Document:

Exhibit 10.99

 

Execution Version

 

SEVENTH AMENDMENT

TO NOTE AND WARRANT PURCHASE AGREEMENT

 

THIS SEVENTH AMENDMENT TO NOTE AND WARRANT PURCHASE
AGREEMENT (this “Amendment”) is dated as of March 30, 2009 by and
among ISI Security Group, Inc., a Delaware corporation formerly known as
ISI Detention Contracting Group, Inc. (the “Company”), and William
Blair Mezzanine Capital Fund III, L.P., a Delaware limited partnership
(the “Purchaser”).

 

RECITALS:

 

WHEREAS, the
Company, the Purchaser and the Guarantors (as such term is defined in the
Purchase Agreement (as defined below)) (such Guarantors are parties to the
Purchase Agreement solely for the purposes of Section 8 thereof)
previously entered into that certain Note and Warrant Purchase Agreement, dated
as of October 22, 2004, as amended by that certain Omnibus First Amendment
to Note and Warrant Purchase Agreement and Warrant dated as of November 1,
2005, by that certain Omnibus Second Amendment to Note and Warrant Purchase
Agreement and Warrant, dated as of July 31, 2007, by that certain Third
Amendment to Note and Warrant Purchase Agreement, dated as of January 2,
2008, by that certain Fourth Amendment to Note and Warrant Purchase Agreement,
dated as of June 25, 2008, by that certain Fifth Amendment and Waiver to
Note and Warrant Purchase Agreement, dated as of November 13, 2008 and by
that certain Sixth Amendment to Note and Warrant Purchase Agreement, dated as
of January 8, 2009 (as further amended, restated, supplemented or
otherwise modified from time to time, the “Purchase Agreement”);

 

WHEREAS, the
Company has requested, and the Purchaser is willing to, amend the Purchase
Agreement, subject to the terms and conditions of this Amendment;

 

WHEREAS, this
Amendment shall constitute a Transaction Document, and these Recitals shall be
construed as part of this Amendment; and

 

WHEREAS,
capitalized terms used but not otherwise defined herein shall have the
respective meanings given to them in the Purchase Agreement.

 

NOW, THEREFORE, in
consideration of the above premises, the agreements contained herein and other
good and valuable consideration, the adequacy, sufficiency and receipt of which
are hereby acknowledged, the parties hereto agree as follows:

 

Section 1.               Amendment to the
Purchase Agreement.

 

(a)           Effective as of December 31,
2008, Section 1.1 of the Purchase Agreement is hereby amended by amending
and restating the following definitions in their entirety:

 

““Permitted
Indebtedness” means:

 

(a)           the Obligations;

 

(b)           the Senior Debt;

 

 

(c)           Indebtedness (other than
with regard to the Green Wing Lease as described in subpart (i) below) not to
exceed $600,000 in the aggregate at any time outstanding secured by purchase
money Liens or incurred with respect to Capital Leases;

 

(d)           Indebtedness identified
on the Indebtedness Schedule,

 

(e)           unsecured Indebtedness
to trade creditors incurred in the ordinary course of business;

 

(f)            Indebtedness secured
by Permitted Encumbrances;

 

(g)           operating lease
obligations, excluding real property leases, requiring payments not to exceed
$500,000 in the aggregate for the Company and its Subsidiaries during any
Fiscal Year of the Company;

 

(h)           operating lease
obligations solely with respect to real property leases requiring payments not
to exceed $750,000 in the aggregate for the Company and its Subsidiaries during
any Fiscal Year of the Company;

 

(i)            intercompany
Indebtedness; and

 

(j)            Indebtedness in
connection with the Green Wing Lease.”

 

(b)           Section 4.7(a) of
the Purchase Agreement is hereby amended and restated in its entirety to read
as follows:

 

“(a)         Maximum Capital
Expenditures.  (i) For the
fiscal quarters ending March 31, 2009, June 30, 2009 and September 30,
2009, the Company and its Subsidiaries, on a consolidated basis, shall not make
Capital Expenditures in excess of $330,000 per fiscal quarter; and (ii) for
the twelve (12) month period ending on December 31, 2009 and each twelve
(12) month period ending on the last day of each fiscal quarter thereafter, the
Company and its Subsidiaries, on a consolidated basis, shall not make Capital
Expenditures in excess of $2,000,000.”

 

Section 2.               Representations
and Warranties.  To induce the
Purchaser to enter into this Amendment, the Company represents and warrants
that:

 

(a)           Representations,
Warranties; No Default.  The
warranties and representations of the Company contained in the Transaction
Documents shall be true and correct as of the effective date hereof, with the
same effect as though made on such date, except to the extent that such
warranties and representations expressly relate to an earlier date.  No Event of Default or Potential Event of
Default has occurred and is continuing under the Purchase Agreement.

 

2

 

(b)           Organizational
Authority.  (i) The execution,
delivery and performance by the Company of this Amendment are within its
corporate powers and have been duly authorized by all necessary corporate
action, (ii) this Amendment is the legal, valid and binding obligation of
the Company enforceable in accordance with its terms and (iii) neither the
execution and delivery nor the performance by the Company of this Amendment (1) violates
any law or regulation, or any other decree of any governmental body, (2) conflicts
with or results in the breach or termination of, constitutes a default under or
accelerates any performance required by, any indenture, mortgage, deed of
trust, lease, agreement or other instrument to which such Person is a party or
by which such Person or any of its property is bound, (3) results in the
creation or imposition of any Lien, upon any of the Collateral (as defined in
the Senior Loan Documents) other than Liens in favor of the Senior Lender,
(4) violates or conflicts with the certificate of incorporation or bylaws
of such Person, or (5) requires the consent, approval or authorization of,
or declaration or filing with, any other Person, except for those already duly
obtained.

 

Section 3.               Conditions
Precedent.  The effectiveness of this
Amendment is subject to the following conditions precedent:

 

(a)           No Default.  No Potential Event of Default or Event of
Default under the Purchase Agreement shall have occurred and be continuing.

 

(b)           Warranties and
Representations.  The warranties and
representations of the Company contained in the Transaction Documents shall be
true and correct as of the effective date hereof, with the same effect as
though made on such date, except to the extent that such warranties and
representations expressly relate to an earlier date.

 

(c)           Execution and
Delivery.  The Company and the
Purchaser shall have executed and delivered this Amendment, that certain
Allonge to Amended and Restated Senior Subordinated Promissory Note A dated as
of the date hereof between the Company and the Purchaser and that certain
Allonge to Third Amended and Restated Senior Subordinated Promissory Note dated
as of the date hereof between the Company and the Purchaser.

 

(d)           Other.  The Company shall have executed and delivered
to the Purchaser such other documents and instruments that the Purchaser may
reasonably request to effect the purposes of this Amendment, including, without
limitation, a corresponding amendment to the Loan and Security Agreement of
Senior Lender.

 

Section 4.               Reference and
Effect on Operative Documents.

 

(a)           Ratification.  Except as specifically amended above, the
Purchase Agreement and the other Transaction Documents, as amended, shall
remain in full force and effect. 
Notwithstanding anything contained herein, the terms of this Agreement
are not intended to and do not effect a novation of the Purchase Agreement or
any other Transaction Document.  The
Company hereby ratifies and reaffirms each of the terms and conditions of the
Transaction Documents to which it is a party and all of its obligations thereunder.

 

(b)           References.  Upon the effectiveness of this Amendment,
each reference in (i) the Purchase Agreement to “this Agreement,” “hereunder,”
“hereof,” or words of similar import, and 

 

3

 

(ii) any
other Transaction Document to “the Agreement” or “the Purchase Agreement”
shall, in each case and except as otherwise specifically stated therein, mean
and be a reference to the Purchase Agreement or such other Transaction
Documents, as applicable, as amended hereby.

 

Section 5.               Miscellaneous.

 

(a)           Additional Fee and
Expenses.  Pursuant to Section 9.1
of the Purchase Agreement, the Company further agrees to pay on demand all
reasonable legal fees and out-of-pocket costs and expenses of or incurred by
the Purchaser in connection with the instruments and agreements contemplated
hereby.  The failure of the Company to
comply with the foregoing requirements shall constitute an immediate Event of
Default under the Purchase Agreement.

 

(b)           Binding Effect.  This Amendment shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors and assigns.

 

(c)           Counterparts.  This Amendment may be executed in one or more
counterparts, each of which when so executed and delivered, shall be an
original, and all of which together shall constitute one and the same
instrument.

 

(d)           Governing Law.  This Amendment shall be governed by the laws
of the State of Illinois, without giving effect to its conflict of laws
principles.

 

[Remainder of page intentionally left
blank.]

 

4

 

Signature Page to
Seventh Amendment and

Waiver to Note and Warrant Purchase Agreement

 

 

	
  COMPANY:

  	
  PURCHASER:

  
	
   

  	
   

  
	
   

  	
   

  
	
  ISI
  SECURITY GROUP, INC.,

  a Delaware corporation, formerly known

  as ISI Detention Contracting Group, Inc.

  	
  WILLIAM
  BLAIR MEZZANINE

  CAPITAL FUND III, L.P.

  
	
   

  	
  By:

  	
  William Blair Mezzanine
  Capital

  
	
   

  	
   

  	
  Partners III, L.L.C.,
  its General Partner

  
	
  By:

  	
   /s/ Donald F. Neville

  	
   

  	
   

  	
   

  
	
  Name: 

  	
  Donald F. Neville

  	
   

  	
   

  
	
  Its: 

  	
  CFO

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Marc Walfish

  
	
   

  	
  Name: 

  	
  Marc Walfish

  
	
   

  	
  Its:

  	
  Managing DirectorExhibit 10.1

 

PLANTATION
GOLF COURSE LEASE

 

THIS LEASE (the “Lease”) is made and entered into effective March 27,
2009 (the (Effective Date”), by and between TY
MANAGEMENT CORPORATION, a Hawaii corporation, whose address is
c/o Carlsmith Ball LLP, One Maui Plaza, Suite 400, Wailuku, Hawaii
96793-1086 (“Lessor”), and KAPALUA PLANTATION GOLF
LLC, a Hawaii limited liability company, whose address is P.O. Box 187,
Kahului, Hawaii  96733-6687, (“Lessee”);

 

In consideration of the agreements hereinafter set forth, Lessor and
Lessee do hereby agree as follows:

 

1.                                       Premises.  Lessor does hereby demise and let unto
Lessee, and Lessee does hereby lease and hire from Lessor, that certain real
property more particularly described on Exhibit A attached hereto
and incorporated herein by reference commonly known as the “Kapalua Plantation
Golf Course”, together with all buildings and other improvements located
thereon, and any rights, easements or appurtenances belonging to the same or
held and enjoyed in connection therewith, subject, however, to the encumbrances
set forth in said Exhibit A (hereinafter collectively called the “Premises”
or the “Golf Course”).

 

2.                                       Term.  This Lease shall be for a term of two (2) years
(the “Term”) commencing on March 27, 2009 (the “Commencement Date”) and
ending on March 31, 2011 (the “Termination Date”), unless such term shall
be sooner terminated as hereinafter provided.

 

3.                                       Quiet
Enjoyment. 
Upon payment by Lessee of the rent, additional payments and all other
charges to be borne by Lessee as set forth in this Lease, and upon Lessee’s
observance and performance of all of the terms, covenants and conditions
hereinafter contained, Lessee shall peaceably and quietly enjoy the Premises
for the term hereof without hindrance or interruption by Lessor or any other
persons lawfully claiming by, through or under Lessor, except as expressly
provided in this Lease.

 

4.                                       Rent.  Lessee shall pay to Lessor at its address set
forth above in legal tender of the United States of America, without any
deduction, notice or demand except as otherwise set forth herein, an annual net
rent of FOUR MILLION AND NO/100 DOLLARS ($4,000,000.00) in monthly installments
of $333,333.00 each payable in advance on the first (1st) day of each month
during the Term prorated for partial months. 
If the monthly rent payment is not received prior to the tenth (10th) of
any month, or any other charge or additional rent due hereunder shall not be
received when due, then a late fee in the amount of five percent (5%) of the
amount due which shall be due Lessor from Lessee within ten (10) days of
written demand therefore.

 

5.                                       Additional
Payments and Expenses To Be Borne By Lessee.  In addition to the monthly rent set forth
herein, Lessee shall pay the following:

 

a.                                       Real
Property Taxes and Assessments.  Lessee will pay directly to the taxing
authority before delinquency, all real property taxes and assessments of every
description assessed against the Premises that Lessor or Lessee in respect
thereof may be assessed or become liable, whether assessed to or payable by
Lessor or Lessee, during the term of this Lease, pro rated for periods prior to
the Commencement Date and as of the Termination Date.

 

 

b.                                      Utility
Charges and Service. 
Lessee will pay, before delinquency, all charges for potable water,
irrigation water, gas, sewer service, refuse collection, electricity,
telephone, cable television, and other utility and similar charges arising from
the use of the Premises.  Lessee
acknowledges that sewage treatment for the clubhouse is provided through a
sewage treatment plant (“STP”) located on a portion of the Premises and that
Lessee shall be responsible for all costs of operating, maintaining and
repairing the STP during the term of this Lease.  Unless caused by the gross negligence or willful
misconduct of Lessor, Lessor shall not be responsible for any interruption or
failure in the supply of any utilities to the Premises.

 

c.                                       Tax
on Lease Payments. 
In addition to the rents reserved above, Lessee shall pay to Lessor, as
additional rent, together with each payment of rent or any other payment
required hereunder which is subject to the State of Hawaii general excise tax
on gross income, as it may be amended from time to time, or any successor or
similar tax, an amount which, when added to such rental or other payment
(currently 4.166% of each such payment), shall yield to the Lessor, after
deduction of all such tax payable by Lessor with respect to all such rent and
other payments, a net amount equal to that which Lessor would have realized
from such payments had no such tax been imposed.

 

d.                                      Other
Taxes.  Further Lessee
shall be responsible for and shall pay before delinquency all municipal, state
or county taxes assessed during the term of this Lease against it by reason of
the conduct of its business in the Premises or with respect to personal
property of any kind, owned by or placed in, upon or about the Premises by
and/or at the expense of Lessee

 

e.                                       Security
Deposit.  Lessee,
contemporaneously with the execution of this Lease, has deposited with Lessor
the sum of $333,333.00 to be held by Lessor as security for the faithful
performance by Lessee of all of the terms, covenants and conditions of this
Lease by Lessee to be kept and performed during the term hereof.  The security deposit may be commingled by
Lessor with other funds of the Lessor and shall bear no interest.  If, at any time during the term of this
Lease, any of the rent herein reserved shall be overdue and unpaid beyond
applicable cure periods, or any other sum payable by Lessee to Lessor hereunder
shall be overdue and unpaid beyond applicable cure periods, then Lessor may, at
the option of Lessor (but Lessor shall not be required to) appropriate and
apply any portion of said deposit to the payment of any such overdue rent or other
sum.  In the event of the failure of
Lessee to keep and perform any of the terms, covenants and conditions of this
Lease to be kept and performed by Lessee beyond applicable cure periods, then
at the option of Lessor said Lessor may appropriate and apply said entire
deposit, or so much thereof as may be necessary, to compensate Lessor for all
loss or damage sustained or suffered by Lessor due to such breach on the part
of Lessee.  Should the entire deposit, or
any portion thereof, be appropriated and applied by Lessor for the payment of
overdue rent or other sums due and payable to Lessor by Lessee hereunder, then
Lessee shall, upon the written demand of Lessee’s, forthwith remit to Lessor a
sufficient amount in cash to restore said security to the amount held by Lessor
prior to such appropriation and application and Lessee’s failure to do so
within ten (10) days after receipt of such demand shall constitute a
default hereunder entitling Lessor to immediately invoke the remedies set forth
in paragraph 35, including the termination of this Lease.  Should Lessee comply with all of said terms,
covenants and conditions and promptly pay all of the rentals herein provided
for as the same fall due, and all other sums payable by Lessee to Lessor
hereunder, the said deposit shall be returned in full to Lessee after Lessee
shall have vacated the Premises at the end of the term of this Lease or upon
the earlier termination of this Lease. 
In the event any bankruptcy, insolvency, reorganization or other
creditor-debtor proceedings shall be instituted by or against Lessee, the
security deposit shall be deemed to be 

 

 

applied
first to payment of any rents and/or other charges due Lessor for all periods
prior to the institution of such proceedings, and the balance, if any, of the
security deposit may be retained by Lessor in partial liquidation of Lessor’s
damages.  Lessor may transfer and/or
deliver the security, as such, to any purchaser of Lessor’s interest in the
Premises and thereupon Lessor shall be discharged from any further liability in
reference thereto.

 

6.                                       Guaranty.  This Lease and the terms, provisions and
obligations contained herein, including, without limitation, on completion of
the Irrigation Work, will be guaranteed by Maui Land & Pineapple, Inc.
a Hawaii corporation (“Guarantor”), pursuant to a guaranty agreement in the
form attached hereto as Exhibit B.

 

7.                                       Acceptance
Of Premises.

 

a.                                       Premises
in “As Is, Where Is” Condition.  It is expressly understood and agreed that
Lessor has not made any representation or warranty, express or implied,
regarding any aspect of the Premises including, but not limited to, the implied
warranties of merchantability, fitness for a particular purpose, suitability,
habitability, quality, physical condition, value or profitability, and Lessor
hereby disclaims any and all liability for any and all such representations and
warranties.  Lessee agrees that it has
examined and investigated the Premises prior to the execution of this Lease and
that Lessee has relied solely upon such examinations and investigations in
leasing the Premises.  Without limiting
the generality of the foregoing, Lessee acknowledges that (x) it has made
all inspections, investigations and analyses deemed necessary or appropriate to
determine compliance by the Premises with all Hazardous Materials Laws that may
apply to the Premises, and (y) Lessor has made no representation or
warranty, express or implied, concerning the Premises’ compliance with
Hazardous Materials Laws.  Lessee
acknowledges and agrees that it is leasing the Premises in its “as is, where is”
condition, with all faults, if any, and subject to termination rights described
herein, that Lessee has assumed all risks regarding all aspects of the
Premises, and the condition thereof, including, without limitation:  (i) the risk of any physical condition
affecting the Premises including, without limitation, the existence of any
Hazardous Materials, the existence of any soils conditions, or the existence of
archeological or historical conditions on the Premises; (ii) the risk of
any damage or loss to the Premises caused by any means including, without
limitations, tsunami, flood, earthquake or volcanic eruption; and (iii) the
risk of use, zoning, habitability, merchantability or quality of the Premises
or the suitability of the Premises for its use. 
Except as otherwise described herein, Lessee expressly releases Lessor
from any and all liability and claims that it may have against Lessor, its
successors and assigns with regard to Hazardous Materials presently existing or
hereafter placed on the Premises, and Lessee hereby agrees to indemnify, defend
and hold Lessor harmless from and against any and all claims and demands for
loss or damage, including claims for personal injury, property damage or wrongful
death, arising out of or in connection with a release by Lessee during the Term
of Hazardous Materials in violation of Hazardous Materials Laws (collectively, “Lessee
Hazmat Liability”).  Lessee shall not be
responsible for any Hazardous Materials released in, on, under and about the
Premises by Lessor (collectively “Lessor Hazmat Liability”).  Lessor shall be and remain liable for all,
Lessor Hazmat Liability, on, under or about the Premises, and for all clean-up
and remediation thereof.  Lessor shall and
does hereby indemnify, defend and hold harmless Lessee and Lessee’s members,
officers, directors, agents, employees and invitees from and against any and
all claims, lawsuits, liabilities, costs, fees (including reasonable attorney’s
fees) and expenses of every kind and nature relating to or rising from a Lessor
Hazmat Liability.  The provisions of this
paragraph 7 shall survive the termination of this Lease.

 

 

b.                                      Adjacent
and Nearby Property Uses.  Lessee, for itself and any person or entity
claiming by, through or under it, understands and acknowledges that the
Premises are adjacent to or nearby lands used for the operation of a pineapple
plantation and other agriculture related activities and such other uses as may
be permitted by law on said lands, and that Lessee desired and sought the
Premises with the understanding that the Premises may be affected by nuisance
or hazards to persons and property from such operations and related
activities.  Lessee covenants and agrees
for itself, its permitted assigns, transferees, and any other party claiming
by, through or under it that it assumes all such risks associated with such
location and that it shall defend and hold Lessor harmless from any liability,
claims or expenses, including attorneys’ fees, property damage, personal
injury, or wrongful death arising from such operations and activities, and
further covenants and agrees that the owners and occupants of such lands shall
have the right, in the nature of an easement, to perpetually discharge, emit,
diffuse, and inflict over and upon the Premises noise, smoke, soot, dust,
lights, noxious vapors, odors, and other nuisances of every description arising
from or incidental to the operation of the foregoing and other activities,
subject only to zoning and other legal restrictions on use.

 

8.                                       Use;
Continuation of Golf Course Operations By Lessee.  Prior to the date of this Lease, Lessee was
the owner of the Premises and used the Premises for the operation of the
18-hole championship Kapalua Plantation Golf Course, including a clubhouse, pro
shop, driving range, practice facilities and a subleased restaurant operation
(the “Golf Course Operations”).  Lessee
shall continue to use the Premises during the term hereof solely for the Golf
Course Operations and for no other purpose without the prior written consent of
Lessor, which consent may be withheld by Lessor in its sole discretion.  In connection with Lessee’s use and occupancy
of the Premises, Lessee agrees as follows:

 

a.                                       Golf
Course Standard. 
So long as Lessor abides by all of its obligations hereunder, including
Lessor’s obligation to make capital repairs and replacements,  and otherwise to perform the Lessor Work
(defined below) Lessee shall operate the Golf Course in a manner that will
ensure that the Golf Course would be reasonably considered by an independent
person knowledgeable about the operation of resort golf courses in Hawaii to be
among the top tier of resort golf courses open to public play on the Islands of
Maui and Lanai (the “Golf Course Standard”). 
The Golf Course’s compliance with the Golf Course Standard as of the
date of this Lease may be evidenced by, among other things, the fact that the
Golf Course is ranked by Golf Digest Magazine as one of America’s Greatest
Resort Golf Courses, and as one of the top 75 Best Resort Courses in North
America, and is currently recipient of Golf Course World’s Reader’s Choice
Awards. Other Maui and Lanai golf courses which in addition to the Golf Course
are agreed to meet the Golf Course Standard as of the date of this Lease are
the Challenge at Manele, the Experience at Koele, the Royal Kaanapali and the
Wailea Gold golf course.

 

b.                                      Golf
Course Agreements. 
Lessee shall, at Lessee’s sole cost and expense, observe and perform all
of the Lessor’s obligations under (i) that certain Second Amended and
Restated Golf Course Use Agreement, dated March 27, 2007, as amended, and
that certain Signature Events Agreement, dated March 27, 2007 made by and
among Maui Land & Pineapple, Inc. (“MLP”), W2005 Kapalua/Gengate
Hotel Realty, L.L.C. and The Ritz-Carlton Hotel Company, L.L.C., (ii) that
certain Management & Site Agreement dated June     ,
2007 made by and between Kapalua Maui Charities, Inc. and MLP regarding
the Mercedes-Benz Championship, (iii) Agreement for Water Delivery
(Plantation Golf Course), dated March 27, 2009 made by and between MLP and
Lessor, (iv) that certain Grant of Golf Course Facilities Easement, dated March 27,
2009 made by and between MLP and Lessor, (v) the easements 

 

 

and
agreements listed in that certain Assignment of Easements and Agreements, dated
March 27, 2009 made by Lessee in favor of Lessor, (vi) the
Declaration of Covenants, Conditions and Restrictions (Plantation Course),
dated March 27, 2009 made by MLP as Declarant, (vii) the contracts
and agreements described in that certain Assignment and Assumption of
Contracts, dated March 27, 2009 made by and between Lessee and Lessor, (viii) that
certain Golf Course Use Agreement (Kapalua Club), dated March 27, 2009
between MLP and Lessor, (ix) that certain Nextel Site Agreement, dated November 10,
1999, as amended, and (x) that certain Grant of Reservoir, Waterline and
Well Declarant Easement, dated March 27, 2009 made by and between MLP and
Lessor.  During the term of this Lease,
Lessee shall be entitled to all rents, reimbursements or other payments
otherwise due Lessor under such agreements which shall be prorated for the
periods prior to the Commencement Date and through the Termination Date based
on the actual number of days in the respective months when such dates occur and
the actual number of days elapsed. 
Lessee shall have no right to amend the terms and conditions of any of
the foregoing agreements or instruments without the prior written consent of
Lessor, which consent may be withheld by Lessor in its sole discretion.

 

c.                                       Restaurant
Sublease. 
Lessee shall, at Lessee’s sole cost and expense, observe and perform all
of the Lessor’s obligations as Landlord under that certain Restaurant Lease
dated February 7, 1991, as amended and extended, with P.H.K., Inc.,
as Tenant (the “Restaurant Lease”). 
During the term of this Lease, Lessee shall be entitled to all rents and
other periodic charges payable by Tenant under the Restaurant Lease which shall
be prorated for the periods prior to the Commencement Date and following the
Termination Date based on the actual number of days in the respective months
when such dates occur and the actual number of days elapsed.  Lessee shall have no right to amend the Restaurant
Lease without the prior written consent of Lessor, which consent may be
withheld by Lessor in its sole discretion.

 

d.                                      Declarations.  Lessee shall, at Lessee’s sole cost and
expense, observe and perform all of the Lessor’s obligations, including payment
obligations, under (i) the Amended and Restated Declaration of Covenants
and Restrictions for the Kapalua Resort dated September 30, 1987, as
amended from time to time, and (ii) the Plantation Estates Declaration of
Covenants, Conditions and Restrictions dated April 6, 1990, as amended
from time to time and (iii) the Declaration of Covenants, Conditions, &
Restrictions (Plantation Course) dated concurrently herewith.  Any payment obligations of Lessor under such
Declarations shall be prorated for periods prior to the Commencement Date and
following the Termination Date based on the actual number of days in the
respective billing periods when such dates occur and the actual number of days
elapsed.

 

9.                                       Operational
Plans and Reports.

 

a.                                       Annual
Plans.  Lessee shall
prepare and submit to Lessor for Lessor’s reasonable approval an annual plan
for the operation of the Golf Course by Lessee, which plan shall include Lessee’s
projected income and budgeted expenses for the year, including the number of
rounds projected to be played during such year broken down by each guest or
other category, the amount to be expended by Lessee during such quarter for the
replacement of the Golf Course irrigation system, a schedule of the
Lessor-approved capital improvements to be completed in such year and such
other information as may be reasonably requested by Lessor.  The annual plan for calendar year 2009 will
be submitted to Lessor by April 1, 2009 and thereafter not less than sixty
(60) days prior to the start of each subsequent calendar year during the term
of the Lease.  Along with each annual
plan, Lessee shall also 

 

 

submit
to Lessor a report on Lessee’s compliance with the Golf Course Standard
described in paragraph 8(a) above.

 

b.                                      Quarterly
Reports.  Within thirty (30)
days of the end of each calendar quarter during the term of this Lease, Lessee
shall provide Lessor with a written report showing the operating results for
such quarter and year to date, including income and expenses, the number of
golf rounds played, including paid rounds by each guest or other category,
expenditures made for capital improvements approved by Lessor, the amount
expended by Lessee for the replacement of the Golf Course irrigation system and
such other information as Lessor may reasonably request.

 

10.                                 Golf
Course Irrigation System.  Lessee shall, at its own cost and expense,
but subject to the Lessee Irrigation System Cap (defined below), and the terms
and provision set forth herein, complete the replacement and/or repair of the
Golf Course irrigation system,  (the “Irrigation
Work”), pursuant to plans and specifications approved by Lessor in its
reasonable discretion.  Notwithstanding
anything to the contrary contained herein, Lessee’s contribution to the cost of
the Irrigation Work shall not exceed the total sum of Five Million Dollars
($5,000,000) (the “Lessee Irrigation System Cap”).  Lessee will provide to Lessor plans and
specifications for the Irrigation Work (the “Irrigation Plans”) no later than
ninety (90) days following the Effective Date. 
Lessor will promptly review the Irrigation Plans and either approve or
disapprove of the Irrigation Plans by delivery to Lessee of written
notice.  If disapproved, the  parties will thereafter work in good faith to
reach agreement on the Irrigation Plans. 
Promptly following Lessor’s approval, Lessee will commence to provide
all necessary governmental permits necessary to construct the Irrigation
Work.  Lessee shall use commercially
reasonable efforts, subject to force majeure delays and Lessor delays, to
complete the Irrigation Work within eighteen (18) months (the “Construction
Period”) of receipt by Lessee of (i) Lessor’s reasonable approval of the
plans and specifications for the Irrigation Work and (ii) all necessary
building permits.  Lessee will complete
the Irrigation work in accordance with the approved plans and specifications,
all laws and paragraphs 12, 13 and 15. 
Lessee’s obligation to complete the Irrigation Work in accordance with
the Irrigation Plans will survive expiration or earlier termination of this
Lease.

 

11.                                 Other
Improvements. 
Lessee shall prepare and submit to Lessor for Lessor’s reasonable
approval an annual capital improvements budget for the Golf Course Operations
which shall take into account the level of capital expenditures made by Lessee
for the Golf Course Operations during the three (3) calendar years prior
to the Commencement Date.  The budget
will be submitted to Lessor by April 1, 2009 for calendar year 2009 and
thereafter not less than sixty (60) days prior to the start of each subsequent
calendar year during the term of this Lease. 
The capital improvement budgets prepared by Lessee shall stipulate which
items are to be funded exclusively by Lessee (i.e. costs and expenses of the
Irrigation Work up to the Lessee Irrigation System Cap) and those capital
expenditures that constitute exclusively a Lessor expense.  Lessor shall have no obligation to approve
line items in the capital improvement budget that exceed in the aggregate
$342,500 annually. Lessor shall reimburse Lessee for amounts paid by Lessee to
complete capital improvements included in the annual budgets approved by Lessor
within thirty (30) days of Lessor’s receipt of Lessee’s written request for
such reimbursements accompanied by such documentation as may be reasonably
requested by Lessor to confirm that the capital improvements have been
completed by Lessee free and clear of all liens for such work.  Any sums not paid by Lessor to Lessee within
ten (10) days of written notice from Lessee that the same is past due
shall bear interest from the date due until paid in full at the rate of twelve
percent (12%) per year.

 

 

12.                                 Alterations
and Improvements.

 

12.1                           Lessee Obligation. 
Unless set forth in the annual plan, Lessee shall not make any
alterations, improvements or additions in or to the Premises, nor make any
repairs requiring any such alteration, improvements or additions, nor install
any antennas, trade fixtures, exterior signs, interior or exterior lighting,
plumbing fixtures, shade or awnings, without the prior written consent of Lessor,
which consent shall not be unreasonably withheld, delayed or conditioned.  As a prerequisite to any such consent, Lessee
shall comply with and/or satisfy each of the following conditions unless any of
such conditions or requirements shall be waived by Lessor in its sole
discretion:

 

a.                                       Lessee
shall obtain Lessor’s approval of Lessee’s construction contractor(s) and
architect who shall be licensed in the State of Hawaii, and Lessee shall submit
complete plans and specifications for such alterations, improvements or
additions to the Lessor for Lessor’s prior written approval.

 

b.                                      Lessee,
or its architect, shall, if plans and specifications are necessary, deliver to
Lessor upon completion of construction a certification setting forth the total
cost of such construction and certifying that such construction has been
completed in compliance with the approved plans and specifications therefor.

 

c.                                       Lessee
shall furnish Lessor with evidence that all governmental approvals necessary to
commence construction have been obtained, including, without limiting the
generality of the foregoing, a building and/or grading permit.  Any work, (which is not a Lessor
responsibility) not acceptable to any governmental authority or agency having
or exercising jurisdiction over such work shall be promptly replaced, at Lessee’s
sole expense, notwithstanding any failure by Lessor to object to any such work,
and Lessor shall have no responsibility therefor.

 

d.                                      In
addition to any other insurance required under this Lease, during any construction
Lessee and/or its contractor shall maintain such commercial general liability
and other insurance policies as may be reasonably specified by Lessor, all of
which policies shall be reasonably satisfactory to Lessor in form, content and
amount of coverage, insuring Lessor, Lessee and such other parties as Lessor
shall reasonably specify against loss or damage to third parties or their
property from hazards normally insured against in the construction industry
with respect to construction of the type to be undertaken by Lessee.  Lessee shall deliver to Lessor certificates
of insurance certifying that such insurance is in full force and effect prior
to commencing the construction of any alterations, additions or improvement on
the Premises.

 

e.                                       Lessee
shall reimburse Lessor for any expense actually incurred by Lessor by reason of
repair or replacement of faulty work done by Lessee or its contractors.

 

f.                                         All
work by Lessee shall be diligently and continuously pursued from the date of
its commencement through its completion. 
Upon substantial completion of any construction, Lessee shall publish a “Notice
of Completion” as required under Section 507-43(f) of the Hawaii
Revised Statutes and file an affidavit of publication of said Notice in the
Office of the Clerk of the Circuit Court of the Second Circuit, State of
Hawaii, and shall provide a certified “filed” stamped copy thereof to Lessor.

 

 

12.2                           Lessor
Obligations. 
Except as otherwise required in this Lease, any and all capital repairs
and replacements approved by Lessor in accordance with Section 11,
excluding the Irrigation Work up to the Lessee Irrigation System Cap, or
required to comply with laws and legal requirements, will be made at the sole
cost and expense of Lessor (“Lessor Work”).

 

13.                                 Protection
Against Construction Liens.  Lessee shall promptly pay all contractors and
materialmen, and shall keep the Premises free from any liens or encumbrances
arising out of any work performed for Lessee, materials furnished for Lessee or
obligations incurred by Lessee.  Lessee
agrees to indemnify, defend and save the Lessor and the Premises harmless from
and against any and all claims for mechanics’, materialmen’s or other liens in
connection with any work by Lessee, except to the extent such claims are the
result of Lessor’s failure to meet its funding obligations under this Lease, in
which case Lessor agrees to indemnify, defend and save Lessee and the Premises
harmless from and against any and all such claims and for any liens in
connection with any Lessor Work.  If a
mechanics’ or materialmen’s lien shall be filed against the Premises for, or
purporting to be for, labor or material alleged to have been furnished or to be
furnished to or for Lessee, Lessee shall bond against or discharge said lien
within ten (10) days after the filing of the application for the
lien.  If Lessee shall fail to bond
against or discharge said lien as aforesaid, Lessor may pay the amount of such
lien or discharge the same by deposit or by bonding against such lien.  In the event that Lessor shall discharge such
lien as aforesaid, Lessor may require the lienor to prosecute an appropriate
action to enforce such claim, and if said lienor shall prevail in its claim,
Lessor may pay the judgment recovered thereon. 
Any amount paid or expense incurred by Lessor pursuant to this paragraph
13 shall be paid by Lessee to Lessor upon demand, together with interest
thereon from the date of payment by Lessor at the rate provided in paragraph 36
hereinbelow.

 

14.                                 Disclaimer.  Notwithstanding anything in this Lease
contained to the contrary, neither Lessor’s approval nor the approval of any
architect or engineer engaged by Lessor of any plans or specifications
submitted to Lessor or such architect or engineer pursuant to the provisions of
this Lease shall be deemed a warranty or other representation on Lessor’s part
to any person that such plans or specifications or the improvements therein
described are legal or structurally safe or sound.

 

15.                                 Alterations
Belonging to Lessor. 
All alterations, improvements and additions to the Premises shall remain
for the benefit of the Lessor and shall not be removed unless otherwise
consented to in writing by Lessor, and shall be presumed to become an integral
part of said Premises.

 

16.                                 Waste;
Compliance with Law. 
Lessee will not make or suffer any waste or strip of the Premises.  Lessee will not use the Premises or suffer
the same to be used for any purpose or purposes in violation of any condition
or provision of this Lease, or of any law, ordinance or regulation of any
public authority, or of any policy of insurance upon said Premises, or do or
permit to be done any act which will occasion or constitute a ground for
cancellation of any such insurance policy or for any increase in the rate of
insurance on said Premises, and will not commit or suffer to be committed any
nuisance upon said Premises or act which may disturb the quiet enjoyment of
others.

 

17.                                 Prohibited
Conduct.  Lessee will not
conduct or permit to be conducted any auction and/or sale by auction on the
Premises or any fire sale or bankruptcy sale.

 

 

18.           Signs and Advertising.  Lessee will not, without the prior written
approval of Lessor, display, erect, install, paint or place any sign, logo,
emblem, or other advertisement whatsoever in, on or about the exterior of the
Premises.  Lessor acknowledges that the
signage on the Premises on the date of this Lease is approved by Lessor.

 

19.           Liens and Encumbrances.  Lessee will not commit or suffer any act or
neglect whereby said Premises or any improvements thereon, or the estate of
Lessee or the Lessor therein, shall at any time during said term become subject
to any attachment, judgment, lien, charge or encumbrance whatsoever, and will
indemnify and hold the Lessor harmless from all loss, costs and expense,
including attorneys’ fees, with respect thereto.

 

20.           Hazardous Materials.

 

a.             Use of Hazardous Materials.  Except as provided herein, Lessee shall not
cause any Hazardous Material to be brought upon, kept or used in or about the
Premises by Lessee in violation of Hazardous Materials Laws.  Lessee may use and store on the Premises such
items as may be classified as Hazardous Materials but which are typically used
in golf course operations (e.g. fertilizers, pesticides,
herbicides, machinery lubricants, cleaning and maintenance supplies) provided
that the same are used, kept, stored and disposed of in full compliance with
all applicable Hazardous Materials Laws. 
If Lessee breaches the obligations stated in the preceding sentences, or
if the presence of Hazardous Material on the Premises caused by Lessee results
in contamination of the Premises in violation of Hazardous Materials Laws, then
Lessee shall indemnify, defend and hold Lessor harmless from any and all
claims, judgments, damages, penalties, fines, costs, liabilities or losses
(including, without limitation, diminution in value of the Premises, and sums
paid in settlement of claims, attorneys’ fees, consultation fees and expert
fees) which arise during or after the Lease term as a result of such
contamination.  This indemnification of
Lessor by Lessee includes, without limitation, costs incurred in connection
with any investigation of site conditions or any clean-up, remedial, removal or
restoration work required by any federal, state or local governmental agency or
political subdivision because of a release of Hazardous Material by Lessee
during the Term.  Without limiting the
foregoing, with respect to any Hazardous Material on the Premises released by
Lessee during the Term which results in any contamination of the Premises in
violation of Hazardous Materials Laws, Lessee shall promptly take all actions
at its sole expense as are necessary comply with Hazardous Materials Laws.  The foregoing indemnity shall survive the
expiration or earlier termination of this Lease.

 

b.             Definitions.  As used herein, the term “Hazardous Material”
means any hazardous or toxic substance, material or waste, including, but not
limited to, those substances, materials and wastes listed in the United States
Department of Transportation Hazardous Materials Table (49 CFR 172.101) or by
the United States Environmental Protection Agency as hazardous substances (40
CFR Part 302) or as defined in the Hawaii Hazardous Waste Law (Haw. Rev.
Stat. Chapter 342J) and amendments thereto, or such substances, materials and
wastes that are or become regulated under any applicable local, state or
federal law.

 

c.             Disclosure.  Upon Lessor’s written request, Lessee shall
disclose to Lessor the names and amounts of all Hazardous Material, or any
combination thereof, which were stored, used or disposed of or on the Premises,
or which Lessee intends to store, use or dispose of or on the Premises in the
future.

 

 

d.             Inspection.  Lessor and its agents shall have the right,
but not the duty, to inspect the Premises during normal business hours following
48 hours’ prior written notice to determine whether Lessee is complying with
the provisions of this paragraph 17.  If
Lessee is not in compliance with the provisions of this paragraph 17, Lessor
shall have the right to immediately enter upon the Premises to remedy any
contamination caused by Lessee’s failure to comply notwithstanding any other
provision of this Lease.  Lessor shall
use reasonable efforts to minimize interference with Lessee’s business but
shall not be liable for any interference caused thereby.

 

e.             Reports.  To the extent Lessee is required to file any
reports with the United States Environmental Protection Agency or any other
federal, state, city or county agency having jurisdiction over Hazardous
Material, Lessee shall concurrently provide Lessor a copy of such report.

 

21.           Compliance With Disability
Access Laws.  Except as otherwise set forth herein, Lessee
hereby covenants and agrees with Lessor that Lessee shall at all times during
the term of this Lease comply with any and all governmental regulation of the
Premises regarding access of disabled persons, including without limitation,
Titles III and V of the Americans with Disabilities Act of 1990, 42 U.S.C. Sec.
12101 et seq. or any other similar federal, state or local laws or ordinances
and the regulations promulgated thereunder (collectively, the “Disability
Access Laws”); provided, however, the costs of any such compliance, if required
as a result of any changes to the, or new, Disability Access Laws after the
Effective Date, will be the sole responsibility of Lessor.  Unless any such failure is the result of
Lessor failing to pay for the cost of any Landlord Work related to the
compliance with Disability Access Laws (in which case the indemnity contained
herein will be of Lessee by Lessor), Lessee shall indemnify, defend and hold
Lessor harmless from and against any and all claims and demands for loss or
damage, including claims for discrimination, personal injury, monetary damage
or injunctive relief arising out of or in connection with any failure or
alleged failure of the Premises to comply with the Disability Access Laws, and,
unless caused by the failure of Lessor to pay for Lessor’s Work, Lessee shall
reimburse Lessor for all costs and expense, including reasonable attorneys’ and
other professional or consultants’ fees, paid or incurred by Lessor in
connection with the defense of any such claims including, but not limited to,
all costs for research regarding settlement or other preventive measures which
Lessor may take prior to the filing of such action or to attempt to prevent the
filing of such an action.

 

22.           Repairs and Upkeep by Lessee.  Lessee shall at all times during the term
hereof and at its own expense, keep the Premises in good order, condition and
repair, reasonable wear and tear damage and destruction and Lessor Work
excepted, including such repairs, and alterations as may be required by fire
insurance companies, by law, ordinance or regulation of any public authority
relating to the use or occupancy of the Premises or otherwise.  Lessee shall, if deemed necessary by Lessor,
repaint the exterior of the buildings and improvements in the Premises once
during each three (3) years during the term of this Lease within ninety
(90) days after Lessor’s notice to Lessee to do so.  Lessee will, at its own expense, replace
plate glass and other glass in the Premises which may become damaged or
broken.  If Lessee fails to commence
repairs required by the terms hereof to be made by it within ten (10) days
after written notice from Lessor of the necessity therefor and specifying the
nature thereof, and if Lessee thereafter fails to prosecute such work
diligently to completion, then Lessor shall have the right to make or complete
and pay for such repairs and bill Lessee for the cost thereof or to terminate
this Lease for breach of covenant in the event Lessor makes such repairs but
Lessee does not pay Lessor pursuant to paragraph 22 herein.  Lessor shall have the right to enter upon the
Premises at times reasonably established by Lessor and Lessee for the purpose 

 

 

of making such
repairs and to erect any necessary scaffolding or barricades.  Failure on the part of Lessor to make repairs
or alterations as herein provided shall in no event constitute a breach of this
Lease.  That Lessee will keep the
Premises, including any loading or service areas, in a clean, orderly and
sanitary condition and free from obstructions, insects, rodents, vermin and
other pests, and shall store all trash and refuse within the Premises or in
areas designated therefor by Lessor and share in the cost of having the same
picked up regularly.

 

23.           Right of Access.  Lessor shall have access at all reasonable
times to the Premises and each and every part thereof for purposes of
inspecting same; making repairs (if Lessor elects to undertake any repairs due
to Lessee’s failure to do so), and Lessor shall be allowed to take all material
into and upon the Premises that may be required therefor without the same
constituting an eviction of Lessee in whole or in part, without the lease
rental and other fees and charges abating and without any liability to Lessee
or any loss or interruption of business of Lessee or any loss of occupation or
quiet enjoyment of the Premises occasioned thereby; posting such notices as it
may deem necessary for its protection or for protection of the Premises; and
for the purpose of showing same to prospective tenants, purchasers, mortgagees,
and/or others.

 

24.           Expenditures by Lessor on Behalf
of Lessee.  If Lessor shall make any expenditure or incur
any liability which Lessee is required to make or pay under this Lease, the
amount thereof shall be added to and deemed a part of the next succeeding
payment of rent thereafter falling due, and said amount shall bear interest at
the rate provided in paragraph 39 hereinbelow from the date paid by Lessor
until repaid by Lessee.  Lessor may, at
its option and at any time, terminate this Lease for failure on the part of
Lessee to pay such amounts within thirty (30) days of written notice when due.

 

25.           Indemnity.  Lessee, as a material part of the
consideration to Lessor for this Lease, will and does hereby assume all risk of
bodily injury, wrongful death and/or property damage, business interruption or
economic loss occasioned by any accident, fire or nuisance made or suffered by
Lessee or its officers, directors, agents, employees, contractors, invitees,
customers, sublessees and licensees (herein collectively called “Lessee’s
Affiliates”) in the Premises or resulting from any failure on the part of Lessee
to maintain the Premises in a safe condition, and Lessee hereby waives on its
own behalf, and on behalf of Lessee’s Affiliates, all claims in respect thereof
against Lessor and Lessor’s shareholders, employees, agents, licensees,
contractors and invitees (herein collectively called “Lessor’s Affiliates”)
except claims arising from the acts or omissions of Lessor or Lessor’s
Affiliates, and acknowledges that this assumption of risk by Lessee has been
bargained for in determining rent and other obligations of Lessee under this
Lease.  Lessee hereby agrees to indemnify
and save harmless Lessor and Lessor’s Affiliates from and against any and all
claims for bodily injury, wrongful death and/or property damage, business
interruption and economic loss by any person (including without limiting the
generality of said term, Lessee’s Affiliates and Lessor’s Affiliates) arising
out of, caused by, occasioned by or resulting from any accident, fire or
nuisance in the Premises or Lessee’s failure to maintain the Premises in
accordance with this Agreement, except where such injury, death or loss is
caused by the acts or omissions of Lessor or Lessor’s Affiliates.  Lessee further agrees to indemnify and save
harmless Lessor, and Lessor’s Affiliates, from and against any and all
liability, loss, costs, charges, fines, penalties, obligations or expenses of
whatsoever nature in connection with any and all claims by or on behalf of any
person or persons, firm or firms, corporation or corporations, arising from the
conduct or management of any work or thing whatsoever done by Lessee or Lessee’s
Affiliates in or about the Premises during the Term, or from any transactions
of Lessee concerning the Premises, and will further indemnify and save Lessor
and Lessor’s Affiliates harmless from any and all claims arising from 

 

 

any breach or
default on the part of Lessee in the performance of any covenant or agreement
on the part of Lessee to be performed pursuant to the terms of this Lease, or
arising from any act on the part of Lessee or Lessee’s Affiliates, and shall
reimburse Lessor and Lessor’s Affiliates for all costs, reasonable attorneys’
fees, expenses and liabilities incurred in connection with any such claim or
any action or proceeding brought thereon. 
Lessee further agrees that in case of any claim, demand, proceeding,
action or cause of action, threatened or actual, against Lessor or Lessor’s
Affiliates resulting from the matters for which Lessee indemnifies Lessor
hereunder, Lessee, upon the written request of Lessor or any of Lessor’s
Affiliates, shall defend Lessor and Lessor’s Affiliates at Lessee’s expense by
counsel reasonably satisfactory to Lessor or Lessor’s Affiliates, as the case
may be.  If Lessor or any of Lessor’s
Affiliates does not request such defense or Lessee does not provide such
defense, then Lessee will reimburse Lessor and Lessor’s Affiliates as
aforesaid, and agrees to cooperate with Lessor and Lessor’s Affiliates in such
defense, including, but not limited to, providing of affidavits and testimony
upon request of Lessor or Lessor’s Affiliates.

 

26.           Assumption of Risk by Lessee.  Lessee, as a material part of the
consideration to Lessor for this Lease, will and hereby does assume all risk of
loss or damage to Lessee’s personal property, machinery, equipment, fixtures,
supplies, merchandise, and other personal property, by whomsoever owned, stored
or placed in, upon or about the Premises, and does hereby agree that Lessor
shall not be responsible for loss or damage to any such property, unless caused
by the willful act or gross neglect of Lessor or Lessor’s Affiliates, and
Lessee waives all claims in respect thereof and acknowledges that this
assumption of risk by Lessee has been bargained for in determining rent and
other obligations of Lessee under this Lease. 
Without prejudice to the generality of the foregoing, Lessor shall not
be liable for loss or damage to any property entrusted to Lessor or Lessor’s
Affiliates nor for loss or damage to any property at any time stored or kept in
the Premises, either from rain or from any other water which may leak, issue or
flow from any part thereof, or from the pipes or plumbing of the same or from
any other place or quarter, nor for any loss or damage to property in the
Premises caused by theft, or by accident involving escalators, or for damage or
any character.

 

27.           Property Insurance.

 

a.             In General.  Lessee shall
at its own expense and at all times during the term keep all buildings,
improvements, fixtures, and personal property by whomsoever installed or constructed,
now existing or hereafter erected on the Premises, insured against (i) all
of the risks covered by a standard ISO Commercial Property Special Causes of
Loss Form written on a replacement cost basis, without deduction
for depreciation, with an agreed value endorsement, (ii) a “difference in conditions” policy providing coverage limits
for risk of loss by earthquake of $25,000,000 and flood of $20,000,000, (iii) such
other hazards or risks which a prudent businessman would insure against,
including plate glass insurance and business interruption insurance in an
amount sufficient to insure payment of rent, real property taxes and
assessments, insurance and other fixed costs for not less than twelve (12)
months during any interruption of Lessee’s business on the Premises from any
risk covered under (i) and (ii) above, and (iv) in time of war against war damage, if available at
reasonable cost.  This coverage shall be
in an amount equal to the full replacement cost of such buildings,
improvements, fixtures and personal property and shall not have deductibles in
excess of $250,000 AOP and flood, 2% wind, and 5% earthquake.  Lessee hereby waives any and all rights of
subrogation which it may have against Lessor and any insurance carrier of
Lessor.  Such insurance shall contain a
standard mortgagee clause which shall provide that any reference to a mortgagee
in such policy shall mean and include all holders of mortgages of any interests
in the Premises, in their respective order and preference as provided in their
respective 

 

 

mortgages;
provide that such insurance as to the interest of any mortgagee shall not be
invalidated by any act or neglect of Lessor, Lessee or any person claiming by,
through, or under any of them; and contain a waiver of any provision invalidating
such mortgagee clause by reason of the failure of any mortgagee or Lessor,
Lessee, or any person claiming by, through, or under any of them to notify the
insurer of any hazardous use or vacancy, any requirement that any mortgagee pay
any premium thereon, or any contribution clause.

 

b.             Use of Insurance Proceeds.  In case the buildings, improvements or
fixtures required to be insured in subparagraph 27.a above or any part thereof
shall be destroyed or damaged by fire or such other casualty required to be
insured against, then and as often as the same shall happen, all proceeds of
such insurance, including the interest therein of Lessor and the interest
therein of Lessee shall be made available for and used with all reasonable
dispatch by Lessee in rebuilding, repairing, replacing or otherwise reinstating
the buildings, improvements or fixtures so destroyed or damaged in a good and
substantial manner according to the plan and elevation thereof or according to
such modified plan for the same or substitute buildings, improvements or
fixtures as shall be approved in writing by the Lessor in accordance with
paragraphs 12 and 13 above.  If the
available insurance proceeds shall be insufficient for rebuilding, repairing,
replacing or otherwise reinstating such buildings, improvements or fixtures in
the manner provided in this paragraph above, then Lessor shall provide the
balance of all funds required to completely rebuild, repair, replace or
otherwise reinstate such buildings, improvements or fixtures; provided,
however, that Lessee shall be responsible for any deductible amounts or
self-insured retentions and if Lessee fails to carry the types and amounts of
insurance required by Section 27(a), then Lessee shall be responsible for
any shortfall.

 

28.           Liability Insurance.

 

a.             In General.  Lessee shall maintain at its own expense
during the term a policy or policies of “commercial general liability”
insurance on an “occurrence” basis including coverage for bodily injury and
property damage, personal injury and medical payments, naming Lessor as an
additional insured thereunder, with limits not less than those set forth in
subparagraph 28.b below.  The commercial
general liability insurance shall specifically cover blanket contractual
liability, fire damage legal liability, host liquor liability if liquor will be
sold, serviced or manufactured on the Premises, personal and advertising
liability, medical payments, premises and operations liability and
products/completed operations liability. 
Lessee shall periodically, but not less frequently than annually,
reevaluate the scope of the risks covered and the liability limits of such
insurance policies and, if necessary, increase such coverage or liability
limits in order to provide coverage of risks and liability limits which a
prudent businessman would provide under similar circumstances.  Lessee shall also increase the liability
limits or the scope of the risks covered by such insurance policies to such
higher levels or such broader scope of risks as Lessor may from time to time
reasonably specify.

 

b.             Coverage Amounts.

 

Minimum Liability Coverage Amounts:

 

	
  (i)

  	
   

  	
  $ 5,000,000
  Each Occurrence

  
	
   

  	
   

  	
   

  
	
  (ii)

  	
   

  	
  $ 5,000,000
  General Aggregate

  
	
   

  	
   

  	
   

  
	
  (iii)

  	
   

  	
  $ 5,000,000
  Products & Completed Operations Aggregate

  

 

 

	
  (iv)

  	
   

  	
  $ 5,000,000
  Personal and Advertising Injury

  
	
   

  	
   

  	
   

  
	
  (v)

  	
   

  	
  $ 1,000,000
  Fire Damage (any one fire)

  
	
   

  	
   

  	
   

  
	
  (vi)

  	
   

  	
  $ 10,000,000
  Umbrella Coverage

  
	
   

  	
   

  	
   

  
	
  (vii)

  	
   

  	
  $ 10,000,000
  Excess Coverage

  

 

29.           Worker’s Compensation and
Employer’s Liability Insurance.  Lessee shall
maintain at is own expense during the term of this Lease a policy or policies
of “worker’s compensation” insurance with minimum limits as required by Hawaii
Revised Statutes Title 21, Labor and Industrial Relations, and the rules and
regulations promulgated thereunder, and a policy or policies of “employer’s
liability” insurance with per accident and per disease limits not less than
$5,000,000.00.  Both policies shall be in
form and with coverages satisfactory to and approved by Lessor.  Lessee shall increase the liability limits or
the scope of the risks covered by such insurance policies to such higher levels
or such broader scope of risks as Lessor may from time to time reasonably
specify.

 

30.           Auto Liability Insurance.  Lessee shall maintain at is own expense
during the term of this Lease a policy or policies of “commercial auto
liability” insurance naming Lessor as an additional insured thereunder, in form
and with coverage satisfactory to and approved by Lessor, with a combined
single limit for bodily injury and property damage not less than
$5,000,000.00.  The
foregoing coverage may be placed through a combination of primary, umbrella and
excess coverages.  The automobile liability
insurance shall specifically cover all automobiles and other vehicles used by
Lessee in connection with its operations at the Premises, whether owned or
non-owned, leased, rented, borrowed or hired.

 

31.           General Insurance Requirements.

 

a.             Each policy of commercial
property insurance and general liability insurance required in paragraphs 27
and 28 above shall:

 

(1)           name Lessor as an additional
insured and provide that the liability of the insurer thereunder shall not be
affected by, and that the insurer shall not claim, any right of set-off,
counterclaim, apportionment, proration, or contribution by reason of, any other
insurance obtained by or for Lessor, Lessee, or any person claiming by,
through, or under any of them;

 

(2)           contain no provision relieving
the insurer from liability for loss occurring while the hazard to buildings and
personal property is increased, whether or not within the knowledge or control
of, or because of any breach of warranty or condition or any other act or
neglect by Lessor, Lessee, or any person claiming by, through, or under any of
them;

 

(3)           be specifically endorsed to
provide that such policy may not be cancelled except upon the insurer giving at
least thirty (30) days’ prior written notice thereof to Lessor, Lessee, and
every mortgagee and other person having an interest in the Premises who has
requested such notice of the insurer;

 

(4)           be written by an insurance
company rated A or better, Class size IX or better, by the Best’s Key
Rating Guide, based upon the rating system in effect 

 

 

on the date this Lease is
signed, and in form and with coverage satisfactory to and approved in writing
by Lessor.  In the event that Best’s
changes its rating system or ceases to provide ratings at some later date, then
such insurance company shall have a rating from Best (or some other comparable
rating service if Best’s ceases to provide ratings) comparable to the “A or
better, Class IX or better” requirement of the immediately preceding
sentence; and

 

(5)           be specifically endorsed to
provide that they are primary policies, not contributing with and not in excess
of any coverage that Lessor may carry, notwithstanding anything to the contrary
contained in any policies obtained by Lessor.

 

b.             A certificate of insurance
listing all of the required coverages should be issued for Lessee.

 

32.           Assignment and Subletting.  Lessee will not sublet the whole or any part
of said Premises or grant any concession therein, or part with possession of
the whole or any part of the Premises, or assign this Lease or any interest
therein (nor may this Lease be assigned by operation of law) or hypothecate,
mortgage or in any way create any lien on this Lease or the Premises or any
interest therein without the consent in writing of Lessor first being obtained,
and any such attempt without the prior consent in writing of Lessor shall be
void for all purposes and Lessor shall then have the right and option to
terminate this Lease as hereinafter provided. 
Lessor may grant or withhold its consent in its sole discretion for any
reason. It is further agreed that any consent given to any assignment, hypothecation,
transfer of this Lease or parting of possession, or to any sublease of said
Premises or a portion thereof, shall not be construed as a consent to any other
further assignment, hypothecation, transfer, parting of possession or
subletting or as a waiver of Lessor’s right to object to any assignment,
hypothecation, transfer parting of possession, or sublease to which Lessor’s
consent in writing has not been obtained. 
It is further agreed that Lessee will remain liable in the event of any
assignment, mortgage or sublease for the payment of the rental hereunder and
for the observance and performance of all the terms, covenants and conditions
herein contained and on the part of Lessee to be observed and performed.  Any change in the present ownership or control
of Lessee’s business, directly or indirectly, whether as a result of any sale
of assets, transfer of stock, merger, consolidation or otherwise, shall be
deemed an assignment within the meaning of this provision; provided however,
and notwithstanding anything to the contrary contained herein, no sale of
assets, transfer of stock, merger or consolidation by Guarantor shall
constitute an assignment hereunder.

 

33.           Transfer of Control.  It is understood and agreed that Lessor must
at all times be satisfied with the operator of the Premises from the standpoint
of said operator’s experience, management ability and/or financial capacity,
and that upon any merger or transfer of stock, directly or indirectly,
involving a change in control of either of Lessee, Lessor shall have the right
and option to terminate this Lease.

 

34.           Subordination.  Lessee hereby subordinates its rights
hereunder to any encumbrances shown on Exhibit A and to the lien of
any mortgage or mortgages now or hereafter arranged by Lessor, to any bank,
insurance company or other lending institution, against the land and
improvements of which the Premises are a part and/or upon any buildings now on
or hereafter placed upon said land, for all loans or advances made or hereafter
to be made upon said security, provided in every case the mortgagee or
mortgagees named in said mortgage or mortgages shall agree in a written
instrument acceptable to Lessee to recognize this Lease in the event of
foreclosure by judicial proceedings or otherwise, if Lessee is not then 

 

 

in default
beyond applicable cure periods.  Lessee
hereby agrees to execute any instruments on a commercially reasonable form
necessary or expedient to carry out the foregoing.

 

35.           Default and Remedies.  If Lessee shall fail to pay said rent or any
part thereof or any other monies which under the provisions of the Lease Lessee
shall be obligated to pay, on or before the dates the same have become due and
payable, no notice being required, demand made, or forfeiture declared, and
such non-payment shall continue for ten (10) days, or fail in any other
respect faithfully to observe or perform any condition or covenant in this
Lease contained and on Lessee’s part to be observed and performed, including
Lessee’s failure to achieve the Golf Course Standard set forth in
paragraph 8.a above or to submit the annual operational plans described in
paragraph 9.a above for Lessor’s approval, and any such failure shall
continue for thirty (30) days following written notice from the Lessor to
Lessee (or such longer time as is reasonably necessary so long as Lessee has
commenced and is diligently prosecuting the cure); or if Lessee shall become
insolvent or be adjudicated bankrupt; or shall make any general arrangement or
assignment for the benefit of creditors or shall seek protection under any
bankruptcy laws; or permit a lien to attach to the premises; or abandon the
Premises; or suffer this Lease or any estate or interest hereunder to be taken
under any mesne process or any writ of execution; or any other judicial
order,  and any such event is not
dismissed and cured with sixty (60) days, then and in any such event:

 

a.             Right of Re-Entry; Termination.  The Lessor may at once enter into and upon
the Premises or any part thereof in the name of whole, and upon or without such
entry at Lessor’s option terminate this Lease, without service of notice of
legal process, and thereupon take possession of the Premises and all
improvements thereon, and thereby become wholly vested with all right, title
and interest of Lessee therein and may expel and remove from said Premises
Lessee and/or those claiming under it, and their effects, all without service
of notice or resort to any legal process and without being deemed guilty of any
trespass or becoming liable for any loss or damage which may be occasioned
thereby, and without prejudice to any other remedy or right of action which the
Lessor may have for collection of arrears of rent for other or preceding breach
of covenant by Lessee.  If this Lease or
any short form thereof is recorded or filed of record in Hawaii, termination
may be made effective by Lessor by mailing a written notice to Lessee or such
termination and recording or filing an affidavit thereof.

 

b.             Summary Possession.  Whether or not Lessor shall have taken any
action above permitted, Lessor may bring an action for summary possession in
case of such default, and in any such action, service of prior notice or demand
is hereby expressly waived.  Lessor may,
at its option, assert its claim for unpaid rent in such action or may institute
a separate action for the recovery of rent.

 

c.             Removal of Persons or Property.  In the event of such resumption of possession
under this Lease, whether by summary proceedings or by any other means, Lessor,
or any receiver appointed by a court having jurisdiction, may dispossess and
remove all persons and property from the Premises, and any property so removed
may be stored in any public warehouse or elsewhere at the cost of and for the
account of Lessee, and Lessor shall not be responsible for the care or
safekeeping thereof, and Lessee hereby waives any and all loss, destruction,
and/or damages or injury which may be occasioned in the exercise of any of the
aforesaid acts.

 

d.             Damages, Attorneys’ Fees and
Costs.  Lessor may recover from Lessee all damages,
reasonable attorneys’ fees and costs which may have been incurred by

 

 

Lessor as a
result of any default of Lessee hereunder, including the expense of recovering
possession.

 

e.             Right to Re-let.  Should Lessor elect to reenter for Lessee’s
default, as provided hereinabove, or should it take possession pursuant to
legal proceedings or pursuant to any notice provided for by law, it may either
terminate this Lease or it may, from time to time without terminating this
Lease, and re-let said Premises or any part thereof for such term or terms
(which may be for a term extending beyond the term of this Lease) and at such
rental or rentals and upon such other terms and conditions as Lessor in its
sole discretion may deem advisable; upon each such re letting all rental
received by Lessor from such re-letting shall be applied, first, to the
payment of any indebtedness other than rent due hereunder from Lessee to
Lessor; second, to the payment of any costs and expenses of such
re-letting; third, to the payment of rent due and unpaid hereunder; and
the residue, if any, shall be held by Lessor and applied in payment of future
rent as the same may become due and payable hereunder.  If such rentals received from such re-letting
during any month be less than that to be paid during that month by Lessee hereunder,
Lessee shall pay any such deficiency to Lessor. Such deficiency shall be
calculated and paid monthly. Termination may, but need not necessarily, be made
effective by the giving of written notice to Lessee of intention to end the
term of this Lease, specifying a day not earlier than three (3) days
thereafter, and upon the giving of such notice, the term of this Lease and all
right, title and interest of Lessee hereunder shall expire as fully and
completely on the day so specified as if that day were the date herein
specifically fixed for the expiration of the term.  No re-entry or taking possession of said
Premises by Lessor shall be construed as an election on its part to terminate
this Lease unless a written notice of such intention is given to Lessee or
unless the termination thereof be decreed by a court of competent
jurisdiction.  Notwithstanding any such
re-letting without termination, Lessor may at any time thereafter elect to
terminate this Lease for such previous default. 
Should Lessor at any time terminate this Lease for Lessee’s default, in
addition to any other remedies it may have, Lessor may recover from Lessee all
damages it may incur by reason of such default, including the cost of
recovering possession of the Premises, reasonable attorneys’ fees, delinquent
rent and other charges due through the date of termination and the discounted
present value (computed at 8%) at the time of such termination of the rent and
charges reserved in this Lease for the remainder of the stated term, all of
which amounts shall be immediately due and payable from Lessee to Lessor.

 

36.           Remedies Cumulative.  The various rights, options, elections and
remedies of Lessor contained in the Lease shall be construed as cumulative and
no one of them as exclusive of any of the other, or of any right or priority
allowed by law.

 

37.           Waiver of Breach.  The waiver by the Lessor of any breach of any
term, covenant or condition herein contained shall not be deemed to be a waiver
of any subsequent breach of the same or of any other terms, covenant or
condition herein contained; that the acceptance of rent by the Lessor shall not
be deemed to be a waiver of any of the terms, covenants or conditions of this
Lease, or of the remedies of Lessor herein (including the remedy of forfeiture
of this Lease); that no term, covenant, condition or remedy herein shall be
deemed to be waived by Lessor unless such waiver be in writing by Lessor.

 

38.           Attorneys Fees.  If either party hereto institutes any action
or proceeding in court to enforce any provision hereof or for damages or other
relief by reason of any alleged breach of any provision hereof, the prevailing
party shall be entitled to receive from the losing party all costs, including
reasonable attorneys’ fees.  If any
litigation or legal expense incurred by either party hereto in connection with
any litigation commenced by or against the other party 

 

 

(other than
condemnation proceedings) in which it shall without fault be made by a party,
then it will be entitled to recover against the opposite party all of its costs
including reasonable attorneys’ fees.

 

39.           Delinquent Payments.  If any payment or payments called for under
this Lease is not paid on the date due, Lessor shall have the right, without
waiving any breach or default by Lessee or any of its other rights herein, to
demand and receive the unpaid sum together with the interest accrued thereon
from the date of delinquency at the rate of one percent (1%) per month until
paid.

 

40.           No Accord And Satisfaction.  No payment by Lessee or receipt by Lessor of
a lesser amount than the monthly rent herein stipulated shall be deemed to be
other than on account of rents due, nor shall any endorsement or statement on
any check or any letter accompanying any check or payment of rent be deemed and
accord and satisfaction, and Lessor may accept such check or payment without
prejudice to Lessor’s rights to recover the balance of such rent or other
amount or pursue any other remedy in this Lease.  In the event that the rent or any other
monies which are due hereunder by Lessee are delinquent, Lessor may, upon the
receipt of any payments, apply them to any account or period it shall determine
in its discretion.

 

41.           Damage to Premises.  If there is a partial “material” or total
destruction of the Premises and Lessor, in its sole discretion, elects not to
rebuild or repair the same, this Lease shall terminate as of the date of such
destruction upon written notice from Lessor to Lessee of Lessor’s determination
not to rebuild or repair, such notice to be given within thirty (30) days of the
date of such destruction.  In the event
of such termination, Lessee shall forthwith surrender the Premises and shall be
relieved of all liability for any further rental and Lessor shall refund any
unearned rent paid in advance by Lessee and shall be thereby released from any
obligation or duty to Lessee.  Lessee
hereby waives any and all claims for damage and shall not be entitled to any
damages for any loss occasioned by any such injury to or destruction of said Premises
or any of Lessee’s property.  As used
herein, “material” partial destruction will mean destruction to a portion of
the Premises which will, in the reasonable opinion of the parties, require 12
months or more to substantially complete the repair.

 

42.           Condemnation.  In the event the whole or any portion of the
Premises shall be taken or condemned by any duly constituted authority or any
condemnation suit is instituted, Lessee will peaceably surrender and deliver up
to Lessor possession of the portion of the Premises so taken or condemned and
Rent shall be appropriately abated.  In
the event of a condemnation of a nonmaterial part of the Premises, such partial
condemnation shall not annul or void this Lease.  In the event of a condemnation of such part
or such form, shape or reduced area as to render the Premises not effectively
usable for the purpose for which the property is demised, or in the event of a
condemnation of all of said Premises, this Lease shall terminate as of the date
when the condemning authority has become entitled to, and does take actual
possession of the property condemned.  In
the event of any condemnation, it is understood and agreed that the Lessor
shall be entitled to, and shall receive and retain, any award made as
compensation for or in respect of the land, buildings, improvements and
fixtures actually taken and also any award for or in respect of damages
sustained to the land or portion of the buildings or other improvements and
fixtures not taken by reason of the severance there from of the land and/or
portion of building actually taken.

 

43.           Surrender Upon Termination.  At the expiration of the term or any
extension thereof or any sooner termination of this Lease, Lessee shall quietly
quit and 

 

 

surrender the
Premises to Lessor, without notice of any kind, notice being expressly waived,
together with all improvements upon the Premises or belonging to Lessor, by
whomsoever made, in good repair, order and condition, except for reasonable
wear and tear.  Lessee’s obligation to
observe and perform this covenant shall survive the expiration or sooner
termination of Lessee’s rights hereunder.

 

44.           Holding Over of Premises.  If upon termination of the Lease as herein
provided, Lessee withholds possession of the Premises from Lessor from and
after the date of such termination, the Lessor shall be entitled to monthly
rent equal to 125% of the monthly rent specified in paragraph 4 of this
Lease.  The provisions herein concerning
Lessee’s increased liability in the event of wrongful withholding of the
Premises from the Lessor shall not be deemed to be a waiver of any breach by
Lessee of any covenant herein contained or of any of Lessor’s rights herein,
and shall not prejudice any other remedy or right of action which the Lessor
may have for collection of arrears of rent or for other or preceding breach of
covenant by Lessee.  Any holding over
after the expiration of the said term, or any extension or renewal thereof,
with the written consent of the Lessor, shall be construed to be a tenancy from
month to month only, and shall otherwise be on the same terms and conditions
herein specified, so far as applicable.

 

45.           Lessor’s Right to Assign and
Transfer Security.  Lessor may, without consent of Lessee, sell,
assign, mortgage, transfer or hypothecate all of its right, title and interest
in this Lease, in the improvements constructed on the property demised
hereunder, or its interest in the property of which said Premises is a portion,
to the extent of its right, title, and interest therein.  In the event Lessor proposes to sell, assign,
mortgage, transfer or hypothecate all or any portion of Lessor’s right, title
or interest in this Lease and the prospective purchaser, assignee, mortgagee or
other financial source requires verification of Lessee’s financial condition on
the income and expense of Lessee’s obligations on the Premises, Lessee will
furnish to Lessor, upon request, any and all financial statements or records
reasonably necessary to verify such financial condition and income and expense.

 

46.           Lessor’s Failure to Perform.  Lessor shall not be deemed to be in default
in the performance of any obligation required by it under this Lease unless and
until it has failed to perform such obligation within thirty (30) days after
written notice by Lessee to Lessor, specifying wherein Lessor has failed to
perform such obligation; provided that if the nature of Lessor’s obligation is
such that more than thirty (30) days are required for its performance, Lessor
shall not be in default if Lessor commences to cure the default within such thirty
(30) day period and thereafter diligently prosecutes the same to
completion.  If Lessor fails to cure any
such default within the time periods so specified, Lessee may perform them on
Lessor’s behalf and deduct the cost therefore from Rent and Additional Rent due
hereunder.

 

47.           Time of Essence.  Time and exact performance are of the essence
of this Lease and all parts and paragraphs thereof.

 

48.           Force Majeure.  In the event that either party hereto shall
be delayed or hindered in or prevented from the performance of any act required
hereunder by reason of strikes, failure of power, restrictive governmental laws
or regulations, riots, insurrection, war or other reason of a like nature not
the fault of the party delayed in performing work or doing acts required under
the terms of this Lease, then performance of such act shall be excused for the
period of the delay and the period for the performance of such act shall be
extended for a period equivalent to the period of such delay.  It is understood, however, that this
provision shall not 

 

 

operate to
excuse Lessee from the prompt payment of rents or any other payments required
by the terms of the Lease.

 

49.           Notices.  Any notice from either party to the other
shall be in writing and shall be given by delivering the same to such other
party or by mailing the same by United States certified mail in an envelope
with sufficient postage prepaid thereon addressed to such party at the
addresses shown on page 1 of this Lease. 
For the purpose of this paragraph, either party may change its address
by notice to the other.

 

50.           Waiver of Jury Trial and
Counterclaims.  Lessor and Lessee hereby waive trial by jury
in any action or proceeding brought by either of the parties hereto against the
other party on any matters whatsoever arising out of or in any way connected
with this Lease, the relationship of landlord and tenant, Lessee’s use or
occupancy of the Premises, and/or any claim of injury or damage.  To facilitate the resolution of questions of
possession, if Lessor commences any proceedings for summary possession, if for
nonpayment of rent or for any other cause, Lessee will not interpose any
counterclaim of whatever nature or description in any such proceedings.  Lessee shall have the right to assert such
claims in a separate action or actions brought by Lessee.

 

51.           All Agreements are Contained
Herein; No Party Deemed Drafter.  This Lease contains
all of the terms, covenants, conditions, stipulations, agreements and
provisions agreed upon between the parties hereto in relation to the Premises
and this Lease supersedes and cancels each and every other agreement, promise
and/or negotiation between the parties with reference to the Premises.  Lessor and Lessee agree that neither party
shall be deemed to be the drafter of this Lease and in the event this Lease is
ever construed by a court of law, such court shall not construe this Lease
against either party as the drafter of this Lease.

 

52.           No Increase of Lessee’s Estate.  Lessee hereby waives and relinquishes any and
all rights given to a lessee under Chapter 516 of the Hawaii Revised
Statues (1968), as amended from time to time, or any similar law which may be
enacted at any time during the term giving Lessor the right to expand Lessee’s
leasehold estate under this Lease, which Lessee would not have under the terms
of this Lease in the absence of such chapter or such law, it being understood
and agreed by and between Lessor and Lessee that the provisions of such chapter
or such law shall not apply to this Lease. 
Any attempt by Lessee or any person claiming by or through Lessee to
expand its estate under this Lease pursuant to such chapter or such law shall
be a breach of this Lease.

 

53.           Recordation.  This Lease shall not be recorded by Lessor or
Lessee.  At the request of either party,
a short form memorandum of this Lease sufficient to give notice of the
leasehold estate hereby created shall be recorded in the Bureau of Conveyances
of the State of Hawaii.  Lessor shall
prepare the short form memorandum of the Lease and Lessee shall execute and
deliver the same to Lessor within seven (7) days of tender thereof by
Lessor.

 

54.           Headings.  The paragraph headings are inserted merely
for convenience and are not to be construed as part of this Lease or in any way
affecting it.

 

55.           Severability.  If any provision of this Lease shall be found
or held to be illegal, such illegality shall not affect the remainder of this
Lease, which shall remain in full force and effect.

 

 

56.           Definitions.  Words in the singular or plural signify both
the plural and singular; the use of any gender shall include all genders; and
each of the terms “or” and “and” has the meaning of the other or both where the
subject matters, sense and context require such construction.

 

57.           Matters Upon Lease Termination.

 

a.             Certain Prorations.

 

(i)            Lease Termination Prorations.  All real property taxes and utility charges
for the Premises shall be prorated for periods prior to the Commencement Date
and following the Termination Date based on the actual number of days in the
respective billing periods when such dates occur and the actual number of days
elapsed.  On the Termination Date, Lessee
shall deliver to Lessor cash in the amount of all deposits received by Lessee
for the use of the Premises for periods following the Termination Date.  Lessee shall reimburse Lessor each month for
any gift cards issued by MLP, Kapalua Land Company, Ltd. or Lessee at any time
prior to termination of the Lease (including prior to commencement of the
Lease) and accepted for redemption by Lessor within fifteen (15) days following
the last day of the month in which such gift certificate is accepted for
redemption by Lessor.  Any payments
received by Lessor each month with respect to the use of the Premises for
periods following the Commencement Date and prior to the Termination Date shall
be paid by Lessor to Lessee within fifteen (15) days following the last day of
the month in which the payment is received; provided, however, that Lessor may
offset from any such payments the outstanding amount of any gift certificates
accepted for redemption by Lessor.

 

(ii)           Pro Shop Inventory.  Upon the termination of the Lease, the
representatives of Lessor and Lessee shall prepare an inventory at the Golf
Course (which inventory shall be binding on Lessor and Lessee) of (i) all
of guests’ golf clubs and luggage checked or left in the care of the Golf
Course by guests then or formerly at the Golf Course, (ii) parcels,
laundry or other property of guests checked or left in the care of the Golf
Course by guests then or formerly at the Golf Course, and (iii) all items
contained in the Golf Course “lost and found”. 
Lessor shall be responsible for all of such items listed in the
inventory from and after the delivery of such items by Lessee to Lessor and
shall indemnify, defend and hold Lessee harmless from and against any claim,
liability, cost or expense (including reasonable attorneys’ fees) incurred by
Lessee relating to the loss of or damage to such items listed in the inventory
from and after their delivery to Lessor. 
The provisions of this paragraph 57(a)(ii) shall survive
termination of this Lease.

 

(iii)          Equipment Leases.  Upon the Termination Date, Lessor shall have
the right, but not the obligation, to the extent assignable, to receive an assignment
of Lessee’s rights under any of the equipment leases for golf course
maintenance equipment, golf carts and related accessories and other personal
property then subject to lease upon Lessor’s written agreement to assume Lessee’s
obligations under such equipment leases after the Termination Date.  Lessee shall provide Lessor with complete
copies of each such equipment lease not less than 60 days prior to the
Termination Date and Lessor shall notify Lessee in writing not less than 30
days prior to the Termination Date which, if any, of the equipment leases
Lessor shall assume on the Termination Date and Lessee shall, to the extent
assignable, assign those leases to Lessor

 

 

b.             Revenues and Expenses.

 

(1)           All other revenues and expenses
for the Golf Course shall be allocated between Lessor and Lessee as provided
herein, effective as of the end of the day night audit process, but no later
than 5:00 a.m. Hawaiian Time, on the Termination Date (the “Cutoff Time”),
determined in accordance with sound accounting principles, consistently
applied.  Except as otherwise expressly
provided for in this Lease, Lessee shall be entitled to all revenue and shall
be responsible for all expenses for the period of time up to but not including
the Cutoff Time, and Lessor shall be entitled to all revenue and be responsible
for all expenses for the period of time from, after and including the Cutoff
Time.

 

(2)           Lessor shall promptly pay and
reimburse Lessee for the following:  (i) petty
cash funds and house banks on hand at the Golf Course as of the Cutoff Time; (ii) guest
ledger balance as of the Cutoff Time; (iii) unexpired portions of prepaid
expenses for all contracts assumed by Lessor, if any, to include (but not
limited to) deposits, dues and memberships, maintenance agreements, advertising
contracts, licensing agreements and software support agreements; (iv) prepaid
amounts of taxes and assessments; (v) prepaid amounts of city, county and
state permit and license fees (if transferable) allocable to the period
following the Cutoff Time and any deposits assumed by Lessor in connection with
any such permits and licenses; (vi) for all contracts that are assumed by
Landlord upon termination, security deposits paid by Lessee to outside vendors
and suppliers to the Golf Course (provided such security deposits remain on
deposit for the benefit of Lessor); and (vii) if and when received by
Lessor, uncollected rents due from the Restaurant Lease, subleases and other
occupancy agreements allocable to the period before the Cutoff Time.

 

c.             Reconciliation.  Except as otherwise provided herein, any
revenue or expense amount that cannot be ascertained with certainty as of the
Termination Date shall be prorated on the basis of the parties’ reasonable
estimate of such amount, and shall be the subject of a final proration within
ninety (90) days after Termination Date, or as soon thereafter as a precise
amount can be ascertained.  Lessor shall
promptly notify Seller when it becomes aware that any such actual amount has
been ascertained.  Once all revenue and
expense amounts have been ascertained, Lessor shall prepare a final proration
statement which shall be subject to Lessee’s approval.  Upon Lessee’s acceptance and approval of any
such final proration statement, such statement shall be conclusively deemed to
be accurate and final and Lessee and Lessor shall each make any further
adjustments required by such final proration statement.  Lessee shall be entitled to an accounting
from Lessor with respect to any such revenue and expense amount, which is
subject to allocation between Lessor and Lessee.

 

d.             Customer Relation Data.  At Lease termination, Lessee shall retain one
(1) set of customer relationship management (CRM) data for the Golf
Course.

 

e.             Pro-Shop Lease.  At Lease termination, provided such
termination was not the result of an uncured breach or default of this Lease by
Lessee, Lessor and Lessee shall execute the pro shop lease attached hereto as Exhibit C.

 

58.           Miscellaneous.  Any agreement hereafter made shall be
ineffective to change, modify, discharge or effect an abandonment of this Lease
in whole or in part unless such agreement is in writing and signed by the party
against whom enforcement of the change, modification, discharge or abandonment
is sought.  The laws of the State of Hawaii
shall govern the validity, performance and enforcement of this Lease.  Any action under or related to this Lease
shall be brought in a court of competent jurisdiction in the State of Hawaii.  The 

 

 

covenants and
conditions herein contained shall, subject to the provisions as to assignment,
apply to and bind and inure to the benefit of the respective successors and
permitted assigns of the parties hereto.

 

[Remainder of page intentionally
left blank.]

 

 

IN WITNESS WHEREOF, Lessor and Lessee have executed this Lease
effective the day and year first above written.

 

	
   

  	
  TY MANAGEMENT CORPORATION, a

  
	
   

  	
  Hawaii corporation

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Tadashi Yanai

  
	
   

  	
   

  	
  Name: Tadashi Yanai

  
	
   

  	
   

  	
  Title: President

  
	
   

  	
   

  
	
   

  	
  Lessor

  
	
   

  	
   

  
	
   

  	
  KAPALUA PLANTATION GOLF LLC

  
	
   

  	
   

  
	
   

  	
  By

  	
  Maui Land & Pineapple Company, Inc.,

  
	
   

  	
   

  	
  Its Sole Member

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Robert I. Webber

  
	
   

  	
   

  	
  Name: Robert I. Webber

  
	
   

  	
   

  	
  Title: President & CEO

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Ryan L. Churchill

  
	
   

  	
   

  	
  Name: Ryan L. Churchill

  
	
   

  	
   

  	
  Title: Senior Vice President

  
	
   

  	
  Lessee

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00156-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00156-of-00352.parquet"}]]