Document:

NOT
  VALID UNLESS COUNTERSIGNED BY TRANSFER AGENT.

  INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE.

  	
   

  	
   

  
	
  NUMBER

  

  	
   

  	
  TorreyPines

  Therapeutics,
  Inc.

   

  	
   

  	
  SHARES

  

  
	
  AUTHORIZED COMMON
  STOCK:

  150,000,000 SHARES

  PAR VALUE: $.001

  	
   

  	
   

  	
   

  	
  CUSIP NO. 89235K 10 5

   

  

This Certifies that

Is The Record
Holder Of

Shares of TorreyPines
Therapeutics, Inc. Common Stock transferable on the books of the
Corporation by the holder hereof, in person or by duly authorized attorney,
upon surrender of this Certificate properly endorsed. This Certificate is not
valid until countersigned by the Transfer Agent and registered by the
Registrar.

Witness the facsimile seal of the Corporation and the
facsimile signatures of its duly authorized officers.

Dated:

	
  /s/ [ILLEGIBLE]

  	
   

  	
  [SEAL]

  	
  /s/ [ILLEGIBLE]

  	
   

  
	
  SECRETARY

  	
   

  	
  PRESIDENT

  	
   

  

 

	
  NOT VALID UNLESS COUNTERSIGNED BY TRANSFER
  AGENT

  	
  Countersigned &
  Registered

  Nevada Agency and Trust Company

  50 West Liberty Street ·
  Suite 880 · Reno Nevada 89501

  	
   

  	
   

  
	
  By:

  	
   

  
	
   

  	
  Authorized
  Signature

  
					

 

 

	
  The following
  abbreviations, when used in the inscribption on the face of this certificate,
  shall be construed as though they were written out in full according to
  applicable laws or regulations.

  
	
   

  
	
   

  	
  TEN COM

  	
  - as tenants in common

  	
  UNIF GIFT MIN ACT.          Custodian          

  
	
   

  	
  TEN ENT

  	
  - as tenants by the
  entireties

  	
   

  	
        (Cust)                (Minor)

  
	
   

  	
  JT TEN

  	
  - as joint tenants with
  right of

  	
   

  	
  Under Uniform Gifts to
  Minors

  
	
   

  	
  Surviorship and
  not as tenants

  	
   

  	
  Act                 

  
	
   

  	
  In common

  	
   

  	
  (State)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Additional abbreviations may also be used though not
  in the above list.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  For Value Received,
                 
  hereby sell, assign and transfer unto

  
	
   

  	
   

  	
   

  
	
   

  	
  PLEASE INSERT SOCIAL
  SECURITY OR OTHER

  INDENTIFYING NUMBER OF ASSIGNEE

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  
	
  (PLEASE PRINT OR
  TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)

  
	
   

  
	
   

  
	
   

  
	
  Shares of the capital stock represented by the
  within certificate, and do hereby Irrevocably constitute and appoint
                              Attorney
  to transfer the said stock on the books of the within named Corporation with
  full power of substitution in the premises.

  
	
   

  
	
  Dated

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  NOTICE:  THE SIGNATURE TO THIS ASSIGNMENT MUST
  CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY
  PARTICULAR WITHOUT ALTERNTION OR ENLARGEMENT OR ANY CHANGE WATEREVER

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  • NOTICE
  SIGNATURE GUARANTEED:

  
	
   

  	
   

  
	
   

  	
  SIGNATURE(S) MUST BE
  GUARANTEED BY A FIRM WHICH IS A MEMBER OF A REGISTERED NATIONAL STOCK
  EXCHANGE, OR BY A BANK (OTHER THAN A SAVINGS BANK). OR A TRUST COMPANY. THE
  GUARANTEEING FIRM MUST BE A MEMBER OF THE MEDALLION GUARANTEE
  PROGRAM.

  
	
   

  	
   

  
	
   

  	
  TRANSFER FEE
  WILL APPLY

  
	
   

  	
   

  
	
  THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE
  HOLDER HEREOF TO CERTAIN RIGHTS AS SET FORTH IN A RIGHTS AGREEMENT BETWEEN
  TORREYPINES THERAPEUTICS, INC. (THE “COMPANY”) AND THE NEVADA AGENCY AND
  TRUST COMPANY DATED AS OF MAY 13, 2005. AS AMENDED ON OCTOBER 3, 2006 (THE
  “RIGHTS AGREEMENT”), THE TERMS OF WHICH ARE HEREBY INCORPORATED HEREIN BY
  REFERENCE AND A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICES OF THE
  COMPANY. UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT.
  SUCH RIGHTS MAY BE REDEEMED, MAY EXPIRE, OR MAY BE EVIDENCED BY SEPARATE
  CERTIFICATES AND WILL NO LONGER BE EVIDENCED BY THIS CERTIFICATE. THE COMPANY
  WILL MAIL TO THE HOLDER OF THIS CERTIFICATE A COPY OF THE RIGHTS AGREEMENT
  WITHOUT CHARGE WITHIN FIVE DAYS AFTER RECEIPT OF A WRITTEN REQUEST THEREFOR.
  UNDER CERTAIN CIRCUMSTANCES, RIGHTS ISSUED TO ACQUIRING PERSONS (AS DEFINED
  IN THE RIGHTS AGREEMENT) OR CERTAIN RELATED PERSONS AND ANY SUBSEQUENT HOLDER
  OF SUCH RIGHTS MAY BECOME NULL AND VOID.Exhibit
10.1

LOAN AGREEMENT (REAL ESTATE)

	
  Lender:

  	
  Bank of Hawaii

  
	
   

  	
  Commercial Real Estate Loan Division

  
	
   

  	
  130 Merchant Street, 17th Floor

  
	
   

  	
  Honolulu, HI 96813

  
	
   

  	
  Attn: Tony Mizuno

  
	
   

  	
   

  
	
  Borrower:

  	
  Maui Land & Pineapple Company, Inc.

  
	
   

  	
  120 Kane Street

  
	
   

  	
  Kahului, HI 96733-6687

  
	
   

  	
  Attn: Vice President/Treasurer

  
	
   

  	
  Telephone: (302) 996-6800

  
	
   

  	
  Telecopier: (302) 996-6838

  

THIS LOAN AGREEMENT (REAL
ESTATE) dated as of October 1, 2006 (this “Agreement”) between Bank of Hawaii,
a Hawaii corporation, as lender (with its successors and assigns, “Lender”),
and Maui Land & Pineapple Company, Inc., a Hawaii corporation, as borrower
(“Borrower”).  The effective date of this
Agreement is the Closing Date.

WHEREAS,
Borrower desires to obtain a loan from Lender to finance or refinance the
acquisition and construction of certain property and improvements thereon.

NOW,
THEREFORE, for good and valuable consideration, receipt of which is hereby
acknowledged, and in consideration of the premises contained in this Agreement,
Lender and Borrower agree as follows:

ARTICLE I

DEFINITIONS AND EXHIBITS

Section
1.01.  Definitions.  The following terms
used herein will have the meanings indicated below unless the context clearly
requires otherwise:

“Agreement” means this Agreement, including all exhibits
hereto, as any of the same may be supplemented or amended from time to time in
accordance with the terms hereof.

“Borrower” means
Maui Land & Pineapple Company, Inc., a Hawaii corporation.

“Business Day” means a day other than a Saturday or Sunday on
which banks are generally open for business in New York, New York and Kahului,
Hawaii.

“Closing Date” means October 27, 2006.

 1
 

 

“Consolidated Cash Flow Available for Debt Service” means,
with respect to the applicable period of determination, for Borrower and its
Subsidiaries on a consolidated basis (a) the sum of Consolidated Net
Income, interest expense, depreciation, amortization and other non-cash
charges, minus (ii) dividends and distributions paid out to shareholders
during such Fiscal Year.

“Consolidated Debt Service” means, with respect to the
applicable period of determination, for Borrower and its Subsidiaries on a
consolidated basis the aggregate of (a) interest expense, (b) current
maturities of long term debt during the period of determination, and (c) the
current portion of capital leases that are due during the period of
determination.

“Consolidated Funded Debt”
shall mean, as at any date of determination, for Borrower and its Subsidiaries
on a consolidated basis, all indebtedness for borrowed money evidenced notes,
bonds, debentures, or similar evidences of indebtedness, and which by its term
matures more than one year from, or is directly or indirectly renewable or
extendible at such person’s option under a revolving credit or similar
agreement obligating the lender or lenders thereunder to extend credit over a
period of more than one year from the date of creation thereof, and
specifically including (i) capital lease obligations, (ii) current maturities
of long-term debt, and (iii) revolving credit and short-term debt
extendible beyond one year at the option of the debtor.

“Consolidated Net Income”
shall mean, for any period, on a consolidated basis, the net income, if any, of
Borrower and its Subsidiaries, determined in accordance with GAAP.

“Consolidated Net Worth”
shall mean, as at any date of determination, on a consolidated basis, the gross
book value of the assets of Borrower, minus the sum of (a) all reserves
applicable thereto, and (b) all liabilities of Borrower (including
subordinated liabilities).

“Consolidated Total Capitalization” shall mean, as at any
date of determination, the sum of (a) Consolidated Funded Debt, plus
(b) Consolidated Net Worth.

“Contractor” means any contractor that is constructing the
Improvements on the Property.

“Construction Contract” means Borrower’s construction
contract with any Contractor.

“Construction Costs” means the contract price paid or to be
paid to Contractor or reimbursed to Borrower for any portion of construction of
the Improvements, including administrative, engineering, legal, financial and
other costs incurred by Lender, Borrower or any Contractor in connection with
the acquisition and construction of the Improvements.

“Damaged Property” has the meaning assigned to such term in
Section 8.01 hereof.

“Damaged Property
Amount” means an amount equal to the product of (a) the then
Prepayment Amount, and (b) a percentage equal to the original appraised value
of the Damaged Property divided by the original appraised value of all of the
Property.

 2
 

 

“Default” means an event that, with giving of notice or
passage of time or both, would constitute an Event of Default as provided in
Article X hereof.

“Environmental
Indemnity Agreement” means the Environmental Indemnity Agreement
Regarding Hazardous Substances dated of even date herewith by Borrower and
Guarantor for the benefit of Lender, as hereafter modified or amended.

“Environmental Laws” means any federal, state and local laws
relating to emissions, discharges, releases of Hazardous Wastes or Materials
into ambient air, surface water, ground water or land, or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Wastes or Materials.

“Equipment” has the meaning assigned to such term in the
Master Security Agreement.

“Fixed Charge Coverage Ratio” means the ratio of (a) Borrower’s
Consolidated Cash Flow Available for Debt Service to (b) Borrower’s
Consolidated Debt Service.

“GAAP” means generally accepted accounting principles under
the United States as established by the Financial Accounting Standards Board
applied on a consistent basis.

“Guarantor”
means Maui Pineapple Company, Ltd., a Hawaii corporation.

“Guaranty Agreement”
means the Guaranty Agreement dated as of October 1, 2006 by Guarantor for the
benefit of Lender.

“Hazardous Waste or Materials” means any substance or
material defined in or designated as hazardous or toxic wastes, hazardous or
toxic material, a hazardous, toxic or radioactive substance, or other similar
term, by any Environmental Law now or hereafter in effect.

“Improvements” has the meaning set forth in the definition of
“Property.”

“Leases” has the meaning set forth in the definition of “Property.”

“Lender” means (i) Bank of Hawaii, acting as lender
under this Agreement, (ii) any surviving, resulting or transferee
corporation of Bank of Hawaii and (iii) except where the context requires
otherwise, any assignee(s) of Lender.

“Liens” means any mortgage, pledge, lien, charge, license or
encumbrance.

“Loan” means the
loan from Lender to Borrower pursuant to this Agreement.

“Loan Payments” means the loan payments payable by Borrower
pursuant to the provisions of this Agreement as specifically set forth in
Exhibit A hereto.  As provided in Article
II hereof, Loan Payments shall be payable by Borrower to Lender in the amounts
set forth in Exhibit A hereto.

 3
 

 

“Loan Proceeds” means the total amount of money to be paid
pursuant to Section 2.02 hereof by Lender to Borrower.

“Make Whole Amount” means (i) the net present value of
the remaining scheduled principal and interest payments (including any balloon
or other amount of principal payable that but for the prepayment of the Loan
would be payable on or prior to the scheduled maturity date hereof), discounted
to the prepayment date at a per annum interest rate equal to the then
Reinvestment Rate minus (ii) the principal balance outstanding as of the
prepayment date (immediately prior to any such prepayment); provided, that the
Make Whole Amount shall be deemed zero if the calculation results in a negative
number.

“Master Security Agreement” means the Master Security
Agreement dated as of September 29, 2006 and schedules thereto between
Guarantor and GE Capital Public Finance, Inc. and the promissory notes issued
thereunder.

“Material Adverse Effect”
means a material adverse effect or change on (a) the business, assets,
operations, properties or condition (financial or otherwise) of Borrower or
Guarantor, (b) the ability of Borrower to perform or pay its obligations
hereunder or on any other material obligation in accordance with the terms
thereof, (c) the ability of Guarantor to perform its obligations under the
Guaranty Agreement, (d) Lender’s Lien on the Property or the priority of such
Lien, or (e) the validity or enforceability of this Agreement, the Mortgage,
the Environmental Indemnity Agreement or the Guaranty Agreement or the rights
and remedies available to Lender hereunder or thereunder.

“Mortgage”
means the Mortgage, Security Agreement, Assignment of Leases and Rents and
Fixture Filing dated as of even date herewith by Borrower in favor of Lender,
as hereafter modified or amended.

“Permitted Exceptions” means:

(a)           Liens existing on the date hereof and
listed on Exhibit B to the Mortgage and any renewals or extensions thereof,
provided that (i) the property covered thereby is not changed, (ii) the amount
secured or benefited thereby is not increased, and (iii) the direct or any
contingent obligor with respect thereto is not changed;

(b)           Liens for taxes not yet delinquent or
which are being contested in good faith and by appropriate proceedings
diligently conducted, if adequate reserves with respect thereto are maintained
on the books of Borrower in accordance with GAAP;

(c)           carriers’, warehousemen’s, mechanics’,
materialmen’s, repairmen’s or other like Liens arising in the ordinary course
of business which are not overdue for a period of more than 30 days or which
are being contested in good faith and by appropriate proceedings diligently
conducted, if adequate reserves with respect thereto are maintained on the
books of Borrower; and

 4
 

 

(d)           Liens securing judgments for the
payment of money which (i) are being contested in good faith and by appropriate
proceedings diligently conducted, if adequate reserves with respect thereto are
maintain on the books of Borrower in accordance with GAAP and (ii) do not
otherwise constitute on Event of Default under Section 10.01 hereof.

“Prepayment Amount” means the amount which Borrower may or
must from time to time pay or cause to be paid to Lender in order to prepay the
Loan, as provided in Section 2.07 hereof, such amounts being set forth in
Exhibit A hereto, together with the Make Whole Amount and any accrued interest
and all other amounts due hereunder.

“Property”
means, collectively, all of Borrower’s estate, right, title and interest, now
owned or hereafter acquired, including any reversion or remainder interest, in
the real property located in the City of Kahului, County of Maui, State of
Hawaii described on Exhibit A to the Mortgage, including all heretofore or
hereafter vacated alleys and streets abutting the property, and all easements,
rights, appurtenances, tenements, hereditaments, rents, royalties, mineral, oil
and gas rights and profits, water, water rights and water stock appurtenant to
the property (collectively “Premises”); together with all of Borrower’s estate,
right, title and interest, now owned or hereafter acquired, in:

(a)           all buildings, structures,
improvements, parking areas, landscaping, equipment, software intangibles,
fixtures and articles of property now or hereafter erected on, attached to, or
used or adapted for use in the operation of the Premises, including (without
limitation) all heating, air conditioning, manufacturing and incinerating
apparatus and equipment; all boilers, engines, motors, dynamos, generating
equipment, piping and plumbing fixtures, water heaters, ranges, cooking
apparatus and mechanical kitchen equipment, refrigerators, freezers, cooling, ventilating,
sprinkling and vacuum cleaning systems, fire extinguishing apparatus, gas and
electric fixtures, carpeting, floor coverings, underpadding, elevators,
escalators, partitions, mantels, built-in mirrors, window shades, blinds,
draperies, screens, storm sash, awnings, signs, furnishings of public spaces,
halls and lobbies, and shrubbery and plants, and including also all interest of
any owner of the Premises in any of such items hereafter at any time acquired
under conditional sale contract, chattel mortgage or other title retaining or
security instrument, all of which property mentioned in this clause (a)
shall be deemed part of the realty covered by this Agreement and not severable
wholly or in part without material injury to the freehold of the Premises (all
of the foregoing together with replacements and additions thereto are referred
to herein as “Improvements”);

(b)           all compensation, awards, damages,
rights of action and proceeds, including interest thereon and/or the proceeds
of any policies of insurance therefor, arising out of or relating to a
(i) taking or damaging of the Premises or Improvements thereon by reason
of any public or private improvement, condemnation proceeding (including change
of grade), sale or transfer in lieu of condemnation, or fire, earthquake or
other casualty, or (ii) any injury to or decrease in the value of the
Premises or the Improvements for any reason whatsoever;

 5
 

 

(c)           return premiums or other payments
upon any insurance any time provided for the benefit of or naming Lender, and
refunds or rebates of taxes or assessments on the Premises;

(d)           all the right, title and interest of
Borrower in, to and under all written and oral leases and rental agreements
(including extensions, renewals and subleases; all of the foregoing shall be
referred to collectively herein as the “Leases”) now or hereafter affecting the
Premises including, without limitation, all rents, issues, profits and other
revenues and income therefrom and from the renting, leasing or bailment of
Improvements and equipment, all guaranties of tenants’ performance under the
Leases, all letter-of-credit rights and all other supporting obligations
associated with the Leases and all rights and claims of any kind that Borrower
may have against any tenant under the Leases or in connection with the
termination or rejection of the Leases in a bankruptcy or insolvency
proceeding; and the leasehold estate, if applicable;

(e)           plans, specifications, contracts,
documents and agreements relating to the design or construction of the
Improvements; Borrower’s rights under any payment, performance or other bond in
connection with the design or construction of the Improvements; all landscaping
and construction materials, supplies and equipment used or to be used or
consumed in connection with construction of the Improvements, whether stored on
the Premises or at some other location; and contracts, agreements and purchase
orders with contractors, subcontractors, suppliers and materialmen incidental
to the design or construction of the Improvements;

(f)            all contracts, accounts, deposit
accounts, documents, rights, claims or causes of action to the extent
pertaining to or affecting the Premises or the Improvements, including, without
limitation, all options or contracts to acquire other property for use in
connection with operation or development of the Premises or Improvements,
promissory notes, management contracts, service or supply contracts, deposits,
bank accounts, general intangibles (including without limitation trademarks,
trade names, symbols and payment intangibles), permits, licenses, franchises
and certificates, and all commitments or agreements, now or hereafter in
existence, intended by the obligor thereof to provide Borrower with proceeds to
satisfy the loan evidenced hereby or improve the Premises or Improvements, and
the right to receive all proceeds due under such commitments or agreements,
including refundable deposits and fees;

(g)           all books, records, surveys, reports
and other documents related to the Premises, the Improvements, the Leases or
other items of collateral described herein; and

(h)           all additions, accessions,
replacements, substitutions, proceeds and products of the real and personal
property, tangible and intangible, described herein.

“Reinvestment Rate” means the per annum interest rate that is
equal to the sum of (a) 1.90% plus (b) the stated yield to maturity
of United States Treasury Notes having a life equal to the remaining term of
the Loan as stated in the most current Federal Reserve Statistical Release
H.15(519) on the day Lender receives notice of the prepayment.  If no maturity exactly

 6
 

 

corresponds to the
remaining term of the Loan, the Treasury Note life to be adopted from Federal
Reserve Statistical Release H.15(519) shall correspond to a full number of
years period, excluding partial years of such remaining term.

“State” means
the State of Hawaii.

“Subsidiaries”
means any corporation, partnership, limited liability company, joint venture or
any other legal entity that in accordance with GAAP would be properly
consolidated on the books of Borrower.

“Terrorism Laws”
means Executive Order 13224 issued by the President of the United States
of America, the Terrorism Sanctions Regulations (Title 31 Part 595 of
the U.S. Code of Federal Regulations), the Terrorism List Governments Sanctions
Regulations (Title 31 Part 596 of the U.S. Code of Federal
Regulations) and the Foreign Terrorist Organizations Sanctions Regulations
(Title 31 Part 597 of the U.S. Code of Federal Regulations), and all
other present and future federal, state and local laws, ordinances,
regulations, policies and any other requirements of any governmental authority
(including, without limitation, the United States Department of the Treasury
Office of Foreign Assets Control) addressing, relating to, or attempting to
eliminate, terrorist acts and acts of war, each as hereafter supplemented,
amended or modified from time to time, and the present and future rules,
regulations and guidance documents promulgated under any of the foregoing, or under
similar laws, ordinances, regulations, policies or requirements of other states
or localities.

“UCC” means the
Uniform Commercial Code as adopted and in effect in the State.

Section 1.02.  Exhibits.  The following
exhibits are attached hereto and made a part hereof:

Exhibit A:              Schedule of Loan Payments setting
forth the Loan Payments and Prepayment Amounts.

Exhibit B:              [Reserved.]

Exhibit C:              Form of Certificate of Chief
Financial Officer.

Exhibit D:              Survey Requirements.

Exhibit E:              Permanent Loan Insurance
Requirements.

Section 1.03.  Rules of Construction.  (a) The singular
form of any word used herein, including the terms defined in Section 1.01
hereof, shall include the plural, and vice versa.  The use herein of a word of any gender shall
include correlative words of all genders.

(b)           Unless otherwise specified,
references to Articles, Sections and other subdivisions of this Agreement are
to the designated Articles, Sections and other subdivision of this

 7
 

 

Agreement as originally
executed.  The words “hereof,” “herein,” “hereunder”
and words of similar import refer to this Agreement as a whole.

(c)           The headings or titles of the several
articles and sections shall be solely for convenience of reference and shall
not affect the meaning, construction or effect of the provisions hereof.

ARTICLE
II

FINANCING
OF PROPERTY AND TERMS OF LOAN

Section 2.01.  Construction of
Improvements.  Borrower has caused to be constructed, or
will cause to be constructed, the Improvements pursuant to each Construction
Contract with each Contractor.  Borrower
shall remain liable to each Contractor in respect of its duties and obligations
in accordance with each Construction Contract and shall bear the risk of loss
with respect to any loss or claim relating to any portion of the Improvements
covered by any Construction Contract, and Lender shall not assume any such
liability or risk of loss.

Section
2.02.  Loan.  Lender hereby
agrees, subject to the terms and conditions of this Agreement, to make a loan
to Borrower in the amount of $10,000,000; and Borrower hereby agrees to borrow
such amount from Lender.  Upon
fulfillment of the conditions set forth in Article III hereof, Lender shall
disburse the Loan Proceeds to First American Title Insurance Company, Inc. (“Title
Company”).  Borrower’s obligation to
repay the Loan shall commence, and interest shall begin to accrue, on the date
that Loan Proceeds are  disbursed to
Title Company.

Section
2.03.  Interest.  The principal
amount of the Loan outstanding from time to time shall bear interest (computed
on the basis of actual days elapsed in a 360-day year) at an annual rate equal
to 6.93%.  Interest accruing on the
principal balance of the Loan outstanding from time to time shall be payable as
provided in Exhibit A  and upon earlier
demand in accordance with the terms hereof or prepayment in accordance with
Section 2.07 hereof.

Section
2.04.  Payments.  Borrower shall pay
Loan Payments, in the amounts and on the dates set forth in Exhibit A
hereto.  Additionally, Borrower shall pay
to Lender an amount equal to the product of (i) the lesser of (A) 15% per annum
and (B) the highest rate permitted by law and (ii) the delinquent amount of any
Loan Payment not paid when due.  All
amounts required to be paid by Borrower hereunder shall be paid in lawful money
of the United States of America in immediately available funds.

Section
2.05 Payment on Non-Business Days.  Whenever any
payment to be made hereunder shall be stated to be due on a day which is not a
Business Day, such payment may be made on the next succeeding Business Day, and
such extension of time shall in such case be included in the computation of
interest or the fees hereunder, as the case may be.

 8
 

 

Section
2.06.  Loan
Payments To Be Unconditional.  The obligations of Borrower to pay the Loan
Payments required under this Article II and to make other payments
hereunder and to perform and observe the covenants and agreements contained
herein shall be absolute and unconditional in all events, without abatement,
diminution, deduction, setoff or defense for any reason, including (without
limitation) any failure of the Improvements to be constructed, any defects,
malfunctions, breakdowns or infirmities in the Improvements or any accident,
condemnation, destruction or unforeseen circumstances.  Notwithstanding any dispute between Borrower
and any of Lender, any Contractor or any other person, Borrower shall make all
Loan Payments when due and shall not withhold any Loan Payments pending final
resolution of such dispute, nor shall Borrower assert any right of set-off
or counterclaim against its obligation to make such payments required under
this Agreement.

Section
2.07.  Prepayments.  (a) Borrower may,
in its discretion, prepay the Loan in whole at any time on any payment date by
paying the applicable Prepayment Amount.

(b)           Borrower shall prepay the Loan in
whole or in part at any time pursuant to Article VIII hereof by paying the
applicable Prepayment Amount.

(c)           Borrower shall prepay the Loan in
full immediately upon demand of Lender after the occurrence of an Event of
Default by paying the applicable Prepayment Amount.

Upon
any prepayment in part of the Loan, the prepayment shall be applied to the Loan
Payments and any other amounts due hereunder as determined by Lender.

ARTICLE III

CONDITIONS PRECEDENT

Lender’s agreement to
make the loan to Borrower hereunder and to disburse the Loan Proceeds shall be
subject to the condition precedent that Lender shall have received all of the
following, each in form and substance satisfactory to Lender:

(a)           This Agreement, properly executed on
behalf of Borrower, and each of the Exhibits hereto properly completed.

(b)           The Guaranty Agreement, properly
executed on behalf of Guarantor.

(c)           The Mortgage, properly executed on
behalf of Borrower.

(d)           The Environmental Indemnity
Agreement, properly executed on behalf of Borrower and Guarantor.

(e)           A certificate of the Secretary or an
Assistant Secretary of Borrower, certifying as to (i) the resolutions of the
board of directors and, if required, the shareholders of Borrower, authorizing
the execution, delivery and performance of this Agreement, the Mortgage, the
Environmental Indemnity Agreement and any related

 9
 

 

documents, (ii) the bylaws of Borrower, and (iii) the
signatures of the officers or agents of Borrower authorized to execute and
deliver this Agreement, the Mortgage, the Environmental Indemnity Agreement and
other instruments, agreements and certificates on behalf of Borrower.

(f)            Currently certified copies of the
Articles of Incorporation of Borrower.

(g)           A Certificate of Good Standing issued
as to Borrower by the Department of Commerce and Consumer Affairs of the State
of Hawaii.

(h)           A certificate of the Secretary or an
Assistant Secretary of Guarantor, certifying as to (i) the resolutions of the
board of directors and, if required, the shareholders of Guarantor, authorizing
the execution, delivery and performance of the Guaranty Agreement and the
Environmental Indemnity Agreement and any related documents, (ii) the bylaws of
Guarantor, and (iii) the signatures of the officers or agents of Guarantor
authorized to execute and deliver the Guaranty Agreement, the Environmental
Indemnity Agreement and other instruments, agreements and certificates on
behalf of Guarantor.

(i)            Currently certified copies of the
Articles of Incorporation of Guarantor.

(j)            A Certificate of Good Standing
issued as to Guarantor by the Department of Commerce and Consumer Affairs of
the State of Hawaii.

(k)           Current searches of appropriate
filing offices showing that (i) no state or federal tax liens have been
filed and remain in effect against Borrower, (ii) no financing statements
have been filed and remain in effect against Borrower relating to the Property
except those financing statements filed by Lender, and (iii)  all
financing statements necessary to perfect the security interest created
pursuant to this Agreement and the Mortgage have been filed.

(l)            Financing statements authorized by
Borrower as debtor, and naming Lender as secured party.

(m)          An appraisal of the Property addressed
to Lender, in form and substance acceptable to Lender and prepared by an MAI
certified appraiser acceptable to Lender in conformance with the guidelines and
recommendations set forth in the Uniform Standards of Professional Appraisal
Practice (USPAP) and the requirements of the Code of Professional Ethics and
Standards of Professional Appraisal Practice of the Appraisal Institute.  In addition to the foregoing requirements,
whenever the income approach is utilized by the appraiser, the report shall
include a direct capitalization analysis as well as a discounted cash flow
analysis and a final estimate of value based on the property’s fee simple
estate.

 10

 

(n)           Certificates of the insurance
required hereunder, containing a lender’s loss payable clause or endorsement in
favor of Lender and the permanent loan insurance requirements set forth in
Exhibit E hereto.

(o)           An “as built” ALTA survey of the
Property prepared in compliance with the requirements set forth in
Exhibit D hereto.

(p)           An ALTA (or equivalent) mortgagee
policy of title insurance in the amount of $10,000,000, with reinsurance and
endorsements as Lender may require, containing no exceptions to title (printed
or otherwise) which are unacceptable to Lender, and insuring that the Mortgage
is a first-priority lien on the Premises. 
Without limitation, such policy shall (i) be in the 1970 ALTA (as
amended 84) form or, if not available, ALTA 1992 form (deleting arbitration and
creditors’ rights, if permissible) or, if not available, the form commonly used
in the State, insuring Lender and its successors and assigns; and
(ii) include the following endorsements and/or affirmative coverages:
(A) ALTA 9 Comprehensive, (B) Survey, (C) Access,
(D) Environmental Protection Lien, (E) Subdivision,
(F) Contiguity (as applicable), (G) Tax Parcel, (H) Address and
Improvement, (I) Usury, (J) Tax Sale (as applicable), (K) Doing Business, (L)
First Loss, (M) Last Dollar and (N) Zoning 3.1 (with additional coverage for
number and type of parking).  Lender may
require additional endorsements after reviewing the survey.

(q)           A copy of the temporary Certificate
of Occupancy for the Improvements.

(r)            An environmental engineering report
for the Premises prepared by an engineer engaged by Lender and at Borrower’s
expenses.

(s)           An opinion of counsel to Borrower and
Guarantor addressed to Lender in form and substance acceptable to Lender.

(t)            Payment of Lender’s origination fee
in the amount of $25,000.

(u)           Any other documents or items required
by Lender.

ARTICLE
IV

REPRESENTATIONS,
WARRANTIES AND COVENANTS OF BORROWER

Borrower
represents and warrants to Lender as of the Closing Date, and covenants for the
benefit of Lender, as follows:

(a)           Borrower is a corporation duly
organized, validly existing and in good standing under the laws of the State,
has power to enter into this Agreement and by proper corporate action has duly
authorized the execution and delivery of this Agreement, the Mortgage, and the
Environmental Indemnity Agreement. 
Borrower is in good standing and is duly licensed or qualified to
transact business in the State and, except to the extent that failure to do so
could not reasonably be expected to have a Material

 11
 

 

Adverse Effect, in all other jurisdictions where the
character of the property owned or leased or the nature of the business
transacted by it makes such licensing or qualification necessary.  Borrower’s exact legal name is as set forth
on the execution page hereof.

(b)           Borrower has been fully authorized to
execute and deliver this Agreement, the Mortgage and the Environmental
Indemnity Agreement under the terms and provisions of the resolution of its
board of directors, or by other appropriate official approval, and further
represents, covenants and warrants that all requirements have been met, and
procedures have occurred in order to ensure the enforceability of this
Agreement, the Mortgage and the Environmental Indemnity Agreement and this
Agreement, the Mortgage and the Environmental Indemnity Agreement have been
duly authorized, executed and delivered.

(c)           The officer of Borrower executing
this Agreement, the Mortgage, the Environmental Indemnity Agreement and any
related documents has been duly authorized to execute and deliver this
Agreement, the Mortgage, the Environmental Indemnity Agreement and such related
documents under the terms and provisions of a resolution of Borrower’s board of
directors.

(d)           This Agreement, the Mortgage and the
Environmental Indemnity Agreement constitute valid and legally binding
obligations of Borrower, enforceable against Borrower in accordance with their
respective terms, except to the extent limited by bankruptcy, reorganization or
other laws of general application relating to or affecting the rights and
remedies of creditors and by general equitable principles, regardless of
whether such enforceability is considered in a proceeding in equity or at law.

(e)           The execution and delivery of this
Agreement, the Mortgage and the Environmental Indemnity Agreement, the
consummation of the transactions contemplated hereby and the fulfillment of the
terms and conditions hereof do not and will not violate any law, rule,
regulation or order, conflict with or result in a breach of any of the terms or
conditions of the articles of incorporation or bylaws of Borrower or of any
agreement or instrument to which Borrower is now a party and do not and will
not constitute a default under any of the foregoing or result in the creation
or imposition of any liens, charges or encumbrances of any nature upon any of
the property or assets of Borrower contrary to the terms of any instrument or
agreement.

(f)            The authorization, execution,
delivery and performance of this Agreement, the Mortgage and the Environmental
Indemnity Agreement by Borrower do not require submission to, approval of, or
other action by any governmental authority or agency, which action with respect
to this Agreement, the Mortgage or the Environmental Indemnity Agreement has
not been taken and which is final and nonappealable.

(g)           There is no action, suit, proceeding,
claim, inquiry or investigation, at law or in equity, before or by any court,
regulatory agency, public board or body pending or, to Borrower’s actual
knowledge, threatened against or affecting Borrower, challenging

 12
 

 

Borrower’s authority to enter into this Agreement, the
Mortgage or the Environmental Indemnity Agreement or any other action wherein
an unfavorable ruling or finding would adversely affect the enforceability of this
Agreement, the Mortgage or the Environmental Indemnity Agreement or any other
transaction of Borrower which is similar hereto, or if determined adversely to
Borrower, could reasonably be expected to have a Material Adverse Effect.

(h)           The Premises and the property at
which any portion of the Property is located is properly zoned for its current
and anticipated use and the use of the Property will not violate any applicable
zoning, land use, environmental or similar law or restriction, except in such instances
in which any such violation could not reasonably be expected to have a Material
Adverse Effect.  Borrower has all
licenses and permits to use the Property, except in such instances in which the
failure to have such licenses and permits, either individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.

(i)            Borrower has furnished to Lender the
Report (as defined in the Environmental Indemnity Agreement).  Except as disclosed to Lender in the Report,
Borrower has received no notification of any kind suggesting that the Property
or any adjacent property is or may be contaminated with any Hazardous Waste or
Materials or is or may be required to be cleaned up in accordance with any
applicable law or regulation; and Borrower further represents and warrants
that, except as disclose to Lender in the Report or as previously disclosed to
Lender in writing, to its actual knowledge as of the date hereof, there are no
Hazardous Waste or Materials (other than Permitted Substances as such term is
defined in the Environmental Indemnity Agreement) located in, on or under the
Property or any adjacent property, or incorporated in any Improvements, nor has
the Property or any adjacent property ever been used as a landfill or a waste
disposal site, or a manufacturing, handling, storage, distribution or disposal
facility for Hazardous Waste or Materials. 
Borrower has obtained all permits, licenses and other authorizations
which are required under any Environmental Laws at Borrower’s facilities or in
connection with the operation of its facilities.  Except as previously disclosed to Lender in
writing, Borrower and all activities of Borrower at its facilities comply with
all Environmental Laws and with all terms and conditions of any required
permits, licenses and authorizations applicable to Borrower with respect
thereto.  Except as previously disclosed
to Lender in writing, Borrower is also in compliance with all limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in Environmental Laws or contained in any
plan, order, decree, judgment or notice of which Borrower is aware.  Except as previously disclosed to Lender in
writing, Borrower is not aware of, nor has Borrower received notice of, any
events, conditions, circumstances, activities, practices, incidents, actions or
plans which may interfere with or prevent continued compliance with, or which
may give rise to any liability under, any Environmental Laws.

(j)            Borrower has heretofore furnished to
Lender the audited consolidated financial statements of Borrower for its fiscal
years ended December 31, 2000, December 31, 2001, December 31, 2002,
December 31, 2003, December 31, 2004 and

 13
 

 

December 31, 2005, and those statements fairly present
in all material respects the financial condition of Borrower and Guarantor on
the dates thereof and the results of its operations and cash flows for the
periods then ended and were prepared in accordance with GAAP.  Since the date of the most recent audited
financial statements, there has been no material adverse change in the
business, properties or condition (financial or otherwise) of Borrower or
Guarantor.

(k)           Borrower has paid or caused to be
paid to the proper authorities when due all federal, state and local taxes
required to be withheld by it.  Borrower
has filed all federal, state and local tax returns which are required to be
filed, and Borrower has paid or caused to be paid to the respective taxing
authorities all taxes as shown on said returns or on any assessment received by
it to the extent such taxes have become due, except those which are being
contested in good faith by appropriate proceedings and for which adequate
reserves have been provided in accordance with GAAP.

(l)            Borrower has or will have good and
marketable fee simple interest to the Premises and all proceeds thereof, free
and clear of all mortgages, security interests, liens, licenses and
encumbrances except for the security interest created pursuant to this Agreement
and the Mortgage and the Permitted Exceptions.

(m)          All financial and other information
provided to Lender by or on behalf of Borrower in connection with Borrower’s
request for the Loan contemplated hereby is true and correct in all material
respects and, as to projections, valuations or pro forma financial statements,
present a good faith opinion as to such projections, valuations and pro forma
condition and results.

(n)           Borrower has authorized Lender to
file a financing statement describing the Property.  When such financing statements are filed with
the Bureau of Conveyances of the State of Hawaii, Lender will have a valid and
perfected security interest in the personal property which is described in such
financing statement and the Mortgage and for which perfection may occur by the
filing of a financing statement with the Bureau of Conveyances of the State of
Hawaii, subject to no other security interest, assignment, lien, license or
encumbrance other than the liens created by this Agreement and by the Mortgage
and the Permitted Exceptions.  None of
the Property constitutes a replacement of, substitution for or accessory to any
property of Borrower subject to a lien of any kind.

(o)           No person other than Borrower is in
occupancy or possession of the Property.

(p)           Neither Borrower nor any individual
or entity owing directly or indirectly any interest in Borrower, is an
individual or entity whose property or interests are subject to being “blocked”
under any of the Terrorism Laws or is otherwise in violation of any of the
Terrorism Laws.

 14
 

 

ARTICLE V

TITLE TO
PROPERTY; SECURITY INTEREST

Section 5.01.  Title to Property.  Legal title to the
Property and any and all repairs, replacements, substitutions and modifications
to such Property shall be in Borrower. 
Borrower will at all times protect and defend, at its own cost and
expense, its title from and against all claims, liens and legal processes of
creditors of Borrower (other than Lender), and keep all Property free and clear
of all such claims, liens and processes, except for the liens created hereunder
and under the Mortgage and the Permitted Exceptions.

Section
5.02.  Security
Interest in Property.  This Agreement is intended to constitute a
security agreement within the meaning of the UCC.  As security for Borrower’s payment to Lender
of Loan Payments and all other amounts payable to Lender hereunder, or any
other obligation (whether direct or indirect and whether now existing or
hereafter arising), Borrower hereby grants to Lender a security interest constituting
a first lien on the Property.  To the
extent that GE Capital Public Finance, Inc. or an affiliate thereof is “Lender”
under both this Agreement and the Master Security Agreement, the security
interest in the Property also shall secure all of Borrower’s obligations under
the Master Security Agreement, but shall not secure Borrower’s obligations
under the Master Security Agreement if an entity other than GE Capital Public
Finance, Inc. or an affiliate thereof is “Lender” under the Master Security
Agreement.  Borrower ratifies its
previous authorization for Lender to pre-file UCC financing statements and any
amendments thereto describing the Property and all other collateral described
above and containing any other information required by the applicable UCC.  Borrower authorizes Lender, and hereby grants
Lender a power of attorney (which is coupled with an interest), to file
financing statements and amendments thereto describing the Property and
containing any other information required by the applicable UCC and all
terminations of the filings of other secured parties with respect to the
Property, which either Borrower has the right to terminate pursuant to the UCC
or such secured party has authorized the filing thereof, in such form and
substance as Lender, in its sole discretion, may determine.  Borrower agrees to execute such additional
documents, including demands for terminations, assignments, affidavits, notices
and similar instruments, in form satisfactory to Lender, and take such other
actions that Lender deems necessary or appropriate to establish and maintain
the security interest created by this Section, and Borrower hereby designates
and appoints Lender as its agent, and grants to Lender a power of attorney
(which is coupled with an interest), to execute on behalf of Borrower such
additional documents and to take such other actions.  Borrower hereby waives any right that
Borrower may have to file with the applicable filing officer any financing
statement, amendment, termination or other record pertaining to the Property
and/or Lender’s interest therein.

Section
5.03.  Change
in Name or Corporate Structure of Borrower; Change in Location of Borrower’s
Chief Executive Office or Principal Executive Office.  Borrower’s chief
executive office and principal executive office are located at the address set
forth above, and all of Borrower’s records relating to its business and the
Property are kept at such location. 
Borrower hereby agrees to provide written notice to Lender of any change
or proposed change in its name, corporate structure, state of organization,
chief executive office or principal executive

 15
 

 

office or change or
proposed change in the location of the Property.  Such notice shall be provided 30 days in
advance of the date that such change or proposed change is planned to take
effect.

Section
5.04.  [Reserved.]

Section
5.05.  Assignment
of Insurance.  As additional security for the payment and
performance of Borrower’s obligations hereunder, Borrower hereby assigns to
Lender any and all moneys (including, without limitation, proceeds of insurance
and refunds of unearned premiums) due or to become due under, and all other
rights of Borrower with respect to, any and all policies of insurance now or at
any time hereafter covering the Property or any evidence thereof or any
business records or valuable papers pertaining thereto, and Borrower hereby
directs the issuer of any such policy to pay all such moneys directly to
Lender.  Borrower hereby assigns to
Lender any and all moneys due or to become due with respect to any condemnation
proceeding affecting the Property.  At
any time, whether before or after the occurrence of any Event of Default,
Lender may (but need not), in Lender’s name or in Borrower’s name, execute and
deliver proof of claim, receive all such moneys, endorse checks and other
instruments representing payment of such moneys, and adjust, litigate,
compromise or release any claim against the issuer of any such policy or party
in any condemnation proceeding.

ARTICLE VI

AFFIRMATIVE
COVENANTS OF BORROWER

So
long as the Loan shall remain unpaid, Borrower will comply with the following
requirements:

Section
6.01.  Reporting
Requirements.  Borrower will deliver, or cause to be
delivered, to Lender each of the following, which shall be in form and detail
acceptable to Lender:

(a)           as soon as available, and in any
event within 120 days after the end of each fiscal year of Borrower,
audited consolidated financial statements of Borrower with the unqualified
opinion of independent certified public accountants selected by Borrower and
reasonably acceptable to Lender, which annual consolidated financial statements
shall include the consolidated balance sheet of Borrower as at the end of such
fiscal year and the related consolidated statements of income, retained
earnings and cash flows of Borrower for the fiscal year then ended, all in
reasonable detail and prepared in accordance with GAAP, together with a
certificate of the chief financial officer of Borrower in the form of
Exhibit C hereto stating that such financial statements have been prepared
in accordance with GAAP and whether or not such officer has knowledge of the
occurrence of any Default or Event of Default hereunder and, if so, stating in
reasonable detail the facts with respect thereto and all relevant facts in
reasonable detail to evidence, and the computations as to, whether or not
Borrower is in compliance with the requirements set forth in Sections 6.10
through 6.12 hereof;

 16
 

 

(b)           as soon as available and in any event
within 90 days after the end of each fiscal quarter of Borrower, an
unaudited/internal consolidated balance sheet and statements of income and
retained earnings of Borrower as at the end of and for such quarter and for the
year to date period then ended, in reasonable detail and stating in comparative
form the figures for the corresponding date and periods in the previous year,
all prepared in accordance with GAAP and certified by the chief financial
officer of Borrower, subject to year-end audit adjustments; and accompanied
by a certificate of that officer in the form of Exhibit C hereto stating
(i) that such financial statements have been prepared in accordance with
GAAP, (ii) whether or not such officer has knowledge of the occurrence of
any Default or Event of Default hereunder not theretofore reported and remedied
and, if so, stating in reasonable detail the facts with respect thereto and
(iii) all relevant facts in reasonable detail to evidence, and the computations
as to, whether or not Borrower is in compliance with the requirements set forth
in Sections 6.10 through 6.12 hereof;

(c)           immediately after the commencement
thereof, notice in writing of all litigation and of all proceedings before any
governmental or regulatory agency affecting Borrower of the type described in
Article IV hereof or which seek a monetary recovery against Borrower or
Guarantor in excess of $100,000;

(d)           as promptly as practicable (but in
any event not later than five Business Days) after an officer of Borrower
obtains knowledge of the occurrence of any event that constitutes a Default or
an Event of Default hereunder, notice of such occurrence, together with a
detailed statement by a responsible officer of Borrower of the steps being
taken by Borrower to cure the effect of such Default or Event of Default;

(e)           promptly upon knowledge thereof,
notice of any loss or destruction of or damage to any of the Property in excess
of $100,000;

(f)            promptly upon their distribution,
copies of all financial statements, reports and proxy statements that Borrower
shall have sent to its stockholders;

(h)           promptly after the amending thereof,
copies of any and all amendments to its certificate of incorporation, articles
of incorporation or bylaws;

(i)            promptly upon knowledge thereof,
notice of the violation by Borrower of any law, rule or regulation, if such
violation has resulted or could reasonably be expected to result in a Material
Adverse Effect; and

(j)            promptly upon knowledge thereof,
notice of any Material Adverse Effect.

Section
6.02.  Books
and Records; Inspection and Examination.  Borrower will keep accurate books of record
and account for itself pertaining to the Property and pertaining to Borrower’s
business and financial condition and such other matters as Lender may from time
to time reasonably request in which true and complete entries will be made in
accordance with

 17
 

 

GAAP and, upon reasonable
advance notice to Borrower, will permit any officer, employee, attorney or
accountant for Lender to audit, review, make extracts from, or copy any and all
corporate and financial books, records and properties of Borrower at any time
during Borrower’s normal business hours, and to discuss the affairs of Borrower
with any of its directors, officers, employees or agents; provided, however,
that Lender shall not exercise such rights more than one time in any fiscal
year of Borrower unless a Default or an Event of Default exists, in which case
Lender (or any of its representatives or independent contractors) may do any of
the foregoing at the expense of Borrower at any time during normal business
hours and without advance notice.  Upon
reasonable advance notice to Borrower, Borrower will permit Lender, or its
employees, accountants, attorneys or agents, to examine and copy any or all of
its records and to examine and inspect the Property at any time during Borrower’s
normal business hours; provided, however, that Lender shall not exercise such
rights more than one time in any fiscal year of Borrower unless a Default or an
Event of Default exists, in which case Lender (or any of its representatives or
independent contractors) may do any of the foregoing at the expense of Borrower
at any time during normal business hours and without advance notice.

Section
6.03.  Compliance
With Laws; Environmental Compliance.  (a)
Borrower will (i) comply with the requirements of applicable laws
and regulations, the noncompliance with which could not reasonably be expected
to result in a Material Adverse Effect, and (ii) use and keep the
Property, and will require that others use and keep the Property, only for
lawful purposes.  Borrower shall secure
all permits and licenses, if any, necessary for the installation and operation
of the Property, except in such instances in which the failure to have such
licenses and permits, either individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.

(b)           Borrower shall promptly comply with
all statutes, regulations and ordinances, and with all orders, decrees or
judgments of governmental authorities or courts having jurisdiction, relating
to the use, collection, treatment, disposal, storage, control, removal or
cleanup of Hazardous Waste or Materials in, on or under the Property or any
adjacent property, or incorporated in any Improvements, at Borrower’s expense,
except in such instances in which such statute, regulation, ordinance, order,
decrees or judgment is being contested in good faith by appropriate proceedings
diligently conducted and adequate reserves with respect thereto are maintained
on the books of Borrower in accordance with GAAP.  In the event that Lender at any time
reasonably believes that the Property is not free of all Hazardous Waste or
Materials or that Borrower has violated any applicable Environmental Laws with
respect to the Property, then immediately, upon request by Lender, Borrower
shall obtain and furnish to Lender, at Borrower’s sole cost and expense, an
environmental audit and inspection of the Property from an expert satisfactory
to Lender in its reasonable discretion. 
In the event that Borrower fails to obtain such audit or inspection,
Lender or its agents may perform or obtain such audit or inspection at Borrower’s
sole cost and expense.  Lender may, but
is not obligated to, enter upon the Property and take such actions and incur
such costs and expenses to effect such compliance as it deems advisable to
protect its interest in the Property; and whether or not Borrower has actual
knowledge of the existence of Hazardous Waste or Materials on the Property or
any adjacent property as of the date hereof, Borrower shall reimburse Lender as
provided herein for the full amount of all costs and expenses incurred by
Lender prior to Lender acquiring title to the

 18
 

 

Property through
foreclosure or acceptance of a deed in lieu of foreclosure, in connection with
such compliance activities.  Neither this
provision nor any provision herein or in the Mortgage or related documents
shall operate to put Lender in the position of an owner of the Property prior
to any acquisition of the Property by Lender. 
The rights granted to Lender herein and in the Mortgage or related
documents are granted solely for the protection of Lender’s lien and security
interest covering the Property and do not grant to Lender the right to control
Borrower’s actions, decisions or policies regarding Hazardous Waste or
Materials.

Section
6.04.  Payment
of Taxes and Other Claims.  Borrower will pay or discharge, prior to
delinquency, (a) all taxes, assessments and governmental charges levied or
imposed upon it or upon its income or profits, upon any properties belonging to
it (including, without limitation, the Property) or upon or against the
creation, perfection or continuance of the security interest created pursuant
to this Agreement, prior to the date on which penalties attach thereto,
(b) all federal, state and local taxes required to be withheld by it, (c)
all taxes and governmental charges of any kind whatsoever that may at any time
be lawfully assessed or levied against or with respect to the Property and
(d) all lawful claims for labor, materials and supplies which, if unpaid,
might by law become a lien or charge upon any properties of Borrower; provided,
that Borrower shall not be required to pay any such tax, assessment, charge or
claim whose amount, applicability or validity is being contested in good faith
by appropriate proceedings diligently conducted and adequate reserves with
respect thereto are maintained on the books of Borrower in accordance with
GAAP.

Section
6.05.  Preservation
and Maintenance of Property.  Borrower (a) shall, at its own expense,
maintain, preserve and keep the Property in good repair, working order and
condition, and shall from time to time make all repairs and replacements
necessary to keep the Property in such condition, ordinary wear and tear excepted,
and, except where the failure to do so could not reasonably be expected to have
a Material Adverse Effect, in compliance with state and federal laws,
(b) shall not commit waste or permit impairment or deterioration of the
Property, (c) shall not abandon the Property, (d) if all or part of
the Property is for rent or lease, then Lender, at its option after the
occurrence of an Event of Default, may require Borrower to provide for
professional management of the Property by a property manager satisfactory to
Lender pursuant to a contract approved by Lender in writing, unless such
requirement shall be waived by Lender in writing, and (e) shall give
notice in writing to Lender of and, unless otherwise directed in writing by
Lender, appear in and defend any action or proceeding purporting to affect the
Property, the security of this Agreement or the rights or powers of Lender
hereunder.  Neither Borrower nor any
tenant or other person shall remove, demolish or alter any improvement now
existing or hereafter erected on the Property or any fixture, equipment,
machinery or appliance in or on the Property with a fair market value in excess
of $50,000 individually or $100,000 in the aggregate except when incident to
the replacement of fixtures, equipment, machinery and appliances with items of
like kind.  Borrower will defend the
Property against all claims or demands of all persons (other than Lender)
claiming the Property or any interest therein.

Borrower represents and warrants as of the Closing
Date that, to the best of Borrower’s knowledge, the Property is in compliance
with the Americans with Disabilities Act of 1990 and all of the regulations
promulgated thereunder, as the same may be amended from time to time

 19
 

 

(the “ADA”). 
Borrower shall promptly make all necessary changes to the Property in
order to make it in compliance with the ADA.

Section
6.06.  Insurance;
Indemnification.  (a) Borrower shall obtain and maintain
the following types of insurance upon and relating to the Property:

(i)            “All Risk” property and fire
insurance (with extended coverage endorsement including malicious mischief and
vandalism) in an amount not less than the full replacement value of the
Property (with a deductible not to exceed $250,000 and with co-insurance
limited to a maximum of 10% of the amount of the policy), naming Lender under a
lender’s loss payee endorsement (form 438BFU or equivalent) and including
agreed amount, replacement cost, inflation guard and waiver of subrogation
endorsements;

(ii)           Comprehensive general liability insurance
in an amount not less than $2,000,000.00 insuring against personal injury,
death and property damage and naming Lender as additional insured;

(iii)          Business interruption insurance
covering loss of rental or other income (including all expenses payable by
tenants) for up to 12 months; and

(iv)          Such other types of insurance or
endorsements to existing insurance as may be required from time to time by
Lender, provided that such coverage is generally being required by other
lenders with respect to properties similar to and in the general vicinity of
the Premises.

(b)           Upon each reasonable request of
Lender (not to be made more than once during the term of the Loan), Borrower
shall increase the coverages under any of the insurance policies required to be
maintained hereunder or otherwise modify such policies in accordance with
Lender’s request.  All of the insurance
policies required hereunder shall be issued by corporate insurers licensed to
do business in the state in which the Property is located and rated A:X or
better by A.M. Best Company, and shall be in form acceptable to Lender in its
reasonable discretion.  If and to the
extent that the Property is located within an area that has been or is
hereafter designated or identified as an area having special flood hazards by
the Department of Housing and Urban Development or such other official as shall
from time to time be authorized by federal or state law to make such
designation pursuant to any national or state program of flood insurance,
Borrower shall carry flood insurance with respect to the Property in amounts
not less than the maximum limit of coverage then available with respect to the
Property or the principal amount of the Loan, whichever is less.  Certificates of all insurance required to be
maintained hereunder shall be delivered to Lender, along with evidence of
payment in full of all premiums required thereunder, contemporaneously with
Borrower’s execution of this Agreement. 
All such certificates shall be in form acceptable to Lender in its
reasonable discretion and shall require the insurance company to give to Lender
at least 30 days’ prior written notice before canceling the policy for any
reason or materially amending it. 
Certificates evidencing all renewal and substitute policies of insurance
shall

 20
 

 

be delivered to Lender,
along with evidence of the payment in full of all premiums required thereunder,
at least 15 days before termination of the policies being renewed or
substituted.  If any loss shall occur at
any time after an Event of Default has occurred hereunder, Lender shall be
entitled to the benefit of all insurance policies held or maintained by
Borrower, to the same extent as if same had been made payable to Lender, and
upon foreclosure hereunder, Lender shall become the owner thereof.  Lender shall have the right, but not the
obligation, to make premium payments, at Borrower’s expense, to prevent any
cancellation, endorsement, alteration or reissuance of any policy of insurance
maintained by Borrower, and such payments shall be accepted by the insurer to
prevent same.

(c)           As between Lender and Borrower,
Borrower assumes all risks and liabilities from any cause whatsoever, whether
or not covered by insurance, for loss or damage to any portion of the Property
and for injury to or death of any person or damage to any property, whether
such injury or death be with respect to agents or employees of Borrower or of
third parties, and whether such property damage be to Borrower’s property or
the property of others.  Whether or not
covered by insurance, Borrower hereby assumes responsibility for and agrees to
reimburse Lender for and will indemnify, defend and hold Lender harmless from
and against all liabilities, obligations, losses, damages, penalties, claims,
actions, costs and expenses (including reasonable attorneys’ fees) of
whatsoever kind and nature, imposed on, incurred by or asserted against Lender
that in any way relate to or arise out of this Agreement, the transactions
contemplated hereby and the Property, including but not limited to, (i) the
selection, manufacture, construction, purchase, acceptance or rejection of the
Property or the ownership of the Property, (ii) the delivery, lease,
possession, maintenance, use, condition, return or operation of the Property,
(iii) the condition of the Property sold or otherwise disposed of after
possession by Borrower, (iv) any patent or copyright infringement, (v) the
conduct of Borrower, its officers, employees and agents, (vi) a breach of
Borrower of any of its covenants or obligations hereunder and (vii) any claim,
loss, cost or expense involving alleged damage to the environment relating to
the Property, including, but not limited to investigation, removal, cleanup and
remedial costs.  All amounts payable by
Borrower pursuant to the immediately preceding sentence shall be paid within 30
days after demand of Lender.  This
provision shall survive the termination of this Agreement.

Section
6.07.  Preservation
of Corporate Existence.  Borrower will preserve and maintain its
corporate existence and all of its rights, privileges and franchises necessary
or desirable in the normal conduct of its business.

Section
6.08.  Performance
by Lender.  If Borrower at any time fails to perform or
observe any of the covenants or agreements contained in this Agreement, the
Mortgage or the Environmental Indemnity Agreement, and if such failure shall
continue for a period of 10 calendar days after Lender gives Borrower written
notice thereof (or in the case of the agreements contained in Sections 6.05 and
6.06 hereof, immediately upon the occurrence of such failure, without notice or
lapse of time), Lender may, but need not, perform or observe such covenant on
behalf and in the name, place and stead of Borrower (or, at Lender’s option, in
Lender’s name)

 21
 

 

and may, but need not,
take any and all other actions which Lender may reasonably deem necessary to
cure or correct such failure (including, without limitation, the payment of
taxes, the satisfaction of security interests, liens or encumbrances, the
performance of obligations owed to account debtors or other obligors, the
procurement and maintenance of insurance, the execution of assignments,
security agreements and financing statements, and the endorsement of
instruments); and Borrower shall thereupon pay to Lender on demand the amount
of all moneys expended and all costs and expenses (including reasonable
attorneys’ fees and legal expenses) incurred by Lender in connection with or as
a result of the performance or observance of such agreements or the taking of such
action by Lender, together with interest thereon from the date expended or
incurred at the lesser of 18% per annum or the highest rate permitted by
law.  To facilitate the performance or
observance by Lender of such covenants of Borrower, Borrower hereby irrevocably
appoints Lender, or the delegate of Lender, acting alone, as the attorney in
fact of Borrower with the right (but not the duty) from time to time to create,
prepare, complete, execute, deliver, endorse or file in the name and on behalf
of Borrower any and all instruments, documents, assignments, security
agreements, financing statements, applications for insurance and other
agreements and writings required to be obtained, executed, delivered or
endorsed by Borrower under this Agreement.

Section 6.09.  Limitations of Liability.  In no event, whether as a result of breach of
contract, warranty, tort (including negligence or strict liability), indemnity
or otherwise, shall Lender, its assignees, if any, be liable for any special,
consequential, incidental, punitive or penal damages, including, but not
limited to, loss of profit or revenue, loss of use of the Premises or any
associated equipment, service materials or software, damage to associated
equipment, service materials or software, cost of capital, cost of substitute
property, service materials or software, facilities, services or replacement
power or downtime costs.

Section 6.10.  Minimum Net Worth.  Borrower shall maintain at all times its
Consolidated Net Worth at not less than $85,000,000.

Section 6.11.  Funded Debt to Capitalization.  Borrower shall not permit Consolidated Funded
Debt to exceed 55% of Consolidated Total Capitalization.

Section 6.12.  Fixed Charge Coverage Ratio.  Borrower shall have a Fixed Charge Coverage
Ratio of at least 1.50 to 1.00 at the end of each Fiscal Year.

ARTICLE VII

NEGATIVE COVENANTS OF BORROWER

So long as the Loan shall remain unpaid, Borrower
agrees that:

Section
7.01.  Lien.  Borrower will not
create, incur or suffer to exist any Lien on any of the Property except for any
security interest created in favor of Lender and the lien created by the
Mortgage and the Permitted Exceptions. 
Borrower shall promptly, at its own expense, take such action as may be
necessary to discharge or remove any such Lien. 
Borrower shall reimburse Lender for any expenses incurred by Lender to
discharge or remove any Lien.

 22

 

Section
7.02.  Sale
of Assets.  Neither Borrower nor Guarantor will sell,
lease, assign, transfer or otherwise dispose of (a “Disposition”) all or
substantially all of its assets or of any of the Property or any interest
therein (whether in one transaction or in a series of transactions), except (a)
Dispositions of obsolete or worn out property, whether now owned or hereafter
acquired, in the ordinary course of business, (b) Dispositions of inventory in
the ordinary course of business, (c) Dispositions of equipment to the extent
that (i) such property is exchanged for credit against the purchase price of
similar replacement property or (ii) the proceeds of such Dispositions are
reasonably promptly applied to the purchase price of replacement property; and (d) Dispositions
of property (other than the Property) by Borrower or Guarantor, the fair market
value of which does not exceed $1,000,000 in the aggregate.  Notwithstanding any provision herein or in
any Borrower Document to the contrary, if the Property is properly and legally
subdivided into smaller parcels (any such parcel that does not have any
Improvements located thereon, a “Subdivided Parcel”), Borrower may request
Lender’s release of its lien on the Subdivided Parcel, which request Lender may
accept or reject in its sole and absolute discretion.

Section
7.03.  Consolidation
and Merger.  (a) 
Neither Borrower nor Guarantor will consolidate with or merge into any
person, unless such merger or consolidation is between only Borrower and
Guarantor and Borrower and Guarantor provide Lender with notice thereof and any
such items as are required by Lender in its reasonable discretion.

(b)           Neither Borrower nor Guarantor will
permit any other person to merge into it, or acquire (in a transaction
analogous in purpose or effect to a consolidation or merger) all or
substantially all of the assets of any other person, unless (i) immediately
upon the consummation of such merger, consolidation or acquisition, Borrower
shall be in compliance with the financial covenants set forth in Section 6.10
through 6.12 hereof and (ii) no Default or Event of Default would result from
such merger or consolidation.

Section
7.04.  Accounting.  Neither Borrower
nor Guarantor will adopt, permit or consent to any material change in accounting
principles other than as required by GAAP. 
Neither Borrower nor Guarantor will adopt, permit or consent to any
change in its fiscal year.

Section
7.05.  [Reserved.]

Section
7.06.  Place
of Business.  Borrower will not permit any of the Property
or any records pertaining to the Property to be located in any state or area in
which, in the event of such location, a financing statement covering such
Property would be required to be, but has not in fact been, filed in order to
perfect the security interest created pursuant to this Agreement and the
Mortgage.

Section
7.07.  Modifications
and Substitutions.  Borrower will not make any material
alterations, modifications, substitutions or additions to the Property, without
the prior written consent of Lender (which consent shall not be unreasonably
withheld, delayed or conditioned if such alteration, modification, substitution
or addition does not materially and adversely affect the value, operation or
utility of the Property); provided, however, that any substitutions made 

 23
 

 

pursuant to Borrower’s
obligations to make repairs referenced under any provision of this Agreement
shall not require such prior written consent. 
Borrower shall provide such documents or assurances as Lender may
reasonably request to maintain or confirm the security interest assigned to
Lender in the Property as so modified or substituted.

Section
7.08.  Use
of Property.  Unless required by applicable law or unless
Lender has otherwise agreed in writing, Borrower shall not allow changes in the
use for which all or any part of the Property was intended at the time this
Agreement was executed.  Borrower shall
not, without Lender’s prior written consent (which consent shall not be
unreasonably withheld, delayed or conditioned if such action does not
materially and adversely affect the value, operation or utility of the
Property), (a) initiate or acquiesce in a change in the zoning
classification (including any variance under any existing zoning ordinance
applicable to the Property), (b) permit the use of the Property to become
a non-conforming use under applicable zoning ordinances, (c) file any
subdivision or parcel map affecting the Property, or (d) amend, modify or
consent to any easement or covenants, conditions and restrictions pertaining to
the Property.

ARTICLE VIII

DAMAGE AND DESTRUCTION; USE OF NET PROCEEDS

Section
8.01.  Damage
and Destruction.  Borrower
shall provide a complete written report to Lender immediately upon any loss,
theft, damage or destruction of any Property and of any accident involving any
Property in excess of $100,000.  If all
or any part of the Property is lost, stolen, destroyed or damaged beyond repair
(“Damaged Property”), Borrower shall as soon as practicable after such event
either:  (a) replace the same at
Borrower’s sole cost and expense with property having substantially similar
specifications and of equal or greater value to the Damaged Property
immediately prior to the time of the loss occurrence, such replacement property
to be subject to Lender’s approval, whereupon such replacement property shall
be substituted in this Agreement and the other related documents by appropriate
endorsement or amendment; or (b) use the Net Proceeds to prepay the Loan
(with premium) in the amount of the Damaged Property Amount.  Borrower shall notify Lender of which course
of action it will take within 15 calendar days after the loss
occurrence.  If, within 45 calendar
days of the loss occurrence, (x) Borrower fails to notify Lender;
(y) Borrower and Lender fail to execute an amendment to this Agreement to
delete the Damaged Property and add the replacement property or
(z) Borrower fails to comply with subparagraph (b) above, then Lender
may, at its sole discretion, use the Net Proceeds to prepay the Loan (with
premium) in the amount of the Damaged Property Amount.  The Net Proceeds of insurance with respect to
the Damaged Property shall be made available by Lender to be applied to
discharge Borrower’s obligation under this Section.  For purposes of this Section, the term “Net
Proceeds” shall mean the amount remaining from the gross proceeds of any
insurance claim after deducting all expenses (including reasonable attorneys’
fees) incurred in the collection of such claim.

Section
8.02.  Condemnation.  If the Property, or any part thereof, shall
be condemned for any reason, including without limitation fire or earthquake
damage, or otherwise taken for 

 24
 

 

public or quasi-public
use under the power of eminent domain, or be transferred in lieu thereof, all
damages or other amounts awarded for the taking of, or injury to, the Property
shall be paid to Lender who shall have the right, in its sole and absolute
discretion, to apply the amounts so received against (a) first, all
amounts owing to Lender hereunder, including (without limitation) the costs and
expenses of Lender, including attorneys’ fees incurred in connection with
collection of such amounts, and (b) next, the principal amount of the Loan
(including premium thereon); provided,
however, that if (i) no Event of Default shall have occurred and be
continuing hereunder, (ii) Borrower provides evidence satisfactory to
Lender in its reasonable discretion of its ability to pay all amounts becoming
due hereunder during the pendency of any restoration or repairs to or
replacement of the Property, (iii) Lender determines, in its reasonable
discretion, that the proceeds of such award are sufficient to restore, repair,
replace and rebuild the Property as nearly as possible to its value, condition
and character immediately prior to such taking (or, if the proceeds of such
award are insufficient for such purpose, if Borrower provides additional sums
to Lender’s satisfaction so that the aggregate of such sums and the proceeds of
such award will be sufficient for such purpose), and (iv) Borrower provides
evidence satisfactory to Lender in its reasonable discretion that none of the
tenants of the Property will terminate their lease agreements as a result of
either the condemnation or taking or the repairs to or replacement of the
Property, the proceeds of such award, together with additional sums provided by
Borrower, shall be placed in a separate account for the benefit of Lender and
Borrower to be used to restore, repair, replace and rebuild the Property as
nearly as possible to its value, condition and character immediately prior to
such taking.  All work to be performed in
connection therewith shall be pursuant to a written contract therefor, which
contract shall be subject to the prior approval of Lender.  To the extent that any funds remain after the
Property has been so restored and repaired, the same shall be applied in the
manner set forth above in this Section. 
To enforce its rights hereunder, Lender shall be entitled to participate
in and, if the portion of the affected Property has a value in excess in of
$100,000, control any condemnation proceedings and to be represented therein by
counsel of its own choice, and Borrower will deliver, or cause to be delivered
to Lender such instruments as may be requested by it from time to time to
permit such participation.  In the event
Lender, as a result of any such judgment, decree or award, reasonably believes
that the payment of the Loan or performance of the obligations hereunder is
impaired, Lender may declare the Loan and all other amounts due hereunder
immediately due and payable.

ARTICLE IX

ASSIGNMENT, SUBLEASING AND
SELLING

Section
9.01.  Assignment
by Lender.  This Agreement, and the obligations of
Borrower to make payments hereunder, may be assigned and reassigned in whole or
in part to one or more assignees or subassignees by Lender at any time
subsequent to its execution, without the necessity of obtaining the consent of
Borrower.  On the Closing Date, Lender
shall assign to GE Capital Public Finance, Inc. (“GECPF”) all of its rights,
title and interest in and to this Agreement, the Mortgage, the Environmental
Indemnity Agreement, the Guaranty Agreement and the Property, including
(without limitation) its rights to Loan Payments hereunder.  Borrower acknowledges and consents to such
assignment.  Any questions of Borrower
relative to billing or 

 25
 

 

other administrative
matters and all notices required to be delivered hereunder by Borrower should
be referred or sent to GECPF at the following address:

GE Capital Public Finance, Inc.

Suite 470

8400 Normandale Lake Boulevard

Minneapolis, MN 
55437

Attn:  Vice
President—Risk Management

Telephone: 
(952) 897-5600

Facsimile: 
(952) 897-5601

Section
9.02.  No
Sale or Assignment by Borrower.  This Agreement and the interest of Borrower
in the Property may not be sold, assumed, assigned or encumbered by Borrower.

ARTICLE X

EVENTS OF DEFAULT AND REMEDIES

Section 10.01.  Events of Default.  The following
constitute “Events of Default” under this Agreement:

(a)           failure by Borrower to pay to Lender
when due any Loan Payment or to pay any other payment required to be paid
hereunder and the continuation of such failure for a period of 10 days;

(b)           failure by Borrower to maintain
insurance on the Property in accordance with Section 6.06 hereof;

(c)           failure by Borrower to comply with
the provisions of Sections 7.02 or 7.03 hereof or Guarantor to comply with the
provisions of Sections 11 or 12 of the Guaranty Agreement;

(d)           failure by Borrower or Guarantor to
observe and perform any other covenant, condition or agreement contained
herein, in the Mortgage, in the Environmental Indemnity Agreement, in the
Guaranty Agreement or in any other document or agreement executed in connection
herewith on its part to be observed or performed for a period of 30 days after
written notice is given to Borrower or Guarantor, as the case may be,
specifying such failure and directing that it be remedied; provided,
however, that, if the failure stated in
such notice cannot be corrected within such 30-day period, Lender will
not unreasonably withhold its consent to an extension of such time if
corrective action is instituted by Borrower or Guarantor within the applicable
period and diligently pursued until the default is corrected;

(e)           Borrower or Guarantor shall be or
become insolvent, or admit in writing its inability to pay its debts as they
mature, or make an assignment for the benefit of 

 26
 

 

creditors; or Borrower or Guarantor shall apply for or
consent to the appointment of any receiver, trustee or similar officer for it
or for all or any substantial part of its property; or such receiver, trustee
or similar officer shall be appointed without the application or consent of
Borrower or Guarantor shall institute (by petition, application, answer,
consent or otherwise) any bankruptcy, insolvency, reorganization, arrangement,
readjustment of debt, dissolution, liquidation or similar proceeding relating
to it under the laws of any jurisdiction; or any such proceeding shall be
instituted (by petition, application or otherwise) against Borrower or Guarantor
and not dismissed within 60 days; or any writ, warrant of attachment or
execution or similar process shall be issued or levied against a substantial
part of the property of Borrower or Guarantor and is not released, vacated or
fully bonded within 60 days after its issue or levy; or there is entered
against Borrower or Guarantor a final judgment or order for the payment of
money in an aggregate amount of at least $3,000,000 (to the extent not covered
by independent third-party insurance as to which the insurer does not dispute
coverage) and enforcement proceedings with respect thereto have commenced;

(f)            determination by Lender that any
representation or warranty made by Borrower or Guarantor herein, in the
Mortgage, in the Environmental Indemnity Agreement, in the Guaranty Agreement
or in any other document executed in connection herewith was untrue in any
material respect when made;

(g)           an amendment or termination relating
to a filed financing statement describing any of the Property is improperly
filed, or caused to be filed, by Borrower or any of its affiliates;

(h)           the occurrence of a default or an
event of default (beyond any applicable grace or notice period) under any
instrument, agreement or other document evidencing or relating to any
indebtedness or other monetary obligation of Borrower or Guarantor in excess of
$1,000,000;

(i)            the occurrence of a default or event
of default (beyond any applicable grace or notice period) under the Master
Security Agreement or the Mortgage or any other agreement between GE Capital
Public Finance, Inc. or any of its affiliates and Borrower or Guarantor; or

(j)            Guarantor shall repudiate, purport
to revoke or fail to perform Guarantor’s obligations under the Guaranty
Agreement beyond any applicable grace or cure period.

Section
10.02.  Remedies
on Default.  Whenever an Event of Default described in
Section 10.01(e) hereof shall have occurred, the Prepayment Amount
automatically shall be due and payable, whereupon the Prepayment Amount
automatically shall become and be forthwith due and payable without
presentment, notice of dishonor, protest or further notice of any kind, all of
which are hereby expressly waived by Borrower. 
Whenever any Event of Default shall have occurred, Lender shall have the
right, at its sole option without any further demand or notice, to 

 27
 

 

take any one or any
combination of the following remedial steps or such other remedies which are
otherwise accorded to Lender by applicable law:

(a)           by notice to Borrower, declare the
Prepayment Amount to be forthwith due and payable, whereupon the Prepayment
Amount shall become and be forthwith due and payable, without presentment,
notice of dishonor, protest or further notice of any kind, all of which are
hereby expressly waived by Borrower;

(b)           take possession of the Property
wherever situated, without any court order or other process of law and without
liability for entering the premises, and lease, sublease or make other
disposition of the Property for use over a term in a commercially reasonable
manner, all for the account of Lender, provided that Borrower shall remain
directly liable for the deficiency, if any, between the rent or other amounts
paid by a lessee or sublessee of the Property pursuant to such lease or
sublease during the same period of time, after deducting all costs and
expenses, including reasonable attorneys’ fees and expenses, incurred with
respect to the recovery, repair and storage of the Property during such period
of time;

(c)           take possession of the Property
wherever situated, without any court order or other process of law and without
liability for entering the premises, and sell the Property in a commercially
reasonable manner.  All proceeds from
such sale shall be applied in the following manner:

FIRST, to pay all proper
and reasonable costs and expenses associated with the recovery, repair, storage
and sale of the Property, including reasonable attorneys’ fees and expenses;

SECOND, to pay (i) Lender
the amount of all unpaid Loan Payments or other obligations (whether direct or
indirect owed by Borrower to Lender), if any, which are then due and owing,
together with interest and late charges thereon, (ii) Lender the then
applicable Prepayment Amount (taking into account the payment of past-due
Loan Payments as aforesaid), plus a pro rata allocation of interest, at the
rate utilized to calculate the Loan Payments, from the next preceding due date
of a Loan Payment until the date of payment by the buyer, and (iii) any other
amounts due hereunder, including indemnity payments, taxes, charges,
reimbursement of any advances and other amounts payable to Lender hereunder;
and

THIRD, to pay the
remainder of the sale proceeds, purchase moneys or other amounts paid by a
buyer of the Property to Borrower;

(d)           exercise any rights or remedies under
the Mortgage or the Master Security Agreement;

 28
 

 

(e)           proceed by appropriate court action
to enforce specific performance by Borrower of the applicable covenants of this
Agreement or to recover for the breach thereof, including the payment of all
amounts due from Borrower.  Borrower
shall pay or repay to Lender all costs of such action or court action,
including, without limitation, reasonable attorneys’ fees; and

(f)            take whatever action at law or in
equity that may appear necessary or desirable to enforce its rights with
respect to the Property.  Borrower shall
pay or repay to Lender all costs of such action or court action, including,
without limitation, reasonable attorneys’ fees.

Notwithstanding
any other remedy exercised hereunder, Borrower shall remain obligated to pay to
Lender any unpaid portion of the Prepayment Amount.

Section
10.03.  No
Remedy Exclusive.  No remedy herein conferred upon or reserved
to Lender is intended to be exclusive and every such remedy shall be cumulative
and shall be in addition to every other remedy given under this Agreement or
now or hereafter existing at law or in equity. 
No delay or omission to exercise any right or power accruing upon any
Event of Default shall impair any such right or power or shall be construed to
be a waiver thereof, but any such right or power may be exercised from time to
time and as often as may be deemed expedient. 
In order to entitle Lender to exercise any remedy reserved to it in this
Article, it shall not be necessary to give any notice other than such notice as
may be required by this Article.  All
remedies herein conferred upon or reserved to Lender shall survive the
termination of this Agreement.

Section
10.04.  Late
Charge.  Any Loan Payment not paid by Borrower on the
due date thereof shall, to the extent permissible by law, bear a late charge
equal to the lesser of five cents ($.05) per dollar of the delinquent amount or
the lawful maximum, and Borrower shall be obligated to pay the same immediately
upon receipt of Lender’s written invoice therefor.

ARTICLE
XI

MISCELLANEOUS

Section 11.01.  Costs and Expenses of Lender.  Borrower shall pay
to Lender, in addition to the Loan Payments payable by Borrower hereunder, such
amounts in each year as shall be required by Lender in payment of any reasonable
costs and expenses incurred by Lender in connection with the execution,
performance or enforcement of this Agreement, including but not limited to
payment of all reasonable fees, costs and expenses and all administrative costs
of Lender in connection with the Property, expenses (including, without
limitation, attorneys’ fees and disbursements), fees of auditors or attorneys,
insurance premiums not otherwise paid hereunder and all other direct and
necessary administrative costs of Lender or charges required to be paid by it
in order to comply with the terms of, or to enforce its rights under, this
Agreement.  Such costs and expenses shall
be billed to Borrower by Lender from time to time, together with a statement
certifying that the amount so billed has been paid by Lender for one or more of
the 

 29
 

 

items
above described, or that such amount is then payable by Lender for such
items.  Amounts so billed shall be due
and payable by Borrower within 30 days after receipt of the bill by Borrower.

Section
11.02.  Disclaimer
of Warranties.  LENDER
MAKES NO WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE
VALUE, DESIGN, CONDITION, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE
OR FITNESS FOR USE OF THE PROPERTY, OR ANY OTHER WARRANTY OR REPRESENTATION,
EXPRESS OR IMPLIED, WITH RESPECT THERETO.  In no event shall Lender be liable for any
loss or damage in connection with or arising out of this Agreement, the
Property or the existence, furnishing, functioning or Borrower’s use of any
item or products or services provided for in this Agreement.

Section
11.03.  Notices.  All notices,
certificates, requests, demands and other communications provided for hereunder
shall be in writing and shall be (a) personally delivered, (b) sent by
first-class United States mail, (c) sent by overnight courier of national
reputation, or (d) transmitted by telecopy, in each case addressed to the party
to whom notice is being given at its address as set forth above and, if
telecopied, transmitted to that party at its telecopier number set forth above
or, as to each party, at such other address or telecopier number as may
hereafter be designated by such party in a written notice to the other party
complying as to delivery with the terms of this Section.  All such notices, requests, demands and other
communications shall be deemed to have been given on (a) the date received if
personally delivered, (b) when deposited in the mail if delivered by mail, (c)
the date sent if sent by overnight courier, or (d) the date of transmission if
delivered by telecopy.  If notice to
Borrower of any intended disposition of the Property or any other intended
action is required by law in a particular instance, such notice shall be deemed
commercially reasonable if given (in the manner specified in this Section) at
least 10 calendar days prior to the date of intended disposition or other
action.

Section
11.04.  Further
Assurance and Corrective Instruments.  Borrower hereby agrees that it will, from
time to time, execute, acknowledge and deliver, or cause to be executed,
acknowledged and delivered, such further acts, instruments, conveyances,
transfers and assurances, as Lender reasonably deems necessary or advisable for
the implementation, correction, confirmation or perfection of this Agreement,
the Mortgage or the Environmental Indemnity Agreement and any rights of Lender
hereunder or thereunder.

Section
11.05.  Binding
Effect; Time of the Essence.  This Agreement shall inure to the benefit of
and shall be binding upon Lender, Borrower and their respective successors and
assigns.  Time is of the essence.

Section
11.06.  Severability.  In the event any
provision of this Agreement shall be held invalid or unenforceable by any court
of competent jurisdiction, such holding shall not invalidate or render
unenforceable any other provision hereof.

Section
11.07.  Amendments.  To the extent
permitted by law, the terms of this Agreement shall not be waived, altered,
modified, supplemented or amended in any manner whatsoever except by written
instrument signed by the parties hereto, and then such waiver, 

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consent, modification or
change shall be effective only in the specific instance and for the specific
purpose given.

Section
11.08.  Execution
in Counterparts.  This Agreement may be executed in several counterparts,
each of which shall be an original and all of which shall constitute one and
the same instrument, and any of the parties hereto may execute this Agreement
by signing any such counterpart, provided that only the original marked “Original:
1 of 2” on the execution page thereof shall constitute chattel paper under the
UCC.

Section
11.09.  Applicable
Law. 
This Agreement shall be governed by and construed in accordance with the
laws of the State of Hawaii.

Section
11.10.  Captions.  The captions or headings
in this Agreement are for convenience only and in no way define, limit or
describe the scope or intent of any provisions or sections of this Agreement.

Section
11.11.  Entire
Agreement.  This Agreement, the Mortgage, the
Environmental Indemnity Agreement and the exhibits hereto and thereto
constitute the entire agreement among Lender and Borrower.  There are no understandings, agreements,
representations or warranties, express or implied, not specified herein or in
such documents regarding this Agreement or the Property financed hereby.

Section
11.12.  Usury.  It is the intention
of the parties hereto to comply with any applicable usury laws; accordingly, it
is agreed that, notwithstanding any provisions to the contrary in this
Agreement, in no event shall this Agreement require the payment or permit the
collection of interest or any amount in the nature of interest or fees in
excess of the maximum permitted by applicable law.

Section
11.13.  Waiver
of Jury Trial.   to the extent permitted by applicable law,
lender and borrower hereby waive their respective rights to a jury trial of any
claim or cause of action based upon or arising out of, directly or indirectly,
this agreement, any of the related documents, any dealings between lender and
borrower relating to the subject matter of the transactions contemplated by
this agreement or any related transactions, and/or the relationship that is
being established between lender and borrower. 
the scope of this waiver is intended to be all encompassing of any and
all disputes that may be filed in any court (including, without limitation,
contract claims, tort claims, breach of duty claims and all other common law
and statutory claims).  this waiver is
irrevocable, meaning that it may not be modified either orally or in writing,
and this waiver shall apply to any subsequent amendments, renewals, supplements
or modifications to this agreement, any related documents, or to any other
documents or agreements relating to the transactions contemplated by this
agreement or any related transactions. 
in the

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event
of litigation, this agreement may be filed as a written consent to a trial by
the court.

IN
WITNESS WHEREOF, the parties hereto have executed this Agreement in their
respective corporate names by their duly authorized officers, all as of the
date first written above.

	
  Lender:

  	
  BANK OF HAWAII

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
      /S/ LISA C. WONG

  	
   

  
	
   

  	
  Title:

  	
    Vice President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Borrower:

  	
  MAUI LAND & PINEAPPLE COMPANY, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
      /S/ FRED W. RICKERT

  	
   

  
	
   

  	
  Title:

  	
    Vice President/Treasurer

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
      /S/ ADELE H. SUMIDA

  	
   

  
	
   

  	
  Title:

  	
    Controller & Secretary

  	
   

  

 

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