otherwise.

 

5.                                       REGISTER; TRANSFER AGENT INSTRUCTIONS.

 

(a)                                  Register.  The Company shall maintain at its principal
executive offices (or such other office or agency of the Company as it may
designate by notice to each holder of Securities), a register for the Notes in
which the Company shall record the name and address of the Person in whose name
the Notes have been issued (including the name and address of each transferee),
the principal amount of Notes held by such Person, the number of Conversion
Shares issuable upon conversion of the Notes held by such Person.  The Company shall keep the register open and
available at all times during business hours for inspection of any Buyer or its
legal representatives.

 

(b)                                 Transfer Agent
Instructions.  The Company
shall issue irrevocable instructions to its transfer agent, and any subsequent
transfer agent, to issue certificates or credit shares to the applicable
balance accounts at DTC, registered in the name of each Buyer or its respective
nominee(s), for the Conversion Shares issued at the Closing or upon conversion
of the Notes in such amounts as specified from time to time by each Buyer to
the Company upon conversion of the Notes in the form of Exhibit D
attached hereto (the “Irrevocable Transfer
Agent Instructions”).  The
Company warrants that no instruction other than the Irrevocable Transfer Agent
Instructions referred to in this Section 5(b), and stop transfer
instructions to give effect to Section 2(f) hereof, will be given by
the Company to its transfer agent, and that the Securities shall otherwise be
freely transferable on the books and records of the Company as and 

 

31

 

to the extent provided in
this Agreement and the other Transaction Documents.  If a Buyer effects a sale, assignment or
transfer of the Securities in accordance with Section 2(f), the Company
shall permit the transfer and shall promptly instruct its transfer agent to
issue one or more certificates or credit shares to the applicable balance
accounts at DTC in such name and in such denominations as specified by such
Buyer to effect such sale, transfer or assignment.  In the event that such sale, assignment or
transfer involves Conversion Shares sold, assigned or transferred pursuant to
an effective registration statement or pursuant to Rule 144, the transfer
agent shall issue such Securities to the Buyer, assignee or transferee, as the
case may be, without any restrictive legend. 
The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to a Buyer.  Accordingly, the Company acknowledges that
the remedy at law for a breach of its obligations under this Section 5(b) will
be inadequate and agrees, in the event of a breach or threatened breach by the
Company of the provisions of this Section 5(b), that a Buyer shall be
entitled, in addition to all other available remedies, to an order and/or
injunction restraining any breach and requiring immediate issuance and
transfer, without the necessity of showing economic loss and without any bond
or other security being required.

 

6.                                       CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL.

 

The obligation of the
Company hereunder to issue and sell the Notes to each Buyer at the Closing is
subject to the satisfaction, at or before the Closing Date, of each of the
following conditions, provided that these conditions are for the Company’s sole
benefit and may be waived by the Company at any time in its sole discretion by
providing each Buyer with prior written notice thereof:

 

(a)                                 Such Buyer shall have
executed each of the Transaction Documents to which it is a party and delivered
the same to the Company.

 

(b)                                Such Buyer and each other
Buyer shall have delivered to the Company the Purchase Price (less, in the case
of the RCG Entities, the amounts withheld pursuant to Section 4(g)) for
the Notes being purchased by such Buyer at the Closing by wire transfer of
immediately available funds pursuant to the wire instructions provided by the
Company.

 

(c)                                 The representations and
warranties of such Buyer shall be true and correct in all respects as of the
date when made and as of the Closing Date as though made at that time (except
for representations and warranties that speak as of a specific date, which
shall be true and correct as of such specified date), and such Buyer shall have
performed, satisfied and complied in all respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by such Buyer at or prior to the Closing Date.

 

7.                                       CONDITIONS TO EACH BUYER’S OBLIGATION TO PURCHASE.

 

The obligation of each Buyer
hereunder to purchase the Notes at the Closing is subject to the satisfaction,
at or before the Closing Date, of each of the following conditions, provided
that these conditions are for each Buyer’s sole benefit and may be waived by
such Buyer at any time in its sole discretion by providing the Company with
prior written notice thereof:

 

32

 

(a)                                 The Company shall have duly
executed and delivered to such Buyer (i) each of the Transaction Documents
and (ii) the Notes (allocated in such principal amounts as such Buyer
shall request), being purchased by such Buyer at the Closing pursuant to this
Agreement (allocated in such amounts as such Buyer shall request) being
purchased by such Buyer at the Closing pursuant to this Agreement.

 

(b)                                Such Buyer shall have
received the opinion of Stradling Yocca Carlson & Rauth the Company’s
outside counsel (“Company Counsel”),
dated as of the Closing Date, in substantially the form of Exhibit E-1 attached
hereto.

 

(c)                                 The Company shall have
delivered to such Buyer a copy of the Irrevocable Transfer Agent Instructions,
in the form of Exhibit D attached hereto, which instructions shall
have been delivered to and acknowledged in writing by the Company’s transfer
agent.

 

(d)                                The Company shall have
delivered to such Buyer a certificate evidencing the formation and good standing
of the Company and each of its operating Subsidiaries that constitute “significant
subsidiaries” under Rule 1-02 of Regulation S-X, in such corporation’s
state of incorporation issued by the Secretary of State or comparable office of
such state of incorporation as of a date within ten (10) days of the
Closing Date.

 

(e)                                 The Company shall have
delivered to such Buyer a certificate evidencing the Company’s qualification as
a foreign corporation and good standing issued by the Secretary of State (or
comparable office) of each jurisdiction in which the Company conducts business
and is required to so qualify, as of a date within ten (10) days of the
Closing Date.

 

(f)                                   The Company shall have
delivered to such Buyer a certified copy of the Certificate of Incorporation as
certified by the Secretary of State of the State of Hawaii.

 

(g)                                The Company shall have
delivered to such Buyer a certificate, executed by the Secretary of the Company
and dated as of the Closing Date, as to (i) the resolutions consistent
with Section 3(b) as adopted by the Company’s Board of Directors in a
form reasonably acceptable to such Buyer, (ii) the Certificate of
Incorporation and (iii) the Bylaws, each as in effect at the Closing, in
the form attached hereto as Exhibit F.

 

(h)                                The representations and
warranties of the Company shall be true and correct in all material respects
(except for those representations and warranties that are qualified by
materiality or Material Adverse Effect, which shall be true and correct in all
respects) as of the as of the Closing Date as though made at that time (except
for representations and warranties that speak as of a specific date, which
shall be true and correct as of such specified date) and the Company shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by the Transaction Documents to be
performed, satisfied or complied with by the Company at or prior to the Closing
Date.  Such Buyer shall have received a
certificate, executed by the Chief Executive Officer of the Company, dated as
of the Closing Date, to the foregoing effect and as to such other matters as
may be reasonably requested by such Buyer in the form attached hereto as Exhibit G.

 

33

 

(i)                                    The Company shall have
delivered to such Buyer a letter from the Company’s transfer agent certifying
the number of shares of Common Stock outstanding as of a date within five days
of the Closing Date.

 

(j)                                    The Common Stock (I) shall
be designated for quotation or listed on the Principal Market and (II) shall
not have been suspended, as of the Closing Date, by the SEC or the Principal
Market from trading on the Principal Market nor shall suspension by the SEC or
the Principal Market have been threatened, as of the Closing Date, either (A) in
writing by the SEC or the Principal Market or (B) by falling below the
minimum listing maintenance requirements of the Principal Market.

 

(k)                                 The Company shall have
obtained all governmental, regulatory or third party consents and approvals, if
any, necessary for the sale of the Securities.

 

(l)                                     The Company
shall have delivered to each Buyer a lock-up agreement in the form attached
hereto as Exhibit H executed and delivered by each director and
executive officer of the Company (the “Lock-Up Agreements”).

 

(m)                               The Company
shall have delivered evidence of flood insurance in form and substance
reasonably acceptable to each Buyer.

 

(n)                                The Company shall have
delivered to such Buyer such other documents relating to the transactions
contemplated by this Agreement as such Buyer or its counsel may reasonably
request.

 

8.                                       TERMINATION.  In the event that the Closing shall not have
occurred with respect to a Buyer on or before five (5) Business Days from
the date hereof due to the Company’s or such Buyer’s failure to satisfy the
conditions set forth in Sections 6 and 7 above (and the nonbreaching party’s
failure to waive such unsatisfied condition(s)), the nonbreaching party shall
have the option to terminate this Agreement with respect to such breaching
party at the close of business on such date without liability of any party to
any other party; provided, however, that if this Agreement is
terminated pursuant to this Section 8, the Company shall remain obligated
to reimburse the non-breaching Buyers for the expenses described in Section 4(g) above.

 

9.                                       MISCELLANEOUS.

 

(a)          Governing Law; Jurisdiction;
Jury Trial.  All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by the internal laws of the State of New
York, without giving effect to any choice of law or conflict of law provision
or rule (whether of the State of New York or any other jurisdictions) that
would cause the application of the laws of any jurisdictions other than the
State of New York.  Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in The City of New York, Borough of Manhattan  for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein, and
hereby irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, that such suit, action or proceeding is brought in an
inconvenient forum or that the venue of such suit, action or 

 

34

 

proceeding is improper.  Each party hereby irrevocably waives personal
service of process and consents to process being served in any such suit,
action or proceeding by mailing a copy thereof to such party at the address for
such notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to
limit in any way any right to serve process in any manner permitted by
law.  EACH
PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.

 

(b)         Counterparts.  This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party; provided that a facsimile signature
shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original,
not a facsimile signature.

 

(c)          Headings.  The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.

 

(d)         Severability.  If any provision of this Agreement is
prohibited by law or otherwise determined to be invalid or unenforceable by a
court of competent jurisdiction, the provision that would otherwise be
prohibited, invalid or unenforceable shall be deemed amended to apply to the
broadest extent that it would be valid and enforceable, and the invalidity or
unenforceability of such provision shall not affect the validity of the
remaining provisions of this Agreement so long as this Agreement as so modified
continues to express, without material change, the original intentions of the
parties as to the subject matter hereof and the prohibited nature, invalidity
or unenforceability of the provision(s) in question does not substantially
impair the respective expectations or reciprocal obligations of the parties or
the practical realization of the benefits that would otherwise be conferred
upon the parties.  The parties will
endeavor in good faith negotiations to replace the prohibited, invalid or
unenforceable provision(s) with a valid provision(s), the effect of which
comes as close as possible to that of the prohibited, invalid or unenforceable
provision(s).

 

(e)          Entire Agreement; Amendments.   This Agreement and the other Transaction
Documents supersede all other prior oral or written agreements between the
Buyers, the Company, their affiliates and Persons acting on their behalf with
respect to the matters discussed herein, and this Agreement, the other
Transaction Documents and the instruments referenced herein and therein contain
the entire understanding of the parties with respect to the matters covered
herein and therein and, except as specifically set forth herein or therein,
neither the Company nor any Buyer makes any representation, warranty, covenant
or undertaking with respect to such matters. 
No provision of this Agreement may be amended or waived other than by an
instrument in writing signed by the Company and the holders of at least 60% of
the aggregate number of Registrable Securities issued and issuable hereunder
and under the Notes, and any amendment or waiver to this Agreement made in
conformity with the provisions of this Section 9(e) shall be binding
on all Buyers and holders of Securities as applicable.  No such 

 

35

 

amendment shall be effective
to the extent that it applies to less than all of the holders of the applicable
Securities then outstanding.  No
consideration shall be offered or paid to any Person to amend or consent to a
waiver or modification of any provision of any of the Transaction Documents
unless the same consideration also is offered to all of the parties to the
Transaction Documents and the holders of Notes. 
The Company has not, directly or indirectly, made any agreements with
any Buyers relating to the terms or conditions of the transactions contemplated
by the Transaction Documents except as set forth in the Transaction
Documents.  Without limiting the
foregoing, the Company confirms that, except as set forth in this Agreement, no
Buyer has made any commitment or promise or has any other obligation to provide
any financing to the Company or otherwise.

 

(f)            Notices.  Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this Agreement
must be in writing and will be deemed to have been delivered:  (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one Business Day after
deposit with an overnight courier service, in each case properly addressed to
the party to receive the same.  The
addresses and facsimile numbers for such communications shall be:

 

If to the Company:

 

Maui Land & Pineapple Company, Inc.

120 Kane Street

P. O. Box 187

Kahului, Maui, Hawaii 96733-6687

	
  Telephone:

  	
  (808) 877-3351

  
	
  Facsimile:

  	
  (808) 871-0953

  
	
  Attention:

  	
  David Cole

  

 

With
a copy to (for information purposes only):

 

Stradling Yocca Carlson & Rauth

660 Newport Center Drive, Suite 1600

Newport Beach, CA 92660

	
  Telephone:

  	
  (949) 725-4121

  
	
  Facsimile:

  	
  (949) 823-5121

  
	
  Attention:

  	
  Christopher Ivey, Esq.

  

 

If
to the Transfer Agent:

 

BNY Mellon Shareholder Services LLC

525 Market Street - 35th Floor

San Francisco, CA 94105

	
  Telephone:

  	
  (415) 951-4188

  
	
  Facsimile:

  	
  (415) 951-4181

  
	
  Attention:

  	
  Joshua P. McGinn

  

 

36

 

If to a Buyer, to its address and facsimile
number set forth on the Schedule of Buyers, with copies to such Buyer’s
representatives as set forth on the Schedule of Buyers,

 

with a copy (for
informational purposes only) to:

 

Schulte Roth & Zabel LLP 

919 Third Avenue

New York, New York  10022

	
  Telephone:

  	
  (212) 756-2000

  
	
  Facsimile:

  	
  (212) 593-5955

  
	
  Attention:

  	
  Eleazer N. Klein, Esq.

  

 

or to such other address, facsimile number
and/or email address to the attention of such other Person as the recipient
party has specified by written notice given to each other party five (5) days
prior to the effectiveness of such change. 
Written confirmation of receipt (A) given by the recipient of such
notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender’s facsimile machine containing the time,
date, recipient facsimile number and an image of the first page of such
transmission or (C) provided by an overnight courier service shall be
rebuttable evidence of personal service, receipt by facsimile or receipt from
an overnight courier service in accordance with clause (i), (ii) or (iii) above,
respectively.

 

(g)         Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and
assigns, including any purchasers of the Notes. 
The Company shall not assign this Agreement or any rights or obligations
hereunder without the prior written consent of the holders of at least 60% of
the aggregate number of Registrable Securities issued and issuable hereunder
and under the Notes, including by way of a Fundamental Transaction (unless the
Company is in compliance with the applicable provisions governing Fundamental
Transactions set forth in the Notes).  No
Buyer may assign some or all of its rights hereunder without the written
consent of the Company, unless such Buyer assigns Notes having an aggregate
principal balance greater than or equal to the applicable Minimum Transfer
Amount, in which event such assignee shall be deemed to be a Buyer hereunder
with respect to such assigned rights.

 

(h)         No Third Party Beneficiaries.  This Agreement is intended for the benefit of
the parties hereto and their respective permitted successors and assigns, and
is not for the benefit of, nor may any provision hereof be enforced by, any
other Person.

 

(i)             Survival.  Unless this Agreement is terminated under Section 8,
the representations and warranties of the Company and the Buyers contained in
Sections 2 and 3, the agreements and covenants set forth in Sections 4, 5 and 9
shall survive the Closing and the delivery and conversion of Securities.  Each Buyer shall be responsible only for its
own representations, warranties, agreements and covenants hereunder.

 

37

 

(j)             Further Assurances.  Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
any other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

 

(k)          Indemnification.  In consideration of each Buyer’s execution
and delivery of the Transaction Documents and acquiring the Securities
thereunder and in addition to all of the Company’s other obligations under the
Transaction Documents, the Company shall defend, protect, indemnify and hold
harmless each Buyer and each other holder of the Securities and all of their
stockholders, partners, members, officers, directors, employees and direct or indirect
investors and any of the foregoing Persons’ agents or other representatives
(including, without limitation, those retained in connection with the
transactions contemplated by this Agreement) (collectively, the “Indemnitees”) from and against any and all
actions, causes of action, suits, claims, losses, costs, penalties, fees,
liabilities and damages, and expenses in connection therewith (irrespective of
whether any such Indemnitee is a party to the action for which indemnification
hereunder is sought), and including reasonable attorneys’ fees and
disbursements (the “Indemnified Liabilities”),
incurred by any Indemnitee as a result of, or arising out of, or relating to (a) any
misrepresentation or breach of any representation or warranty made by the Company
in the Transaction Documents or any other certificate, instrument or document
contemplated hereby or thereby, (b) any breach of any covenant, agreement
or obligation of the Company contained in the Transaction Documents or any
other certificate, instrument or document contemplated hereby or thereby or (c) any
cause of action, suit or claim brought or made against such Indemnitee by a
third party (including for these purposes a derivative action brought on behalf
of the Company) and arising out of or resulting from (i) the execution,
delivery, performance or enforcement of the Transaction Documents or any other
certificate, instrument or document contemplated hereby or thereby, (ii) any
transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of the issuance of the Securities, (iii) any
disclosure made by such Buyer pursuant to Section 4(i), or (iv) the
status of such Buyer or holder of the Securities as an investor in the Company
pursuant to the transactions contemplated by the Transaction Documents.  To the extent that the foregoing undertaking
by the Company may be unenforceable for any reason, the Company shall make the
maximum contribution to the payment and satisfaction of each of the Indemnified
Liabilities that is permissible under applicable law.  Except as otherwise set forth herein, the
mechanics and procedures with respect to the rights and obligations under this Section 9(k) shall
be the same as those set forth in Section 6 of the Registration Rights
Agreement.

 

(l)                                     No Strict
Construction.  The
language used in this Agreement will be deemed to be the language chosen by the
parties to express their mutual intent, and no rules of strict
construction will be applied against any party.

 

(m)                               Remedies.  Each Buyer and each holder of the Securities
shall have all rights and remedies set forth in the Transaction Documents and
all rights and remedies which such holders have been granted at any time under
any other agreement or contract and all of the rights which such holders have
under any law.  Any Person having any
rights under any provision of this Agreement shall be entitled to enforce such
rights specifically (without posting a bond or other security), to recover damages
by reason of any breach of any provision of this Agreement and to exercise all
other rights granted by law. 
Furthermore, the Company 

 

38

 

recognizes that in the event
that it fails to perform, observe, or discharge any or all of its obligations
under the Transaction Documents, any remedy at law may prove to be inadequate
relief to the Buyers.  The Company
therefore agrees that the Buyers shall be entitled to seek temporary and
permanent injunctive relief in any such case without the necessity of proving
actual damages and without posting a bond or other security.

 

(n)                                 Rescission and
Withdrawal Right. 
Notwithstanding anything to the contrary contained in (and without
limiting any similar provisions of) the Transaction Documents, whenever any Buyer
exercises a right, election, demand or option under a Transaction Document and
the Company does not timely perform its related obligations within the periods
therein provided, then such Buyer may rescind or withdraw, in its sole
discretion from time to time upon written notice to the Company, any relevant
notice, demand or election in whole or in part without prejudice to its future
actions and rights.

 

(o)                                 Payment Set
Aside.  To the extent that the Company
makes a payment or payments to the Buyers hereunder or pursuant to any of the
other Transaction Documents or the Buyers enforce or exercise their rights
hereunder or thereunder, and such payment or payments or the proceeds of such
enforcement or exercise or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, recovered from, disgorged
by or are required to be refunded, repaid or otherwise restored to the Company,
a trustee, receiver or any other Person under any law (including, without
limitation, any bankruptcy law, foreign, state or federal law, common law or
equitable cause of action), then to the extent of any such restoration the
obligation or part thereof originally intended to be satisfied shall be revived
and continued in full force and effect as if such payment had not been made or
such enforcement or setoff had not occurred.

 

(p)                                 Independent Nature of Buyers’
Obligations and Rights.  The
obligations of each Buyer under any Transaction Document are several and not
joint with the obligations of any other Buyer, and no Buyer shall be
responsible in any way for the performance of the obligations of any other
Buyer under any Transaction Document. 
Nothing contained herein or in any other Transaction Document, and no
action taken by any Buyer pursuant hereto or thereto, shall be deemed to
constitute the Buyers as, and the Company acknowledges that the Buyers do not
so constitute, a partnership, an association, a joint venture or any other kind
of entity, or create a presumption that the Buyers are in any way acting in
concert or as a group, and the Company shall not assert any such claim with
respect to such obligations or the transactions contemplated by the Transaction
Documents and the Company acknowledges that the Buyers are not acting in
concert or as a group with respect to such obligations or the transactions
contemplated by the Transaction Documents. 
The Company acknowledges and each Buyer confirms that it has
independently participated in the negotiation of the transaction contemplated
hereby with the advice of its own counsel and advisors.  Each Buyer shall be entitled to independently
protect and enforce its rights, including, without limitation, the rights
arising out of this Agreement or out of any other Transaction Documents, and it
shall not be necessary for any other Buyer to be joined as an additional party
in any proceeding for such purpose.

 

[Signature Page Follows]

 

39

 

IN WITNESS WHEREOF, each Buyer and
the Company have caused their respective signature page to this Securities
Purchase Agreement to be duly executed as of the date first written above.

 

 

	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  MAUI
  LAND & PINEAPPLE

  COMPANY, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert I. Webber

  
	
   

  	
   

  	
  Robert I. Webber

  
	
   

  	
   

  	
  Chief Operating Officer,
  Chief

  Financial Officer, and Executive Vice

  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Adele H. Sumida

  
	
   

  	
   

  	
  Adele H. Sumida

  
	
   

  	
   

  	
  Controller and Secretary

  

 

[Signature Page to Securities Purchase Agreement]

 

 

IN WITNESS
WHEREOF, each Buyer and the Company have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed as of the date first written above.

 

 

	
   

  	
  BUYERS:

  
	
   

  	
   

  
	
   

  	
  RCG PB, LTD

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Owen Littman

  
	
   

  	
   

  	
  Owen Littman

  
	
   

  	
   

  	
  Authorized Signatory

  

 

[Signature
Page to Securities Purchase Agreement]

 

 

IN WITNESS
WHEREOF, each Buyer and the Company have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed as of the date first written above.

 

 

	
   

  	
  BUYERS:

  
	
   

  	
   

  
	
   

  	
  RCG ENTERPRISE, LTD  

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Owen Littman

  
	
   

  	
   

  	
  Owen Littman

  
	
   

  	
   

  	
  Authorized Signatory

  

 

[Signature
Page to Securities Purchase Agreement]

 

 

IN WITNESS
WHEREOF, each Buyer and the Company have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed as of the date first written above.

 

 

	
   

  	
  BUYERS:

  
	
   

  	
   

  
	
   

  	
  HIGHBRIDGE INTERNATIONAL LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  HIGHBRIDGE CAPITAL

  
	
   

  	
  MANAGEMENT, LLC,

  
	
   

  	
   

  	
  its Trading Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Adam J. Chill

  
	
   

  	
   

  	
  Adam J. Chill

  
	
   

  	
   

  	
  Managing Director

  
				

 

[Signature Page to Securities Purchase Agreement]

 

 

IN WITNESS
WHEREOF, each Buyer and the Company have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed as of the date first written above.

 

 

	
   

  	
  BUYERS:

  
	
   

  	
   

  
	
   

  	
  INTERLACHEN CONVERTIBLE

  INVESTMENTS LIMITED

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gregg T. Colburn

  
	
   

  	
   

  	
  Gregg T. Colburn

  
	
   

  	
   

  	
  Authorized Signatory

  

 

[Signature
Page to Securities Purchase Agreement]

 

 

SCHEDULE OF BUYERS

 

	
  (1)

  	
   

  	
  (2)

  Address and

  	
   

  	
  (3)

  Aggregate

  Principal

  	
   

  	
  (4)

  Purchase

  	
   

  	
  (5)

  Legal Representative’s Address

  
	
  Buyer

  	
   

  	
  Facsimile Number

  	
   

  	
  Amount of Notes

  	
   

  	
  Price

  	
   

  	
  and Facsimile Number

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  RCG PB, Ltd

  	
   

  	
  c/o Ramius LLC

  	
   

  	
  $

  	
  10,950,000

  	
   

  	
  $

  	
  10,950,000

  	
   

  	
  Schulte Roth &
  Zabel LLP

  
	
   

  	
   

  	
  599 Lexington Avenue, 20th
  Floor

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  919 Third Avenue

  
	
   

  	
   

  	
  New York, NY 10022

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  New York, NY 10022

  
	
   

  	
   

  	
  Attention: Jeffrey Smith

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Attn: Eleazer
  Klein, Esq.

  
	
   

  	
   

  	
  Owen Littman

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Fax: (212) 593-5955

  
	
   

  	
   

  	
  Facsimile:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Tel: (212)756-2376

  
	
   

  	
   

  	
  Telephone

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Email: Eleazer.Klein@srz.com

  
	
   

  	
   

  	
  Residence: Cayman Islands

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  RCG Enterprise, Ltd

  	
   

  	
  c/o Ramius LLC

  	
   

  	
  $

  	
  8,050,000

  	
   

  	
  $

  	
  8,050,000

  	
   

  	
  Schulte Roth &
  Zabel LLP

  
	
   

  	
   

  	
  599 Lexington Avenue, 20th
  Floor

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  919 Third Avenue

  
	
   

  	
   

  	
  New York, NY 10022

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  New York, NY 10022

  
	
   

  	
   

  	
  Attention: Jeffrey Smith

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Attn: Eleazer
  Klein, Esq.

  
	
   

  	
   

  	
  Owen Littman

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Fax: (212) 593-5955

  
	
   

  	
   

  	
  Facsimile:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Tel: (212)756-2376

  
	
   

  	
   

  	
  Telephone:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Email:
  Eleazer.Klein@srz.com

  
	
   

  	
   

  	
  Residence: Cayman Islands

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Highbridge International LLC

  	
   

  	
  c/o Highbridge Capital Management,
  LLC

  	
   

  	
  $

  	
  10,500,000

  	
   

  	
  $

  	
  10,500,000

  	
   

  	
   

  
	
   

  	
   

  	
  9 West 57th Street, 27th
  Floor

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  New York, New York 10019

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attention: Adam J. Chill

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Facsimile:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Telephone:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Residence: Cayman Islands

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Interlachen Convertible 

  	
   

  	
  c/o Interlachen Capital
  Group LP

  	
   

  	
  $

  	
  10,500,000

  	
   

  	
  $

  	
  10,500,000

  	
   

  	
   

  
	
  Investments Limited

  	
   

  	
  Attention: Gregg T. Colburn
  and Legal

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  800 Nicollet Mall,
  Suite 2500

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Minneapolis, MN 55402

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Facsimile:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Telephone:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Residence: Cayman Islands

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

EXHIBITS

 

	
  Exhibit A

  	
  Form of
  Note

  
	
  Exhibit B

  	
  Registration
  Rights Agreement

  
	
  Exhibit C

  	
  Form of
  Guaranty

  
	
  Exhibit D

  	
  Form of
  Irrevocable Transfer Agent Instructions

  
	
  Exhibit E-1

  	
  Form of
  Company Counsel Opinion

  
	
  Exhibit E-2

  	
  Form of
  Hawaiian Counsel Mortgage Opinion

  
	
  Exhibit F

  	
  Form of
  Secretary’s Certificate

  
	
  Exhibit G

  	
  Form of
  Officer’s Certificate

  
	
  Exhibit H

  	
  Form of
  Lock-Up Agreement

  
	
   

  	
   

  
	
  SCHEDULES

  	
   

  
	
   

  	
   

  
	
  Schedule
  3(e)

  	
  Consents

  
	
  Schedule
  3(k)

  	
  SEC
  Documents; Financial Statements

  
	
  Schedule
  3(l)

  	
  Absence
  of Certain Changes

  
	
  Schedule
  3(q)

  	
  Transactions
  with Affiliates

  
	
  Schedule
  3(r)

  	
  Equity
  Capitalization

  
	
  Schedule
  3(s)

  	
  Indebtedness
  and Other Contracts

  
	
  Schedule
  3(v)

  	
  Employee
  Relations

  
	
  Schedule
  3(w)

  	
  Title

  
	
  Schedule
  3(y)

  	
  Environmental
  Laws

  
	
  Schedule
  3(cc)

  	
  Ranking
  of Notes

  
	
  Schedule
  3(pp)

  	
  PropertiesExhibit 10.2

 

REGISTRATION RIGHTS AGREEMENT

 

REGISTRATION
RIGHTS AGREEMENT (this “Agreement”), dated as of July 27, 2008, by and among Maui
Land & Pineapple Company, Inc., a Hawaiian corporation, with
headquarters located at P.O. Box 187, Kahului, Maui, Hawaii 96733-6687
(the “Company”), and the
undersigned buyers (each, a “Buyer”,
and collectively, the “Buyers”).

 

WHEREAS:

 

A.            In
connection with the Securities Purchase Agreement by and among the parties
hereto of even date herewith (the “Securities Purchase
Agreement”), the Company has agreed, upon the terms and subject to
the conditions set forth in the Securities Purchase Agreement, to issue and
sell to each Buyer senior secured convertible notes of the Company (the “Notes”), which will, among other things, be convertible into
the Company’s common stock, no par value (the “Common Stock”)
(as converted, collectively, the “Conversion Shares”)
in accordance with the terms of the Notes.

 

B.            In
accordance with the terms of the Securities Purchase Agreement, the Company has
agreed to provide certain registration rights under the Securities Act of 1933,
as amended, and the rules and regulations thereunder, or any similar
successor statute (collectively, the “1933
Act”), and applicable state securities laws.

 

NOW,
THEREFORE, in consideration of the premises and the
mutual covenants contained herein and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Company and
each of the Buyers hereby agree as follows:

 

1.     Definitions.

 

Capitalized
terms used herein and not otherwise defined herein shall have the respective
meanings set forth in the Securities Purchase Agreement.  As used in this Agreement, the following
terms shall have the following meanings:

 

a.             “Additional Effective Date” means the date the Additional
Registration Statement is declared effective by the SEC.

 

b.             “Additional Effectiveness Deadline” means
the date which is sixty (60) calendar days after the earlier of the Additional
Filing Date and the Additional Filing Deadline or in the event that the
Registration Statement is subject to a full review by the SEC, ninety (90)
calendar days after the earlier of the Additional Filing Date and the
Additional Filing Deadline.

 

c.             “Additional Filing Date” means the date on which the
Additional Registration Statement is filed with the SEC.

 

d.             “Additional Filing Deadline” means if
Cutback Shares are required to be included in any Additional Registration
Statement, the later of (i) the date sixty (60) days after the date
substantially all of the Registrable Securities registered under the immediately preceding Registration
Statement are sold and (ii) the date six (6) months from the
Initial Effective Date or the most recent Additional Effective Date, as
applicable.

 

1

 

e.             “Additional Registrable Securities” means, (i) any
Cutback Shares not previously included on a Registration Statement and (ii) any
capital stock of the Company issued or issuable with respect to the Notes, the
Conversion Shares or the Cutback Shares as a result of any stock split, stock
dividend, recapitalization, exchange or similar event or otherwise, without
regard to any limitations on conversion and/or redemption of the Notes.

 

f.              “Additional Registration Statement” means a
registration statement or registration statements of the Company filed under
the 1933 Act covering any Additional Registrable Securities.

 

g.             “Additional Required Registration Amount”
means any Cutback Shares not previously included on a Registration Statement,
all subject to adjustment as provided in Section 2(f), without regard to
any limitations on conversions and/or redemptions of the Notes.

 

h.             “Business Day” means any day other than
Saturday, Sunday or any other day on which commercial banks in the City of New
York are authorized or required by law to remain closed.

 

i.              “Closing Date” shall have the meaning set
forth in the Securities Purchase Agreement.

 

j.              “Cutback Shares” means any of the Initial Required
Registration Amount (without regard to clause (II) in the definition
thereof) or the Additional Required Registration Amount of Registrable
Securities not included in all Registration Statements previously declared
effective hereunder as a result of a limitation on the maximum number of shares
of Common Stock of the Company permitted to be registered by the staff of the
SEC pursuant to Rule 415.  For the
purpose of determining the Cutback Shares, in order to determine any applicable
Required Registration Amount, the Conversion Shares shall be excluded on a pro
rata basis among the Investors.

 

k.             “Effective Date” means the Initial Effective
Date and the Additional Effective Date, as applicable.

 

l.              “Effectiveness Deadline” means the Initial
Effectiveness Deadline and the Additional Effectiveness Deadline, as
applicable.

 

m.            “Filing Deadline” means the Initial Filing
Deadline and the Additional Filing Deadline, as applicable.

 

n.             “Initial Effective Date”
means the date that the Initial Registration Statement has been declared effective
by the SEC.

 

2

 

o.             “Initial Effectiveness
Deadline” means the date (i) in the event that the Initial
Registration Statement is not subject to a full review by the SEC, ninety (90)
calendar days after the Closing Date or (ii) in the event that the Initial
Registration Statement is subject to a full review by the SEC, one hundred and
twenty (120) calendar days after the Closing Date.

 

p.             “Initial Filing Deadline”
means the date which is thirty (30)
calendar days after the Closing Date.

 

q.             “Initial Registrable Securities” for the
Initial Registration Statement means (i) the Conversion Shares issued or
issuable upon conversion and/or redemption of the Notes and (ii)  any
capital stock of the Company issued or issuable, with respect to the Notes
and/or the Conversion Shares as a result of any stock split, stock dividend,
recapitalization, exchange or similar event or otherwise, without regard to any
limitations on conversion and/or redemption of the Notes.

 

r.              “Initial Registration Statement”
means a registration statement or registration statements of the Company filed
under the 1933 Act covering the Initial Registrable Securities.

 

s.             “Initial Required Registration Amount” means
(I) 120% of the maximum number of Conversion Shares issued and issuable
pursuant to the Notes as of the Trading Day immediately preceding the
applicable date of determination, subject to adjustment as provided in Section 2(f),
without regard to any limitations on conversion and/or redemption of the Notes
or (II) such other amount as may be required by the staff of the SEC
pursuant to Rule 415 with any cutback applied pro rata to all Investors.

 

t.              “Investor” means a Buyer or any transferee
or assignee thereof to whom a Buyer assigns its rights under this Agreement and
who agrees to become bound by the provisions of this Agreement in accordance
with Section 9 and any transferee or assignee thereof to whom a transferee
or assignee assigns its rights under this Agreement and who agrees to become
bound by the provisions of this Agreement in accordance with Section 9.

 

u.             “Person” means an individual, a limited
liability company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or any department or agency
thereof.

 

v.             “register,” “registered,” and “registration”
refer to a registration effected by preparing and filing one or more
Registration Statements in compliance with the 1933 Act and pursuant to Rule 415
and the declaration or ordering of effectiveness of such Registration Statement(s) by
the SEC.

 

w.            “Registrable Securities” means the Initial
Registrable Securities and the Additional Registrable Securities.

 

x.             “Registration
Period” means, with respect to any investor, the period between the
Closing Date and the earlier of (i) the date as of which such Investor may
sell all of the Registrable Securities covered by such Registration Statement
without restriction or limitation pursuant to Rule 144 and without the
requirement to be in compliance with Rule 144(c)(1) (or any successor
thereto) promulgated under the 1933 Act or (ii) the date on which such
Investor shall have sold all of the Registrable Securities covered by such
Registration Statement.

 

3

 

y.             “Registration Statement” means the Initial
Registration Statement and the Additional Registration Statement, as
applicable.

 

z.             “Required Holders” means the holders of at
least 60% of the Registrable Securities.

 

aa.           “Required
Registration Amount” means either the Initial Required Registration
Amount or the Additional Required Registration Amount, as applicable.

 

bb.          “Rule 415” means Rule 415
promulgated under the 1933 Act or any successor rule providing for
offering securities on a continuous or delayed basis.

 

cc.           “SEC” means the United States Securities and
Exchange Commission.

 

dd.          “Trading Day” means any day on which the Common Stock is
traded on the Principal Market, or, if the Principal Market (as defined in the
Securities Purchase Agreement)is not the principal trading market for the
Common Stock, then on the principal securities exchange or securities market on
which the Common Stock is then traded; provided that “Trading Day” shall not
include any day on which the Common Stock is scheduled to trade on such
exchange or market for less than 4.5 hours or any day that the Common Stock is
suspended from trading during the final hour of trading on such exchange or
market (or if such exchange or market does not designate in advance the closing
time of trading on such exchange or market, then during the hour ending at
4:00:00 p.m., New York Time).

 

2.     Registration.

 

a.         Initial Mandatory
Registration.  The Company shall
prepare, and, as soon as practicable, but in no event later than the Initial
Filing Deadline, file with the SEC the Initial Registration Statement on Form S-3
covering the resale of all of the Initial Registrable Securities.  In the event that Form S-3 is
unavailable for such a registration, the Company shall use such other form as
is available for such a registration on another appropriate form reasonably
acceptable to the Required Holders, subject to the provisions of Section 2(e).  The Initial Registration Statement prepared
pursuant hereto shall register for resale at least the number of shares of
Common Stock equal to the Initial Required Registration Amount determined as of
the date the Initial Registration Statement is initially filed with the
SEC.  The Initial Registration Statement
shall contain (except if otherwise directed by the Required Holders) the “Selling
Stockholders” and “Plan of Distribution” sections in substantially
the form attached hereto as Exhibit B.  The Company shall use its best efforts to
have the Initial Registration Statement declared effective by the SEC as soon
as practicable, but in no event later than the Initial Effectiveness
Deadline.  By 5:30 p.m. New York time on the Business Day following the
Initial Effective Date, the Company shall file with the SEC in accordance with Rule 424
under the 1933 Act the final prospectus to be used in connection with sales
pursuant to such Initial Registration Statement.

 

4

 

b.         Additional Mandatory
Registrations.  The Company shall
prepare, and, as soon as practicable but in no event later than the Additional
Filing Deadline, file with the SEC an Additional Registration Statement on Form S-3
covering the resale of all of the Additional Registrable Securities not
previously registered on an Additional Registration Statement hereunder.  To the extent the staff of the SEC does not
permit the Additional Required Registration Amount to be registered on an
Additional Registration Statement, the Company shall file Additional
Registration Statements successively trying to register on each such Additional
Registration Statement the maximum number of remaining Additional Registrable
Securities until the Additional Required Registration Amount has been
registered with the SEC.  In the event that
Form S-3 is unavailable for such a registration, the Company shall use
such other form as is available for such a registration on another appropriate
form reasonably acceptable to the Required Holders, subject to the provisions
of Section 2(e).  Pursuant to the
terms of this Section 2(b), each Additional Registration Statement
prepared pursuant hereto shall register for resale at least that number of
shares of Common Stock equal to the Additional Required Registration Amount
determined as of the date such Additional Registration Statement is initially
filed with the SEC.  Each Additional
Registration Statement shall contain (except if otherwise directed by the
Required Holders) the “Selling Stockholders” and “Plan of
Distribution” sections in substantially the form attached hereto as Exhibit B.  The Company shall use its best efforts to
have each Additional Registration Statement declared effective by the SEC as
soon as practicable, but in no event later than the Additional Effectiveness
Deadline.  By 5:30 p.m. New York time on the Business Day following
the Additional Effective Date, the Company shall file with the SEC in
accordance with Rule 424 under the 1933 Act the final prospectus to be
used in connection with sales pursuant to such Additional Registration
Statement.

 

c.         Allocation of Registrable
Securities.  The initial number of
Registrable Securities included in any Registration Statement and any increase
or decrease in the number of Registrable Securities included therein shall be
allocated pro rata among the Investors based on the number of Registrable
Securities held by each Investor at the time the Registration Statement
covering such initial number of Registrable Securities or increase or decrease
thereof is declared effective by the SEC. 
In the event that an Investor sells or otherwise transfers any of such
Investor’s Registrable Securities, each transferee shall be allocated a pro
rata portion of the then remaining number of Registrable Securities included in
such Registration Statement for such transferor.  Any shares of Common Stock included in a
Registration Statement and which remain allocated to any Person which ceases to
hold any Registrable Securities covered by such Registration Statement shall be
allocated to the remaining Investors, pro rata based on the number of Registrable
Securities then held by such Investors which are covered by such Registration
Statement.  In no event shall the Company
include any securities other than Registrable Securities on any Registration
Statement without the prior written consent of the Required Holders.

 

d.         Legal Counsel.  Subject to Section 5 hereof, the
Required Holders shall have the right to select one legal counsel to review and
oversee any registration pursuant to this Section 2 (“Legal Counsel”), which shall be Schulte
Roth & Zabel LLP or such other counsel as thereafter designated by the
Required Holders.  The Company and Legal
Counsel shall reasonably cooperate with each other in performing the Company’s
obligations under this Agreement.

 

5

 

e.         Ineligibility for Form S-3.  In the event that Form S-3 is not
available for the registration of the resale of Registrable Securities
hereunder, the Company shall (i) register the resale of the Registrable
Securities on another appropriate form reasonably acceptable to the Required
Holders and (ii) undertake to register the Registrable Securities on Form S-3
as soon as such form is available, provided that the Company shall maintain the
effectiveness of the Registration Statement then in effect until such time as a
Registration Statement on Form S-3 covering the Registrable Securities has
been declared effective by the SEC.

 

f.          Sufficient Number of
Shares Registered.  In the event the
number of shares available under a Registration Statement filed pursuant to Section 2(a) or
Section 2(b) is insufficient to cover all of the Registrable
Securities required to be covered by such Registration Statement or an Investor’s
allocated portion of the Registrable Securities pursuant to Section 2(c),
the Company shall amend the applicable Registration Statement, or file a new
Registration Statement (on the short form available therefor, if applicable),
or both, so as to cover at least the Required Registration Amount as of the
Trading Day immediately preceding the date of the filing of such amendment or
new Registration Statement, in each case, as soon as practicable, but in any
event not later than twenty (20) days after the necessity therefor arises.  The Company shall use its best efforts to
cause such amendment and/or new Registration Statement to become effective as
soon as practicable following the filing thereof.  For purposes of the foregoing provision, the
number of shares available under a Registration Statement shall be deemed “insufficient
to cover all of the Registrable Securities” if at any time the number of shares
of Common Stock available for resale under the Registration Statement is less
than the product determined by multiplying (i) the Required Registration
Amount as of such time by (ii) 0.90. 
The calculation set forth in the foregoing sentence shall be made
without regard to any limitations on the conversion and/or redemption of the
Notes and such calculation shall assume that the Notes are then convertible
into shares of Common Stock at the then prevailing Conversion Rate (as defined
in the Notes), assuming the initial outstanding principal amount of the Notes
remains outstanding through the scheduled Maturity Date (as defined in the
Notes) and assuming no conversions or redemptions of the Notes prior to the
scheduled Maturity Date.

 

g.         Effect of Failure to
File and Obtain and Maintain Effectiveness of Registration Statement.  If (i) a Registration Statement covering
all of the Registrable Securities required to be covered thereby and required
to be filed by the Company pursuant to this Agreement is (A) not filed
with the SEC on or before the respective Filing Deadline (a “Filing Failure”) or (B) not declared
effective by the SEC on or before the respective Effectiveness Deadline (an “Effectiveness Failure”) or (ii) on any
day after the Effective Date sales of all of the Registrable Securities
required to be included on such Registration Statement cannot be made (other
than during an Allowable Grace Period (as defined in Section 3(r))
pursuant to such Registration Statement (including, without limitation, because
of the suspension of trading or any other limitation imposed by an Eligible
Market (as defined in the Securities Purchase Agreement), a failure to keep
such Registration Statement effective, a failure to disclose such information
as is necessary for sales to be made pursuant to such Registration Statement, a
failure to register a sufficient number of shares of Common Stock or to
maintain the listing of the Common Stock) (a “Maintenance
Failure”) then, as partial relief for the damages to any holder by
reason of any such delay in or reduction of its ability to sell the underlying
shares of Common Stock (which remedy shall not be exclusive of any other 

 

6

 

remedies available at law or in equity), the
Company shall pay to each holder of Registrable Securities relating to such
Registration Statement an amount in cash equal to one percent (1.0%) of the
aggregate Purchase Price (as such term is defined in the Securities Purchase
Agreement) of such Investor’s Registrable Securities whether or not included in
such Registration Statement, on each of the following dates:  (i) on every thirtieth day after the day
of a Filing Failure  and thereafter
until such Filing Failure is cured (all
such periods to be pro rated for periods totaling less than thirty days);
(ii) on every thirtieth day after the day of an Effectiveness Failure and
thereafter until such Effectiveness Failure is cured (all such periods to be pro rated for periods totaling less than thirty
days); and (iii) on every thirtieth day after the initial day of a
Maintenance Failure and thereafter until such Maintenance Failure is cured (all such periods to be pro rated for periods
totaling less than thirty days). 
The payments to which a holder shall be entitled pursuant to this Section 2(g) are
referred to herein as “Registration Delay
Payments”.  Registration Delay Payments shall be paid on
the earlier of (I) the dates set forth above and (II) the third
Business Day after the event or failure giving rise to the Registration Delay
Payments is cured.  Notwithstanding the
foregoing, Registration Delay Payments payable pursuant to this Section 2(g) shall
cease to accrue after the date that is six (6) months after the Closing
Date.  In the event the Company fails to
make Registration Delay Payments in a timely manner, such Registration Delay
Payments shall bear interest at the rate of one and one half percent (1.5%) per
month (prorated for partial months) until paid in full.

 

3.     Related
Obligations.

 

At such time
as the Company is obligated to file a Registration Statement with the SEC
pursuant to Section 2(a), 2(b), 2(e) or 2(f), the Company will use
its best efforts to effect the registration of the Registrable Securities in
accordance with the intended method of disposition thereof and, pursuant
thereto, the Company shall have the following obligations:

 

a.     The Company shall promptly
prepare and file with the SEC a Registration Statement with respect to the
Registrable Securities and use its best efforts to cause such Registration
Statement relating to the Registrable Securities to become effective as soon as
practicable after such filing (but in no event later than the Effectiveness
Deadline).  The Company shall keep each
Registration Statement effective pursuant to Rule 415 at all times until
the expiration of the Registration
Period.  The Company shall ensure
that each Registration Statement (including any amendments or supplements
thereto and prospectuses contained therein) shall not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein, or necessary to make the statements therein (in the case of
prospectuses, in the light of the circumstances in which they were made) not
misleading.  The term “best efforts”
shall mean, among other things, that the Company shall submit to the SEC,
within two (2) Business Days after the later of the date that (i) the
Company learns that no review of a particular Registration Statement will be
made by the staff of the SEC or that the staff has no further comments on a
particular Registration Statement, as the case may be, and (ii) the
approval of Legal Counsel pursuant to Section 3(c) (which approval is
immediately sought), a request for acceleration of effectiveness of such
Registration Statement to a time and date not later than two (2) Business
Days after the submission of such request. 
The Company shall respond in writing to comments made by the SEC in
respect of a Registration Statement as soon as practicable, but in no event
later than fifteen (15) days after the receipt of comments by or notice from
the SEC that an amendment is required in order for a Registration Statement to
be declared effective.

 

7

 

b.         The Company shall prepare
and file with the SEC such amendments (including post-effective amendments) and
supplements to a Registration Statement and the prospectus used in connection
with such Registration Statement, which prospectus is to be filed pursuant to Rule 424
promulgated under the 1933 Act, as may be necessary to keep such Registration
Statement effective at all times during the Registration Period, and, during
such period, comply with the provisions of the 1933 Act with respect to the
disposition of all Registrable Securities of the Company covered by such
Registration Statement until such time as all of such Registrable Securities
shall have been disposed of in accordance with the intended methods of disposition
by the seller or sellers thereof as set forth in such Registration
Statement.  In the case of amendments and
supplements to a Registration Statement which are required to be filed pursuant
to this Agreement (including pursuant to this Section 3(b)) by reason of
the Company filing a report on Form 10-Q, Form 10-K or any analogous
report under the Securities Exchange Act of 1934, as amended (the “1934 Act”), the Company shall have
incorporated such report by reference into such Registration Statement, if
applicable, or shall file such amendments or supplements with the SEC on the
same day on which the 1934 Act report is filed which created the requirement
for the Company to amend or supplement such Registration Statement.

 

c.         The Company shall (A) permit
Legal Counsel to review and comment upon (i) a Registration Statement at
least four (4) Business Days prior to its filing with the SEC and (ii) all
amendments and supplements to all Registration Statements (except for Annual
Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports
on Form 8-K, and any similar or successor reports) within a reasonable
number of days prior to their filing with the SEC, and (B) not file any
Registration Statement or amendment or supplement thereto in a form to which
Legal Counsel reasonably objects.  The
Company shall not submit a request for acceleration of the effectiveness of a
Registration Statement or any amendment or supplement thereto without the prior
approval of Legal Counsel, which consent shall not be unreasonably
withheld.  The Company shall furnish to
Legal Counsel, without charge, (i) copies of any correspondence from the
SEC or the staff of the SEC to the Company or its representatives relating to
any Registration Statement, (ii) promptly after the same is prepared and
filed with the SEC, one copy of any Registration Statement and any amendment(s) thereto,
including financial statements and schedules, all documents incorporated
therein by reference, if requested by an Investor, and all exhibits (unless
such Registration Statement is available on EDGAR) and (iii) upon the
effectiveness of any Registration Statement, one copy of the prospectus
included in such Registration Statement and all amendments and supplements
thereto.  The Company shall reasonably
cooperate with Legal Counsel in performing the Company’s obligations pursuant
to this Section 3.

 

d.         The Company shall furnish
to each Investor whose Registrable Securities are included in any Registration
Statement, without charge, (i) promptly after the same is prepared and
filed with the SEC, at least one copy of such Registration Statement and any
amendment(s) thereto, including financial statements and schedules, all
documents incorporated therein by reference, if requested by an Investor, all
exhibits and each preliminary prospectus (unless such Registration Statement is
available on EDGAR), (ii) upon the 

 

8

 

effectiveness of any Registration Statement,
one (1) copy of the prospectus included in such Registration Statement and
all amendments and supplements thereto (unless such Registration Statement and
such amendments and supplements are available on EDGAR) and (iii) such
other documents, including copies of any of the foregoing (regardless of whether
such documents are available on EDGAR or any preliminary or final prospectus,
as such Investor may reasonably request from time to time in order to
facilitate the disposition of the Registrable Securities owned by such
Investor.

 

e.         The Company shall use its
best efforts to (i) register and qualify, unless an exemption from
registration and qualification applies, the resale by Investors of the
Registrable Securities covered by a Registration Statement under such other
securities or “blue sky” laws of all applicable jurisdictions in the United
States, (ii) prepare and file in those jurisdictions, such amendments
(including post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness thereof during
the Registration Period, (iii) take such other actions as may be necessary
to maintain such registrations and qualifications in effect at all times during
the Registration Period, and (iv) take all other actions reasonably
necessary or advisable to qualify the Registrable Securities for sale in such
jurisdictions; provided, however, that the Company shall not be required in
connection therewith or as a condition thereto to (x) qualify to do
business in any jurisdiction where it would not otherwise be required to
qualify but for this Section 3(e), (y) subject itself to general
taxation in any such jurisdiction, or (z) file a general consent to
service of process in any such jurisdiction. 
The Company shall promptly notify Legal Counsel and each Investor who
holds Registrable Securities of the receipt by the Company of any notification
with respect to the suspension of the registration or qualification of any of
the Registrable Securities for sale under the securities or “blue sky” laws of
any jurisdiction in the United States or its receipt of actual notice of the
initiation or threatening of any proceeding for such purpose.

 

f.          The Company shall notify
Legal Counsel and each Investor in writing of the happening of any event, as
promptly as practicable after becoming aware of such event, as a result of
which the prospectus included in a Registration Statement, as then in effect,
includes an untrue statement of a material fact or omission to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading
(provided that in no event shall such notice contain any material, nonpublic
information), and, subject to Section 3(r), promptly prepare a supplement
or amendment to such Registration Statement to correct such untrue statement or
omission and deliver ten (10) copies of such supplement or amendment to
Legal Counsel and each Investor (or such other number of copies as Legal
Counsel or such Investor may reasonably request) (unless such supplements or
amendments are available on EDGAR).  The
Company shall also promptly notify Legal Counsel and each Investor in writing (i) when
a prospectus or any prospectus supplement or post-effective amendment has been
filed, and when a Registration Statement or any post-effective amendment has
become effective (notification of such effectiveness shall be delivered to
Legal Counsel and each Investor by facsimile or e-mail on the same day of such
effectiveness and by overnight mail), (ii) of any request by the SEC for
amendments or supplements to a Registration Statement or related prospectus or
related information, and (iii) of the Company’s reasonable determination
that a post-effective amendment to a Registration Statement would be
appropriate.  By 5:30 p.m. New York
City time on the date following the date any post-effective amendment has
become effective, the Company shall file with the SEC in accordance with
Rule 424 under the 1933 Act the final prospectus to be used in connection
with sales pursuant to such Registration Statement.

 

9

 

g.         The Company shall use its
best efforts to prevent the issuance of any stop order or other suspension of
effectiveness of a Registration Statement, or the suspension of the
qualification of any of the Registrable Securities for sale in any jurisdiction
and, if such an order or suspension is issued, to obtain the withdrawal of such
order or suspension at the earliest possible moment and to notify Legal Counsel
and each Investor who holds Registrable Securities being sold of the issuance
of such order and the resolution thereof or its receipt of actual notice of the
initiation or threat of any proceeding for such purpose.

 

h.         If any Investor is
required under applicable securities laws to be described in the Registration
Statement as an underwriter or an Investor believes that it could reasonably be
deemed to be an underwriter of Registrable Securities, at the reasonable
request of such Investor, the Company shall furnish to such Investor, on the
date of the effectiveness of the Registration Statement and thereafter from
time to time on such dates as an Investor may reasonably request (i) a
letter, dated such date, from the Company’s independent certified public
accountants in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public
offering, addressed to the Investors, and (ii) an opinion, dated as of
such date, of counsel representing the Company for purposes of such
Registration Statement, in form, scope and substance as is customarily given in
an underwritten public offering, addressed to the Investors.

 

i.          If any Investor is
required under applicable securities laws to be described in the Registration
Statement as an underwriter or an Investor believes that it could reasonably be
deemed to be an underwriter of Registrable Securities, the Company shall, upon
the reasonable request of such Investor, make available for inspection by (i) such
Investor, (ii) Legal Counsel and (iii) one firm of accountants or
other agents retained by the Investors (collectively, the “Inspectors”), all pertinent financial and
other records, and pertinent corporate documents and properties of the Company
(collectively, the “Records”), as
shall be reasonably deemed necessary by each Inspector, and cause the Company’s
officers, directors and employees to supply all information which any Inspector
may reasonably request; provided, however, that each Inspector shall agree to
hold in strict confidence and shall not make any disclosure (except to an
Investor) or use of any Record or other information which the Company
determines in good faith to be confidential, and of which determination the Inspectors
are so notified, unless (a) the disclosure of such Records is necessary to
avoid or correct a misstatement or omission in any Registration Statement or is
otherwise required under the 1933 Act, (b) the release of such Records is
ordered pursuant to a final, non-appealable subpoena or order from a court or
government body of competent jurisdiction, or (c) the information in such
Records has been made generally available to the public other than by
disclosure in violation of this Agreement. 
Each Investor agrees that it shall, upon learning that disclosure of
such Records is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt notice to the Company and
allow the Company, at its expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, the Records deemed
confidential.  Nothing herein (or in any
other confidentiality agreement between the Company and any Investor) shall be
deemed to limit the Investors’ ability to sell Registrable Securities in a
manner which is otherwise consistent with applicable laws and regulations.

 

10

 

j.          The Company shall hold
in confidence and not make any disclosure of information concerning an Investor
provided to the Company unless (i) disclosure of such information is
necessary to comply with federal or state securities laws, (ii) the
disclosure of such information is necessary to avoid or correct a misstatement
or omission in any Registration Statement, (iii) the release of such
information is ordered pursuant to a subpoena or other final, non-appealable
order from a court or governmental body of competent jurisdiction, or (iv) such
information has been made generally available to the public other than by
disclosure in violation of this Agreement or any other agreement.  The Company agrees that it shall, upon
learning that disclosure of such information concerning an Investor is sought
in or by a court or governmental body of competent jurisdiction or through
other means, give prompt written notice to such Investor and allow such
Investor, at the Investor’s expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, such information.

 

k.         The Company shall use its
best efforts either to (i) cause all of the Registrable Securities covered
by a Registration Statement to be listed on each securities exchange on which
securities of the same class or series issued by the Company are then listed,
if any, if the listing of such Registrable Securities is then permitted under
the rules of such exchange or (ii) secure the inclusion for quotation
of all of the Registrable Securities on The New York Stock Exchange or (iii) if,
despite the Company’s best efforts, the Company is unsuccessful in satisfying
the preceding clauses (i) and (ii), to secure the inclusion for quotation
on The NASDAQ Global Select Market, The NASDAQ Global Market, The NASDAQ
Capital Market or the American Stock Exchange for such Registrable Securities
and, without limiting the generality of the foregoing, to use its best efforts
to arrange for at least two market makers to register with the Financial
Industry Regulatory Authority (“FINRA”) as such
with respect to such Registrable Securities. 
The Company shall pay all fees and expenses in connection with
satisfying its obligation under this Section 3(k).

 

l.          The Company shall
cooperate with the Investors who hold Registrable Securities being offered and,
to the extent applicable, facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legend) representing the Registrable
Securities to be offered pursuant to a Registration Statement and enable such
certificates to be in such denominations or amounts, as the case may be, as the
Investors may reasonably request and registered in such names as the Investors
may request.

 

m.        If requested by an
Investor, the Company shall as soon as practicable (i) incorporate in a
prospectus supplement or post-effective amendment such information as an
Investor reasonably requests to be included therein relating to the sale and
distribution of Registrable Securities, including, without limitation,
information with respect to the number of Registrable Securities being offered
or sold, the purchase price being paid therefor and any other terms of the
offering of the Registrable Securities to be sold in such offering; (ii) make
all required filings of such prospectus supplement or post-effective amendment
after being notified of the matters to be incorporated in such prospectus
supplement or post-effective amendment; and (iii) supplement or make
amendments to any Registration Statement if reasonably requested by an Investor
holding any Registrable Securities.

 

11

 

n.         The Company shall use its
best efforts to cause the Registrable Securities covered by a Registration
Statement to be registered with or approved by such other governmental agencies
or authorities as may be necessary to consummate the disposition of such
Registrable Securities.

 

o.         The Company shall make
generally available to its security holders as soon as practical, but not later
than ninety (90) days after the close of the period covered thereby, an
earnings statement (in form complying with, and in the manner provided by, the
provisions of Rule 158 under the 1933 Act) covering a twelve-month period
beginning not later than the first day of the Company’s fiscal quarter next
following the applicable Effective Date of a Registration Statement.

 

p.         The Company shall
otherwise use its best efforts to comply with all applicable rules and
regulations of the SEC in connection with any registration hereunder.

 

q.         Within two (2) Business
Days after a Registration Statement which covers Registrable Securities is
ordered effective by the SEC, the Company shall deliver, and shall cause legal
counsel for the Company to deliver, to the transfer agent for such Registrable
Securities (with copies to the Investors whose Registrable Securities are
included in such Registration Statement) confirmation that such Registration
Statement has been declared effective by the SEC in the form attached hereto as
Exhibit A.

 

r.          Notwithstanding anything
to the contrary herein, at any time after the Effective Date, the Company may
delay the disclosure of material, non-public information concerning the Company
the disclosure of which at the time is not, in the good faith opinion of the
Board of Directors of the Company and its counsel, in the best interest of the
Company and, in the opinion of counsel to the Company, otherwise required (a “Grace Period”); provided, that the Company
shall promptly (i) notify the Investors in writing of the existence of
material, non-public information giving rise to a Grace Period (provided that
in each notice the Company will not disclose the content of such material,
non-public information to the Investors) and the date on which the Grace Period
will begin, and (ii) notify the Investors in writing of the date on which
the Grace Period ends; and, provided further, that no Grace Period shall exceed
ten (10) consecutive days and during any three hundred sixty five (365)
day period such Grace Periods shall not exceed an aggregate of thirty (30) days
and the first day of any Grace Period must be at least five (5) Trading
Days after the last day of any prior Grace Period (each, an “Allowable Grace Period”).  For purposes of determining the length of a
Grace Period above, the Grace Period shall begin on and include the date the
Investors receive the notice referred to in clause (i) and shall end on
and include the later of the date the Investors receive the notice referred to
in clause (ii) and the date referred to in such notice.  The provisions of Section 3(g) hereof
shall not be applicable during the period of any Allowable Grace Period.  Upon expiration of the Grace Period, the
Company shall again be bound by the first sentence of Section 3(f) with
respect to the information giving rise thereto unless such material, non-public
information is no longer applicable. 
Notwithstanding anything to the contrary, the Company shall cause its
transfer agent to deliver unlegended shares of Common Stock to a transferee of
an Investor in accordance with the terms of the Securities Purchase Agreement
in connection with any sale of Registrable Securities with respect to which an
Investor has entered into a contract for sale, prior to the Investor’s receipt
of the notice of a Grace Period and for which the Investor has not yet settled.

 

12

 

s.         Neither the Company nor any Subsidiary
or affiliate thereof shall identify any Investor as an underwriter in any
public disclosure or filing with the SEC or any Principal Market (as defined in
the Securities Purchase Agreement) or Eligible Market and any Buyer being
deemed an underwriter by the SEC shall not relieve the Company of any
obligations it has under this Agreement or any other Transaction Document (as
defined in the Securities Purchase Agreement); provided, however,
that the foregoing shall not prohibit the Company from including the disclosure
found in the “Plan of Distribution” section attached hereto as Exhibit B
in the Registration Statement.

 

4.     Obligations of the
Investors.

 

a.         At least three (3) Business
Days prior to the first anticipated Filing Date of a Registration Statement,
the Company shall notify each Investor in writing of the information the
Company requires from each such Investor if such Investor elects to have any of
such Investor’s Registrable Securities included in such Registration
Statement.  It shall be a condition
precedent to the obligations of the Company to complete the registration
pursuant to this Agreement with respect to the Registrable Securities of a
particular Investor that such Investor shall furnish to the Company such
information regarding itself, the Registrable Securities held by it and the
intended method of disposition of the Registrable Securities held by it, as
shall be reasonably required to effect and maintain the effectiveness of the
registration of such Registrable Securities and shall execute such documents in
connection with such registration as the Company may reasonably request.

 

b.         Each Investor, by such
Investor’s acceptance of the Registrable Securities, agrees to cooperate with
the Company as reasonably requested by the Company in connection with the
preparation and filing of any Registration Statement hereunder, unless such
Investor has notified the Company in writing of such Investor’s election to
exclude all of such Investor’s Registrable Securities from such Registration
Statement.

 

c.         Each Investor agrees
that, upon receipt of any notice from the Company of the happening of any event
of the kind described in Section 3(g) or the first sentence of 3(f),
such Investor will immediately discontinue disposition of Registrable
Securities pursuant to any Registration Statement(s) covering such
Registrable Securities until such Investor’s receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(g) or
the first sentence of 3(f) or receipt of notice that no supplement or
amendment is required.  Notwithstanding
anything to the contrary, the Company shall cause its transfer agent to deliver
unlegended shares of Common Stock to a transferee of an Investor in accordance
with the terms of the Securities Purchase Agreement in connection with any sale
of Registrable Securities with respect to which an Investor has entered into a
contract for sale prior to the Investor’s receipt of a notice from the Company
of the happening of any event of the kind described in Section 3(g) or
the first sentence of 3(f) and for which the Investor has not yet settled.

 

13

 

d.         Each Investor covenants and agrees that
it will comply with the prospectus delivery requirements of the 1933 Act as
applicable to it or an exemption therefrom in connection with sales of
Registrable Securities pursuant to the Registration Statement.

 

5.     Expenses of Registration.

 

All reasonable
expenses, other than underwriting discounts and commissions, incurred in
connection with registrations, filings or qualifications pursuant to Sections 2
and 3, including, without limitation, all registration, listing and
qualifications fees, printers and accounting fees, and fees and disbursements
of counsel for the Company shall be paid by the Company.  The Company shall also reimburse the
Investors for the fees and disbursements of Legal Counsel in connection with
registration, filing or qualification pursuant to Sections 2 and 3 of this
Agreement which amount shall be limited to $10,000 for each such registration,
filing or qualification.

 

6.     Indemnification.

 

In the event
any Registrable Securities are included in a Registration Statement under this
Agreement:

 

a.         To the fullest extent permitted by law,
the Company will, and hereby does, indemnify, hold harmless and defend each
Investor, the directors, officers, members, partners, employees, agents,
representatives of, and each Person, if any, who controls any Investor within
the meaning of the 1933 Act or the 1934 Act (each, an “Indemnified Person”), against any losses,
claims, damages, liabilities, judgments, fines, penalties, charges, costs,
reasonable attorneys’ fees, amounts paid in settlement or expenses, joint or
several, (collectively, “Claims”)
incurred in investigating, preparing or defending any action, claim, suit,
inquiry, proceeding, investigation or appeal taken from the foregoing by or
before any court or governmental, administrative or other regulatory agency,
body or the SEC, whether pending or threatened, whether or not an indemnified
party is or may be a party thereto (“Indemnified
Damages”), to which any of them may become subject insofar as such
Claims (or actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon: 
(i) any untrue statement or alleged untrue statement of a material
fact in a Registration Statement or any post-effective amendment thereto or in
any filing made in connection with the qualification of the offering under the
securities or other “blue sky” laws of any jurisdiction in which Registrable
Securities are offered (“Blue Sky Filing”),
or the omission or alleged omission to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, (ii) any
untrue statement or alleged untrue statement of a material fact contained in
any preliminary prospectus if used prior to the effective date of such
Registration Statement, or contained in the final prospectus (as amended or
supplemented, if the Company files any amendment thereof or supplement thereto
with the SEC) or the omission or alleged omission to state therein any material
fact necessary to make the statements made therein, in light of the
circumstances under which the statements therein were made, not misleading, (iii) any
violation or alleged violation by the Company of the 1933 Act, the 1934 Act,
any other law, including, without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the Registrable
Securities pursuant to a Registration Statement or (iv) any violation of
this Agreement (the matters in the foregoing 

 

14

 

clauses (i) through (iv) being,
collectively, “Violations”).  Subject to Section 6(c), the Company
shall reimburse the Indemnified Persons, promptly as such expenses are incurred
and are due and payable, for any legal fees or other reasonable expenses
incurred by them in connection with investigating or defending any such
Claim.  Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this Section 6(a):  (i) shall not apply to a Claim by an
Indemnified Person arising out of or based upon a Violation which occurs in
reliance upon and in conformity with information furnished in writing to the
Company by such Indemnified Person for such Indemnified Person expressly for
use in connection with the preparation of the Registration Statement or any
such amendment thereof or supplement thereto, if such prospectus was timely
made available by the Company pursuant to Section 3(d); and (ii) shall
not apply to amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of the Company, which consent shall
not be unreasonably withheld or delayed. 
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Indemnified Person and shall survive
the transfer of the Registrable Securities by the Investors pursuant to Section 9.

 

b.         In connection with any Registration
Statement in which an Investor is participating, each such Investor agrees to
severally and not jointly indemnify, hold harmless and defend, to the same
extent and in the same manner as is set forth in Section 6(a), the
Company, each of its directors, each of its officers who signs the Registration
Statement and each Person, if any, who controls the Company within the meaning
of the 1933 Act or the 1934 Act (each, an “Indemnified
Party”), against any Claim or Indemnified Damages to which any of
them may become subject, under the 1933 Act, the 1934 Act or otherwise, insofar
as such Claim or Indemnified Damages arise out of or are based upon any
Violation, in each case to the extent, and only to the extent, that such
Violation occurs in reliance upon and in conformity with written information
furnished to the Company by such Investor expressly for use in connection with
such Registration Statement; and, subject to Section 6(c), such Investor
shall reimburse the Indemnified Party, for any legal or other expenses
reasonably incurred by an Indemnified Party in connection with investigating or
defending any such Claim; provided, however, that the indemnity agreement contained
in this Section 6(b) and the agreement with respect to contribution
contained in Section 7 shall not apply to amounts paid in settlement of
any Claim if such settlement is effected without the prior written consent of
such Investor, which consent shall not be unreasonably withheld or delayed;
provided, further, however, that the Investor shall be liable under this Section 6(b) for
only that amount of a Claim or Indemnified Damages as does not exceed the net
proceeds to such Investor as a result of the sale of Registrable Securities
pursuant to such Registration Statement. 
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such Indemnified Party and shall survive
the transfer of the Registrable Securities by the Investors pursuant to Section 9.

 

c.         Promptly after receipt by an
Indemnified Person or Indemnified Party under this Section 6 of notice of
the commencement of any action or proceeding (including any governmental action
or proceeding) involving a Claim, such Indemnified Person or Indemnified Party
shall, if a Claim in respect thereof is to be made against any indemnifying
party under this Section 6, deliver to the indemnifying party a written
notice of the commencement thereof, and the indemnifying party shall have the
right to participate in, and, to the extent the indemnifying party so desires,
jointly with any other indemnifying party 

 

15

 

similarly noticed, to assume control of the
defense thereof with counsel mutually satisfactory to the indemnifying party
and the Indemnified Person or the Indemnified Party, as the case may be;
provided, however, that an Indemnified Person or Indemnified Party shall have
the right to retain its own counsel with the fees and expenses of not more than
one counsel for all such Indemnified Person or Indemnified Party to be paid by
the indemnifying party, if, in the reasonable opinion of counsel retained by
the Indemnified Person or Indemnified Party, as applicable, the representation
by such counsel of the Indemnified Person or Indemnified Party and the
indemnifying party would be inappropriate due to actual or potential differing
interests between such Indemnified Person or Indemnified Party and any other
party represented by such counsel in such proceeding.  In the case of an Indemnified Person, legal
counsel referred to in the immediately preceding sentence shall be selected by
the Investors holding at least 60%  in
interest of the Registrable Securities included in the Registration Statement
to which the Claim relates.  The
Indemnified Party or Indemnified Person shall reasonably cooperate with the
indemnifying party in connection with any negotiation or defense of any such
action or Claim by the indemnifying party and shall furnish to the indemnifying
party all information reasonably available to the Indemnified Party or
Indemnified Person which relates to such action or Claim.  The indemnifying party shall keep the Indemnified
Party or Indemnified Person fully apprised at all times as to the status of the
defense or any settlement negotiations with respect thereto.  No indemnifying party shall be liable for any
settlement of any action, claim or proceeding effected without its prior
written consent; provided, however, that the indemnifying party shall not
unreasonably withhold, delay or condition its consent.  No indemnifying party shall, without the
prior written consent of the Indemnified Party or Indemnified Person, consent
to entry of any judgment or enter into any settlement or other compromise which
does not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party or Indemnified Person of a release from all
liability in respect to such Claim or litigation, and such settlement shall not
include any admission as to fault on the part of the Indemnified Party.  Following indemnification as provided for
hereunder, the indemnifying party shall be subrogated to all rights of the
Indemnified Party or Indemnified Person with respect to all third parties,
firms or corporations relating to the matter for which indemnification has been
made.  The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement
of any such action shall not relieve such indemnifying party of any liability
to the Indemnified Person or Indemnified Party under this Section 6,
except to the extent that the indemnifying party is prejudiced in its ability
to defend such action.

 

d.         The indemnification required by this Section 6
shall be made by periodic payments of the amount thereof during the course of
the investigation or defense, as and when bills are received or Indemnified
Damages are incurred.

 

e.         The indemnity agreements contained
herein shall be in addition to  (i) any
cause of action or similar right of the Indemnified Party or Indemnified Person
against the indemnifying party or others, and (ii) any liabilities the
indemnifying party may be subject to pursuant to the law.

 

16

 

7.     Contribution.

 

To the extent
any indemnification by an indemnifying party is prohibited or limited by law,
the indemnifying party agrees to make the maximum contribution with respect to
any amounts for which it would otherwise be liable under Section 6 to the
fullest extent permitted by law; provided, however, that:  (i) no Person involved in the sale of
Registrable Securities which Person is guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1933 Act) in connection
with such sale shall be entitled to contribution from any Person involved in
such sale of Registrable Securities who was not guilty of fraudulent
misrepresentation; and (ii) contribution by any seller of Registrable
Securities shall be limited in amount to the amount of net proceeds received by
such seller from the sale of such Registrable Securities pursuant to such
Registration Statement.

 

8.     Reports Under the 1934
Act.

 

With a view to
making available to the Investors the benefits of Rule 144 promulgated
under the 1933 Act or any other similar rule or regulation of the SEC that
may at any time permit the Investors to sell securities of the Company to the
public without registration (“Rule 144”),
the Company agrees to:

 

a.         make and keep public information
available, as those terms are understood and defined in Rule 144;

 

b.         file with the SEC in a timely manner
all reports and other documents required of the Company under the 1933 Act and
the 1934 Act so long as the Company remains subject to such requirements and
the filing of such reports and other documents is required for the applicable
provisions of Rule 144; and

 

c.         furnish to each Investor so long as
such Investor owns Registrable Securities, promptly upon request, (i) a
written statement by the Company, if true, that it has complied with the
reporting requirements of Rule 144, the 1933 Act and the 1934 Act, (ii) a
copy of the most recent annual or quarterly report of the Company and such
other reports and documents so filed by the Company, and (iii) such other
information as may be reasonably requested to permit the Investors to sell such
securities pursuant to Rule 144 without registration.

 

9.             Assignment of Registration
Rights.

 

The rights
under this Agreement shall be automatically assignable by the Investors to any
transferee of all or any portion of such Investor’s Registrable Securities
if:  (i) the Investor agrees in
writing with the transferee or assignee to assign such rights, and a copy of
such agreement is furnished to the Company within a reasonable time after such
assignment; (ii) the Company is, within a reasonable time after such
transfer or assignment, furnished with written notice of (a) the name and
address of such transferee or assignee, and (b) the securities with respect
to which such registration rights are being transferred or assigned; (iii) immediately
following such transfer or assignment the further disposition of such
securities by the transferee or assignee is restricted under the 1933 Act or
applicable state securities laws; (iv) at or before the time the Company
receives the written notice contemplated by clause (ii) of this sentence
the transferee or assignee agrees in writing with the Company to be bound by
all of the provisions contained herein; and (v) such transfer shall have
been made in accordance with the applicable requirements of the Securities
Purchase Agreement.

 

17

 

10.           Amendment of Registration Rights.

 

Provisions of
this Agreement may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the Required
Holders.  Any amendment or waiver
effected in accordance with this Section 10 shall be binding upon each
Investor and the Company.  No such
amendment shall be effective to the extent that it applies to less than all of
the holders of the Registrable Securities. 
No consideration shall be offered or paid to any Person to amend or
consent to a waiver or modification of any provision of this Agreement unless
the same consideration also is offered to all of the parties to this Agreement.

 

11.           Miscellaneous.

 

a.         A Person is deemed to be a holder of
Registrable Securities whenever such Person owns or is deemed to own of record
such Registrable Securities.  If the
Company receives conflicting instructions, notices or elections from two or
more Persons with respect to the same Registrable Securities, the Company shall
act upon the basis of instructions, notice or election received from such
record owner of such Registrable Securities.

 

b.         Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered:  (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one (1) Business Day
after deposit with a nationally recognized overnight delivery service, in each
case properly addressed to the party to receive the same.  The addresses and facsimile numbers for such
communications shall be:

 

	
  If to the
  Company:

  
	
   

  
	
  Maui
  Land & Pineapple Company, Inc.

  
	
  P. O. Box
  187

  
	
  Kahului,
  Maui, Hawaii 96733-6687

  
	
  Telephone:

  	
   

  	
  (808)
  877-3351

  
	
  Facsimile:

  	
   

  	
  (808)
  871-0953

  
	
  Attention:

  	
   

  	
  Robert I.
  Webber

  

 

18

 

	
  With a copy (for informational purposes
  only) to:

  
	
   

  
	
  Stradling
  Yocca Carlson & Rauth

  
	
  660 Newport
  Center Drive, Suite 1600

  
	
  Newport
  Beach, California 92660

  
	
  Telephone:

  	
   

  	
  (949) 725-4121

  
	
  Facsimile:

  	
   

  	
  (949) 823-5121

  
	
  Attention:

  	
   

  	
  Christopher Ivey, Esq.

  
	
   

  	
   

  	
   

  
	
  If to the Transfer Agent:

  
	
   

  
	
  BNY Mellon
  Shareowner Services LLC

  
	
  525 Market
  Street - 35th Floor

  
	
  San
  Francisco, CA 94105

  
	
  Telephone:

  	
   

  	
  (415)
  951-4188

  
	
  Facsimile:

  	
   

  	
  (415) 951-
  4181

  
	
  Attention:

  	
   

  	
  Joshua P. McGinn

  
	
   

  
	
  If to Legal Counsel:

  
	
   

  
	
  Schulte Roth & Zabel LLP

  
	
  919 Third Avenue

  
	
  New York, New York 10022

  
	
  Telephone:

  	
   

  	
  (212) 756-2000

  
	
  Facsimile:

  	
   

  	
  (212) 593-5955

  
	
  Attention:

  	
   

  	
  Eleazer N. Klein, Esq.

  

 

If to a Buyer,
to its address and facsimile number set forth on the Schedule of Buyers
attached hereto, with copies to such Buyer’s representatives as set forth on
the Schedule of Buyers, or to such other address and/or facsimile number and/or
to the attention of such other Person as the recipient party has specified by
written notice given to each other party five (5) days prior to the
effectiveness of such change.  Written
confirmation of receipt (A) given by the recipient of such notice,
consent, waiver or other communication, (B) mechanically or electronically
generated by the sender’s facsimile machine containing the time, date,
recipient facsimile number and an image of the first page of such
transmission or (C) provided by a courier or overnight courier service
shall be rebuttable evidence of personal service, receipt by facsimile or
receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.

 

c.         Failure of any party to exercise any
right or remedy under this Agreement or otherwise, or delay by a party in
exercising such right or remedy, shall not operate as a waiver thereof.

 

19

 

d.         All questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by the internal laws of the State of New York, without giving
effect to any choice of law or conflict of law provision or rule (whether
of the State of New York or any other jurisdictions) that would cause the
application of the laws of any jurisdictions other than the State of New
York.  Each party hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting
in The City of New York, Borough of Manhattan, for the adjudication of any
dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and
agrees not to assert in any suit, action or proceeding, any claim that it is
not personally subject to the jurisdiction of any such court, that such suit,
action or proceeding is brought in an inconvenient forum or that the venue of
such suit, action or proceeding is improper. 
Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it
under this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to
limit in any way any right to serve process in any manner permitted by law.  EACH PARTY
HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.

 

e.         If any provision of this Agreement is
prohibited by law or otherwise determined to be invalid or unenforceable by a
court of competent jurisdiction, the provision that would otherwise be
prohibited, invalid or unenforceable shall be deemed amended to apply to the
broadest extent that it would be valid and enforceable, and the invalidity or
unenforceability of such provision shall not affect the validity of the
remaining provisions of this Agreement so long as this Agreement as so modified
continues to express, without material change, the original intentions of the
parties as to the subject matter hereof and the prohibited nature, invalidity
or unenforceability of the provision(s) in question does not substantially
impair the respective expectations or reciprocal obligations of the parties or
the practical realization of the benefits that would otherwise be conferred
upon the parties.  The parties will
endeavor in good faith negotiations to replace the prohibited, invalid or
unenforceable provision(s) with a valid provision(s), the effect of which
comes as close as possible to that of the prohibited, invalid or unenforceable
provision(s).

 

f.          This Agreement, the other Transaction
Documents (as defined in the Securities Purchase Agreement) and the instruments
referenced herein and therein constitute the entire agreement among the parties
hereto with respect to the subject matter hereof and thereof.  There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
and therein.  This Agreement, the other
Transaction Documents and the instruments referenced herein and therein
supersede all prior agreements and understandings among the parties hereto with
respect to the subject matter hereof and thereof.

 

g.         Subject to the requirements of Section 9,
this Agreement shall inure to the benefit of and be binding upon the permitted
successors and assigns of each of the parties hereto.

 

h.         The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.

 

20

 

i.          This Agreement may be executed in
identical counterparts, each of which shall be deemed an original but all of
which shall constitute one and the same agreement.  This Agreement, once executed by a party, may
be delivered to the other party hereto by facsimile transmission of a copy of
this Agreement bearing the signature of the party so delivering this Agreement.

 

j.          Each party shall do and perform, or
cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and
documents as any other party may reasonably request in order to carry out the
intent and accomplish the purposes of this Agreement and the consummation of
the transactions contemplated hereby.

 

k.         All consents and other determinations
required to be made by the Investors pursuant to this Agreement shall be made,
unless otherwise specified in this Agreement, by the Required Holders.

 

l.          The language used in this Agreement
will be deemed to be the language chosen by the parties to express their mutual
intent and no rules of strict construction will be applied against any
party.

 

m.        This Agreement is intended for the benefit
of the parties hereto and their respective permitted successors and assigns,
and is not for the benefit of, nor may any provision hereof be enforced by, any
other Person.

 

n.         The obligations of each Investor
hereunder are several and not joint with the obligations of any other Investor,
and no provision of this Agreement is intended to confer any obligations on any
Investor vis-à-vis any other Investor. 
Nothing contained herein, and no action taken by any Investor pursuant
hereto, shall be deemed to constitute the Investors as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Investors are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated herein.

 

* * * * * *

 

[Signature Page Follows]

 

21

 

IN WITNESS
WHEREOF, each Buyer and the Company have caused their respective signature page to
this Registration Rights Agreement to be duly executed as of the date first
written above.

 

	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MAUI LAND & PINEAPPLE COMPANY, 

  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
    /s/ Robert
  I. Webber

  
	
   

  	
   

  	
  Robert I. Webber

  
	
   

  	
   

  	
  Chief
  Operating Officer, Chief Financial

  
	
   

  	
   

  	
  Officer,
  and Executive Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
    /s/ Adele
  H. Sumida

  
	
   

  	
   

  	
  Adele H. Sumida

  
	
   

  	
   

  	
  Controller and
  Secretary

  

 

	
   

  	
  [Signature
  Page to Registration Rights Agreement]

  

 

 

IN WITNESS
WHEREOF, each Buyer and the Company have caused their respective signature page to
this Registration Rights Agreement to be duly executed as of the date first
written above.

 

 

	
   

  	
  BUYERS:

  
	
   

  	
   

  
	
   

  	
  RCG PB, LTD

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
    /s/ Owen
  Littman

  
	
   

  	
   

  	
  Owen Littman

  
	
   

  	
   

  	
  Authorized Signatory

  

 

	
   

  	
  [Signature
  Page to Registration Rights Agreement]

  

 

 

IN WITNESS
WHEREOF, each Buyer and the Company have caused their respective signature page to
this Registration Rights Agreement to be duly executed as of the date first
written above.

 

 

	
   

  	
  BUYERS:

  
	
   

  	
   

  
	
   

  	
  RCG
  ENTERPRISE, LTD

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Owen Littman  

  
	
   

  	
   

  	
  Owen
  Littman

  
	
   

  	
   

  	
  Authorized
  Signatory

  

 

	
   

  	
  [Signature
  Page to Registration Rights Agreement]

  

 

 

IN WITNESS
WHEREOF, each Buyer and the Company have caused their respective signature page to
this Registration Rights Agreement to be duly executed as of the date first
written above.

 

 

	
   

  	
  BUYERS:

  
	
   

  	
   

  
	
   

  	
  HIGHBRIDGE
  INTERNATIONAL LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Adam J. Chill

  
	
   

  	
   

  	
  Adam
  J. Chill

  
	
   

  	
   

  	
  Managing
  Director

  

 

	
   

  	
  [Signature
  Page to Registration Rights Agreement]

  

 

 

IN WITNESS
WHEREOF, each Buyer and the Company have caused their respective signature page to
this Registration Rights Agreement to be duly executed as of the date first
written above.

 

 

	
   

  	
  BUYERS:

  
	
   

  	
   

  
	
   

  	
  INTERLACHEN CONVERTIBLE INVESTMENTS

  LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Gregg T. Colburn

  
	
   

  	
   

  	
  Gregg
  T. Colburn

  
	
   

  	
   

  	
  Authorized
  Signatory

  

 

	
   

  	
  [Signature
  Page to Registration Rights Agreement]

  

 

 

SCHEDULE OF BUYERS

 

	
   

  	
   

  	
  Buyer Address

  	
   

  	
  Buyer’s Representative’s Address

  
	
  Buyer

  	
   

  	
  and Facsimile Number

  	
   

  	
  and Facsimile Number

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  RCG PB, Ltd

  	
   

  	
  c/o Ramius LLC

  	
   

  	
  Schulte Roth &
  Zabel LLP

  
	
   

  	
   

  	
  599 Lexington Avenue, 20th
  Floor

  	
   

  	
  919 Third Avenue

  
	
   

  	
   

  	
  New York, NY 10022

  	
   

  	
  New York, NY 10022

  
	
   

  	
   

  	
  Attention: 

  	
  Jeffrey Smith

  	
   

  	
  Attn: Eleazer
  Klein, Esq.

  
	
   

  	
   

  	
   

  	
   Owen Littman

  	
   

  	
  Facsimile: (212) 593-5955

  
	
   

  	
   

  	
  Facsimile:

  	
   

  	
  Telephone: (212) 756-2000

  
	
   

  	
   

  	
  Telephone:

  	
   

  	
   

  
	
   

  	
   

  	
  Residence: Cayman Islands

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  RCG Enterprise, Ltd

  	
   

  	
  c/o Ramius LLC

  	
   

  	
  Schulte Roth &
  Zabel LLP

  
	
   

  	
   

  	
  599 Lexington Avenue, 20th
  Floor

  	
   

  	
  919 Third Avenue

  
	
   

  	
   

  	
  New York, NY 10022

  	
   

  	
  New York, NY 10022

  
	
   

  	
   

  	
  Attention: 

  	
  Jeffrey Smith

  	
   

  	
  Attn: Eleazer
  Klein, Esq.

  
	
   

  	
   

  	
   

  	
   Owen Littman

  	
   

  	
  Facsimile: (212) 593-5955

  
	
   

  	
   

  	
  Facsimile:

  	
   

  	
  Telephone: (212) 756-2000

  
	
   

  	
   

  	
  Telephone:

  	
   

  	
   

  
	
   

  	
   

  	
  Residence: Cayman Islands

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Highbridge International LLC

  	
   

  	
  c/o Highbridge Capital

  	
   

  	
   

  
	
   

  	
   

  	
  Management, LLC

  	
   

  	
   

  
	
   

  	
   

  	
  9 West 57th Street, 27th
  Floor

  	
   

  	
   

  
	
   

  	
   

  	
  New York, New York 10019

  	
   

  	
   

  
	
   

  	
   

  	
  Attention: Adam J. Chill

  	
   

  	
   

  
	
   

  	
   

  	
  Facsimile:

  	
   

  	
   

  
	
   

  	
   

  	
  Telephone:

  	
   

  	
   

  
	
   

  	
   

  	
  Residence: Cayman Islands

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Interlachen Convertible Investments Limited

  	
   

  	
  c/o Interlachen Capital
  Group LP

  Attention: Gregg T. Colburn and Legal

  	
   

  	
   

  
	
   

  	
   

  	
  800 Nicollet Mall,
  Suite 2500

  	
   

  	
   

  
	
   

  	
   

  	
  Minneapolis, MN 55402

  	
   

  	
   

  
	
   

  	
   

  	
  Facsimile:

  	
   

  	
   

  
	
   

  	
   

  	
  Telephone:

  	
   

  	
   

  
	
   

  	
   

  	
  Residence: Cayman Islands

  	
   

  	
   

  
							

 

 

EXHIBIT A

 

FORM OF NOTICE OF EFFECTIVENESS

OF REGISTRATION STATEMENT

 

VIA
FEDEX and FACSIMILE (415-951-4181)

 

BNY
Mellon Shareowner Services LLC

525
Market Street - 35th Floor

San
Francisco, CA 94105

Attention:              Joshua P. McGinn

 

Re:          Maui Land & Pineapple Company, Inc.

 

Ladies
and Gentlemen:

 

[We
are][I am] counsel to Maui Land & Pineapple Company, Inc., a
Hawaiian corporation (the “Company”),
and have represented the Company in connection with that certain Securities
Purchase Agreement (the “Securities Purchase Agreement”) entered into
by and among the Company and the buyers named therein (collectively, the “Holders”) pursuant to which the Company
issued to the Holders senior secured convertible notes (the “Notes”) which shall be convertible into the Company’s common
stock, no par value (the “Common Stock”).  Pursuant to the Securities Purchase
Agreement, the Company also has entered into a Registration Rights Agreement
with the Holders (the “Registration Rights
Agreement”) pursuant to which the Company agreed, among other
things, to register the Registrable Securities (as defined in the Registration
Rights Agreement), including the shares of Common Stock issuable upon
conversion of the Notes, under the Securities Act of 1933, as amended (the “1933 Act”). 
In connection with the Company’s obligations under the Registration
Rights Agreement, on                        ,
200  , the Company filed a Registration Statement on Form S-3
(File No. 333-                       )
(the “Registration Statement”)
with the Securities and Exchange Commission (the “SEC”) relating to the Registrable Securities which names each
of the Holders as a selling stockholder thereunder.

 

In connection with the
foregoing, [we][I] advise you that a member of the SEC’s staff has advised
[us][me] by telephone that the SEC has entered an order declaring the
Registration Statement effective under the 1933 Act at [ENTER TIME OF EFFECTIVENESS] on [ENTER
DATE OF EFFECTIVENESS] and [we][I]
have no knowledge, after telephonic inquiry of a member of the SEC’s staff,
that any stop order suspending its effectiveness has been issued or that any
proceedings for that purpose are pending before, or threatened by, the SEC and
the Registrable Securities are available for resale under the 1933 Act pursuant
to the Registration Statement.

 

A-1

 

This letter shall serve as
our standing instruction to you that the shares of Common Stock are freely
transferable by the Holders pursuant to the Registration Statement.  You need not require further letters from us to
effect any future legend-free issuance or reissuance of shares of Common Stock
to the Holders as contemplated by the Company’s Irrevocable Transfer Agent
Instructions dated July  , 2008.

 

 

	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
  [ISSUER’S
  COUNSEL]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  

CC:          [LIST
NAMES OF HOLDERS]

 

A-2

EXHIBIT B

 

SELLING STOCKHOLDERS

 

The
shares of common stock being offered by the selling stockholders are those
issuable to the selling stockholders upon conversion of the convertible
notes.  For additional information
regarding the issuance of those convertible notes, see “Private Placement of
Convertible Notes” above.  We are
registering the shares of common stock in order to permit the selling
stockholders to offer the shares for resale from time to time.  Except for the ownership of the convertible
notes issued pursuant to the Securities Purchase Agreement, the selling
stockholders have not had any material relationship with us within the past
three years.

 

The
table below lists the selling stockholders and other information regarding the
beneficial ownership of the shares of common stock by each of the selling
stockholders.  The second column lists
the number of shares of common stock beneficially owned by each selling
stockholder, based on its ownership of the convertible notes, as of              ,
2008, assuming conversion of all convertible notes held by the selling
stockholders on that date.

 

The
third column lists the shares of common stock being offered by this prospectus
by the selling stockholders.

 

In
accordance with the terms of a registration rights agreement with the selling
stockholders, this prospectus generally covers the resale of at least 120% of
the maximum number of shares of common stock issuable upon conversion of the
convertible notes as of the Trading Day immediately preceding the date the
registration statement is initially filed with the SEC.  Because the conversion
price of the convertible notes may be adjusted, the number of shares that will
actually be issued may be more or less than the number of shares being offered
by this prospectus.  The fourth column
assumes the sale of all of the shares offered by the selling stockholders
pursuant to this prospectus.

 

Under
the terms of the convertible notes, a selling stockholder may not convert the
convertible notes to the extent such conversion would cause such selling
stockholder, together with its affiliates, to beneficially own a number of
shares of common stock which would exceed 4.99% of our then outstanding shares
of common stock following such conversion, excluding for purposes of such
determination shares of common stock issuable upon conversion of the
convertible notes which have not been converted.  The number of shares in the second column
reflects this limitation.  The selling
stockholders may sell all, some or none of their shares in this offering.  See “Plan of Distribution.”

 

B-1

 

	
  Name of Selling Stockholder

  	
   

  	
  Number of Shares of 

  Common Stock Owned 

  Prior to Offering

  	
   

  	
  Maximum Number of Shares 

  of Common Stock to be Sold 

  Pursuant to this Prospectus

  	
   

  	
  Number of Shares of 

  Common Stock Owned 

  After Offering

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  RCG PB, Ltd (1)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  RCG Enterprise, Ltd (2)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

(1)           Ramius Advisors, LLC (“Ramius
Advisors”) is the investment adviser of RCG PB, Ltd. (“RCG PB”) and
consequently has voting control and investment discretion over securities held
by RCG PB.  Ramius LLC (“Ramius”) is the
sole member of Ramius Advisors and consequently has voting control and
investment discretion over securities held by RCG PB.  Each of Ramius Advisors and Ramius disclaims
beneficial ownership of the shares held by RCG PB.  Peter A. Cohen, Morgan B. Stark, Thomas W.
Strauss and Jeffrey M. Solomon are the sole managing members of C4S& Co.,
LLC, the sole managing member of Ramius. 
As a result, Messrs. Cohen, Stark, Strauss and Solomon may be
considered beneficial owners of any shares deemed to be beneficially owned by
Ramius.  Messrs. Cohen, Stark,
Strauss and Solomon disclaim beneficial ownership of these shares.

 

(2)           Ramius is the investment
adviser of RCG Enterprise, Ltd (“RCG Enterprise”) and consequently has voting
control and investment discretion over securities held by RCG Enterprise.  Ramius disclaims beneficial ownership of the
shares held by RCG Enterprise.  Peter A.
Cohen, Morgan B. Stark, Thomas W. Strauss and Jeffrey M. Solomon are the sole
managing members of C4S& Co., LLC, the sole managing member of Ramius.  As a result, Messrs. Cohen, Stark,
Strauss and Solomon may be considered beneficial owners of any shares deemed to
be beneficially owned by Ramius.  Messrs. Cohen,
Stark, Strauss and Solomon disclaim beneficial ownership of these shares.

 

B-2

 

PLAN OF DISTRIBUTION

 

We
are registering the shares of common stock issuable upon conversion of the
convertible notes to permit the resale of these shares of common stock by the
holders of the convertible notes from time to time after the date of this
prospectus.  We will not receive any of
the proceeds from the sale by the selling stockholders of the shares of common
stock.  We will bear all fees and
expenses incident to our obligation to register the shares of common stock.

 

The
selling stockholders may sell all or a portion of the shares of common stock
beneficially owned by them and offered hereby from time to time directly or
through one or more underwriters, broker-dealers or agents.  If the shares of common stock are sold through
underwriters or broker-dealers, the selling stockholders will be responsible
for underwriting discounts or commissions or agent’s commissions.  The shares of common stock may be sold in one
or more transactions at fixed prices, at prevailing market prices at the time
of the sale, at varying prices determined at the time of sale, or at negotiated
prices.  These sales may be effected in
transactions, which may involve crosses or block transactions,

 

·                  on any national securities exchange or
quotation service on which the securities may be listed or quoted at the time
of sale;

 

·                  in the over-the-counter market;

 

·                  in transactions otherwise than on these
exchanges or systems or in the over-the-counter market;

 

·                  through the writing of options, whether such
options are listed on an options exchange or otherwise;

 

·                  ordinary brokerage transactions and
transactions in which the broker-dealer solicits purchasers;

 

·                  block trades in which the broker-dealer will
attempt to sell the shares as agent but may position and resell a portion of
the block as principal to facilitate the transaction;

 

·                  purchases by a broker-dealer as principal and
resale by the broker-dealer for its account;

 

·                  an exchange distribution in accordance with
the rules of the applicable exchange;

 

·                  privately negotiated transactions;

 

·                  short sales;

 

·                  sales pursuant to Rule 144;

 

·                  broker-dealers may agree with the selling
securityholders to sell a specified number of such shares at a stipulated price
per share;

 

·                  a combination of any such methods of sale;
and

 

·                  any other method permitted pursuant to
applicable law.

 

B-3

 

If
the selling stockholders effect such transactions by selling shares of common
stock to or through underwriters, broker-dealers or agents, such underwriters,
broker-dealers or agents may receive commissions in the form of discounts,
concessions or commissions from the selling stockholders or commissions from
purchasers of the shares of common stock for whom they may act as agent or to
whom they may sell as principal (which discounts, concessions or commissions as
to particular underwriters, broker-dealers or agents may be in excess of those
customary in the types of transactions involved).  In connection with sales of the shares of
common stock or otherwise, the selling stockholders may enter into hedging
transactions with broker-dealers, which may in turn engage in short sales of
the shares of common stock in the course of hedging in positions they
assume.  The selling stockholders may
also sell shares of common stock short and deliver shares of common stock
covered by this prospectus to close out short positions and to return borrowed
shares in connection with such short sales. 
The selling stockholders may also loan or pledge shares of common stock
to broker-dealers that in turn may sell such shares.

 

The
selling stockholders may pledge or grant a security interest in some or all of
the convertible notes or shares of common stock owned by them and, if they
default in the performance of their secured obligations, the pledgees or
secured parties may offer and sell the shares of common stock from time to time
pursuant to this prospectus or any amendment to this prospectus under Rule 424(b)(3) or
other applicable provision of the Securities Act of 1933, as amended, amending,
if necessary, the list of selling stockholders to include the pledgee,
transferee or other successors in interest as selling stockholders under this
prospectus.  The selling stockholders
also may transfer and donate the shares of common stock in other circumstances
in which case the transferees, donees, pledgees or other successors in interest
will be the selling beneficial owners for purposes of this prospectus.

 

The
selling stockholders and any broker-dealer participating in the distribution of
the shares of common stock may be deemed to be “underwriters” within the
meaning of the Securities Act, and any commission paid, or any discounts or
concessions allowed to, any such broker-dealer may be deemed to be underwriting
commissions or discounts under the Securities Act.  At the time a particular offering of the
shares of common stock is made, a prospectus supplement, if required, will be
distributed which will set forth the aggregate amount of shares of common stock
being offered and the terms of the offering, including the name or names of any
broker-dealers or agents, any discounts, commissions and other terms
constituting compensation from the selling stockholders and any discounts,
commissions or concessions allowed or reallowed or paid to broker-dealers.

 

Under
the securities laws of some states, the shares of common stock may be sold in
such states only through registered or licensed brokers or dealers.  In addition, in some states the shares of
common stock may not be sold unless such shares have been registered or
qualified for sale in such state or an exemption from registration or
qualification is available and is complied with.

 

B-4

 

There
can be no assurance that any selling stockholder will sell any or all of the
shares of common stock registered pursuant to the registration statement, of
which this prospectus forms a part.

 

The
selling stockholders and any other person participating in such distribution
will be subject to applicable provisions of the Securities Exchange Act of
1934, as amended, and the rules and regulations thereunder, including,
without limitation, Regulation M of the Exchange Act, which may limit the
timing of purchases and sales of any of the shares of common stock by the selling
stockholders and any other participating person.  Regulation M may also restrict the ability of
any person engaged in the distribution of the shares of common stock to engage
in market-making activities with respect to the shares of common stock.  All of the foregoing may affect the
marketability of the shares of common stock and the ability of any person or
entity to engage in market-making activities with respect to the shares of
common stock.

 

We
will pay all expenses of the registration of the shares of common stock
pursuant to the registration rights agreement, estimated to be
$[     ] in total, including, without limitation,
Securities and Exchange Commission filing fees and expenses of compliance with
state securities or “blue sky” laws; provided, however, that a selling
stockholder will pay all underwriting discounts and selling commissions, if
any.  We will indemnify the selling
stockholders against liabilities, including some liabilities under the
Securities Act, in accordance with the registration rights agreements, or the
selling stockholders will be entitled to contribution.  We may be indemnified by the selling
stockholders against civil liabilities, including liabilities under the Securities
Act, that may arise from any written information furnished to us by the selling
stockholder specifically for use in this prospectus, in accordance with the
related registration rights agreement, or we may be entitled to contribution.

 

Once
sold under the registration statement, of which this prospectus forms a part,
the shares of common stock will be freely tradable in the hands of persons
other than our affiliates.

 

B-5

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