Document:

EXHIBIT 10.34

 

INVERSIONES TURISTICAS GAMING UNLIMITED S.A. 

PURCHASE OPTION AGREEMENT

 

by and between

 

H y H Investments, S.A.

and/or Assigns

 

as SELLER

 

and

 

Elite Data Services, Inc.

 

as BUYER

 

THIS OPTION AGREEMENT ("Agreement") made and entered into this 30th day of November, 2014 between H y H Investments, Sociedad Anonima (hereafter the “Seller”) and Elite Data Services Inc. (hereafter the “Buyer”) hereby replaces the Purchase and Sale Agreement entered November 12, 2014. The purpose of this Option Agreement is for the mutual benefit of both the Seller and Buyer:

 

WITNESSETH:

 

WHEREAS, Seller is the legal owner of Inversiones Turisticas Gaming Unlimited S.A., (hereafter “ITGU”) a Honduras corporation, in whose sole assets consist of a license to operate five casino tables and one hundred and fifty slot machines on Roatan, a bay island of Honduras.

 

WHEREAS, Buyer desires to procure an option to acquire ITGU upon the terms and provisions as hereinafter set forth;

 

NOW, THEREFORE, for good and valuable consideration the receipt and sufficiency of which is hereby acknowledged by the parties hereto and for the mutual covenants contained herein, Seller and Buyer hereby agree as follows:

 

	
1.

	
Definitions. For the purposes of this Agreement, the following terms shall have the following meanings:

 

	 	
(a)

	
"Execution Date" shall mean the day upon which the last party to this Agreement shall duly execute this Agreement;

	 	
 

	 
	 	
(b)

	
"Option Fee" shall mean the total sum of a down payment of One Hundred Thousand Dollars ($100,000.00) plus all closings costs, payable as set forth below;

	 	
 

	 
	 	
(c)

	
"Option Term" shall mean that period of time commencing on the Execution Date and ending on or before January 31, 2015;

	 	
 

	 
	 	
(d)

	
"Option Exercise Date" shall mean that date, within the Option Term, upon which the Buyer shall send its written notice to Seller exercising its Option to Purchase;

	 	
 

	 
	 	
(e)

	
"Closing Date" shall mean the last day of the closing term or such other date during the closing term

 

	
2.

	
Grant of Option. For and in consideration of the Option Fee payable to Seller as set forth herein, Seller does hereby grant to Buyer the exclusive right and Option ("Option") to purchase ITGU upon the terms and conditions as set forth herein.

	
 

	 
	
3.

	
Payment of Option Fee. Buyer agrees to pay the Seller a down payment of One Hundred Thousand Dollars by Fifty Thousand (50,000) Shares of the Company’s [Symbol: DEAC] restricted stock valued at $2.00 per share.

	
 

	 
	
4.

	
Exercise of Option. Buyer may exercise its exclusive right to acquire ITGU pursuant to the Option, at any time during the Option Term, by giving written notice thereof to Seller. As provided for above, the date of sending of said notice shall be the Option Exercise Date. In the event the Buyer does not exercise its exclusive right to purchase ITGU granted by the Option during the Option Term, Seller shall be entitled to retain the Option Fee, and this agreement shall become absolutely null and void and neither party hereto shall have any other liability, obligation or duty herein under or pursuant to this Agreement.

 

	 
	
1

	

 

	
5.

	
Consents and Approvals. All necessary government filings and approvals relating to the transactions contemplated by this Agreement and the Contract, and all consents and approvals of third parties necessary for the consummation of the transactions contemplated by this Agreement and the Contract, shall have been obtained.

	
 

	 
	
6.

	
Purchase and Sale Agreement. In the event that the Buyer exercises its exclusive Option as provided for in the preceding paragraph, Seller agrees to sell and Buyer agrees to acquire ITGU’s corporation stock and both parties agree to execute a contract for such acquisition in accordance with the following terms and conditions:

 

	 	
a)

	
Purchase Price. The purchase price for ITGU shall be the sum of Ten Million Dollars ($10,000,000.00) due and payable as follows: the Buyer shall make a cash payment of Two Million Dollars ($2,000,000.00) on or before thirty days from the option exercise date with the remaining balance of Eight Million Dollars ($8,000,000.00) payable as follows: Two Million Dollars ($2,000,000.00) due January 1, 2016, Two Million Dollars ($2,000,000.00) due January 1, 2017, Two Million Dollars ($2,000,000.00) due January 1, 2018, and One Million Nine Hundred Dollars ($1,900,000.00) due on January 1, 2019, payable in either cash or the Buyer’s stock [Symbol: DEAC] at no higher than $4.00 per share and no lower than the share value on December 20th of each prior year. It is the sole discretion of the Seller to receive cash or stock, unless specifically objected to by the Company’s Board of Directors for each annual payment. If the Buyer exercises its option, the Buyer shall receive a credit for the option fee of One Hundred Thousand Dollars ($100,000.00) toward the purchase price as reflected in the January 1, 2019 payment.

	 	
 

	 
	 	
b)

	
Prepayment. Prepayment of this Agreement will not result in any penalties or any liability to Buyer. Buyer may pay the purchase price by cash and Seller Agrees to deduct such payments of the entire purchase price.

	 	
 

	 
	 	
c)

	
Acceleration. This Agreement provides that if the Buyer disposes or agrees to dispose of ITGU, the full balance will immediately become due and payable at the Seller’s option. The Agreement further provides that if the Buyer fails to make any annual payments to the Seller before February 1 of each year, the full balance will immediately become due and payable at the Seller’s option.

	 	
 

	 
	 	
d)

	
Closing Date. The closing date shall on or before January 31, 2015;

	 	
 

	 
	 	
e)

	
Closing Costs. The Buyer(s) agrees to pay all closing costs and stamp taxes at the time of transfer of possession, and Buyer(s) further agrees to reimburse Seller(s) for all taxes on the above described corporation stock and casino license from the execution date, as such becomes due.

	 	
 

	 
	 	
f)

	
Date of Possession. The date of possession shall be the date in which the first Two Million ($2,000,000) cash payment has been delivered to Seller or its designated agent.

	 	
 

	 
	 	
g)

	
Default by Buyer; Remedies of Seller. In the event Buyer, after exercising the Option, fails to proceed with the closing of the purchase of ITGU pursuant to the terms and provisions as contained herein and/or under this Agreement, Seller shall be entitled to retain the Option Fee as liquidated damages and shall have no further recourse against Buyer;

	 	
 

	 
	 	
h)

	
Default by Seller; Remedies of Buyer. In the event Seller fails to close the acquisition of ITGU pursuant to the terms and provisions of this Agreement, Buyer shall be entitled to either sue for specific performance or sue for money damages.

 

	
7.

	
Compliance an Law with Regulatory Bodies. This Agreement must be in compliance with all applicable Federal and state laws and regulations including, without limitation, compliance with applicable Honduras laws and with the rules of the Securities and Exchange Commission. Any share certificate issued to evidence shares for which an option is exercised may bear legends and statements, and be subject to such restrictions, as the Company will deem advisable to assure compliance with Federal and state laws and regulations. Both Buyer and Seller agree that these regulatory changes may incur modification of the Agreement and that such terms shall be requisitely modified as immaterial unless such modification changes the provisions as specified in this paragraph.

	
 

	 
	
8.

	
Option Renewal and Extension. This option shall be renewable and/or extended upon the exclusive consent of the Seller and may be subject to additional option requirements.

	
 

	 
	
9.

	
Indemnification. The Seller represent and warrant that the Buyer will not incur any liability of any kind or nature whatsoever in connection with the consummation of this Agreement to any third party, and the Seller agrees to indemnify, defend and hold harmless the Buyers, its officers, directors, stockholders, lenders and affiliates from any claims by or liabilities to such third parties, including any legal or other expenses incurred in connection with the defense of such claims.

	
 

	 
	
10.

	
Severability. If any provision of this Agreement should, for any reason, be held violative of any applicable law, and so much of this Agreement, be held unenforceable, then the invalidity of such a specific provision in this Agreement shall not be held to invalidate any other provision in this Agreement, which other provisions shall remain in full force and effect unless removal of the invalid provisions destroys the legitimate purposes of this Agreement, in which event this Agreement shall be cancelled.

 

	 
	
2

	

 

	
11.

	
MISCELLANEOUS.

 

	 	
(a)

	
Execution by Both Parties. This Agreement shall not become effective and binding until fully executed by both Buyer and Seller.

	 	
 

	 
	 	
(b)

	
Notice. Any and all notice under the terms and provisions of this Agreement shall be in writing with a copy of same to the Buyer and Seller.

	 	
 

	 
	 	
(c)

	
Governing Law. This Agreement shall be governed by and construed in accordance with the laws of Honduras, C.A.

	 	
 

	 
	 	
(d)

	
Successors and Assigns. This Agreement shall apply to, inure to the benefit of and be binding upon and enforceable against the parties hereto and their respective heirs, successors, trustees in bankruptcy, administrators, executors and successors in title of any form whatsoever of the Seller and of the Buyer.

	 	
 

	 
	 	
(e)

	
Time. Time is and shall be of the essence with all terms and conditions of this Agreement.

	 	
 

	 
	 	
(f)

	
Signatures. Signatures via facsimile shall have the same validity as original signatures. E-mail acceptances, offers, counter-offers, etc., shall have the same validity as if they were a signed original document and shall be incorporated into and form part of this Agreement.

	 	
 

	 
	 	
(g)

	
Condition of Buyer. The Seller agrees to deliver to the Buyer clear title to the corporation stock and casino license clear of all defects, liens, and encumbrances, restrictions or pending litigation upon completion of all terms and conditions of this Agreement.

	 	
 

	 
	 	
(h)

	
Condition of Seller. Neither the Seller, employees nor agents have made any warranties or representations of any kind relating to ITGU and Buyer is responsible to conduct his own due diligence in connection with the Agreement. Buyer understands that additional approvals will have to be granted to transfer ITGU to the Buyer’s proposed casino location and that Buyer must comply with all Honduras laws and regulations when in so doing. Seller shall reasonably assist with the transfer of such and Buyer shall be responsible for its execution.

	 	
 

	 
	 	
(i)

	
Headings. The headings inserted at the beginning of each paragraph and/or subparagraph are for convenience of reference only and shall not limit or otherwise affect or be used in the construction of any terms or provisions hereof.

	 	
 

	 
	 	
(j)

	
Cost of this Agreement. Any cost and/or fees incurred by the Buyer or Seller in executing this Agreement shall be borne by the respective party incurring such cost and/or fee.

	 	
 

	 
	 	
(k)

	
Entire Agreement. This Agreement contains all of the terms, promises, covenants, conditions and representations made or entered into by or between Seller and Buyer and supersedes all prior discussions and agreements whether written or oral between Seller and Buyer with respect to the Option and all other matters contained herein and constitutes the sole and entire agreement between Seller and Buyer with respect thereto. This Agreement may not be modified or amended unless such amendment is set forth in writing and executed by both Seller and Buyer with the formalities hereof.

 

	 
	
3

	

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed under proper authority:

 

 

	
By:

	
/s/ Steven Frye 

	 
	 	
Steven Frye, CEO & President

	 

 

	
By:

	
/s/ W.P. Stevenson 

	 
	 	
H y H Investments, Sociedad Anonima

	 

 

 

4Exh 10.1

Hawaii
Loan No. 340166    PROMISSORY NOTE

$92,000,000.00                            As of November 20, 2014
(Dated)

For value received, the undersigned, herein called "Borrower," promises to pay to the order of THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY, a Wisconsin corporation, who, together with any subsequent holder of this note (hereinafter, the "Note"), is hereinafter referred to as "Lender", at 720 E. Wisconsin Avenue, Milwaukee, WI 53202 or at such other place as Lender shall designate in writing, in coin or currency which, at the time or times of payment, is legal tender for public and private debts in the United States, the principal sum of NINETY TWO MILLION DOLLARS or so much thereof as shall have been advanced from time to time plus interest on the outstanding principal balance at the rate and payable as follows:

Interest shall accrue from the date of advance until maturity at the rate of four and fifteen hundredths percent (4.15%) per annum (the "Interest Rate").
Accrued interest only on the amount advanced shall be paid on the eighth day of the month following the date of advance ("Amortization Period Commencement Date").  On the eighth day of the following month and on the eighth day of each month thereafter until maturity, installments of principal and interest shall be paid in the amount of $447,216.00.
Interest for each full or partial month the principal balance of this Note is outstanding, will be calculated based on the actual number of days the principal balance of this Note is outstanding in the month and the actual number of days in the calendar year.
Payments shall be made directly to Lender by electronic transfer of funds using the Automated Clearing House System.  To effectuate these payments, Borrower, at or prior to the date hereof, shall execute an ACH form provided by Lender.  All installments shall be applied first in payment of interest, calculated monthly on the unpaid principal balance, and the remainder of each installment shall be applied in payment of principal.  The entire unpaid principal balance plus accrued interest thereon shall be due and payable on December 8, 2024 (the "Maturity Date").

Provided Lender has no further obligation to advance principal under this Note to Borrower, beginning January 8, 2015 Borrower shall have the right, upon not less than ten (10) Business Days prior written notice, to prepay (on a Business Day only) this Note in full with a Prepayment Fee (as hereinafter defined); provided, however, that such notice must contain the anticipated date of prepayment.  If Borrower fails to prepay on, or 

1

within five (5) Business Days before or after such anticipated date of prepayment, such failure shall be deemed to be a withdrawal of Borrower's notice of prepayment, and Borrower shall be required to submit another written notice of prepayment pursuant to the terms and conditions set forth in this Note if Borrower thereafter elects to prepay this Note.  This Prepayment Fee represents consideration to Lender for loss of yield and reinvestment costs and shall also be payable whenever prepayment occurs as a result of the application of Condemnation Proceeds as defined in the Lien Instrument (as hereinafter defined).  The Prepayment Fee shall be the greater of Yield Maintenance or one percent (1%) of the outstanding principal balance of this Note (the "Prepayment Fee").  The Prepayment Fee shall be calculated as of the Prepayment Fee Determination Date.

"Business Day" means any day other than a Saturday, a Sunday or a day on which:  (i) Lender is closed for business or (ii) the Federal Reserve Bank of New York is closed for business.

"Yield Maintenance" means the amount, if any, by which

(i)    the present value on the Prepayment Fee Determination Date of the Then Remaining Payments determined by using the Periodic Discount Rate; exceeds

(ii)    the outstanding principal balance of this Note (exclusive of all accrued interest) on the Prepayment Fee Determination Date.

"Prepayment Fee Determination Date" means

		
	(A)
	In the case of a voluntary prepayment, the date of the voluntary prepayment; 

		
	(B)
	In the case of a prepayment following an acceleration of the Indebtedness (as hereinafter defined), the date of such acceleration; 

		
	(C)
	In the case of a prepayment due to a condemnation: 

		
	(1)
	involving the filing of a claim for the Prepayment Fee with the condemning authority or court of competent jurisdiction, the date of such filing; or

		
	(2)
	not involving the filing of a claim for the Prepayment Fee with the condemning authority or court of competent jurisdiction, the date of such prepayment;

2

		
	(D)
	In the case of Borrower becoming a debtor in a bankruptcy or other insolvency proceeding, the date of Lender's filing of its proof of claim in such proceeding.

"Then Remaining Payments" means payments in such amounts and at such times as would have been payable subsequent to the Prepayment Fee Determination Date (assuming no prepayment) in accordance with the terms of this Note.

"Periodic Discount Rate" means the rate which, when compounded monthly, equals the Treasury Rate. 

"Treasury Rate" means: 

		
	(A)
	The linearly interpolated yield, compounded semi-annually, of the two (2) most recently auctioned (on the run) non-callable U.S. Treasury bonds, notes or bills (other than inflation indexed (i.e., inflation protected) securities) issued by the United States Treasury having maturity dates equivalent or most nearly equivalent to the Average Life Date as reported (on-line or otherwise) by The Wall Street Journal one (1) Business Day prior to the Prepayment Fee Determination Date; or 

		
	(B)
	If the yields from (A) above are not available, the linearly interpolated yield, compounded semi-annually, of the two (2) Treasury Constant Maturity Series (other than inflation indexed (i.e., inflation protected) securities) having constant maturity dates equivalent or most nearly equivalent to the Average Life Date as reported, for the latest day for which such yields shall have been so reported, as of one (1) Business Day preceding the Prepayment Fee Determination Date, in Federal Reserve Statistical Release H.15 (or comparable successor publication); or 

		
	(C)
	If the yields from (A) and (B) above are not available, a rate comparable to what would have been calculated under clause (A) or (B) above, as reasonably determined by Lender.

To the extent that the source used in (A), (B) or (C) above updates treasury yield information during the day, Lender shall rely on the treasury yields reported prior to 12:00 Noon (Central Time) one (1) Business Day prior to the Prepayment Fee Determination Date.

"Average Life Date" means the date which is the Remaining Average Life from the Prepayment Fee Determination Date.

"Remaining Average Life" means the number of years (calculated to the nearest day) obtained by dividing:

3

(A)    the sum of the products obtained by multiplying

(1)    the principal component of each Then Remaining Payment;

by

(2)    the number of years (calculated to the nearest day) that will elapse between the Prepayment Fee Determination Date and the scheduled due date of such Then Remaining Payment;

by

(B)    The outstanding principal balance of this Note (exclusive of all accrued interest) on the Prepayment Fee Determination Date.

Upon the occurrence of an Event of Default (as defined in the Lien Instrument) followed by the acceleration of the whole indebtedness evidenced by this Note, the payment of such indebtedness will constitute an evasion of the prepayment terms hereunder and be deemed to be a voluntary prepayment hereof and such payment will, therefore, to the extent not prohibited by law, include the Prepayment Fee required under the prepayment in full right recited above.

In the event of a partial prepayment of this Note for any reason contemplated in the Loan Documents (as defined in the Lien Instrument), the Prepayment Fee, if required, shall be an amount equal to the Prepayment Fee if this Note were prepaid in full, multiplied by a fraction, the numerator of which shall be the principal amount prepaid and the denominator of which shall be the outstanding principal balance of this Note immediately preceding the Prepayment Fee Determination Date with respect to such partial prepayment.

Notwithstanding the above and provided Borrower is not in default under any provision contained in the Loan Documents, this Note may be prepaid in full at any time, without a prepayment fee, during the last sixty (60) days of the term of this Note.

The prepayment of this Note as herein provided, together with the Prepayment Fee (if required as herein provided) if received by Lender prior to 12:00 p.m. Central Time on a Business Day, shall be credited on that Business Day, or, if received by Lender at or after 12:00 p.m. Central Time on a Business Day, shall, at Lender's option, be credited on the next Business Day.

Borrower acknowledges and agrees that the Interest Rate hereunder shall be increased if certain financial statements and other reports and evidence of insurance 

4

acceptable to Lender are not furnished to Lender, all as described in more detail in the provisions of the Lien Instrument entitled "Financial Statements" and "Insurance". 

This Note is secured by certain property (the "Property") in the County of Honolulu, State of Hawaii described in a Mortgage and Security Agreement (the "Lien Instrument") of even date herewith executed by ABP PEARL HIGHLANDS LLC, a Hawaii limited liability company, to THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY.

Upon the occurrence of an Event of Default (as defined in the Lien Instrument), the whole unpaid principal hereof and accrued interest shall, at the option of Lender, to be exercised at any time thereafter, become due and payable at once without notice, notice of the exercise of, and the intent to exercise, such option being hereby expressly waived.

All parties at any time liable, whether primarily or secondarily, for payment of indebtedness evidenced hereby, for themselves, their heirs, legal representatives, successors and assigns, respectively, expressly waive presentment for payment, notice of dishonor, protest, notice of protest, and diligence in collection; consent to the extension by Lender of the time of said payments or any part thereof; further consent that the real or collateral security or any part thereof may be released by Lender, without in any way modifying, altering, releasing, affecting, or limiting their respective liability or the lien of the Lien Instrument; and agree to pay reasonable attorneys' fees and expenses of collection in case this Note is placed in the hands of an attorney for collection or suit is brought hereon and any attorneys' fees and expenses incurred by Lender to enforce or preserve its rights under any of the Loan Documents in any bankruptcy or insolvency proceeding.

All amounts due Lender including principal and, to the extent permitted by applicable law, interest not paid when due (without regard to any notice and/or cure provisions contained in any of the Loan Documents), including principal becoming due by reason of acceleration by Lender of the entire unpaid balance of this Note, shall bear interest from the due date thereof until paid at the Default Rate.  "Default Rate" means the lower of a rate equal to the interest rate in effect at the time of the default as herein provided plus 5% per annum or the maximum rate permitted by law.

No provision of this Note shall require the payment or permit the collection of interest, including any fees paid which are construed under applicable law to be interest, in excess of the maximum permitted by law.  If any such excess interest is collected or herein provided for, or shall be adjudicated to have been collected or be so provided for herein, the provisions of this paragraph shall govern, and Borrower shall not be obligated to pay the amount of such interest to the extent that it is in excess of the amount permitted by law.  Any such excess collected shall, at the option of Lender, unless otherwise required by applicable law, be immediately refunded to Borrower or credited on the 

5

principal of this Note immediately upon Lender's awareness of the collection of such excess.

Notwithstanding any provision contained herein or in the Lien Instrument to the contrary, if Lender shall take action to enforce the collection of the indebtedness evidenced hereby or secured by the Lien Instrument (collectively, the "Indebtedness"), its recourse shall, except as provided below, be limited to the Property or the proceeds from the sale of the Property and the proceeds realized by Lender in exercising its rights and remedies (i) under the Absolute Assignment (as defined in the Lien Instrument), (ii) under the Guarantee of Recourse Obligations of even date herewith executed by A & B Properties, Inc., a Hawaii corporation, for the benefit of Lender and under other separate guarantees, if any, (iii) under any of the other Loan Documents (as defined in the Lien Instrument) and (iv) in any other collateral securing the Indebtedness.  If such proceeds are insufficient to pay the Indebtedness, Lender will never institute any action, suit, claim or demand in law or in equity against Borrower for or on account of such deficiency; provided, however, that the provisions contained in this paragraph

(i)    shall not in any way affect or impair the validity or enforceability of the Indebtedness or the Lien Instrument; and

(ii)    shall not prevent Lender from seeking and obtaining a judgment against Borrower, and Borrower shall be personally liable, for the Recourse Obligations.

"Recourse Obligations" means

(a) rents and other income from the Property received by Borrower or those acting on behalf of Borrower from and after the date of any default under the Loan Documents remaining uncured prior to the Conveyance Date (as hereinafter defined), which rents and other income have not been applied to the payment of principal and interest on this Note or to reasonable operating expenses of the Property;

(b) amounts necessary to repair any damage to the Property caused by the intentional acts or omissions of Borrower or those acting on behalf of Borrower;

(c) insurance loss and Condemnation Proceeds (as defined in the Lien Instrument) released to Borrower but not applied in accordance with any agreement between Borrower and Lender as to their application;

(d) the amount of insurance loss proceeds which would have been available with respect to a casualty on the Property, but were not available due to the default by Borrower in carrying all insurance required by Lender;

6

(e) damages suffered by Lender as a result of fraud or misrepresentation in connection with the Indebtedness by Borrower or any other person or entity acting on behalf of Borrower;

(f) amounts in excess of any rents or other revenues collected by Lender from operation of the Property from and after acceleration of the Indebtedness until the Conveyance Date, which amounts are necessary to pay real estate taxes, special assessments and insurance premiums with respect to the Property (to the extent not previously deposited with Lender by Borrower pursuant to the provision of the Lien Instrument following the caption entitled "Deposits by Mortgagor"), and amounts required to fulfill Borrower's obligations as lessor under any leases of the Property, in each case, either paid by Lender and not reimbursed prior to, or remaining due or delinquent on the Conveyance Date;

(g) all security deposits under leases of the Property or any portion of the Property collected by Borrower, any agent of Borrower or any predecessor of Borrower, and not refunded to the tenants thereunder in accordance with their respective leases, applied in accordance with such leases or law or delivered to Lender, and all advance rents collected by Borrower, any agent of Borrower or any predecessor of Borrower and not applied in accordance with the leases of the Property or delivered to Lender;

(h) all outstanding amounts due under the Indebtedness, including principal, interest, and other charges if there shall be a violation of any of the provisions of the Lien Instrument following the caption entitled "Prohibition on Transfer/One-Time Transfer", and

(i) all outstanding amounts due under the Indebtedness, including principal, interest, and other charges if an action for partition of the Property, whether by sale or division or otherwise, is brought by ABP and A&B;

(j) reasonable attorneys' fees and expenses incurred to the extent suit is brought to collect any of the amounts described in subparagraphs (a) through (i) above.

"Conveyance Date" means (i) the later of (a) the date on which title vests in the purchaser at the foreclosure sale of the Property pursuant to the Lien Instrument or (b) the date on which Borrower's statutory right of redemption shall expire or be waived or (ii) the date of the conveyance of the Property to Lender in lieu of foreclosure.

Notwithstanding the foregoing, the personal liability of Borrower shall be limited to the assets of Borrower as opposed to the assets of Borrower's beneficial owners.  A negative capital account of any member in Borrower shall not be deemed an asset of Borrower.  If such proceeds are insufficient to pay the Indebtedness, Lender will never 

7

institute any action, suit, claim or demand in law or in equity against the members of Borrower for or on account of such deficiency.
 
All notices, demands, requests and consents permitted or required under this Note shall be given in the manner prescribed in the Lien Instrument.

 (Signatures commence on next page)

8

This Note, the interpretation hereof and the rights, obligations, duties and liabilities hereunder shall be governed and controlled by the laws of the State of Hawaii.

ABP PEARL HIGHLANDS LLC, a Hawaii
limited liability company

By:    A & B Properties, Inc., a Hawaii
corporation, its manager

By:/s/ Charles W. Loomis            
Name:    Charles W. Loomis            
Its:    Vice-President            

By:/s/ Paul K. Ito                
Name:    Paul K. Ito                
Its:    Treasurer                

9

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