10-K

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)
ý	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2008
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                                 to

Commission file number 1-6510

MAUI LAND & PINEAPPLE COMPANY, INC.
(Exact name of registrant as specified in its charter)

HAWAII (State or other jurisdiction of incorporation or organization)	99-0107542 (IRS Employer Identification number)
161 SOUTH WAKEA AVENUE, P. O. BOX 187, KAHULUI, MAUI, HAWAII (Address of principal executive offices)	96733-6687 (Zip Code)

Registrant's telephone number, including area code (808) 877-3351

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange on Which Registered
Common Stock, without Par Value	New York Stock Exchange

         Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o    No ý

         Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o    No ý

         Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý    No o

         Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

         Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer ý Non-accelerated filer o
(Do not check if a smaller reporting company) Smaller reporting company o

         Indicate by check mark whether the registrant is a shell Company (as defined in Rule 12b-2 of the Exchange Act). Yes o    No ý

         The aggregate market value, as of June 30, 2008, of the voting stock held by non-affiliates of the registrant was $119,896,000 based upon the closing price on the New York Stock Exchange on such date. This computation assumes that all directors, executive officers and persons known to the Company to be the beneficial owners of more than ten percent of the Company's common stock are affiliates. Such assumption should not be deemed conclusive for any other purpose.

         At March 20, 2009, the number of shares outstanding of the registrant's common stock was 8,141,988.

Documents incorporated by reference:

         Part III—Certain portions of the proxy statement for the registrant's annual meeting of stockholders to be held on May 4, 2009, to be filed no later than 120 days after the close of the registrant's fiscal year ended December 31, 2008, are incorporated by reference into Part III of this report. Only those portions of the proxy statement that are specifically incorporated by reference herein shall constitute a part of this annual report.

FORWARD-LOOKING STATEMENTS AND RISKS

        This and other reports filed by Maui Land & Pineapple Company, Inc. with the Securities and Exchange Commission contain forward-looking statements intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. These statements can be identified by the fact that they do not relate strictly to historical or current facts. They contain words such as "may," "will," "project," "might," "expect," "believe," "anticipate," "intend," "could," "would," "estimate," "continue" or "pursue," or the negative or other variations thereof or comparable terminology. Actual results could differ materially from those projected in forward-looking statements as a result of the following factors, among others:

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our ability to comply with the terms of our indebtedness and to extend the maturity dates of, or refinance, portions as they become due;

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general economic factors, including the current economic recession, tightening credit markets, declining demand for real estate, and increased fuel and travel costs;

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the satisfaction of certain closing conditions set forth in the amended construction loan agreement and certain related agreements relating to the construction of the Residences at Kapalua Bay project;

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the ability and willingness of our lenders to comply with the terms of their lending agreements with us;

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timing and success of sales and construction at the Residences at Kapalua Bay project;

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timing and success of the Kapalua Resort initiatives to enhance and improve the resort and the Kapalua Villas;

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increased fuel and travel costs, and reductions in airline passenger capacity;

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dependence on third parties and actual or potential lack of control over joint venture relationships;

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recoverability from operations of real estate development deferred costs;

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timing of approvals and conditions of future real estate entitlement applications;

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impact of current and future local, state and national government regulations, including Maui County affordable housing legislation;

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future cost of compliance with environmental laws;

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effects of weather conditions and natural disasters;

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compliance with financial and other covenants contained in our third party lending arrangements; and

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availability of capital on terms favorable to us, or at all.

        Such risks and uncertainties also include those risks and uncertainties discussed under the headings "Business," "Risk Factors," and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this annual report, as well as other factors described from time to time in our reports filed with the Securities and Exchange Commission. Because the factors referred to above could cause actual results or outcomes to differ materially from those expressed in any forward-looking

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statements made by us or on our behalf, you should not place undue reliance on any forward-looking statements. New factors emerge from time to time, and it is not possible for us to predict which factors will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Further, any forward-looking statement speaks only as of the date on which it is made, and, except as required by law, we undertake no obligation to publicly revise our forward-looking statements to reflect events or circumstances that arise after the date of this annual report or the date of documents incorporated by reference in this annual report that include forward-looking statements. You should read this annual report and the documents that we reference and have filed as exhibits to this annual report with the understanding that we cannot guarantee future results, levels of activity, performance or achievements.

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TABLE OF CONTENTS

PART I
Item 1.	Business	1
Item 1A.	Risk Factors	10
Item 1B.	Unresolved Staff Comments	20
Item 2.	Properties	20
Item 3.	Legal Proceedings	21
Item 4.	Submission of Matters to a Vote of Security Holders	21
PART II
Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	22
Item 6.	Selected Financial Data	24
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	25
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	47
Item 8.	Financial Statements and Supplementary Data	48
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	87
Item 9A.	Controls and Procedures	87
Item 9B.	Other Information	88
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	90
Item 11.	Executive Compensation	90
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	90
Item 13.	Certain Relationships and Related Transactions, and Director Independence	90
Item 14.	Principal Accountant Fees and Services	90
PART IV
Item 15.	Exhibits and Financial Statement Schedules	91
SIGNATURES		97

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PART I

Item 1.    BUSINESS

Overview

        Maui Land & Pineapple Company, Inc. is a Hawaii corporation, the successor to a business organized in 1909. The Company consists of a landholding and operating parent company and its principal subsidiaries, including Maui Pineapple Company, Ltd. and Kapalua Land Company, Ltd. Depending upon the context, the terms the "Company," "we," "our," and "us," refer to either Maui Land & Pineapple Company, Inc. alone, or to Maui Land & Pineapple Company, Inc. and its subsidiaries collectively.

        We have three operating segments as follows:

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Agriculture.  The Agriculture segment primarily includes growing, packing, and marketing of fresh pineapple. Our pineapple is sold under the brand names Maui Gold® and Hawaiian Gold^TM. We also grow and market fresh organic pineapple. A portion of our business included processing (canning) pineapple; however, we ceased substantially all canning and processing of solid-pack product in June 2007.

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Resort.  The Resort segment includes our ongoing operations at the Kapalua Resort. These operations include two championship golf courses, a tennis facility, a vacation rental program (The Kapalua Villas), and several retail outlets. In 2008, we opened the Mountain Outpost and a guided zip-line business.

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Community Development.  The Community Development segment includes our real estate entitlement, development, construction, sales and leasing activities. This segment also includes the operations of Kapalua Realty Company, a general brokerage real estate company located within Kapalua Resort and Public Utilities Commission-regulated water and sewage transmission operations. The Community Development segment includes our 51% equity interest in Kapalua Bay Holdings, LLC ("Bay Holdings") (Note 4 to consolidated financial statements).

        For additional financial information about these segments, see Segment Information, Note 18 to our consolidated financial statements.

2008 Business Developments

        In 2008, all of our business segments were negatively affected by the global recession, the resulting uncertainty in the local, national and world economies, and the continuing turmoil in the financial and credit markets. Uncertainty about current global economic conditions caused consumers to postpone spending in response to tighter credit, negative financial news and declines in income or asset values, which negatively impacted all three of our operating segments. The economic turmoil and higher transportation costs resulted in reduced visitor counts to Maui and to the State of Hawaii, which negatively affected our Resort segment, and also resulted in slower sales of, and increased potential default rates on the residential units at Kapalua Bay, which negatively affected our Community Development segment. In our pineapple operations, high energy prices increased the cost of fertilizers, packaging and other materials, increased the cost of transporting fruit to markets, and increased the cost of transporting fruit, equipment and employees between our locations, all of which negatively impacted our Agriculture segment. In July 2008, we announced the reduction of 274 positions affecting jobs throughout our Company, primarily in the pineapple operations. We continued throughout the remainder of the year to seek additional areas to reduce cost and, in March 2009, we began to implement staff and salary reductions affecting nearly all employees.

        In 2008, we incurred an operating loss of $71.6 million and negative cash flow from operations of $51.8 million. In addition at the end of 2008, $77.8 million of borrowings under our revolving line of

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credit was scheduled to become due in November 2009. In March 2009, we amended both our $90 million revolving line of credit and our $25 million revolving loan agreements in order to be in compliance with all covenants effective December 31, 2008. Also in March 2009, we sold the Plantation Golf Course ("PGC") for $50 million (see Note 21 to consolidated financial statements), which was included in the collateral securing the line of credit agreement. In consideration for release of the PGC from the collateral, $45 million of the sales proceeds were applied to partially repay outstanding borrowings and the credit limit under this facility was reduced to $45 million. In conjunction with the PGC sale, we amended our line of credit agreement to extend the maturity date to March 2010 and all financial covenants, except for the minimum liquidity and maximum indebtedness requirements were eliminated. The financial covenants in our $25 million revolving loan agreement were suspended through 2009, except for a minimum liquidity requirement and maximum indebtedness limitation, and the maturity of this loan was accelerated to March 2010 (previously June 2011). As a result of these amendments, $57.8 million of the remaining outstanding borrowings as of March 30, 2009, will become due in March 2010. We are currently in discussions with both lenders to restructure our line of credit and revolving loan agreements to extend the maturity dates beyond 2010, and to increase the amounts available under the line of credit agreement based, in part, on a re-appraisal of the properties securing the line of credit and by providing additional properties as collateral under the agreement. We also plan to sell selected real estate assets in 2009 to provide additional liquidity.

        In September 2008, Lehman Brothers Holdings, Inc., the lead lender in the syndicated construction loan for our Residences at Kapalua Bay project filed a bankruptcy petition under Chapter 11 of the U.S. Bankruptcy Code. Avoiding the stoppage of construction work on this project was a high priority to us as we worked with Lehman, other lenders and the bankruptcy courts to resolve the funding shortfall. The members of Bay Holdings agreed to advance funds to the joint venture, which when combined with funding received from the other lenders in the loan syndicate, were sufficient to pay the minimum progress payments due to the contractor. Construction of the project continued uninterrupted and on February 11, 2009, Bay Holdings entered into an amended and restated construction loan agreement that we believe will be sufficient to complete construction of the project. The interim and amended financing arrangement increased costs and are expected to result in significantly reduced returns to us from the project.

        The following is a summary of other material business developments in 2008. For more discussion about business developments in 2008, see Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," in this annual report.

        Development Projects.    While sales at the Residences at Kapalua Bay project have continued throughout 2008 and early in 2009, based on potential for an increase in default rates because of the current economic environment, Bay Holdings significantly increased the allowance for default reserves and we recorded fourth quarter equity in losses of affiliates from the joint venture of $7.5 million. In the fourth quarter of 2008, we recorded an impairment charge of $37.8 million related to this investment due to the increased cost from the restructured financing arrangements and slower sell out of the project than originally forecasted (Note 4 to consolidated financial statements). In addition, due to uncertainty as to when the real estate markets will rebound and our cash flow constraints, we have delayed the start of construction of new development projects and have written off deferred project costs that we do not believe can be recovered. This resulted in a total pre-tax charge of $10.6 million in 2008 (Note 3 to consolidated financial statements).

        Management Changes.    Effective January 1, 2009, Warren H. Haruki was appointed to the position of Chairman of our Board of Directors and Robert I. Webber was appointed to the positions of President and Chief Executive Officer. In November 2008, David C. Cole resigned from his position of Chairman, President and CEO effective as of December 31, 2008.

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        Board Appointment and Annual Meeting.    In December 2008, our Board of Directors approved an amendment to our Bylaws to increase the Class I Directors to four and appointed Stephen M. Case to fill the new Class I Director position. At our annual meeting in May 2008, our shareholders re-elected John H. Agee, Warren H. Haruki and Duncan MacNaughton as Class III Directors.

        Ladies Professional Golf Association ("LPGA").    In October 2008, we held the inaugural LPGA Kapalua Classic, a full field tournament on the Bay Course and Morgan Pressel, Kapalua Resort's official touring professional, won the tournament with a dramatic final putt on the 18^th green.

        Convertible Notes.    In July 2008, we issued $40 million in senior secured convertible notes. A portion of the proceeds were used to repay other debt and the remainder was used to fund operations, capital expenditures and development projects (Note 5 to consolidated financial statements).

        New Operations.    In June 2008, we entered into an agreement with WTS International, Inc. to perform pre-opening services and to operate the spa that will be located adjacent to the condominiums currently being constructed by Bay Holdings. We expect to open the spa by mid-2009. Also in June, Merriman's Kapalua, a fine dining restaurant opened under a long-term lease with us, in a newly renovated location on Kapalua Bay. The site of the former Bay Club had been closed since August 2004.

        New York Stock Exchange ("NYSE").    In April 2008, our common stock stopped trading on AMEX and began trading on the NYSE.

        Interest Rate Agreements.    In January 2008, we entered into interest rate swap agreements for approximately two years that converted $55 million of variable-rate debt to fixed-rate debt based on a 2-year LIBOR rate.

        Sales of Non-Core Property.    In 2008, we sold approximately 111 acres of Upcountry Maui land in three land sales transactions for a total of $4.4 million in revenues. These properties primarily consisted of land that was deemed unsuitable for precision cultivation of pineapple and were also not suitable for creating new holistic development communities.

Description of Business

Agriculture

        Maui Pineapple Company, Ltd. is the operating subsidiary for our Agriculture segment. Our business is focused on growing, harvesting, packing and marketing fresh premium pineapple. We sell our fresh Maui Gold® pineapple directly to wholesalers and grocery stores in Hawaii and through a consignment arrangement with Calavo Growers, Inc. to customers in the continental United States and Canada. We also sell our Maui Gold® pineapple as gift packs on our website and through certain retail outlets in Hawaii. Revenues from our Agriculture segment for the year ended December 31, 2008 were $27.8 million, or approximately 35% of our consolidated revenues.

Planting, Harvesting and Packing

        The fresh fruit market is a year-round business, which requires consistency of supply. Over the past two years, we have made significant progress in changing our agronomic practices and planting schedules to produce a more consistent and predictable supply of fruit throughout the year. Planting and harvesting take place throughout the year. Our pineapple farms encompass approximately 2,000 acres on Maui. Two pineapple crops are normally harvested from each new planting. The first, or plant crop, is harvested approximately 18 to 23 months after planting; the second, or ratoon crop, is harvested 12 to 14 months later. A third crop, the second ratoon, may be harvested 9 to 14 months later depending on a number of conditions.

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        The availability of water for irrigation is critical to the cultivation of pineapple. The Upcountry Maui area, in which we have historically grown pineapple, is susceptible to drought conditions, which can adversely affect pineapple operations by resulting in poor yields (tons per acre) and lower recoveries (the amount of packable and saleable product per ton of fruit harvested). A large portion of the fields in our Upcountry Maui plantation is equipped with drip irrigation systems.

        Harvested pineapple is packed for fresh shipment at our packing facility located in Kahului. Our pineapple is shipped to our customers in Hawaii and to the consignee's locations in the continental United States by ocean or air freight.

        Prior to 2008, we owned and operated fully integrated facilities for the production of fresh and processed pineapple. Harvested fruit was directed to fresh or canning facilities based on market conditions and fruit size and quality. The metal containers used in canning pineapple were produced in a Company-owned plant at the cannery site. Our processed pineapple products were primarily sold as private label pineapple with 100% HAWAIIAN U.S.A. stamped on the can lid, primarily to large grocery chains and to the United States government. We substantially ceased canning operations by the end of 2007, and now focus on the sale of fresh fruit and pineapple juice.

Competition

        Our fresh pineapple is sold in competition with both foreign and United States companies. Our principal competitors are Dole Food Company, Inc. and Del Monte Fresh Produce Company, each of which produces substantial quantities of fresh pineapple products, a significant portion of which is grown in Central America.

Resort

        Kapalua Land Company, Ltd. is the operating subsidiary that includes our Resort segment, which operates the Kapalua Resort, a master-planned, resort community on Maui's northwest coast. Our property on West Maui includes approximately 22,100 acres, most of which remain as conservation or open space. Revenues from our Resort segment for the year ended December 31, 2008 were $37.4 million, or approximately 47% of our consolidated revenues.

        Presently, the Kapalua Resort includes 1,650 acres bordering the ocean with three white sand beaches and includes two championship golf courses (The Bay Course and The Plantation Course), The Ritz-Carlton, Kapalua hotel, eight residential subdivisions, a ten-court tennis facility, the first phase of commercial space in the central area of the Resort, several restaurants, and over 700 single-family residential lots, condominiums and homes. We operate Kapalua Resort's golf courses, a tennis facility, retail shops, a vacation rental program (The Kapalua Villas), and provide certain services to the Resort. We have approximately 220 units in our Kapalua Villas short-term rental program. We also manage The Kapalua Club, a membership program that provides certain benefits and privileges within the Kapalua Resort for its members. The Kapalua Golf Academy, located on 23 acres of land in the Central Resort area is a state-of-the-art teaching and practice facility that was developed in conjunction with PGA Touring Professional Hale Irwin. Prior to March 2007, the Resort included a third golf course, The Village Course, which was closed on February 28, 2007. On March 17, 2009, we entered into a sale and purchase agreement to sell The Plantation Golf Course for $50 million (Note 21 to consolidated financial statements).

        In late December 2007, our Kapalua Adventure Center opened and in January 2008 our Mountain Outpost began operations. The Adventure Center is located in the former Village Clubhouse and includes a retail area featuring outdoor clothing and gear, a café and is the check-in point for the Mountain Outpost, which is comprised of zip-lines stretching over scenic ravines in the West Maui Mountains, a ropes challenge course, a climbing wall and other adventures.

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        In 2008, we completed several major new initiatives to improve and revitalize the Kapalua Resort. Financial results for the year were sharply affected by the high cost of fuel throughout most of the year that increased traveling costs. Traveling costs were also affected by airline closures and the resulting reduced seat capacity to Hawaii. In addition, the economic recession in the United States and elsewhere resulted in reduced travel. We launched various innovative marketing initiatives to draw guests to the Kapalua Resort, which partially mitigated the negative influences on our Resort operations.

        In 2008, we continued construction of a trail system that will run along the ocean, through the mountains and wind through the entire resort and our other land holdings. The Resort segment has also been implementing the Kapalua Gold program to upgrade and standardize the privately-owned Kapalua Villas units in our rental program, as well as other initiatives to enhance and improve the Kapalua Resort.

Signature Events

        We utilize nationally televised professional golf tournaments as a marketing tool for the Kapalua Resort. Since January 1999, Kapalua has hosted the Mercedes-Benz Championship, the season opening event for the PGA TOUR. We have agreements with Mercedes-Benz and the PGA Tour to host and manage this event at the Kapalua Resort through January 2010.

        Other signature events at the Kapalua Resort include:

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WhaleQuest at Kapalua, an annual event to celebrate the annual migration of North Pacific Humpback Whales to Hawaiian waters, which includes lectures, tours and educational workshops;

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Celebration of the Arts, a three-day festival held in the Spring that pays tribute to the people, arts and culture of Hawaii through demonstrations in hula and chant, workshops in Hawaiian art, and one-on-one interaction with local artists;

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Kapalua Wine & Food Festival, an annual event held in the summer that attracts world-famous winemakers, chefs and visitors to Kapalua for a series of wine tasting, festive gatherings and gourmet meals;

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LPGA Kapalua Classic, a full-field tournament that commenced in October 2008 on the Bay Course that features the world's top professional women golfers; and

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Billabong Pro Maui, the last Triple Crown women's surf contest of the year held in December at Honolua Bay.

Competition

        The Kapalua Resort faces substantial competition from alternative visitor destinations and resort communities in Hawaii and throughout the world. The Kapalua Resort's primary resort competitors on Maui are located in Kaanapali, which is approximately five miles from Kapalua, and in Wailea on Maui's south coast.

Community Development

        The Community Development segment is responsible for all of our real estate entitlement, development, construction, sales and leasing activities. Our projects are focused primarily on the luxury real estate market in and surrounding the Kapalua Resort and affordable and moderately priced residential and mixed use projects in West Maui and Upcountry Maui. This segment also includes the operations of Kapalua Realty Company, a general brokerage real estate company located within the Kapalua Resort; and our Public Utilities Commission-regulated water and sewage transmission

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operations that service the Kapalua Resort and parts of West Maui. Revenues from our Community Development segment for the year ended December 31, 2008 were $11.4 million, or approximately 14% of consolidated revenues.

        We are the lessor of certain commercial and residential properties primarily at the Kapalua Resort. We were the ground lessor under a long-term lease with the Ritz-Carlton, Kapalua hotel, until March 2007 when we sold the land to the lessee and acquired a partial interest in the joint venture that is now the owner of the hotel and fee interest (Note 4 to consolidated financial statements). In August 2004, we contributed the fee interests in the land underlying the Kapalua Bay Hotel and our interests in The Kapalua Shops to Kapalua Bay LLC ("Kapalua Bay"), a wholly owned subsidiary of Bay Holdings, a limited liability company formed as a joint venture among the Company, Marriott International Inc. and Exclusive Resorts LLC. We have a 51% interest in, and are the managing member of, Bay Holdings. Bay Holdings is constructing the Residences at Kapalua Bay, consisting of approximately 146 units that will be sold as whole ownership and fractional ownership residences, a clubhouse, pool, spa and other amenities. The percentage of completion of the six residential buildings in the project ranged from approximately 83% to 98% as of the end of 2008, and we expect the project to be completed by the second quarter of 2009. See Note 4 to consolidated financial statements.

        Appropriate entitlements must be obtained for land that is intended for development. Securing proper land entitlement is a process that requires obtaining county, state and federal approvals, which can take many years to complete and entails a variety of risks. The entitlement process requires that we satisfy all conditions and restrictions imposed in connection with such governmental approvals including, among other things, construction of infrastructure improvements, payment of impact fees (for things such as parks and traffic mitigation), restrictions on permitted uses of the land, and provision of affordable housing. We actively work with the community, regulatory agencies, and legislative bodies at all levels of government in an effort to obtain necessary entitlements consistent with the needs of the community.

        We have approximately 1,800 acres of land in Maui that are at various stages in the land entitlement process as follows:

Location	Number of Acres		Zoned for Planned Use
Kapalua Resort		975	Yes
Other Kapalua Resort and West Maui		528	No
Upcountry		305	No

        Since 2004, we have identified over 3,700 acres of non-core Upcountry Maui land and have sold to date approximately 3,500 acres with total sales proceeds of approximately $79 million, of which $4.4 million were recognized in 2008.

        Honolua Ridge Phase I and II are comprised of a total 50 agricultural lots ranging from three to 30 acres, with original list sales prices ranging from $895,000 to $7.3 million. We began selling Phase I in 2004 and Phase II in 2005; there were no sales in 2008, and as of December 31, 2008, we have one unsold Phase II lot in inventory.

        As mentioned above, under the caption "2008 Business Developments," the start of construction of new development projects, other than the Residences at Kapalua Bay project, are now delayed because of the current economic climate and cash flow constraints. However, we expect to continue engaging in planning, permitting and entitlement activities for our development projects, and we intend to proceed

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with construction and sales of the following projects, among others, when internal and external factors permit:

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Kapalua Mauka:  As presently planned, this project is comprised of 690 single and multi-family residential units and commercial components, five acres of commercial space and up to 27 holes of golf on a total of 925 acres.

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The Village at Kapalua:  This is the commercial component of the central area of the Kapalua Resort. It is planned to be built in two phases and will add approximately 30,000 square feet of new retail space to the Kapalua Resort. The Village will also include apartments, condominiums and other resort-related facilities. The first phase of the commercial component opened in October 2006.

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Pulelehua:  This project is designed to be a new traditional community for working families in West Maui. It encompasses 312 acres and is currently planned to include 13 acres for an elementary school, 882 dwelling units, 91 acres of usable open space, and a traditional village center with a mix of residential and neighborhood-serving commercial uses. We are currently in the process of securing a hearing for the project with the Maui County Council Land Use Committee.

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Hali`imaile Town:  This project is contemplated to be a new town in Upcountry Maui, a holistic traditional community with agriculture, education, and sustainability as core design elements. Community design workshops were held to involve the Maui community in determining the vision for this community. The public approval process for any plan to develop this area is expected to take several years and will be subject to urban growth boundary determination by the County of Maui as it updates the County General Plan over the next two years.

        The price and market for luxury real estate on Maui has in the past been highly cyclical based upon interest rates, the general real estate markets on the mainland United States (specifically the West Coast), the popularity of Hawaii as a vacation destination, the general condition of the economy in the United States and Asia, and the relationship of the dollar to foreign currencies. The Community Development segment faces substantial competition from other land developers on the island of Maui as well as in other parts of Hawaii and the mainland United States.

Employees

        In 2008, we employed approximately 800 people. Agricultural operations employed approximately 250 employees of which approximately 43% were seasonal or intermittent employees and approximately 71% were covered by collective bargaining agreements. Resort operations employed approximately 400 employees, of which approximately 10% were part-time employees and approximately 23% were covered by collective bargaining agreements. The Community Development segment employed approximately 35 employees, and corporate services and other operations employed approximately 100 employees in 2008. In 2009, we began to implement staff reductions that are expected to reduce the number of employees by about 100 with the majority of the reduction to be made in March 2009.

Other Information

        Our Agriculture segment engages in continuous research to develop techniques to reduce costs through crop production and processing innovations and to develop and perfect new products. Research and development expenses approximated $1,407,000 in 2008, $1,155,000 in 2007, and $1,078,000 in 2006.

        We have reviewed our compliance with federal, state and local provisions that regulate the discharge of materials into the environment or are otherwise related to the protection of the

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environment. We do not expect any material future financial impact as a result of compliance with these laws.

        Pursuant to a settlement agreement with the County of Maui in 1999, we have a commitment until December 1, 2039 to share with several chemical manufacturers in the capital costs to install filtration systems in any future water wells if the presence of a nematocide, commonly known as DBCP, exceeds specified levels, and for the ongoing maintenance and operating costs for filtrations systems on existing and future wells. We are not presently aware of any plans by the County of Maui to install other filtration systems or to drill any water wells in areas affected by agricultural chemicals. For additional information, see Note 19 to consolidated financial statements.

Financial Information about Geographic Areas

        Revenues attributable to foreign countries were not material for the last three years.

Available Information

        Our Internet address is www.mauiland.com. Information about the Company is also available on www.kapalua.com and www.mauipineapple.com. Reference in this annual report to our website address does not constitute incorporation by reference of the information contained on the websites. We make available free of charge on or through our website our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission, or SEC. We also make available through our website all filings of our executive officers and directors on Forms 3, 4 and 5 under Section 16 of the Exchange Act. These filings are also available on the SEC's website at www.sec.gov.

Executive Officers of the Company

        The Company's executive officers as of March 2009 are listed below. The current term of Mr. Webber by contract continues through April 2010, and terms of the other executive officers expire in May 2009, or at such time as their successors are elected.

Robert I. Webber (50) Mr. Webber has served as President and Chief Executive Officer since January 2009. From March 2008 through December 2008, he served as Executive Vice President and Chief Operating Officer; and also as Chief Financial Officer from April 2006. From April 2006 to March 2008, Mr. Webber served as Senior Vice President of Business Development. He served as President of Dyntek, Inc., a provider of technology services based in Irvine, California, from June 2005 to March 2006; and as Chief Financial Officer and Director from July 2004 to March 2006. He was the General Manager of Spectrus, Inc., (formerly known as FOR1031) a privately held commercial real estate development and services company in Irvine, California from October 2003 to June 2004. Previously, Mr. Webber worked as a consultant for McKinsey & Company, Inc. in Los Angeles, California.

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Ryan L. Churchill (37)

Mr. Churchill has served as Senior Vice President/Corporate Development of the Company since March 2007. He served as Vice President/Community Development from November 2005 to March 2007. Mr. Churchill was Vice President/Planning of Kapalua Land Company, Ltd., the operating subsidiary responsible for the Company's Community Development and Resort segments, from June 2004 to November 2005 and Development Manager from October 2000 to June 2004.

Fred W. Rickert (65)

Mr. Rickert has served as Vice President/Treasurer of the Company since May 2006. He served as Vice President/Chief Financial Officer from September 2004 to May 2006 and Acting Chief Financial Officer from July 2004 to September 2004; Vice President/Finance of Maui Pineapple Company, Ltd., the operating subsidiary of the Company's Agriculture segment from April 2004 to July 2004. Mr. Rickert served as Chief Financial Officer of the Port of Oakland, a municipal corporation with operations in the Oakland International Airport, maritime operations, and commercial real estate development 1996 to 2004 and Vice President Accounting of PLM International, Inc., an AMEX listed company syndicating partnerships for transportation equipment operating leases, from 1990 to 1996. Mr. Rickert's employment with the Company terminated on March 20, 2009.

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Item 1A.    RISK FACTORS

The following is a summary of certain risks we face in our business. They are not the only risks we face. Additional risks that we do not yet know of or that we currently believe are immaterial may also impair our business operations. If any of the events or circumstances described in the following risks actually occurs, our business, financial condition or results of operations could suffer, and the trading price of our common stock could decline. In assessing these risks, investors should also refer to the other information contained or incorporated by reference in our other filings with the Securities and Exchange Commission.

Risks Related to our Business

Risks Relating to our Community Development and Resort Segments

Unstable market conditions could continue to materially and adversely affect our operating results.

        Our operations and performance depend significantly on worldwide economic conditions. Uncertainty about current global economic conditions poses a risk as consumers, tourists and real estate investors postpone or reduce spending in response to tighter credit, higher energy costs, negative financial news and/or declines in income or asset values, which could have a material negative effect on the demand for our products and services. Other factors that could influence demand include continuing increases in fuel and other energy costs, conditions in the residential real estate and mortgage markets, labor costs, access to credit, consumer confidence, and other macroeconomic factors affecting consumer spending behavior. These and other economic factors could have a material adverse effect on demand for our products and services and on our financial condition and operating results.

        The current financial turmoil affecting the banking system and financial markets and the possibility that financial institutions may consolidate or go out of business have resulted in a tightening in the credit markets, a low level of liquidity in many financial markets, and extreme volatility in fixed income, credit, currency and equity markets. There could be a number of follow-on effects from the credit crisis on our business, including insolvency of our lenders and the inability of prospective purchasers to obtain credit to finance purchases of real property, including ownership interests in the Residences at Kapalua Bay, for example.

        In addition, if the current equity and credit markets further deteriorate, or do not improve, it may make any necessary debt or equity financing more difficult, more costly, and more dilutive. While we believe we have adequate capital resources to meet current and anticipated working capital and capital expenditure requirements for at least the next twelve months, a sustained economic recession or increase in our expenses could require additional financing on less than attractive rates or on terms that are excessively dilutive to existing stockholders. Failure to secure any necessary financing in a timely manner and on favorable terms could have a material adverse effect on our growth strategy, financial performance and stock price.

Real estate investments are subject to numerous risks and we are negatively impacted by the downturn in the real estate market.

        We are subject to the risks that generally relate to investments in real property because we develop and sell real property, primarily for residential use. Also, we have a 51% ownership interest in Bay Holdings, the owner and developer of the Residences at Kapalua Bay, a luxury community. The market for real estate on Maui tends to be highly cyclical and is typically affected by changes in general local, national and worldwide conditions, especially economic conditions, which are beyond our control, including the following:

•

periods of economic slowdown or recession, such as we are currently experiencing;

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•

the general availability of mortgage financing, including:

•

the impact of the recent contraction in the subprime and mortgage markets generally; and

•

the effect of more stringent lending standards for mortgages;

•

rising interest rates, which increases the cost of acquiring, developing, expanding or renovating real property, resulting in decreased real property values as the number of potential buyers decreases;

•

local, state and federal government regulation, including eminent domain laws, which may result in a taking for less compensation than the owner believes the property is worth;

•

the popularity of Hawaii as a vacation destination;

•

shifts in populations away from the markets that we serve;

•

the relationship of the dollar to foreign currencies;

•

tax law changes, including potential limits or elimination of the deductibility of certain mortgage interest expense, the application of the alternative minimum tax, real property taxes and employee relocation expenses; and/or

•

acts of God, such as hurricanes, earthquakes and other natural disasters.

        The occurrence of any of the foregoing could have a material adverse effect on our business by causing a more significant general decline in the number of residential or luxury real estate sales and/or prices of the units available for sale, which, in turn, could adversely affect our revenues and profitability. During low periods of demand, real estate product may remain in inventory for much longer than expected or be sold at lower than expected returns, or even at a loss, which could impair our liquidity and ability to proceed with additional land development projects and negatively affect our operating results. The residential real estate market on the mainland United States and on Maui as well, is currently in a significant downturn due to the occurrence of several of the factors outlined above, such as the worldwide economic recession and the declining availability of credit, and may continue indefinitely into the future. Due to uncertainty as to when the real estate markets will rebound and our cash flow constraints, we have delayed construction of new development projects, other than the Residences at Kapalua Bay project, and have written off project costs that we do not believe can be realized. This resulted in a total pre-tax charge of $10.6 million in 2008. Sustained adverse changes to our development plans could result in additional impairment charges or write-offs of deferred development costs, which could continue to have a material adverse impact on our financial condition and results of operations. In addition, in the current economic environment, equity real estate investments may be difficult to sell quickly and we may not be able to adjust our portfolio of properties quickly in response to economic or other conditions.

The current economic environment and the more limited availability of credit may increase the possibility of default on sales at the Residences at Kapalua Bay project which could materially and adversely affect our financial condition and results of operations.

        We currently have pre-sales totaling approximately $314 million that are secured by non-refundable deposits ranging from approximately 10% for fractional ownership interests and up to 20% for whole-ownership purchases. The project is comprised of six residential buildings that as of December 31, 2008 ranged from 83% to 98% complete. Although the deposits we have collected are substantial, the current uncertainty in the national and world economies and the continuing turmoil in the financial and credit markets increases the possibility that purchasers who have entered into agreements to purchase property may fail to fulfill their contractual obligations, notwithstanding our receipt of nonrefundable deposits. As a result of such uncertainty, Bay Holdings has significantly increased the allowance for

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default reserves and we recorded equity in losses from affiliates from this joint venture of $7.5 million in the fourth quarter. The increased allowance is based on our prior experience and current information available to us to cover potential defaults on the purchase of fractional and whole-ownership units. While the reserves for defaults are based on the best knowledge that we have to date, there is no certainty as to whether the reserves are sufficient or in excess of the actual cancellations that we will experience. Although the impact to our results of operations from defaults will be offset by forfeited deposits, any such defaults may affect the timing and success of the project and could have a material adverse effect on our financial condition and results of operations.

Because we are located in Hawaii and therefore apart from the mainland United States, we are more sensitive to certain economic factors, such as increased fuel and travel costs, which may adversely impact and materially affect our business, financial condition and results of operations.

        Our Community Development and Resort segments are dependent on attracting visitors to the Kapalua Resort, to Maui, and the State of Hawaii as a whole. Economic factors that affect the number of visitors, their length of stay or expenditure levels will affect our financial performance. Factors such as the recent, worldwide economic recession, substantial increases in the cost of energy, including fuel costs, and events in the airline industry that reduce passenger capacity or increase traveling costs, including the recent cessation of operations of two airlines that provided significant service to the Hawaiian market, could reduce the number of visitors to the Kapalua Resort and negatively affect a potential buyer's demand for our ongoing and future property developments, each of which could have a material adverse impact on our business, financial condition and results of operations. If the cost of energy, including fuel costs, continue to increase at the rate and at the pace as they recently have, it is likely that our business, financial condition and results of operations will be adversely impacted. In addition, the threat, or perceived threat, of heightened terrorist activity in the United States or other geopolitical events, or the spread of contagious diseases, such as Avian Flu or SARS, could negatively affect a potential visitor's choice of vacation destination or second home location and as a result, have a material adverse impact on our business, financial condition and results of operations.

A reduction in the value of our investment in Bay Holdings would require us to reduce the value of this investment on our balance sheet, which could adversely affect our results of operations and financial condition.

        The carrying value of Bay Holdings on our balance sheet at December 31, 2008 is $41.7 million. We have made total cash contributions to Bay Holdings of $53.2 million. We also made a loan to Bay Holdings of $3.6 million in October 2008. Factors such as increases in costs because of significantly higher interest rates related to construction financing, significant lag in sales resulting in higher inventory carrying costs to the joint venture, or other possible events could result in a reduction of the value of the investment that we currently have on our balance sheet, and would require a write down of our carrying value of this investment, which could adversely affect our financial condition and results of operations. In the fourth quarter of 2008, we recorded an impairment charge of $37.8 million related to our investment in the joint venture because of the increased cost from the restructured financing arrangements and prospective slower than expected sell out of the project.

We are involved in joint ventures and are subject to risks associated with joint venture relationships.

        We are involved in partnerships, joint ventures and other joint business structures relationships, and may initiate future joint venture projects. We currently have, among others, a 51% interest in Bay Holdings, the joint venture that is constructing the Residences at Kapalua Bay, and a 16% interest in the joint venture that owns and operates the Ritz-Carlton, Kapalua hotel.

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        A joint venture involves certain risks such as:

•

our actual or potential lack of voting control over the joint venture;

•

our inability to maintain good relationships with our joint venture partners;

•

a venture partner at any time may have economic or business interests that are inconsistent with ours;

•

a venture partner may fail to fund its share of operations and development activities, or to fulfill its other commitments, including providing accurate and timely accounting and financial information to us; and

•

a joint venture or venture partner could lose key personnel.

        In connection with our joint venture projects, we may be asked to guarantee the joint venture's obligations, or to indemnify third parties in connection with a joint venture's contractual arrangements. If we were to become obligated under such arrangement or become subject to the risks associated with joint venture relationships, our business, financial condition and results of operations may be adversely affected.

If we are unable to complete land development projects within forecasted timing and budgeting, or at all, financial results may be negatively affected.

        We intend to develop resort and other properties as suitable opportunities arise, taking into consideration the general economic climate. New project developments have a number of risks, including risks associated with:

•

construction delays or cost overruns that may increase project costs;

•

receipt of zoning, occupancy and other required governmental permits and authorizations;

•

development costs incurred for projects that are not pursued to completion;

•

earthquakes, hurricanes, floods, fires or other natural disasters that could adversely impact a project;

•

defects in design or construction that may result in additional costs to remedy or require all or a portion of a property to be closed during the period required to rectify the situation;

•

ability to raise capital;

•

governmental restrictions on the nature or size of a project or timing of completion; and

•

potential lack of adequate building/construction capacity for large development projects.

        If any development project is not completed on time or within budget, this could have a material adverse affect on our financial results.

If we are unable to obtain required land use entitlements at reasonable costs, or at all, our operating results would be adversely affected.

        Our financial results are highly dependent on our Community Development segment. The financial performance of our Community Development segment is closely related to our success in obtaining land use entitlements for proposed development projects. Obtaining all of the necessary entitlements to develop a parcel of land is often difficult, costly and may take several years, or more, to complete. In some situations, we may be unable to obtain the necessary entitlements to proceed with a real estate development or may be required to alter our plans for the development. Delays or failures to obtain these entitlements may have a material adverse effect on our financial results.

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If we are unable to successfully compete with other developers of luxury real estate on Maui, our financial results could be materially affected.

        Our real estate product faces significant competition from other luxury resort real estate properties on Maui, and from other luxury resort residential property in Hawaii and the mainland United States. In many cases, our competitors are larger than us and have greater access to capital. If we are unable to compete with these larger competitors, our financial results could be materially adversely affected.

We have entered into limited guarantees under which we may be required to guarantee completion of the Residences at Kapalua Bay project or certain limited recourse obligations of Bay Holdings.

        Bay Holdings, in which we own a 51% ownership interest, is constructing a new project consisting of residential development on land that it owns at the site of the former Kapalua Bay Hotel, and a spa on an adjacent parcel of land that is owned by us and leased to Bay Holdings. In connection with the construction loan agreement we, and other members of Bay Holdings, entered into a completion guaranty and a recourse guaranty. Under the completion guaranty, members of Bay Holdings agreed to guarantee substantial completion of the project. Under the recourse guaranty, members of Bay Holdings agreed to reimburse the lenders for losses incurred due to specified actions of Bay Holdings, including, without limitation, fraud or intentional misrepresentation, gross negligence, physical waste of project assets, and breach of certain environmental provisions of the construction loan agreement. Our guarantees do not include payment in full of the loan. If Bay Holdings fails to complete the project or takes any of the specified actions that result in expenses to the lender and which are covered by the guarantees that we entered into, we could incur unanticipated expenses that could have a material adverse effect our results of operations and financial condition.

We may be subject to certain environmental regulations under which we may have additional liability and experience additional costs for land development.

        Various federal, state, and local environmental laws, ordinances and regulations regulate our properties and could make us liable for the costs of removing or cleaning up hazardous or toxic substances on, under, or in property we currently own or operate or that we previously owned or operated. These laws could impose liability without regard to whether we knew of, or were responsible for, the presence of hazardous or toxic substances. The presence of hazardous or toxic substances, or the failure to properly clean up such substances when present, could jeopardize our ability to develop, use, sell or rent the real property or to borrow using the real property as collateral. If we arrange for the disposal or treatment of hazardous or toxic wastes, we could be liable for the costs of removing or cleaning up wastes at the disposal or treatment facility, even if we never owned or operated that facility. Certain laws, ordinances and regulations, particularly those governing the management or preservation of wetlands, coastal zones and threatened or endangered species, could limit our ability to develop, use, sell or rent its real property.

Risks Relating to our Agriculture Segment

Our agriculture operations face significant competition from companies with greater financial resources and from foreign competition with lower cost structures.

        We sell our pineapple products in competition with both foreign and United States companies. Our principal competitors are Dole Food Company, Inc. and Del Monte Fresh Produce Company, each of which produces substantial quantities of pineapple products, a significant portion of which is produced in Central America. Producers of pineapple in foreign countries have substantially lower land, water, labor, and regulatory costs than we do, which affects our ability to compete with other producers and thus could materially adversely affect our business, financial condition and results of operations.

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If we are unable to successfully compete with other producers of fresh pineapple products, our financial results could be materially affected.

        In addition, a decline in the price of pineapple or increases in the price of fuel or packaging materials could adversely affect operating results and our ability to compete. Furthermore, agricultural chemicals used by us in the past have resulted in contingent liabilities that could result in future claims against us, which could affect our ability to compete with other producers.

We are highly dependent on the success of our consignment arrangement to sell our fresh pineapple.

        In November 2007, we entered into an exclusive consignment and marketing agreement with a third party to sell our Maui Gold® pineapple in North America. A significant portion of our fresh pineapple is sold through this arrangement. Failure for any reason of the consignee to fulfill its obligations under the applicable arrangement with us could result in disruptions to our supply of Maui Gold® pineapple in North America, and therefore could have a material adverse impact on our results of operations. We cannot provide assurance that a new arrangement would be available on similar terms as the existing consignment and marketing arrangement, if at all.

Our ability to competitively serve our customers depends on the availability of reliable and low-cost transportation, and any increases in transportation- related costs could have material adverse impact on our results of operations.

        We use multiple forms of transportation to bring our products to market, including by airplanes, ships, railcars and trucks. Disruption to the timely supply of these services or increases in the cost of these services for any reason, including availability or cost of fuel, regulations affecting the industry, or labor shortages in the transportation industry, could have an adverse effect on our ability to serve our customers, and could have a material adverse effect on our financial performance.

Other Risks

Changes in weather conditions or natural disasters could adversely impact and materially affect our business, financial condition and results of operations.

        Changes in weather conditions and natural disasters, such as earthquakes, droughts, extreme cold or pestilence, may affect the planting, growing and delivery of crops, reduce sales stock, interrupt distribution of our products, and have a material adverse impact on our Agriculture segment, which could adversely impact our business, financial condition and results of operations. Natural disasters could also damage our resort and real estate holdings, resulting in substantial repair or replacement costs to the extent not covered by insurance, a reduction in property values, or a loss of revenue, each of which could have a material adverse impact on our business, financial condition and results of operations. Our competitors may be affected differently by such changes in weather conditions or natural disasters depending on the location of their supplies or operations.

If we are unable to find a title sponsor for the LPGA golf tournament that we are contractually obligated to sponsor, we may have to bear the full cost of producing the tournament.

        We have an agreement with the LPGA to sponsor an annual 72-hole stroke play golf tournament for five years beginning in October 2008. We were unable to find a title sponsor for the first LPGA Classic in October 2008 and we absorbed the net cost of approximately $3.4 million. We continue to seek a company or companies that would be suitable as a title sponsor for this event. The cost of such a tournament including the production and the purse is significant and if we continue to bear the full cost of producing the tournament, our results of operations could be negatively affected.

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Risks Related to Indebtedness

Risk Factors

We have incurred a significant amount of indebtedness and are subject to certain covenants under those agreements. Failure to satisfy covenants under these agreements could accelerate our obligations under such credit agreements, which could adversely affect our operations and financial results and impact our ability to satisfy our obligations and ability to continue as a going concern.

        We had approximately $137 million of indebtedness as of December 31, 2008, including capital leases, consisting of a secured revolving line of credit with Wells Fargo Bank and certain other lenders for up to $90 million that was scheduled to mature in November 2009, of which we had $11.7 million in availability as of December 31, 2008, a secured revolving line of credit with American AgCredit, FLCA for up to $25 million that was fully drawn as of December 31, 2008, and $40 million of senior secured convertible notes issued in July 2008. Our indebtedness could have the effect of, among other things, increasing our exposure to general adverse economic and industry conditions, limiting our flexibility in planning for, or reacting to, changes in our business and industry, and limiting our ability to borrow additional funds. Also, continuing to fund developments and improvements in our Resort segment and construction projects in our Community Development segment, in addition to our debt service, requires a significant amount of cash, which depends to a large extent upon our ability to generate cash from operations and our ability to borrow under our credit facilities.

        Each of our credit agreements with Wells Fargo Bank and American AgCredit, FLCA contain financial and other covenants that we must satisfy. Our ability to continue to borrow under our credit agreements and to fund our cash requirements depends upon our ability to comply with those covenants. If we fail to satisfy any of our covenants, the lender may elect to accelerate our payment obligations under the credit agreement. In addition, failure to satisfy any of the covenants or to otherwise default under any of our credit agreements would also cause a default under our other credit agreements and our senior secured convertible notes issued in July 2008. If we default under any of our senior secured convertible notes, the holders of such notes may require us to redeem the notes, in which case we would also be required to pay a redemption premium equal to 115% multiplied by (i) the principal and accrued and unpaid interest under the note, or (ii) the highest closing sale price of our common stock during the period between the event of default and delivery of redemption notice multiplied by the number of shares of our common stock into which a note is then convertible.

        In March 2009, we amended our credit agreements in order to be in compliance with all covenants effective December 31, 2008. Also in March 2009, we sold the PGC for $50 million (see note 21 to consolidated financial statements), which was included in the collateral securing the line of credit agreement. In consideration for release of the PGC from the collateral, $45 million of the sales proceeds were applied to partially repay outstanding borrowings and the credit limit under this facility was reduced to $45 million. In conjunction with the PGC sale, we amended our line of credit agreement to extend the maturity date to March 2010 and eliminated all financial covenants, except for a minimum liquidity requirement and limitations on new indebtedness. The financial covenants in our $25 million revolving loan agreement were eliminated through 2009, and a minimum liquidity requirement and limitations on new indebtedness were imposed, and the maturity of this loan was accelerated to March 2010 (previously June 2011). As a result of these amendments, $57.8 million of the remaining outstanding borrowings as of March 30, 2009 will become due in March 2010.

        We are currently in discussions with both lenders to additionally restructure our line of credit and revolving loan agreements to extend the maturity dates beyond 2010, and to increase the amounts available under the line of credit agreement based, in part, on a re-appraisal of the properties securing the line of credit and by providing additional properties as collateral under the agreement. We also plan to sell selected real estate assets in 2009 to provide additional liquidity. We may be unable to refinance our indebtedness or raise equity capital on favorable terms, or at all. In addition, the timing

16

of our real estate asset sales may not enable us to maximize the value of such assets. We also may be unable to satisfy our debt obligations if they are accelerated due to an event of default. The failure to satisfy covenants, refinance, raise capital or sell assets, if required, sufficient to meet our debt obligations as they become due would have a material adverse effect on our results of operation and financial condition. See Note 5 to consolidated financial statements.

Available credit under each of our revolving credit facilities is dependent upon maintaining a specified percentage of the amount of the loan relative to the value of the property securing the loan and any reduction in the appraised value of such property could reduce our borrowing capacity.

        Each of our credit agreements with Wells Fargo Bank and American AgCredit, FLCA limits the aggregate amount or our borrowings under such agreements to fifty percent of the value of the property securing each loan. In connection with amending each of our credit agreements effective as of December 31, 2008, each of the lenders will be obtaining an appraisal of the property securing the lines of credit. If the principal amount outstanding under each credit agreement exceeds the specified loan-to-value percentage, we will be required to immediately make a principal payment to the lender in an amount necessary to meet the specified loan-to-value percentage or to provide the lender with additional collateral required to meet the specified loan-to-value percentage. If the loan-to-value percentage is not satisfied and we do not provide additional collateral, the new credit limit under the applicable credit agreement will be reduced. There is no assurance that the value of the appraisals will result in property values necessary to maintain current availability under our credit facilities. Further, if the amount of our borrowing capacity under our credit facilities is reduced, we may not have sufficient capital to fund operating expenses and our results of operations and financial condition could be materially adversely affected.

The financial markets have recently experienced significant turmoil which may negatively impact our liquidity and our ability to obtain financing.

        Our liquidity and our ability to obtain debt financing may be negatively impacted if one of our lenders or other financial institutions suffers liquidity issues. In such an event, we may not be able to draw on all, or a substantial portion, of the remaining available funds under our credit facilities. In addition, if we attempt to obtain future financing or refinance our existing credit facilities, the credit market turmoil could negatively impact our ability to obtain such financing. If we are unable to borrow the full amount of available credit under our credit agreements or we are unable to obtain future financing or to refinance our existing credit facilities, our ability to respond to changing economic and business conditions and our results of operations and financial condition could be negatively impacted.

The number of shares registered for resale pursuant to an effective Registration Statement on Form S-3 is significant in relation to our outstanding shares and trading volume and sales of substantial amounts of our common stock may adversely affect our market price.

        On July 27, 2008, we entered into a securities purchase agreement with certain institutional accredited investors (the "investors"), to sell and issue to the investors in reliance on Section 4(2) of the Securities Act an aggregate of $40,000,000 in principal amount of our senior secured convertible notes (the "convertible notes"), bearing 5.875% interest per annum payable quarterly in cash in arrears beginning October 15, 2008. The financing closed on July 28, 2008. As of December 31, 2008 we had 8,142,293 shares of common stock outstanding and our average weekly trading volume during the four full weeks prior to December 31, 2008 was 22,500 shares. The convertible notes are convertible at the option of the holders into 1,194,030 shares of our common stock at an initial conversion price of $33.50 per share. We filed a registration statement with the SEC for the public resale of the shares of common stock issuable upon conversion of the convertible notes. The registration statement was declared effective by the SEC on October 24, 2008. Accordingly, so long as the registration statement remains effective, the common stock issued upon conversion of the convertible notes will be freely

17

tradable in the public markets without restriction and sales of a substantial number of shares could occur at any time during such period. Such sales may adversely affect the prevailing market prices of our common stock. In addition, the existence of the convertible notes may encourage short selling by market participants because the conversion of the convertible notes could be used to satisfy short positions, and anticipated conversion of the convertible notes into shares of our common stock could depress the price of our common stock.

The conversion price of the convertible notes is subject to adjustment and, if adjusted, will result in dilution to our existing holders of common stock.

        The convertible notes are convertible, at any time following their issuance, into shares of our common stock at an initial conversion price of $33.50 per share, which is equal to an initial conversion rate of 29.8507 shares per $1,000 principal amount of the convertible notes, or 1,194,030 shares in the aggregate, assuming payment in cash of all interest payments. The conversion price is subject to (i) standard weighted-average anti-dilution protection, and (ii) to an automatic reset 18 months following the closing of the sale of convertible notes at the lower of the then current conversion price and 115% of the closing bid price of our common stock as reported on the NYSE on the adjustment date, provided, that, with respect to the reset adjustment, in no event shall the conversion price be reset below $30.00 per share. If the conversion price is reduced, the convertible notes will be convertible into additional shares of our common stock without the payment of any additional consideration, resulting in dilution to our then existing holders of common stock. There can be no assurance that an event that results in a reduction of the conversion price will not occur.

The convertible notes provide the holders with certain rights of redemption and, upon the occurrence of various events of default and change of control transactions, the right to require us to redeem the convertible notes for cash. We may not have the funds necessary to redeem the convertible notes for cash, or any such redemption of the convertible notes could leave us with little or no working capital for operations or capital expenditures.

        On the third anniversary of the closing of the sale of convertible notes, or upon a change of control transaction, each investor has the right to require us to redeem all or any portion of such investor's convertible note at a redemption price equal to 100% of the principal amount of the convertible note being redeemed, plus accrued and unpaid interest thereon. If an investor elects to convert its convertible note in connection with a change of control, we may also have to pay a make-whole premium. In addition, the convertible notes allow each investor to require us to redeem the convertible notes upon the occurrence of various events of default. In such a situation, we may be required to redeem all or part of the convertible notes, including any accrued interest, redemption premiums and penalties. If holders of the convertible notes elect to redeem their notes or an event of default or a change of control occurs, we may be unable to repay the full redemption amount in cash. Even if we were able to prepay the full amount in cash, any such repayment could leave us with little or no working capital for our business. We have not established a sinking fund for payment of our obligations under our convertible notes, nor do we anticipate doing so. Any failure to pay amounts due under the convertible notes may also constitute an event of default under the terms of our other credit facilities existing at the time.

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Risks Relating to our Stock

Our stock price has been subject to significant volatility.

        In 2008, the daily closing price per share of our common stock has ranged from a high of $34.25 per share to a low of $7.50 per share. Our stock price has been and may continue to be subject to significant volatility. Among others, including the risks and uncertainties discussed in this annual report, the following factors, some of which are out of our control, may cause the market price of our common stock to continue to be volatile:

•

our quarterly or annual earnings or those of other companies in our industry;

•

actual or anticipated fluctuations in our operating results; and

•

comments made by securities analysts covering our stock.

        Fluctuations in the price of our common stock may be exacerbated by economic and other conditions on Maui in particular, or conditions in the financial markets generally.

Trading in our stock over the last twelve months has been limited, so investors may not be able to sell as much stock as they want at prevailing prices.

        The average daily trading volume in our common stock for the year ended December 31, 2008 was approximately 16,500 shares. If limited trading in our stock continues, it may be difficult for investors to sell their shares in the public market at any given time at prevailing prices. Moreover, the market price for shares of our common stock may be made more volatile because of the relatively low volume of trading in our common stock. When trading volume is low, significant price movement can be caused by the trading in a relatively small number of shares. Volatility in our common stock could cause stockholders to incur substantial losses.

We do not anticipate declaring any cash dividends on our common stock.

        We have not declared or paid regular cash dividends on our common stock and do not plan to pay any cash dividends in the near future. Our current policy is to retain all funds and any earnings for use in the operation and expansion of our business. The payment of cash dividends by us is restricted by certain of our credit facilities, which contains restrictions prohibiting us from paying any cash dividends without the lender's prior approval. If we do not pay dividends, our stock may be less valuable to you because a return on your investment will only occur if our stock price appreciates.

If we do not meet the continued listing requirements of the New York Stock Exchange (NYSE), our common stock may be delisted.

        Our common stock is currently listed on the NYSE. To remain so listed, NYSE rules require, among other things, that the minimum listing price of our common stock not be less than $1.00 for more than 30 consecutive trading days, and that our average global market capitalization over a consecutive 30 trading-day period be not less than $75 million and, at the same time, our total stockholders' equity be not less than $75 million. However, a company is subject to delisting if average global market capitalization over a consecutive 30 trading day period is less than $25 million, regardless of stockholders' equity. Under temporary rulemaking, the NYSE has, through June 30, 2009, suspended the $1.00 requirement and also lowered the average market capitalization requirement from $25 million to $15 million. As of March 20, 2009, our closing stock price was $7.42, our average global market capitalization over the previous consecutive 30 trading-day period was $56,204,000, and, at the same time, our total stockholders' equity was $31,688,000.

        In the future, we may not be able to meet the continued listing requirements of the NYSE, in response to which, the NYSE may take action to delist our common stock. In such event, if we were

19

unable to regain compliance with the NYSE's continued listing standards within the required time frames, our common stock would be delisted, which could negatively impact us by, among other things, reducing the liquidity and market price of our common stock, reducing the number of investors willing to hold or acquire our common stock, decreasing the amount of news and analyst coverage for us, and limiting our ability to issue additional securities or obtain additional financing in the future. In addition, delisting from the NYSE might negatively impact our reputation and, as a consequence, our business.

Item 1B.    UNRESOLVED STAFF COMMENTS

        Not applicable.

Item 2.    PROPERTIES

        We own approximately 24,500 acres of land on Maui. Approximately 16% of the acreage is used directly or indirectly in our operations and the remaining land is primarily in pasture or forest reserve. This land, most of which was acquired from 1911 to 1932, is carried on our balance sheet at cost. We believe we have clear and unencumbered marketable title to all such property, except for the following:

•

certain easements and rights-of-way that do not materially affect the Company's use of its property;

•

a mortgage on approximately 3,100 acres used in Agriculture operations, which secures our $25 million revolving loan agreement;

•

a mortgage on approximately 1,437 acres of land in West Maui primarily within the Kapalua Resort, which secures our $90 million revolving credit facility;

•

a mortgage on approximately 25 acres comprising our Kahului property, 49 acres within the Kapalua Resort and 86 acres in Upcountry Maui, which secures our $40 million convertible notes arrangement;

•

a permanent conservation easement granted to The Nature Conservancy of Hawaii, a non-profit corporation, covering approximately 8,600 acres of forest reserve land;

•

a small percentage of our land in various locations on which multiple claims exist, for some of which we are securing clean title; and

•

a mortgage on 249 acres of our land that secures a $4.2 million loan to Maui Preparatory Academy, or MPA, a new private middle school in West Maui. We have an agreement to sell 15 acres of the parcel to MPA for $100, and are in the process of subdividing the parcel.

        Approximately 22,100 acres of our land are located in West Maui, approximately 2,400 acres are located in Upcountry Maui and approximately 28 acres are located in Kahului, Maui.

        The 22,100 acres in West Maui comprise a largely contiguous parcel that extends from the sea to an elevation of approximately 5,700 feet and includes 10.6 miles of ocean frontage with approximately 3,300 lineal feet along sandy beaches, as well as agricultural and grazing lands, gulches and heavily forested areas. The West Maui acreage includes approximately 1,800 acres designated for the Kapalua Resort.

        The Upcountry Maui property is situated at elevations between 1,000 and 3,000 feet above sea level on the slopes of Haleakala, a volcanic-formed mountain on the island that rises above 10,000 feet in elevation. Approximately 530 acres are used for the Company's Agriculture operations in our Upcountry pineapple plantation.

        The Kahului acreage includes our administrative offices, a fresh fruit packing facility and a former pineapple cannery site.

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        Approximately 2,100 acres of leased land are used in our Agriculture operations under four leases expiring at various dates through 2017. We paid $609,000 in 2008 for the aggregate land rental for all leased land in agricultural production. We believe our facilities are suitable and adequate for our business and have sufficient capacity for the purposes for which they are currently being used or intended to be used.

Item 3.    LEGAL PROCEEDINGS

        We are a party to various claims, complaints and other legal actions that have arisen in the normal course of business from time to time. We believe the outcome of these pending legal proceedings, in the aggregate, is not likely to have a material adverse effect on our operations, financial position or cash flows.

Item 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

        No matters were submitted to a vote of our stockholders during the fourth quarter of fiscal year 2008.

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PART II

Item 5.    MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

        Our common stock is traded on the NYSE under the symbol "MLP." We did not declare any dividends in 2008 and 2007. Our ability to declare dividends is restricted by the terms of our outstanding convertible notes, unless we obtain the prior consent of the holders of the convertible notes representing at least 60% of the aggregate principal amount of convertible notes then outstanding. We do not intend to pay any cash dividends on our common stock in the foreseeable future. As of March 20, 2009, there were 369 shareholders of record, which do not include beneficial owners of our common stock whose shares are held in the names of various securities brokers, dealers and registered clearing agencies.

        The following chart reflects high and low sales prices during each of the quarters in 2008 and 2007:

		First Quarter		Second Quarter		Third Quarter		Fourth Quarter
2008	High	$	33.01	$	34.00	$	34.25	$	28.00
	Low		24.98		27.00		22.19		7.50
2007	High	$	36.79	$	38.99	$	37.87	$	30.82
	Low		29.55		32.12		27.50		25.70

        We did not repurchase any shares of common stock during the fiscal year ended December 31, 2008.

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Shareholder Return Performance Graph

        Set forth below is a graph comparing the cumulative total shareholder return on our common stock against the cumulative total return of the S&P Small Cap 600 Index and S&P Real Estate Index for the period beginning on December 31, 2003 and ending on December 31, 2008. The historical stock price performance of our common stock shown in the performance graph below is not necessarily indicative of future stock price performance. Total return assumes reinvestment of dividends; we have paid no dividends on our common stock during the five-year period presented.

*

$100 invested on December 31, 2003 in common stock of Maui Land & Pineapple Company, Inc., S&P Small Cap 600 Index and S&P Real Estate.

The material in the above performance graph does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other Company filing, whether under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made on, before or after the date of this Annual Report on Form 10-K and irrespective of any general incorporation language in such filing, except to the extent the Company specifically incorporates this performance graph by reference therein.

Securities Authorized For Issuance Under Equity Compensation Plans

        The following table provides summary information as of December 31, 2008, for our equity compensation plans:

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
	(a)		(b)		(c)
Equity compensation plans approved by security holders		889,795	$	30.28		204,750
Equity compensation plans not approved by security holders		133,333	$	27.60		—

23

Item 6.    SELECTED FINANCIAL DATA

        The selected financial data set forth below for the five years ended December 31, 2008, should be read in conjunction with the consolidated financial statements and accompanying notes thereto, as well as "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in this annual report.

		2008			2007			2006			2005			2004
		(in thousands except share amounts)
FOR THE YEAR
Summary of Operations
	Product revenues	$	44,364		$	118,190		$	137,741		$	149,204		$	115,715
	Service revenues		34,469			35,880			41,156			37,476			37,534
	Cost of product revenues		40,255			55,107			65,488			73,537			71,226
	Cost of service revenues		40,621			37,452			39,253			36,418			36,177
	Shipping and marketing		16,788			16,450			16,528			14,446			15,621
	General and administrative		42,125			37,998			41,939			38,425			29,347
	Impairment—deferred development cost(1)		10,634			—			—			—			—
	Pineapple restructuring charges(2)		—			8,455			—			—			—
	Equity in income (losses) of affiliates(3)		(18,839	)		16,832			(5,340	)		(484	)		(727	)
	Interest expense		(2,436	)		(2,647	)		(775	)		(521	)		(1,159	)
	Interest income		553			985			1,367			443			23
	Income tax (expense) benefit		12,916			(5,767	)		(3,716	)		(8,723	)		528
	Income (loss) from continuing operations		(79,396	)		8,011			7,225			14,569			(457	)
	Discontinued operations, net of income taxes(4)		—			—			—			—			74
	Net income (loss)		(79,396	)		8,011			7,225			14,569			(383	)
Earnings (Loss) Per Common Share—Basic
	Income (loss) from continuing operations		(9.98	)		1.03			1.00			2.02			(0.06	)
	Discontinued operations, net of income taxes		—			—			—			—			0.01
	Net income (loss)		(9.98	)		1.03			1.00			2.02			(0.05	)
Other Data
	Depreciation	$	13,131		$	11,868		$	12,374		$	14,263		$	10,040
	Return on beginning stockholders' equity		(60.9	)%		8.0	%		7.9	%		20.3	%		(0.5	)%
	Percent of net income (loss) to revenues		(100.7	)%		5.2	%		4.0	%		7.8	%		(0.2	)%
AT YEAR END
Current assets less current liabilities		$	(14,445	)	$	(1,184	)	$	19,003		$	8,900		$	11,184
Ratio of current assets to current liabilities			.8			1.0			1.7			1.2			1.3
Property, net of accumulated depreciation		$	116,240		$	140,547		$	129,849		$	96,935		$	93,897
Total assets			248,200			271,176			220,199			185,999			160,923
Long-term debt and capital leases			90,941			60,077			49,716			10,284			13,953
Stockholders' equity
	Amount		31,688			130,267			100,369			91,180			71,621
	Per common share	$	3.95		$	16.37		$	13.77		$	12.57		$	9.91
Common shares outstanding			8,021,248			7,959,154			7,287,779			7,254,779			7,226,550

(1)

In 2008, we wrote off $10.6 million of abandoned development plans and other deferred development costs that are not expected to be recoverable (Note 3 to consolidated financial statements).

(2)

In 2007, we restructured our pineapple operations (Note 7 to consolidated financial statements).

(3)

In 2008, we recorded an impairment charge of $37.8 million on our investment in Bay Holdings (Note 4 to consolidated financial statements).

(4)

In 2003, we sold the Napili Plaza and substantially all of our Costa Rican pineapple assets. The operating results of these operations and the gains from the sales of these assets are reported as discontinued operations through 2004 when the wind-down of the operations and sales were completed.

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Item 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        The following discussion and analysis should be read in conjunction with our consolidated financial statements and the related notes to those statements contained elsewhere in this annual report.

Overview of the Company

        The Company operates as a landholding and operating parent company for its principal subsidiaries, including Maui Pineapple Company, Ltd. and Kapalua Land Company, Ltd. Our reportable segments are Agriculture, Resort and Community Development.

Agriculture

        The Agriculture segment primarily includes growing, packing, and marketing of fresh premium pineapple. Our fresh pineapple is sold under the brand names Maui Gold® and Hawaiian Gold^TM. We also grow and market fresh organic pineapple. Through most of 2007, we also processed (canned) our pineapple, which we sold under buyers' private labels and to the United States government (Note 7 to consolidated financial statements).

Resort

        The Resort segment includes our ongoing operations at the Kapalua Resort. These operations include two championship golf courses, a tennis facility, a vacation rental program, and several retail outlets. In late December 2007, our new Kapalua Adventure Center opened and in January 2008 our Mountain Outpost began operations. In March 2009, we entered into a sale and purchase agreement to sell The Plantation Golf Course for $50 million (Note 21 to consolidated financial statements).

Community Development

        The Community Development segment includes our real estate entitlement, development, construction, sales and leasing activities. This segment also includes the operations of Kapalua Realty Company, a general brokerage real estate company, and Public Utilities Commission-regulated water and sewage transmission operations located within the Kapalua Resort. Beginning August 31, 2004, the Community Development segment includes our investment in Bay Holdings (Note 4 to consolidated financial statements).

Current Developments

        In 2008, all of our business segments were negatively affected by the global recession, the resulting uncertainty in the local, national and world economies, and the continuing turmoil in the financial and credit markets. Uncertainty about current global economic conditions caused consumers to postpone spending in response to tighter credit, negative financial news and declines in income or asset values, which negatively impacted all three of our operating segments. The economic turmoil and higher transportation costs resulted in reduced visitor counts to Maui and to the State of Hawaii, which negatively affected our Resort segment, and also resulted in slower sales of, and increased potential default rates on the residential units at Kapalua Bay, which negatively affected our Community Development segment. In our pineapple operations, high energy prices increased the cost of fertilizers, packaging and other materials, increased the cost of transporting fruit to markets, and increased the cost of transporting fruit, equipment and employees between our locations, all of which negatively impacted our Agriculture segment. In July 2008, we announced the reduction of 274 positions affecting jobs throughout our Company, primarily in the pineapple operations. We continued throughout the remainder of the year to seek additional areas to reduce cost and, in March 2009, we began to implement staff and salary reductions affecting nearly all employees.

25

        In 2008, we incurred an operating loss of $71.6 million and negative cash flow from operations of $51.8 million. In addition at the end of 2008, $77.8 million of borrowings under our revolving line of credit was scheduled to become due in November 2009. In March 2009, we amended both our $90 million revolving line of credit and our $25 million revolving loan agreements in order to be in compliance with all covenants effective December 31, 2008. Also in March 2009, we sold the Plantation Golf Course ("PGC") for $50 million (see Note 21 to consolidated financial statements), which was included in the collateral securing the line of credit agreement. In consideration for release of the PGC from the collateral, $45 million of the sales proceeds were applied to partially repay outstanding borrowings and the credit limit under this facility was reduced to $45 million. In conjunction with the PGC sale, we amended our line of credit agreement to extend the maturity date to March 2010 and all financial covenants, except for the minimum liquidity and maximum indebtedness requirements were eliminated. The financial covenants in our $25 million revolving loan agreement were suspended through 2009, except for a minimum liquidity requirement and maximum indebtedness limitation, and the maturity of this loan was accelerated to March 2010 (previously June 2011). As a result of these amendments, $57.8 million of the remaining outstanding borrowings as of March 30, 2009, will become due in March 2010. We are currently in discussions with both lenders to restructure our line of credit and revolving loan agreements to extend the maturity dates beyond 2010, and to increase the amounts available under the line of credit agreement based, in part, on a re-appraisal of the properties securing the line of credit and by providing additional properties as collateral under the agreement. We also plan to sell selected real estate assets in 2009 to provide additional liquidity.

        In September 2008, Lehman Brothers Holdings, Inc., the lead lender in the syndicated construction loan for our Residences at Kapalua Bay project filed a bankruptcy petition under Chapter 11 of the U.S. Bankruptcy Code. Avoiding the stoppage of construction work on this project was a high priority to us as we worked with Lehman, other lenders and the bankruptcy courts to resolve the funding shortfall. The members of Bay Holdings agreed to advance funds to the joint venture, which when combined with funding received from the other lenders in the loan syndicate, were sufficient to pay the minimum progress payments due to the contractor. Construction of the project continued uninterrupted and on February 11, 2009, Bay Holdings entered into an amended and restated construction loan agreement that we believe will be sufficient to complete construction of the project. The interim and amended financing arrangement increased costs and are expected to result in significantly reduced returns to us from the project.

        The following is a summary of other material business developments in 2008. For more discussion about business developments in 2008, see Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," in this annual report.

        Development Projects.    While sales at the Residences at Kapalua Bay project have continued throughout 2008 and early in 2009, based on potential for an increase in default rates because of the current economic environment, Bay Holdings significantly increased the allowance for default reserves and we recorded fourth quarter equity in losses of affiliates from the joint venture of $7.5 million. In the fourth quarter of 2008, we recorded an impairment charge of $37.8 million related to this investment due to the increased cost from the restructured financing arrangements and slower sell out of the project than originally forecasted (Note 4 to consolidated financial statements). In addition, due to uncertainty as to when the real estate markets will rebound and our cash flow constraints, we have delayed the start of construction of new development projects and have written off deferred project costs that we do not believe can be recovered. This resulted in a total pre-tax charge of $10.6 million in 2008 (Note 3 to consolidated financial statements).

        Management Changes.    Effective January 1, 2009, Warren H. Haruki was appointed to the position of Chairman of our Board of Directors and Robert I. Webber was appointed to the positions of President and Chief Executive Officer. In November 2008, David C. Cole resigned from his position of Chairman, President and CEO effective as of December 31, 2008.

26

        Board Appointment and Annual Meeting.    In December 2008, our Board of Directors approved an amendment to our Bylaws to increase the Class I Directors to four and appointed Stephen M. Case to the fill the new Class I Director position. At our annual meeting in May 2008, our shareholders re-elected John H. Agee, Warren H. Haruki and Duncan MacNaughton as Class III Directors.

        Ladies Professional Golf Association (LPGA).    In October 2008, we held the inaugural LPGA Kapalua Classic, a full field tournament on the Bay Course and Morgan Pressel, Kapalua Resort's official touring professional, won the tournament with a dramatic final putt on the 18^th green.

        Convertible Notes.    In July 2008, we issued $40 million in senior secured convertible notes. A portion of the proceeds were used to repay other debt and the remainder was used to fund operations, capital expenditures and development projects (Note 5 to consolidated financial statements).

        New Operations.    In June 2008, we entered into an agreement with WTS International, Inc. to perform pre-opening services and to operate the spa that will be located adjacent to the condominiums currently being constructed by Bay Holdings. We expect to open the spa by mid-2009. Also in June, Merriman's Kapalua, a fine dining restaurant opened under a long-term lease with us, in a newly renovated location on Kapalua Bay. The site of the former Bay Club had been closed since August 2004.

New York Stock Exchange (NYSE). In April 2008, our common stock stopped trading on AMEX and began trading on the NYSE.

        Interest Rate Agreements.    In January 2008, we entered into interest rate swap agreements for approximately two years that converted $55 million of variable-rate debt to fixed-rate debt based on a 2-year LIBOR rate.

        Sales of Non-Core Property.    In 2008, we sold approximately 111 acres of Upcountry Maui land in three land sales transactions for a total of $4.4 million in revenues. These properties primarily consisted of land that was deemed unsuitable for precision cultivation of pineapple and were also not suitable for creating new holistic development communities.

RESULTS OF OPERATIONS

Comparison of Years Ended December 31, 2008 and 2007

CONSOLIDATED

	Year Ended December 31,
	2008			2007		change
	(in millions, except share amounts)
Consolidated Revenues	$	78.8		$	154.1	$	(75.3	)
Net Income (Loss)	$	(79.4	)	$	8.0	$	(87.4	)
Basic Earnings (Loss) Per Common Share	$	(9.98	)	$	1.03	$	(11.01	)

        We reported a net loss of $79.4 million for 2008 compared to net income of $8.0 million for 2007. For 2008, basic earnings (loss) per common share was $(9.98) compared to $1.03 for 2007. Consolidated revenues of $78.8 million were $75.3 million or 49% lower in 2008 compared to 2007. The reduction in 2008 revenues was primarily due to a $56.7 million decrease in the Community Development segment revenues, as a result of lower real estate sales in 2008 caused by, among other things, the global economic recession, declining availability of credit and worsening consumer confidence, and to a $19.7 million decrease in Agriculture segment revenues, primarily as a result of cessation of producing and selling solid-packed pineapple products in 2007. Operating losses from all of

27

our business segments and, impairment charges of $48.4 million in the Community Development segment, were primarily responsible for the net loss in 2008.

        In 2008, we recognized $4.4 million in revenues from the sale of real estate compared to $59.6 million in revenues from real estate sales, including the land underlying the Ritz-Carlton, Kapalua hotel in 2007.

General and Administrative

        In 2008, general and administrative expenses increased by 11% to $42.1 million compared to $38.0 million for 2007. The major components of the difference in general and administrative expenses were asset write offs and severance, as follows:

	Year ended December 31,
	2008		2007		change
	(in millions)
Salaries and wages	$	8.9	$	10.0	$	(1.1	)
Employee incentives and stock compensation		2.5		6.6		(4.1	)
Professional and other outside services		6.7		7.7		(1.0	)
Depreciation and asset write offs		8.6		1.8		6.8
Employee severance expense		4.1		0.3		3.8
Other (net)		11.3		11.6		(0.3	)
Total	$	42.1	$	38.0	$	4.1

        General and administrative salaries and wages were lower in 2008 compared to 2007 due to a reduction in the number of employees across all business segments and corporate services as we reduced the size of our workforce during the second half of 2008 in response to weak economic conditions and operating losses, in particular from our Agriculture segment. Increase in employee severance expense in 2008 reflects the reduction in force as well as termination payments pursuant to management changes.

        The decrease in employee incentives and stock compensation was primarily due to restricted stock vesting in 2007 for certain officers and a payment in 2007 of $1.1 million to David C. Cole, our former Chairman, President & CEO because of an amendment to Mr. Cole's stock option agreement with the Company that reduced the value of his stock options. The stock option agreement was amended to eliminate adverse tax consequences to our former Chairman imposed by section 409A of the Internal Revenue Code.

        The decrease in professional services and other services primarily reflects a reduction in use of outside consultants.

        The increase in depreciation and asset write offs primarily reflects the continued restructuring of the Agriculture segment that resulted in additional asset write offs in 2008 and a reduction of the estimated useful lives of certain assets, which increased depreciation charges. The Kapalua Resort and other operations recorded asset write off charges in 2008 primarily for excess equipment.

        Other includes insurance, pensions and other benefits, charitable contributions, etc.

        General and administrative expenses are incurred at the corporate level and at the operating segment level. All general and administrative expenses incurred at the corporate level are allocated to the operating segments. Such allocations are consistent with our management's evaluation of services provided to the operating segments.

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Interest Expense

        Interest expense was $2,436,000 for 2008 compared to $2,647,000 for 2007. In 2008 and 2007, $343,000 and $1,165,000, respectively, of interest was capitalized to construction projects. Interest expense for 2008 includes a charge of $1,160,000 representing the change in the estimated fair value of the swap agreements entered into in January 2008 (see Note 6 to consolidated financial statements). Interest expense for 2008 also includes a net credit of $6,152,000 representing the change in the estimated fair value of the derivative liability that was bifurcated from our $40 million convertible notes, less interest accretion of $1,230,000 on the carrying value of the convertible note (see Notes 5 and 6 to consolidated financial statements). Our effective interest rate on borrowings was 4.7% for 2008 compared to 7.5% for 2007. The decrease in interest expense was due primarily to higher average borrowings in 2008, being offset by lower average interest rates and the fair value credit adjustment for the convertible notes of $7.4 million.

AGRICULTURE

		Year Ended December 31,
		2008			2007			change
		(in millions)
Revenues		$	27.8		$	47.5		$	(19.7	)
	% of consolidated revenues		35	%		31	%
Operating Loss		$	(30.4	)	$	(26.6	)	$	(3.8	)

        The Agriculture segment produced an operating loss of $30.4 million for 2008 compared to an operating loss of $26.6 million for 2007. Revenues for 2008 were $27.8 million or 41% lower than revenues for 2007, primarily due to a reduction in sales of processed products. In 2008, continued losses reflect processing plant and logistical issues that affected the quality of our fresh product, increased costs of operations and employee severance costs as we further reduced the size of our Agriculture workforce in the second half of 2008. The increased loss also reflects increased depreciation charges as we adjusted the estimated useful life of assets and asset write offs. The operating loss for 2007 includes net charges totaling approximately $8.5 million related to the restructuring of our pineapple operations. In addition, the operating losses in 2008 and 2007 reflect the time-related constraints to restructuring our pineapple operations, such as the growing period of our pineapple crop.

        In, 2007, we ceased the production of substantially all solid-packed pineapple products (Note 7 to consolidated financial statements). With the cessation of solid-pack canned products, we began to focus our business on the sale of fresh premium pineapple.

Fresh and Processed Operations

        The case volume of fresh pineapple sales decreased by approximately 12% in 2008 compared to 2007, and revenue per case was lower by approximately 3% in 2008 compared to 2007. Lower case sales volume and pricing in 2008 were due to delayed ripening of the fruit early in 2008 and product quality and distribution issues that prevented us from achieving optimum pricing and resulted in the disposal of a significant volume of product.

        The Agriculture segment cost of sales was lower by approximately 23% in 2008 compared to 2007, largely as a result of the lower sales volume of fresh and processed product, partially offset by increased per unit cost of sales. Per unit cost of sales increased in 2008 because all fruit growing costs are now allocated to the fresh fruit product line, because of lower production volumes and fixed costs, and due to disposal of fruit as a result of quality problems and distribution logistics. Juice is accounted

29

for as a by-product and the cost of the product includes the additional direct factory cost of processing fruit that is not suitable to be sold as fresh fruit product into juice.

        Shipping and marketing cost decreased by 27% in 2008 compared to 2007 because of lower volume of sales and lower average per unit shipping costs. Although higher fuel charges have increased transportation costs, we were able to reduce our average shipping cost in 2008 by shipping a greater percentage of products to the mainland United States by ocean freight rather than air freight, which is more costly.

RESORT

		Year Ended December 31,
		2008			2007			change
		(in millions)
Revenues		$	37.4		$	35.8		$	1.6
	% of consolidated revenues		47	%		23	%
Operating Loss		$	(19.7	)	$	(11.7	)	$	(8.0	)

        The Resort segment reported an operating loss of $19.7 million for 2008 compared to an operating loss of $11.7 million for 2007. Resort segment revenues were $37.4 million for 2008 or 5% higher compared to revenues for 2007 largely reflecting our Adventure Center and Mountain Outpost operations that began in December 2007 and early in 2008. The increased operating loss was primarily due to increased operating costs, in particular for the new operations, a lower revenue base in our golf operations with the closure of the Village Course in 2007, the cost of hosting the LPGA tournament in October 2008 without a sponsor, and higher administrative costs.

        In 2008, financial results for the Resort segment were sharply affected by the reduction in visitor counts due to the economic recession in the United States and elsewhere that has resulted in inability or hesitation to travel, reduced airline passenger capacity to Hawaii caused by airline closures, and the high cost of energy through most of the year that affected the cost of traveling. Maui and the State of Hawaii experienced approximately a 15% and 11%, respectively, decreases in visitor counts in 2008 compared to 2007.

        Results for 2007 were negatively affected by the closure of the 548-room Ritz-Carlton, Kapalua hotel in July 2007 for extensive renovations. The hotel partially re-opened in December 2007. Closure of the back-nine of the Bay Course for a comprehensive re-seeding of the greens in August 2007 also had a negative impact on Resort operating results. The Bay Course re-opened in December 2007, but the renovation continued in 2008 and will continue in 2009 on the final greens without a course closure.

Golf, Retail and Villas

        Revenues from golf operations decreased by 8% and paid rounds of golf decreased by approximately 17% for 2008 compared to 2007. Average green and cart fees increased by approximately 10% in 2008 compared to 2007. Resort retail sales for 2008 were approximately 11% higher than sales for 2007, reflecting increased food service sales from the Honolua Store after renovations were completed in May 2008 and revenues from the Adventure Center café and retail operations that opened at the end of December 2007.

        Revenues from the Kapalua Villas were approximately 10% lower in 2008 compared to 2007, reflecting an 11% decrease in occupied rooms partially offset by a 1% higher average room rate. There were approximately 3% fewer rooms available in 2008, partially reflecting units under renovation under our Kapalua Gold program to upgrade and standardize the units in our rental program.

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COMMUNITY DEVELOPMENT

		Year Ended December 31,
		2008			2007			change
		(in millions)
Revenues		$	11.4		$	68.1		$	(56.7	)
	% of consolidated revenues		14	%		44	%
Operating Profit (Loss)		$	(40.0	)	$	53.1		$	(93.1	)

        The Community Development segment reported an operating loss of $40.0 million for 2008 compared to operating profit of $53.1 million for 2007. Revenues from this operating segment were $11.4 million for 2008 compared to revenues of $68.1 million for 2007. In 2008, the operating loss includes a charge of $37.8 million representing impairment of our investment in Bay Holdings (Note 4 to consolidated financial statements) and a charge of $10.6 million for the write off of development plans and other project costs that are not expected to be realized due to the delay of the start of construction of new development projects in the fourth quarter of 2008 caused by, among other things, the economic recession, a worsening credit market, reduced demand for real estate, and declining consumer confidence (Note 3 to consolidated financial statements). In 2007, revenues and operating profit include our sale of the land underlying the Ritz-Carlton, Kapalua hotel in March 2007, which resulted in revenues and operating profit of approximately $25 million (Note 4 to consolidated financial statements).

        Our equity in the income of Bay Holdings was $18.9 million (excluding the effect of the $37.8 million impairment charge discussed above) for 2008 compared to $16.8 million in 2007. In the fourth quarter of 2008, Bay Holdings has significantly increased the allowance for default reserves and we recorded equity in losses from affiliates from this joint venture of $7.5 million. While sales of the project have continued in 2008 and early 2009, estimated default rates were based on changes and uncertainties in the global economy. We expect default rates to increase as a result of, among other things, the economic recession, a worsening credit market, reduced demand for real estate, and declining consumer confidence. In 2007, the joint venture began to recognize revenues and profits on the percentage-of-completion method from the whole and fractional residential condominiums. The percentage-of-completion of the six residential buildings in this project ranged from 83% to 98% as of the end of 2008. In connection with profit recognition under the percentage-of-completion method, we began to recognize a proportionate amount of the unrealized appreciation of the fair value of the land and other non-monetary contributions and other deferred costs related to the joint venture.

Real Estate Sales

        Our total real estate sales in 2008 produced $4.4 million in revenues compared to $59.6 million in revenues in 2007, including the $25 million sale of land underlying the Ritz-Carlton, Kapalua hotel.

        In 2008, we sold approximately 111 acres of Upcountry Maui property in three land sales transactions and recognized revenues of $4.4 million and pretax gains of approximately $4.1 million. In 2007, we sold approximately 683 acres of Upcountry Maui property in five land sales transactions and recognized revenues of $19.9 million and a pre-tax gain of approximately $19.5 million from non-core land sales. The land sold in 2008 and 2007 had previously been earmarked as "non-core" to our strategic plans.

        In 2007, we closed escrow on eight Honolua Ridge Phase II lots and recognized revenues of $14.7 million. Our Honolua Ridge Phase II subdivision consists of 25 agricultural-zoned lots, which began selling in August 2005. There were no sales in 2008 and one lot remains in inventory at the end of 2008.

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        Real estate development and sales are cyclical and depend on a number of factors (see the risk factor entitled "Real estate investments are subject to numerous risks and we are negatively impacted by the downturn in the real estate market" under Risk Factors in Item 1A above). Results for one period are therefore not necessarily indicative of future performance trends for this segment.

Comparison of Years Ended December 31, 2007 and 2006

CONSOLIDATED

	Year Ended December 31,
	2007		2006		change
	(in millions, except share amounts)
Consolidated Revenues	$	154.1	$	178.9	$	(24.8	)
Net Income	$	8.0	$	7.2	$	0.8
Basic Earnings Per Common Share	$	1.03	$	1.00	$	0.03

        We reported net income of $8.0 million for 2007 compared to $7.2 million for 2006. For 2007, basic earnings per common share were $1.03 compared to $1.00 for 2006. Consolidated revenues of $154.1 million were 14% or $24.8 million lower in 2007 compared to 2006. The reduction in 2007 revenues was primarily due to a $17.7 million decrease in Agriculture segment revenues as a result of the restructuring that began in the second quarter of 2007 and to a $10.3 million decrease in the Resort segment revenues, largely because of the closure of the Village Course in February 2007, and the temporary closure of other facilities during 2007.

        In 2007, we recognized over $44 million in pre-tax profit from the sale of non-core land parcels and the land underlying the Ritz-Carlton, Kapalua hotel. We also recognized over $16 million of income from our investment in Kapalua Bay Holdings, LLC. Losses from the Agriculture and Resort segments largely offset much of these gains.

General and Administrative

        In 2007, general and administrative expenses decreased by 9% to $38.0 million compared to $41.9 million for 2006.

        The major components of the difference in general and administrative expenses were as follows:

	Year Ended December 31,
	2007		2006		change
	(in millions)
Salaries and wages	$	10.0	$	12.0	$	(2.0	)
Employee incentives and stock compensation		6.6		2.8		3.8
Professional and other outside services		7.7		6.8		0.9
Depreciation and asset write offs		1.8		6.4		(4.6	)
Employee severance expense		0.3		2.7		(2.4	)
Other (net)		11.6		11.2		0.4
Total	$	38.0	$	41.9	$	(3.9	)

        The reduction in salaries and wages in 2007 compared to 2006 was due primarily to Agriculture re-training charges that are included in 2006. At the end of June 2006, we began to operate our new fresh fruit packing facility, which is less labor intensive. In 2006, some of the Agriculture segment employees were taken out of operations and retrained for other work as the operations moved toward

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a less labor-intensive process and, in 2006, we incurred employee severance charges of $1.8 million as a result of the reduction in the Agriculture segment work force.

        The increase in professional services in 2007 primarily reflects increases in actuarial services, largely because of the restructuring of the Agriculture business in 2007. In 2007, we also incurred outside consultant costs to evaluate and manage construction issues on our Kahului properties.

        The increase in employee incentives and stock compensation was primarily due to restricted stock vesting in 2007 for certain officers and a payment of $1.1 million to David C. Cole, our former Chairman, President & CEO because of an amendment to Mr. Cole's stock option agreement with the Company that reduced the value of the stock options. The stock option agreement was amended to eliminate adverse tax consequences to our former Chairman imposed by section 409A of the Internal Revenue Code.

        The reduction in depreciation expense charged to general and administrative expense is primarily due to acceleration of depreciation charges in 2006 for some of our Agriculture segment assets because of changes in our business and acceleration of depreciation charges for our accounting systems that were replaced in 2006.

        General and administrative expenses are incurred at the corporate level and at the operating segment level. All general and administrative expenses incurred at the corporate level are allocated to our operating segments. Such allocations are made on the basis of our management's evaluation of services provided to the operating segments.

Interest Expense

        Interest expense was $2,647,000 for 2007 compared to $775,000 for 2006. Interest incurred in 2007 was $3,812,000, of which $1,165,000 was capitalized to construction projects. Capital projects in 2007 included the Honolua Store renovation, the Kapalua Mountain Activity Center, and planning, design and entitlement work for various capital projects at Kapalua Resort. In 2006, interest incurred was $2,473,000, of which $1,698,000 was capitalized to construction projects. Capital projects under construction in 2006 included Honolua Ridge Phase II, Honolua Village at Kapalua Resort, the fresh fruit packing facility and offices, and replacement of our accounting systems. Our effective interest rate on borrowings was 7.5% in 2007 compared to 7.4% in 2006.

AGRICULTURE

		Year Ended December 31,
		2007			2006			change
		(in millions)
Revenues		$	47.5		$	65.2		$	(17.7	)
	% of consolidated revenues		31	%		36	%
Operating Loss		$	(26.6	)	$	(18.6	)	$	(8.0	)

        The Agriculture segment produced an operating loss of $26.6 million for 2007 compared to an operating loss of $18.6 million for 2006. Revenues for 2007 were $47.5 million or 27% lower than 2006, primarily due to a reduction in sales of processed products. The principal reason for the increased operating loss is due to net charges totaling approximately $8.5 million that were recorded in 2007 related to the restructuring of our pineapple operations. In addition, the operating losses in 2007 reflect the time-related constraints to restructuring our pineapple operations, such as the growing period of our pineapple crop.

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        Effective as of June 30, 2007, we ceased the production of substantially all solid-packed pineapple products (Note 7 to consolidated financial statements). With the cessation of solid-pack canned products, we began to focus our business on the sale of fresh premium pineapple.

        Results for 2006 included $4.0 million of accelerated depreciation charges related to assets where the estimated useful lives were reduced because of changes in our pineapple operations; $1.8 million of employee severance cost; $1.8 million of charges related to re-training employees; and $944,000 of material and supply write-offs. These Agriculture segment charges in 2006 were related to the move to the new fresh processing facility that went into operation in July 2006.

Fresh and Processed Operations

        The case volume of fresh pineapple sales was lower by 10% for 2007 and revenue per case sold was higher by 12% in 2007 compared to 2006 reflecting higher per unit sales revenues. Improved pricing was due to improved fruit quality in 2007. The lower case sales volume in 2007 reflects premature ripening of fruit in 2006, which also produces lower quality fruit. Revenues from fresh pineapple sales represented approximately 59% of the Agriculture segment net sales for 2007, compared to approximately 44% for 2006, reflecting the refocusing of our business on the fresh fruit market.

        The case volume of processed pineapple sales was 43% lower for 2007 as compared to 2006 primarily reflecting our plans to cease substantially all solid-pack production after June 30, 2007. The average sales prices for our processed pineapple products decreased by approximately 10% for 2007 compared to 2006, primarily because we sold relatively more juice in 2007, which has a lower sales value than canned fruit.

        The Agriculture segment cost of sales was lower by approximately 12% in 2007 compared to 2006 as a result of lower sales volume of processed product. Per unit cost of sales was higher as a result of significantly lower canned product production due to the discontinuation of processing and selling solid-pack pineapple.

        Shipping and marketing cost was approximately the same in 2007 as compared to 2006 as a result of higher per unit shipping costs being more than offset by lower sales volume. Per unit shipping costs were higher because of higher warehousing costs and higher ocean and surface transportation costs primarily reflecting higher fuel costs.

RESORT

		Year Ended December 31,
		2007			2006			change
		(in millions)
Revenues		$	35.8		$	46.1		$	(10.3	)
	% of consolidated revenues		23	%		26	%
Operating Loss		$	(11.7	)	$	(6.4	)	$	(5.3	)

        The Resort segment reported an operating loss of $11.7 million for 2007 compared to an operating loss of $6.4 million for 2006. Resort segment revenues were $35.8 million or 22% lower for 2007 compared to 2006.

        Hotel and condominium room occupancies at the Kapalua Resort and, to a somewhat lesser extent for Maui in general, largely drive resort activity as reflected by increased golf play and merchandise sales. In early April 2006, the Kapalua Bay Hotel held its final guest night and the hotel was permanently closed, resulting in approximately 20% fewer rooms available at the Kapalua Resort. In

34

addition, the 548-room Ritz-Carlton, Kapalua hotel closed in July 2007 for extensive renovations. The hotel partially re-opened in December 2007. As expected, the reduction in available rooms has negatively affected the number of paid rounds of golf and retail sales.

        The closure of the Village Course at the end of February 2007 and closure of the back-nine of the Bay Course for a comprehensive re-seeding of the greens in August 2007 also had a negative impact on Resort operating results. The Bay Course re-opened in December 2007, but the renovation will continue in 2008 and 2009 on the final greens without a course closure.

Golf, Retail and Villas

        Revenues from golf operations and paid rounds of golf both decreased by approximately 28% for 2007 compared to 2006. Average green and cart fees increased by approximately 1% in 2007 compared to 2006. Resort retail sales for 2007 were approximately 22% lower than 2006. In addition to the closure of facilities at Kapalua Resort as mentioned above, retail sales were negatively affected by lower average square footage of retail space in 2007 reflecting the closure in May 2006 of our Logo Shop, Kids Shop and Home Store comprising approximately 5,800 square feet in the Kapalua Shops following the closure of the adjacent Kapalua Bay Hotel for the development of The Residences at Kapalua Bay; and the closure of our 1,900 square foot Kapalua Collections in our Honolua Village Center in July 2007 to make room for a Resort-wide welcoming, information and real estate sales center.

        Revenues from the Kapalua Villas were approximately 13% lower in 2007 compared to 2006, reflecting a 20% decrease in occupied rooms partially offset by a 10% higher average room rate. The lower occupancy rate appears to be a trend throughout the Maui travel markets and was exacerbated by the closure of the Ritz-Carlton, Kapalua hotel, which is used as an amenity by our Kapalua Villas guests. There were approximately 7% fewer rooms available in 2007 partially reflecting units under renovation under our Kapalua Gold program to upgrade and standardize the units in our rental program.

COMMUNITY DEVELOPMENT

		Year Ended December 31,
		2007			2006			change
		(in millions)
Revenues		$	68.1		$	67.3		$	0.8
	% of consolidated revenues		44	%		38	%
Operating Profit		$	53.1		$	36.2		$	16.9

        The Community Development segment reported an operating profit of $53.1 million for 2007 compared to $36.2 million for 2006. Revenues from this operating segment of $68.1 million in 2007 were $800,000 higher than 2006. Revenues and operating profit for 2007 include our sale of the land underlying the Ritz-Carlton, Kapalua hotel in March 2007, which resulted in revenues and operating profit of approximately $25 million (Note 4 to consolidated financial statements).

        Our equity in the income of Kapalua Bay Holdings, LLC was $16.8 million in 2007 compared to a loss of $5.3 million in 2006. In 2007, the joint venture began to recognize revenues and profits on the percentage-of-completion method from the whole and fractional residential condominiums. The percentage-of-completion of the six residential buildings in this project ranged from 15% to 60% as of the end of 2007. In connection with profit recognition under the percentage-of-completion method, we began to recognize a proportionate amount of the unrealized appreciation of the fair value of the land

35

and other non-monetary contributions and other deferred costs related to the joint venture. See Note 4 to consolidated financial statements.

Real Estate Sales

        Our Honolua Ridge Phase II subdivision consists of 25 agricultural-zoned lots, which began selling in August 2005. Through the end of 2007, 24 lot sales have closed escrow, eight of which closed in 2007. Revenues of $14.7 million were recognized in 2007 compared to revenues of $26.2 million from this project in 2006. In 2006, we were accounting for revenues and profit from Honolua Ridge Phase II on the percentage-of-completion method and the project was substantially complete as of December 31, 2006.

        In 2007, we sold approximately 683 acres of Upcountry Maui property in five land sales transactions and recognized revenues of $19.9 million and a pre-tax gain of approximately $19.5 million from these land sales. In 2006, we recognized revenues of $33.5 million and a pre-tax gain of $31.6 million from the sale of approximately 2,200 acres of Upcountry Maui Land. The land sold in 2007 and 2006 had previously been earmarked as "non-core" to our strategic plans.

        Real estate development and sales are cyclical and depend on a number of factors. Results for one period are therefore not necessarily indicative of future performance trends for this segment.

LIQUIDITY AND CAPITAL RESOURCES

Debt Position

        At December 31, 2008, the Company's total debt, including capital leases, was $137 million, an increase of $75.3 million from December 31, 2007. Additional debt in 2008 was needed to fund operations as well as essential capital expenditures and investments. At December 31, 2008, we had $13.7 million in cash and cash equivalents, including $10.0 million in short-term treasury investments, and $11.7 million in available lines of credit.

Revolving Line of Credit with American AgCredit, FLCA

        We have a secured revolving line of credit with American AgCredit, FLCA, in the principal amount of up to $25 million. The loan is secured by certain parcels of our real property on Maui. Commitment fees of .25% to .50% are payable on the unused portion of the revolving facility. At our option, interest rates on advances are adjustable to the prime rate or based on one-month to one-year LIBOR rates. The agreement included financial covenants for the maintenance of a minimum net worth and interest coverage ratio, and maximum permitted indebtedness and funded debt to capitalization ratio. In March 2009, we amended the agreement in order to be in compliance with these financial covenants effective December 31, 2008, to suspend these covenants through 2009 and to add financial covenants for the maintenance of minimum liquidity of $10 million and restrictions on new indebtedness. The line of credit agreement was also amended to eliminate the automatic extension of the draw period and maturity that was to occur on June 1, 2011, to change the maturity to March 2010, to increase the interest rate on loan draws by 60 to 110 basis points, and to require a re-appraisal of the collateral and a permanent pay down if the collateral value is less than 50% of the loan commitment. We were in compliance with the financial covenants as of December 31, 2008 (as amended), and we expect to remain in compliance if our plans for real estate sales and cost reduction measures are successful. We have undertaken several financial and strategic initiatives to restructure the terms of our credit agreements and generate cash flow from a variety of sources, including the sale of several real estate assets, such as the sale of the PGC for $50 million which closed in March 2009 (see Note 21 to consolidated financial statements). In addition, we have taken several other actions to reduce cash outflows including reducing our headcount by about 100 personnel in March 2009, as well as other measures to reduce our operating expenses. We expect our real estate sales and cost reduction

36

initiatives to be successful. At December 31, 2008, this revolving line of credit was fully drawn. We are currently in discussions with the lender to restructure the line of credit agreement to extend the maturity date past 2010 and to increase the available loan capacity under this agreement which will be based, in part, on the additional collateral provided to support the line of credit and the re-appraisal of the properties which is currently in process. While we believe we will be able extend our agreement with American AgCredit upon its maturity or refinance outstanding amounts with another lender, we may not be able to do so due to general economic conditions and tight credit markets. If we are unable to renew our credit facility or obtain suitable alternative debt financing, it may adversely affect our ability to execute on our business plan.

Revolving Line of Credit with Wells Fargo and Certain Other Lenders

        As of December 31, 2008, we had a secured revolving line of credit with Wells Fargo Bank and certain other lenders in the principal amount of up to $90 million. At our option, interest on advances will be based on Wells Fargo's prime rate or an applicable LIBOR rate. Interest is due monthly and all outstanding principal and accrued interest was scheduled to be due on November 13, 2009. There are no commitment fees on the unused portion of this revolving facility. The loan is secured by approximately 1,437 acres of our land in West Maui. The agreement included certain financial covenants, including the maintenance of a minimum net worth, liquidity and interest coverage ratio, and maximum funded debt. In March 2009, we amended the line of credit agreement in order to be in compliance with certain financial covenants under the agreement effective December 31, 2008. The agreement was further amended to eliminate all financial covenants except for the maintenance of minimum liquidity of $10 million and to impose limits on additional indebtedness, to eliminate the limitation on the lenders' recourse to recovery against us, to increase the interest rate on loan draws by 275 basis points as of April 1, 2009, and to require a re-appraisal of the collateral and a permanent pay down if the collateral value is less than 50% of the loan commitment. The properties are currently being reappraised. We expect to remain in compliance with such covenants if our plans for real estate sales and cost reduction measures are successful. We have undertaken several financial and strategic initiatives to restructure the terms of our credit agreements and generate cash flow from a variety of sources, including the sale of several real estate assets, such as the sale of the PGC for $50 million which closed in March 2009 (see Note 21 to consolidated financial statements). In consideration for release of the PGC from the collateral, $45 million of the sales proceeds were applied to partially repay outstanding borrowings, and the credit limit under this facility was reduced to $45 million. In conjunction with the PGC sale, we amended the line of credit agreement to extend the maturity date to March 13, 2010 and, accordingly, classified the remaining outstanding principle of $32.8 million as a noncurrent liability at December 31, 2008 in the consolidated balance sheet. We have taken several other actions to reduce cash outflows including reducing our headcount by about 100 personnel in March 2009, as well as other measures to reduce our operating expenses. We expect our real estate sales and cost reduction initiatives to be successful. The loan may become immediately due and payable upon a "default," as defined in the loan agreement, such as the failure to pay amounts due or perform obligations under the agreements, bankruptcy, or recording any additional liens on collateralized property. The Company is currently in discussions with the lender to restructure the line of credit agreement to extend the maturity date past 2010 and to increase the available loan capacity under this agreement which will be based, in part, on the additional collateral provided to support the line of credit and the re-appraisal of the properties which is currently in process. While we believe we will be able extend our agreement with Wells Fargo and the other lenders upon its maturity or refinance outstanding amounts with another lender, we may not be able to do so due to general economic conditions and tight credit markets. If we are unable to renew our credit facility or obtain suitable alternative debt financing, it may adversely affect our ability to execute on our business plan.

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Fixed Rate Swap Agreement

        In January 2008, we entered into a fixed interest rate swap agreement with Wells Fargo Bank, the effect of which was to convert variable-rate interest expense, which was previously tied to 1-, 2-, 3- and 6-month LIBOR terms, to fixed-rate interest expense based on a 2-year fixed LIBOR rate. The interest rate swap enabled us to lock-in an average interest rate of 4.4% for approximately two years on $55.0 million of outstanding variable rate, revolving balances (see Note 6 to consolidated financial statements).

Private Placement of Convertible Notes

        On July 28, 2008, we issued $40 million in aggregate principal amount of convertible notes, bearing 5.875% interest per annum payable quarterly in cash in arrears beginning October 15, 2008. The financing resulted in net proceeds to us of approximately $38.4 million, after deducting the placement agent fee and approximately $300,000 in legal and accounting expenses relating to the financing. The net proceeds from this financing were used to re-pay $28.0 million of debt under our revolving lines of credit with interest rates that floated with the prime rate and a $9.7 million 6.93% fixed rate term loan that matured in 2026 (see Note 5 to consolidated financial statements). The remaining net proceeds of approximately $800,000 were used to fund our working capital.

        The convertible notes are convertible, at any time following their issuance, into shares of our common stock at an initial conversion price of $33.50 per share, which is equal to an initial conversion rate of 29.8507 shares per $1,000 principal amount of the convertible notes. On July 28, 2008, the date the financing closed, the closing sales price for a share of our common stock was $28.62. The conversion price is subject to (i) standard weighted-average anti-dilution protection, and (ii) to an automatic reset 18 months following the closing of the financing at the lower of the then current conversion price and 115% of the closing bid price of our common stock as reported on the NYSE on the adjustment date, provided, that, with respect to the reset adjustment, in no event shall the conversion price be reset below $30.00 per share. The convertible notes are not convertible to the extent that their conversion would cause the holder to be the beneficial owner of more than 4.99% of our common stock immediately after giving effect to such conversion.

        Further, if an adjustment to the conversion price would result in any investor owning in excess of (i) such investor's FIRPTA Cap (as defined in the convertible notes) on an as converted basis (without regard for any limitations of conversion set forth in the convertible notes) or (ii) the Exchange Cap Allocation (as defined in the convertible notes), then in lieu of the full anti-dilution adjustment, the conversion price will be reduced to the conversion price that would result in such note being convertible into such number of shares of common stock equal to the lower of the investor's FIRPTA Cap or Exchange Cap Allocation, as applicable (without regard to any limitations on conversion set forth in the convertible note), and, in addition, no later than five business days following the date of conversion of the convertible note, such investor shall receive a cash payment from us equal to the product of (x) the closing bid price of our common stock on such conversion date and (y) the number of shares of common stock in excess of such FIRPTA Cap or Exchange Cap Allocation, as applicable, that would have otherwise been issuable without regard to such limitation and any other limitations on conversion set forth in the convertible note.

        The convertible notes mature on July 15, 2013. However, at any time after the second anniversary of the closing, we have the right, but not the obligation, to require the investors to convert their convertible notes into shares of our common stock at the then applicable conversion price if the average of the daily volume weighted average price of our common stock is 175% of the conversion price then in effect for 20 out of 30 consecutive trading days.

        On the third anniversary of the closing, each investor has the right to require us to redeem all or any portion of such investor's convertible note at a redemption price equal to 100% of the principal

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amount of the convertible note being redeemed, plus accrued and unpaid interest thereon. Upon the occurrence of a change of control of the Company, each investor will have the right to require us to repurchase all or any portion of such investor's convertible note at a repurchase price equal to 100% of the principal amount of the convertible note being redeemed, plus accrued and unpaid interest thereon. If an investor elects to convert its convertible note in connection with a change of control, we will pay a make-whole premium to such investor, unless (i) at least 90% of the consideration, excluding cash payments for fractional shares, in such change of control consists of shares of capital stock of the surviving or resulting entity that are listed on, or immediately after the transaction or event will be listed on, a national securities exchange and as a result of such transaction or transactions the convertible notes become convertible into or exchangeable or exercisable for such capital stock of the surviving or resulting entity and such entity has assumed the obligations under this convertible note or (ii) we continue to be the successor entity and our common stock continues to be listed on a national securities exchange. The make-whole premium table included in the convertible notes sets forth the number of additional shares to be paid depending upon the effective date of the change of control triggering the make-whole premium payment and the price paid per share of common stock in the change of control.

        Additionally, the convertible notes may become immediately due and payable upon an "event of default," as defined in the convertible notes.

        If a convertible note is redeemed in connection with an event of default, we may be required to pay a redemption premium, in which case the redemption amount would equal 115% multiplied by (i) the principal and accrued and unpaid interest under the convertible note, or (ii) the highest closing sale price of our common stock during the period between the event of default and delivery of redemption notice multiplied by the number of shares of our common stock into which a convertible note is then convertible.

        We intend to make all required payments on the convertible notes, and we believe that we have a reasonable basis for our belief that we will have the financial ability to do so.

        The convertible notes are secured by a security interest in the form of and with respect to the following property, referred to as the "Real Property Collateral":

•

a first priority lien on our headquarters, with up to 30% of all proceeds realized from any sale of the headquarters being placed in a collateral account for the repayment of the convertible notes;

•

a first priority lien on what is known as the "Central Resort" property, provided that the security interest granted in the Central Resort will be subordinated to any future construction or other project financing;

•

a first priority lien on all or a portion of what is known as the "Upcountry Hali'imaile" property, with up to 35% of all proceeds realized from any sale of such property being placed in the collateral account; and

•

a first priority lien on all or a portion of what is known as the "Merriman's" property, with up to 35% of all proceeds realized from any sale of such property being placed in the collateral account.

        We have also agreed to deposit into the collateral account up to 10% of any proceeds or distributions realized from our equity interest in Bay Holdings, and up to 50% of any proceeds or distributions realized from our equity interest in W2005 Kapalua/Gengate Hotel Holdings L.L.C. All liens placed on the Real Property Collateral will be released by the investors at such time as at least 80% of the outstanding principle and accrued interest owing under the convertible notes has been

39

deposited into the collateral account. In addition, all cash deposited into the collateral account shall be released back to us if and when the convertible notes are converted into shares of our common stock.

Fixed Rate Debt Repayment

        In December 2008, we re-paid approximately $5.6 million of 6.7% - 6.8% fixed rate debt with funds from our revolving line of credit.

Amended Construction Loan Agreement Following Lehman Bankruptcy

        In July 2006, Kapalua Bay entered into a construction loan agreement with Lehman Brothers Holdings Inc. in connection with constructing the Residences at Kapalua Bay project. Bay Holdings, in which we own a 51% equity interest, is the sole member of Kapalua Bay. Pursuant to the terms of the construction loan agreement, Lehman initially agreed to loan to Kapalua Bay the lesser of $370 million or 61.6% of the total projected cost of the project.

        In January 2007, the original promissory note issued to Lehman under the construction loan agreement was divided into six separate promissory notes, one of which was retained by Lehman in the principal amount of $255 million, and the other five of which were then assigned by Lehman to certain other lenders (the "Syndicate Lenders") ranging in principal amounts of $15 million to $30 million.

        On October 3, 2008, we disclosed that Lehman ceased funding under the construction loan agreement following Lehman's bankruptcy filing on September 15, 2008. As a result of Lehman's failure to provide continued construction financing as required under the construction loan agreement, we and other members of Bay Holdings agreed to advance funds to Kapalua Bay in order to continue construction of the project, which has progressed without any material impairments. Since Lehman's bankruptcy, the Syndicate Lenders and Swedbank continued to provide funding.

        On February 11, 2009, Kapalua Bay, Lehman, the Syndicate Lenders, Swedbank, and MH Kapalua Venture, LLC, an affiliate of Marriott International, Inc. entered into an Amended and Restated Construction Loan Agreement (the "Amended Loan Agreement"). Pursuant to the Amended Loan Agreement, the aggregate amount that Kapalua Bay may borrow, including amounts previously funded under the original construction loan agreement, is approximately $354.5 million. We believe that this amount will be sufficient to fund the full development of the Residences at Kapalua Bay project.

        Under the terms of the Amended Loan Agreement, the original loan was modified by creating the following tranches of notes: (1) a new facility A in the amount of $120.1 million consisting of $35.0 million to be funded by Lehman, $20.1 million to be funded by the Syndicate Lenders pursuant to existing obligations, $55.0 million to be funded by the Syndicate Lenders pursuant to new obligations, and $10.0 million to be funded by Marriott, (2) a new facility B-1 in the amount of $28.0 million consisting of $16.2 million of advances from the Syndicate Lenders following the Lehman's bankruptcy filing, $10.0 million of loans previously advanced by Kapalua Bay's joint venture partners following Lehman's bankruptcy filing, and $1.8 million of interest advances by Lehman following Lehman's bankruptcy filing, (3) a new facility B-2 in the amount of $4.1 million consisting of the advances made by Swedbank under Note B following Lehman's bankruptcy filing, (4) a new facility C-1 in the amount of $191.4 million consisting of the amounts outstanding under Notes A-1 through A-5 prior to Lehman's bankruptcy filing, and (5) a new facility C-2 in the amount of $10.9 million consisting of the balance of Note B prior to Lehman's bankruptcy filing.

        The various debt facilities mentioned in the foregoing paragraph have the following ranking for payment, lien priority, and collateral: facility A has first priority, facility B-1 has second priority, facility B-2 has third priority, facility C-1 has fourth priority, and facility C-2 has fifth priority. Interest accrues on facility A at a floating rate equal to the one month LIBOR rate plus 5.0%. Interest accrues on facility B-1, facility B-2 and facility C-1 at a floating rate equal to the one month LIBOR rate plus

40

1.7%. Interest accrues on facility C-2 at a floating rate equal to the one month LIBOR rate plus 10.95%. Subject to certain limitations, Kapalua Bay may elect to have the then-current adjusted LIBOR rate apply to some, or all, of the outstanding loan amount. In addition, subject to the provisions of the Amended Loan Agreement, the maturity date of facility A is February 11, 2010 and the maturity date of facility B-1, facility B-2, facility C-1 and facility C-2 is August 11, 2011. Kapalua Bay may prepay the loans in whole or in part, provided that it pays certain costs and fees as set forth in the Amended Loan Agreement.

        The full amount advanced under the Amended Loan Agreement will continue to be secured by a mortgage on the project assets, including the land owned by Kapalua Bay upon which the project is being constructed. The amounts which may be borrowed under the Amended Loan Agreement are not revolving in nature and amounts repaid may not be subsequently advanced.

        All loan proceeds disbursed under the Amended Loan Agreement shall be used only for items specified in the construction budget relating to the project. The Amended Loan Agreement contains customary affirmative and negative covenants for transactions of this type, including those with respect to proper zoning, required governmental approvals, deviation from Project plans, avoidance of construction liens, minimum insurance requirements, payment of taxes and other similar covenants.

        We and the other members of the joint venture continue to guarantee to the lenders completion of the project and each member's pro rata share of costs and losses incurred by the lender as a result of the occurrence of specified triggering events during the term of the Amended Loan Agreement. The members' guarantee to the lender does not include payment in full of the loan. We have recognized a liability of $968,000, representing the estimated fair value of our obligation under these provisions.

Operating Cash Flows

        Net cash used in operating activities for 2008, 2007 and 2006 was $51.8 million, $7.6 million and $20.2 million, respectively. By reportable segment, these cash flows were approximately as follows:

	Year ended December 31,
	2008			2007			2006
	(in millions)
Agriculture	$	(22.2	)	$	(12.3	)	$	(5.5	)
Resort		(13.8	)		(5.3	)		(0.6	)
Community Development		(15.6	)		16.0			(6.6	)
Interest, taxes and other		(0.2	)		(6.0	)		(7.5	)
Total	$	(51.8	)	$	(7.6	)	$	(20.2	)

        Agriculture and Resort segment cash flows used in operating activities for 2008, 2007 and 2006 are largely results of our operating losses in those segments.

        The Community Development segment cash flows from operating activities generally vary with the amount of new real estate product available for sale and construction activity on products held for sale. In 2008, we did not sell any real estate inventory and one Honolua Ridge Phase II lot remained in inventory at the end of the year. In 2007, the closing of Honolua Ridge lot sales and collections on promissory notes for prior year lot sales produced cash of approximately $25.6 million. In 2006, nine Honolua Ridge Phase II lots closed escrow, resulting in cash proceeds of approximately $14 million. Cash outflows for construction of this project was approximately $11 million in 2006.

        Taxes and interest paid in 2008, 2007 and 2006 was $0.2 million, $6.0 million and $7.5 million, respectively. The amount for 2008 represents a net of $4.4 million paid for interest and tax refunds received of $4.2 million.

41

Investing and Financing Cash Flows

        Cash provided by investing and financing activities in 2008 included the following significant transactions:

•

Issuance of senior secured convertible notes provided net cash proceeds of $38.4 million.

•

The sale of approximately 111 acres of Upcountry Maui land that was considered non-core to our business resulted in cash proceeds of $4.4 million; and collection of a promissory note from a 2007 land sale provided cash of $2.8 million.

•

Sale leaseback transactions of our some of our autos, trucks and golf equipment provided cash proceeds of approximately $2 million.

        Cash used in investing and financing activities in 2008 included the following significant transactions:

•

Cash contributions of $7.8 million were made to Bay Holdings pursuant to cash calls; and a member loan of $3.6 million was made to supplement other funds to continue construction in October 2008 after the default by the primary lender on the project.

•

Cash outflow for the completion of major capital projects included $2.5 million for the drilling of a well to serve certain land parcels sold in a prior year; $2.1 million for improvements to the Merriman's restaurant per our lease agreement; $1.4 million for completion of the Kapalua Adventure Center and Mountain Outpost; $1.4 million for renovations to the Bay Course; and $6.5 million for other capital projects. In total, additions to fixed assets used cash of $13.9 million.

•

We repaid a $9.7 million term loan that was due through 2026 with proceeds from the senior secured convertible notes issued in July 2008; and we repaid $6.5 million of equipment loans due through 2013 with proceeds from our revolving credit facilities.

        Cash provided by investing and financing activities in 2007 included the following significant transactions:

•

The sale of approximately 683 acres of Upcountry Maui land that was considered non-core to our businesses and collection on a promissory note from 2006 land sales resulted in cash proceeds of $21.2 million.

•

Sale of approximately 49 acres underlying the Ritz-Carlton, Kapalua hotel provided cash of $25.2 million.

•

We received cash of $3.6 million from the auction of our pineapple cannery fixed assets, materials and supplies.

•

A private placement of 517,242 shares of common stock at a purchase price of $29.00 per share, which resulted in net cash proceeds of approximately $14.9 million; and common stock issuances from stock option exercises provided cash of $1.4 million.

42

        Cash used in investing activities in 2007 included the following significant transactions:

•

We made cash contributions of $33.2 million to Bay Holdings pursuant to equity calls.

•

Cash outflows for major capital projects include the following: $2.4 million for Kapalua Adventure Center and Mountain Outpost; $4.9 million for the renovation of the Bay Course, Honolua Store and other Resort renovations; $5.6 million for construction of the corporate office building; and $2.2 million for trucks and harvesters for our Agriculture operations. In total, additions to fixed assets used cash of $24.4 million.

•

Additions to deferred costs, principally planning and other pre-development costs for our Kapalua Resort and other West Maui projects totaled $9.8 million.

        Cash provided by investing activities in 2006 included the following significant transactions:

•

The return from the exchange intermediary of $13.9 million of proceeds from previous sales of properties in 2005.

•

The sale of approximately 2,200 acres of Upcountry Maui land that was considered non-core to our businesses, which resulted in cash proceeds of $27.6 million, and a promissory note of $4.5 million that was collected in January 2007.

        Cash used in investing activities in 2006 included the following significant transactions:

•

Cash outflows for major capital projects include the following: $9.0 million for Honolua Village; $15.8 million for the fresh pineapple packing facility; $5.4 million for new corporate offices; and $3.4 million for replacement of accounting systems. In total, cash flows used in investing activities included $45.9 million for additions to fixed assets.

•

Cash flows used for deferred development costs of approximately $11 million.

•

Cash contributions of $11.7 million to Bay Holdings.

Future Cash Inflows and Outflows

        Our plans for 2009 include the possible sale of certain operating and non-operating real estate assets that could result in net cash proceeds of approximately $100 million. In March 2009, we began the implementation of staff and salary reductions, consolidation of offices, elimination of non-essential travel and trimming of operating budgets to reduce cash outflows.

        Contributions to our defined benefit pension plans are expected to be approximately $2.8 million in 2009.

        In 2009, capital expenditures and expenditures for deferred development cost have been reduced except for expenditures that are expected to have a commensurate return within a relatively short period or are necessary to maintain our operations and standards of quality at the Kapalua Resort. Capital expenditures planned for 2009 total $4.7 million and include $2.7 million for the replacement of equipment, $1.2 million to remodel certain property and $0.8 million for new equipment and facilities. We will seek project specific financing for some of the capital projects where deemed feasible.

        At December 31, 2008, we had $13.7 million in cash and cash equivalents and unused long-term credit lines of $11.7 million. Based on our current operating plan, we believe that existing cash and cash equivalents balances, short-term investment balances, cash flows from operations, proceeds from the sale of real estate assets, and borrowings from existing credit facilities will be sufficient to meet our working capital and capital expenditure requirements for at least the next 12 months. However, if events or circumstances occur such that we do not meet our operating plan as expected, such as our inability to conclude land sales as projected, we may be required to seek additional financing to fund working capital or essential capital expenditures in 2009. Such financing may include debt and/or equity

43

financing or funding through third party agreements. There can be no assurance that funds from these sources will be available when needed or, if available, will be on terms favorable to us or to our stockholders. Any equity financing may result in dilution to existing stockholders and any debt financing may include restrictive covenants. We believe that (although no assurances can be given) we will be able to obtain the necessary financing for any new capital projects.

Contractual Obligations

        The following summarizes our contractual obligations as of December 31, 2008 (in thousands):

				Payment due by period (years)
Contractual Obligations		Total		Less Than 1		1 - 3		4 - 5		After 5
Long-term debt(1)		$	142,800	$	45,000	$	57,800	$	40,000	$	—
Capital lease obligations (including interest)			3,717		1,290		1,516		579		332
Interest on long-term debt(2)			13,408		4,510		5,177		3,721		—
Operating leases(3)			2,535		948		1,161		389		37
Purchase commitments(3)			13,447		2,778		4,846		4,076		1,747
Other long-term liabilities(4)(5)(6)			3,655		602		1,102		1,034		917
	Total	$	179,562	$	55,128	$	71,602	$	49,799	$	3,033

(1)

Long-term debt as presented above includes convertible notes of $40 million due in July 2013. These notes are included in our December 31, 2008 balance sheet as long-term debt of $31,159,000 and other accrued liabilities (derivative liability) of $2,689,000. The purchasers of the notes have the right to require redemption on the third anniversary of the purchase, but the notes have a stated five year maturity. See Note 5 to consolidated financial statements.

(2)

Future interest payments on long term debt were calculated assuming that future interest rates equal the rates at December 31, 2008.

(3)

These operating leases and purchase commitments are not reflected on the consolidated balance sheets under accounting principles generally accepted in the United States of America.

(4)

Amounts consist primarily of payments due under our deferred compensation plan, unfunded pension payments and severance plans. Where pension payments were for lifetime, payments were estimated for five additional years.

(5)

The Company adopted FIN 48 on January 1, 2007. The Company has not provided a detailed estimate of the timing of payments amounting to $945,000 due to the uncertainty of when the related tax settlements are due.

(6)

The Company has an obligation to purchase the spa, beach club improvements and the sundry store from Bay Holdings at actual construction cost, which is currently estimated to be approximately $35 million. Terms of the purchase are currently being negotiated between the members and the obligation is not included in the table above because the timing and amount of the payment is uncertain.

CRITICAL ACCOUNTING POLICIES

        Our accounting policies are described in Summary of Significant Accounting Policies, Note 1 to the consolidated financial statements (included in Item 8). The preparation of financial statements in conformity with generally accepted accounting principles requires the use of accounting estimates. Some of these estimates and assumptions involve a high level of subjectivity and judgment and therefore the impact of a change in these estimates and assumptions could materially affect the

44

amounts reported in our financial statements. The accounting policies and estimates that we have identified as critical to the consolidated financial statements are as follows:

•

Our investment in Bay Holdings was written down to its fair value of $41.7 million at December 31, 2008 to recognize an other-than-temporary impairment. In determining the fair value of this investment and assessing whether any identified impairment was other-than-temporary, significant estimates and considerable judgment were involved. These estimates and judgments were based, in part, on the our current and future evaluation of economic conditions in general, as well as Bay Holdings' current and future plans. These impairment calculations contain additional uncertainties because they also require management to make assumptions and apply judgments to, among others, estimates of future cash flows, probabilities related to various cash flow scenarios, and appropriate discount rates. Changes in these and other assumptions could affect the projected operational results of Bay Holdings and, accordingly, may require valuation adjustments to our investment in Bay Holdings that may materially impact our financial condition or our future operating results. For example, if current market conditions continue to deteriorate or Bay Holdings' plans change, additional impairment charges may be required in future periods, and those charges could be material.

•

Our long-lived assets are reviewed for impairment if events or circumstances indicate that the carrying amount of the long-lived asset may not be recoverable. Management has evaluated certain long-lived assets for impairment, and has recognized impairment charges related to deferred development costs of $10.6 million in 2008 for costs that are not expected to be recovered due to the delay of the start of construction of new development projects and by the decision to not proceed with certain projects in the fourth quarter of 2008 caused by, among other things, the economic recession, a worsening credit market, reduced demand for real estate, and declining consumer confidence. These asset impairment loss analyses contain uncertainties because they require management to make assumptions and apply considerable judgments to, among others, estimates of the timing and amount of future cash flows, expected useful lives of the assets, uncertainty about future events, including changes in economic conditions, changes in operating performance, changes in the use of the assets, and ongoing costs of maintenance and improvements of the assets, and thus, the accounting estimates may change from period to period. If management uses different assumptions or if different conditions occur in future periods, our financial condition or future operating results could be materially impacted.

•

We have a derivative liability related to $40 million of senior secured notes that are convertible into shares of our common stock that is recorded at fair value and interest rate swap agreements that were designed to reduce future cash flow variability that is also recorded at fair value. The fair values are calculated using "level 2" inputs as defined in SFAS No. 157. While management believes that the inputs are reasonable and consistent, the fair values recorded can vary significantly depending on the assumptions made.

•

The percentage-of-completion method is used to recognize revenues (and profits) from the sale of residential land parcels where we are obligated to construct improvements (roads, sidewalks, drainage, and utilities) after the closing of the sale. Under this method, revenues are recognized over the improvement period on the basis of costs incurred as a percentage of total expected costs to be incurred. Changes in the total estimated cost expected to be incurred could be affected by conditions not anticipated that could result in higher or lower cost to complete the improvements. In 2006, the Company recognized revenues (and profits) using the percentage-of-completion method for the sales of lots in the Honolua Ridge Phase I and II residential subdivisions. At December 31, 2006 both Phase I and II were substantially complete.

•

The percentage-of-completion method is also used to recognize revenues and profits at Bay Holdings, our unconsolidated joint venture. Under this method, revenues and profits on units for

45

which Bay Holdings has received the required level of nonrefundable deposits are recognized on the basis of project costs incurred to total expected project costs. In addition to requiring Bay Holdings' management to make judgments regarding total estimated project costs, use of the percentage-of-completion method also required management at Bay Holdings to estimate the total sales revenues that will be received at the project, as well as estimating the number of buyers of units from which nonrefundable deposits have been received that will not close on the purchase of their units. During 2008, management of Bay Holdings has significantly increased its estimated levels of buyer defaults, and our equity in the earnings of Bay Holdings was adversely affected. Changes in the estimated levels of sales proceeds, buyer defaults, or total project costs could cause further losses in the future.

•

In connection with one of the 2005 sales transactions of Upcountry Maui land, the Company and the buyer executed a Water Development Agreement. Based on the estimated cost to drill the new water well and construct a storage tank and the estimated water flow from the future well, costs were allocated to the sales transaction. The profit from the sale has been allocated between the land parcels sold and the agreement to provide the water source, and the portion related to the water source ($1.9 million) has been deferred pending performance of our obligations under the agreement. The estimates of the costs of the water source could differ from actual costs because final contracts with the County of Maui and with the outside contractors for completion of the water source have not yet been consummated.

•

Deferred development costs, principally predevelopment costs and offsite development costs related to various projects in the planning stages by our Community Development segment, totaled $22.8 million at year-end 2008. Based on our future development plans for Kapalua Resort and other properties such as Kapalua Mauka, The Village at Kapalua, Pulelehua, and Hali`imaile Town, and the estimated value of these future projects, management has concluded that these deferred costs will be recoverable from future development projects. The volatility of this assumption arises because of the long-term nature of our development plans and the uncertainty of when or if certain parcels will be developed.

•

Pension expense for our two defined benefit pension plans utilize actuarial estimates of employees' expected service period, age at retirement, and compensation levels, as well as estimates as to employee turnover, the long term rate of return on investments and other factors. Other post retirement benefits for life insurance and health care utilize actuarial estimates as to the retirees' life span, the cost of future health insurance premiums and utilization of health benefits by the employees. In addition, both pension and other post retirement expenses are sensitive to the discount rate utilized. This rate should be commensurate to the interest rate yield of a high quality corporate fixed income investment portfolio. These assumptions are subject to the risk of change as they require significant judgment and have inherent uncertainties that management or its consulting actuaries may not control or anticipate. As of December 31, 2008, the market value of our defined benefit plans totaled approximately $31.7 million, compared with $46.7 million as of December 31, 2007. The recorded net pension liability was approximately $28.0 million as of December 31, 2008, compared to a net pension liability of $10.4 million as of December 31, 2007. As a result of realized and unrealized losses, we expect net periodic pension expense to increase in 2009, compared with net periodic pension expense of approximately $2.3 million in 2008.

•

Stock-based compensation expense is calculated based on assumptions as to expected life of the options, price volatility, risk-free interest rate and expected forfeitures. While management believes that the assumptions made are appropriate, compensation expense recorded currently and future compensation expense would vary based on the assumptions used.

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•

Management calculates the income tax provision, current and deferred income taxes along with the valuation allowance based upon various complex estimates and interpretations of income tax laws and regulations. Deferred tax assets are reduced by a valuation allowance to the extent that it is more likely than not that they will not be realized. To the extent we begin to generate taxable income in future years and it is determined the valuation allowance is no longer required, the tax benefit for the remaining deferred tax assets will be recognized at such time. As of December 31, 2008, valuation allowances of $30.1 million have been established primarily for tax credits, net operating loss carryforwards, and accrued retirement benefits to reduce future tax benefits expected to be realized.

Item 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

        Our primary market risk exposure with regard to financial instruments is due to changes in interest rates. We manage this risk by monitoring interest rates and future cash requirements and evaluating opportunities to refinance borrowings at various maturities and interest rates. We may also utilize interest rate swaps or other derivatives to reduce risks associated with changes in interest rates.

        At December 31, 2008, 36% of our borrowings carried interest rates that were periodically adjustable to the prime rate, or to a LIBOR rate, and 64% carried interest at fixed rates, which includes $55 million of variable rate debt that is converted to fixed rate debt by interest rate swap agreements. The average interest rate on our debt outstanding at December 31, 2008 was 4.95% and the fair value of our debt was $126.7 million (Note 17 to consolidated financial statements).

        In January 2008, we entered into interest rate swap agreements for approximately two years on $55.0 million of variable rate debt. We completed the swap agreements in order to reduce the variability in cash flows attributable to interest rate risk caused by changes in short-term LIBOR rates. The effect of the swaps is to convert variable-rate interest expense, which was previously tied to 1-, 2-, 3- and 6-month LIBOR terms, to an average fixed rate interest of approximately 4.4%. The estimated fair value of these derivative instruments was a liability of approximately $1,160,000 as of December 31, 2008.

        Absent the interest rate swap described above, and based on debt outstanding at the end of 2008, a hypothetical increase in interest rates of 100 basis points would have increased our interest expense by approximately $478,000 and a hypothetical decrease in interest rates of 100 basis points would have decreased the fair value of our long-term debt by approximately $310,000.

        We do not have significant market risk exposure due to foreign currency exchange transactions.

IMPACT OF INFLATION AND CHANGING PRICES

        Most of the land owned by us was acquired from 1911 to 1932 and is carried at cost. A small portion of "Real Estate" represents land cost. Replacements and additions to Pineapple operations occur every year and some of the assets presently in use were placed in service in 1934. At Kapalua, some of the fixed assets were constructed and placed in service in the mid-to-late 1970s. Depreciation expense would be considerably higher if fixed assets were stated at current cost.

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Item 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
Maui Land & Pineapple Company, Inc.
Kahului, Hawaii

        We have audited the accompanying consolidated balance sheets of Maui Land & Pineapple Company, Inc. and subsidiaries (the "Company") as of December 31, 2008 and 2007, and the related consolidated statements of operations and comprehensive income (loss), stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2008. Our audits also included the financial statement schedule listed in the Index at Item 15. We also have audited the Company's internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company's management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on these financial statements and financial statement schedule and an opinion on the Company's internal control over financial reporting based on our audits.

        We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

        A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

        Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the

48

risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

        In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Maui Land & Pineapple Company, Inc. and subsidiaries as of December 31, 2008 and 2007, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2008, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2008, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

        As discussed in Note 1 to the consolidated financial statements, the Company adopted the provisions of the Emerging Issues Task Force of the Financial Accounting Standards Board ("FASB") ("EITF") Issue No. 06-8, Applicability of the Assessment of a Buyer's Continuing Investment under FASB Statement No. 66 for Sales of Condominiums on January 1, 2008, FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109 on January 1, 2007, and Statement of Financial Accounting Standards ("SFAS") No. 158, Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans—an amendment of FASB Statements No. 87, 88, 106, and 132(R), on December 31, 2006.

/s/ DELOITTE & TOUCHE LLP

Honolulu, Hawaii
March 30, 2009

49

MAUI LAND & PINEAPPLE COMPANY, INC. & SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)

		Year Ended December 31,
		2008			2007			2006
		(in thousands except share amounts)
OPERATING REVENUES
Product revenues		$	44,364		$	118,190		$	137,741
Service revenues			34,469			35,880			41,156
Total Operating Revenues			78,833			154,070			178,897
OPERATING COSTS AND EXPENSES
Cost of product revenues			40,255			55,107			65,488
Cost of service revenues			40,621			37,452			39,253
Shipping and marketing			16,788			16,450			16,528
General and administrative			42,125			37,998			41,939
Impairment—deferred development costs (Note 3)			10,634			—			—
Pineapple restructuring charges (Note 7)			—			8,455			—
Total Operating Costs and Expenses			150,423			155,462			163,208
Operating Income (Loss)			(71,590	)		(1,392	)		15,689
Equity in income (losses) of affiliates (Note 4)			(18,839	)		16,832			(5,340	)
Interest expense			(2,436	)		(2,647	)		(775	)
Interest income			553			985			1,367
Income (Loss) Before Income Taxes			(92,312	)		13,778			10,941
Income Tax Expense (Benefit)			(12,916	)		5,767			3,716
NET INCOME (LOSS)			(79,396	)		8,011			7,225
Pension Benefit Adjustment net of taxes of $0, $597 and $(1,335)			(16,778	)		1,061			(2,373	)
COMPREHENSIVE INCOME (LOSS)		$	(96,174	)	$	9,072		$	4,852
EARNINGS (LOSS) PER COMMON SHARE
	Basic	$	(9.98	)	$	1.03		$	1.00
	Diluted	$	(9.98	)	$	1.02		$	0.98
Average Common Shares Outstanding
	Basic		7,959,472			7,802,282			7,259,534
	Diluted		7,959,472			7,862,956			7,347,694

See Notes to Consolidated Financial Statements

50

MAUI LAND & PINEAPPLE COMPANY, INC. & SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

			December 31,
			2008			2007
			(in thousands)
ASSETS
CURRENT ASSETS
	Cash and cash equivalents		$	13,668		$	1,991
	Accounts receivable, less allowance of $658 and $327 for doubtful accounts			5,509			10,227
	Refundable income taxes			4,662			—
	Inventories
		Pineapple products		807			1,112
		Real estate		3,254			3,255
		Merchandise, materials, and supplies		5,676			6,801
	Prepaid expenses and other assets			600			371
	Deferred income taxes			—			3,364
	Real estate held for sale (Note 1)			18,963			—
		Total Current Assets		53,139			27,121
PROPERTY
	Land			9,905			9,907
	Land improvements			57,131			55,469
	Buildings			57,290			60,364
	Machinery and equipment			82,814			87,033
	Construction in progress			5,102			25,850
		Total Property		212,242			238,623
	Less accumulated depreciation			96,002			98,076
		Net Property		116,240			140,547
INVESTMENT IN AFFILIATES				41,683			59,792
OTHER ASSETS				37,138			43,716
TOTAL			$	248,200		$	271,176
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
	Current portion of long-term debt		$	45,000		$	1,251
	Current portion of capital lease obligations			1,050			380
	Trade accounts payable			8,183			15,776
	Payroll and employee benefits			5,525			6,041
	Income taxes payable			1,492			992
	Other accrued liabilities			6,334			3,865
		Total Current Liabilities		67,584			28,305
LONG-TERM LIABILITIES
	Long-term debt			88,959			58,453
	Capital lease obligations			1,982			1,624
	Accrued retirement benefits			43,798			29,349
	Deferred income taxes			—			9,462
	Deferred revenues			4,991			6,683
	Other noncurrent liabilities			9,198			7,033
		Total Long-Term Liabilities		148,928			112,604
COMMITMENTS AND CONTINGENCIES (Note 19)
STOCKHOLDERS' EQUITY
	Common stock—no par value, 23,000,000 and 9,000,000 shares authorized, 8,021,248 and 7,959,154 shares issued and outstanding			34,791			34,168
	Additional paid in capital			8,363			6,769
	Retained earnings			6,558			90,576
	Accumulated other comprehensive loss			(18,024	)		(1,246	)
		Stockholders' Equity		31,688			130,267
TOTAL			$	248,200		$	271,176

See Notes to Consolidated Financial Statements

51

MAUI LAND & PINEAPPLE COMPANY, INC. & SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

For the Three Years Ended December 31, 2008

(in thousands)

	Common Stock												Accumulated Other Comprehensive Income (Loss)
							Additional Paid in Capital			Retained Earnings
	Shares			Amount												Total
Balance, January 1, 2006		7,255		$	14,186		$	2,930		$	75,540		$	(1,476	)	$	91,180
Adjustment to initially apply FASB Statement No. 158, net of tax														1,542			1,542
Minimum pension liability, net of tax														(2,373	)		(2,373	)
Stock option exercises		25			694												694
Stock compensation expense								2,063									2,063
Vested restricted stock issued		8			288			(288	)								—
Tax benefit from stock compensation								38									38
Net income											7,225						7,225
Balance, December 31, 2006		7,288			15,168			4,743			82,765			(2,307	)		100,369
Cumulative impact of adoption of FASB Interpretation No. 48											(200	)					(200	)
Minimum pension liability, net of tax														1,061			1,061
Private placement of common stock		517			14,944												14,944
Stock option exercises		71			1,422												1,422
Stock compensation expense								4,684									4,684
Vested restricted stock issued		83			2,634			(2,634	)								—
Tax benefit deficiency from stock compensation								(24	)								(24	)
Net income											8,011						8,011
Balance, December 31, 2007		7,959			34,168			6,769			90,576			(1,246	)		130,267
Cumulative impact of adoption of EITF No. 06-8, net of tax											(4,622	)					(4,622	)
Pension benefits adjustment (Note 13)														(16,778	)		(16,778	)
Stock option exercises		1			14												14
Stock compensation expense								2,752									2,752
Vested restricted stock issued		93			1,107			(1,107	)								—
Shares cancelled to pay tax liability		(32	)		(498	)											(498	)
Tax benefit deficiency from stock compensation								(51	)								(51	)
Net loss											(79,396	)					(79,396	)
Balance, December 31, 2008		8,021		$	34,791		$	8,363		$	6,558		$	(18,024	)	$	31,688

See Notes to Consolidated Financial Statements

52

MAUI LAND & PINEAPPLE COMPANY, INC. & SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

				Year Ended December 31,
				2008			2007			2006
				(in thousands)
OPERATING ACTIVITIES
Net Income (Loss)				$	(79,396	)	$	8,011		$	7,225
Adjustments to reconcile net income (loss) to net cash used in operating activities
	Depreciation				13,131			11,868			12,374
	Stock based compensation				2,752			4,684			2,063
	Equity in (income) losses of affiliates				18,839			(16,845	)		5,336
	Gain on property disposals				(2,836	)		(45,593	)		(30,465	)
	Deferred income taxes				(4,085	)		1,910			(906	)
	Change in derivative liabilities and accretion of interest				(4,992	)		—			—
	Impairment charges				10,634			—			—
	Changes in operating assets and liabilities:
		Accounts receivable			1,030			13,446			(629	)
		Inventories			1,520			6,856			(719	)
		Trade accounts payable			(4,412	)		1,160			(3,693	)
		Income taxes payable			(4,162	)		446			(2,083	)
		Deferred revenues			(1,692	)		2,885			(8,941	)
		Other operating assets and liabilities			1,872			3,592			206
NET CASH USED IN OPERATING ACTIVITIES					(51,797	)		(7,580	)		(20,232	)
INVESTING ACTIVITIES
	Purchases of property				(13,909	)		(24,443	)		(45,874	)
	Proceeds from disposals of property				8,942			49,815			44,071
	Capital distributions from affiliates				—			2,346			—
	Contributions to affiliates				(8,156	)		(33,218	)		(11,735	)
	Payments for other assets				(4,106	)		(10,143	)		(12,954	)
NET CASH USED IN INVESTING ACTIVITIES					(17,229	)		(15,643	)		(26,492	)
FINANCING ACTIVITIES
	Proceeds from long-term debt				153,400			130,450			112,600
	Payments of long-term debt				(70,304	)		(121,798	)		(72,365	)
	Payments on capital lease obligations				(721	)		(107	)		(310	)
	Stock option exercises				14			1,422			694
	Stock issuance				—			14,944			—
	Debt issuance cost and other				(1,686	)		(840	)		32
NET CASH PROVIDED BY FINANCING ACTIVITIES					80,703			24,071			40,651
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS					11,677			848			(6,073	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR					1,991			1,143			7,216
CASH AND CASH EQUIVALENTS AT END OF YEAR				$	13,668		$	1,991		$	1,143
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year:
			Interest (net of amounts capitalized)	$	4,445		$	2,112		$	793
			Income taxes (refunds)	$	(4,229	)	$	3,860		$	6,672

SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES:

•

Property acquired under capital leases was $1,532,000, $2,038,000, and $81,000 in 2008, 2007 and 2006, respectively.

•

Amounts included in trade accounts payable for additions to property and other investments totaled $2,010,000, $2,046,000 and $2,359,000 at December 31, 2008, 2007 and 2006, respectively.

See Notes to Consolidated Financial Statements

53

MAUI LAND & PINEAPPLE COMPANY, INC. & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CONSOLIDATION

        The consolidated financial statements include the accounts of Maui Land & Pineapple Company, Inc. and its subsidiaries, primarily Maui Pineapple Company, Ltd. and Kapalua Land Company, Ltd. The Company's principal operations include production and sale of pineapple products, resort operations, and real estate development and sales. Significant intercompany balances and transactions have been eliminated.

LIQUIDITY

        The Company incurred an operating loss of $71.6 million and negative cash flow from operations of $51.8 million for the year ended December 31, 2008. On March 30, 2009, the Company has borrowings of almost $100 million outstanding (Notes 5 and 21) and approximately $11.7 million available under existing lines of credit. In March 2010, $70 million of the Company's available credit matures. This credit is comprised of two revolving credit facilities, both of which have financial covenants requiring a minimum of $10 million in liquidity and limitations on new indebtedness. Failure to satisfy any of the covenants or to otherwise default under either of the credit agreements would result in the outstanding borrowings to become immediately due and would also cause a default under the other credit agreement and the $40 million senior secured convertible notes issued in July 2008. If the Company defaults under the senior secured convertible notes, the holders of such notes may require the Company to redeem the notes, in which case the Company would also be required to pay a redemption premium equal to 115% multiplied by (i) the principal and accrued and unpaid interest under the note, or (ii) the highest closing sale price of the Company's common stock during the period between the event of default and delivery of redemption notice multiplied by the number of shares of our common stock into which a note is then convertible. The Company would have been out of compliance at December 31, 2008 with certain financial covenants under the line of credit agreement and the revolving loan agreement had it not amended the agreements as discussed in the following paragraph. At December 31, 2008 these factors raised significant uncertainty about the Company's ability to continue as a going concern.

        In response to these matters, the Company has undertaken several financial and strategic initiatives to restructure the terms of its credit agreements and generate cash flow from a variety of sources, including the sale of several real estate assets. In March 2009, the Company sold the Plantation Golf Course (PGC) for $50 million (see Note 21) and $45 million of the sales proceeds were applied to partially repay outstanding borrowings. In conjunction with the PGC sale, the Company amended its line of credit agreement to extend the maturity date to March 2010 and all financial covenants were eliminated, except for a minimum liquidity requirement and limitations on new indebtedness. The Company also amended its revolving loan agreement in March 2009 to suspend financial covenants through 2009, except for a minimum liquidity requirement and limitations on additional indebtedness. In return for the suspension of the covenants, the maturity date of the revolving loan was accelerated to March 2010 from June 2011. The Company is currently in discussions with both lenders to further restructure its line of credit and revolving loan agreements to extend the maturity dates beyond 2010, and to increase the amounts available under the line of credit agreement based, in part, on a re-appraisal of the properties securing the line of credit and by providing additional properties as collateral under the agreement. In addition, the Company has taken several other actions to reduce cash outflows including reducing its headcount by about 100 personnel (approximately 10% of employees) in March 2009, as well as other measures to reduce operating expenses. The Company also

54

plans to sell selected real estate assets in 2009 to provide additional liquidity. As a result of these actions, the Company believes it will be able to continue to be in compliance with its covenants under its borrowing arrangements and will continue operating as a going concern.

COMPREHENSIVE INCOME

        Comprehensive income includes all changes in Stockholders' Equity, except those resulting from capital stock transactions. Comprehensive income includes the pension benefit adjustment (see Note 10).

CASH AND CASH EQUIVALENTS

        Cash and cash equivalents include cash on hand, deposits in banks and commercial paper with original maturities of three months or less at the time of purchase.

INVENTORIES

        The Company's fresh fruit and processed juice inventories are stated at cost, not to exceed net realizable value using the first-in, first-out ("FIFO") method. The Company accounts for the costs of growing pineapple in accordance with the "annual accrual method," which has been used by Hawaii's pineapple and sugarcane growers since the 1950s. Under this method, revenues and costs are determined on the accrual basis, and pineapple production costs incurred during a year are charged to the costs of crops harvested during that year. These costs include land preparation and planting, cultivation, irrigation, crop development, harvesting and hauling to the packing facility. They also include certain overhead costs that are directly related to the growing of pineapple. Accordingly, no costs are assigned to the growing (unharvested) crops. The annual accrual method is the most appropriate method of accounting for the costs of growing pineapple because of the pineapple's crop cycle (18 to 48 months) and the uncertainties about fruit quality and the number of crops to be harvested from each planting (one to three crops). AICPA Statement of Position No. 85-3 ("SOP"), Accounting by Agricultural Producers and Agricultural Cooperatives, states that all direct and indirect costs of growing crops should be accumulated and growing crops should be reported at the lower of cost or market. However, the SOP does not apply to growers of pineapple and sugarcane in tropical regions because tropical agriculture (of which pineapple and sugarcane production in Hawaii are examples) differs greatly from agriculture in temperate regions of the mainland United States. The Company's growing (unharvested) crops generally consisted of approximately 2,000 acres that are expected to yield up to 52 tons per acre for the first crop harvested. The Company's growing crops are in various stages of development, and will be harvested principally in the years 2009 through 2011.

        Real estate is stated at the lower of cost or fair value less cost to sell. These costs generally include direct on-site construction costs, offsite improvement costs, planning and permitting costs for the project, and the cost of the land.

        Merchandise, materials and supplies are stated at cost, not in excess of fair value, using the retail and average cost methods. Merchandise inventories are retail inventories held for sale at the Kapalua Resort. Materials and supply inventories include amounts for both the Agriculture and the Resort segments.

REAL ESTATE HELD FOR SALE

        Real estate held for sale at December 31, 2008 includes the net book value of the buildings and land improvements located on an approximately 25-acre parcel of land in Kahului, Maui. The Company's Board of Directors approved the sale of the Kahului property in the fourth quarter of 2008 and the property is currently being actively marketed. The Kahului property includes the Company's administrative offices, a fresh fruit packing facility and a former cannery site.

55

INVESTMENT IN AFFILIATES

        Investments in affiliates, partnerships, and limited liability companies, over which the Company exercises significant influence, but not control, are accounted for using the equity method.

        Investments in unconsolidated affiliates are reviewed for impairment whenever there is evidence of a loss in value. An investment is written down to fair value if the impairment is considered to be other-than-temporary. In evaluating the fair value of an investment, the Company reviews the discounted projected cash flows associated with the investment and other relevant information. In evaluating whether an impairment is other-than-temporary, the Company considers all available information, including the length of time and extent of the impairment, the financial condition and near-term prospects of the affiliate, the Company's ability and intent to hold the investment for a period of time sufficient to allow for any anticipated recovery in fair value, and projected industry and economic trends, among others. In 2008, the Company evaluated its investment in Kapalua Bay Holdings, LLC ("Bay Holdings") for impairment. As a result of this process, the Company recorded an other-than-temporary impairment loss of $37.8 million. In determining the fair value of an investment and assessing whether any identified impairment is other-than-temporary, significant estimates and considerable judgment are involved. These estimates and judgments are based, in part, on the Company's current and future evaluation of economic conditions in general, as well as Bay Holdings' current and future plans. These impairment calculations contain additional uncertainties because they also require management to make assumptions and apply judgments to, among others, estimates of future cash flows, probabilities related to various cash flow scenarios, and appropriate discount rates. Changes in these and other assumptions could affect the projected operational results of Bay Holdings and, accordingly, may require valuation adjustments to the Company's investment in Bay Holdings that may materially impact the Company's financial condition or its future operating results. For example, if current market conditions continue to deteriorate or Bay Holdings' plans change, additional impairment charges may be required in future periods, and those charges could be material.

OTHER ASSETS

        Deferred costs are primarily real estate development costs related to various projects at the Kapalua Resort that will be allocated to future income-producing development projects. In 2008, the Company evaluated its deferred costs related to real estate developments for impairment and, as a result of this process, the Company recorded an impairment loss of $10.6 million (see Note 3).

        Cash surrender value of life insurance policies is reflected net of loans against the policies.

PROPERTY AND DEPRECIATION

        Property is stated at cost. Major replacements, renewals and betterments are capitalized while maintenance and repairs that do not improve or extend the life of an asset are charged to expense as incurred. When property is retired or otherwise disposed of, the cost of the property and the related accumulated depreciation are written off and the resulting gains or losses are included in income. Depreciation is provided over the estimated useful lives of the respective assets using the straight-line method generally over three to 25 years.

LONG-LIVED ASSETS

        Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When such events or changes occur, an estimate of the future cash flows expected to result from the use of the assets and their eventual disposition is made. If the sum of such expected future cash flows (undiscounted and without interest charges) is less than the carrying amount of the asset, an impairment loss is recognized in an amount by which the assets' net book values exceed their fair value. The Company has evaluated

56

certain long-lived assets for impairment; however, no impairment charges were recorded as a result of this process, other than impairment charges recorded for deferred development costs (see Note 3). These asset impairment loss analyses require management to make assumptions and apply considerable judgments to, among others, estimates of the timing and amount of future cash flows, expected useful lives of the assets, uncertainty about future events, including changes in economic conditions, changes in operating performance, changes in the use of the assets, and ongoing cost of maintenance and improvements of the assets, and thus, the accounting estimates may change from period to period. If management uses different assumptions or if different conditions occur in future periods, the Company's financial condition or its future operating results could be materially impacted.

DERIVATIVE FINANCIAL INSTRUMENTS

        The Company accounts for all derivative financial instruments, such as interest rate swap agreements and the derivative liability related to its convertible debt, by recognizing the derivative on the balance sheet at fair value, regardless of the purpose or intent of holding them. Changes in the fair value will be recognized in interest expense.

EMPLOYEE BENEFIT PLANS

        The Company's policy is to fund pension cost at a level at least equal to the minimum amount required under federal law, but not more than the maximum amount deductible for federal income tax purposes.

        The Company adopted Financial Accounting Standards Board ("FASB") Statement of Financial Accounting Standards ("SFAS") No. 158 ("SFAS 158"), Employers' Accounting for Defined Benefits Pension and Other Postretirement Plans as of December 31, 2006. The Standard requires an employer to recognize the over-funded or under-funded status of a defined benefit postretirement plan (other than a multiemployer plan) as an asset or liability in its balance sheet and to recognize changes in that funded status in the year in which the changes occur though comprehensive income. The pension asset or liability is the difference between the plan assets at fair value and the projected benefit obligation as of year end.

        Deferred compensation plans for certain management employees provide for specified payments after retirement. The present value of estimated payments to be made is accrued over the period of active employment. In 1998, future benefits under these plans were terminated (see Note 10).

        The estimated cost of providing postretirement health care and life insurance benefits is accrued over the period employees render the necessary services.

REVENUE RECOGNITION

        Product revenues primarily include the sales of pineapple, retail merchandise at the Kapalua Resort, sales of real estate inventories and revenues from the sale of non-core land parcels (land not used in the Company's core operations). Service revenues primarily include revenues from golf course operations, revenues from the Kapalua Villas rental program, lease revenues and real estate commission income.

        Revenues from the sale of pineapple products are recognized when title and risk of loss to the product are transferred to the customer. The timing of transfer of title varies according to the shipping and delivery terms of the sale.

        Sales of real estate are recognized as revenues in the period in which sufficient cash has been received, collection of the balance is reasonably assured and risks of ownership have passed to the buyer. The Company uses the percentage-of-completion method to recognize revenues and profits from the sale of residential land parcels where the Company is obligated to construct improvements (roads,

57

sidewalks, drainage, and utilities) after the closing of the sale. Under this method, revenues are recognized over the construction improvement period on the basis of costs incurred as a percentage of expected total costs to be incurred. Bay Holdings also uses the percentage-of-completion method for its sales of condominiums (see Note 4).

        Rental income is recognized on a straight-line basis over the terms of the leases. Also included in rental income are certain percentage rents determined in accordance with the terms of the leases. Rental income arising from tenant rents that are contingent upon the sales of the tenant exceeding a defined threshold are recognized only after the contingency has been resolved (e.g., sales thresholds have been achieved).

        Revenues from other activities are recognized when delivery has occurred or services have been rendered, the sales price is fixed or determinable, and collectibility is reasonably assured.

INTEREST CAPITALIZATION

        Interest costs are capitalized during the construction period of major capital projects.

ADVERTISING AND RESEARCH AND DEVELOPMENT

        The costs of advertising and research and development activities are expensed as incurred. Advertising costs are included in shipping and marketing costs, and research and development costs are included in operating expenses in the consolidated statements of operations.

LEASES

        Leases that transfer substantially all of the benefits and risks of ownership of the property are accounted for as capital leases. Amortization of property under capital leases is included in depreciation expense. Other leases are accounted for as operating leases. Rentals under operating leases are recognized on a straight-line basis.

INCOME TAXES

        The Company adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109 ("FIN 48") on January 1, 2007. This interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return (see Note 13).

        The Company's provision for income taxes is calculated using the liability method. Deferred income taxes are provided for all temporary differences between the financial statement and income tax bases of assets and liabilities using tax rates enacted by law or regulation. A valuation allowance is established for deferred income tax assets if management believes that it is more likely than not that some portion or all of the asset will not be realized through future taxable income.

STOCK COMPENSATION PLANS

        The Company adopted SFAS No. 123(R), Share-Based Payment ("SFAS 123(R)"), effective January 1, 2006, using the modified prospective application transition method. The Company had previously accounted for its stock-based compensation arrangements under SFAS 123, Accounting for Stock-Based Compensation. SFAS 123(R) requires all share-based payments, including grants of employee stock options, to be recognized as compensation expense over the service period (generally the vesting period) in the consolidated financial statements based on their fair values. Under the modified prospective method, awards that were granted, modified, or settled on or after January 1,

58

2006 are measured and accounted for in accordance with SFAS 123(R). The impact of forfeitures that may occur prior to vesting is also estimated and considered in the amount recognized.

USE OF ESTIMATES

        The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Future actual amounts could differ from these estimates.

RISKS AND UNCERTAINTIES

        Factors that could adversely impact the Company's operations or financial results include, but are not limited to, the following: continued unfavorable economic conditions in Hawaii and the mainland United States that result in a further decline in the market demand for the Company's products and services; numerous risks related to the Company's investments in real property which could be impacted by unfavorable economic conditions, interest rates, and availability of financing; untimely completion of land development projects within forecasted timing and budget; inability to obtain land use entitlements at a reasonable cost; unfavorable legislative decisions by the County of Maui; the cyclical market demand for luxury real estate on Maui; increased competition from other luxury real estate developers on Maui; the Company's limited guarantees to complete development of the Residences at Kapalua Bay project; failure of joint venture partners to perform; environmental regulations; competition from other agriculture producers; adverse weather conditions and natural disasters; failure of the Company's consignment arrangement to sell fresh pineapple; inability to find a title sponsor for the Company's LPGA or other events; availability of reliable and low-cost transportation to serve customers; being located apart from the United States mainland makes the Company more sensitive to economic factors; failure to comply with restrictive financial covenants in the Company's credit arrangements; an inability to achieve the Company's short and long-term goals and cash flow requirements; future impairment charges of long-lived assets or investments; and inadequate internal controls.

NEW ACCOUNTING PRONOUNCEMENTS

        As of January 1, 2008, the Company and its equity method investee, Bay Holdings (see Note 4) adopted the provisions of the Emerging Issues Task Force of the FASB ("EITF") Issue No. 06-8, Applicability of the Assessment of a Buyer's Continuing Investment under FASB Statement No. 66, Accounting for Sales of Real Estate ("SFAS No. 66"), for Sales of Condominiums ("EITF 06-8"). EITF 06-8 requires condominium sales to meet the continuing investment criterion in SFAS No. 66 in order for profit to be recognized under the percentage-of-completion method. For sales through 2007 that do not meet the continuing investment criteria in SFAS No. 66, EITF 06-8 requires that such transactions be accounted for using the deposit method with profits being deferred until the sales qualify for percentage-of-completion, or full accrual accounting in later periods. The cumulative effect for the Company of applying EITF 06-8, including its share of Bay Holdings' cumulative effect was $4,622,000 (net of income tax effect) and is reported as a charge to retained earnings as of January 1, 2008.

        In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities—an amendment of FASB Statement No. 133. SFAS 161 requires enhanced disclosures about (i) how and why derivative instruments are used; (ii) how derivative instruments and related hedged items are accounted for under SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities as amended; and (iii) how derivative instruments and related hedged items affect the Company's financial position, results of operations, and cash flows. SFAS 161 is effective for the

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Company on January 1, 2009 and is not expected to have a significant impact on the disclosures in the consolidated financial statements.

        In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51 ("SFAS 160"). SFAS 160 requires that a noncontrolling interest in a subsidiary be reported as equity and the amount of consolidated net income specifically attributable to the noncontrolling interest be identified in the consolidated financial statements. It also calls for consistency in the manner of reporting changes in the parent's ownership interest and requires fair value measurement of any noncontrolling equity investment retained in a deconsolidation. SFAS 160 is effective for the Company on January 1, 2009. The Company does not expect the adoption of SFAS 160 to have a material effect on its consolidated financial statements.

        In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations ("SFAS 141R"). SFAS 141R broadens the guidance of SFAS141, extending its applicability to all transactions and other events in which one entity obtains control over one or more other businesses. It broadens the fair value measurement and recognition of assets acquired, liabilities assumed, and interests transferred as a result of business combinations. SFAS 141R expands on required disclosures to improve the statement users' abilities to evaluate the nature and financial effects of business combinations. SFAS 141R is effective for the Company on January 1, 2009. The Company does not expect the adoption of SFAS 141R to have a material effect on its consolidated financial statements.

EARNINGS (LOSS) PER COMMON SHARE

        Basic earnings (loss) per share is computed by dividing net income or loss by the weighted-average number of common shares outstanding. Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares from stock-based compensation arrangements had been issued.

        Diluted earnings (loss) per common share is computed on the assumption that the shares of nonvested restricted stock are issued for an amount based on the grant date market price of the shares and that the outstanding stock options are exercised. The treasury stock method is applied to determine the number of potentially dilutive shares for nonvested restricted stock and stock options. Convertible debt is assumed to be converted by applying the if-converted method.

        Reconciliation between average number of shares outstanding and the average number of shares outstanding after the effect of dilutive shares follows:

		2008		2007		2006
Average number of shares outstanding			7,959,472		7,802,282		7,259,534
Effect of dilutive securities:
	Outstanding stock options and non-vested restricted stock		—		60,674		88,160
Average number of shares outstanding after effect of dilutive shares			7,959,472		7,862,956		7,347,694

        The computation of average dilutive shares outstanding excluded 587,902, 623,280, and 433,540 of non-qualified stock options to purchase common stock, non-vested restricted stock and common stock issuable upon assumed conversion of convertible debt (see Note 11) for the years ended December 31, 2008, 2007 and 2006, respectively. These amounts were excluded because the options' effect would be anti-dilutive.

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2. INVENTORIES

        At December 31, 2008, pineapple inventories consist of (finished goods) fresh fruit and processed juice products at First-in, First-out ("FIFO") cost. At December 31, 2007, finished goods inventories were comprised of fresh fruit at a FIFO cost of $1.0 million and processed juice products at a Last-In, First-Out ("LIFO") cost of $112,000. The replacement cost of the LIFO inventories at year-end 2007 was approximately $628,000. In 2007 and 2006, there were partial liquidations of LIFO inventories; thus, cost of product revenues included prior years' inventory costs, which were lower than current costs. Had current costs been charged to cost of product revenues, income before income taxes for 2007 and 2006 would have decreased by $4.3 million and $2.3 million, respectively.

        Effective January 1, 2008, the Company changed its method of accounting for pineapple juice inventory from the LIFO method to the FIFO method, which is the method used for fresh pineapple fruit inventory. The Company did not apply the accounting change to its previous inventories of processed solid-pack pineapple products, as the Company ceased all processing and canning of solid-pack pineapple products in 2007 and had no inventory as of January 1, 2008. The Company expects that a single method of accounting for both fresh fruit and processed juice will improve the clarity of the Company's financial results by more clearly reflecting periodic income. The Company believes the FIFO method is preferable to the LIFO method because it 1) provides better matching of inventory costs to revenues, 2) eliminates the non-cash earnings that have resulted from past LIFO liquidations and from future liquidations that are likely to occur, 3) better reflects the physical flow of inventories, and 4) more closely reflects the current cost of inventories on the Company's consolidated balance sheet. The effect of the accounting change would not have been material to the Company's previously issued condensed consolidated financial statements for quarterly periods during 2007, or to the Company's consolidated financial statements for the years ended December 31, 2007 or 2006. As a result, the Company has not made any adjustments to reflect a retrospective application to its prior financial statements; rather the Company recorded the cumulative effect of this change of $326,000 (net of income taxes of $191,000) as a credit to cost of product revenues with associated increases in inventory and deferred tax liabilities.

3. OTHER ASSETS

        Other Assets at December 31, 2008 and 2007 consisted of the following:

	2008		2007
	(in thousands)
Deferred costs	$	25,436	$	32,251
Deferred compensation plan contributions		3,095		4,670
Cash surrender value of life insurance policies (net)		91		1,791
Notes receivable from real estate sales		1,076		1,076
Note receivable from affiliate		3,600		—
Other		3,840		3,928
Total	$	37,138	$	43,716

        In the fourth quarter of 2008, due to uncertainty in the real estate markets and to cash flow constraints, we delayed the start of construction of new development projects until internal and external conditions improve. Deferred development costs and construction in progress totaling $10.6 million were written off in the fourth quarter of 2008. Costs written off consisted of development plans that were abandoned and other pre-development work that are not expected to benefit existing projects and are not recoverable.

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        The Company maintained a non-qualified deferred compensation plan whereby management could make pre-tax deferrals of their salary and any cash bonus. Effective December 31, 2008, the plan ceased operations and all of the funds in the plan were distributed to the participants in February 2009.

        In 2008, the Company cancelled substantially all company-owned life insurance policies and all policy loans were repaid. At December 31, 2007, cash surrender value of life insurance policies is stated net of policy loans, totaling $642,000. Interest rates on the loans were 5.75% to 8% and were payable upon the death of the insured or cancellation of the policies. The Company owned the insurance policies and the related cash surrender values, and had directly borrowed against such cash surrender values for general operating purposes. The loans were not provided by or on behalf of the Company to our officers and/or directors. The Company had the right to offset the loans against the proceeds received on maturity or cancellation of the policies; accordingly, the loans were presented as a reduction of the respective cash surrender values included in other noncurrent assets on the Company's balance sheet.

4. INVESTMENT IN AFFILIATES

        The Company's investment in affiliates consists of the following as of December 31, 2008 and 2007:

	2008		2007
	(in thousands)
Kapalua Bay Holdings, LLC	$	41,683	$	59,792
Ritz-Carlton, Kapalua Hotel JV		—		—
	$	41,683	$	59,792

KAPALUA BAY HOLDINGS, LLC

        The Company has a 51% ownership interest in Bay Holdings, which is the sole member of Kapalua Bay LLC, ("Kapalua Bay"). The other members of Bay Holdings through wholly owned affiliates are Marriott International Inc. ("Marriott"), 34%, and Exclusive Resorts LLC ("ER"), 15%. A 43% shareholder and director (as of December 31, 2008) of the Company through related companies is the majority owner of ER. Bay Holdings is not a variable interest entity, as defined in FASB Interpretation No. 46(R), Consolidation of Variable Interest Entities ("FIN 46(R)"). The Company accounts for its investment in Bay Holdings using the equity method of accounting because, although it has the ability to exercise significant influence over operating and financial policies, it does not control Bay Holdings through a majority voting interest. Under the LLC agreement, major decisions require the approval of either 75% or 100% of the membership interests. The Company has been designated as the managing member of Bay Holdings and as such manages the day-to-day affairs of the entity. Profits and losses of Bay Holdings are allocated in proportion to the members' ownership interests, which approximate the estimated cash distributions to the members.

        Upon formation of Kapalua Bay in 2004, the Company's non-monetary contributions to Bay Holdings, including a 21-acre land parcel, were valued at $25 million by the members through arms-length negotiations. The land contribution was recorded by the Company in its investment in Bay Holdings at historical cost, which was nominal, and Bay Holdings recorded the contribution at its fair value of $25 million. The Company recorded its non-monetary capital contributions to Bay Holdings at the carrying values (carryover historical cost basis) of the assets contributed because the contributions are not the culmination of an earnings process. The historical cost basis of the land is nominal because it was acquired in the early 1900s. Through December 31, 2008, the Company has made cash contributions to Bay Holdings of $53.2 million.

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        The carrying amount of the Company's investment in Bay Holdings of $41.7 million as of December 31, 2008, reflects an impairment charge of $37.8 million recorded by the Company in December 2008. Higher than expected project costs and estimated carrying costs as a result of the restructured financing described below, as well as slower anticipated sell-out of the project in the current market environment, has reduced the expected return from the project. As a result, the fair value of the project was less than its carrying value, which the Company believes represents an other-than-temporary impairment in the carrying value of the investment.

        Bay Holdings is constructing a residential development on land that it owns at the site of the former Kapalua Bay Hotel, and a spa on an adjacent parcel of land that is owned by the Company and leased to Bay Holdings. The Kapalua Bay Hotel closed in April 2006 to prepare for the commencement of sales and marketing efforts for the whole and fractional condominium units that comprise the Residences at Kapalua Bay project. In June 2006, Bay Holdings began to enter into binding sales contracts and, in the second half of 2006, demolition and construction began. Sales of the whole units began in June 2006 and sales of the fractional residential units began in July 2006. In 2007, Bay Holdings began to recognize profit from binding sales contracts on the whole and fractional ownership condominiums on the percentage-of-completion method.

        The Company's 2008, 2007 and 2006 equity in the income (losses) of Bay Holdings was $18.9 million (excluding the effect of the $37.8 million impairment charge discussed above), $16.8 million and $(5.3) million, respectively. While sales at the Residences at Kapalua Bay project have continued throughout 2008 and early 2009, based on potential for an increase in default rates because of the current economic environment, Bay Holdings significantly increased the allowance for default reserves and the Company recorded equity in losses from the joint venture of $7.5 million in the fourth quarter. In 2007, as Bay Holdings began to recognize profit from the binding sales contracts on a percentage-of-completion method, the Company began to recognize a proportionate amount of the unrealized appreciation of the fair value of the land and other non-monetary contributions to Bay Holdings and other deferred costs related to the joint venture. This resulted in additional income, net of deferred costs, of $3.0 million for 2008 and $3.3 million for 2007, which is included in the Company's equity in income (losses) of Bay Holdings.

        As of January 1, 2008, Bay Holdings adopted EITF 06-8. The cumulative effect of adopting EITF 06-8 of $12.5 million was recorded as a reduction to Bay Holdings' January 1, 2008 retained earnings, and the Company recorded its proportionate share of this adjustment to its opening retained earnings for 2008 (see Note 1).

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        In July 2006, Bay Holdings entered into a syndicated construction loan agreement with Lehman Brothers Holdings Inc. ("Lehman") for the lesser of $370 million or 61.6% of the total projected cost of the project. Lehman's commitment under the loan agreement was approximately 78% of the total. The loan is collateralized by the project assets, including the fee simple interest in the land owned by Bay Holdings, the adjacent spa parcel owned by the Company, and all of the sales contracts.

        On September 15, 2008 Lehman filed a petition under Chapter 11 of the U.S. Bankruptcy Code with the United States Bankruptcy Court for the Southern District of New York. As a result of Lehman's failure to comply with the loan agreement, the members of Bay Holdings advanced funds to the joint venture, which, when combined with funding received from lenders other than Lehman under the loan agreement, was sufficient to pay minimum progress payments due to the general contractor. In October 2008, the Company made an uncollateralized loan to Bay Holdings totaling $3.6 million which incurs interest at 16%.

        On February 11, 2009, Kapalua Bay, Lehman, other lenders under the loan agreement, Swedbank and MH Kapalua Venture, LLC, an affiliate of Marriott, entered into an Amended and Restated Construction Loan Agreement (the "Amended Loan Agreement"). Pursuant to the Amended Loan Agreement, the aggregate amount that Kapalua Bay may borrow, including amounts previously funded under the loan agreement is approximately $354.5 million. The Company believes that this amount will be sufficient to fund the full development and completion of the project.

        The Company and the other members of the joint venture continue to guarantee to the lenders completion of the project and each member's pro rata share of costs and losses incurred by the lender as a result of the occurrence of specified triggering events during the term of the Amended Loan Agreement. The members' guarantee to the lender does not include payment in full of the loan. The Company has recognized a liability of $968,000 at December 31, 2008, representing the estimated fair value of its obligation under these provisions.

        The Company had an agreement with Bay Holdings to provide entitlement services relating to the receipt of governmental permits for the development projects. The fee to the Company for these services was $450,000, which in lieu of cash payment, was deemed to be contributed to the Company's capital account in Bay Holdings in two equal installments in 2005 and 2006. The Company recorded income for 49% (amount attributable to the other members) of the fee earned in 2005 and 2006. In 2006, Bay Holdings entered into agreements with the Company to sell the spa, beach club improvements, and the sundry store to the Company upon completion. These agreements are currently being renegotiated. In addition, pursuant to a sales and marketing agreement, Bay Holdings paid $173,000, $98,000 and $341,000 to the Company in 2008, 2007 and 2006, respectively.

        Summarized balance sheet information for Bay Holdings as of December 31, 2008 and 2007 and operating information for 2008, 2007 and 2006 are as follows:

	2008		2007
	(in thousands)
Restricted cash	$	8,688	$	8,861
Project development costs		358,413		201,098
Other assets, net		161,274		80,209
Total Assets	$	528,375	$	290,168
Construction loan and notes payable	$	279,318	$	85,000
Other liabilities		62,491		52,064
Total Liabilities	$	341,809	$	137,064
Members' Capital	$	186,566	$	153,104

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	2008		2007		2006
	(in thousands)
Revenues	$	122,218	$	121,229	$	62
Costs and Expenses		90,993		94,659		10,324
Income (Loss) From Continuing Operations		31,225		26,570		(10,262	)
Loss From Discontinued Operations		—		—		(221	)
Net Income (Loss)	$	31,225	$	26,570	$	(10,483	)

		2008			2007		2006
		(in thousands)
A reconciliation of the Company's equity in income (losses) of affiliates is as follows:
51% of Bay Holdings net income (loss)		$	15,925		$	13,551	$	(5,346	)
Recognition of unrealized appreciation of the fair value of the land contribution and other			3,010			3,281		6
	Subtotal		18,935			16,832		(5,340	)
Impairment charge on investment			(37,774	)		—		—
Equity in income (losses) of affiliates		$	(18,839	)	$	16,832	$	(5,340	)

RITZ-CARLTON, KAPALUA HOTEL JV

        In March 2007, the Company sold the land underlying the Ritz-Carlton, Kapalua hotel to W2005 Kapalua/Gengate Hotel Holdings, L.L.C., (the "Hotel JV") that owned the hotel and was the lessee under the long-term ground lease with the Company. Approximately 49 acres, with a nominal cost basis, were sold for $25 million in cash at closing and for a 21.4% interest in the Hotel JV, and the Company recognized a gain of $24.8 million on the partial sale of the land.

        Profits and losses of the Hotel JV will be allocated in proportion to the members' ownership interests, which approximate the estimated cash distributions to the members. The Company has the ability to exercise significant influence, but not control, over operating and financial policies of the Hotel JV and accounts for its investment in the Hotel JV using the equity method. The Hotel JV is not a variable interest entity as defined in FIN 46(R).

        The Company's carrying value of its interest in the Hotel JV is $0 and, accordingly, the Company is not recording its share of the equity in losses in the Hotel JV because the Company is neither guaranteeing the obligations of the Hotel JV nor is it committed or expected to fund future obligations or losses of the Hotel JV.

        Certain dilution provisions provide that should the Company choose not to fund additional cash calls, if any, its interest will be reduced by the aggregate amount of the increase in the percentage interests of all contributing members, but in no event shall the Company's percentage interest be reduced below 10%. At December 31, 2008, the Company's percentage interest in the Hotel JV was 15.9% reflecting dilution as a result of cash calls in which the Company chose not to participate in.

        Concurrent with the Hotel JV Agreement, the Hotel JV entered into certain loan agreements with Lehman totaling $271.7 million and an amendment to an existing loan agreement of $20 million with Luxury Finance, LLC. The loans were principally for the purpose of acquiring the land from the Company, repaying existing debt, and completing a rooms conversion project and comprehensive refurbishment of the hotel. The Company is not liable for the repayment of the loans, but is liable for any loss suffered by the lenders as a result of the Company's fraudulent acts, misrepresentation or certain other triggering events, up to 10.71% of the then outstanding loan balances. The Company has

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recognized a liability of $93,000, representing the estimated fair value of its obligations under these provisions.

5. FINANCING ARRANGEMENTS

        During 2008, 2007 and 2006, the Company had average borrowings outstanding of $111.5 million, $39.1 million, and $29.5 million, respectively, at average interest rates of 5.0%, 7.7% and 7.4%, respectively. At December 31, 2008, the Company had unused long-term credit lines of $11.7 million.

        Long-term debt at December 31, 2008 and 2007 consisted of the following (interest rates represent the rates at December 31):

	2008		2007
	(in thousands)
Revolving loan and line of credit, 3.25% to 3.48% and 6.23% to 6.54%	$	102,800	$	43,500
Senior secured convertible notes, 5.875%		31,159		—
Term loan, 6.93%		—		9,726
Equipment loans, 6.05% to 6.93%		—		6,478
Total		133,959		59,704
Less current portion		45,000		1,251
Long-term debt	$	88,959	$	58,453

        On July 28, 2008, the Company concluded a securities purchase agreement with certain institutional accredited investors and issued an aggregate of $40 million in principal amount of senior secured convertible notes (the "convertible notes"), bearing 5.875% interest per annum payable quarterly in cash in arrears beginning October 15, 2008, resulting in proceeds of $38,365,000 (net of issuance costs of $1,635,000).

        The convertible notes are convertible, at any time following their issuance, into shares of common stock of the Company at an initial conversion price of $33.50 per share, which is equal to an initial conversion rate of 29.8507 shares per $1,000 principal amount of the convertible notes. The conversion price is subject to (i) standard weighted-average anti-dilution protection, and (ii) to an automatic reset 18 months following the closing of the financing at the lower of the then current conversion price and 115% of the closing bid price of the common stock as reported on the NYSE on the adjustment date; provided, that, with respect to the reset adjustment, in no event shall the conversion price be reset below $30.00 per share. The convertible notes are not convertible to the extent that their conversion would cause the holder to be the beneficial owner of more than 4.99% of our common stock immediately after giving effect to such conversion. The convertible notes are secured by specified assets of the Company.

        Further, if an adjustment to the conversion price would result in any investor owning in excess of (i) such investor's FIRPTA Cap (as defined in the convertible notes) on an as converted basis (without regard for any limitations of conversion set forth in the convertible notes) or (ii) the Exchange Cap Allocation (as defined in the convertible notes), then in lieu of the full anti-dilution adjustment, the conversion price will be reduced to the conversion price that would result in such note being convertible into such number of shares of common stock equal to the lower of the investor's FIRPTA Cap or Exchange Cap Allocation, as applicable (without regard to any limitations on conversion set forth in the convertible note), and, in addition, no later than five business days following the date of conversion of the convertible note, such investor shall receive a cash payment from the Company equal to the product of (x) the closing bid price of our common stock on such conversion date and (y) the number of shares of common stock in excess of such FIRPTA Cap or Exchange Cap Allocation, as

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applicable, that would have otherwise been issuable without regard to such limitation and any other limitations on conversion set forth in the convertible note.

        The convertible notes mature on July 15, 2013. However, at any time after the second anniversary of the closing, the Company has the right, but not the obligation, to require the investors to convert their convertible notes into shares of our common stock at the then applicable conversion price if the average of the daily volume weighted average price of the Company's common stock is 175% of the conversion price then in effect for 20 out of 30 consecutive trading days.

        On the third anniversary of the closing, each holder of the convertible notes has the right to require the Company to redeem all or any portion of such convertible note at a redemption price equal to 100% of the principal amount of the convertible note being redeemed, plus accrued and unpaid interest thereon. Upon the occurrence of a change of control of the Company, each convertible note holder will have the right to require the Company to repurchase all or any portion of such convertible note at a repurchase price equal to 100% of the principal amount of the convertible note being redeemed, plus accrued and unpaid interest thereon. If a convertible note holder elects to convert its convertible note in connection with a change of control, the Company will pay a make-whole premium to such convertible note holder, unless (i) at least 90% of the consideration, excluding cash payments for fractional shares, in such change of control consists of shares of capital stock of the surviving or resulting entity that are listed on, or immediately after the transaction or event will be listed on, a national securities exchange and as a result of such transaction or transactions the convertible notes become convertible into or exchangeable or exercisable for such capital stock of the surviving or resulting entity and such entity has assumed the obligations under the convertible note or (ii) the Company continues to be the successor entity and the common stock continues to be listed on a national securities exchange. The make-whole premium table included in the convertible notes sets forth the number of additional shares to be paid depending upon the effective date of the change of control triggering the make-whole premium payment and the price paid per share of common stock in the change of control.

        Additionally, the convertible notes may become immediately due and payable upon an "event of default," as defined in the convertible notes, such as the suspension from trading on the NYSE for more than 10 days in any 365-day period, failure to pay convert notes timely or to pay amounts due under the agreement, or bankruptcy. If a convertible note is redeemed in connection with an event of default, the Company may be required to pay a redemption premium, in which case the redemption amount would equal 115% multiplied by (i) the principal and accrued and unpaid interest under the convertible note, or (ii) the highest closing sale price of the Company's common stock during the period between the event of default and delivery of redemption notice multiplied by the number of shares of the Company's common stock into which a convertible note is then convertible.

        The conversion features of the convertible notes including the make-whole premium ("conversion features") gave rise to an embedded derivative instrument that is required to be accounted for separately in accordance with SFAS No. 133 and EITF 00-19, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company's Own Stock. Accordingly, the Company bifurcated the fair value of the conversion features of the convertible notes which was determined to be $10.1 million on July 28, 2008, and was recorded as a derivative liability carried at fair value, with changes in fair value being recorded in earnings. At December 31, 2008, the fair value of the derivative liability was approximately $2.7 million, and the $7.4 million reduction in fair value was recorded as a credit to interest expense. As a result of the bifurcation, the carrying value of the convertible notes was $29.9 million which is being accreted to interest expense using the effective interest method to the stated value of the convertible notes of $40 million over the three-year term of the Notes. For 2008, such accretion amounted to $1.2 million and is recorded as interest expense.

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        In November 2007, the Company entered into a $90 million revolving line of credit secured by approximately 1,437 acres of the Company's West Maui land. At the Company's option, interest on advances will be based on the Administrative Agent's prime rate or a one- to six-month LIBOR rate. Interest is due monthly and all outstanding principal and accrued interest was scheduled to be due on November 13, 2009. There are no commitment fees on the unused portion of the revolving facility. The line of credit agreement contains various representations, warranties, affirmative, negative and financial covenants and events of default customary for financings of this type. The initial advance at closing in November 2007, of approximately $16.1 million was used to repay all principal and interest due on the Company's $30 million revolving credit agreement and such agreement was cancelled. At December 31, 2008, the Company had irrevocable letters of credit totaling $509,000 that were secured by this loan facility. The line of credit agreement includes certain financial covenants, including the maintenance of a minimum net worth, liquidity and interest coverage ratio, and maximum funded debt. At December 31, 2008, the Company would have been out of compliance with certain of these covenants and, in March 2009, the Company amended the line of credit agreement in order to be in compliance with certain financial covenants effective December 31, 2008. The agreement was further amended to eliminate all financial covenants except for the maintenance of minimum liquidity of $10 million and to limit additional indebtedness, to eliminate the limitations on the lenders' recourse to recovery against the Company, to increase the interest rate on loan draws by 275 basis points as of April 1, 2009, and to require a re-appraisal of the collateral and a permanent pay down if the collateral value is less than 50% of the loan commitment. The properties are currently being re-appraised. In March 2009, the Company sold the Plantation Golf Course (PGC) for $50 million (see Note 21), which was included in the collateral securing the line of credit agreement. In consideration for release of the PGC from the collateral, $45 million of the sales proceeds were applied to partially repay outstanding borrowings and the credit limit under this facility was reduced to $45 million. In conjunction with the PGC sale, the Company amended the line of credit agreement to extend the maturity date to March 13, 2010 and, accordingly, classified the remaining outstanding principle of $32.8 million as a noncurrent liability at December 31, 2008 in the consolidated balance sheet. The Company is currently in discussions with the lender to restructure the line of credit agreement to extend the maturity date beyond 2010 and to increase the available credit under this agreement.

        The Company has a $25.0 million revolving loan that is secured by certain parcels of the Company's real property on Maui that matures in March 2010 (as amended). Commitment fees of .25% to .50% are payable on the unused portion of the revolving facility. At the Company's option, interest rates on advances are adjustable to the prime rate or based on one-month to one-year LIBOR rates. The agreement included financial covenants for the maintenance of a minimum net worth and interest coverage ratio, and maximum permitted indebtedness and funded debt to capitalization ratio. At December 31, 2008, the Company would have been out of compliance with certain covenants and, in March 2009, the Company amended the agreement in order to be in compliance with all covenants effective December 31, 2008. These covenants were suspended through 2009 and replaced with covenants for the maintenance of minimum liquidity of $10 million and limitations on additional indebtedness. The line of credit agreement was also amended to eliminate the automatic extension of the draw period and maturity that was to occur on June 1, 2011, to change the maturity to March 2010, increase the interest rate on loan draws by 60 to 110 basis points, and to require a re-appraisal of the collateral and a permanent pay down or encumbrance of additional assets if the collateral value is less than 50% of the loan commitment.

        A $9.7 million term loan and $6.5 million of equipment loans were repaid in 2008 with proceeds from the convertible debt and the revolving loans.

        Maturities of long-term debt during the next five years, from 2009 through 2013, are as follows: $45,000,000 in 2009, $57,800,000 in 2010 and $31,159,000 in 2013.

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6. FAIR VALUE

        The Company adopted SFAS No. 157, Fair Value Measurements, on January 1, 2008 for its financial assets and liabilities and there was no material impact to the consolidated financial statements. SFAS No. 157 applies to all assets and liabilities that are being measured and reported on a fair value basis. SFAS No. 157 requires new disclosure that establishes a framework for measuring fair value in GAAP, and expands disclosure about fair value measurements. This statement is intended to enable the reader of the financial statements to assess the inputs used to develop those measurements by establishing a hierarchy for ranking the quality and reliability of the information used to determine fair values. The statement requires that assets and liabilities carried at fair value be classified and disclosed in one of the following three categories:

        Level 1: Quoted market prices in active markets for identical assets or liabilities.

        Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.

        Level 3: Unobservable inputs that are not corroborated by market data.

        In July 2008, the Company issued $40 million in senior secured notes that are convertible in to the Company's common stock (see Note 5). The conversion features related to the notes that gave rise to a derivative liability is recorded at fair value as of December 31, 2008.

        In January 2008, the Company entered into interest rate swap agreements to reduce future cash flow variability for approximately two years on $55 million of variable rate debt. The effect of the agreements is to convert variable-rate interest, which was previously tied to 1-, 2-, 3- and 6-month LIBOR terms, to fixed-rate interest of approximately 4.4% based on a 2-year fixed LIBOR rate. The transactions were not designated as hedges under FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities, and accordingly, the gains and losses resulting from the change in fair value from these interest rate swaps are recognized currently in interest expense.

        Fair value measurements at December 31, 2008 using significant other inputs (Level 2) were as follows and are recognized as current liabilities on the Company's consolidated balance sheet:

Interest rate swap agreements	$	1,160,000
Derivative liability	$	2,689,000

        SFAS No. 157 is effective for the Company's nonfinancial assets and liabilities on January 1, 2009; it is not expected to have a significant impact on the consolidated financial statements.

7. PINEAPPLE OPERATIONS RESTRUCTURING

        In April 2007, the Company's Board of Directors approved a comprehensive plan that would continue to shift the pineapple operations' focus to fresh fruit sales. As part of this plan, the Company ceased substantially all canning and processing of solid-pack pineapple products effective as of June 30, 2007. The Company continues to process pineapple juice and has extended its fresh fruit line to include products for institutional accounts.

        As a result of this restructuring, the Company eliminated 133 positions in its pineapple operations, including all but one of its California sales staff. Agreements were concluded to terminate a long-term purchase commitment for Champaka pineapple (a variety used principally for canning or juice) and to cancel the Company's seven-year lease of its California sales office. Equipment, material and supplies

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related to the canning operations were sold to a third party auctioneer or written off. The net charges recorded in 2007 related to the restructuring of canning operations were as follows:

		In thousands
Net loss on disposition of fixed assets, materials and supplies		$	2,471
Loss on purchase supply contract and lease agreement			2,629
Employee severance			2,811
Other			544
	Total	$	8,455

        At December 31, 2008, $900,000 related to the purchase supply contract remains unpaid.

8. REAL ESTATE SALES

        In 2008, the Company sold approximately 111 acres of non-core Upcountry Maui property in three land sales transactions and recognized revenues of $4.4 million and pre-tax gains of $4.1 million.

        In 2007, the Company sold approximately 683 acres of non-core Upcountry Maui property in five land sales transactions and recognized revenues of $19.9 million and a pre-tax gain of approximately $19.5 million. The Company also sold the approximately 49 acres of land underlying the Ritz-Carlton, Kapalua hotel and recorded a gain of $24.8 million (see Notes 4 and 12). In 2007, the Company recognized revenues of $14.7 million for the sale of lots at Honolua Ridge Phase II.

        In 2006, the Company sold approximately 2,200 acres of non-core Upcountry Maui land in three land sales transactions, and recognized pre-tax gains of $31.6 million. In 2006, the Company recognized revenues of $26.2 million on a percentage-of-completion basis from lot sales at Honolua Ridge Phase II.

9. LEASING ARRANGEMENTS

LESSEE

        The Company has capital leases, on equipment used in its Resort and Agriculture operations, which expire at various dates through 2014. At December 31, 2008 and 2007, property included capital leases of $3,384,000 and $2,308,000 (before accumulated amortization of $1,665,000 and $1,335,000, respectively). Future minimum rental payments under capital leases aggregate $3,465,000 (including $433,000 representing interest) and are payable for the next five years (2009 to 2013) as follows: $1,290,000, $944,000, $572,000, $319,000 and $259,000 respectively, and $81,000 thereafter.

        The Company has various operating leases, primarily for land used in Agriculture operations, which expire at various dates through 2018. Total rental expense under operating leases was $1,342,000 in 2008, $1,288,000 in 2007 and $878,000 in 2006. Future minimum rental payments under operating leases aggregate to $2,536,000 and are payable during the next five years (2009 to 2013) as follows: $948,000, $662,000, $499,000, $308,000 and $82,000, respectively, and $37,000 thereafter.

LESSOR

        The Company leases space in buildings, primarily to retail tenants. These operating leases generally provide for minimum rents and, in most cases, percentage rentals based on tenant revenues.

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In addition, the leases generally provide for reimbursement of common area maintenance and other expenses. Total rental income under these operating leases was as follows:

	2008		2007		2006
	(in thousands)
Minimum rentals	$	989	$	590	$	665
Percentage rentals		840		1,280		1,925
Total	$	1,829	$	1,870	$	2,590

        Property at December 31, 2008 and 2007 includes leased property of $18,679,000 and $13,699,000, respectively (before accumulated depreciation of $4,874,000 and $4,322,000, respectively). As discussed in Note 4, the Company was the ground lessor of the land underlying the Ritz-Carlton, Kapalua hotel until the sale of the land in March 2007.

        Future minimum rental income aggregates $5,103,000 and is receivable during the next five years (2009 to 2013) as follows: $961,000, $882,000, $613,000, $473,000 and $473,000, respectively, and $1,701,000 thereafter.

10. EMPLOYEE BENEFIT PLANS

        The Company has defined benefit pension plans covering substantially all full-time, part-time and intermittent employees. Pension benefits are based primarily on years of service and compensation levels. The Company has defined benefit postretirement health and life insurance plans that cover primarily non-bargaining salaried employees and certain bargaining unit employees. Postretirement health and life insurance benefits are principally based on the employee's job classification at the time of retirement and on years of service.

        The measurement date for the Company's benefit plan disclosures is December 31^st of each year. The changes in benefit obligations and plan assets for 2008 and 2007, and the funded status of the

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plans, and assumptions used to determine benefit information at December 31, 2008 and 2007 were as follows:

		Pension Benefits						Other Benefits
		2008			2007			2008			2007
		(in thousands)
Change in benefit obligations:
	Benefit obligations at beginning of year	$	57,195		$	58,109		$	13,787		$	13,257
	Service cost		1,558			1,835			268			302
	Interest cost		3,551			3,360			805			743
	Actuarial (gain) loss		888			(1,970	)		(972	)		549
	Special termination benefits		33			369			—			36
	Curtailments		51			(248	)		(474	)		(411	)
	Benefits paid		(3,539	)		(4,260	)		(778	)		(689	)
	Benefit obligations at end of year		59,737			57,195			12,636			13,787
Change in plan assets:
	Fair value of plan assets at beginning of year		46,745			45,799			—			—
	Actual return on plan assets		(12,836	)		3,640			—			—
	Employer contributions		1,353			1,566			777			687
	Benefits paid		(3,539	)		(4,260	)		(777	)		(687	)
	Fair value of plan assets at end of year		31,723			46,745			—			—
Funded status		$	(28,014	)	$	(10,450	)	$	(12,636	)	$	(13,787	)
Weighted average assumption used to determine benefit obligations at December 31:
Discount rate			6.250	%		6.375	%		6.250	%		6.375	%
Expected long-term return on plan assets			8.00	%		8.00	%
Rate of compensation increase			3.50	%		3.50	%		3.50	%		3.50	%

        Curtailments in 2008 relate primarily to the termination of approximately 11% of the non-bargaining unit pension and postretirement plan participants. Special termination benefits and curtailments in 2007 primarily relate to the termination of Agriculture segment employees because of changes in the business.

        The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for pension plans with accumulated benefits in excess of plan assets were $59,737,000, $56,243,000 and $31,723,000, respectively as of December 31, 2008 and $57,195,000, $53,042,000 and $46,745,000, respectively as of December 31, 2007.

        The accumulated postretirement benefit obligation for health care as of December 31, 2008 was determined using a health care cost trend rate of 8% and decreasing by .5% each year through 2013, and 5% thereafter. The effect of a 1% annual increase in these assumed cost trend rates would increase the accrued postretirement benefit obligation by approximately $1,247,000 as of December 31, 2008, and the aggregate of the service and interest cost for 2008 by approximately $140,000. A 1% annual decrease would reduce the accrued postretirement benefit obligation by approximately $1,028,000 as of December 31, 2008, and the aggregate of the service and interest cost for 2008 by approximately $113,000.

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        The amounts recognized on the Company's consolidated balance sheets as of December 31, 2008 and 2007 were as follows:

	Pension Benefits						Other Benefits
	2008			2007			2008			2007
	(in thousands)
Current Liability	$	(302	)	$	(278	)	$	(810	)	$	(753	)
Noncurrent Liability		(27,712	)		(10,172	)		(11,826	)		(13,034	)
Net amounts recognized	$	(28,014	)	$	(10,450	)	$	(12,636	)	$	(13,787	)

        Amounts recognized in accumulated other comprehensive (income) loss (before income tax effect of $0 and $701,000) at December 31, 2008 and 2007 are as follows:

	Pension Benefits				Other Benefits
	2008		2007		2008			2007
	(in thousands)
Net loss (gain)	$	24,523	$	7,827	$	(6,747	)	$	(6,218	)
Prior service cost (credit)		176		235		1			1
Net initial obligation (asset)		71		102		—			—
Net amounts recognized	$	24,770	$	8,164	$	(6,746	)	$	(6,217	)

        Amounts in accumulated other comprehensive (income) loss at December 31, 2008 that are expected to be recognized as components of net periodic benefit cost in 2009 are as follows:

	Pension Benefits		Other Benefits
	(in thousands)
Net loss (gain)	$	1,927	$	(506	)
Net transition obligation		16		—
Prior service cost		46		1
	$	1,989	$	(505	)

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        Components of net periodic benefit cost and other amounts recognized in other comprehensive income were as follows:

			Pension Benefits									Other Benefits
			2008			2007			2006			2008			2007			2006
			(in thousands)
Pension benefits:
		Service cost	$	1,558		$	1,835		$	1,830		$	268		$	302		$	328
		Interest cost		3,551			3,360			3,278			805			743			770
		Expected return on plan assets		(3,472	)		(3,595	)		(3,366	)		—			—			—
		Recognized net actuarial (gain) loss		471			425			658			(496	)		(559	)		(500	)
		Amortization of obligation (asset)		19			21			24			—			—			—
		Amortization of prior service cost		50			47			47			1			(32	)		(126	)
		Special termination benefits		33			369			—			—			36			—
		Recognition of (gain) loss due to curtailment		102			28			74			(421	)		(398	)		(7	)
		Net expense	$	2,312		$	2,490		$	2,545		$	157		$	92		$	465
Other Changes in Plan Assets and Benefit
	Obligations Recognized in Other
	Comprehensive Income:
		Net (gain) loss	$	17,166		$	(2,312	)	$	—		$	(1,025	)	$	536		$	—
		Recognized gain (loss)		(470	)		(425	)		—			496			559			—
		Prior service cost (credit)		15			48			—			—			—			—
		Recognized prior service (cost) credit		(74	)		(51	)		—			(1	)		32			—
		Recognized net initial asset (obligation)		(31	)		(45	)		—			—			—			—
		Total recognized in net benefit cost and comprehensive income	$	16,606		$	(2,785	)	$	—		$	(530	)	$	1,127		$	—

		2008		2007		2006
Weighted average assumptions used to determine net periodic benefit cost:
Pension benefits:
	Discount rate		6.375%		6.0%		5.875%
	Expected long-term return on plan assets		8.0%		8.0%		8.0%
	Rate of compensation increase		3% - 4%		3% - 4%		3% - 4%
Other benefits:
	Discount rate		6.375%		6.0%		5.875%
	Rate of compensation increase		3% - 4%		3% - 4%		3% - 4%

        The expected long-term rate of return on plan assets was based on historical total returns of broad equity and bond indices for ten to fifteen year periods, weighted against the Company's targeted pension asset allocation ranges. These rates were also compared to historical rates of return on hypothetical blended funds with 60% equity securities and 40% bond securities.

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        The Company's pension plan weighted-average asset allocations at December 31, 2008 and 2007, by asset category, were as follows:

Asset Category	2008			2007
Equity securities		61	%		75	%
Debt securities		32	%		24	%
Other		7	%		1	%

        A pension committee consisting of certain senior management employees administers the Company's defined benefit pension plans. The pension plan assets are allocated among approved asset types based on asset allocation guidelines and investment and risk-management guidelines set by the pension committee, and subject to liquidity requirements of the plans. The pension committee has set the following asset mix guidelines: equity securities 40% to 80%; debt securities 20% to 60%; international securities 0% to 10%; and cash or equivalents 0% to 10%.

        The Company expects to contribute $2.5 million to its defined benefit pension plans and $835,000 to its other postretirement benefit plans in 2009. Estimated future benefit payments, which include expected future service, are as follows:

	Pension Benefits		Other Benefits
	(in thousands)
2009	$	3,544	$	835
2010		3,497		844
2011		3,554		843
2012		3,613		833
2013		3,749		829
2014 - 2018		20,855		4,224

        The Company has investment and savings plans that allow eligible employees on a voluntary basis to make pre-tax contributions of their cash compensation. Substantially all employees are eligible to participate in one or more plans. No Company contributions were made to these plans in 2008, 2007 or 2006.

        On October 1, 1998, deferred compensation plans that provided for specified payments after retirement for certain management employees were amended to eliminate future benefits. At the termination date, these employees were given credit for existing years of service and future vesting of additional benefits was discontinued. The present value of the benefits to be paid is being accrued over the period of active employment. As of December 31, 2008 and 2007, deferred compensation plan liabilities totaled $1,225,000 and $1,498,000, respectively.

11. STOCK COMPENSATION PLANS

        The Company accounts for stock compensation arrangements in accordance with SFAS 123(R), Share-Based Payment. SFAS 123(R) requires all share-based payments, including grants of employee stock options, to be recognized as compensation expense over the service period (generally the vesting period) in the consolidated financial statements based on their fair values. The impact of forfeitures that may occur prior to vesting is also estimated and considered in the amount recognized. SFAS No. 123(R) requires excess tax benefits be reported as a financing cash inflow rather than as a reduction of taxes paid.

        The total compensation expense recognized for stock-based compensation was $2,752,000, $4,684,000 and $2,063,000 for 2008, 2007 and 2006, respectively. The total tax benefit related thereto was $895,000, $1,355,000 and $743,000 for 2008, 2007 and 2006, respectively. Recognized stock

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compensation was reduced for estimated forfeitures prior to vesting primarily based on historical annual forfeiture rates of approximately 4.6%, 5.3% and 5.1% for 2008, 2007 and 2006, respectively. Estimated forfeitures will be reassessed in subsequent periods and may change based on new facts and circumstances.

Stock Options

        In May 2006, the Company's shareholders approved the 2006 Equity and Incentive Award Plan (the "2006 Plan") and an increase in the number of shares of common stock authorized under the Articles of Association by 1,000,000 shares, all of which have been reserved for issuance under the 2006 Plan. The 2006 Plan provides that the administrator can grant stock options and other equity instruments. The terms of certain grant types follow general guidelines, but the term and conditions of each award can vary at the discretion of the administrator. With respect to awards granted to non-employee directors, the administrator of the 2006 Plan is the Board of Directors. The Compensation Committee of the Board is the administrator of the 2006 Plan for all other persons, unless the Board assumes authority for administration. Upon approval of the 2006 Plan, the Company's Stock and Incentive Compensation Plan of 2003 (the "2003 Plan") was terminated and no further grants will be made under that plan.

        The 2003 Plan was approved by the Company's shareholders in December 2003 and included 500,000 shares of common stock authorized for issuance. The Company also has a stock compensation agreement with its former President and Chief Executive Officer under which non-qualified stock options (133,333 shares) remain outstanding as of December 31, 2008.

        A summary of stock option award activity as of and for the year ended December 31, 2008 is presented below:

	Shares			Weighted Average Exercise Price		Weighted Average Grant-Date Fair Value		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value $(000)(1)
Outstanding at December 31, 2007		822,833		$	32.51
Granted		130,000		$	9.82	$	4.27
Exercised		(500	)	$	27.25
Forfeited or Cancelled		(50,500	)	$	33.32	$	13.21
Outstanding at December 31, 2008		901,833		$	29.20	$	12.01		4.3	$	535
Exercisable at December 31, 2008		578,633		$	32.31	$	13.34		2.1	$	—
Expected to Vest at December 31, 2008(2)		248,702		$	23.62	$	9.63		8.2	$	412

(1)

For in the money options

(2)

Options expected to vest reflect estimated forfeitures.

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        Additional stock option information for the years ended December 31, 2008, 2007 and 2006 follows:

	2008		2007		2006
Weighted Average Grant-Date Fair Value For Options Granted During the Period	$	4.27	$	12.39	$	15.76
Intrinsic Value of Options Exercised $(000)		4		759		80
Cash Received From Option Exercises $(000)		14		1,422		694
Tax Benefit From Option Exercises $(000)		—		—		—
Fair Value of Shares Vested During the Period $(000)		3,202		2,020		1,270

        For the years ended December 31, 2008, 2007 and 2006 the fair value of the Company's stock based awards to employees was estimated using the Black Scholes option pricing model and the following weighted average assumptions:

	2008			2007			2006
Expected Life of Options in Years		6.5			6.5			6.2
Expected Volatility		40.3	%		31.6	%		32.4	%
Risk-free interest rate		2.2	%		4.4	%		5.0	%
Expected dividend yield		—			—			—

•

The expected life of the options represents expectations of future employee exercise and post-vesting termination behavior and was calculated using the "simplified" method for all of its plain vanilla options as allowed for in the SEC Staff Accounting Bulletin ("SAB") 107, Share-Based Payment. The simplified method was used because the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term due to the limited period that it has been issuing stock options.

•

Expected volatility was based on the historical volatility of the Company's common stock for a period equal to the option's estimated life.

•

The risk-free interest rate was based on U.S. Government treasury yields for periods equal to the expected term of the option on the grant date.

•

The expected dividend yield is based on the Company's current and historical dividend policy.

        SFAS No. 123(R) requires the recognition of stock-based compensation for the number of awards that are ultimately expected to vest. Estimated forfeitures will be reassessed in subsequent periods and may change based on new facts and circumstances.

        As of December 31, 2008, there was $2,420,000 of total unrecognized compensation for awards granted under the stock options plans that is expected to be recognized over a weighted average period of 2.2 years.

Restricted Stock

        In 2008, 84,250 shares of restricted stock were granted pursuant to the 2006 Plans, including 9,250 shares to new and re-elected directors and the remainder to certain management of the Company. The restricted shares vest as service is provided or vest subject to the achievement of certain performance measures. In 2008, 8,000 shares of restricted stock vested as the directors' service requirements were met, and 2,000 restricted shares that were earned by one management employee in 2007 based on the achievement of certain performance goals, vested in 2008 when the shares became available per the restricted share agreement. Also in 2008, 84,000 restricted shares previously granted to the Company's former President and Chief Executive Officer, vested upon termination from employment as of

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December 31, 2008. The weighted average grant-date fair value of restricted stock granted during 2008, 2007 and 2006 was $23.37, $32.32 and $34.94 per share, respectively.

        A summary of the activity for nonvested restricted stock awards as of and for the year ended December 31, 2008 is presented below:

	Shares			Weighted Average Grant-Date Fair Value
Nonvested balance at December 31, 2007		146,795		$	34.39
Granted		84,250		$	23.37
Vested		(94,000	)	$	11.79
Forfeited or Cancelled		(15,750	)	$	32.96
Nonvested balance at December 31, 2008		121,295		$	26.70

12. RELATED PARTY TRANSACTIONS

        In April 2007, the sale of approximately 181 acres of Upcountry Maui land to the Company's Senior Vice President/ Corporate Development closed escrow and the Company recognized a pre-tax gain of $2.8 million. In February 2007, the $4.1 million sale ($4.0 million pre-tax gain) of approximately 157 acres of Upcountry Maui land to the Company's former Chairman, President and Chief Executive Officer closed escrow. Prior to the closing of the latter sale, the Company leased a 3,500 square foot residence that is located on the property to the executive for $1,500 per month, which represented the estimated fair value.

        These land sale agreements were structured in compliance with the Company's policy for related party real estate sales. Such policy requires an independent appraisal of the property value, allows for a 3% discount to the sales price in lieu of broker's commissions, and requires review and approval of the sales price by the Audit Committee of the Board of Directors (the "Committee"). The Committee reviewed the appraisals and the terms of the agreements with the other independent Directors, and the sales were approved by all of the independent Directors. The sales agreements require a deposit of $50,000 upon execution and the balance of the sales price is payable in cash upon closing of the sale. Subdivision of the land parcels is a condition precedent to the closing of the sales. The subject properties had been previously designated for sale in 2004 as part of the real estate that is considered non-core to the Company's operations.

        The Company is leasing to its current President and Chief Executive Officer for $3,500 per month, which represents the fair value, a residential property under a lease agreement through mid-2010. The property was purchased in 2005 for $2.6 million.

        The Company has a 51% ownership interest in Bay Holdings, the owner and developer of The Residences at Kapalua Bay. The other members of Bay Holdings, through wholly owned affiliates, are Marriott International Inc., which owns a 34% interest in Bay Holdings, and Exclusive Resorts LLC, which owns the remaining 15% interest in Bay Holdings. Stephen M. Case, a director and largest shareholder of the Company, is the Chairman, Chief Executive Officer, and indirect beneficial owner of Revolution LLC, which is the indirect majority owner of Exclusive Resorts LLC, and thus Mr. Case may be deemed to have a beneficial interest in Bay Holdings.

13. INCOME TAXES

        The Company adopted FIN 48 on January 1, 2007. This interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. As a result of the implementation of FIN 48,

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the Company increased its liability for unrecognized tax benefits by $200,000, which was accounted for as a reduction to the January 1, 2007 balance of retained earnings. In 2008 and 2007, the Company recorded $856,000 and $425,000 of interest expense and penalties for unrecognized tax benefits. As of December 31, 2008 and 2007, total accrued interest and penalties were $1,106,000 and $425,000, respectively.

        The Company recognizes interest accrued related to unrecognized tax benefits as interest expense and penalties in general & administrative expense in its statement of operations, and such amounts are included in income taxes payable on the Company's balance sheet. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

	(in thousands)
Balance at January 1, 2008	$	748
Additions based on tax positions related to the current year		31
Additions for tax positions of prior years		754
Reductions for settlements with taxing authorities		(378	)
Expiration of statutes of limitation		(210	)
Balance as of December 31, 2008	$	945

        At December 31, 2008 and 2007, $13.3 million and $2.5 million, respectively, of the unrecognized tax benefits represent taxes on revenues for which the timing of the taxability is uncertain and the liability for such taxes has been recognized as deferred tax liabilities. The acceleration of the recognition of such income would not affect the estimated annual effective tax rate, but would accelerate the payment of income taxes to earlier periods and would result in additional interest expense. At December 31, 2008 and 2007, there were $551,000 and $774,000 of unrecognized tax benefits that, if recognized, would affect the effective tax rate.

        The components of the income tax provision for 2008, 2007 and 2006 were as follows:

		2008			2007		2006
		(in thousands)
Current
	Federal	$	(7,956	)	$	3,844	$	4,535
	State		(875	)		13		87
	Total		(8,831	)		3,857		4,622
Deferred
	Federal		(3,757	)		1,535		(654	)
	State		(328	)		375		(252	)
	Total		(4,085	)		1,910		(906	)
	Total provision (credit)	$	(12,916	)	$	5,767	$	3,716

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        Reconciliations between the total provision (credit) and the amount computed using the statutory federal rate of 35% were as follows:

			2008			2007			2006
			(in thousands)
Federal provision (credit) at statutory rate			$	(32,309	)	$	4,822		$	3,829
Adjusted for State income taxes, net of effect on federal income taxes				1,321			222			(67	)
	Valuation allowance			17,415			—			—
	Federal research credits			—			(115	)		(98	)
	Provision for FIN 48			597			81			—
	Permanent differences and other			60			757			52
		Total provision (credit)	$	(12,916	)	$	5,767		$	3,716

        Deferred tax assets and liabilities were comprised of the following temporary differences as of December 31, 2008 and 2007:

	2008			2007
	(in thousands)
Accrued retirement benefits	$	17,043		$	11,217
Accrued liabilities		—			1,214
Inventory		615			396
Allowance for doubtful accounts		750			145
Stock compensation		3,187			2,456
Deferred revenue		788			—
Net operating loss and tax credit carryforwards		21,889			292
Total deferred tax assets		44,272			15,720
Valuation allowance		(30,115	)		—
Deferred condemnation proceeds		(6,224	)		(6,390	)
Tax deferred land sales		(43	)		(1,064	)
Property net book value		(518	)		(6,182	)
Joint ventures and other investments		(3,925	)		(4,027	)
Other		(3,447	)		(4,155	)
Total deferred tax liabilities		(14,157	)		(21,818	)
Net deferred tax assets (liabilities)	$	—		$	(6,098	)

        As of December 31, 2008, valuation allowances have been established primarily for tax credits, net operating loss carryforwards and accrued retirement benefits to reduce future tax benefits expected to be realized. The Company had $50.7 million in federal net operating loss carryforwards at December 31, 2008, that expire in 2028. Net operating loss and tax credit carryforwards for State income tax purposes totaled $64.1 million and $2.7 million, respectively, at December 31, 2008 that expire in 2012 through 2028. In 2008, the State of Hawaii Department of Taxation completed its examination of the Company's state income tax returns for the years 2000 through 2005. The Company's federal income tax return for 2006 is currently under examination. Depending on the outcome of the federal examination, certain unrecognized tax benefits may decrease. The Company currently does not have enough information to estimate the range of any possible adjustments.

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14. INTEREST CAPITALIZATION

        Interest costs incurred in 2008, 2007 and 2006 were $2,779,000, $3,813,000 and $2,473,000, respectively, of which $343,000, $1,165,000 and $1,698,000, respectively, were capitalized.

15. ADVERTISING AND RESEARCH AND DEVELOPMENT

        Advertising expense totaled $3,765,000 in 2008, $2,425,000 in 2007 and $6,314,000 in 2006. Research and development expenses totaled $1,407,000 in 2008, $1,155,000 in 2007 and $1,078,000 in 2006.

16. CONCENTRATIONS OF CREDIT RISK

        A substantial portion of the Company's trade receivables results from sales of pineapple products, primarily to food distribution customers in the United States, buyers of real estate products and travel product wholesalers. Credit is extended after evaluating creditworthiness and no collateral generally is required from customers, except for notes receivable taken on real estate sales.

17. DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

        Except as indicated below, the carrying amount of the Company's financial instruments approximates fair value.

Long-Term Debt:

        For disclosure purposes, the Company's long-term debt is classified within Level 2 as defined by SFAS No. 157, as the valuation inputs are based on quoted prices and market observable data of similar instruments. The fair value of long-term debt was estimated based on rates currently available to the Company for debt with similar terms and remaining maturities. The carrying amount of long-term debt at December 31, 2008 and 2007 was $133,959,000 and $59,704,000, respectively, and the fair value was $126,708,000 and $59,693,000, respectively.

18. SEGMENT INFORMATION

        The Company's reportable operating segments are Agriculture, Resort and Community Development based on how the Company's chief operating decision maker makes decisions about allocating resources and assessing performance. Each segment is a line of business requiring different technical and marketing strategies.

        Agriculture primarily includes growing, packing and marketing fresh premium pineapple products. In 2007, the Company ceased substantially all processing (canning) of solid-pack pineapple.

        Resort includes the ongoing operations at the Kapalua Resort on Maui. These operations include two championship golf courses, a tennis facility, a vacation rental program, several retail outlets, and a resort activities department starting in 2008.

        Community Development includes the Company's real estate entitlement, development, construction, sales and leasing activities. This segment also includes the operations of Kapalua Realty Company, a general brokerage real estate company located within Kapalua Resort, Kapalua Water Company and Kapalua Waste Treatment Company, the Company's Public Utilities Commission-regulated water and sewage transmission operations.

        The accounting policies of the segments are the same as those described in Summary of Significant Accounting Policies, Note 1.

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        The financial information for each of the Company's reportable segments for 2008, 2007, and 2006 follows:

	Agriculture			Resort			Community Development			Other(4)			Consolidated
	(in thousands)
2008
Operating revenues(1)	$	27,779		$	37,439		$	11,394		$	2,221		$	78,833
Operating loss(2)		(30,425	)		(19,710	)		(40,007	)		(287	)		(90,429	)
Interest expense														(2,436	)
Interest income														553
Loss before income tax benefit														(92,312	)
Depreciation		6,112			4,076			1,590			1,353			13,131
Equity in income of affiliates								(18,839	)					(18,839	)
Investment in affiliates								41,683						41,683
Segment Assets(3)		35,713			54,793			107,424			50,270			248,200
Expenditures for segment assets(5)		1,354			4,551			19,005			199			25,109
2007
Operating revenues(1)	$	47,466		$	35,804		$	68,105		$	2,695		$	154,070
Operating profit (loss)(2)		(26,615	)		(11,707	)		53,135			627			15,440
Interest expense														(2,647	)
Interest income														985
Income before income taxes														13,778
Depreciation		6,230			3,176			1,511			951			11,868
Equity in income of affiliates								16,832						16,832
Investment in affiliates								59,792						59,792
Segment Assets(3)		50,973			49,947			127,741			42,515			271,176
Expenditures for segment assets(5)		6,845			4,552			46,971			10,282			68,650
2006
Operating revenues(1)	$	65,194		$	46,098		$	67,326		$	279		$	178,897
Operating profit (loss)(2)		(18,580	)		(6,426	)		36,236			(881	)		10,349
Interest expense														(775	)
Interest income														1,367
Income before income taxes														10,941
Depreciation		7,919			3,249			781			425			12,374
Equity in losses of affiliates								(5,340	)					(5,340	)
Investment in affiliates								10,041						10,041
Segment Assets(3)		58,607			49,301			80,867			31,424			220,199
Expenditures for segment assets(5)		21,320			4,147			36,825			8,905			71,197

(1)

Amounts are principally revenues from external customers and exclude equity in earnings of affiliates and interest income. Intersegment revenues were insignificant. Sales of Hawaii grown pineapple to customers located in foreign countries were approximately $1.3 million, $1.4 million, and $2.8 million, respectively in 2008, 2007 and 2006.

(2)

"Operating profit (loss)" is total operating revenues, less operating costs and expenses, plus equity in earnings and losses of affiliates (excludes interest income, interest expense and income taxes).

(3)

"Segment assets" are located in the United States.

(4)

Consists primarily of miscellaneous corporate transactions and assets.

(5)

Primarily includes expenditures for property, deferred costs and contributions to affiliates.

82

19. COMMITMENTS AND CONTINGENCIES

        Pursuant to a 1999 settlement agreement with the County of Maui, the Company and several chemical manufacturers have agreed that until December 1, 2039, they will pay for 90% of the capital cost to install filtration systems in any future water wells if the presence of a nematocide commonly known as DBCP exceeds specified levels, and for the ongoing maintenance and operating cost for filtration systems on existing and future wells. The Company estimated its share of the cost to operate and maintain the filtration systems for the existing wells and its share of the cost of a letter of credit used to secure its obligations, and recorded a liability of $250,000 in 1999. The Company recognized an additional liability and expense of $51,000 since 1999; and paid $238,000 in 2005 for its share of the capital costs to install a filtration system for an existing well. The Company is presently not aware of any plans by the County of Maui to install other filtration systems or to drill any water wells in areas affected by agricultural chemicals. Accordingly, a reserve for costs relating to any future wells has not been recorded because the Company is not able to reasonably estimate the amount of liability (if any).

        Pursuant to loan agreements of certain equity investments, the Company and the other members of the respective joint ventures have guaranteed to lenders each investors pro rata share of costs and losses that may be incurred by the lender as a result of the occurrence of specified triggering events. These guarantees do not include full payment of the loans. At December 31, 2008, the Company has recognized liabilities of $1,061,000 representing the estimated fair value of its obligations under these agreements (see Note 4).

        In addition to the matters noted above, there are various other claims and legal actions pending against the Company. In the opinion of management, after consultation with legal counsel, the resolution of these other matters is not expected to have a material adverse effect on the Company's financial position or results of operations.

        The Company, as an investor in various affiliates (partnerships, limited liability companies), may under specific circumstances be called upon to make additional capital contributions.

        The Company is obligated to purchase the spa, beach club improvements and the sundry store from Bay Holdings at actual construction cost. Terms of the purchase are being negotiated with the members of Bay Holdings. The cost of the facilities is currently estimated to be approximately $35 million.

        The Company has a contractual obligation to the LPGA to sponsor an annual 72-hole stroke play golf tournament for five years beginning in October 2008. The cost of such a tournament, including the production and the purse is significant and the Company is currently seeking a title sponsor to defray part of the cost. Commitments for the purse, sanction fees and scoring system are approximately $6.7 million for 2009 through 2012.

        At December 31, 2008, the Company had commitments under other signed contracts totaling $6.7 million which primarily relate to real estate development projects.

20. PRIVATE PLACEMENT OF COMMON STOCK

        In March 2007, the Company entered into a Securities Purchase Agreement with two accredited investors, Ohana Holdings, LLC and ZG Ventures, LLC, pursuant to which the Company raised approximately $14,900,000 in net proceeds through a private placement of 517,242 shares of common stock at a purchase price of $29.00 per share. Miles R. Gilburne, who was elected to the Company's Board of Directors in May 2007, is the managing member of ZG Ventures, LLC. In 2008, the Company registered for resale the shares on a registration statement filed with the Securities and Exchange Commission.

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21. SUBSEQUENT EVENT

        On March 17, 2009, the Company entered into a sale and purchase agreement to sell approximately 263 acres and the improvements thereon comprising the Plantation Golf Course at the Kapalua Resort for $50 million, and on March 27, 2009, the transaction was consummated. Concurrent with the closing of the sale and purchase agreement, the Company entered into an agreement to lease back the golf course, including the retail shop for a period of two years at a fixed rental rate of $4.0 million per year (the "Ground Lease"), and an agreement to lease back the portion of the Plantation Clubhouse comprising the retail shop for a period of five years, which will commence after the Ground Lease expires or is terminated. Proceeds from the sale were used to reduce borrowings under the Company's line of credit agreement by $45 million (see Note 5).

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SUMMARIZED QUARTERLY RESULTS
(unaudited)

		First Quarter			Second Quarter			Third Quarter			Fourth Quarter
		(in thousands except share amounts)
2008
Product revenues		$	15,272			10,268		$	10,802		$	8,022
Service revenues			10,097			7,293			8,317			8,762
Gross profit (loss)—product revenues(1)			5,104			2,858			(1,371	)		(2,482	)
Net income (loss)(1)			(414	)		272			(8,695	)		(70,559	)
Net income (loss) per common share:
	Basic(1)	$	(.05	)	$	..03		$	(1.09	)	$	(8.86	)
	Diluted(1)		(.05	)		..03			(1.09	)		(8.86	)
2007
Product revenues		$	50,087		$	30,332		$	21,151		$	16,620
Service revenues			10,896			8,358			7,343			9,283
Gross profit—product revenues			36,901			12,002			8,178			6,002
Net income (loss)			15,714			(3,510	)		(155	)		(4,038	)
Net income (loss) per common share:
	basic	$	2.12		$	(.44	)	$	(.02	)	$	(.51	)
	diluted		2.10			(.44	)		(.02	)		(.51	)

(1)

Subsequent to the Company's issuance of Form 10-Q for the quarter ended March 31, 2008, the Company determined that the cumulative effect of changing its method of accounting for pineapple juice inventories from the LIFO to FIFO method of $326,000 (net of income taxes of $191,000) should not have been recorded to beginning retained earnings; rather, the cumulative effect should have been recorded as an adjustment in the statement of operations in 2008. As a result, the gross profit-product revenues, net income (loss) and basic and diluted net income (loss) per share for the first quarter of 2008 have been corrected from $4,587, $(740), and $(.09) for basic and diluted per share amounts that were previously reported, to $5,104, $(414), and $(.05) for basic and diluted per share amounts.

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SCHEDULE II

MAUI LAND & PINEAPPLE COMPANY, INC.
AND SUBSIDIARIES

VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006

DESCRIPTION		BALANCE AT BEGINNING OF PERIOD		ADDITIONS (DEDUCTIONS) TO COSTS AND EXPENSES		ADDITIONS (DEDUCTIONS) TO OTHER ACCOUNTS			DEDUCTIONS			BALANCE AT END OF PERIOD
		(in thousands)
Allowance for Doubtful Accounts
	2008	$	327	$	1,846	$	8	(c)	$	(1,523	)(a)	$	658
	2007		555		136		14	(c)		(378	)(a)		327
	2006		265		563		—			(273	)(a)		555
Valuation Allowance for Deferred Tax Assets
	2008	$	—	$	23,627	$	6,488		$	—		$	30,115
Reserve for Environmental Liability
	2008	$	204	$	3	$	—		$	(31	)(b)	$	176
	2007		233		3		—			(32	)(b)		204
	2006		230		3		—			—			233

(a)

Write off of uncollectible accounts

(b)

Payments

(c)

Recoveries

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Item 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

        None.

Item 9A.    CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

        The Company's management, with the participation of the Company's Chief Executive Officer (who also performs the function of Principal Financial Officer), has evaluated the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report.

        Based upon the foregoing, the Company's Chief Executive Officer concluded that, as of such date, the Company's disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms and to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

        The report of the Company's management on the Company's internal control over financial reporting follows this Item 9A.

        There have been no changes in the Company's internal controls over financial reporting (as such term is defined in Rules 13a-15(f) under the Exchange Act) during the fiscal fourth quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal controls over financial reporting.

MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

        The Management of Maui Land & Pineapple Company, Inc. and subsidiaries (the "Company") has the responsibility for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a- 15(f) and 15d- 15(f) under the Securities Exchange Act of 1934, as amended, as a process designed by, or under the supervision of, the Company's principal executive and principal financial officer and effected by the Company's board of directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America and includes those policies and procedures that:

•

Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of assets of the Company;

•

Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the Company; and

•

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the consolidated financial statements.

87

        Because of its inherent limitations, internal control over financial reporting only provides reasonable assurance with respect to financial statement presentation and preparation. Projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

        Management assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2008. In making this assessment, Management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework. Based on its assessments, Management believes that, as of December 31, 2008, the Company's internal control over financial reporting is effective. The Company's independent registered public accounting firm, Deloitte & Touche LLP, has issued an audit report on the Company's internal control over financial reporting. That report appears on page 48 of this Form 10-K.

MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING

        Management is also responsible for preparing the accompanying consolidated financial statements and related notes accurately and objectively. The statements have been prepared in accordance with accounting principles generally accepted in the United States of America, and necessarily include amounts based on judgments and estimates made by management. Management also prepared the other information in this Form 10-K and is responsible for its accuracy and consistency with the consolidated financial statements.

        The Company's consolidated financial statements have been audited by Deloitte & Touche LLP and its report appears on page 48 of this Form 10-K. Management has made available to Deloitte & Touche LLP all of the Company's financial records and related data. Furthermore, management believes that all representations made to Deloitte & Touche LLP during its audit were valid and appropriate.

        The Board of Directors, through its Audit Committee (composed solely of independent directors), oversees Management's responsibilities in the preparation of the consolidated financial statements. The Audit Committee appoints the independent registered public accounting firm, subject to shareholder ratification. The Audit Committee meets regularly with the external and internal auditors to evaluate the effectiveness of their work in discharging their respective responsibilities and to assure their independent and free access to the Committee.

/s/ ROBERT I. WEBBER
President and Chief Executive Officer
March 30, 2009

Item 9B.    OTHER INFORMATION

        Effective as of December 31, 2008, the $90 million revolving credit agreement between the Company and Wells Fargo Bank was amended to modify the financial covenant requirements, to eliminate the restrictions on the lenders recourse to the Company, to increase the interest rate on loan draws, and to require a re-appraisal of the collateral and a permanent pay down if the collateral value is less than 50% of the loan commitment. The properties are currently being reappraised. Effective as of March 27, 2009, the revolving credit agreement was further amended to reduce the credit limit under the revolving credit agreement to $45 million after the Company paid down the loan with proceeds from the sale of the Plantation Golf Course (Note 21 to consolidated financial statements), to extend the maturity date of the line from November 2009 to March 2010, and to eliminate certain financial covenants.

        Effective as of December 31, 2008, the $25 million revolving credit agreement between the Company and American AgCredit, FLCA was amended to suspend the financial covenants, to

88

eliminate the automatic extension of the draw period and maturity that was to occur on June 1, 2011 and change the maturity date to March 2010, to increase the interest rate on loan draws and the commitment fee on any unused portions of the loan, and to require a re-appraisal of the collateral and a permanent pay down if the collateral value is less than 50% of the loan commitment.

        The foregoing summary of the terms of the amendments to the loan agreements is not complete and is qualified in its entirety by reference to the full text of the amendments, which are filed herewith as Exhibits 10.42, 10.43, 10.4 and 10.5.

89

PART III

Item 10.    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

        The information set forth under "—Section 16(a) Beneficial Ownership Reporting Compliance" and "Election of Directors" in the Maui Land & Pineapple Company, Inc. Proxy Statement, to be filed no later than 120 days after the close of our fiscal year ended December 31, 2008, is incorporated herein by reference.

        Our Board of Directors approved the Amended and Restated Code of Ethics in March 2008 that covers the Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer and all other employees of the Company. A copy of the Code of Ethics will be furnished, free of charge, upon written request to: Corporate Secretary, Maui Land & Pineapple Company, Inc., P. O. Box 187, Kahului, Hawaii 96733-6687; or email: communications@mlpmaui.com.

Item 11.    EXECUTIVE COMPENSATION

        The information set forth under "Executive Compensation," and "—Director Compensation" in the Maui Land & Pineapple Company, Inc. Proxy Statement, to be filed no later than 120 days after the close of our fiscal year ended December 31, 2008, is incorporated herein by reference.

        The material incorporated herein by reference to the material under the caption "—Compensation Committee Report" in the Proxy Statement shall be deemed furnished, and not filed, in this Report on Form 10-K and shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, as a result of this furnishing, except to the extent that we specifically incorporates it by reference.

Item 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

        The information set forth under "Security Ownership of Certain Beneficial Owners" in the Maui Land & Pineapple Company, Inc. Proxy Statement, to be filed no later than 120 days after the close of our fiscal year ended December 31, 2008, is incorporated herein by reference, with the exception of the information regarding securities authorized for issuance under our equity compensation plans, which is set forth in Item 5 of this annual report on Form 10-K under the heading "Securities Authorized For Issuance under Equity Compensation Plans" and is incorporated herein by reference.

Item 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

        The information set forth under "Certain Relationship and Related Transactions," and "—Director Independence" in the Maui Land & Pineapple Company, Inc. Proxy Statement, to be filed no later than 120 days after the close of our fiscal year ended December 31, 2008, is incorporated herein by reference.

Item 14.    PRINCIPAL ACCOUNTANT FEES AND SERVICES

        Information set forth under "Independent Registered Public Accounting Firm" in the Maui Land & Pineapple Company, Inc. Proxy Statement, to be filed no later than 120 days after the close of our fiscal year ended December 31, 2008, is incorporated herein by reference.

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PART IV

Item 15.    EXHIBITS AND FINANCIAL STATEMENT SCHEDULE

1.     Financial Statements

        The following Financial Statements of Maui Land & Pineapple Company, Inc. and subsidiaries and Report of Independent Registered Public Accounting Firm are included in Item 8 of this report:

Consolidated Statements of Operations and Comprehensive Income (Loss) for the Years
Ended December 31, 2008, 2007 and 2006

Consolidated Balance Sheets, December 31, 2008 and 2007

Consolidated Statements of Stockholders' Equity for the Years
Ended December 31, 2008, 2007 and 2006

Consolidated Statements of Cash Flows for the Years
Ended December 31, 2008, 2007 and 2006

Notes to Consolidated Financial Statements

Financial Statements for Kapalua Bay Holdings, LLC as of December 31, 2008 and 2007 and for the Years Ended December 31, 2008, 2007 and 2006 (exhibit 99).

Financial Statements of W2005 Kapalua/Gengate Hotel Holdings L.L.C., as of December 31, 2008 (Unaudited) (exhibit 99.1)

Financial Statements of W2005 Kapalua/Gengate Hotel Holdings L.L.C., December 31, 2007 (exhibit 99.2)

2.     Financial Statement Schedules

        The following Financial Statement Schedule of Maui Land & Pineapple Company, Inc. and subsidiaries is filed herewith:

II.

Valuation and Qualifying Accounts for the Years Ended December 31, 2008, 2007 and 2006.

3.     Exhibits

Exhibit No.
	3.1	Restated Articles of Association, as of May 7, 2007 (Filed as Exhibit 3.1 to Form 10-K/A for the year ended December 31, 2008 and incorporated herein by reference).
	3.2	Bylaws (Amended as of December 8, 2008). (Filed as Exhibit 3.1 to Form 8-K filed December 11, 2008 and incorporated herein by reference).
	10.1	Revolving Line of Credit Loan Agreement between American AgCredit, FLCA, successor in interest to Pacific Coast Farm Credit Services, ACA and Maui Land & Pineapple Company, Inc., dated September 1, 2005 (Filed as Exhibit 4 to Form 10-Q for the quarter ended September 30, 2005 and incorporated herein by reference).
	10.2	First Amendment to Revolving Line of Credit Loan Agreement between American AgCredit, FLCA, successor in interest to Pacific Coast Farm Credit Services, ACA and Maui Land & Pineapple Company, Inc., dated December 4, 2006 (Filed as Exhibit 10.1 to Form 8-K filed December 19, 2006 and incorporated herein by reference).
	10.3*	Second Amendment to Revolving Line of Credit Loan Agreement between American AgCredit, FLCA, successor in interest to Pacific Coast Farm Credit Services, ACA and Maui Land & Pineapple Company, Inc., effective as of September 30, 2008.
	10.4*	Third Amendment to Revolving Line of Credit Loan Agreement between American AgCredit, FLCA, successor in interest to Pacific Coast Farm Credit Services, ACA and Maui Land & Pineapple Company, Inc., effective as of December 31, 2008.

91

Exhibit No.
	10.5*	Fourth Amendment to Revolving Line of Credit Loan Agreement between American AgCredit, FLCA, successor in interest to Pacific Coast Farm Credit Services, ACA and Maui Land & Pineapple Company, Inc., effective as of December 31, 2008.
	10.6	Second Amended and Restated Hotel Ground Lease (The Ritz-Carlton, Kapalua) between Maui Land & Pineapple Company, Inc. (Lessor) and RCK Hawaii, LLC dba RCK Hawaii-Maui (Lessee), effective as of January 31, 2001 (Filed as Exhibit 10.2(i) to Form 10-K for the year ended December 31, 2000 and incorporated herein by reference).
	10.7†	Executive Deferred Compensation Plan (revised as of 8/16/91) (Filed as Exhibit (10)A to Form 10-Q for the quarter ended September 30, 1994 and incorporated herein by reference).
	10.8†	Supplemental Executive Retirement Plan (effective as of January 1, 1988) (Filed as Exhibit (10)B to Form 10-K for the year ended December 31, 1988 and incorporated herein by reference).
	10.9†	Employment Agreement effective as of October 6, 2003 by and between Maui Land & Pineapple Company, Inc. and David C. Cole (Filed as Exhibit 10.3(viii) to Form 10-K for the year ended December 31, 2003 and incorporated herein by reference).
	10.10†	Maui Land & Pineapple Company, Inc. Stock Option Agreement for David Cole, dated October 6, 2003 (Filed as Exhibit 10.3 (ix) to Form 10-K for the year ended December 31, 2003 and incorporated herein by reference).
	10.11†	Maui Land & Pineapple Company, Inc. Restricted Share Agreement for David Cole, dated October 6, 2003 (Filed as Exhibit 10.3(x) to Form 10-K for the year ended December 31, 2003 and incorporated herein by reference).
	10.12†	Maui Land & Pineapple Company, Inc. 2006 Equity and Incentive Award Plan (Incorporated by reference to Appendix B of the Definitive Proxy Statement on Schedule 14A filed on March 27, 2006).
	10.13	Limited Liability Company Agreement of Kapalua Bay Holdings, LLC, dated August 31, 2004 (Filed as Exhibit 10(A) to Form 10-Q for the quarter ended September 30, 2004 and incorporated herein by reference).
	10.14	Settlement Agreement and Release of All Claims (Board of Water Supply of the County of Maui vs. Shell Oil Company, et al.) (Filed as Exhibit 10.5(i) to Form 10-K for the year ended December 31, 1999 and incorporated herein by reference).
	10.15	Purchase and Sale Agreement effective as of March 14, 2006, by and between Maui Land & Pineapple Company, Inc. and David C. Cole and Margaret Cole (Filed as Exhibit 10 to Form 10-Q for the quarter ended March 31, 2006 and incorporated herein by reference).
	10.16	Construction Loan Agreement between Kapalua Bay Holdings, LLC, and Lehman Brothers Holdings, Inc. (Filed as Exhibit 10.1 to Form 8-K filed July 20, 2006 and incorporated herein by reference).
	10.17	Fee and Leasehold Mortgage, Security Agreement and Fixture Filing made by Kapalua Bay, LLC in favor of Lehman Brothers Holdings, Inc. (Filed as Exhibit 10.2 to Form 8-K filed July 20, 2006 and incorporated herein by reference).
	10.18	Promissory Note issued by Kapalua Bay, LLC to Lehman Brothers Holdings, Inc. (Filed as Exhibit 10.3 to Form 8-K filed July 20, 2006 and incorporated herein by reference).

92

Exhibit No.
	10.19	Completion Guaranty made by Maui Land & Pineapple Company, Inc., The Ritz-Carlton Development Company, Inc. and Exclusive Resorts Development Company, LLC in favor of Lehman Brothers Holdings,  Inc. (Filed as Exhibit 10.4 to Form 8-K filed July 20, 2006 and incorporated herein by reference).
	10.20	Recourse Guaranty made by Maui Land & Pineapple Company, Inc., The Ritz-Carlton Development Company, Inc. and Exclusive Resorts Development Company, LLC in favor of Lehman Brothers Holdings,  Inc. (Filed as Exhibit 10.5 to Form 8-K filed July 20, 2006 and incorporated herein by reference).
	10.21†	Amendment to Stock Option Agreement dated August 7, 2006, by and between Maui Land & Pineapple Company, Inc. and David C. Cole (Filed as Exhibit 10.1 to Form 10-Q for the quarter ended June 30, 2006 and incorporated herein by reference).
	10.22†	Restricted Stock Award Agreement and Award Grant Notice, dated as of August 4, 2006, by and between Maui Land & Pineapple Company, Inc. and David C. Cole (Filed as Exhibit 10.2 to Form 10-Q for the quarter ended June 30, 2006 and incorporated herein by reference).
	10.23†	Stock Option Agreement and Stock Option Grant Notice, dated as of August 4, 2006, by and between Maui Land & Pineapple Company, Inc. and David C. Cole (Filed as Exhibit 10.3 to Form 10-Q for the quarter ended June 30, 2006 and incorporated herein by reference).
	10.24†	Employment Agreement, dated August 4, 2006, by and between Maui Land & Pineapple Company, Inc. and Robert I. Webber (Filed as Exhibit 10.5 to Form 10-Q for the quarter ended June 30, 2006 and incorporated herein by reference).
	10.25†	Restricted Stock Award Agreement and Award Grant Notice, dated as of August 4, 2006, by and between Maui Land & Pineapple Company, Inc. and Robert I. Webber (Filed as Exhibit 10.7 to Form 10-Q for the quarter ended June 30, 2006 and incorporated herein by reference).
	10.26†	Restricted Stock Award Agreement and Award Grant Notice, dated as of August 4, 2006, by and between Maui Land & Pineapple Company, Inc. and Fred W. Rickert (Filed as Exhibit 10.8 to Form 10-Q for the quarter ended June 30, 2006 and incorporated herein by reference).
	10.27†	Form of Award Grant Notice and Stock Option Agreement, pursuant to the Maui Land & Pineapple Company, Inc. 2006 Equity and Incentive Award Plan (Filed as Exhibit 10.9 to Form 10-Q for the quarter ended June 30, 2006 and incorporated herein by reference).
	10.28†	Form of Restricted Stock Award Grant Notice and Restricted Stock Award Agreement, pursuant to the Maui Land & Pineapple Company, Inc. 2006 Equity and Incentive Award Plan (Filed as Exhibit 10.10 to Form 10-Q for the quarter ended June 30, 2006 and incorporated herein by reference).
	10.29	First Amendment to Purchase and Sale Agreement, dated as of August 7, 2006, by and between Maui Land & Pineapple Company, Inc. and David C. Cole (Filed as Exhibit 10.11 to Form 10-Q for the quarter ended June 30, 2006 and incorporated herein by reference).
	10.30	Promissory Note issued by Maui Land & Pineapple Company, Inc. in favor of GE Capital Public Finance, Inc., dated September 29, 2006 (Filed as Exhibit 10.1 to Form 8-K filed October 5, 2006 and incorporated herein by reference).
	10.31	Guaranty Agreement made by Maui Land & Pineapple Company, Inc. in favor of GE Capital Public Finance, Inc., dated September 29, 2006 (Filed as Exhibit 10.2 to Form 8-K filed October 5, 2006 and incorporated herein by reference).

93

Exhibit No.
	10.32	Loan Agreement (Real Estate) between Bank of Hawaii and Maui Land & Pineapple Company, Inc., dated October 1, 2006 (Filed as Exhibit 10.1 to Form 8-K filed November 2, 2006 and incorporated herein by reference).
	10.33	Mortgage, Security Agreement, Assignment of Leases and Rents and Fixture Filing made by Maui Land & Pineapple Company, Inc. in favor of Bank of Hawaii, dated October 1, 2006 (Filed as Exhibit 10.2 to Form 8-K filed November 2, 2006 and incorporated herein by reference).
	10.34±	Sale, Purchase and Lease Termination Agreement, entered into on March 28, 2007. (Filed as Exhibit 10.1 to Form 10-Q for the quarter ended March 31, 2007 and incorporated herein by reference).
	10.35±	Second Amended and Restated Limited Liability Company Agreement of W2005 Kapalua/Gengate Hotel Holdings L.L.C., entered into on March 28, 2007 (Filed as Exhibit 10.2 to Form 10-Q for the quarter ended March 31, 2007 and incorporated herein by reference).
	10.36	Termination of Memorandum of Hotel Ground Lease, dated as of March 28, 2007 (Filed as Exhibit 10.3 to Form 10-Q for the quarter ended March 31, 2007 and incorporated herein by reference).
	10.37†	Option Agreement dated August 6, 2007 between Maui Land & Pineapple Company, Inc. and Robert I. Webber (Filed as Exhibit 10.1 to Form 10-Q for the quarter ended June 30, 2007 and incorporated herein by reference).
	10.38±	Exclusive Consignment and Marketing Agreement with Calavo Growers, Inc. and Maui Pineapple Company, Ltd. Entered into on November 2, 2007 (filed as Exhibit 10.43 to Form 10-K for the year ended December 31, 2008 and incorporated herein by reference).
	10.39	First Amendment to Consignment and Marketing Agreement with Calavo Growers, Inc., entered into on November 2, 2007 (Filed as Exhibit 10.44 to Form 10-K for the year ended December 31, 2008 and incorporated herein by reference).
	10.40	Loan Agreement between Maui Land & Pineapple Company, Inc., Wells Fargo Bank, National Association, and each of the Financial Institutions Signatory thereto, Entered into on November 15, 2007 (Filed as Exhibit 10.1 to Form 8-K filed November 19, 2007 and incorporated herein by reference).
	10.41*	Modification Agreement dated November 2, 2008, entered into by and among Maui Land & Pineapple Company, Inc., Wells Fargo Bank, National Association, and each of the Financial Institutions Signatory thereto.
	10.42*	Second Modification Agreement dated March 3, 2009, entered into by and among Maui Land & Pineapple Company, Inc., Wells Fargo Bank, National Association, and each of the Financial Institutions Signatory thereto.
	10.43*	Third Modification Agreement dated March 27, 2009, entered into by and among Maui Land & Pineapple Company, Inc., Wells Fargo Bank, National Association, and each of the Financial Institutions Signatory thereto.
	10.44	Fee and Leasehold Mortgage with Absolute Assignment of Leases and Rents, Security Agreement and Fixture Filing, Entered into on November 15, 2007 (Filed as Exhibit 10.2 to Form 8-K filed November 19, 2007 and incorporated herein by reference).
	10.45	Consulting Agreement between Maui Land & Pineapple Company, Inc., and BC&G International LLC, entered into on April 9, 2007 (Filed as Exhibit 10.1 to Form 8-K filed April 13, 2007 and incorporated herein by reference).

94

Exhibit No.
	10.46	Securities Purchase Agreement between Maui Land & Pineapple Company, Inc., and Ohana Holdings, LLC and ZG Ventures, LLC entered into on March 12, 2007 (Filed as Exhibit 10.1 to Form 8-K filed March 15, 2007 and incorporated herein by reference).
	10.47	Registration Rights Agreement between Maui Land & Pineapple Company, Inc. and Ohana Holdings, LLC and ZG Ventures, LLC entered into on March 12, 2007 (Filed as Exhibit 10.2 to Form 8-K filed March 15, 2007 and incorporated herein by reference).
	10.48	Amendment No. 1 to Registration Rights Agreement, entered into as of March 10, 2008 (Filed as Exhibit 10.50 to Form 10-K/A for the year ended December 31, 2008 and incorporated herein by reference).
	10.49†	Restricted Share Agreement and Award Grant Notice, dated as of May 7, 2008, by and between Maui Land & Pineapple Company, Inc. and Robert I. Webber (Filed as Exhibit 10.1 to Form 10-Q for the quarter ended March 31, 2008 and incorporated herein by reference).
	10.50†	Amendment and Extension of Employment Agreement, executed on May 7, 2008, between Maui Land & Pineapple Company, Inc. and Robert I. Webber (Filed as Exhibit 10.2 to Form 10-Q for the quarter ended March 31, 2008 and incorporated herein by reference).
	10.51	Waiver and Amendment No. 2 to Registration Rights Agreement, dated as of April 30, 2008, by and among Maui Land & Pineapple Company, Inc., Ohana Holdings, LLC, and ZG Ventures,  LLC.(1) (Filed as Exhibit 10.3 to Form 10-Q for the quarter ended March 31, 2008 and incorporated herein by reference).
	10.52	Securities Purchase Agreement, dated as of July 27, 2008, by and between Maui Land & Pineapple, Inc. and the investors named therein (Filed as Exhibit 10.1 to Form 8-K dated July 27, 2008 and incorporated herein by reference).
	10.53	Registration Rights Agreement, dated as of July 27, 2008, by and between Maui Land & Pineapple, Inc. and the investors named therein ((Filed as Exhibit 10.2 to Form 8-K dated July 27, 2008 and incorporated herein by reference).
	10.54	Form of Senior Secured Convertible Note (Filed as Exhibit 10.3 to Form 8-K dated July 27, 2008 and incorporated herein by reference).
	10.55*	Amended and Restated Construction Loan Agreement, dated as of February 11, 2009, by and among Kapalua Bay, LLC, Lehman Brothers Holdings Inc., Central Pacific Bank, Landesbank Baden-Württemberg, Deutsche Hypothekenbank, Swedbank AB, New York Branch, and MH Kapalua Venture, LLC.
	10.56*	Master Assignment and Assumption and Modification Agreement, dated as of February 11, 2009, by and among Kapalua Bay, LLC, Lehman Brothers Holdings Inc., Central Pacific Bank, Landesbank Baden-Württemberg, Deutsche Hypothekenbank, Swedbank AB, New York Branch, and MH Kapalua Venture, LLC.
	10.57*	Second Omnibus Amendment to Construction Loan Documents, dated as of February 11, 2009, by and among Kapalua Bay, LLC, Lehman Brothers Holdings Inc., Central Pacific Bank, Landesbank Baden-Württemberg, Deutsche Hypothekenbank, Swedbank AB, New York Branch, and MH Kapalua Venture, LLC.
	10.58*†	First Amendment to Employment Agreement, dated December 8, 2008, by and between Maui Land & Pineapple Company, Inc. and David C. Cole.
	11.	Statement re computation of per share earnings. See Earnings Per Common Share under Note 1 to the Consolidated Financial Statements.

95

Exhibit No.
	18.	Preferability Letter of Deloitte & Touche LLP, Independent Registered Public Accounting Firm, dated August 7, 2008 (Filed as Exhibit 18.1 to Form 10-Q for the quarter ended June 30, 2008 and incorporated herein by reference).
	21.*	Subsidiaries of Maui Land & Pineapple Company, Inc.
	23.1*	Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm, dated March 30, 2009.
	23.2*	Consent of Deloitte & Touche LLP, Independent Auditors, dated March 30, 2009.
	23.3*	Consent of PricewaterhouseCoopers LLP, Independent Certified Public Accountants, dated March 30, 2009,
	31.1*	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) / 15d-14(a) of the Securities Exchange Act of 1934.
	31.2*	Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) / 15d-14(a) of the Securities Exchange Act of 1934.
	32.1**	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	99.*	Financial Statements for Kapalua Bay Holdings, LLC as of December 31, 2008 and 2007 and for the Years Ended December 31, 2008, 2007 and 2006 (Restated).
	99.1*	W2005 Kapalua/Gengate Hotel Holdings L.L.C. Consolidated Financial Statements December 31, 2008 (Unaudited).
	99.2*	W2005 Kapalua/Gengate Hotel Holdings L.L.C. Consolidated Financial Statements December 31, 2007.

*

Filed herewith.

**

Furnished herewith and not "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

†

Management contract or compensatory plan or arrangement required to be filed as an exhibit to this Form pursuant to Item 15(c) of Form 10-K.

±

Portions of this exhibit have been omitted pursuant to a request for confidential treatment under Rule 24-b-2 of the Exchange Act. The omitted material has been separately filed with the Securities and Exchange Commission.

96

SIGNATURES

        Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on March 30, 2009.

MAUI LAND & PINEAPPLE COMPANY, INC.
By	/s/ ROBERT I. WEBBER
	Robert I. Webber President & Chief Executive Officer

        Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

By	/s/ WARREN H. HARUKI	Date	March 30, 2009
	Warren H. Haruki, Chairman of the Board
By	/s/ JOHN H. AGEE	Date	March 30, 2009
	John H. Agee, Director
By	/s/ STEPHEN M. CASE	Date	March 30, 2009
	Stephen M. Case, Director
By	/s/ DAVID C. COLE	Date	March 30, 2009
	David C. Cole, Director
By	/s/ WALTER A. DODS JR.	Date	March 30, 2009
	Walter A. Dods, Director
By	/s/ MILES R. GILBURNE	Date	March 30, 2009
	Miles R. Gilburne, Director
By	/s/ DAVID A. HEENAN	Date	March 30, 2009
	David A. Heenan, Director
By	/s/ KENT T. LUCIEN	Date	March 30, 2009
	Kent T. Lucien, Director
By	/s/ DUNCAN MACNAUGHTON	Date	March 30, 2009
	Duncan MacNaughton, Director
By	/s/ FRED E. TROTTER III	Date	March 30, 2009
	Fred E. Trotter III, Director
By	/s/ ROBERT I. WEBBER	Date	March 30, 2009
	Robert I. Webber, President & Chief Executive Officer (Principal Executive Officer and Principal Financial Officer)
By	/s/ ADELE H. SUMIDA	Date	March 30, 2009
	Adele H. Sumida, Controller & Secretary (Principal Accounting Officer)

97

EX-10.3

Exhibit 10.3

Loan No. 0426195000

SECOND AMENDMENT TO

REVOLVING LINE OF CREDIT LOAN AGREEMENT

This Second Amendment to Revolving Line of Credit Loan Agreement (this “Amendment”) is entered into by and between American AgCredit, FLCA, successor in interest to Pacific Coast Farm Credit Services, ACA (“Lender”) and Maui Land & Pineapple Company, Inc., a Hawaii corporation (“Borrower”) to be effective as of September 30, 2008 (the “Effective Date”).

RECITALS

A.Borrower and Lender entered into a Revolving Line of Credit Loan Agreement dated September 1, 2005 (the “Original Credit Agreement”), whereby Lender converted a term loan agreement to a revolving line of credit pursuant to the terms and conditions set forth in the Original Credit Agreement and evidenced by a promissory note dated June 1, 1999 in the amount of Fifteen Million Dollars ($15,000,000.00) (the “Original Note”).

B.The Original Credit Agreement and the Original Note were subsequently modified and amended by that First Amendment to Revolving Line of Credit Loan Agreement dated December 4, 2006 (the “First Amendment to Credit Agreement”, and together with the Original Credit Agreement, the “Credit Agreement”), and the first amendment to Promissory Note dated December 4, 2006 (the “Amended Note”, and together with the Original Note, the “Note”) whereby Borrower and Lender agreed to, among other things, increase the total line of credit as evidenced by the Original Note and governed by the Original Credit Agreement to $25,000,000, and to extend the draw period and extend the maturity date.

C.Lender is willing to modify Section 12(j) of the Credit Agreement to allow the Indebtedness for Borrowed Money restriction to increase from $122,000,000 to $150,000,000, subject to and in accordance with the terms, covenants, conditions and provisions of this Amendment.

Accordingly the parties agree as follows:

1.Conditions Precedent.  The modification provided for herein is hereby granted provided that the following conditions precedent are satisfied by no later than October 15, 2008:

1.1Execution and delivery to Lender of this Amendment to be executed and, where applicable, acknowledged by Borrower and Guarantors.

1.2No Default or Event of Default shall have occurred and be continuing under the Note.

1.3All of the representations and warranties contained in the Credit Agreement shall continue to be true and correct and remain in full force and effect as of the date of this Amendment.

2.Amendments.  Provided that the conditions specified in Section 1 of this Amendment have been satisfied, the Credit Agreement shall be amended as follows:

2.1Increase Restriction on Indebtedness for Borrowed Money.  Section 12(j) of the Credit Agreement is hereby deleted in its entirety and replaced with the following:

Indebtedness for Borrowed Money.  Incur any Indebtedness for Borrowed Money if after such Indebtedness for Borrowed Money is incurred the aggregate amount of all such Indebtedness for Borrowed Money of the Borrower and its Subsidiaries shall exceed One Hundred Fifty Million Dollars ($150,000,000.00).

3.Representations and Warranties of Borrower.  Borrower represents, warrants and covenants to Lender that:

3.1Borrower knows of no Default or Event of Default under the terms and conditions of the Loan Documents.

1

3.2This Amendment constitutes a legal, valid and binding obligation of Borrower, enforceable against Borrower in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors’ rights generally.

3.3The representations and warranties of Borrower set forth in Section 10 of the Credit Agreement are correct in all material respects as though made on and as of the date of this Amendment (provided, if a representation or warranty was made as of a specific date, such representation or warranty was true and correct in all material respects as of the date made).

3.4Since December 4, 2006, there has been no material adverse change in the business, assets, liabilities (actual or contingent), operations, condition (financial or otherwise) or prospects of Borrower and its Subsidiaries taken as a whole or in the facts and information regarding such entities as represented to Lender to date.

3.5There are no actions, suits, investigations or proceedings pending or threatened in any court or before any arbitrator or governmental authority that purport (x) to materially and adversely affect Borrower or any of its Subsidiaries, or (y) to affect any transaction contemplated hereby or the ability of Borrower to perform its obligations under the Loan Documents.

3.6Borrower is in material compliance with all laws, including satisfaction of all tax obligations prior to delinquency.

3.7Borrower is in compliance with all insurance requirements imposed upon Borrower under the Loan Documents.

3.8Borrower is in compliance with the negative covenants set forth in Section 12 of the Credit Agreement, amended herein.

4.Representations and Warranties of Guarantors.  Each Guarantor by its signature below represents, warrants and covenants to Lender that:

4.1Such Guarantor knows of no Default or Event of Default under the terms and conditions of the Loan Documents.

4.2This Amendment constitutes a legal, valid and binding obligation of such Guarantor, enforceable against such Guarantor in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors’ rights generally.

4.3Since December 4, 2006, there has been no material adverse change in the business, assets, liabilities (actual or contingent), operations, condition (financial or otherwise) or prospects of such Guarantor taken as a whole or in the facts and information regarding such Guarantor as represented to Lender to date.

4.4There are no actions, suits, investigations or proceedings pending or threatened in any court or before any arbitrator or governmental authority that purport (x) to materially and adversely affect such Guarantor, or (y) to affect any transaction contemplated hereby or the ability of Guarantor to perform its obligations under the Loan Documents.

4.5Such Guarantor is in material compliance with all laws, including satisfaction of all tax obligations prior to delinquency.

5.Continuing Validity.  Except as expressly modified or changed by this Amendment, the terms of the Credit Agreement, the Note and all other related Loan Documents remain unchanged and in full force and effect.  Consent by the Lender to the changes described herein does not waive Lender’s right to strict performance of the terms and conditions contained in the Credit Agreement, Note and all other loan and security documents as amended, nor obligate the Lender to make future changes in terms.  Nothing in this Amendment will constitute a satisfaction of the indebtedness represented by the Note.

2

6.Miscellaneous.

6.1Borrower acknowledges and agrees that the execution and delivery by the Lender of this Amendment shall not be deemed to create a course of dealing or an obligation to execute similar amendments or substitutions of collateral under the same or similar circumstances in the future.

6.2This Amendment shall be binding upon and inure to the benefit of the Borrower, and Lender and their respective successors and assigns.

6.3This Amendment shall be governed by and construed in accordance with the laws of the State of California.

6.4This Amendment contains the entire agreement of the parties hereto with reference to the matters discussed herein.

6.5If any term or provision of this Amendment shall be deemed prohibited or invalid under any applicable law, such provision shall be invalidated without affecting the remaining provisions of this Amendment, the Credit Agreement, the Note or any other Loan Documents or related documents.

6.6Capitalized terms used in this Amendment without being defined shall have the same meaning ascribed to them in the Credit Agreement.

IN WITNESS WHEREOF the parties have executed this Amendment on the date first above written.

THE UNDERSIGNED AGREE TO ALL THE TERMS AND CONDITIONS SET FORTH ABOVE.

BORROWER:

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

By:	/s/ Robert Webber
Name:	Robert Webber
Title:	CFO

By:	/s/ Fred Rickert
Name:	Fred Rickert
Title:	VP Treasurer

LENDER:

AMERICAN AGCREDIT, FLCA

By:	/s/ Dennis P. Regli
	Dennis P. Regli, Vice President

THE SIGNATURES OF GUARANTORS APPEAR ON THE FOLLOWING PAGE.

3

GUARANTORS:

The undersigned Guarantors hereby consent to, ratify and approve the terms, covenants, conditions and provisions of the foregoing Amendment and agree that the guaranty(ies) executed by them shall be extended to include the obligations of the Borrower under the Credit Agreement as amended by this Amendment.

KAPALUA LAND COMPANY, LTD., a Hawaii corporation

By:	/s/ Robert Webber
Name:	Robert Webber
Title:	CFO

By:	/s/ Fred Rickert
Name:	Fred Rickert
Title:	VP Treasurer

MAUI PINEAPPLE COMPANY, LTD., a Hawaii corporation

By:	/s/ Robert Webber
Name:	Robert Webber
Title:	CFO

By:	/s/ Fred Rickert
Name:	Fred Rickert
Title:	VP Treasurer

4

EX-10.4

Exhibit 10.4

Loan No. 0426195000

THIRD AMENDMENT TO
REVOLVING LINE OF CREDIT LOAN AGREEMENT

This Third Amendment to Revolving Line of Credit Loan Agreement (this “Amendment”) is entered into by and between American AgCredit, FLCA (“Lender”) and Maui Land & Pineapple Company, Inc., a Hawaii corporation (“Borrower”) to be effective as of December 31, 2008 (the “Effective Date”).

RECITALS

A.  Borrower and Lender are parties to a Revolving Line of Credit Loan Agreement dated September 1, 2005 and amended by a First Amendment dated as of December 4, 2006 and a Second Amendment dated as of September 30, 2008 (as it may be further amended, restated, modified or supplemented from time to time, the “Credit Agreement”).  (Capitalized terms used but not otherwise defined in this Amendment shall have the meanings given to them in the Credit Agreement.)

B.  Borrower has requested that Lender agree to modify certain terms of the Credit Agreement.  Lender is willing to do so on the terms and conditions set forth in this Amendment.

Accordingly the parties agree as follows:

1.Conditions Precedent.  The modification provided for herein is hereby granted provided that the following conditions precedent are satisfied by a date acceptable to Lender in its sole discretion:

1.1Lender shall have received one or more counterparts of this Amendment duly executed and delivered by Borrower and each Guarantor.

1.2All of the representations and warranties contained in the Credit Agreement shall continue to be true and correct and remain in full force and effect as of the date of this Amendment.

1.3Borrower shall have paid to Lender a fee (the “Amendment Fee”) in the amount of $37,500.  The Amendment Fee shall be considered fully earned and non-refundable upon its receipt by Lender and no portion thereof shall be refundable to Borrower under any circumstances.

2.Amendments.  Provided that the conditions specified in Section 1 of this Amendment have been satisfied, the Credit Agreement shall be modified and amended as follows:

2.1Accelerated Delivery of Financial Statements and Compliance Certificate.  For the Fiscal Quarter ending March 31, 2009, Borrower shall deliver to Lender the financial statements and the compliance certificate required by Section 11(g)(2) no later than April 30, 2009.  For each subsequent Fiscal Quarter, Borrower shall deliver such financial statements and compliance certificate to Lender by the date otherwise set forth in Section 11(g)(2).

2.2Minimum Net Worth Covenant not to Apply as of December 31, 2008.  The Minimum Net Worth covenant set forth in Section 12(i)(1) shall not apply for the Fiscal Quarter ending December 31, 2008.  This covenant shall apply on the Fiscal Quarter ending on March 31, 2009 and each Fiscal Quarter thereafter in the amounts set forth in the Credit Agreement.

1

2.3Funded Debt to Capitalization covenant not to Apply as of December 31, 2008; Amendment and Restatement of Covenant.  The Funded Debt to Capitalization covenant set forth in Section 12(i)(2) is shall not apply as of December 31, 2008.  This section is hereby amended and restated to read as follows:

(1)           Funded Debt to Capitalization.  Borrower shall not permit its Consolidated Fund Debt to exceed fifty-five percent (55%) of its Consolidated Total Capitalization as of the end of any Fiscal Quarter.

2.4Interest Coverage Ratio Covenant not to Apply as of December 31, 2008; Amendment and Restatement of Covenant.  The Interest Coverage Ratio covenant set forth in Section 12(i)(3) shall not apply for the Fiscal Year ending December 31, 2008.  This covenant shall apply for the Fiscal Year ending on December 31, 2009 and each Fiscal Year thereafter in the amounts set forth in the Credit Agreement.

2.5Mandatory Prepayment or Posting of Additional Collateral.  Borrower acknowledges that Lender is obtaining an appraisal of the real property securing the Obligations.  If the principal amount of the Obligations exceeds fifty percent (50%) of the value of such property as set forth in the appraisal, then Borrower shall immediately make a principal payment to Lender in such amount as would reduce the principal balance of the obligations to 50% of such appraised value (such 50% figure being the “New Credit Limit”).  Thereafter, the maximum amount that may be borrowed by Borrower under the revolving line of credit shall not exceed the New Credit Limit.  Borrower may, if it so chooses, propose to Lender that Borrower provide Lender with additional collateral in lieu of making the mandatory prepayment and request that Lender consent to no reduction in the maximum amount that may be borrowed.  Any proposed additional collateral shall be acceptable to Lender in Lender’s sole and absolute discretion.

2.6Extension of Maturity Date Requires Consent of Lender.  Section 3.4 of the Second Amendment to the Credit Agreement provides for an extension of the Maturity Date from June 1, 2011 to June 1, 2026 so long as no Default or Event of Default exists on June 1, 2011.  Notwithstanding the Second Amendment, the extension of the Maturity Date shall not occur unless Lender notifies Borrower in writing before June 1, 2011 that Lender has consented to such extension.  Lender may consent to or deny such extension in Lender’s sole and absolute discretion.

2.7Amended Definition of Applicable Spread.  The definition of “Applicable Spread” in the Credit Agreement is hereby amended and restated to read as follows:

“Applicable Spread” shall mean, (i) with respect to that portion of the Loan bearing interest at the Base Rate, one hundred eighty-five (185) basis points, and (ii) with respect to any Fixed Rate Tranche, three hundred fifty (350) basis points; provided that the Applicable Spread may be adjusted pursuant to Section 4(d)(3).

2

2.8Amended Section 4(d)(3).  Section 4(d)(3) of the Credit Agreement, entitled “Adjustment in Applicable Spread,” is hereby amended and restated to read as follows:

(3)           Adjustment in Applicable Spread. Commencing with the receipt of the quarterly financial statements of Borrower for the period ended June 30, 2009, the Applicable Spread shall be adjusted in accordance with the performance pricing grid below based on Borrower’s Consolidated Funded Debt to Consolidated Net Worth Ratio:

		Applicable Spread
Tier	Consolidated Funded Debt to Consolidated Net Worth Ratio Level	LIBOR FIXED RATE	BASE RATE
I	Less than or equal to 0.25	200	60
II	Greater than 0.25 but less than or equal to 0.50	225	60
III	Greater than 0.50 but less than or equal to 0.75	250	60
IV	Greater than 0.75 but less than or equal to 1.00	275	85
V	Greater than 1.00 but less than or equal to 1.25	300	135
VI	Greater than 1.25	350	185

The Applicable Spread shall be adjusted quarterly on the date (each a “Rate Calculation Date”) that is five Business Days after the date on which Borrower provides the quarterly compliance certificate in accordance with the provisions of Section 11(g)(2) (each a “Certificate Delivery Date”); provided, that if either Borrower fails to provide the compliance certificate to Lender for any fiscal quarter as required by and within the time limits set forth in Section 11(g)(2), or a Default or an Event of Default occurs, then the Applicable Spread from the date of such failure or Default or Event of Default shall be based on row above entitled “Tier VI” until five Business Days after the appropriate compliance certificate is provided or until such Default or Event of Default is cured or waived, respectively, whereupon the Applicable Spread shall be determined by the then current ratio of Consolidated Funded Debt to Consolidated Net Worth.  Except to the extent otherwise provided above, each Applicable Spread shall be effective from one Rate Calculation Date until the next Rate Calculation Date.

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2.9Amended Section 4(e).  Section 4(e) of the Credit Agreement, entitled “Unused Commitment Fee,” is hereby amended and restated to read as follows:

(e)           Commitment Fee. In consideration of Lender remaining committed to fund the full amount of the Loan regardless of Borrower’s actual utilization of the entire commitment, Borrower shall pay to Lender a quarterly unused commitment fee (the “Unused Commitment Fee”) equal to quantity obtained by multiplying the average daily balance of the unfunded commitment during the quarter most recently ended by one half of one percent (0.50%) (the “Unused Commitment Fee Percentage”). The Unused Commitment Fee shall be paid to Lender on the first (1st) day of each calendar quarter with respect to the previous calendar quarter and on the Maturity Date with respect to the period from the last full calendar quarter through the Maturity Date. Commencing with the receipt of the quarterly financial statements of Borrower for the period ended June 30, 2009, the Unused Commitment Fee Percentage shall be adjusted in accordance with the performance pricing grid below based on Borrower’s Consolidated Funded Debt to Consolidated Net Worth Ratio:

Tier	Consolidated Funded Debt to Consolidated Net Worth Ratio Level	Unused Commitment Fee
I	Less than or equal to 0.25	.25	%
II	Greater than 0.25 but less than or equal to 0.50	.25	%
III	Greater than 0.50 but less than or equal to 0.75	.30	%
IV	Greater than 0.75 but less than or equal to 1.00	.35	%
V	Greater than 1.00 but less than or equal to 1.25	.40	%
VI	Greater than 1.25	.50	%

The Unused Commitment Fee Percentage shall be adjusted quarterly on the date (each a “Commitment Fee Calculation Date”) that is five Business Days after the date on which Borrower provides the quarterly compliance certificate in accordance with the provisions of Section 11(g)(2) (each a “Certificate Delivery Date”); provided, that if either Borrower fails to provide the compliance certificate to Lender for any fiscal quarter as required by and within the time limits set forth in Section 11(g)(2), or a Default or an Event of Default occurs, then the Unused Commitment Fee Percentage from the date of such failure or Default or Event of Default shall be based on row above entitled “Tier VI” until five Business Days after the appropriate compliance certificate is provided or until such Default or Event of Default is cured or waived, respectively, whereupon the Unused Commitment Fee Percentage shall be determined by the then current ratio of Consolidated Funded Debt to Consolidated Net Worth.  Except to the extent otherwise provided above, each Unused Commitment Fee Percentage shall be effective from one Commitment Fee Calculation Date until the next Commitment Fee Calculation Date.

3.Representations and Warranties of Borrower.  Borrower represents, warrants and covenants to Lender that:

3.1Borrower knows of no Default or Event of Default under the terms and conditions of the Loan Documents.

3.2This Amendment constitutes a legal, valid and binding obligation of Borrower, enforceable against Borrower in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors’ rights generally.

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3.3The representations and warranties of Borrower set forth in Section 10 of the Credit Agreement are correct in all material respects as though made on and as of the date of this Amendment (provided, if a representation or warranty was made as of a specific date, such representation or warranty was true and correct in all material respects as of the date made).

3.4Except as disclosed to Lender in draft financial statements provided for the period ending December 31, 2008, since the date of the last financial statements delivered by Borrower to Lender, there has been no material adverse change in the business, assets, liabilities (actual or contingent), operations, condition (financial or otherwise) or prospects of Borrower and its Subsidiaries taken as a whole or in the facts and information regarding such entities as represented to Lender to date.

3.5There are no actions, suits, investigations or proceedings pending or to Borrower’s knowledge, threatened in any court or before any arbitrator or governmental authority that purport (x) to materially and adversely affect Borrower or any of its Subsidiaries, or (y) to affect any transaction contemplated hereby or the ability of Borrower to perform its obligations under the Loan Documents.

3.6Borrower is in material compliance with all laws, including satisfaction of all tax obligations prior to delinquency.

3.7Borrower is in compliance with all insurance requirements imposed upon Borrower under the Loan Documents.

3.8Borrower is in compliance with the negative covenants set forth in Section 12 of the Credit Agreement, as amended herein.

4.Representations and Warranties of Guarantors.  Each Guarantor by its signature below represents, warrants and covenants to Lender that:

4.1Such Guarantor knows of no Default or Event of Default under the terms and conditions of the Loan Documents.

4.2This Amendment constitutes a legal, valid and binding obligation of such Guarantor, enforceable against such Guarantor in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors’ rights generally.

4.3Since the date of the last financial statements delivered by Borrower to Lender, there has been no material adverse change in the business, assets, liabilities (actual or contingent), operations, condition (financial or otherwise) or prospects of such Guarantor taken as a whole or in the facts and information regarding such Guarantor as represented to Lender to date.

4.4There are no actions, suits, investigations or proceedings pending or to Borrower’s knowledge, threatened in any court or before any arbitrator or governmental authority that purport (x) to materially and adversely affect such Guarantor, or (y) to affect any transaction contemplated hereby or the ability of Guarantor to perform its obligations under the Loan Documents.

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4.5Such Guarantor is in material compliance with all laws, including satisfaction of all tax obligations prior to delinquency.

5.Continuing Validity.  Except as expressly modified or changed by this Amendment, the terms of the Credit Agreement, the Note and all other related loan documents remain unchanged and in full force and effect. Consent by Lender to the changes described herein does not waive Lender’s right to strict performance of the terms and conditions contained in the Credit Agreement, the Note and all other loan and security documents as amended, nor obligate Lender to make future changes in terms. Nothing in this Amendment will constitute a satisfaction of the indebtedness represented by the Note.

6.Release.  Borrower hereby releases, remises, acquits and forever discharges Lender and its employees, agents, representatives, consultants, attorneys, fiduciaries, officers, directors, partners, predecessors, successors and assigns, subsidiary corporations, parent corporations, and related corporate divisions (collectively, the “Released Parties”), from any and all actions and causes of action, judgments, executions, suits, debts, claims, demands, liabilities, obligations, damages and expenses of any and every character, known or unknown, direct and/or indirect, at law or in equity, of whatsoever kind or nature, for or because of any matter or things done, omitted or suffered to be done by any of the Released Parties prior to and including the date of delivery hereof, and in any way directly or indirectly arising out of or in any way connected to the Credit Agreement (collectively, the “Released Matters”).  Borrower acknowledges that the agreements in this Section are intended to be in full satisfaction of all or any alleged injuries or damages arising in connection with the Released Matters.

Without limiting the generality of the foregoing, Borrower hereby waives the provisions of any statute that prevents a general release from extending to claims unknown by the releasing party, including Section 1542 of the California Civil Code which provides:

A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.

By entering into this release, Borrower recognizes that no facts or representations are ever absolutely certain and Borrower may hereafter discover facts in addition to or different from those which Borrower presently knows or believes to be true, but that it is the intention of Borrower to hereby fully, finally and forever settle and release all matters, disputes and differences, known or unknown, suspected or unsuspected; accordingly, if Borrower should subsequently discover that any fact that Borrower relied upon in delivering this release was untrue, or that any understanding of the facts was incorrect, Borrower shall not be entitled to set aside this release by reason thereof, regardless of any claim of mistake of fact or law or any other circumstances whatsoever.  Borrower acknowledges that Borrower is not relying upon and has not relied upon any representation or statement made by Lender with respect to the facts underlying this release or with regard to Borrower’s rights or asserted rights.

This release may be pleaded as a full and complete defense and/ or as a cross-complaint or counterclaim against any action, suit, or other proceeding that may be instituted, prosecuted or attempted in breach of this release.  Borrower acknowledges that the release contained herein constitutes a material inducement to Lender to enter into this Amendment and that Lender would not have done so but for Lender’s expectation that such release is valid and enforceable in all events.

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7.Enforceability.  Borrower represents, warrants and acknowledges that it has had the opportunity to consult with independent counsel regarding the legal effects of this Amendment, and that it is executing this Amendment of its own free will and accord, for the purposes and considerations set forth herein.  Borrower hereby acknowledges that this Amendment is binding and enforceable against it in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, or similar laws relating to the enforcement of creditor’s rights generally and by general equitable principles.  Any law or regulation that provides that the language of a contract shall be construed against the drafter shall not apply to this Amendment.

8.Miscellaneous.

8.1Borrower acknowledges and agrees that the execution and delivery by the Lender of this Amendment shall not be deemed to create a course of dealing or an obligation to execute similar amendments or substitutions of collateral under the same or similar circumstances in the future.

8.2This Amendment shall be binding upon and inure to the benefit of the Borrower, and Lender and their respective successors and assigns.

8.3This Amendment shall be governed by and construed in accordance with the laws of the State of California.

8.4This Amendment contains the entire agreement of the parties hereto with reference to the matters discussed herein.

8.5If any term or provision of this Amendment shall be deemed prohibited or invalid under any applicable law, such provision shall be invalidated without affecting the remaining provisions of this Amendment, the Credit Agreement, the Note or any other Loan Documents or related documents.

8.6This Amendment may be executed in multiple counterparts, each of which shall be deemed to be an original and all of which when taken together shall constitute one and the same instrument.  The manual signature of any party hereto that is transmitted to any other party or its counsel by facsimile or electronic transmission shall be deemed for all purposes to be an original signature.

IN WITNESS WHEREOF the parties have executed this Amendment on the date first above written.

THE UNDERSIGNED AGREE TO ALL THE TERMS AND CONDITIONS SET FORTH ABOVE.

BORROWER:

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

By:	/s/ Robert I. Webber
Name:	Robert I. Webber
Title:	President & CEO

By:	/s/ Adele H. Sumida
Name:	Adele H. Sumida
Title:	Controller & Secretary

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LENDER:

AMERICAN AGCREDIT, FLCA

By:	/s/ Gary Van Schuyver
Name:	Gary Van Schuyver
Title:	Vice President

THE SIGNATURES OF GUARANTORS APPEAR ON THE FOLLOWING PAGE.

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GUARANTORS:

The undersigned Guarantors hereby consent to, ratify and approve the terms, covenants, conditions and provisions of the foregoing Amendment and agree that the guaranty(ies) executed by them shall be extended to include the obligations of the Borrower under the Credit Agreement as amended by this Amendment.

KAPALUA LAND COMPANY, LTD., a Hawaii corporation

By:	/s/ Robert I. Webber
Name:	Robert I. Webber
Title:	Executive Vice President

By:	/s/ Adele H. Sumida
Name:	Adele H. Sumida
Title:	Controller & Secretary

MAUI PINEAPPLE COMPANY, LTD., a Hawaii corporation

By:	/s/ Robert I. Webber
Name:	Robert I. Webber
Title:	Executive Vice President

By:	/s/ Adele H. Sumida
Name:	Adele H. Sumida
Title:	Controller & Secretary

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EX-10.5

Exhibit 10.5

Loan No. 0426195000

FOURTH AMENDMENT TO
REVOLVING LINE OF CREDIT LOAN AGREEMENT

This Fourth Amendment to Revolving Line of Credit Loan Agreement (this “Amendment”) is entered into by and between American AgCredit, FLCA (“Lender”) and Maui Land & Pineapple Company, Inc., a Hawaii corporation (“Borrower”), to be effective as of December 31, 2008 (the “Effective Date”).

RECITALS

A.Borrower and Lender are parties to a Revolving Line of Credit Loan Agreement dated September 1, 2005 and amended by a First Amendment dated as of December 4, 2006, a Second Amendment dated as of September 30, 2008, and a Third Amendment dated as of December 31, 2008 (as it may be further amended, restated, modified or supplemented from time to time, the “Credit Agreement”).  (Capitalized terms used but not otherwise defined in this Amendment shall have the meanings given to them in the Credit Agreement.)

B.Borrower has requested that Lender agree to modify certain terms of the Credit Agreement.  Lender is willing to do so on the terms and conditions set forth in this Amendment.

Accordingly the parties agree as follows:

1.Conditions Precedent.  The modification provided for herein is hereby granted provided that the following conditions precedent are satisfied by a date acceptable to Lender in its sole discretion:

1.1Lender shall have received one or more counterparts of this Amendment duly executed and delivered by Borrower and each Guarantor.

1.2All of the representations and warranties contained in the Credit Agreement shall continue to be true and correct and remain in full force and effect as of the date of this Amendment.

1.3Borrower shall have paid to Lender a fee (the “Amendment Fee”) in the amount of $50,000.  The Amendment Fee shall be considered fully earned and non-refundable upon its receipt by Lender and no portion thereof shall be refundable to Borrower under any circumstances.

2.Amendments.  Provided that the conditions specified in Section 1 of this Amendment have been satisfied, the Credit Agreement shall be modified and amended as follows:

2.1Change in Maturity Date.  The Maturity Date is hereby changed to March 13, 2010.  Any extension beyond such date shall be in Lender’s sole and absolute discretion.

2.2Liquidity.  Borrower shall maintain, as of the end of each Fiscal Quarter, Liquidity of not less than $10,000,000.  As used herein, “Liquidity” means the sum of (i) cash, (ii) cash equivalents, (iii) publicly traded and publicly quoted marketable securities acceptable to Lender in its reasonable discretion, (iv) undisbursed commitment under secured lines of credit available to Borrower including, without limitation, the Loan, and (v) the amount, if any, not to exceed $2,000,000, by which accounts receivable of the Borrower exceed accounts payable of the Borrower, net, in connection with any of the foregoing, of any encumbrance, setoff or claim and minus any unsecured Indebtedness of Borrower.

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2.3Transfer of Assets.  Section 12(b) of the Credit Agreement is hereby amended and restated in its entirety as follows: “Transfer of Assets.  Sell, transfer, lease or otherwise dispose of any of its assets, or cause or permit any Subsidiary to sell, transfer, lease or otherwise dispose of any of its assets, except: (i) inventory in the ordinary course of Borrower’s or any Subsidiary’s business; (ii) obsolete or worn out property, whether now owned or hereafter acquired, in the ordinary course of Borrower’s or any Subsidiary’s business; and (iii) as approved by Lender in writing prior to the sale, transfer, lease or other disposition of such assets.”

2.4Restricted Payments.  Section 12(g) of the Credit Agreement is hereby amended and restated in its entirety as follows: “Restricted Payments.  Borrower shall not, and shall not permit any of its Subsidiaries to, declare or make, directly or indirectly, any Restricted Payment or incur any obligation (contingent or otherwise) to do so.”

2.5Minimum Net Worth Covenant not to Apply During 2009.  The Minimum Net Worth covenant set forth in Section 12(i)(1) shall not apply to any Fiscal Quarter in 2009, but shall again become applicable on the Fiscal Quarter ending March 31, 2010, if Lender in its sole discretion consents to an extension of the Maturity Date.

2.6Funded Debt to Capitalization covenant not to Apply During 2009.  The Funded Debt to Capitalization covenant set forth in Section 12(i)(2) shall not apply to any Fiscal Quarter in 2009, but shall again become applicable on the Fiscal Quarter ending March 31, 2010, if Lender in its sole discretion consents to an extension of the Maturity Date.

2.7Interest Coverage Ratio Covenant not to Apply as of December 31, 2009; Amendment and Restatement of Covenant.  The Interest Coverage Ratio covenant set forth in Section 12(i)(3) shall not apply for the Fiscal Year ending December 31, 2009.  This covenant shall apply for the Fiscal Year ending on December 31, 2010 and each Fiscal Year thereafter in the amounts set forth in the Credit Agreement, if Lender in its sole discretion consents to an extension of the Maturity Date.

2.8Indebtedness.  Section 12(j) of the Credit Agreement is hereby amended and restated in its entirety as follows:  “Indebtedness for Borrowed Money.  Incur any Indebtedness for Borrowed Money, except for Indebtedness for Borrowed Money disclosed on the consolidated balance sheet of Borrower and its Subsidiaries dated as of December 31, 2008, provided, however, that (i) Indebtedness for Borrowed Money incurred in connection with leases of resort operations equipment (including, without limitation, golf carts) in an amount not to exceed $750,000 and (ii) an increase in the amount of Indebtedness attributable to the convertible debt of Borrower arising solely from the recalculation of the amount of such debt under GAAP based on a change in the stock price of shares of Borrower (and not as a result of the issuance of new debt) shall not be considered an incurrence of Indebtedness for Borrowed Money hereunder.”

3.Representations and Warranties of Borrower.  Borrower represents, warrants and covenants to Lender that:

3.1Borrower knows of no Default or Event of Default under the terms and conditions of the Loan Documents.

3.2This Amendment constitutes a legal, valid and binding obligation of Borrower, enforceable against Borrower in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors’ rights generally.

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3.3The representations and warranties of Borrower set forth in Section 10 of the Credit Agreement are correct in all material respects as though made on and as of the date of this Amendment (provided, if a representation or warranty was made as of a specific date, such representation or warranty was true and correct in all material respects as of the date made).

3.4Except as disclosed to Lender in draft financial statements provided for the period ending December 31, 2008, since the date of the last financial statements delivered by Borrower to Lender, there has been no material adverse change in the business, assets, liabilities (actual or contingent), operations, condition (financial or otherwise) or prospects of Borrower and its Subsidiaries taken as a whole or in the facts and information regarding such entities as represented to Lender to date.

3.5There are no actions, suits, investigations or proceedings pending or to Borrower’s knowledge, threatened in any court or before any arbitrator or governmental authority that purport (x) to materially and adversely affect Borrower or any of its Subsidiaries, or (y) to affect any transaction contemplated hereby or the ability of Borrower to perform its obligations under the Loan Documents.

3.6Borrower is in material compliance with all laws, including satisfaction of all tax obligations prior to delinquency.

3.7Borrower is in compliance with all insurance requirements imposed upon Borrower under the Loan Documents.

3.8Borrower is in compliance with the negative covenants set forth in Section 12 of the Credit Agreement, as amended herein.

4.Representations and Warranties of Guarantors.  Each Guarantor by its signature below represents, warrants and covenants to Lender that:

4.1Such Guarantor knows of no Default or Event of Default under the terms and conditions of the Loan Documents.

4.2This Amendment constitutes a legal, valid and binding obligation of such Guarantor, enforceable against such Guarantor in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors’ rights generally.

4.3Since the date of the last financial statements delivered by Borrower to Lender, there has been no material adverse change in the business, assets, liabilities (actual or contingent), operations, condition (financial or otherwise) or prospects of such Guarantor taken as a whole or in the facts and information regarding such Guarantor as represented to Lender to date.

4.4There are no actions, suits, investigations or proceedings pending or to Borrower’s knowledge, threatened in any court or before any arbitrator or governmental authority that purport (x) to materially and adversely affect such Guarantor, or (y) to affect any transaction contemplated hereby or the ability of Guarantor to perform its obligations under the Loan Documents.

4.5Such Guarantor is in material compliance with all laws, including satisfaction of all tax obligations prior to delinquency.

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5.Continuing Validity.  Except as expressly modified or changed by this Amendment, the terms of the Credit Agreement, the Note and all other related loan documents remain unchanged and in full force and effect. Consent by Lender to the changes described herein does not waive Lender’s right to strict performance of the terms and conditions contained in the Credit Agreement, the Note and all other loan and security documents as amended, nor obligate Lender to make future changes in terms. Nothing in this Amendment will constitute a satisfaction of the indebtedness represented by the Note.

6.Release.  Borrower hereby releases, remises, acquits and forever discharges Lender and its employees, agents, representatives, consultants, attorneys, fiduciaries, officers, directors, partners, predecessors, successors and assigns, subsidiary corporations, parent corporations, and related corporate divisions (collectively, the “Released Parties”), from any and all actions and causes of action, judgments, executions, suits, debts, claims, demands, liabilities, obligations, damages and expenses of any and every character, known or unknown, direct and/or indirect, at law or in equity, of whatsoever kind or nature, for or because of any matter or things done, omitted or suffered to be done by any of the Released Parties prior to and including the date of delivery hereof, and in any way directly or indirectly arising out of or in any way connected to the Credit Agreement (collectively, the “Released Matters”).  Borrower acknowledges that the agreements in this Section are intended to be in full satisfaction of all or any alleged injuries or damages arising in connection with the Released Matters.

Without limiting the generality of the foregoing, Borrower hereby waives the provisions of any statute that prevents a general release from extending to claims unknown by the releasing party, including Section 1542 of the California Civil Code which provides:

A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.

By entering into this release, Borrower recognizes that no facts or representations are ever absolutely certain and Borrower may hereafter discover facts in addition to or different from those which Borrower presently knows or believes to be true, but that it is the intention of Borrower to hereby fully, finally and forever settle and release all matters, disputes and differences, known or unknown, suspected or unsuspected; accordingly, if Borrower should subsequently discover that any fact that Borrower relied upon in delivering this release was untrue, or that any understanding of the facts was incorrect, Borrower shall not be entitled to set aside this release by reason thereof, regardless of any claim of mistake of fact or law or any other circumstances whatsoever.  Borrower acknowledges that Borrower is not relying upon and has not relied upon any representation or statement made by Lender with respect to the facts underlying this release or with regard to Borrower’s rights or asserted rights.

This release may be pleaded as a full and complete defense and/ or as a cross-complaint or counterclaim against any action, suit, or other proceeding that may be instituted, prosecuted or attempted in breach of this release.  Borrower acknowledges that the release contained herein constitutes a material inducement to Lender to enter into this Amendment and that Lender would not have done so but for Lender’s expectation that such release is valid and enforceable in all events.

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7.Enforceability.  Borrower represents, warrants and acknowledges that it has had the opportunity to consult with independent counsel regarding the legal effects of this Amendment, and that it is executing this Amendment of its own free will and accord, for the purposes and considerations set forth herein.  Borrower hereby acknowledges that this Amendment is binding and enforceable against it in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, or similar laws relating to the enforcement of creditor’s rights generally and by general equitable principles.  Any law or regulation that provides that the language of a contract shall be construed against the drafter shall not apply to this Amendment.

8.Miscellaneous.

8.1Borrower acknowledges and agrees that the execution and delivery by the Lender of this Amendment shall not be deemed to create a course of dealing or an obligation to execute similar amendments or substitutions of collateral under the same or similar circumstances in the future.

8.2This Amendment shall be binding upon and inure to the benefit of the Borrower, and Lender and their respective successors and assigns.

8.3This Amendment shall be governed by and construed in accordance with the laws of the State of California.

8.4This Amendment contains the entire agreement of the parties hereto with reference to the matters discussed herein.

8.5If any term or provision of this Amendment shall be deemed prohibited or invalid under any applicable law, such provision shall be invalidated without affecting the remaining provisions of this Amendment, the Credit Agreement, the Note or any other Loan Documents or related documents.

8.6This Amendment may be executed in multiple counterparts, each of which shall be deemed to be an original and all of which when taken together shall constitute one and the same instrument.  The manual signature of any party hereto that is transmitted to any other party or its counsel by facsimile or electronic transmission shall be deemed for all purposes to be an original signature.

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IN WITNESS WHEREOF the parties have executed this Amendment on the date first above written.

THE UNDERSIGNED AGREE TO ALL THE TERMS AND CONDITIONS SET FORTH ABOVE.

BORROWER:

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

By:	/s/ Ryan L. Churchill
Name:	Ryan L. Churchill
Title:	Senior Vice President
By:	/s/ Adele H. Sumida
Name:	Adele H. Sumida
Title:	Controller & Secretary

LENDER:

AMERICAN AGCREDIT, FLCA

By:	/s/ Gary VanSchuyver
Name:	Gary VanSchuyver
Title:	Vice President

THE SIGNATURES OF GUARANTORS APPEAR ON THE FOLLOWING PAGE.

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GUARANTORS:

The undersigned Guarantors hereby consent to, ratify and approve the terms, covenants, conditions and provisions of the foregoing Amendment and agree that the guaranty(ies) executed by them shall be extended to include the obligations of the Borrower under the Credit Agreement as amended by this Amendment.

KAPALUA LAND COMPANY, LTD., a Hawaii corporation

By:	/s/ Ryan L. Churchill
Name:	Ryan L. Churchill
Title:	Senior Vice President
By:	/s/ Adele H. Sumida
Name:	Adele H. Sumida
Title:	Controller & Secretary

MAUI PINEAPPLE COMPANY, LTD., a Hawaii corporation

By:	/s/ Wesley M. Nohara
Name:	Wesley M. Nohara
Title:	Vice President
By:	/s/ Adele H. Sumida
Name:	Adele H. Sumida
Title:	Controller & Secretary

7

EX-10.41

Exhibit 10.41

Loan No. 105088

MODIFICATION AGREEMENT

Secured Loan

THIS MODIFICATION AGREEMENT (“Agreement”) dated November 7, 2008, is entered into by and among MAUI LAND & PINEAPPLE COMPANY, INC., a corporation formed under the laws of the State of Hawaii (“Borrower”), each of the financial institutions signatory to the Loan Agreement (as defined below) (“Lenders”), and WELLS FARGO BANK, NATIONAL ASSOCIATION (“Wells Fargo”) as Administrative Agent under the Loan Agreement (in such capacity, the “Administrative Agent”).

R E C I T A L S

A.Pursuant to the terms of a loan agreement between Borrower and Lender dated November 13, 2007 (“Loan Agreement”), Lenders made a loan to Borrower in the principal amount of NINETY MILLION AND NO/100THS DOLLARS ($90,000.000.00) (“Loan”). The Loan is evidenced by promissory notes dated as of the date of the Loan Agreement, executed by Borrower in favor of each Lender, in the aggregate principal amount of the Loan (“Note”), and is further evidenced by the documents described in the Loan Agreement as “Loan Documents.” The Note is secured by, among other things, a Fee and Leasehold Mortgage with Absolute Assignment of Leases and Rents, Security Agreement and Fixture Filing dated as of November 13, 2007, executed by Borrower and Leasehold Mortgagor (as defined in the Loan Agreement”), collectively as Mortgagor, and Administrative Agent, for the benefit of Lenders, as Mortgagee (“Mortgage”). The Mortgage was recorded on November 15, 2007, as Instrument or Document No. 2007-199589, in the Bureau of Conveyances of the State of Hawaii.

B.The Note, Mortgage, Loan Agreement, this Agreement, the other documents described in the Loan Agreement as “Loan Documents”, together with all modifications and amendments thereto and any document required hereunder, are collectively referred to herein as the “Loan Documents.”

C.By this Agreement, Borrower, Administrative Agent and Lenders intend to modify and amend certain terms and provisions of the Loan Documents.

NOW, THEREFORE, Borrower, Administrative Agent and Lenders agree as follows:

1.CONDITIONS PRECEDENT. The following are conditions precedent to Administrative Agent and Lenders’ obligations under this Agreement:

1.1If required by Administrative Agent, receipt and approval by Administrative Agent of a date down to the Title Policy (as defined in the Loan Agreement) and assurance acceptable to Administrative Agent, including, without limitation, CLTA Endorsement No. 110.5, without deletion or exception other than those expressly approved by Administrative Agent in writing, that the priority and validity of the Mortgage has not been and will not be impaired by this Agreement or the transactions contemplated hereby;

1.2Receipt by Administrative Agent of the executed originals of this Agreement, the short form of this Agreement (if any) and any and all other documents and agreements which are required by this Agreement or by any other Loan Document, each in form and content acceptable to Administrative Agent;

1.3If required by Administrative Agent, recordation in the Bureau of Conveyances of the State of Hawaii of (i) the short form of this Agreement (if any), and (ii) any other documents which are required to be recorded by this Agreement or by any other Loan Document (if any);

1.4Reimbursement to Administrative Agent by Borrower of Administrative Agent’s costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby, including, without limitation, title insurance costs, recording fees, attorneys’ fees, appraisal, engineers’ and inspection fees and documentation costs and charges, whether such services are furnished by Administrative Agent’s employees or agents or by independent contractors;

1.5The representations and warranties contained in this Agreement are true and correct; and

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1.6All payments due and owing to Administrative Agent and Lenders under the Loan Documents have been paid current as of the effective date of this Agreement.

2.REPRESENTATIONS AND WARRANTIES. Borrower hereby represents and warrants that no Default, breach or failure of condition has occurred, or would exist with notice or the lapse of time or both, under any of the Loan Documents (as modified by this Agreement) and that all representations and warranties herein and in the other Loan Documents are true and correct, which representations and warranties shall survive execution of this Agreement.

3.MODIFICATION OF LOAN DOCUMENTS. The Loan Documents are hereby supplemented and modified to incorporate the following, which shall supersede and prevail over any conflicting provisions of the Loan Documents:

3.1Section 2.14 of the Loan Agreement is modified to provide that the term “Extension Date,” as used therein with reference to the first extension of the Loan, shall mean February 13, 2009. The term “Extension Date,” as used in the Loan Agreement with reference to all subsequent extensions of the Loan, shall mean the date which is one (1) year prior to the Then Scheduled Maturity Date (as defined in the Loan Agreement).

4.FORMATION AND ORGANIZATIONAL DOCUMENTS. Borrower has previously delivered to Administrative Agent all of the relevant formation and organizational documents of Borrower, of the partners or joint venturers of Borrower (if any), and of all guarantors of the Loan (if any), and all such formation documents remain in full force and effect and have not been amended or modified since they were delivered to Administrative Agent. Borrower hereby certifies that: (i) the above documents are all of the relevant formation and organizational documents of Borrower; (ii) they remain in full force and effect; and (iii) they have not been amended or modified since they were previously delivered to Administrative Agent.

5.NON-IMPAIRMENT. Except as expressly provided herein, nothing in this Agreement shall alter or affect any provision, condition, or covenant contained in the Note or other Loan Document or affect or impair any rights, powers, or remedies of Administrative Agent or Lenders, it being the intent of the parties hereto that the provisions of the Note and other Loan Documents shall continue in full force and effect except as expressly modified hereby.

6.MISCELLANEOUS. The headings used in this Agreement are for convenience only and shall be disregarded in interpreting the substantive provisions of this Agreement. All capitalized terms used herein, which are not defined herein, shall have the meanings given to them in the other Loan Documents. Time is of the essence of each term of the Loan Documents, including this Agreement. If any provision of this Agreement or any of the other Loan Documents shall be determined by a court of competent jurisdiction to be invalid, illegal or unenforceable, that portion shall be deemed severed from this Agreement and the remaining parts shall remain in full force as though the invalid, illegal, or unenforceable portion had never been a part thereof.

7.INTEGRATION; INTERPRETATION. The Loan Documents, including this Agreement, contain or expressly incorporate by reference the entire agreement of the parties with respect to the matters contemplated therein and supersede all prior negotiations or agreements, written or oral. The Loan Documents shall not be modified except by written instrument executed by all parties. Any reference to the Loan Documents includes any amendments, renewals or extensions now or hereafter approved by Administrative Agent and Lenders in writing.

8.EXECUTION IN COUNTERPARTS. To facilitate execution, this document may be executed in as many counterparts as may be convenient or required. It shall not be necessary that the signature of, or on behalf of, each party, or that the signature of all persons required to bind any party, appear on each counterpart. All counterparts shall collectively constitute a single document. It shall not be necessary in making proof of this document to produce or account for more than a single counterpart containing the respective signatures of, or on behalf of, each of the parties hereto. Any signature page to any counterpart may be detached from such counterpart without impairing the legal effect of the signatures thereon and thereafter attached to another counterpart identical thereto except having attached to it additional signature pages.

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IN WITNESS WHEREOF, Borrower, Administrative Agent and Lenders have caused this Agreement to be duly executed as of the date first above written.

“ADMINISTRATIVE AGENT AND LENDER”
WELLS FARGO BANK, NATIONAL ASSOCIATION
By:	/s/ Guy Churchill
Name:	Guy Churchill
Title:	Vice President

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“LENDER”
AMERICAN SAVINGS BANK, F.S.B.
By:	/s/ William M. Russell
Name:	William M. Russell
Title:	Vice President

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“LENDER”
AMERICAN AGCREDIT, PCA
By:	/s/ Gary Van Schuyver
Name:	Gary Van Schuyver
Title:	Vice President

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“BORROWER”
MAUI LAND & PINEAPPLE COMPANY, INC., a Hawaii corporation
By:	/s/ Robert I. Webber
	Robert I. Webber, Chief Financial Officer
By:	/s/ Fred W. Rickert
	Fred W. Rickert, Vice President and Treasurer

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LEASEHOLD MORTGAGOR’S CONSENT

The undersigned (“Leasehold Mortgagor”) consents to the foregoing Modification Agreement and the transactions contemplated thereby and reaffirms its obligations under the Fee and Leasehold Mortgage with Absolute Assignment of Leases and Rents, Security Agreement and Fixture Filing (“Mortgage”) dated as of November 13, 2007, and its waivers, as set forth in the Mortgage, of each and every one of the possible defenses to such obligations. Leasehold Mortgagor further reaffirms that its obligations under the Mortgage are separate and distinct from Borrower’s obligations.

Dated as of: November 7, 2008

“LEASEHOLD MORTGAGOR”
KAPALUA LAND COMPANY, LTD., a Hawaii corporation
By:	/s/ Robert I. Webber
Name:	Robert I. Webber
Title:	Chief Financial Officer
By:	/s/ Fred W. Rickert
Name:	Fred W. Rickert
Title:	Vice President and Treasurer

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EX-10.42

Exhibit 10.42

Loan No. 105088

SECOND MODIFICATION AGREEMENT

Secured Loan

THIS SECOND MODIFICATION AGREEMENT (“Agreement”) dated as of March 3, 2009, is entered into by and among MAUI LAND & PINEAPPLE COMPANY, INC., a corporation formed under the laws of the State of Hawaii (“Borrower”), each of the financial institutions signatory to the Loan Agreement (as defined below) (“Lenders”), and WELLS FARGO BANK, NATIONAL ASSOCIATION (“Wells Fargo”) as Administrative Agent under the Loan Agreement (in such capacity, the “Administrative Agent”).

R E C I T A L S

A.Pursuant to the terms of a loan agreement between Borrower and Lender dated November 13, 2007 (“Loan Agreement”), Lenders made a loan to Borrower in the principal amount of NINETY MILLION AND NO/100THS DOLLARS ($90,000.000.00) (“Loan”). The Loan is evidenced by promissory notes dated as of the date of the Loan Agreement, executed by Borrower in favor of each Lender, in the aggregate principal amount of the Loan (“Note”), and is further evidenced by the documents described in the Loan Agreement as “Loan Documents.” The Note is secured by, among other things, a Fee and Leasehold Mortgage with Absolute Assignment of Leases and Rents, Security Agreement and Fixture Filing dated as of November 13, 2007, executed by Borrower and Leasehold Mortgagor, collectively as Mortgagor, and Administrative Agent, for the benefit of Lenders, as Mortgagee (“Mortgage”). The Mortgage was recorded on November 15, 2007, as Instrument or Document No. 2007-199589, in the Bureau of Conveyances of the State of Hawaii. All capitalized terms used herein, which are not defined herein, shall have the meanings given to them in the other Loan Documents.

B.The Note, Mortgage, Loan Agreement, this Agreement, the other documents described in the Loan Agreement as “Loan Documents”, together with all modifications and amendments thereto and any document required hereunder, are collectively referred to herein as the “Loan Documents.”

C.By this Agreement, Borrower, Administrative Agent and Lenders intend to modify and amend certain terms and provisions of the Loan Documents.

NOW, THEREFORE, Borrower, Administrative Agent and Lenders agree as follows:

1.CONDITIONS PRECEDENT. The following are conditions precedent to Administrative Agent and Lenders’ obligations under this Agreement:

1.1If required by Administrative Agent, receipt and approval by Administrative Agent of a date down to the Title Policy and assurance acceptable to Administrative Agent, including, without limitation, CLTA Endorsement No. 110.5, without deletion or exception other than those expressly approved by Administrative Agent in writing, that the priority and validity of the Mortgage has not been and will not be impaired by this Agreement or the transactions contemplated hereby;

1.2Receipt by Administrative Agent of the executed originals of this Agreement, the short form of this Agreement (if any) and any and all other documents and agreements which are required by this Agreement or by any other Loan Document, each in form and content acceptable to Administrative Agent;

1.3If required by Administrative Agent, recordation in the Bureau of Conveyances of the State of Hawaii of (i) the short form of this Agreement (if any), and (ii) any other documents which are required to be recorded by this Agreement or by any other Loan Document (if any);

1.4Reimbursement to Administrative Agent by Borrower of Administrative Agent’s costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby, including, without limitation, title insurance costs, recording fees, attorneys’ fees, appraisal, engineers’ and inspection fees and documentation costs and charges, whether such services are furnished by Administrative Agent’s employees or agents or by independent contractors;

1.5The representations and warranties contained in this Agreement are true and correct;

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1.6Borrower shall have paid to Administrative Agent (i) for the ratable benefit of Lenders a modification fee equal to 0.15% of the Credit Limit and (ii) for the sole benefit of Administrative Agent, certain other fees, each in the amount and at the times as set forth in a separate letter agreement between Borrower and Administrative Agent dated February 27, 2009; and

1.7All payments due and owing to Administrative Agent and Lenders under the Loan Documents have been paid current as of the effective date of this Agreement.

2.REPRESENTATIONS AND WARRANTIES. Borrower hereby represents and warrants that no Default, Potential Default, breach or failure of condition has occurred, or would exist with notice or the lapse of time or both, under any of the Loan Documents (as modified by this Agreement) and that all representations and warranties herein and in the other Loan Documents are true and correct, which representations and warranties shall survive execution of this Agreement.

3.MODIFICATION OF LOAN DOCUMENTS. The Loan Documents are hereby supplemented and modified to incorporate the following, which shall supersede and prevail over any conflicting provisions of the Loan Documents:

3.1Interest Rate. In order to reflect the agreement of the parties to modify the definition of “Applicable LIBO Rate” and “Variable Rate,”, such definitions are amended to read as follows:

“Applicable LIBO Rate” is the rate of interest, rounded upward to the nearest whole multiple of one-hundredth of one percent (.01%), equal to the sum of: (a) prior to May 1, 2009, one and one-half percent (1.50%), and from and after May 1, 2009, five percent (5.00%) plus (b) the LIBO Rate, which rate is divided by one (1.00) minus the Reserve Percentage:

Applicable LIBO Rate = 1.50% or 5.00% (as provided above)	+	LIBO Rate
		(1 - Reserve Percentage)

“Variable Rate” - on any day means a floating rate of interest per annum equal to the higher of (a) (i) prior to May 1, 2009, the Prime Rate then in effect and (ii) from and after May 1, 2009, four percent (4.00%) plus the Prime Rate then in effect or (b) (i) prior to May 1, 2009, the Federal Funds Rate then in effect as announced by the Federal Reserve Bank of New York plus one and one-half percent (1.50%) and (ii) from and after May 1, 2009, the Federal Funds Rate then in effect as announced by the Federal Reserve Bank of New York plus one and one-half percent (1.50%) plus four percent (4.00%).

3.2Recourse. To reflect the agreement of the parties that any limitation on recourse with respect to the Loan is to be hereby eliminated, Section 2.17 of the Loan Agreement and the defined term “Recourse Amount” are deleted in their entirety. The Borrower, the Administrative Agent and the Lenders confirm and agree that the Loan Documents are amended to provide no limitation on the Administrative Agent’s and Lenders’ recovery against Borrower under the Loan Documents.

3.3Remargin. Borrower acknowledges that one or more Appraisals are being prepared for the portion of the Property which remains subject to the Mortgage (the “Remaining Property”) for the purpose of confirming to the satisfaction of the Administrative Agent that the Credit Limit (whether disbursed or not) as a percentage of the as-is value of the Property does not exceed fifty percent (50%) (“Remargin Loan-to-Value Percentage”), based on the as-is appraisal value of the Remaining Property. In the event such appraised value is not adequate to meet the required Remargin Loan-to-Value Percentage, then Borrower shall pay down the outstanding principal balance of the Loan (to the extent necessary) and the Credit Limit shall be permanently reduced such that said Remargin Loan to-Value Percentage may be met. Any required repayment shall be made by Borrower on May 1, 2009, or such later date as Administrative Agent may specify in its sole discretion in the event that the Appraisals have not been finally prepared and reviewed by such date.

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3.4Financial Covenants.

(a)In order to reflect the agreement of the parties that failure by Borrower to comply with Section 7.12 (a) for the fiscal quarter ending on or about December 31, 2008, shall not constitute a Default, the first sentence of Section 7.12 (a) of the Loan Agreement is modified to read as follows: “Borrower shall, as of the end of each fiscal quarter of Borrower (except for the fiscal quarter ending on or about December 31, 2008), maintain a Net Worth of not less than $85,000,000.00.”

(b)In order to reflect the agreement of the parties that failure by Borrower to comply with Section 7.12 (d) for the fiscal year ending on or about December 31, 2008, shall not constitute a Default, Section 7.12 (d) of the Loan Agreement is modified to read as follows: “Borrower shall not permit the ratio of (i) net income of the Borrower plus interest expense and taxes of Borrower to (ii) interest expense of Borrower, in each case calculated in accordance with GAAP as of the end of each fiscal year for the fiscal year then ending (except for the fiscal year ending on or about December 31, 2008), to be less than 1.50 to 1.00.”

(c)Section 8.2(a) is hereby modified to provide that, notwithstanding anything to the contrary therein, Borrower shall deliver any compliance certificate with respect to the fiscal quarter ending on or about March 31, 2009, not later than April 30, 2009.

(d)Notwithstanding the subsequent execution and effectiveness as a whole of this Amendment, upon satisfaction of the conditions precedent set forth herein, the modifications contained in Section 3.4 (a) and 3.4 (b) shall be deemed to have become effective as of December 31, 2008.

3.5Extension Option. The Borrower hereby acknowledges that (i) the Maturity Date has not been extended under Section 2.14 of the Loan Agreement, (ii) Section 2.14 is of no further force and effect and the Lenders have no further option to extend the Loan, and (iii) the Maturity Date of the Loan is November 13, 2009 and is not subject to further extension.

4.FORMATION AND ORGANIZATIONAL DOCUMENTS. Borrower has previously delivered to Administrative Agent all of the relevant formation and organizational documents of Borrower, of the partners or joint venturers of Borrower (if any), and of all guarantors of the Loan (if any), and all such formation documents remain in full force and effect and have not been amended or modified since they were delivered to Administrative Agent. Borrower hereby certifies that: (i) the above documents are all of the relevant formation and organizational documents of Borrower; (ii) they remain in full force and effect; and (iii) they have not been amended or modified since they were previously delivered to Administrative Agent.

5.NON-IMPAIRMENT. Except as expressly provided herein, nothing in this Agreement shall alter or affect any provision, condition, or covenant contained in the Note or other Loan Document or affect or impair any rights, powers, or remedies of Administrative Agent or Lenders, it being the intent of the parties hereto that the provisions of the Note and other Loan Documents shall continue in full force and effect except as expressly modified hereby.

6.MISCELLANEOUS. The headings used in this Agreement are for convenience only and shall be disregarded in interpreting the substantive provisions of this Agreement. Time is of the essence of each term of the Loan Documents, including this Agreement. If any provision of this Agreement or any of the other Loan Documents shall be determined by a court of competent jurisdiction to be invalid, illegal or unenforceable, that portion shall be deemed severed from this Agreement and the remaining parts shall remain in full force as though the invalid, illegal, or unenforceable portion had never been a part thereof.

7.INTEGRATION; INTERPRETATION. The Loan Documents, including this Agreement, contain or expressly incorporate by reference the entire agreement of the parties with respect to the matters contemplated therein and supersede all prior negotiations or agreements, written or oral. The Loan Documents shall not be modified except by written instrument executed by all parties. Any reference to the Loan Documents includes any amendments, renewals or extensions now or hereafter approved by Administrative Agent and Lenders in writing.

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8.EXECUTION IN COUNTERPARTS. To facilitate execution, this document may be executed in as many counterparts as may be convenient or required. It shall not be necessary that the signature of, or on behalf of, each party, or that the signature of all persons required to bind any party, appear on each counterpart. All counterparts shall collectively constitute a single document. It shall not be necessary in making proof of this document to produce or account for more than a single counterpart containing the respective signatures of, or on behalf of, each of the parties hereto. Any signature page to any counterpart may be detached from such counterpart without impairing the legal effect of the signatures thereon and thereafter attached to another counterpart identical thereto except having attached to it additional signature pages.

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IN WITNESS WHEREOF, Borrower, Administrative Agent and Lenders have caused this Agreement to be duly executed as of the date first above written.

“ADMINISTRATIVE AGENT AND LENDER”
WELLS FARGO BANK, NATIONAL ASSOCIATION
By:	/s/ Guy Churchill
Name:	Guy Churchill
Title:	Vice President

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“LENDER”
AMERICAN SAVINGS BANK, F.S.B.
By:	/s/ William M. Russell
Name:	William M. Russell
Title:	Vice President

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“LENDER”
AMERICAN AGCREDIT, PCA
By:	/s/ Gary Van Schuyver
Name:	Gary Van Schuyver
Title:	Vice President

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“BORROWER”
MAUI LAND & PINEAPPLE COMPANY, INC.,
a Hawaii corporation
By:	/s/ Robert I. Webber
Name:	Robert I. Webber
Title:	President & CEO
By:	/s/ Adele H. Sumida
Name:	Adele H. Sumida
Title:	Controller & Secretary

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LEASEHOLD MORTGAGOR’S CONSENT

The undersigned (“Leasehold Mortgagor”) consents to the foregoing Second Modification Agreement and the transactions contemplated thereby and reaffirms its obligations under the Fee and Leasehold Mortgage with Absolute Assignment of Leases and Rents, Security Agreement and Fixture Filing (“Mortgage”) dated as of November 13, 2007, and its waivers, as set forth in the Mortgage, of each and every one of the possible defenses to such obligations. Leasehold Mortgagor further reaffirms that its obligations under the Mortgage are separate and distinct from Borrower’s obligations.

Dated as of: March 3, 2009

“LEASEHOLD MORTGAGOR”
KAPALUA LAND COMPANY, LTD.,
a Hawaii corporation
By:	/s/ Robert I. Webber
Name:	Robert I. Webber
Title:	CFO & EVP
By:	/s/ Adele H. Sumida
Name:	Adele H. Sumida
Title:	Controller & Secretary

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EX-10.43

Exhibit 10.43

Loan No. 105088

THIRD MODIFICATION AGREEMENT

Secured Loan

THIS THIRD MODIFICATION AGREEMENT (“Agreement”) dated as of March 27, 2009, is entered into by and among MAUI LAND & PINEAPPLE COMPANY, INC., a corporation formed under the laws of the State of Hawaii (“Borrower”), each of the financial institutions signatory to the Loan Agreement (as defined below) (“Lenders”), and WELLS FARGO BANK, NATIONAL ASSOCIATION (“Wells Fargo”) as Administrative Agent under the Loan Agreement (in such capacity, the “Administrative Agent”).

R E C I T A L S

A.Pursuant to the terms of a loan agreement between Borrower and Lender dated November 13, 2007 (“Loan Agreement”), Lenders made a loan to Borrower in the principal amount of NINETY MILLION AND NO/100THS DOLLARS ($90,000.000.00) (“Loan”). The Loan is evidenced by promissory notes dated as of the date of the Loan Agreement, executed by Borrower in favor of each Lender, in the aggregate principal amount of the Loan (“Note”), and is further evidenced by the documents described in the Loan Agreement as “Loan Documents.” The Note is secured by, among other things, a Fee and Leasehold Mortgage with Absolute Assignment of Leases and Rents, Security Agreement and Fixture Filing dated as of November 13, 2007, executed by Borrower and Leasehold Mortgagor, collectively as Mortgagor, and Administrative Agent, for the benefit of Lenders, as Mortgagee (“Mortgage”). The Mortgage was recorded on November 15, 2007, as Instrument or Document No. 2007-199589, in the Bureau of Conveyances of the State of Hawaii.  All capitalized terms used herein, which are not defined herein, shall have the meanings given to them in the other Loan Documents.

B.The Note, Deed of Trust and Loan Agreement have been previously amended and modified by modification agreements dated November 7, 2008 and March 3, 2009.

C.The Note, Mortgage, Loan Agreement, this Agreement, the other documents described in the Loan Agreement as “Loan Documents”, together with all modifications and amendments thereto and any document required hereunder, are collectively referred to herein as the “Loan Documents.”

D.By this Agreement, Borrower, Administrative Agent and Lenders intend to modify and amend certain terms and provisions of the Loan Documents.

NOW, THEREFORE, Borrower, Administrative Agent and Lenders agree as follows:

1.CONDITIONS PRECEDENT. The following are conditions precedent to Administrative Agent and Lenders’ obligations under this Agreement:

1.1If required by Administrative Agent, receipt and approval by Administrative Agent of a date down to the Title Policy and assurance acceptable to Administrative Agent, including, without limitation, CLTA Endorsement No. 110.5, without deletion or exception other than those expressly approved by Administrative Agent in writing, that the priority and validity of the Mortgage has not been and will not be impaired by this Agreement or the transactions contemplated hereby;

1.2Receipt by Administrative Agent of the executed originals of this Agreement, the short form of this Agreement (if any) and any and all other documents and agreements which are required by this Agreement or by any other Loan Document, each in form and content acceptable to Administrative Agent;

1.3If required by Administrative Agent, recordation in the Bureau of Conveyances of the State of Hawaii of (i) the short form of this Agreement (if any), and (ii) any other documents which are required to be recorded by this Agreement or by any other Loan Document (if any);

1.4Reimbursement to Administrative Agent by Borrower of Administrative Agent’s costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby, including, without limitation, title insurance costs, recording fees, attorneys’ fees, appraisal, engineers’ and inspection fees and

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documentation costs and charges, whether such services are furnished by Administrative Agent’s employees or agents or by independent contractors;

1.5The representations and warranties contained in this Agreement are true and correct;

1.6Borrower shall have paid to Administrative Agent (i) for the ratable benefit of Lenders a modification fee equal to 0.20% of the Credit Limit (after reduction by the amount of the Plantation Golf Course Release Price) and (ii) for the sole benefit of Administrative Agent, certain other fees, each in the amount and at the times as set forth in a separate letter agreement between Borrower and Administrative Agent dated March 19, 2009;

1.7All conditions precedent to the Plantation Golf Course Release (as defined, and as such conditions are set forth, in Section 3.2 below) have been satisfied; and

1.8All payments due and owing to Administrative Agent and Lenders under the Loan Documents have been paid current as of the effective date of this Agreement.

2.REPRESENTATIONS AND WARRANTIES.  Borrower hereby represents and warrants that no Default, Potential Default, breach or failure of condition has occurred, or would exist with notice or the lapse of time or both, under any of the Loan Documents (as modified by this Agreement) and that all representations and warranties herein and in the other Loan Documents are true and correct, which representations and warranties shall survive execution of this Agreement.

3.MODIFICATION OF LOAN DOCUMENTS.  The Loan Documents are hereby supplemented and modified to incorporate the following, which shall supersede and prevail over any conflicting provisions of the Loan Documents:

3.1Interest Rate.  In order to reflect the agreement of the parties to modify the definition of “Applicable LIBO Rate,” “Indebtedness” and “Variable Rate,” and to add definitions of “LIBOR Market Index Rate,” “Restricted Payments” and “Disposition,” such definitions are amended or added to read as follows, with changes in the Effective Rate applicable under the Loan to be effective as of April 1, 2009:

“Applicable LIBO Rate” is the rate of interest, rounded upward to the nearest whole multiple of one-hundredth of one percent (.01%), equal to the sum of: (a) four and one-quarter percent (4.25%) plus (b) the LIBO Rate, which rate is divided by one (1.00) minus the Reserve Percentage:

Applicable LIBO Rate = 4.25%	+	LIBO Rate
		(1 - Reserve Percentage)

“Disposition” means the sale, transfer, license, lease or other disposition (including any sale and leaseback transaction) of any property by any Person, including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith.

“Indebtedness” means, as to any Person at a particular time, without duplication, all items of indebtedness which, in accordance with GAAP and industry practices, would be included in determining liabilities as shown on the liability side of a balance sheet of such Person as of the date as of which indebtedness is to be determined, including, without limitation, all obligations for money borrowed and capitalized lease obligations, and shall also include all indebtedness and liabilities of any other Person assumed or guaranteed by such Person or in respect of which such Person is secondarily or contingently liable (other than by endorsement of instruments in the course of collection) whether by reason of any agreement to acquire such indebtedness or to supply or advance sums or otherwise.

 “LIBOR Market Index Rate” means at any time the rate of interest, rounded up to the nearest whole multiple of one-hundredth of one percent (.01%), obtained by dividing (i) the rate of interest, rounded upward to the nearest whole multiple of one-sixteenth of one percent (0.0625%), quoted by the Administrative Agent from time to time as the London Inter-Bank Rate for one-month deposits in U.S. Dollars at approximately 9:00 a.m. Pacific time for such day; provided, if such day is not a Business Day, the immediately preceding Business Day by (ii) a percentage equal to 1 minus the stated maximum rate (stated as a decimal) of all reserves, if any, required to be maintained with respect to Eurocurrency funding (currently referred to as “Eurocurrency liabilities”) as specified in Regulation D of the Board of Governors, of the Federal Reserve System (or against any other category of liabilities which includes deposits by reference to which the interest rate on LIBOR loans is determined or any applicable category of extensions of credit or other assets which includes loans by

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an office of any Lender outside of the United States of America).  Any change in such maximum rate shall result in a change in the LIBOR Market Index Rate on the date on which such change in such maximum rate becomes effective.

“Restricted Payment” means any dividend or other distribution (whether in cash, securities or other property) with respect to any capital stock or other equity interest of Borrower or any Subsidiary, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such capital stock or other equity interest or of any option, warrant or other right to acquire any such capital stock or other equity interest.

“Variable Rate” shall mean the sum of: (a) the LIBOR Market Index Rate and, (b) four and one-quarter percent (4.25%); provided, that if for any reason the LIBOR Market Index Rate is unavailable, Variable Rate shall mean the sum of: (a) the Federal Funds plus 1.50% and (b) four and one-quarter percent (4.25%).

3.2Plantation Golf Course Release.  Administrative Agent shall, at Borrower’s request, release from the lien of the Mortgage (the “Plantation Golf Course Release”) the property described on Exhibit A attached hereto (the “Plantation Golf Course”); provided, however, that immediately prior to or simultaneously with such partial release all of the following conditions shall be satisfied:

(a)No Default shall exist under the Loan Documents, or would exist with notice or passage of time, or both;

(b)Administrative Agent shall have received any and all sums then due and owing under the Loan Documents together with all escrow, closing and recording costs, the costs of preparing and delivering such partial release and the cost of any title insurance endorsements required by Administrative Agent, including, without limitation, a CLTA and 111 endorsement;

(c)Administrative Agent shall have received evidence reasonably satisfactory to Administrative Agent that:  (i) the portion of the Property to be reconveyed and the portion of the Property which shall remain encumbered by the Mortgage are each legal parcels lawfully created in compliance with all subdivision laws and ordinances and, at Borrower’s sole cost, Administrative Agent shall have received any title insurance endorsements to that effect requested by Administrative Agent; and (ii) that the portion of the Property which shall remain encumbered by the Mortgage have the benefit of all utilities, easements, public and/or private streets, covenants, conditions and restrictions as may be necessary, in Administrative Agent’s reasonable judgment, for the anticipated development and improvement thereof;

(d)Administrative Agent shall have received evidence reasonably satisfactory to Administrative Agent that any tax, bond or assessment which constitutes a lien against the Property has been properly allocated between the portion of the Property to be reconveyed and the portion of the Property which shall remain encumbered by the Mortgage; and

(e)Administrative Agent shall have received in immediately available funds for the ratable benefit of the Lenders the Plantation Golf Course Release Price.  As used herein, the “Plantation Golf Course Release Price” shall mean the sum of $45,000,000.00.  The Plantation Golf Course Release Price shall be applied for the ratable benefit of the Lenders to reduce outstanding principal under the Loan and the Credit Limit shall be permanently reduced by the amount of the Plantation Golf Course Release Price.

Neither the acceptance of any payment nor the issuance of any partial release by Administrative Agent shall affect Borrower’s obligation to repay all amounts owing under the Loan Documents or under the lien of the Mortgage on the remainder of the Property which is not reconveyed.

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3.3Financial Covenants.  In order to reflect the agreement of the parties to modify the financial covenants provided in the Loan Agreement, Section 7.12 is amended to read in its entirety as follows:

7.12FINANCIAL COVENANTS.

(a)Reserved.

(b)Liquidity.  Borrower shall maintain, as of the end of each calendar quarter, Liquidity of not less than $10,000,000.  As used herein, “Liquidity” shall mean the sum of (i) cash, (ii) cash equivalents, (iii) publicly traded and publicly quoted marketable securities acceptable to Administrative Agent in its reasonable discretion, (iv) undisbursed commitment under secured lines of credit available to Borrower including, without limitation, under this Loan, and (v) the amount, if any, not to exceed $2,000,000, by which accounts receivable of the Borrower exceed accounts payable of the Borrower, net, in connection with any of the foregoing, of any encumbrance, setoff or claim and minus any unsecured Indebtedness of Borrower.

(c)Indebtedness.  Borrower shall not and shall not permit any Subsidiary to create, incur, assume or suffer to exist any Indebtedness, except for Indebtedness disclosed on the consolidated balance sheet of Borrower and its Subsidiaries dated as of December 31, 2008; provided, however, that (i) Indebtedness incurred in connection with leases of golf carts and (ii) an increase in the amount of Indebtedness attributable to convertible debt of the Borrower arising solely from the recalculation of the amount of such debt under GAAP based on a change in the stock price of shares of the Borrower (and not as a result of issuance of new debt) shall not be considered an incurrence of Indebtedness hereunder.

(d)Reserved.

(e)Restricted Payments.  Borrower shall not, and shall not permit any Subsidiary to, declare or make, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or otherwise) to do so.

(f)Dispositions.  Borrower shall not, and shall not permit any Subsidiary to, make any Disposition or enter into any agreement to make any Disposition, except:

(i)Dispositions of obsolete or worn out property, whether now owned or hereafter acquired, in the ordinary course of business;

(ii)Dispositions of inventory in the ordinary course of business; and

(iii)Dispositions approved in writing by the Administrative Agent in its sole discretion.

3.4Extension.  The Maturity Date is hereby extended to March 13, 2010;

3.5Fixed Rate Period.  Notwithstanding anything to the contrary in the Loan Documents, a two (2) month Fixed Rate Period will no longer be available and the definition of “Fixed Rate Period” and Exhibit F to the Loan Agreement are hereby modified to delete any reference to a Fixed Rate Period of two (2) months.

4.WAIVER.  Lenders hereby waive (the “Waiver”) until June 30, 2009, any Default arising under Section 8.1(a)(ii) of the Loan Agreement arising solely by virtue of the subjection of the report and opinion of the auditors of the Borrower for the fiscal year ending on or about December 31, 2008, to a “going concern” or like qualification (the “Waived Default”).  Borrower understands, acknowledges and agrees (a) that the Waiver is limited to the specific Default described above and that the Lenders have not waived any other Defaults or Potential Defaults, (b) that the effective period of the Waiver will expire automatically and without notice immediately upon the earlier of the date designated above or the occurrence of any other Default or Potential Default and, upon such expiration, Administrative Agent and Lenders shall have all rights and remedies provided under the Loan Documents and applicable law with respect to the Waived Default; and (c) Lenders have not agreed to extend the duration of the Waiver granted herein beyond the date designated above or to grant any additional waivers of, or forbear with respect to, any other Default.

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5.LENDER CONSENT.  Each Lender hereby consents to the transactions contemplated hereby and authorizes the Administrative Agent to execute and deliver all documents which are necessary and desirable to accomplish same or as otherwise contemplated under the sale, purchase and escrow agreement relating to the sale of the Plantation Golf Course including, without limitation, a partial release of mortgage, amendment to UCC financing statement, a consent to and nondisturbance and attornment agreement relating to a maintenance facilities easement being granted over the Collateral in favor of the purchaser of the Plantation Golf Course, an amendment to Water Delivery Agreement, a right of first offer in favor of the purchaser of the portion of the Property more commonly known as the Bay Golf Course,  and a consent to an agreement regarding Kapalua Club.

6.FORMATION AND ORGANIZATIONAL DOCUMENTS.  Borrower has previously delivered to Administrative Agent all of the relevant formation and organizational documents of Borrower, of the partners or joint venturers of Borrower (if any), and of all guarantors of the Loan (if any), and all such formation documents remain in full force and effect and have not been amended or modified since they were delivered to Administrative Agent. Borrower hereby certifies that: (i) the above documents are all of the relevant formation and organizational documents of Borrower; (ii) they remain in full force and effect; and (iii) they have not been amended or modified since they were previously delivered to Administrative Agent.

7.NON-IMPAIRMENT.  Except as expressly provided herein, nothing in this Agreement shall alter or affect any provision, condition, or covenant contained in the Note or other Loan Document or affect or impair any rights, powers, or remedies of Administrative Agent or Lenders, it being the intent of the parties hereto that the provisions of the Note and other Loan Documents shall continue in full force and effect except as expressly modified hereby.

8.MISCELLANEOUS.  The headings used in this Agreement are for convenience only and shall be disregarded in interpreting the substantive provisions of this Agreement.  Time is of the essence of each term of the Loan Documents, including this Agreement. If any provision of this Agreement or any of the other Loan Documents shall be determined by a court of competent jurisdiction to be invalid, illegal or unenforceable, that portion shall be deemed severed from this Agreement and the remaining parts shall remain in full force as though the invalid, illegal, or unenforceable portion had never been a part thereof.

9.INTEGRATION; INTERPRETATION. The Loan Documents, including this Agreement, contain or expressly incorporate by reference the entire agreement of the parties with respect to the matters contemplated therein and supersede all prior negotiations or agreements, written or oral. The Loan Documents shall not be modified except by written instrument executed by all parties. Any reference to the Loan Documents includes any amendments, renewals or extensions now or hereafter approved by Administrative Agent and Lenders in writing.

10.EXECUTION IN COUNTERPARTS. To facilitate execution, this document may be executed in as many counterparts as may be convenient or required. It shall not be necessary that the signature of, or on behalf of, each party, or that the signature of all persons required to bind any party, appear on each counterpart.  All counterparts shall collectively constitute a single document.  It shall not be necessary in making proof of this document to produce or account for more than a single counterpart containing the respective signatures of, or on behalf of, each of the parties hereto. Any signature page to any counterpart may be detached from such counterpart without impairing the legal effect of the signatures thereon and thereafter attached to another counterpart identical thereto except having attached to it additional signature pages.

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IN WITNESS WHEREOF, Borrower, Administrative Agent and Lenders have caused this Agreement to be duly executed as of the date first above written.

“ADMINISTRATIVE AGENT AND LENDER”
WELLS FARGO BANK, NATIONAL ASSOCIATION
By:	/s/ Guy Churchill
Name:	Guy Churchill
Title:	Vice President

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“LENDER”
AMERICAN SAVINGS BANK, F.S.B.
By:	/s/ William Russell
Name:	William Russell
Title:	Vice President

7

“LENDER”
AMERICAN AGCREDIT, PCA
By:	/s/ Gary Van Schuyver
Name:	Gary Van Schuyver
Title:	Vice President

8

“BORROWER”
MAUI LAND & PINEAPPLE COMPANY, INC., a Hawaii corporation
By:	/s/ Warren H. Haruki
Name:	Warren H. Haruki
Title:	Chairman
By:	/s/ Adele H. Sumida
Name:	Adele H. Sumida
Title:	Controller & Secretary

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LEASEHOLD MORTGAGOR’S CONSENT

The undersigned (“Leasehold Mortgagor”) consents to the foregoing Third Modification Agreement and the transactions contemplated thereby and reaffirms its obligations under the Fee and Leasehold Mortgage with Absolute Assignment of Leases and Rents, Security Agreement and Fixture Filing (“Mortgage”) dated as of November 13, 2007, and its waivers, as set forth in the Mortgage, of each and every one of the possible defenses to such obligations. Leasehold Mortgagor further reaffirms that its obligations under the Mortgage are separate and distinct from Borrower’s obligations.

Dated as of:  March 25, 2009

“LEASEHOLD MORTGAGOR”
KAPALUA LAND COMPANY, LTD.,
a Hawaii corporation
By:	/s/ Thomas J. Selby
Name:	Thomas J. Selby
Title:	Vice President
By:	/s/ Adele H. Sumida
Name:	Adele H. Sumida
Title:	Controller & Secretary

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EX-10.55

Exhibit 10.55

Execution Version

AMENDED AND RESTATED CONSTRUCTION LOAN AGREEMENT

for loans in the aggregate amount of up to

$354,455,968.31

MADE BY AND AMONG

KAPALUA BAY, LLC,
a Delaware limited liability company,
as Borrower,

CENTRAL PACIFIC BANK,
as Agent

and

THE LENDERS PARTY HERETO,
as Lenders

Dated as of February 11, 2009

“Residences at Kapalua Bay”

TABLE OF CONTENTS

		Page
ARTICLE I	INCORPORATION OF RECITALS AND EXHIBITS	3
Section 1.1	Incorporation of Recitals.	3
Section 1.2	Incorporation of Exhibits.	3
ARTICLE II	DEFINITIONS	3
Section 2.1	Defined Terms.	3
Section 2.2	Rules of Construction.	31
ARTICLE III	REPRESENTATIONS AND WARRANTIES	32
Section 3.1	Representations and Warranties of Borrower.	32
Section 3.2	Survival of Representations and Warranties.	38
Section 3.3	Representations and Warranties of Lenders.	38
ARTICLE IV	EXCHANGE OF NOTES; LOANS AND LOAN DOCUMENTS	40
Section 4.1	Exchange of Existing Notes.	40
Section 4.2	Facility A Loans; Facility A Lenders’ Obligation to Disburse; Reduction of Facility A Commitment.	40
Section 4.3	Facility B-1 Loans.	42
Section 4.4	Facility B-2 Loans.	42
Section 4.5	Facility C-1 Loans.	42
Section 4.6	Facility C-2 Loans.	42
Section 4.7	Closing Documents.	42
Section 4.8	Term of the Loans.	43
Section 4.9	Prepayments.	43

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Section 4.10	Required Principal Payments.	43
Section 4.11	Payments Generally.	44
ARTICLE V	INTEREST	45
Section 5.1	Interest Rate.	45
ARTICLE VI	COSTS OF MAINTAINING LOAN	47
Section 6.1	Increased Costs and Capital Adequacy.	47
ARTICLE VII	LOAN EXPENSE AND ADVANCES TO CURE DEFAULTS	48
Section 7.1	Loan and Administration Expenses.	48
Section 7.2	Brokerage Fees.	49
Section 7.3	Right of Lenders to Make Advances to Cure Borrower’s Defaults.	49
ARTICLE VIII	CONDITIONS PRECEDENT TO THE MAKING OF THE LOAN	49
Section 8.1	Non-Construction Conditions Precedent.	49
ARTICLE IX	CONSTRUCTION CONDITIONS PRECEDENT FOR SUBSEQUENT ADVANCES UNDER THE FACILITY A COMMITMENT	54
Section 9.1	Required Construction Documents.	54
ARTICLE X	CONSTRUCTION BUDGET; RESERVES; OPERATING BUDGET	55
Section 10.1	Construction Budget.	55
Section 10.2	Budget Line Items.	56
Section 10.3	Contingency Reserve.	56
Section 10.4	Interest Reserve and Facility A Loans to Pay Interest.	57
Section 10.5	Tax and Insurance Reserve.	57

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ARTICLE XI	SUFFICIENCY OF LOANS	57
Section 11.1	Loans In Balance.	57
ARTICLE XII	CONSTRUCTION PAYOUT REQUIREMENTS	58
Section 12.1	Documents to be Furnished for Each Disbursement.	58
Section 12.2	Retainage.	59
Section 12.3	Disbursements for Stored Materials.	59
ARTICLE XIII	FINAL DISBURSEMENT FOR CONSTRUCTION COSTS; EXPENSE RESERVE	60
Section 13.1	Final Disbursement for Construction Costs.	60
Section 13.2	Retainage.	61
Section 13.3	Expense Reserve.	62
ARTICLE XIV	CONDOMINIUM COVENANTS	63
Section 14.1	Contracts of Sale.	63
Section 14.2	Residential Condominium.	64
Section 14.3	Fractional Ownership Units.	65
Section 14.4	Releases of Entire Units and Fractional Ownership Interests.	67
Section 14.5	Releases of Facilities.	71
Section 14.6	Breakage Costs.	72
Section 14.7	Indemnification.	72
Section 14.8	Expenses.	73
Section 14.9	Establishment of Condominium Release Payment Account.	73
ARTICLE XV	COVENANTS	73
Section 15.1	Certain Covenants.	73

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Section 15.2	Insurance.	81
Section 15.3	Special Purpose Covenants.	84
ARTICLE XVI	CASUALTY AND CONDEMNATION	87
Section 16.1	Election to Apply Proceeds to the Debt.	87
Section 16.2	Borrower’s Obligation to Rebuild.	87
ARTICLE XVII	TRANSFERS AND ASSIGNMENTS AND PARTICIPATIONS	88
Section 17.1	Prohibition of Assignments and Transfers by Borrower.	88
Section 17.2	Prohibition of Transfers in Violation of ERISA.	89
Section 17.3	Successors and Assigns.	90
Section 17.4	Lender Assignments and Participations.	90
Section 17.5	Not a Security.	92
ARTICLE XVIII	SERVICER	92
Section 18.1	Servicer.	92
Section 18.2	Servicer and Agent Fees.	92
ARTICLE XIX	EVENTS OF DEFAULT	93
Section 19.1	Events of Default.	93
ARTICLE XX	LENDER’S REMEDIES IN EVENT OF DEFAULT	96
Section 20.1	Remedies Conferred Upon Lender.	96
ARTICLE XXI	INTERCREDITOR ARRANGEMENTS AND APPLICATION OF FUNDS	97
Section 21.1	Application of Funds Other than Interest Payments.	97
Section 21.2	Application of Interest Payments.	99
Section 21.3	Prohibition on Contest or Interference.	100

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Section 21.4	Direction to the Agent to Enforce.	101
Section 21.5	Bankruptcy Proceedings.	101
Section 21.6	Other Rights as Creditors	104
Section 21.7	Payment Over to the Agent.	104
Section 21.8	No Duty to Subordinate Lenders.	104
Section 21.9	Certain Waivers by Subordinate Lenders.	105
Section 21.10	Certain Rights of Subordinate Lenders.	106
Section 21.11	Obligations Unconditional.	106
Section 21.12	Actions Upon Breach.	106
Section 21.13	Purchase Right.	107
ARTICLE XXII	AGENCY	107
Section 22.1	Appointment and Authority.	107
Section 22.2	Rights as a Lender.	108
Section 22.3	Exculpatory Provisions.	109
Section 22.4	Reliance by Agent.	110
Section 22.5	Delegation of Duties.	110
Section 22.6	Resignation of Agent.	110
Section 22.7	Removal of Agent.	111
Section 22.8	Non-Reliance on Agent and Other Lenders.	111
Section 22.9	Indemnification of Agent.	111
Section 22.10	Delivery of Notices to Lenders.	112
Section 22.11	Borrower’s Dealings With Agent.	112
ARTICLE XXIII	GENERAL PROVISIONS	113
Section 23.1	Captions.	113

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Section 23.2	Modification; Waiver.	113
Section 23.3	Governing Law.	115
Section 23.4	Acquiescence Not to Constitute Waiver of Lenders’ Requirements.	115
Section 23.5	Disclaimer by Lenders and the Agent.	115
Section 23.6	Partial Invalidity; Severability.	116
Section 23.7	Definitions Include Amendments.	116
Section 23.8	Execution in Counterparts.	117
Section 23.9	Entire Agreement; Replacing Original Construction Loan Agreement.	117
Section 23.10	Waiver of Damages.	117
Section 23.11	Jurisdiction.	117
Section 23.12	Set-Offs; Adjustments.	118
Section 23.13	Authorized Representative.	119
Section 23.14	Non-Recourse Provisions.	119
Section 23.15	Sole Discretion of Lenders and Agent and Deemed Consent.	119
Section 23.16	Conflict; Construction of Documents: Reliance.	120
Section 23.17	Defaulting Lender.	120
Section 23.18	Waiver of Lender Defaults.	122
Section 23.19	USA PATRIOT Act Notice.	122
Section 23.20	Time is of the Essence.	122
Section 23.21	Replacement of Certain Lenders.	122
Section 23.22	Termination of Co-Lending Agreement.	123
Section 23.23	No Merger of Interest.	123
Section 23.24	LBHI’s Consent to Amendment to Borrower’s Limited Liability Company Agreement.	124
Section 23.25	Draw #29.	124

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ARTICLE XXIV	NOTICES	124
ARTICLE XXV	WAIVER OF JURY TRIAL	125

EXHIBITS AND SCHEDULES TO LOAN AGREEMENT

Exhibit A-1	Legal Description of Development Land
Exhibit A-2	Legal Description of Spa Land
Exhibit B	Entitlements
Exhibit C	Permitted Exceptions
Exhibit D	Form of Requisitions
Exhibit E	Existing Plans and Specifications
Exhibit F	Borrower Ownership Structure Chart
Exhibit G	Construction Budget
Exhibit H	Construction Schedule
Exhibit I	Form of Architect’s Certificate
Exhibit J	Form of Assignment and Assumption Agreement
Exhibit K-1	Form of Facility A Note
Exhibit K-2	Form of Facility B-1 Note
Exhibit K-3	Form of Facility B-2 Note
Exhibit K-4	Form of Facility C-1 Note
Exhibit K-5	Form of Facility C-2 Note
Exhibit L	Permitted Managers
Exhibit M	Qualified Transferee
Schedule A	Release Prices
Schedule B	Agreements with Affiliates
Schedule C	Leases
Schedule D	Lenders, Commitments, Initial Restructuring Funding Date Loan Amounts and Outstanding Notes
Schedule E	Loan Documents
Schedule F	Initial Restructuring Loan and Use of Proceeds
Schedule G	Notices to Lenders

vii

AMENDED AND RESTATED CONSTRUCTION LOAN AGREEMENT

Project commonly known as

“Residences at Kapalua Bay”

THIS AMENDED AND RESTATED CONSTRUCTION LOAN AGREEMENT (this “Agreement”) is made as of February 11, 2009, by and among KAPALUA BAY, LLC (the “Borrower”), CENTRAL PACIFIC BANK, in its capacity as agent for the Lenders (the “Agent”), and the lenders party hereto (the “Lenders”).

RECITALS

A.Borrower is the fee owner of that certain tract of land located in Lahaina, Maui, Hawaii, and being more fully described in Exhibit A-1 attached hereto (the “Development Land”).

B.Borrower is the owner of a leasehold interest in that certain tract of land located in Lahaina, Maui, Hawaii, and being more fully described in Exhibit A-2 attached hereto (the “Spa Land”; and collectively with the Development Land, the “Land”).

C.Borrower is developing a residential development on the Development Land and has submitted the Development Land to a condominium property and fractional ownership regime which includes for-sale Residential Condominium Units and Fractional Ownership Units.  The Spa Land is being developed as a Spa for the benefit of the guests and residents of the Project.  (The Land, the Spa and the other Improvements and the Personal Property (each as hereinafter defined) located thereon are collectively sometimes referred to as the “Project”).

D.Lehman Brothers Holdings Inc., a Delaware corporation (“LBHI”), as lender, and Borrower, as borrower, entered into a Construction Loan Agreement, dated as of July 14, 2006, as amended from time to time (the “Original Construction Loan Agreement”), pursuant to which LBHI agreed to make a loan to Borrower in the aggregate amount of up to $370,000,000 to finance in part the construction of the Project.

E.LBHI and Borrower entered into a Note Splitter and Reaffirmation Agreement (the “Note Splitter Agreement”), dated as of January 26, 2007, pursuant to which the original note delivered by Borrower pursuant to the Original Construction Loan Agreement was split, divided and apportioned into the following six separate promissory notes delivered by Borrower to LBHI: (i) the Amended, Severed and Restated Promissory Note (Note A-1) in the principal amount of $30,000,000 (the “Split Note A-1”), (ii) the Amended, Severed and Restated Promissory Note (Note A-2) in the principal amount of $25,000,000 (the “Split Note A-2”); (iii) the Amended, Severed and Restated Promissory Note (Note A-3) in the principal amount of $25,000,000 (the “Split Note A-3”); (iv) the Amended, Severed and Restated Promissory Note (Note A-4) in the principal

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amount of $15,000,000 (the “Split Note A-4”); (v) Amended, Severed and Restated Promissory Note (Note A-5) in the principal amount of $255,000,000 (the “Split Note A-5” and together with Note A-1, Note A-2, Note A-3 and Note A-4, collectively, the “Split A Notes”); and (vi) the Amended, Severed and Restated Promissory Note (Note B) in the principal amount of $20,000,000 (the “Split Note B”, and collectively with the Split A Notes, the “Split Notes”).

F.In connection with entering into the Note Splitter Agreement, Borrower, LBHI and certain other parties thereto amended the Original Loan Agreement and certain other documents pursuant to the First Amendment and the First Amendment to Recorded Loan Documents (each as defined below).

G.Pursuant to Assignment and Assumption Agreements, each dated February 1, 2007, LBHI subsequently assigned the Split Note A-1 to Central Pacific Bank (“Central Pacific”), the Split Note A-2 to Landesbank Baden-Württemberg (“LBBW”), and the Split Note A-3 to Deutsche Hypothekenbank (Actien-Gesellschaft) (“Deutsche Hypo”).  LBHI retained the Split Note A-4, the Split Note A-5 and the Split Note B.  Swedbank AB (publ), New York Branch (“Swedbank”), subsequently became the assignee and successor-in-interest to the Split Note B.  LBHI, Central Pacific, LBBW, Deutsche Hypo and Swedbank are collectively referred to as the “Split Note Holders”.

H.Pursuant to the Co-Lending Agreement, dated as of February 1, 2007, as amended from time to time (the “Co-Lending Agreement”), among LBHI, as agent, and the Split Note Holders, the Split Note Holders appointed LBHI as agent for the Split Note Holders (in such capacity, the “Prior Agent”).

I.Pursuant to a Master Assignment and Assumption and Modification Agreement (the “Master Assignment Agreement”), dated as of the date hereof, among the Prior Agent, the Split Note Holders, the Lenders and Borrower, the Split Note Holders assigned their outstanding loans and a portion of their then remaining funding commitments under the Original Construction Loan Agreement to the Lenders and the remaining portion of the unfunded commitment of the Split Note Holders under the Original Construction Loan Agreement were cancelled.

J.Pursuant to a letter agreement (the “Successor Agent Agreement”), dated as of the date hereof, among Borrower, the Split Note Holders, the Lenders, the Prior Agent, as resigning agent, and Central Pacific, as successor agent for the Lenders (in such capacity, the “Successor Agent”), (i) the Prior Agent resigned as agent for the Lenders, (ii) Central Pacific was appointed the successor agent for the Lenders and (iii) the Prior Agent assigned to the Successor Agent its rights and privileges as agent under the Co-Lending Agreement and the Loan Documents.

K.The parties hereto desire to amend and restate the Original Construction Loan Agreement to, among other things, split the loan and commitment under the Original Construction Loan Agreement into multiple Loan Facilities in the manner hereinafter set forth and to modify certain other provisions of the Original Construction Loan Agreement.

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NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the parties hereto agree as follows:

ARTICLE I
INCORPORATION OF RECITALS AND EXHIBITS

Section 1.1Incorporation of Recitals.

The foregoing preambles and all other recitals set forth herein are made a part hereof by this reference.

Section 1.2Incorporation of Exhibits.

The Exhibits to this Agreement are incorporated in this Agreement and expressly made a part hereof by this reference.

ARTICLE II
DEFINITIONS

Section 2.1Defined Terms.

The following terms as used herein shall have the following meanings:

Additional Equity Requirement:  The requirement that Borrower contribute up to Four Million Three Hundred Twenty Thousand Four Hundred Thirty-Eight and 49/100 Dollars ($4,320,438.49) of equity to the Project pursuant to Section 12.1(l).  The Additional Equity Requirement shall not include equity provided by Borrower to keep the Loans In Balance, the Contingency Reserve, or sums provided by any Guarantor under the Completion Guaranty.

Adjusted LIBOR Rate:  A rate per annum equal to the LIBOR Rate (determined as herein set forth) plus:

(i)with respect to the Facility A Notes, five hundred (500) basis points (5.00%);

(ii)with respect to the Facility B-1 Notes, one hundred seventy (170) basis points (1.70%);

(iii)with respect to the Facility B-2 Notes, one hundred seventy (170) basis points (1.70%);

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(iv)with respect to the Facility C-1 Notes, one hundred seventy (170) basis points (1.70%); and

(v)with respect to the Facility C-2 Notes, one thousand ninety-five (1095) basis points (10.95%).

Adjusted Prime Rate:  A rate per annum equal to the sum of (a) the Prime Rate Margin and (b) the greater of (i) the Prime Rate and (ii) one percent (1%) in excess of the Federal Funds Effective Rate.  Any change in the Adjusted Prime Rate shall be effective immediately from and after a change in the Prime Rate (or the Federal Funds Effective Rate, as applicable).

Affected Lender: As defined in Section 23.21.

Affiliate:  With respect to a specified Person, any Person which, directly or indirectly, through one or more intermediaries, Controls or is Controlled by or is under common Control with such Person, including, without limitation, any limited liability company in which such Person is a member.

Agent: As defined in the opening paragraph of this Agreement.

Agent’s Consultant:  An independent consulting architect, inspector, and/or engineer designated by the Required Lenders in their sole discretion.

Agent’s Depository Bank: The bank then acting as the Agent hereunder or any other bank reasonably acceptable to the Agent.

Agreement:  This Amended and Restated Construction Loan Agreement.

Applicable Rate:  A rate per annum equal to either the Adjusted LIBOR Rate or the Adjusted Prime Rate, as determined in accordance with the provisions of Article V hereof.

Appraisal:  An MAI-certified appraisal of the Project, performed, at Borrower’s expense, in accordance with FIRREA and the Agent’s appraisal requirements by an appraiser selected and retained by the Agent.

Architect:  WCIT Architecture, or such other licensed, reputable architect as Borrower selects and the Required Lenders, acting reasonably, approve.  In making the determination as to whether to approve an architect other than WCIT Architecture, the Required Lenders may take into account any prior dealings they or the other Lenders may have had with the proposed architect.

Architect’s Agreement:  That certain Agreement dated December 10, 2004, by and between Borrower and Architect, for the design of the Improvements, as same may be amended from time to time, subject to the Required Lenders’ reasonable prior approval.

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Architect’s Certificate:  A certificate by Architect, substantially in the form attached hereto as Exhibit I, in favor of the Agent to the effect that the Project complies with Laws, and as to such other matters as the Agent shall reasonably require.

Assignment and Assumption Agreement:  An Assignment and Assumption Agreement entered into by a Lender pursuant to Section 17.4 substantially in the form of Exhibit J.

Assignment of Leases and Rents:  The Assignment of Leases and Rents, dated July 14, 2006, by Borrower in favor of the Agent (as successor to LBHI).

Assignment of Purchase Contracts:  The Assignment of Purchase Contracts, dated as of July 14, 2006, by Borrower in favor of the Agent (as successor to LBHI), assigning all of Borrower’s rights under Contracts of Sale and Contract Deposits in connection with a sale of any Unit or any portion of the Project, in existence as of the Original Effective Date, and subsequent thereto.

Authorized Representative:  Ryan Churchill and/or Adele Sumida.

Available Contract Deposit:  A Contract Deposit that is permitted and available to be applied to Hard Costs and Soft Costs in accordance with applicable Laws, the applicable Contract of Sale, and against which there are no pending or threatened claims, actions, proceedings.

Available Funds: As defined in Section 11.1.

Bankruptcy Code:  Title 11 of the United States Code, entitled “Bankruptcy”, as now or hereafter in effect, or any successor thereto or any other present or future bankruptcy or insolvency statute.

Bankruptcy Proceeding:  With respect to any Person, (i) any voluntary or involuntary case or proceeding, (ii) any other reorganization or bankruptcy case or proceeding, or any administration, receivership, liquidation, reorganization or other similar case or proceeding with respect to such Person or a material portion of its assets, (iii) any liquidation, dissolution, reorganization or winding up, whether voluntary or involuntary and whether or not involving insolvency or bankruptcy, or (iv) any assignment for the benefit of creditors or any marshalling of assets and liabilities, in each case commenced and maintained under the Bankruptcy Code or any other applicable law.

Beach Club CA:  As defined in the Condominium Documents.

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Bond:  Collectively, (i) the Performance Bond, dated November 21, 2006, issued by Federal Insurance Company, Fidelity and Deposit Company of Maryland, Travelers Casualty and Surety Company of America and Zurich American Insurance Company in connection with the Project and in the amount of $303,385,364, and (ii) the Payment Bond, dated November 21, 2006, issued by Federal Insurance Company, Fidelity and Deposit Company of Maryland, Travelers Casualty and Surety Company of America and Zurich American Insurance Company in connection with the Project and in the amount of $303,385,364, with a rider to the Performance Bond and the Payment Bond naming the Agent as an additional obligee thereunder.

Borrower:  As defined in the opening paragraph of this Agreement.

Breakage Costs:  As defined in Section 5.1(g).

Budget Line Item(s):  As defined in Section 10.2(a).

Business Day:  Any day other than a Saturday, Sunday or day on which banks are required or authorized to be closed in New York, New York, Stuttgart, Germany or Honolulu, Hawaii, provided that when used in connection with Loans bearing interest at the LIBOR Rate, the term “Business Day” shall mean LIBOR Business Day.

Cause:  Any of the following:  (a) fraud, gross negligence or willful misconduct by the Agent, (b) the commencement of any proceeding, under any Bankruptcy Code or similar laws in any applicable jurisdiction with respect to the Agent, (c) any material breach or default by Agent under this Agreement which continues for fifteen (15) days after written notice to the Agent or (d) the Agent is a Defaulting Lender.

Central Pacific:  As defined in the Recitals to this Agreement.

Certificate of Occupancy:  A temporary or permanent certificate issued by the appropriate Governmental Authority certifying that a Unit or Units, as constructed, may be legally occupied.

Change Order:  Any change in the Plans and Specifications (other than minor field changes involving no extra cost).

Co-Lending Agreement:  As defined in the recitals to the Agreement.

Collateral:  All property, real or personal, subject to any lien or security interest or other encumbrance created under the Loan Documents.

Completion Date:  December 31, 2009.

Completion Guaranty:  The Completion Guaranty, dated as July 14, 2006, by Guarantor in favor of the Agent (as successor to the LBHI).

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Condominium Act:  Chapter 514A, Hawaii Revised Statutes, as amended.

Condominium Declaration:  The condominium declaration creating the Residential Condominium.

Condominium Deposit Account:  A deposit account opened and maintained by Borrower with First American Title Insurance Company, to be utilized in the manner set forth in Section 14.1(b) hereof.

Condominium Documents:  All documents, as required by the Condominium Act and otherwise, relating to the submission of the Condominium Project and the Units to be located on the two fee simple parcels, Tax Map Key Nos. (2) 4-2-4-28 and 29 to the provisions of said Condominium Act or to the regulation, operation, administration or sale thereof after such submission, including, but not limited to, a declaration of condominium, offering circular, articles of incorporation, if applicable, by-laws and rules and regulations of a condominium association, management agreement, plats and the contracts of sale and deed forms to be used in connection with the sale of Units.

Condominium Project:  The “Kapalua Bay Condominium” project, created by the Declaration of Condominium Property Regime dated April 18, 2006, recorded in the Bureau of Conveyances of the State of Hawaii as Document No. 2006-083256.

Condominium Release Payment Account:  A deposit account opened and maintained by Borrower with Agent’s Depository Bank, on behalf of the Agent, to be utilized in the manner set forth in Sections 14.4(a)(viii) and 14.4(b)(viii) hereof.

Construction:  The construction of the Improvements in accordance with the Plans and Specifications.

Construction Budget:  A budget for the Project, satisfactory to the Lenders, specifying the categories of all costs and expenses to be incurred by Borrower in connection with the Project prior to the completion of the Construction, including Hard Costs and Soft Costs, together with the changes or modifications thereto hereafter made in accordance with the terms of this Agreement.  The Construction Budget in effect as of the date hereof, which has been reviewed and approved by the Lenders, is annexed hereto as Exhibit G.

Construction Commencement Date:  October 31, 2006.

Construction Contracts:  All contracts between General Contractor and third parties for the design, engineering and construction of the Project.

Construction Contracts Effectiveness Schedule:  Construction Contracts (including for the Spa Improvements) representing 100% of all costs anticipated in the General Contract shall be in effect on the Effective Date.

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Construction Schedule:  A schedule, reasonably satisfactory to the Lenders, establishing a timetable for completion of the Construction, showing, on a monthly basis, the anticipated progress of the Construction, and confirming that the Improvements can be completed on or before the Completion Date, as same may be amended from time to time, subject to the Required Lenders’ approval.  The initial approved Construction Schedule is attached hereto as Exhibit H.

Contingency Reserve:  As defined in Section 10.3.

Contract Deposit:  A deposit (including a reservation deposit) or down payment under a Contract of Sale.

Contract of Sale:  An executed contract of purchase and sale pursuant to which Borrower agrees to sell any Unit (or any part thereof, including interval, fractional ownership interests) (collectively, “Contracts of Sale”).

Control:  As such term is used with respect to any Person, including the correlative meanings of the terms “controlled by” and “under common control with”, the possession, directly or indirectly, of the power to direct or cause the direction of the management policies of such Person, whether through the ownership of voting securities, by contract or otherwise.

Debt:  The outstanding principal balance of the Notes from time to time, together with all accrued and unpaid interest thereon, and all other sums now or hereafter due under the Loan Documents.

Default or default:  Any event, circumstance or condition, which, if it were to continue uncured, would, with notice or lapse of time or both, constitute an Event of Default.

Default Rate:  A rate per annum equal to five hundred (500) basis points in excess of the Applicable Rate, but not at any time in excess of the highest rate permitted by law.

Defaulting Lender:  As defined in Section 23.17(a).

Deficiency Deposit:  As such term is defined in Section 11.1.

Determination Date:  With respect to any Interest Period, the day which is two (2) LIBOR Business Days prior to the day on which such Interest Period commences.

Deutsche Hypo:  As defined in the Recitals to this Agreement.

Development Documents:  As defined in Section 8.1(t).

Development Items:  As defined in Section 8.1(s).

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Development Land:  As defined in the Recitals.

Development Obligations: As defined in Section 8.1(u).

Development Property:  Collectively, the Development Land and the Improvements thereon.

Discharge of Negative Pledge Agreement:  That certain Cancellation and Termination of Negative Pledge Agreement, dated as of the Effective Date, between Borrower and Nordic/PCL.

Draw #29:  The requisition, dated January 7, 2009, delivered under the Original Loan Agreement for an advance in the amount of $14,037,758.08

Effective Date:  The date hereof.

Eligibility Requirements:  With respect to any Person, that such Person (i) has total assets (in name or under management) in excess of $600,000,000 and (except with respect to a pension advisory firm or similar fiduciary) capital/statutory surplus or shareholder’s equity of $250,000,000 and (ii) is engaged in the business of making or owning commercial real estate loans (or interests in commercial real estate loans) or operating commercial mortgage properties.

Enforcement Action:  Any judicial or non-judicial foreclosure proceeding, the exercise of any power of sale, the sale by advertisement, the taking of a deed or assignment in lieu of foreclosure, the obtaining of a receiver, the pursuit of any deficiency judgment, acquisition of any Collateral, any sale of any Collateral (other than the sale of Units in the ordinary course of business), or the taking of any other enforcement action against any Collateral.

Engineers:  Any electrical, civil, structural, mechanical, plumbing and other engineers engaged by Borrower to perform material engineering services for the Project.

Entitlements:  As defined in Section 15.1(a) and shall include: the Special Management Area Use Permit, Shoreline Setback Variance and Planned Development Approval.

Environmental Indemnity:  The Environmental Indemnity Agreement dated as of July 14, 2006 by Borrower and Guarantor in favor of the Agent (as successor to LBHI).

Environmental Proceedings:  Any environmental proceedings, whether civil (including actions by private parties), criminal, or administrative proceedings, relating to the Project.

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Environmental Report:  Collectively (i) the Phase I Environmental Site Assessment for the Kapalua Bay Hotel, dated May 5, 2006, prepared by Clayton Group Services, Inc. and (ii) the Limited Phase II Investigation, dated June 19, 2006, prepared by Clayton Group Services, Inc. with respect to the former laundry room at the Kapalua Bay Hotel.

ER Purchase Agreement:  As defined in Section 8.1(z).

ERISA:  The Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder from time to time.

Event of Default:  As such term is defined in Article XIX.

Expense Reserve:  An amount equal to the sum of (i) the projected amount of real property taxes payable by Borrower with respect to the Project for the three-month period immediately succeeding the disbursement of the final Facility A Loan pursuant to Section 13.1, (ii) the projected amount of Insurance Premiums payable by Borrower for the Project for the three-month period immediately succeeding the disbursement of the final Facility A Loan pursuant to Section 13.1, (iii) the projected amount of interest payable by Borrower on the Loans for the three-month period immediately succeeding the disbursement of the final Facility A Loan pursuant to Section 13.1, (iv) without duplication of any of the foregoing, the projected amount of common maintenance fees and vacation owner association fees payable by Borrower with respect to Units and Fractional Ownership Interests not then conveyed to third party purchasers for the three-month period immediately succeeding the disbursement of the final Facility A Loan pursuant to Section 13.1, and (v) the projected amount of Servicing Fees payable to the Servicer for the three-month period immediately succeeding the disbursement of the final Facility A Loan pursuant to Section 13.1; provided that such amount may be reduced pursuant to Section 13.3(b).

Expense Reserve Account:  A deposit account opened and maintained by the Agent with Agent’s Depository Bank, in the name or under “control” (as defined in the Uniform Commercial Code of the applicable State) of the Agent, pursuant to Section 13.3(a).

Expense Reserve Items:  The items described in clauses (i) through (v) in the definition of Expense Reserve above.

Exclusive Resorts:  Exclusive Resorts, LLC, a Delaware limited liability company.

Facility:  Shall mean each of (i) the Spa and Borrower’s leasehold interest in the Spa Land; (ii) the Beach Club CA; and (iii) the Kapalua General Store (collectively, the “Facilities”).

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Facility A Commitment:  As to any Facility A Lender, the obligation of such Facility A Lender to make a Facility A Loan to the Borrower hereunder in a principal amount not to exceed the amount set forth under the heading “Facility A Commitment” opposite such Lender’s name on Schedule D, or, as the case may be, in the Assignment and Assumption Agreement pursuant to which such Facility A Lender became a party hereto, as the same may be changed from time to time pursuant to the terms hereof.

Facility A Commitment Amount:  $120,078,665.54, as such amount may be reduced pursuant to Section 4.2(j).

Facility A Excess Proceeds Account:  A deposit account opened and maintained by the Agent with Agent’s Depository Bank, or so long as TriMont is the Servicer at a bank designated by TriMont and acceptable to the Agent, in either case in the name or under “control” (as defined in the Uniform Commercial Code of the applicable State) of the Agent, to be utilized in the manner set forth in Section 4.10(b).

Facility A Lenders:  The Persons listed on Schedule D under the heading “Facility A Lenders” and any other Person that shall acquire Facility A Loans and/or a Facility A Commitment pursuant to an Assignment and Assumption Agreement, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption Agreement.

Facility A Loans:  Loans made by the Facility A Lenders under its Facility A Commitment pursuant to Section 4.2.

Facility A Maturity Date:  February 11, 2010, or such earlier date on which the principal payment of the Facility A Notes become due and payable as therein or herein provided, whether at such stated maturity date, by acceleration or otherwise.

Facility A Notes:  The promissory notes of Borrower payable to the Facility A Lenders in substantially the form of Exhibit K-1, evidencing the indebtedness of Borrower to the Facility A Lenders resulting from advances made by the Facility A Lenders.

Facility A Obligations:  The portion of the Debt owing to the Facility A Lenders.

Facility A Pro Rata Share:  With respect to a Facility A Lender, a percentage equal to a fraction the numerator of which is such Facility A Lender’s Facility A Commitment and the denominator of which is the Facility A Commitment Amount (or if the Facility A Commitments have terminated or expired, the Facility A Pro Rata Share shall be determined based upon such Facility A Lender’s share of the outstanding principal amount of the Facility A Loans).

Facility B Lenders:  The Facility B-1 Lenders and the Facility B-2 Lenders.

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Facility B Loans:  The Facility B-1 Loans and the Facility B-2 Loans.

Facility B Obligations:  The portion of the Debt owing to the Facility B Lenders.

Facility B/C Maturity Date:  August 1, 2011, or such earlier date on which the final payment of the principal of the Facility B Notes and Facility C Notes becomes due and payable as therein or herein provided, whether at such stated maturity, by acceleration or otherwise.

Facility B-1 Lenders:  The Persons listed on Schedule D under the heading “Facility B-1 Lenders” and any other Person that shall acquire Facility B-1 Loans pursuant to an Assignment and Assumption Agreement, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption Agreement.

Facility B-1 Loans:  The loans outstanding under the Facility B-1 Notes.

Facility B-1 Notes:  The promissory notes of Borrower payable to the Facility B-1 Lenders, in substantially the form of Exhibit K-2, evidencing the indebtedness of Borrower to the Facility B-1 Lenders resulting from loans made by the Facility B-1 Lenders.

Facility B-1 Obligations:  The portion of the Debt owing to the Facility B-1 Lenders.

Facility B-1 Pro Rata Share:  With respect to a Facility B-1 Lender, a percentage equal to a fraction the numerator of which is such Facility B-1 Lender’s principal amount of the Facility B-1 Loans and the denominator of which is the aggregate outstanding principal amount of Facility B-1 Loans of all Facility B-1 Lenders.

Facility B-2 Lenders:  The Persons listed on Schedule D under the heading “Facility B-2 Lenders” and any other Person that shall acquire Facility B-2 Loans pursuant to an Assignment and Assumption Agreement, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption Agreement.

Facility B-2 Loans:  The loans outstanding under the Facility B-2 Notes.

Facility B-2 Notes:  The promissory notes of Borrower payable to the Facility B-2 Lenders, in substantially the form of Exhibit K-3, evidencing the indebtedness of Borrower to the Facility B-2 Lenders resulting from loans made by the Facility B-2 Lenders.

Facility B-2 Obligations:  The portion of the Debt owing to the Facility B-2 Lenders.

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Facility B-2 Pro Rata Share:  With respect to a Facility B-2 Lender, a percentage equal to a fraction the numerator of which is such Facility B-2 Lender’s principal amount of the Facility B-2 Loans and the denominator of which is the aggregate outstanding principal amount of Facility B-2 Loans of all Facility B-2 Lenders.

Facility C Lenders:  The Facility C-1 Lenders and the Facility C-2 Lenders.

Facility C Loans:  The Facility C-1 Loans and Facility C-2 Loans.

Facility C Obligations:  The Debt owing to the Facility C Lenders.

Facility C-1 Lenders:  The Persons listed on Schedule D under the heading “Facility C-1 Lenders” and any other Person that shall acquire Facility C-1 Loans pursuant to an Assignment and Assumption Agreement, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption Agreement

Facility C-1 Loans:  The loans outstanding under the Facility C-1 Notes.

Facility C-1 Notes:  The promissory notes of Borrower payable to the Facility C-1 Lenders, in substantially the form of Exhibit K-4, evidencing the indebtedness of Borrower to the Facility C-1 Lenders resulting from loans made by the Facility C-1 Lenders.

Facility C-1 Obligations:  The portion of the Debt owing to the Facility C-1 Lenders.

Facility C-1 Pro Rata Share:  With respect to a Facility C-1 Lender, a percentage equal to a fraction the numerator of which is such Facility C-1 Lender’s principal amount of the Facility C-1 Loans and the denominator of which is the aggregate outstanding principal amount of Facility C-1 Loans of all Facility C-1 Lenders.

Facility C-2 Lenders:  The Persons listed on Schedule D under the heading “Facility C-2 Lenders” and any other Person that shall acquire Facility C-2 Loans pursuant to an Assignment and Assumption Agreement, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption Agreement.

Facility C-2 Loans:  The loans outstanding under the Facility C-2 Notes.

Facility C-2 Notes:  The promissory notes of Borrower payable to the Facility C-2 Lenders, in substantially the form of Exhibit K-5, evidencing the indebtedness of Borrower to the Facility C-2 Lenders resulting from loans made by the Facility C-2 Lenders.

Facility C-2 Obligations:  The portion of the Debt owing to the Facility C-2 Lenders.

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Facility C-2 Pro Rata Share:  With respect to a Facility C-2 Lender, a percentage equal to a fraction the numerator of which is such Facility C-2 Lender’s principal amount of the Facility C-2 Loans and the denominator of which is the aggregate outstanding principal amount of Facility C-2 Loans of all Facility C-2 Lenders.

Federal Funds Effective Rate:  For any day, the rate per annum (rounded upward to the nearest one one-hundredth of one percent (1/100 of 1%)) announced by the Federal Reserve Bank of New York on such day as being the weighted average of the rates on overnight federal funds transactions arranged by federal funds brokers on the previous trading day, as computed and announced by such Federal Reserve Bank in substantially the same manner as such Federal Reserve Bank computes and announces the weighted average it refers to as the “Federal Funds Effective Rate.”

FIRREA:  The Financial Institutions Reform, Recovery And Enforcement Act of 1989, as amended from time to time.

First Amendment:  That certain First Omnibus Amendment to Construction Loan Documents, dated as of January 26, 2007, between Borrower and LBHI.

First Amendment to Recorded Loan Documents:  That certain First Amendment to Recorded Loan Documents, dated as of January 26, 2007, between Borrower and LBHI.

Fitch:  Fitch, Inc.

Force Majeure Delays:  Delays due to strike, governmental restrictions, unavailability or shortage of labor and/or materials, enemy or terrorist action, hurricane, civil commotion, fire or other causes beyond the control of Borrower, provided, however, that (i) the aggregate of all such time periods shall not exceed one hundred fifty (150) days, and an additional one hundred twenty (120) days permitted with respect to a tropical storm or hurricane and (ii) neither the failure of Borrower to qualify for an advance hereunder nor the lack of Borrower’s own funds shall constitute a Force Majeure Delay.  In no event shall Force Majeure Delays be deemed to extend the Completion Date beyond the Facility A Maturity Date.

Fractional Ownership Act:  Chapter 514E, Hawaii Revised Statutes, as amended.

Fractional Ownership Declaration:  The Kapalua Bay Vacation Ownership Project Declaration of Covenants, Conditions and Restrictions creating the Fractional Ownership Units.

Fractional Ownership Documents:  All documents, as required by the Fractional Ownership Act relating to the registration of the Fractional Ownership Units and to the regulations, operation and administration or sale thereof after such registration, including, but not limited to, a disclosure statement, declaration of covenants, conditions and

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restrictions, contract with the plan manager, articles of incorporation and by-laws of the fractional ownership association, rules and regulations for the fractional ownership plan, and form of sales contract and apartment deed to be used in connection with the sale of the Fractional Ownership Units.

Fractional Ownership Interest:  A fraction of ownership interest in a Fractional Ownership Unit and the corresponding use rights associated therewith.

Fractional Ownership Units:  The 62 fractional ownership units operated as a “Ritz-Carlton Club” to be sold in 1/12 intervals identified in the Condominium Documents as “Club Units” which have been submitted to a timeshare plan pursuant to the Fractional Ownership Act, together with the undivided percentage ownership interests in the common elements of the condominium project.

General Contract:  That certain Contract between Owner and Contractor, dated October 31, 2006, between Borrower and Nordic/PCL, or in the case of a General Contractor other than Nordic/PCL, a guaranteed maximum price general contract, between Borrower and General Contractor, for the construction of the Improvements, in such form as the Required Lenders shall approve in their sole discretion, as same may be amended from time to time.  Such general contract shall require completion of the Improvements prior to the Completion Date.

General Contractor:  Nordic/PCL Construction or such other licensed, reputable general contractor as Borrower selects and the Required Lenders, acting reasonably, approve.  In making the determination as to whether to approve a general contractor other than Nordic/PCL Construction, the Required Lenders may take into account any prior dealings they or the other Lenders may have had with such proposed general contractor.

Governmental Approvals:  All consents, licenses, permits, and other authorizations or approvals required from any Governmental Authority for the Construction, including, without limitation, the Entitlements and Permits.

Governmental Authority:  Any federal, state, county or municipal governmental authority, agency, department, commission, board, bureau or instrumentality having jurisdiction over the Project.

Gross Sales Price:  The purchase price for each Unit, as well as special assessments (including any items contained in the Construction Budget referenced as “Hospitality Start-Up Recovery”), amounts allocable to personal property, and all amounts paid for extras and the like.

Ground Lease:  That certain Ground Lease dated August 31, 2004, by and between Maui Land & Pineapple Company, Inc., a Hawaii corporation, as ground lessor, and Borrower, as ground lessee, as amended by the Ground Lessor Consent, Estoppel Certificate and Amendment.

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Ground Lessor Consent, Estoppel Certificate and Amendment:  That certain Ground Lessor Consent, Estoppel Certificate and Amendment dated as of July 14, 2006 by and among Maui Land & Pineapple Company, Inc, as ground lessor under the Ground Lease, Borrower, as ground lessee, and the Agent (as successor to LBHI).

Guaranties: Collectively, the Recourse Guaranty, the Completion Guaranty and the Environmental Indemnity.

Guarantor:  Each of Maui Land & Pineapple Company, Inc., a Hawaii corporation; The Ritz-Carlton Development Company, Inc., a Delaware corporation; and Exclusive Resorts Development Company, LLC, a Delaware limited liability company, severally.

Hard Costs:  All costs for labor, materials or equipment supplied to or incorporated in the Project.

Hazardous Material:  Any hazardous or toxic material, substance or waste (including, without limitation, gasoline, petroleum, asbestos-containing materials and radioactive materials) which is regulated under any Law of any Governmental Authority, including: (i) any “hazardous substance” as defined in the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.A. § 9601(14), or any so called “superfund” or “superlien” Law, including the judicial interpretation thereof; (ii) any “pollutant or contaminant” as defined in 42 U.S.C.A. § 9601(33); (iii) any material now defined as “hazardous waste” pursuant to 40 C.F.R.  Part 260; (iv) any petroleum, including crude oil or any fraction thereof; (v) natural gas, natural gas liquids, liquefied natural gas, or synthetic gas usable for fuel; (vi) any “hazardous chemical” as defined pursuant to 29 C.F.R.  Part 1910; and (vii) any other toxic substance or contaminant that is subject to any other Law or other past or present requirement of any Governmental Authority.

Improvements:  Improvements for the Project as more particularly described in the Plans and Specifications, which consist generally of a mixed use condominium development consisting of (i) 84 (unbranded) whole ownership Residential Condominium Units (28 of which shall be purchased by Exclusive Resorts, its Affiliates and their permitted assigns), (ii) 62 fractional ownership units operated as a “Ritz-Carlton Club” to be sold in 1/12 intervals under a fractional ownership plan in accordance with the Fractional Ownership Act, (iii) the Facilities and improvements and amenities contemplated to be located thereon, and (iv) certain additional common facilities, amenities, appurtenances, fixtures, equipment, entry and exit areas, parking areas and other areas for the benefit of the Condominium Project, including the Fractional Ownership Units.

In Balance:  As defined in Section 11.1.

Indemnified Party:  As defined in Section 15.1(t).

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Independent Director:  As defined in Section 15.3(p).

Initial Restructuring Funding Date:  February 11, 2009.

Initial Restructuring Loan:  The Facility A Loans to be made on the Initial Restructuring Funding Date in the amount of $27,202,476.88.

Institutional Lender:  Any one or more of the following other entities, provided that for any such other entity to qualify as an Institutional Lender hereunder, such other entity, together with its affiliates, must have total assets of at least One Billion and 00/100 Dollars ($1,000,000,000.00) and stockholders’ equity or net worth of at least Two Hundred Fifty Million and 00/100 Dollars ($250,000,000.00) (or, in either case, the equivalent thereof in a foreign currency) as of the date the loan is made: a savings bank, a savings and loan association, a commercial bank or trust company, an insurance company subject to regulation by any governmental authority or body, a real estate investment trust, a union, a governmental or secular employees’ welfare, benefit, pension or retirement fund, a pension fund property unit trust (whether authorized or unauthorized), an investment company or trust, a merchant or investment bank or any other entity generally viewed as an institutional lender.  In each of the foregoing cases, such affiliate or other entity shall constitute an Institutional Lender whether (1) acting for itself or (2) as trustee, as a general partner of a partnership, in a fiduciary, management or advisory capacity or, in the case of a bank, as agent bank, for any number of lenders, so long as in the case of clause (2) the day-to-day management decisions relating to the loan are either exercised by or recommended by such Institutional Lender and, during the life of the loan, such Institutional Lender shall only be removed from its applicable capacity as described in clause (2).  Notwithstanding the first sentence of this paragraph, a real estate investment trust that invests primarily in mortgage loans and investment securities, is taxed as a real estate investment trust and, if unaffiliated, has total assets of at least Six Hundred Fifty Million and 00/100 Dollars ($650,000,000.00) and a net worth of at least One Hundred Million and 00/100 Dollars ($100,000,000.00), shall qualify as an Institutional Lender despite its failure to meet the total asset and net worth tests set forth in such first sentence.

Insurance Escrow Fund:  As defined in Section 15.1(l).

Insurance Premiums:  As defined in Section 15.2(b).

Interest Period:  A period of one month, two months or three months, or, to the extent deposits with such maturities are available to the Lenders, six months, commencing on the first calendar day of the month as selected by Borrower in accordance with Section 5.1(c) and ending on the first calendar day of the month that is one month, two months, three months or six months thereafter, as the case may be; provided, however, that  no Interest Period may extend beyond the Facility A Maturity Date, with respect to Facility A Loans, or the Facility B/C Maturity Date, with respect to Facility B Loans and Facility C Loans.  The initial Interest Period for the Initial

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Restructuring Loan shall commence on the Initial Restructuring Funding Date and end on March 1, 2009, and (i) the last Interest Period for Facility A Loans shall commence on the day following the expiration of the last full calendar month occurring during the term of the Facility A Loans and end on the Facility A Maturity Date and (ii) the last Interest Period for Facility B Loans and Facility C Loans shall commence on the date following the expiration of the last full calendar month occurring during the term of the Facility B Loans and Facility C Loans and end on the Facility B/C Maturity Date.

Interest Reserve:  As defined in Section 10.4.

Internal Revenue Code:  The Internal Revenue Code of 1986, as amended from time to time.

Issued Entitlements:  As defined in Section 15.1(a) and shall include the Special Management Area Use Permit, Shoreline Setback Variance and the Planned Development Approval, which provide the right to construct the Project.

Kapalua General Store:  As defined in the Condominium Documents.

Keep Whole Letters:  Those certain “Keep Whole Letters” by each of ML&P, Exclusive Resorts and MII, respectively, each dated July 14, 2006 concerning the funding of their respective Affiliates in order to meet their funding requirements under the Guaranties contemplated hereunder and to enable such Affiliates to comply with their equity obligations under the Limited Liability Operating Agreement of Member.

Land:  As such term is defined in the Recitals to this Agreement.

Laws:  All federal, state and local laws, statutes, codes, ordinances, orders, rules and regulations.

LBBW:  As defined in the Recitals to this Agreement.

LBHI:  As defined in the Recitals to this Agreement.

Leases:  All leases, licenses and occupancy agreements (including any licenses for parking spaces or storage spaces) affecting the Project or any part thereof now or hereafter existing.

Lenders:  The Facility A Lenders, the Facility B Lenders and the Facility C Lenders.

LIBOR Business Day:  A Business Day on which dealings in U.S. dollars are conducted in the London interbank market.

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LIBOR Rate:  For any Interest Period, the rate (expressed as a percentage per annum and rounded upward, if necessary, to the next nearest 1/1000 of 1%) for deposits in U.S. dollars, for (subject to the LIBOR Rate Election) a one-month period, that appears on Telerate Page 3750 (or the successor thereto) as of 11:00 a.m., London time, on the related Determination Date.  If such rate does not appear on Telerate Page 3750 as of 11:00 a.m., London time, on such Determination Date, LIBOR shall be the arithmetic mean of the offered rates (expressed as a percentage per annum) for deposits in U.S. dollars for the number of days of the applicable Interest Period that appear on the Reuters Screen Libor Page as of 11:00 a.m., London time, on such Determination Date, if at least two such offered rates so appear.  If fewer than two such offered rates appear on the Reuters Screen Libor Page as of 11:00 a.m., London time, on such Determination Date, the Agent shall request the principal London office of any four major reference banks in the London interbank market selected by the Agent to provide such bank’s offered quotation (expressed as a percentage per annum) to prime banks in the London interbank market for deposits in U.S. dollars for the number of days of the applicable Interest Period as of 11:00 a.m., London time, on such Determination Date for the amounts of not less than U.S. $1,000,000.  If at least two such offered quotations are so provided, LIBOR shall be the arithmetic mean of such quotations.  If fewer than two such quotations are so provided, the Agent shall request any three major banks in New York City selected by the Agent to provide such bank’s rate (expressed as a percentage per annum) for loans in U.S. dollars to leading European banks for the number of days of the applicable Interest Period as of approximately 11:00 a.m., New York City time on the applicable Determination Date for amounts of not less than U.S. $1,000,000.  If at least two such rates are so provided, LIBOR shall be the arithmetic mean of such rates.  LIBOR shall be determined by the Agent, which determination shall be binding and conclusive absent manifest error.

LIBOR Rate Election:  As defined in Section 5.1(c).

Lien:  Any mortgage, deed of trust, lien, pledge, hypothecation, assignment, security interest, or any other encumbrance, charge or transfer of, on or affecting the Property, or any portion thereof, or Borrower, including, without limitation, any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, the filing of any financing statement, and mechanic’s, materialmen’s and other similar liens and encumbrances against the Project or any portion thereof or Borrower.

Loan Documents:  Collectively, this Agreement, the documents and instruments listed on Schedule E and all other documents and instruments entered into by Borrower and/or Guarantor from time to time which evidence or secure the Debt.

Loan Facility:  When used in reference to any Loans, refers to whether such Loans are Facility A Loans, Facility B-1 Loans, Facility B-2 Loans, Facility C-1 Loans or Facility C-2 Loans.

Loans: The Facility A Loans, the Facility B-1 Loans, the Facility B-2 Loans, the Facility C-1 Loans and the Facility C-2 Loans.

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Loan-to-Value Ratio:  The ratio obtained by dividing the outstanding principal balance due on the Loans by the fair market value of the Project, as determined by an Appraisal.

Major Contract:  A Construction Contract which provides for a contract price equal to or greater than Two Million Five Hundred Thousand and 00/100 Dollars ($2,500,000.00).

Marketing Agreements:  Collectively, (i) Marketing and Sales Services Agreement, dated August 31, 2004, between Borrower and Ritz-Carlton; (ii) Marketing and Sales Services Agreement, dated June 19, 2006, by and between Borrower, Ritz-Carlton and ML&P; and (iii) Marketing and Sales Services Agreement, dated June 19, 2006, by and between Borrower and Kapalua Realty Company, Ltd., a Hawaii corporation.

Master Assignment Agreement:  As defined in the Recitals to this Agreement.

Material Adverse Change or material adverse change:  If, in the Lenders’ reasonable determination, the business prospects, operations or financial condition of a Person or property has changed from and after the Effective Date in a manner which actually impairs the value of the security for the Loans, prevent timely repayment of the Loans or otherwise prevent the applicable Person from timely performing any of its obligations under the Loan Documents.

Member:  Kapalua Bay Holdings, LLC, a Delaware limited liability company.

MH Kapalua:  MH Kapalua Venture, LLC, a Delaware limited liability company.

MH Kapalua Keep Whole Letters:  Collectively, (i) the “Keep Whole Letter” by MH Kapalua, dated the Effective Date, concerning the funding of Borrower in order for Borrower to meet its equity funding obligations under Section 12.1(l) and (ii) the “Keep Whole Letter” by MH Kapalua, dated the Effective Date, concerning the funding of Borrower in order for Borrower to comply with its mandatory prepayment obligation under Section 14.4(c).

MII:  Marriott International, Inc., a Delaware corporation.

MII Keep Whole Letters:  Collectively, (i) the “Keep Whole Letter” by MII, dated the Effective Date, concerning the funding of MH Kapalua in order for MH Kapalua (x) to satisfy its funding requirements under its Facility A Commitment and (y) to provide funds to Borrower to enable Borrower to meet its equity funding obligations under Section 12.1(l) and (ii) the “Keep Whole Letter” by MII, dated the Effective Date, concerning the funding of MH Kapalua (x) in order for MH Kapalua to make the loan under the ER Purchase Agreement and (y) if such loan is not made, to enable MH Kapalua to provide necessary funds to Borrower to prepay the Facility A Loans in an amount not less than $19,741,850.

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MII/MLP Affiliate:  As defined in the definition of Permitted Transfers below.

ML&P:  Maui Land & Pineapple Company, Inc., a Hawaii corporation.

ML&P Agreements:  Collectively, that certain: (i) Agreement of Purchase and Sale dated as of June 19, 2006, between Borrower and ML&P (the “Spa Agreement”) for the purchase by ML&P of the Spa Land and Spa; (ii) Agreement of Purchase and Sale dated as of June 19, 2006, between Borrower and ML&P (the “Beach Club Agreement”) for the purchase by ML&P of the Beach Club CA (as defined in the Condominium Documents); and (iii) Agreement of Purchase and Sale dated as of June 19, 2006, between Borrower and ML&P (the “General Store Agreement”) for the purchase by ML&P of the Kapalua General Store (as defined in the Condominium Documents).

ML&P Consent Agreement:  That certain Consent to Assignment of Agreements dated as of July 14, 2006, by ML&P.

Moody’s:  Moody’s Investors Service, Inc.

Mortgage:  The Fee and Leasehold Mortgage, Security Agreement and Fixture Filing, dated as of July 14, 2006, by Borrower in favor of the Agent (as successor to LBHI) securing the payment of the Debt and constituting a first priority mortgage lien against the Project.

Mortgaged Property: That certain real property owned and leased, as the case may be, by Borrower known as the “Residences at Kapalua Bay” located in Maui, Hawaii, as more particularly described in the Mortgage.

Net Lease Payments:  Lease payments received by the Borrower under a Permitted Lease, less (i) common maintenance fees, (ii) vacation owner association fees. (iii) to the extent not included in items (i) or (ii), real property taxes and (iv) brokerage fees and commissions incurred by Borrower with respect to the Unit subject to such Permitted Lease.

Net Sale Proceeds:  In respect of the sale of a Unit or a Fractional Ownership Interest, the Gross Sales Price, less Transaction Costs and any portion of the Contract Deposit related to a particular Unit or Fractional Ownership Interest that was utilized in accordance with applicable Laws and the Loan Documents to develop the applicable Unit, as determined by the Required Lenders acting reasonably.

Nordic/PCL:  Nordic/PCL, a Hawaii JV.

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Notes: The Facility A Notes, the Facility B-1 Notes, the Facility B-2 Notes, the Facility C-1 Notes and the Facility C-2 Notes.

OFAC:  Office of Foreign Asset Control of the Department of the Treasury of the United States of America.

Office:  Department of Commerce and Consumer Affairs in Hawaii and the Bureau of Conveyances of the State of Hawaii, as the case may be.

Operating Account:  A deposit account opened and maintained by Borrower with The Bank of Hawaii (or such other bank reasonably acceptable to the Agent), on behalf of the Agent, to be utilized in the manner set forth in Section 4.2(i).

Original Construction Budget: The construction budget delivered in connection with the Original Loan Agreement as modified from time to time prior to the Effective Date.

Original Construction Loan Agreement:  The Construction Loan Agreement, dated as of July 14, 2006, between Borrower and LBHI, as amended by the First Amendment and by the Master Assignment Agreement.

Original Effective Date:  July 14, 2006.

Original Equity Requirement:  The requirement that Borrower contribute One Hundred Thirty One Million Two Hundred Sixty Thousand and 00/100 Dollars ($131,260,000) of equity to the Project under the terms of the Original Construction Loan Agreement.

Original Loan:  The loans made under the Original Construction Loan Agreement, including the loans assigned to MH Kapalua under the Master Assignment Agreement and the $10,000,000 loan made by MH Kapalua to Borrower under the Original Construction Loan Agreement and as set forth in the Master Assignment Agreement.

Outstanding Entitlements:  As defined in Section 15.1(a).

Patriot Act: United States Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001), as may be amended from time to time.

Payment Date:  The first (1st) day of each calendar month or, if such day is not a Business Day, the immediately succeeding Business Day.

PDP:  As defined in Section 8.1(f).

Permits:  An administrative approval by a government agency that the Project complies with law and Entitlements, which allow the Project to proceed with certain specific scopes of work; which includes any building permit, excavation permit, foundation permit, environmental permit, utility permit, or other permit required in respect of the Construction or the Project.

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Permitted Exceptions:  The matters listed on Exhibit C annexed hereto.

Permitted Fund Manager:  Any Person that on the date of determination is (i) one of the entities listed on Exhibit L or any other nationally-recognized manager of investment funds investing in debt or equity interests relating to commercial real estate, (ii) investing through a fund with committed capital of at least $250,000,000 and (iii) not subject to any bankruptcy, insolvency or similar proceeding.

Permitted Investments:  Direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States, with maturities set forth in Section 13.3(d).

Permitted Lease:  A lease entered into between Borrower, as lessor, and a third party, as lessee, pursuant to which Borrower leases to such lessee (i) a Fractional Ownership Unit subject to the following conditions:  (A) such lease shall have a term of not more than six months; (B) the rent payable under such lease to Borrower shall not be less than the fair market rental rate as reasonably determined by Borrower; and (C) when such lease is entered into no more than twenty-five (25) Fractional Ownership Units shall be subject to the terms of a Permitted Lease, or (ii) a Residential Condominium Unit pursuant to the consent of the Lenders or pursuant to a leasing plan approved by the Lenders.

Permitted Transfers:  The following transfers shall be deemed “Permitted Transfers” and Borrower shall not be required to obtain any Lender’s prior written consent to such transfers: (i) a transfer made in accordance with the buy-sell provisions of the Member’s Limited Liability Company Agreement as in effect on the date hereof; (ii) a transfer of direct or indirect interests in Member or in any entity owning a direct or indirect interest in Member; provided the transferee shall be a MII/MLP Affiliate; (iii) a transfer of direct or indirect interests in Member or in any entity owning a direct or indirect interest in Member in connection with a public offering or a “privatization,” including, without limitation, interests in ML&P or MII in connection with a publicly traded stock or any public offering of equity ownership interests; and (iv) a one-time transfer of the managing member interest in Borrower to an entity that is a MII/MLP Affiliate or to another Person provided that the other Person has financial capability and creditworthiness comparable to the financial capability and creditworthiness of Member, as reasonably determined by the Required Lenders and each Rating Agency (if applicable).  For purposes hereof, the term “MII/MLP Affiliate” shall mean an entity in which MII and/or ML&P manages, directly or indirectly, the affairs and decisions of the MII/MLP Affiliate, including, without limitation, the day-to-day and major management and operations decisions.

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Person:  Any individual, corporation, partnership, joint venture, limited liability company, estate, trust, unincorporated association, any federal, state, county or municipal government or any bureau, department or agency thereof and any fiduciary acting in such capacity on behalf of any of the foregoing.

Personal Property:  All personal property, fixtures and equipment required or beneficial for the operation of the Land or the Improvements.

Plans and Specifications:  The sets of design plans and specifications for the Project prepared by the Architect and its consultants that have been reviewed and approved by the Lenders, and on which the Construction Contract is based.  The term also includes (a) any material modification of any of those plans, maps, sketches, diagrams, surveys, drawings, specifications or lists of materials that LBHI (prior to the Effective Date) or the Lenders (from and after the Effective Date) has previously reviewed and approved if the modification is in writing and is initialed by LBHI (prior to the Effective Date) or the Lenders (after the Effective Date) and the Borrower or the Architect, and (b) any plans, maps, sketches, diagrams, surveys, drawings, specifications or lists of materials to be utilized for development of the Project that are created subsequent to the Effective Date that have been reviewed and approved by the Lenders.

Pledge and Security Agreement:  Pledge and Security Agreement, dated as of June 14, 2006, by Member in favor of the Agent (as successor to LBHI).

Pledge of Accounts, Security Agreement and Rights to Payment:  That certain Pledge of Accounts, Security Agreement and Rights to Payment dated as of July 14, 2006 by and between Borrower, as debtor, and the Agent (as successor to  LBHI).

Policy:  As defined in Section 15.2(b).

Prepayment Proceeds:  The sum of (i) funds received by the Agent pursuant to Sections 14.4(a)(viii), 14.4(b)(viii) and 14.5(e) and (ii) Net Lease Payments.

Price Protection Letter:  The letter agreement between Exclusive Resorts and the Agent (as successor to LBHI), dated July 14, 2006, relating to the rights of the Agent (as successor to LBHI) to foreclose on certain Units subject to the ER Purchase Agreement.

Prime Rate:  The interest rate per annum publicly announced by Citibank, N.A. in New York City as its base rate, as such rate shall change from time to time.  If Citibank, N.A. ceases to announce a base rate, “Prime Rate” shall mean the interest rate per annum published in The Wall Street Journal from time to time as the “Prime Rate”.  If more than one “Prime Rate” is published in The Wall Street Journal for a day, the average of such “Prime Rates” shall be used, and such average shall be rounded up to the nearest one-eighth of one percent (0.125%).  If The Wall Street Journal ceases to publish a “Prime Rate”, the Agent shall select an equivalent publication that publishes a “Prime Rate”, and if a “Prime Rate” is no longer generally published or is limited, regulated or administered by a governmental or quasi-governmental body, then the Agent shall select a comparable interest rate index.

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Prime Rate Margin:  In respect of each portion of the Loans bearing interest at an Adjusted Prime Rate, the difference (expressed as the number of basis points) between (a) the Adjusted LIBOR Rate on the date the Adjusted LIBOR Rate was last applicable to such portion of the Loans and (b) the Prime Rate on the date that the Adjusted LIBOR Rate was last applicable to the Loans.

Prior Agent:  As defined in the Recitals to this Agreement.

Pro Rata Interest:  With respect to any individual Lender, a percentage equal to a fraction the numerator of which is such Lender’s share of the outstanding principal amount of all Loans and the denominator of which is the aggregate outstanding principal amount of all Loans.

Proceeding:  As defined in Section 23.11.

Proceeds:  As defined in Section 16.1(a).

Prohibited Person:  Any Person:

(i)            listed in the annex to, or who is otherwise subject to the provisions of, Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001, and relating to Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (the “Executive Order”);

(ii)           that is owned or controlled by, or acting for or on behalf of, any person or entity that is listed in the annex to, or is otherwise subject to the provisions, of the Executive Order;

(iii)          with whom a Person is prohibited from dealing or otherwise engaging in any transaction by any terrorism or money laundering Law, including the Executive Order;

(iv)          who commits, threatens or conspires to commit or supports “terrorism” as defined in the Executive Order;

(v)           that is named as a “specially designated national and blocked person” on the most current list published by the U.S. Treasury Department Office of Foreign Assets Control at its official website or at any replacement website or other replacement official publication of such list; or

(vi)          who is an Affiliate of a Person listed in clauses (i)-(v) above.

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Project:  The collective reference to (i) the Land, (ii) the Facilities, (iii) the Improvements and (iv) the Personal Property, excluding such portion of the Project that has been released pursuant to the terms of this Agreement.

Protective Advance: All sums expended by one or more Lenders pursuant to Sections 7.3, 15.1(g), 15.1(k) and 15.2(f).

Public Report:  Condominium Public Report of Kapalua Bay Condominium prepared by Borrower and designated Registration No. 5900.

PUD:  As defined in Section 8.1(f).

Qualified Transferee: A Person that is not a Prohibited Person for purposes of the Patriot Act and that is one or more of the following:

(A)          a real estate investment trust, bank, saving and loan association, investment bank, insurance company, trust company, commercial credit corporation, pension plan, pension fund or pension advisory firm, mutual fund, government entity or plan, provided that any such Person referred to in this clause (A) satisfies the Eligibility Requirements,

(B)           an investment company, money management firm or “qualified institutional buyer” within the meaning of Rule 144A under the Securities Act 1933, as amended, or an institutional “accredited investor” within the meaning of Regulation D under the Securities Act of 1933, as amended, provided that any such Person referred to in this clause (B) satisfies the Eligibility Requirements;

(C)           an institution substantially similar to any of the foregoing entities described in clauses (A) or (B) that satisfies the Eligibility Requirements;

(D)          any entity Controlled by any of the entities described in clauses (A) or (C);

(E)           an investment fund, limited liability company, limited partnership or general partnership where a Permitted Fund Manager or an entity that is otherwise a Qualified Transferee under clauses (A), (B), (C) or (D) of this definition acts as the general partner, managing member or fund manager and at least 50% of the equity interests in such investment vehicle are owned, directly or indirectly, by one or more entities that are otherwise Qualified Transferees under clauses (A), (B), (C) or (D) of this definition;

(F)           any entity listed on Exhibit L attached hereto;

(G)           any entity listed on Exhibit M attached hereto; or

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(H)          any Affiliate of a Person described in subparagraphs (A) — (G).

Qualifying Contract of Sale:  A legally enforceable Contract of Sale between Borrower and an unaffiliated third-party purchaser for the sale and purchase of an individual Unit.  Each Qualifying Contract of Sale must (i) require the payment upon execution of a Contract Deposit equal to no less than ten percent (10%) of the Purchase Price, (ii) require the payment of a Gross Sales Price which will yield Net Sale Proceeds not less the applicable Release Price, (iii) be expressly subordinate to the lien of the Mortgage, (iv) comply with the requirements of Section 14.1(a) hereof, (v) comply with all Laws and (vi) be subject to no contingencies, so that, other than by reason of a default by Borrower thereunder, the purchaser thereunder may not rescind the same without forfeiting its Contract Deposit.  A Qualifying Contract of Sale may be assigned by such a purchaser to a third-party purchaser who is not an Affiliate of Borrower, Guarantor, Member, ML&P, MII, an MII/MLP Affiliate or otherwise under the Control of any such entity.

Rating Agencies:  Each of S&P, Moody’s and Fitch or any other nationally recognized statistical rating agency which has been approved by the Required Lenders.

Recourse Guaranty:  The Guaranty, dated as of July 14, 2006, by Guarantor in favor of Lender, pursuant to which Guarantor guarantees to the Agent (as successor to  LBHI) the payment of the Recourse Obligations.

Recourse Obligations:  As defined in the Notes.

Related Parties:  As defined in Section 15.3(d).

Release Payment:  Any payment required to be made under Section 14.4(a)(viii), 14.4(b)(viii) or Section 14.5(e) (such payments shall collectively be referred to as “Release Payments”).

Release Price:  In respect of each Unit and each Facility, the amount set forth on Schedule A attached hereto.

Replacement Lender: As defined in Section 23.21.

Required Lenders:  Subject to the last sentence of this definition, (i) until the Facility A Obligations have been paid in full, the Facility A Lenders (excluding all Facility A Lenders that are Defaulting Lenders) holding at least sixty-six and two-thirds percent (66 2/3%) of the aggregate unpaid principal amount of the Facility A Loans then outstanding; (ii) from and after the date that the Facility A Obligations have been paid in full, the Facility B Lenders (excluding all Facility B Lenders that are Defaulting Lenders) holding at least sixty-six and two-thirds percent (66 2/3%) of the aggregate unpaid principal amount of the Facility B Loans then outstanding; and (iii) from and after the date that the Facility B Obligations have been paid in full, the Facility C Lenders

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(excluding all Facility C Lenders that are Defaulting Lenders) holding at least sixty-six and two-thirds percent (66 2/3%) of the aggregate unpaid principal amount of the Facility C Loans then outstanding; provided that (x) if clause (ii) above should apply and an Event of Default has occurred and is continuing, then the term “Required Lenders” shall mean the Facility B-1 Lenders (excluding all Facility B-1 Lenders that are Defaulting Lenders) holding at least sixty-six and two-thirds percent (66 2/3%) of the aggregate unpaid principal amount of the Facility B-1 Loans then outstanding, and (y) if clause (iii) above should apply and an Event of Default has occurred and is continuing, then the term “Required Lenders” shall mean the Facility C-1 Lenders (excluding all Facility C-1 Lenders that are Defaulting Lenders) holding at least sixty-six and two-thirds percent (66 2/3%) of the aggregate unpaid principal amount of the Facility C-1 Loans then outstanding.  The Facility A Commitment and the Loans held by MH Kapalua shall be excluded in determining Required Lenders.

Requisition:  A requisition, in the form of Exhibit D annexed hereto, for disbursement of Facility A Loans under the Facility A Commitment.

Reserve Percentage:  For any Interest Period, that percentage which is specified on the Determination Date by the Board of Governors of the Federal Reserve System (or any successor) or any other governmental authority with jurisdiction over the applicable Lender for determining the maximum reserve requirement (including, but not limited to, any marginal reserve requirement) for the holder of the applicable Note with respect to liabilities constituting or including Eurocurrency liabilities in an amount equal to that portion of the Loans affected by such Interest Period and with a maturity equal to such Interest Period.

Residential Condominium:  As defined in Section 14.2(a).

Residential Condominium Unit:  Each individual condominium unit (including, but not limited to, any appurtenant interest in the common elements) in the Residential Property created by the submission thereof to the provisions of the Condominium Act (all such condominium units shall be referred to collectively as the “Residential Condominium Units”).

Residential Property:  That portion of the Development Land designated in the Plans and Specifications for the Residential Condominium and the Improvements to be constructed thereon.

Ritz-Carlton:  The Ritz-Carlton Development Company, Inc., a Delaware corporation.

Ritz-Carlton Consent Agreement:  That certain Consent to Assignment of Agreements dated as July 14, 2006, by Ritz-Carlton.

S&P:  Standard & Poor’s Ratings Group, a division of McGraw-Hill, Inc.

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Second Omnibus Amendment to Construction Loan Documents:  The Second Omnibus Amendment to Construction Loan Documents, dated as of the Effective Date, among the Lenders, the Agent, Borrower and Guarantors.

Second Omnibus Amendment to Recorded Construction Loan Documents:  The Second Omnibus Amendment to Recorded Construction Loan Documents, dated as of the Effective Date, among the Lenders, the Agent, Borrower and ML&P.

Senior Lender:  A Lender other than a Subordinate Lender.

Servicer:  As defined in Section 18.1.

Servicing Agreement:  As defined in Section 18.1.

Servicing Fees:  As defined in Section 18.1.

Servicing Standard:  The servicing and administration of the Loans or the management of the Mortgaged Property, as applicable, by the Agent for the benefit of the Lenders and in accordance with applicable law, the terms of the Loan Documents and this Agreement and in the same manner in which, and with the same care, skill, prudence and diligence with which it administers mortgage loans for its own account, giving due consideration to customary and usual standards of practice of prudent institutional commercial lenders servicing their own loans, and with a view towards the best interests of the Lenders as a collective whole (subject to the relative priority rights of the Lenders as set forth in this Agreement), but without regard to (i) any relationship that Agent, or any Affiliate of Agent, may have with Borrower or any Affiliate of the Borrower or any other parties to this Agreement or the Loan Documents; (ii) the existence of any subordinate or mezzanine loan that Agent, or any Affiliate of Agent, may service, hold or have an interest in; (iii) the ownership of the Loans or any interest or participation therein, or any equity interest in the Mortgaged Property, as applicable, by the Agent or any Affiliate of Agent, as applicable; and (iv) the sufficiency of any compensation for its services hereunder and/or the Agent’s election to make any Protective Advances pursuant to the terms of this Agreement or its incurrence of any expenses.

Soft Costs:  All costs, other than Hard Costs, to be incurred in respect of the Project prior to completion of Construction, including, without limitation, sales and marketing costs and expenses, architects’ fees, engineers’ fees, interest on the Notes, real estate taxes, insurance premiums and bond fees.

Spa:  The improvements and amenities intended to be constructed on the Spa Land.

Spa Land:  As such term is defined in the Recitals to this Agreement.

SPC Party: As defined in Section 15.3(o).

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Split Note Holders:  As defined in the Recitals to this Agreement.

Split Notes:  As defined in the Recitals to this Agreement.

State:  The State of Hawaii.

Stipulation Order:  As defined in Section 8.1(dd).

Subcontractor:  Any party furnishing labor, services or materials to the Project under a Construction Contract.

Subordinate Lender:  So long as any Facility A Commitment remains in effect or any Facility A Obligation remains unpaid, each Facility B-1 Lender, Facility B-2 Lender, Facility C-1 Lender and Facility C-2 Lender; and thereafter so long as any Facility B-1 Obligation remains unpaid, each Facility B-2 Lender, Facility C-1 Lender and Facility C-2 Lender; and thereafter so long as any Facility B-2 Obligation remains unpaid, each Facility C-1 Lender and Facility C-2 Lender; and thereafter so long as any Facility C-1 Obligation remains unpaid, each Facility C-2 Lender.

Successor Agent:  As defined in the Recitals to this Agreement.

Successor Agent Agreement:  As defined in the Recitals to this Agreement.

Swedbank:  As defined in the Recitals to this Agreement.

Tax and Insurance Escrow Fund:  As defined in Section 15.1(l).

Tax and Insurance Reserve:  As defined in Section 10.5.

Tax Escrow Fund:  As defined in Section 15.1(l).

Termination Agreement:  The Termination Agreement, dated as of the Effective Date, among Borrower, Holdings, Nordic/PCL and the other parties thereto terminating: (i) the Forbearance Agreement dated as of October 24, 2008 between Borrower and Nordic/PCL, (ii) the Indemnification Agreement dated as of October 24, 2008 between Borrower and Nordic/PCL and (iii) the Security and Subordination Agreement dated as of October 24, 2008 by Holdings,  and the other parties thereto in favor of Nordic/PCL.

Title Insurer:  First American Title Insurance Company and Fidelity Title Insurance Company:

Title Policy:  An ALTA Mortgagee’s Loan Title Insurance Policy, issued by Title Insurer, insuring the first lien priority of the Mortgage, subject only to the Permitted Exceptions, and otherwise in form satisfactory to the Lenders.

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Transaction Costs:  Out-of-pocket costs payable by Borrower in respect of a sale of a Unit or Fractional Ownership Interest, including brokerage fees, sales commissions, royalty fees, any fees payable to Ritz-Carlton (excluding if payable to Ritz-Carlton any items contained in the Construction Budget referenced as “Hospitality Start-Up Recovery”), any fees payable to Kapalua Realty Company, Ltd., membership deposits for the Kapalua Club payable to Kapalua Land Company, Ltd. (all such fees paid to Affiliates as expressly provided in the Affiliate Agreements referenced in Schedule B and as in effect as of the date hereof), and customary closing costs (whether customarily payable by either seller or purchaser) not to exceed in the aggregate two percent of the Gross Sales Price of the Unit or Fractional Ownership Interest.  In addition to the foregoing, Transaction Costs shall also include any additional costs not referred to above if such costs are approved by (x) the Lenders if the total transaction costs exceed ten percent (10%) of the Gross Sales Price for such Unit, or (y) the Required Lenders if the total Transaction Costs are less than or equal to ten percent (10%) of the Gross Sales Price for such Unit.

Transfer:  Any sale, transfer, lease, conveyance, alienation, pledge, assignment, mortgage, encumbrance, hypothecation or other disposition of (i) all or any portion of the Project, (ii) all or any portion of Borrower’s right, title and interest (legal or equitable) in and to the Project or (iii) any interest in Borrower or any Controlling interest in any member in Borrower and which is not a Permitted Transfer.  Notwithstanding the foregoing, the sale of any Unit or Facility in accordance with the terms of Article XIV hereof shall not constitute Transfers hereunder.

TriMont: As defined in Section 5.1(c).

Unit:  Any individual condominium unit created at the Project, including, without limitation, Residential Condominium Unit or Fractional Ownership Unit (all such condominium units shall collectively be referred to as the “Units”).

Section 2.2Rules of Construction.

The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”.  The word “will” shall be construed to have the same meaning and effect as the word “shall”.  Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns (subject to any restrictions on such assignments set forth herein), (c) the words “herein”, “hereof” and “hereunder”, and words of similar import shall be construed to refer to this Agreement in

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its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Schedules and Exhibits shall be construed to refer to Articles and Sections of, and Schedules and Exhibits to, this Agreement, (e) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, and (f) any reference to any law, rule or regulation shall be construed to mean that law, rule or regulation as amended and in effect from time to time.  Each covenant in this Agreement shall be given independent effect, and the fact that any act or omission may be permitted by one covenant and prohibited or restricted by any other covenant (whether or not dealing with the same or similar events) shall not be construed as creating any ambiguity, conflict or other basis to consider any matter other than the express terms hereof in determining the meaning or construction of such covenants and the enforcement thereof in accordance with their respective terms.

ARTICLE III
REPRESENTATIONS AND WARRANTIES

Section 3.1Representations and Warranties of Borrower.

To induce the Agent and the Lenders to execute this Agreement and perform their obligations hereunder, Borrower hereby represents and warrants to the Agent and the Lenders as of the Effective Date (and as of each date of a Requisition and disbursement of Loans, with updates of such facts and circumstances that are reasonably necessary to include in such Requisition to render the representations set forth therein true and correct in all material respects) as follows:

(a)               Borrower has good and marketable fee simple title to the Development Land free and clear of all liens, encumbrances and charges whatsoever, except for the Permitted Exceptions and such other liens, encumbrances and charges that have been disclosed to, and approved by, the Lenders prior to the Effective Date or shall be discharged in full or bonded over in a manner satisfactory to the Lenders on or prior to the Effective Date.  Borrower has the right to mortgage, grant, bargain, sell, pledge, assign, warrant, transfer and convey the Development Land.

(b)               Borrower has good and marketable leasehold title to the Spa Land, pursuant to the Ground Lease, free and clear of all liens, encumbrances and changes whatsoever, except for the Permitted Exceptions and such other liens, encumbrances and charges that have been disclosed to, and approved by, the Lenders prior to the Effective Date or shall be discharged in full or bonded over in a manner satisfactory to the Lenders on or prior to the Effective Date.  Borrower has the right to mortgage its leasehold estate in the Spa Land.  The certified copy of the Ground Lease provided to the Lenders by Borrower is true, correct and complete in all respects.  The Ground Lease is in full force and effect and has not been amended, except as amended by the Ground Lessor Consent, Estoppel Certificate and Amendment.  All rents, additional rents and other sums due and payable under the Ground Lease have been paid in full.  Neither Borrower, as ground lessee under the Ground Lease, nor ground lessor under the Ground Lease has received or given any notice of a default under the Ground Lease which has not been cured.

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(c)               Except as otherwise disclosed in writing by Borrower to the Lenders, no material litigation or proceedings are pending, or, to the best of Borrower’s knowledge, threatened, against Borrower, Guarantor, Member or the Project or any portion thereof.  There are no pending, or, to Borrower’s knowledge, threatened, Environmental Proceedings in respect of the Project or any portion thereof.

(d)               Borrower, Guarantor and Member have or will upon request provide the Lenders with complete financial statements that reflect a fair and accurate view of their respective financial conditions.  Borrower has no contingent liabilities, other than those related to its ownership of the Land and its preparation for the development of the Project.  Member has no contingent obligations other than capital funding obligations to Borrower.

(e)               Borrower is and always has been a duly organized and validly existing limited liability company, duly organized under the laws of the State of Delaware.  Member is and always has been a duly organized and validly existing limited liability company, duly organized under the laws of the State of Delaware.  Borrower has full power and authority to execute, deliver and perform all Loan Documents to which it is a party, and such execution, delivery and performance have been duly authorized by all requisite action on the part of Borrower.

(f)                The Project is not encumbered or subject to any capital leases, liens or judgments, other than, with respect to Borrower, liens for real estate taxes which are not yet due and such other liens, encumbrances and charges that have been disclosed to, and approved by, the Lenders prior to the Effective Date or shall be discharged in full or bonded over in a manner satisfactory to the Lenders on or prior to the Effective Date.

(g)               To the best knowledge of the Borrower and Member, each of Borrower and Member is in compliance with all Laws applicable to it and has obtained all permits required for it to operate as a limited liability company.

(h)               Neither Borrower nor Member is involved in any dispute with any taxing authority.  Neither Borrower nor Member is in default of any obligation to pay taxes to any taxing authority.

(i)                Borrower has never owned any property, other than the Land, and has never engaged in any business, other than the ownership of the Land, operation of the hotel previously located on the Land, and preparation for the development of the Project.  Member has never owned any property, other than its interest in Borrower, and has never engaged in any business, other than business incidental to its ownership of an interest in, and as member of, Borrower.

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(j)                To the knowledge of Borrower, no consent, approval or authorization of or declaration, registration or filing with any Governmental Authority or nongovernmental Person, including any creditor, partner, or member of Borrower or Guarantor, is required in connection with the execution, delivery and performance of this Agreement or any of the Loan Documents, other than such consents, approvals or authorizations which have been obtained, and the recordation of the Mortgage and the Assignment of Leases and Rents and the filing of UCC financing statements.

(k)               The execution, delivery and performance of this Agreement, the execution and payment of the Notes and the granting of the Mortgage and other security interests under the other Loan Documents will not constitute a breach or default under any other agreement to which Borrower, Member or any Guarantor is a party or may be bound, or a violation of any law or court order which may affect the Project.

(l)                To the knowledge of Borrower, after giving effect to the funding of the Initial Restructuring Loan there is no default under this Agreement, any of the other Loan Documents, or any other document or instrument to which Borrower is bound, nor any condition which, after notice or the passage of time or both, would constitute a default or an Event of Default under said documents.

(m)              Borrower has no knowledge of and has not received written notice of any pending or threatened, condemnation or eminent domain proceedings in respect of the Land or any part thereof.

(n)               As of the date hereof, the amounts set forth in the Construction Budget represent a full and complete itemization by category of all costs, expenses and fees which Borrower reasonably expects to pay or reasonably anticipates becoming obligated to pay to complete the Construction.

(o)               To the knowledge of Borrower, neither the construction of the Improvements nor the use of the Project when completed will violate (i) any Laws (including, without limitation, zoning ordinances, building codes, land use and environmental laws and laws relating to the disabled) or (ii) any restrictions, covenants or conditions of record or agreements affecting the Project.  Neither the zoning authorizations, approvals or variances nor any other right to construct or to use the Project is to any extent dependent upon or related to any real estate other than the Land.  All Governmental Approvals required for the Construction in accordance with the Plans and Specifications have been obtained or will be obtained prior to the commencement of Construction, and, to the knowledge of Borrower, all Laws relating to the Construction and operation of the Improvements have been complied with.  To the extent such Governmental Approvals have been issued or obtained, as the date hereof, Borrower has delivered true, complete and correct copies of same to the Agent.

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(p)               Except for retainage amounts and amounts disclosed to the Lenders prior to the date hereof and which shall be paid in full from the proceeds of the Initial Restructuring Loan, all costs and expenses incurred for any and all labor, materials, supplies and equipment used in the development of the Project or the construction or demolition of any improvement on the Land have been paid in full as of the date hereof or will be paid in full from proceeds of the Loans.

(q)               The Project will have adequate water, gas and electrical supply, storm and sanitary sewerage facilities, other required public utilities, fire and police protection, and means of access between the Project and public streets.

(r)                Except as shown on the Survey submitted to the Agent in connection with the Loans, no portion of the Project and no building or any other portion of the Improvements is located in an area identified by the Secretary of Housing and Urban Development or any successor thereto as an area having special flood hazards pursuant to the National Flood Insurance Act of 1968 or the Flood Disaster Protection Act of 1973, as amended, or any successor law, or, if located within any such area, Borrower has obtained and will maintain the insurance prescribed in Section 15.2 hereof.

(s)               Borrower has dealt with no broker or finder in connection with this Agreement or the Loans.

(t)                All financial statements and other information previously furnished by both Borrower and Guarantor in connection with the Loans are true, complete and correct in all material respects and fairly present the financial conditions of the subjects thereof as of the respective dates thereof and do not fail to state any material fact necessary to make such statements or information not misleading, and no Material Adverse Change with respect to Borrower or Guarantor has occurred since the respective dates of such statements and information.  Neither Borrower nor Guarantor has any material liability, contingent or otherwise, not disclosed in such financial statements.

(u)               Borrower and Guarantor are solvent, and no bankruptcy, reorganization, insolvency or similar proceeding under any state or federal law with respect to Borrower or Guarantor or any Affiliate thereof has been initiated.

(v)               Except as disclosed in the Environmental Report: (i) the Project is free of Hazardous Material and is in compliance with all Laws; (ii) neither Borrower nor, to the best knowledge of Borrower, any other Person, has ever caused or permitted any Hazardous Material to be placed, held, located or disposed of on, under, at or in a manner to affect the Project and the Project has never been used (whether by Borrower or, to the best knowledge of Borrower, by any other Person) for any activities involving, directly or indirectly, the use, generation, treatment, storage, transportation, or disposal of any Hazardous Material; and (iii) there are no underground tanks, vessels, or similar facilities for the storage or containment of Hazardous Materials of any sort on, under or affecting the Project.

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(w)              The Development Land and Spa Land are each taxed separately without regard to any other property and for all purposes the Development Land and Spa Land may be mortgaged, conveyed and otherwise dealt with as an independent parcel.

(x)               There are no Leases, subleases or other arrangements for occupancy of space within the Project, and no person or entity has any possessory interest in, or right to occupy, the Project or any portion thereof, except for the leases and month-to-month rental agreements listed on Schedule C attached hereto and pursuant to Qualifying Contracts of Sale entered into prior to or after the date hereof.

(y)               Except pursuant to the ML&P Agreements, the ER Purchase Agreement, and Qualifying Contracts of Sale currently in effect and that will be entered into after the date hereof, neither the Project nor any portion thereof is subject to any purchase option, buy-sell right (except as provided in the limited liability company agreement of Member), right of first refusal, right of first offer or other similar right to acquire same.

(z)               Upon completion of the Construction, no building or other improvement will encroach upon any property line, building line, setback line, side yard line or any recorded or visible easement.

(aa)             The Loans are not being made for the purpose of purchasing or carrying “margin stock” within the meaning of Regulation G, T, U or X issued by the Board of Governors of the Federal Reserve System, and Borrower agrees to execute all instruments necessary to comply with all the requirements of Regulation U of the Federal Reserve System.

(bb)            The Loans evidenced by the Notes are solely for the business purpose of Borrower, and is not for personal, family, household or agricultural purposes.

(cc)             No portion of the Project has been or, to the knowledge of Borrower, will be purchased with proceeds of any illegal activity.

(dd)            Borrower is not a party in interest to any plan defined or regulated under ERISA, and the assets of Borrower are not “plan assets” of any employee benefit plan covered by ERISA or Section 4975 of the Internal Revenue Code.

(ee)             Borrower is not a “foreign person” within the meaning of Section 1445 or 7701 of the Internal Revenue Code.

(ff)              Neither Borrower, Member, Guarantor nor any Person holding a direct or indirect interest in Borrower is (or will be) a person with whom the Agent or any Lender is restricted from doing business under OFAC (including Persons named on OFAC’s Specially Designated and Blocked Persons list) or under any statute, executive order (including the September 24, 2001, Executive Order Blocking Property and

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Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism), or other governmental action and is not intentionally or with knowledge, and shall not intentionally or with knowledge engage in any dealings or transactions or otherwise be associated with such Persons.  In addition, Borrower hereby agrees to provide the Agent with any additional information that the Agent or any Lender deems reasonably necessary from time to time in order to ensure compliance with all Laws concerning money laundering and similar activities.

(gg)            Borrower has disclosed to the Lenders all material facts regarding the Project and Borrower and has not failed to disclose any material fact that could cause any representation or warranty made herein to be materially misleading.

(hh)            Each of the representations and warranties made by Guarantor herein or in any of the other Loan Documents is true, complete and correct in all material respects.

(ii)               Borrower possesses all franchises, patents, copyrights, trademarks, trade names, servicemarks, licenses and permits, and rights in respect of the foregoing, adequate for the conduct of Borrower’s businesses substantially as now conducted and to be conducted at the Project without conflict with any rights of others.

(jj)               A true and correct organizational chart outlining the percentage of ownership and capital structure of Borrower and the direct and indirect owners of Borrower is attached hereto as Exhibit F.

(kk)             Borrower has delivered to the Agent true, correct and complete copies of the ER Purchase Agreement and the ML&P Agreements.  Each such agreement is in full force and effect and has not been amended.  Borrower, Exclusive Resorts and ML&P have not received or given any notice of a default under such agreements which has not been cured.  Attached hereto as Schedule B is a complete list of all agreements entered into by, between or among Borrower and any Affiliate of ML&P, Exclusive Resorts, LLC, a Delaware limited liability company, MII and MII/MLP Affiliate.  Amendments to the ER Purchase Agreement and any individual purchase agreements entered into pursuant thereto may be amended as permitted by Section 15.1(l).

(ll)               Borrower has satisfied the Original Equity Requirement.

(mm)           Borrower represents that to the best of its knowledge, it is in compliance with all of the requirements of state, local and municipal requirements for the construction of the Project, including but not limited to, the requirements of the State of Hawaii Department of Land and Natural Resources (Historical Preservation Division).

(nn)            All proceeds from the Original Loan have been applied solely to pay for Hard Costs and Soft Costs set forth in the Construction Budget.

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(oo)            Prior to the consummation of the transactions contemplated by the Master Assignment Agreement, the Split Note Holders have funded, and the Borrower acknowledges having received, under the Original Loan Agreement the total amount of advances equal to the sum of $228,764,578.58.

Section 3.2Survival of Representations and Warranties.

Borrower agrees that all of the representations and warranties set forth in Section 3.1 and elsewhere in this Agreement are true as of the Effective Date and, except for matters which have been disclosed by Borrower in writing, will be true at all times thereafter.  Each request for a disbursement under the Loan Documents shall constitute a reaffirmation of such representations and warranties, as deemed modified in accordance with the disclosures made and approved as aforesaid, as of the date of such request.  In addition, Borrower shall be deemed to have reaffirmed such representations and warranties as of the date on which Facility A Loans are made to fund interest due on the Loans pursuant to the second sentence of Section 4.2(e).  It shall be a condition precedent to the making of each disbursement of a Facility A Loan that each of said representations and warranties is true and correct as of the date of such requested disbursement, except as aforesaid.  In addition, at the Agent’s request, Borrower shall reaffirm such representations and warranties in writing prior to each disbursement hereunder; subject to updating same to include those facts and circumstances that are reasonably necessary to include to render the representations true and correct in all material respects.  In the event that a representation and/or warranty made by Borrower on the Effective Date is updated such that a material adverse fact is disclosed to the Agent or any Lender then the Facility A Lenders shall be permitted to withhold disbursement of an advance under the Facility A Commitment until the fact or circumstance no longer exists or the Required Lenders otherwise waive same.

Section 3.3Representations and Warranties of Lenders.

Each Lender (other than LBHI) hereby represents and warrants to each other Lender, the Agent, Borrower and each Guarantor as of the Effective Date as follows, and LBHI hereby represents and warrants to each other Lender, the Agent, Borrower and each Guarantor as of the Effective Date as to the following, other than those matters set forth in paragraphs (b), (c), (d) and (f) below:

(a)               In the case of each Lender other than LBHI that it is duly authorized by all requisite corporate or other requisite actions to enter into and perform the terms of this Agreement and each other Loan Document to which it is a party, and in the case of LBHI that the individual executing this Agreement and each other Loan Document to which LBHI is a party on behalf of LBHI is duly authorized to execute such agreements on behalf of LBHI.

(b)               It is the legal and beneficial owner of its Loans and that such interest is free and clear of any liens or security interests.

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(c)               Immediately prior to the exchange thereof pursuant to Section 4.1, it was the legal and beneficial owner of the portion of the Original Loan evidenced by the promissory notes issued to it under the Original Construction Loan Agreement and the Co-Lending Agreement and that immediately prior to the exchange thereof pursuant to Section 4.1 such interest was free and clear of any liens or security interest.

(d)               The execution and delivery of this Agreement and the performance of its obligations hereunder will not violate, breach or conflict with its organizational documents or any agreement, contract, document or instrument to which it is a party.

(e)               There is no litigation or governmental proceeding pending, or to the best of its knowledge, threatened, which, if determined adversely to such Lender, would materially adversely affect the enforceability of this Agreement or any other Loan Document.

(f)                No approval, authorization, order, license or consent of, or registration or filing with, any Governmental Authority or other Person is required in connection with the execution and delivery of this Agreement by it or the performance of its obligations hereunder, except those which have been obtained.

(g)               It is, and, upon its execution and delivery of this Agreement and its performance hereunder, shall continue to be (1) in compliance with any and all applicable licensing requirements of the state where the Mortgaged Property is located, if any such requirements are applicable to such Lender, and (2) either (i) organized under the laws of such state or (ii) qualified to do business in such state or (iii) to the best of its knowledge, not required to qualify to do business in such state.

(h)               Neither the execution nor delivery of this Agreement, or the other Loan Documents or any subsequent Assignment and Assumption Agreement nor the exercise of any remedy or enforcement of any right with respect thereto will constitute a prohibited transaction within the meaning of section 406 of the Employee Retirement Income Security Act of 1974, as amended, or section 4975 of the Internal Revenue Code of 1986, as amended, for which an exemption is not available, and if such execution, delivery, purchase, exercise or enforcement constitutes such a prohibited transaction, it will cooperate with the Department of Labor, Internal Revenue Service and other affected parties in obtaining an exemption therefor.

(i)                To such Lender’s knowledge, after giving effect to the making of the Initial Restructuring Loan, no Event of Default exists.

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ARTICLE IV
EXCHANGE OF NOTES; LOANS AND LOAN DOCUMENTS

Section 4.1Exchange of Existing Notes.

Each Lender agrees to surrender on the Initial Restructuring Funding Date to the Borrower the promissory notes issued to it under the Original Construction Loan Agreement and in exchange for the cancellation of such promissory notes (without extinguishing the indebtedness evidenced thereby) Borrower shall issue to each Lender on the Initial Restructuring Funding Date the Notes set forth on Schedule D.  As of the Initial Restructuring Funding Date (and after giving effect to the making of the Initial Restructuring Loan), the principal amount outstanding under each Note held by the Lenders is set forth on Schedule D.  As of the Initial Restructuring Funding Date, all promissory notes issued under the Original Construction Loan Agreement are deemed cancelled as of such date.

Section 4.2Facility A Loans; Facility A Lenders’ Obligation to Disburse; Reduction of Facility A Commitment.

(a)               Subject to the terms, provisions and conditions of this Agreement and the other Loan Documents, Borrower agrees to borrow from the Facility A Lenders and each Facility A Lender agrees to make Facility A Loans to Borrower, for the purposes and subject to all of the terms, provisions and conditions contained in this Agreement.  In no event shall a Facility A Lender make Facility A Loans in an amount in excess of its Facility A Commitment or after the Facility A Maturity Date.

(b)               The Facility A Loans shall be made to Borrower on the terms and conditions hereinafter set forth.  The Facility A Loans will bear interest at the rate or rates, and will be repaid, as set forth in this Agreement and in the Facility A Notes.  Borrower shall use the proceeds of the Facility A Loans solely for the purposes specified herein.

(c)               The aggregate amount of the Facility A Loans of any Facility A Lender shall not exceed the Facility A Commitment of such Facility A Lender.  The Facility A Commitment and Facility A Loans are not revolving in nature, and amounts repaid may not be subsequently readvanced.

(d)               Provided that Borrower satisfies the conditions to the making of Facility A Loans set forth in Article VIII hereof, the Facility A Lenders shall disburse the Initial Restructuring Loan to Borrower on the Initial Restructuring Funding Date.  Borrower shall use the Initial Restructuring Loan as set forth on Schedule F.

(e)               Except as set forth in the immediately succeeding sentence, provided that Borrower satisfies the conditions to the making of Facility A Loans set forth in Articles VIII, IX, XII and XIII hereof, the Facility A Lenders shall disburse Facility A Loans (other than the Initial Restructuring Loan as provided for in Section 4.2(d)) approximately ten (10) days after Borrower’s satisfaction of such conditions.  So long as (i) the Facility A Commitments have not been terminated or fully utilized and (ii) there shall exist no Default of which Borrower has received notice from the Agent, or any Lender or Event of Default, then the Facility A Lenders shall make Facility A Loans on

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each Payment Date in an amount equal to interest due on the Loans on such Payment Date, and the delivery of a Requisition by Borrower shall not be required for the making of such Facility A Loans.  On each day on which Facility A Loans are made to pay interest due on the Loans pursuant to the immediately preceding sentence, Borrower shall make an equity contribution in accordance with Section 12.1(l) as if such Facility A Loans were funded pursuant to a Requisition delivered in accordance with Section 12.1(l).

(f)                After the disbursement of the Initial Restructuring Loan and subject to the second sentence of Section 4.2(j), each Facility A Lender shall make successive disbursements under its Facility A Commitment to Borrower, but not more than once per calendar month, provided that (i) there shall then exist no Default or Event of Default, (ii) no Material Adverse Change shall have occurred with respect to Borrower, Guarantor or the Project, (iii) the Loans remain In Balance, (iv) all required Governmental Approvals are in full force and effect as needed for the then-current stage of Construction, and (iv) Borrower satisfies the conditions to the disbursement of the Facility A Loans set forth in Articles VIII, IX, X, XII and XIII hereof, as applicable.  All advances of Facility A Loans made by the Facility A Lenders to Borrower shall be advanced ratably among the Facility A Lenders based on the amount of each Facility A Lender’s Facility A Pro Rata Share.

(g)               To the extent that the Facility A Lenders may have acquiesced in noncompliance with any requirements precedent to the disbursement of a Facility A Loan, such acquiescence shall not constitute a waiver by the Facility A Lenders, and the Facility A Lenders may at any time after such acquiescence require Borrower to comply with all such requirements.

(h)               Each Facility A Lender shall make each Facility A Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds to the account of the Agent.

(i)                Borrower authorizes the Agent to disburse the Facility A Loan proceeds by crediting the Operating Account; provided, however, that the Agent shall not be obligated to use such method.

(j)                If pursuant to Section 4.10(b) Prepayment Proceeds are deposited into the Facility A Excess Proceeds Account, then on the date on which such deposit is made the Facility A Commitments shall be permanently reduced by the amount of such deposit, with such reduction being made pro rata among the Facility A Lenders’ Facility A Commitments.  If amounts are on deposit in the Facility A Excess Proceeds Account, then, subject to satisfying all other conditions of this Agreement for making of additional Facility A Loans, such funds shall be applied fully to fund amounts set forth in any subsequent Requisition and any interest due on any Payment Date that would otherwise be paid from proceeds of Facility A Loans, before utilizing the unfunded balance of the Facility A Commitment.

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Section 4.3Facility B-1 Loans.

As of the Initial Restructuring Funding Date, the aggregate outstanding principal amount of the Facility B-1 Loans is $27,966,385.63.  The Facility B-1 Loans will bear interest at the rate or rates, and will be repaid, as set forth in this Agreement and in the Facility B-1 Notes.  The Facility B-1 Loans are not revolving in nature, and amounts repaid may not be subsequently readvanced.

Section 4.4Facility B-2 Loans.

As of the Initial Restructuring Funding Date, the aggregate outstanding principal amount of the Facility B-2 Loans is $4,041,441.55.  The Facility B-2 Loans will bear interest at the rate or rates, and will be repaid, as set forth in this Agreement and in the Facility B-2 Notes.  The Facility B-2 Loans are not revolving in nature, and amounts repaid may not be subsequently readvanced.

Section 4.5Facility C-1 Loans.

As of the Initial Restructuring Funding Date, the aggregate outstanding principal amount of the Facility C-1 Loans is $191,430,583.52.  The Facility C-1 Loans will bear interest at the rate or rates, and will be repaid, as set forth in this Agreement and in the Facility C-1 Notes.  The Facility C-1 Loans are not revolving in nature, and amounts repaid may not be subsequently readvanced.

Section 4.6Facility C-2 Loans.

As of the Initial Restructuring Funding Date, the aggregate outstanding principal amount of the Facility C-2 Loans is $10,938,892.07.  The Facility C-2 Loans will bear interest at the rate or rates, and will be repaid, as set forth in this Agreement and in the Facility C-2 Notes.  The Facility C-2 Loans are not revolving in nature, and amounts repaid may not be subsequently readvanced.

Section 4.7Closing Documents.

On the Effective Date, Borrower shall execute and deliver (and cause any party thereto other than Borrower, the Agent or Lenders to execute and deliver) to the Agent the following:

(a)               The Notes;

(b)               Second Omnibus Amendment to Construction Loan Documents;

(c)               Second Omnibus Amendment to Recorded Construction Loan Documents;

(d)               MII Keep Whole Letters;

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(e)               MH Kapalua Keep Whole Letters;

(f)                The Successor Agent Agreement;

(g)               The Master Assignment Agreement;

(h)               Termination Agreement;

(i)                Discharge of Negative Pledge Agreement; and

(j)                Such other documents, instruments or certificates as the Agent or its counsel may reasonably require, including such documents as the Agent in its sole discretion deems necessary or appropriate to effectuate the terms and conditions of this Agreement and the Loan Documents and to comply with Laws.

Section 4.8Term of the Loans.

(a)               All Facility A Obligations shall be due and payable in full on the Facility A Maturity Date.

(b)               All Facility B Obligations and all Facility C Obligations shall be due and payable in full on the Facility B/C Maturity Date.

Section 4.9Prepayments.

Except as provided in Section 4.10, Borrower may prepay the Loans in whole only upon not less than thirty (30) days’ written notice to the Agent and the Lenders.  No such prepayment of the Loans shall be permitted unless the same is accompanied by (i) all interest accrued on the Loans through the date of prepayment, (ii) Breakage Costs incurred by the Lenders as a result of the prepayment, and (iii) reasonable attorneys’ fees incurred by the Lenders as a result of the prepayment.  A prepayment notice may be rescinded or withdrawn by Borrower provided that such rescission notice is delivered to the Agent at least five (5) days prior to the prepayment date and Borrower shall pay all of the Agent’s and the Lenders’ actual costs and expenses (including reasonable attorneys’ fees and expenses) incurred in connection with such rescission.  All prepayments under this Section 4.9 shall be applied in accordance with Section 21.1.

Section 4.10Required Principal Payments.

(a)               Borrower shall make payments on account of the principal amount of the Loans upon the release of the lien of the Mortgage in respect of a Unit or a Facility, as provided in Sections 14.4(a)(viii), 14.4(b)(viii), 14.4(c) and 14.5(e), subject to Section 4.10(b) below.

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(b)               Upon receipt thereof, the Agent shall apply the Prepayment Proceeds to repay the Debt owed to the Facility A Lenders pursuant to Section 21.1.  If the Prepayment Proceeds are greater than the Facility A Obligations so prepaid, then such excess amount shall be deposited by the Agent into the Facility A Excess Proceeds Account.  Pursuant to Section 4.2(j), funds on deposit in the Facility A Excess Prepayment Proceeds Account shall be utilized fully to fund amounts that would otherwise be funded from proceeds of Facility A Loans before any new Facility A Loans are made by the Facility A Lenders.  If the portion of the Debt owed to the Facility A Lenders has been paid in full and the Facility A Commitments have expired or have been terminated or upon the Notes being declared due and payable pursuant to Section 20.1(c), the Agent shall apply the Prepayment Proceeds to repay the outstanding Debt in accordance with Section 21.1.

(c)               On the Facility A Maturity Date, Borrower shall pay the entire amount of the Facility A Obligations.

(d)               On the Facility B/C Maturity Date, Borrower shall pay the entire amount of each of the Facility B Obligations and the Facility C Obligations.

Section 4.11Payments Generally.

(a)               All payments (whether of principal or interest) shall be deemed credited to Borrower’s account only if received by 2:00 p.m. (New York time) on a Business Day; otherwise, such payment shall be deemed received on the next Business Day.

(b)               Each Facility A Lender will make the amount of each of its  Facility A Loans, and the Borrower will make available the applicable amount of its Additional Equity Requirement, available to the Agent (or the Servicer, as the case may be) prior to 2:00 p.m. (New York time) on the Business Day on which such Facility A Loan is to be made hereunder, and the Agent (or the Servicer, as the case may be) shall make the funds so received from the Facility A Lenders and the Additional Equity Requirement available to Borrower on such date; provided that if such funds are received by the Agent (or the Servicer, as the case may be) after such time, then such funds shall be made available to Borrower no later than 12:00 p.m. (New York time) on the immediately succeeding Business Day.  Notwithstanding anything to the contrary in this Agreement (i) interest will accrue on such Facility A Lender’s Facility A Loans from the date such Lender’s funds are received by the Agent (or Servicer, as the case may be) if received by 2:00 p.m. (New York time) on the required date, and if such funds are  received on such Business Day after such time then interest shall accrue thereon from the immediately succeeding Business Day, or if such funds are not received on such Business Day then interest shall accrue thereon only after such funds have been received by the Agent (or the Servicer, as the case may be) and made available to the Borrower, and (ii) the interest payments payable to the Facility A Lenders under Sections 21.1 and 21.2 shall be adjusted, if necessary, to take into account accrual of interest on a funding by a Facility A Lender of its Facility A Loan commencing on a date other than the date on which such Facility A Loan was required to be made hereunder.

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ARTICLE V
INTEREST

Section 5.1Interest Rate.

(a)               Interest shall accrue on the Loans at the Applicable Rate.  Subject to the provisions hereinafter set forth, the Applicable Rate shall be the Adjusted LIBOR Rate.

(b)               Interest in arrears at the Applicable Rate shall be payable on each Payment Date.

(c)               As long as no Event of Default has occurred and is continuing, Borrower may elect from time to time (each, a “LIBOR Rate Election”), but no more frequently than once in any calendar month, to have the Adjusted LIBOR Rate apply to any portion of the principal amount of the Loans (including any disbursement of Facility A Loans about to be made) by giving the Servicer irrevocable written notice of such election designating the Interest Period for which such LIBOR Rate Election is to apply. For so long as TriMont Real Estate Advisors, Inc. (“TriMont”) is the Servicer, such written notice shall be given to TriMont at its Atlanta office by no later than 5:00 P.M. New York time at least four (4) LIBOR Business Days prior to the date on which the applicable Interest Period will commence.  If a LIBOR Rate Election is then in effect with respect to any portion of the Loans, then the Adjusted LIBOR Rate with respect to any additional Facility A Loan made during the applicable Interest Period then in effect shall be the Adjusted LIBOR Rate then in effect with respect to such Interest Period.  In no event may Borrower elect an Interest Period with respect to the Facility A Loans which extends beyond the Facility A Maturity Date or an Interest Period with respect to Facility B Loans or Facility C Loans which extends beyond the Facility B/C Maturity Date.  Notwithstanding anything to the contrary, (i) except with respect to Facility A Loans funded solely to fund a Requisition or to pay interest on the Loans, the LIBOR Rate Election may be exercised from time to time only as to a minimum aggregate amount of $53,000,000, and (ii) in no event shall more than seven (7) Interest Periods be in effect at any time for the Loans.  If Borrower does not select an Interest Period at least four (4) LIBOR Business Days prior to the last day of the applicable Interest Period, then the Applicable Rate for such amount following the end of such Interest Period shall be based on a thirty (30) day Interest Period.

(d)               If the Agent determines (in the case of clauses (i), (iii) and (iv) below) or receives notice from any Lender (in the case of clause (ii) below) (which determination by the Agent or such Lender shall be conclusive and binding upon Borrower, absent manifest error) (i) that dollar deposits in respect of any portion of the Loans bearing interest at the Adjusted LIBOR Rate are not generally available at such time in the London Interbank market, (ii) that the rate at which such deposits are being offered will not adequately and fairly reflect the cost to such Lender of maintaining a LIBOR Rate on such portion of the Loans or of funding the same due to circumstances

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affecting the London interbank market generally, (iii) that reasonable means do not exist for ascertaining a LIBOR Rate or (iv) that an Adjusted LIBOR Rate would be in excess of the maximum interest rate which Borrower may by law pay, then, in any such event, the Agent shall so notify Borrower and the Lenders and all portions of the Loans bearing interest at the Adjusted LIBOR Rate that are so affected shall, as of the date of such notification with respect to an event described in clauses (ii) or (iv) above, or as of the expiration of the Applicable Rate Interest Period with respect to an event described in clauses (i) or (iii) above, bear interest at the Adjusted Prime Rate until such time as the situations described above are no longer in effect.

(e)               If the introduction of (or any change in) any Law, regulation or treaty, or in the interpretation thereof by any Governmental Authority charged with the administration or interpretation thereof, shall make it unlawful for any Lender to maintain the Applicable Rate at an Adjusted LIBOR Rate with respect to its Loans or any portion thereof, or to fund its Loans or any portion thereof in dollars in the London interbank market, then (i) such Lender shall notify Borrower and the Agent that such Lender is no longer able to maintain the Applicable Rate at an Adjusted LIBOR Rate, (ii) the Applicable Rate shall automatically be converted to the Adjusted Prime Rate and (iii) Borrower shall pay to such Lender the amount of Breakage Costs (if any) incurred by such Lender in connection with such conversion.  Such Lender shall use reasonable efforts to avoid incurring any Breakage Costs but shall have no liability if any Breakage Costs are incurred. Thereafter, interest shall accrue on such Loans or the applicable portion thereof at the Adjusted Prime Rate until such time as the situation described herein is no longer in effect.

(f)                Interest on the outstanding principal balance of Loans made under a Loan Facility shall be calculated by multiplying (i) the actual number of days elapsed in the period for which the calculation is being made by (ii) a daily rate applicable to such Loans based on a three hundred sixty (360) day year by (iii) the outstanding principal balance of such Loans.

(g)               Borrower shall indemnify each Lender and hold each Lender harmless from any loss or expense which such Lender sustains or incurs as a consequence of (i) any default by Borrower in payment of the principal of or interest on any portion of its Loans bearing interest at an Adjusted LIBOR Rate, including, without limitation, any such loss or expense arising from interest or fees payable by such Lender to lenders of funds obtained by it in order to maintain such portion of its Loans at an Adjusted LIBOR Rate, (ii) any prepayment (whether voluntary or mandatory) of any portion of the Loans bearing interest at an Adjusted LIBOR Rate on a day that (A) is not the Payment Date immediately following the last day of an Interest Period with respect thereto or (B) is the Payment Date immediately following the last day of an Interest Period with respect thereto if Borrower did not give the prior written notice of such prepayment required pursuant to the terms of this Agreement, including, without limitation, such loss or expense arising from interest or fees payable by such Lender to lenders of funds obtained

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by it in order to maintain such portion of its Loans at an Adjusted LIBOR Rate and (iii) the conversion (for any reason whatsoever, whether voluntary or involuntary) of the Applicable Rate from an Adjusted LIBOR Rate to the Adjusted Prime Rate with respect to any portion of the Loans on a date other than the Payment Date immediately following the last day of an Interest Period, including, without limitation, such loss or expenses arising from interest or fees payable by such Lender to lenders of funds obtained by it in order to maintain such portion of its Loans at an Adjusted LIBOR Rate (the amounts referred to in clauses (i), (ii) and (iii) are herein referred to collectively as the “Breakage Costs”). This provision shall survive payment of the Notes in full and the satisfaction of all other obligations of Borrower under this Agreement and the other Loan Documents. Each Lender shall make reasonable efforts to avoid incurring any Breakage Costs in connection with the application of the Release Prices in reduction of the Debt.

(h)               The outstanding principal balance of the Loans shall bear interest at the Default Rate at any time during which an Event of Default exists.

ARTICLE VI
COSTS OF MAINTAINING LOAN

Section 6.1Increased Costs and Capital Adequacy.

(a)               Borrower recognizes that the cost to the Lenders of maintaining the Loans or any portion thereof may fluctuate and Borrower agrees to pay each Lender additional amounts to compensate such Lender for any increase in costs incurred in maintaining its Loans or any portion thereof or for the reduction of any amounts received or receivable from Borrower as a result of:

(i)         any change after the date hereof in any Law, regulation or treaty, or in the interpretation or administration thereof, or by any domestic or foreign court, (x) changing the basis of taxation of payments under this Agreement to such Lender (other than taxes imposed on all or any portion of the overall net income or receipts of such Lender), (y) imposing, modifying or applying any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, credit extended by, or any other acquisition of funds for loans by such Lender or (z) imposing on such Lender, or the London interbank market generally, any other condition affecting its Loans, provided that the result of the foregoing is to increase the cost to such Lender of maintaining its Loans or any portion thereof or to reduce the amount of any sum received or receivable from Borrower by such Lender under the Loan Documents; or

(ii)        the maintenance by such Lender of reserves in accordance with reserve requirements promulgated by the Board of Governors of the Federal Reserve System of the United States with respect to “Eurocurrency Liabilities” of a similar term to that of its Loans (without duplication for reserves already accounted for in the calculation of a LIBOR Rate pursuant to the terms hereof).

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(b)               If the application of any Law, rule, regulation or guideline adopted or arising out of the report of the Basle Committee on Banking Regulations and Supervisory Practices entitled “International Convergence of Capital Measurement and Capital Standards”, or the adoption after the date hereof of any other Law, rule, regulation or guideline regarding capital adequacy, or any change after the date hereof in any of the foregoing, or in the interpretation or administration thereof by any domestic or foreign Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender with any request or directive regarding capital adequacy (whether or not having the force of law) of any such Governmental Authority, central bank or comparable agency, has the effect of reducing the rate of return on such Lender’s capital to a level below that which such Lender would have achieved but for such application, adoption, change or compliance (taking into consideration the policies of such Lender with respect to capital adequacy), then, from time to time Borrower shall pay to such Lender such additional amounts as will compensate such Lender for such reduction with respect to any portion of such Lender’s Loans outstanding.

(c)               Any amount payable by Borrower under subsection (a) or subsection (b) of this Section 6.1 shall be paid within five (5) days of receipt by Borrower of a certificate signed by an authorized officer of a Lender setting forth the amount due and the basis for the determination of such amount, which statement shall be conclusive and binding upon Borrower, absent manifest error.

ARTICLE VII
LOAN EXPENSE AND ADVANCES TO CURE DEFAULTS

Section 7.1Loan and Administration Expenses.

Borrower shall reimburse the Agent, from time to time upon five (5) days’ demand therefor, for reasonable, out-of-pocket expenses incurred by the Agent in connection with the administration of the Loans (excluding the Agent’s general overhead expenses), including all amounts payable pursuant to Sections 7.2 and 7.3 hereof and any and all other fees owing to the Agent pursuant to the Loan Documents, and also including, without limitation, all recording, filing and registration fees and charges, mortgage or documentary taxes, insurance premiums, title insurance premiums and other charges of the Title Insurer, survey fees and charges, cost of certified copies of instruments, cost of premiums on surety company bonds and the Title Policy, charges of Title Insurer or other escrowee for administering disbursements, all fees and disbursements of  Agent’s Consultant, all fees and disbursements of servicer, appraisal fees, syndication fees, insurance consultant’s fees, environmental consultant’s fees, travel related expenses and all costs and expenses incurred by the Agent or Servicer in connection with the determination of whether or not Borrower has performed the obligations undertaken by Borrower hereunder or has satisfied any conditions precedent to the obligations of the Lenders hereunder. Further, if any Default or Event of Default

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occurs or if the Loans or any portion thereof are not paid in full when and as due, Borrower shall pay to the Agent and the Lenders upon five (5) days’ demand therefor, all costs and expenses of the Agent and the Lenders (including, without limitation, reasonable attorneys’ fees and court costs) incurred in attempting to enforce payment of the Loans or to realize upon the security therefor. Borrower agrees to pay the Agent’s fees and disbursements incurred in connection with title updates and title endorsements ordered by the Agent (a) in connection with each disbursement of Facility A Loan proceeds, (b) to be ordered every six (6) months if construction ceases and (c) after completion of construction every six (6) months thereafter throughout the term of the Loans, or more often if an Event of Default has occurred or if required by examiners.

Section 7.2Brokerage Fees.

Borrower shall pay all brokerage, finder or similar fees or commissions payable in connection with the transactions contemplated hereby and shall indemnify and hold each Indemnified Party harmless against all claims, liabilities, costs and expenses (including attorneys’ fees and expenses) incurred in relation to any claim by any broker, finder or similar person claiming that they represented Borrower; provided however, that as an inducement to Borrower to make the foregoing undertaking, the Agent and each Lender represent and warrant to Borrower with respect to itself that it has not dealt with any broker, finder or similar person in connection with the Loans.

Section 7.3Right of Lenders to Make Advances to Cure Borrower’s Defaults.

If Borrower fails to perform any of Borrower’s covenants, agreements or obligations contained in this Agreement or any of the other Loan Documents (after the expiration of applicable grace periods, except in the event of an emergency or other exigent circumstances), any Lender may (but shall not be required to), after written notice to Borrower and the Agent and after the expiration of any applicable cure periods, perform any of such covenants, agreements and obligations, and any amounts expended by such Lender in so doing shall be added to the Debt owed to such Lender and bear interest at the Default Rate.

ARTICLE VIII
CONDITIONS PRECEDENT
TO THE MAKING OF THE LOAN

Section 8.1Non-Construction Conditions Precedent.

The Facility A Lenders’ obligation to fund the Initial Restructuring Loan and thereafter to make any further disbursements of Facility A Loans and the Facility B Lenders’ and Facility C Lenders’ willingness to enter into this Agreement are conditioned upon Borrower’s delivery, performance and satisfaction of the following conditions precedent in form and substance satisfactory to the Agent, or waiver of any such condition precedent by the Lenders:

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(a)               Borrower shall have furnished duly executed copies of the documents listed in Section 4.7;

(b)               There shall exist no Default of which Borrower has received notice from the Agent or any Lender or Event of Default;

(c)               Borrower shall have furnished the Agent with evidence that all taxes then due and payable, including without limitation, real estate taxes, with respect to the Property have been paid or will be paid as of the Effective Date;

(d)               Borrower shall have furnished to the Agent the Title Policy with an appropriate endorsement to the Agent, together with legible copies of all title exception documents cited in the Title Policy and all other legal documents affecting the Project or the use thereof;

(e)               Borrower shall have furnished to the Agent or to the Prior Agent an ALTA/ACSM Land Title Survey of the Project and any and all existing plats regarding the Project;

(f)                Borrower shall have furnished the Agent or the Prior Agent with evidence of zoning or a copy of the final approved Planned Unit Development (“PUD”) map, preliminary development plan (“PDP”) or other development plan for the Project permitting the construction of the Improvements and containing all use or building conditions or restrictions affecting the Project and approved by the appropriate Governmental Authority, and all amendments and changes thereto since the Original Effective Date;

(g)               Borrower shall have furnished to the Agent or to the Prior Agent certified copies of the Issued Entitlements and all other Governmental Approvals and Permits required for the Project and issued after the Original Effective Date;

(h)               Borrower shall have furnished the Agent or the Prior Agent with policies or binders evidencing that Borrower has obtained and maintains insurance coverage in respect of Borrower and the Project in accordance with the provisions of Section 15.2 below, and paid all Insurance Premiums in respect thereof;

(i)                All of the representations of Borrower and Guarantor set forth in the Loan Documents shall be true and correct in all material respects;

(j)                Borrower shall have furnished the Agent and the Lenders with an opinion(s) from counsel to Borrower, in form and substance reasonably satisfactory to the Agent and the Lenders;

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(k)               Borrower shall have furnished the Agent or the Prior Agent with a zoning report from PBR Hawaii as to violations and zoning, and use of property and other non-zoning land use permits;

(l)                Borrower shall have furnished the Agent with current, federal tax lien and UCC searches in respect of Borrower, Member and Guarantor;

(m)              Borrower shall have furnished the Lenders with current annual financial statements of Member and Guarantor, each in form satisfactory to the Lenders and each certified as being true, complete and correct by the party to which it relates;

(n)               Borrower shall have furnished the Agent with proof satisfactory to the Agent of its authority, formation and good standing in the state of its formation and qualification in the State of Hawaii;

(o)               Borrower shall have furnished the Agent with (i) certified copies of all action taken by Borrower, Member and any other principal of Borrower to authorize the execution, delivery and performance, in accordance with its terms, of this Agreement, the Notes, each of the other Loan Documents entered into to consummate the transactions contemplated herein on the Effective Date and any other documents required or contemplated hereunder or thereunder to which it is a party; (ii) a certificate of incumbency with respect to the representatives of each Borrower, Member and any other principal of Borrower authorized and directed to execute and deliver each such Loan Document to which it is a party; (iii) certificates of good standing for Borrower, Member and any other principal of Borrower from the appropriate authority in their jurisdictions of formation, and (iv) certified copies of all organizational documents, including, without limitation, formation and corporate governance documents, for Borrower, Member and any other principal of Borrower;

(p)               Guarantor shall have furnished the Agent with (i) a certificate of incumbency with respect to the representatives of each Guarantor authorized and directed to execute and deliver each of the documents set forth in Section 4.7 to which it is a party; and (ii) certificates of good standing for Guarantor from the appropriate authority in each of their jurisdictions of formation;

(q)               Borrower shall have furnished the Agent or the Prior Agent with evidence of the availability to the Improvements of all utilities utilized or to be utilized at the Project in compliance with the requirements of the Plans and Specifications. Such evidence may be in the form of letters from utility companies or local authorities, that (a) telephone service, cable, telecommunications, electric power, natural gas, storm sewer, sanitary sewer and water facilities are available to the Project; (b) such utilities are adequate to serve the Project and exist at the boundary of the Project; and (c) no conditions exist to affect Borrower’s right to connect into and have unlimited use of such utilities except for the payment of a normal connection charge and except for the payment of subsequent charges for such services to the utility supplier;

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(r)                the Lenders shall have reviewed and approved the Environmental Report;

(s)               Borrower shall have furnished the Agent or the Prior Agent with copies of all engineering reports, land planning maps, or plats, soils tests, environmental reports, surveys prepared for the orderly planning of the Improvements, marketing materials and brochures, building permits or licenses, utility taps or supply agreements, governmental or private agreements, indemnities, waivers, rights to reimbursements, abatements or benefits of whatsoever nature regarding the Property, to the extent assignable, and other documents prepared and existing for the construction of the Improvements, available on the Effective Date, with subsequent submissions to the Agent of reports and studies not required to be available on the Effective Date, if requested by the Agent (collectively, the “Development Items”);

(t)                Borrower shall have furnished the Agent or the Prior Agent with copies of any agreements, existing or proposed, with any Governmental Authority, in the nature of a subdivider’s agreement, public improvements agreement, or annexation agreement affecting the development of the Project or requiring cash equivalent collateral, or imposing building restrictions in lieu of collateral, as a condition to development of the Project (collectively, the “Development Documents”);

(u)               Borrower shall have furnished the Agent or the Prior Agent with evidence that any obligations regarding development in connection with the Project arising under the Development Documents or agreements with providers of utility services or governmental regulations which could become a lien against the Property or a restriction against the issuance of building permits or certificates of occupancy for the Improvements (collectively, the “Development Obligations”) have been or will be satisfied or performance of the Development Obligations has been or will be secured by adequate financial security such as bonds, letters of credit or certificates of deposit pursuant to the agreements creating the Development Obligations or the requirements of the utility provider;

(v)               Borrower shall have furnished to the Agent or the Prior Agent a fully executed Ground Lessor Consent, Estoppel Certificate and Amendment;

(w)              Borrower shall have furnished to the Agent or the Prior Agent fully executed copies of all amendments to the Marketing Agreements;

(x)               Borrower shall have furnished the Agent or the Prior Agent with copies of all amendments to the Condominium Documents and Fractional Ownership Documents;

(y)               Borrower shall have furnished the Agent or the Prior Agent with fully executed copies of all Contracts of Sale existing as of the Effective Date;

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(z)               Borrower shall have furnished the Agent or the Prior Agent with a fully executed copy of that certain ER Residences Agreement (the “ER Purchase Agreement”) dated August 31, 2004, by and between Borrower and Exclusive Resorts, as amended by that certain First Amendment dated June 28, 2006 and that certain Omnibus Amendment to ER Agreements dated as of February 11, 2009, including all fully executed copies of Contracts of Sale executed by Borrower and Exclusive Resorts (or its permitted assigns) in connection therewith;

(aa)             Borrower shall have furnished the Agent or the Prior Agent with fully-executed copies of the ML&P Agreements;

(bb)            The Agent shall have received evidence satisfactory to it that the Operating Account has been established;

(cc)             Borrower shall have paid, or will pay at closing, its own expenses and fees incurred in connection with the Loans, and all of the Agent’s and, subject to an agreement between the Lenders and Borrower, the Lenders’ charges incurred in connection with the making of the Loans, including but not limited to attorneys’ fees and charges, title fees and charges, construction, environmental and engineering consultant’s fees and charges, appraisal costs, surveys, recording and filing fees and taxes;

(dd)            The Agent shall have received (in form and substance satisfactory to the Lenders) an order (the “Stipulation Order”) of the United States Bankruptcy Court for the Southern District of New York having jurisdiction over the Chapter 11 bankruptcy cases of LBHI, et al., entered after a final hearing approving the Stipulation, Agreement and Order, dated January 28, 2009, among Borrower, LBHI, Central Pacific, Deutsche Hypo, LBBW and Swedbank.

(ee)             UCC amendments assigning the security interest granted to LBHI under the Loan Document to the Agent;

(ff)              Such UCC financing statements or amendments thereto as Agent determines are advisable or necessary to perfect or notify third parties of the security interests created by the Loan Documents;

(gg)            MH Kapalua shall have satisfied its funding obligation under Section 5.1 of the Master Assignment Agreement;

(hh)            Swedbank shall have received the payment described in Section 6.1 of the Master Assignment Agreement; and

(ii)               All documents and legal matters in connection with the transactions contemplated by this Agreement shall be satisfactory in form and substance to the Agent and the Lenders.

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ARTICLE IX
CONSTRUCTION CONDITIONS PRECEDENT FOR SUBSEQUENT ADVANCES UNDER THE FACILITY A COMMITMENT

Section 9.1Required Construction Documents.

Borrower shall obtain as a condition for the disbursement of any Facility A Loan to be made under the Facility A Commitment the Agent’s approval of each of the following items:

(a)               Confirmation that Issued Entitlements are still in place and in effect. Confirmation shall amount to an affidavit by Borrower that no action has been undertaken which jeopardizes Entitlements;

(b)               Fully executed copies of: (i) the General Contract, including pertaining to the Spa; (ii) those Construction Contracts then required to comply with the Construction Contracts Effectiveness Schedule or with respect to which any Construction is then being performed; (iii) the Architect’s Agreement and (iv) all contracts with Engineers;

(c)               A schedule of values, including a trade payment breakdown, setting forth a description of all Construction Contracts;

(d)               All Permits then required for that portion of the Construction for which funds will be disbursed; as funds are requested for additional portions of the Construction Borrower shall provide Permits for same;

(e)               The Plans and Specifications;

(f)                Fully paid Bonds, with a rider thereto naming the Agent as an additional obligee thereunder, guaranteeing the obligations of General Contractor under the General Contract and the Subcontractors under the Major Contracts;

(g)               A report from Agent’s Consultant which contains an analysis of the Plans and Specifications, the Construction Budget, the Construction Schedule, the General Contract and all Construction Contracts. Such report shall contain (i) an analysis demonstrating the adequacy of the Construction Budget to complete the Project and (ii) a confirmation that the Construction Schedule is realistic. Agent’s Consultant shall monitor construction of the Project and shall visit the Project at least one (1) time in connection with each disbursement request, and shall certify as to amount of construction costs for all requested advances;

(h)               The Architect’s Certificate, executed by the Architect;

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(i)                Consents from the Architect, and other Persons reasonably specified by the Agent to the collateral assignment by Borrower to the Agent of construction documents, including, without limitation, the General Contract, the Architect’s Agreement, contracts with Engineers, Plans and Specifications, all permits, licenses and approvals (to the extent assignable under applicable law) in respect of the Project, any other Development Item and any Development Document;

(j)                Borrower’s certification that all Contract Deposits utilized to date for Hard Costs and Soft Costs constitute Available Contract Deposits and have been utilized or will be utilized in conjunction with the requested advance;

(k)               An engineer’s report prepared and certified by a qualified engineer acceptable to the Agent, showing locations and results of all borings, together with recommendations for the design of the foundations of the Improvements and certifying in a manner satisfactory to the Agent the adequacy of the existing soils condition, indicating that the Plans and Specifications for construction of the Improvements are satisfactory in view of the condition of the soil;

(l)                Copies of marketing brochures or materials regarding the Project;

(m)              An opinion in form and substance reasonably satisfactory to the Agent from Borrower’s independent counsel that the Fractional Ownership Documents recorded in the Office with respect to the Fractional Ownership Units are sufficient to subject the Fractional Ownership Units to a fractional ownership regime in compliance with the laws of the State of Hawaii (“Fractional Ownership Opinion”), which Fractional Ownership Opinion shall be delivered prior to the initial partial release of any Unit;

(n)               The form of Purchase Contract to be used by Borrower in the sale of the Fractional Ownership Interest, the Fractional Ownership Units and the Residential Condominium Units; and

(o)               Such other materials and documents as the Agent may reasonably require with respect to the Construction.

ARTICLE X
CONSTRUCTION BUDGET; RESERVES; OPERATING BUDGET

Section 10.1Construction Budget.

Disbursements of the Facility A Loans shall be governed by the Construction Budget. The Construction Budget shall include, in addition to the Budget Line Items described in Section 10.2 below, the Contingency Reserve and the Interest Reserve.  Subject to the proviso to the penultimate sentence of this Section 10.1, Borrower shall not modify the Construction Budget without first obtaining the Required Lenders’ prior written consent thereto. Borrower may reallocate funds among Budget Line Items in the

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Construction Budget as are reasonably necessary for the Construction of the Improvements in Borrower’s judgment, provided that without the Lenders’ prior consent (a) funds may only be moved to or from any particular Budget Line Item once per Budget Line Item and (b) any individual Budget Line Item shall not be reduced by more than five percent (5%); provided, however, that no such reallocation or modification to the Construction Budget shall be made which reduces the Budget Line Item for interest payable on the Notes without the prior consent of all Lenders. Borrower shall not otherwise modify the Construction Budget.

Section 10.2Budget Line Items.

(a)               The Construction Budget shall include as line items (“Budget Line Items”) all Hard Costs and Soft Costs. All Facility A Loan proceeds disbursed by Facility A Lenders shall be used only for the Budget Line Items for which such proceeds were disbursed.

(b)               The Facility A Lenders shall not be obligated to disburse any amount for any category of costs set forth as a Budget Line Item which is greater than the amount set forth for such category in the applicable Budget Line Item. Borrower shall pay as they become due all amounts set forth in the Construction Budget with respect to costs to be paid for by Borrower. If any Budget Line Item shall be (i) completed without the expenditure of all amounts in the Construction Budget allocated to such Budget Line Item or (ii) with regard to unfinished Budget Line Items, to the extent Borrower can demonstrate to the satisfaction of the Agent that savings in the particular Budget Line Item exist that do not result from either the Interest Reserve or the Contingency Reserve and such potential savings do not result in an increase to the Construction Budget, then Borrower may reallocate savings, provided that: (x) Borrower shall have submitted to the Lenders a revised Construction Budget reflecting the reallocation of Budget Line Items; and (y) no Budget Line Item for Hard Costs shall be reallocated to pay any Budget Line Item for Soft Costs until Borrower has paid all Hard Costs and completed the Improvements.

Section 10.3Contingency Reserve.

The Construction Budget shall contain a Budget Line Item for additional, unforeseen costs and expenses (the “Contingency Reserve”). Borrower may from time to time request that the Required Lenders permit the reallocation of portions of the Contingency Reserve to pay costs of the Project for which amounts remaining in any Budget Line Item are insufficient. Borrower agrees that the decision with respect to utilizing portions of the Contingency Reserve in order to keep the Loans “In Balance” shall be made by the Required Lenders in their reasonable discretion, and that the Required Lenders may require Borrower to make a Deficiency Deposit even if funds remain in the Contingency Reserve.

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Section 10.4Interest Reserve and Facility A Loans to Pay Interest.

The Construction Budget shall contain a Budget Line Item for payment of interest due in respect of the Loans (the “Interest Reserve”). Pursuant to Section 4.2(e), the Facility A Lenders shall make Facility A Loans to pay accrued interest on the Notes, and Borrower hereby authorizes the Agent from time to time to disburse such Facility A Loan proceeds to pay all such accrued interest regardless of whether Borrower shall have specifically requested disbursement of such amount. Any such disbursement, if made, shall be added to the outstanding principal balance of the Facility A Notes and shall, when disbursed, bear interest at the Applicable Rate.

Section 10.5Tax and Insurance Reserve.

The Construction Budget shall contain Budget Line Items for payment of real estate taxes and Insurance Premiums (the “Tax and Insurance Reserve”). Borrower hereby authorizes the Agent from time to time, for the mutual convenience of the Lenders and Borrower, to disburse Facility A Loan proceeds to pay real estate taxes and Insurance Premiums, to the extent then due and payable, regardless of whether Borrower shall have specifically requested disbursement of such amount. Any such disbursement, if made, shall be added to the outstanding principal balance of the Facility A Notes and shall, when disbursed, bear interest at the Applicable Rate. The authorization hereby granted, however, shall not obligate Facility A Lenders to make disbursements of the Facility A Loans for real estate taxes and Insurance Premiums, unless Borrower requests, and qualifies for, disbursement of the portion of the Construction Budget allocated therefor.

ARTICLE XI
SUFFICIENCY OF LOANS

Section 11.1Loans In Balance.

Anything contained in this Agreement to the contrary notwithstanding, until substantial completion of the Improvements in accordance with the Plans and Specifications (except for the completion of punch-list items) the Loans shall at all times be “In Balance”, on a Budget Line Item basis and in the aggregate. A Budget Line Item shall be deemed to be “In Balance” only if the Required Lenders, in their reasonable discretion, determine that the amount of such Budget Line Item is sufficient for its intended purpose. The Loans shall be deemed to be “In Balance” in the aggregate only when the total of the undisbursed portion of the Facility A Commitment, plus the portion of the Additional Equity Requirement remaining to be invested, plus the undisbursed balance of Available Contract Deposits, plus Deficiency Deposits previously made by Borrower, plus the amount on deposit in the Facility A Excess Proceeds Account, less the Contingency Reserve (such total being the “Available Funds”), equals or exceeds the aggregate of: (i) the costs required to complete the Construction in accordance with the Plans and Specifications and the Construction Budget through substantial completion; (ii) the amounts to be paid as retainages to persons who have supplied labor or materials to the Project; (iii) amounts required to be refunded or otherwise paid to any contract vendee under a Contract of Sale; and (iv) all other Hard Costs and Soft Costs not yet paid

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for in connection with the Project, as such costs and amounts described in clauses (i) through (iv) above may be estimated and/or approved in writing by the Agent from time to time (such costs and amounts in (i) through (iv) being the “Outstanding Loan Costs”). If, in the Agent’s reasonable determination, either any Budget Line Item is insufficient for such purpose or the aggregate amount of the Available Funds is less than Outstanding Loan Costs, then Borrower shall, within fifteen (15) days after written request by the Agent (with simultaneous copies of such written request sent to Guarantors and the Lenders), deposit the deficiency with the Agent (a “Deficiency Deposit”). The Deficiency Deposit shall first be exhausted before any further disbursement of Facility A Loan proceeds shall be made. Any Deficiency Deposit remaining after a particular Budget Line Item or the Loans, as the case may be, are back “In Balance” shall be returned to Borrower. Facility A Lenders shall not be obligated to make any Facility A Loan disbursements if and for as long as the Loans are not “In Balance”.  Notwithstanding the foregoing, Borrower shall not be obligated to make a Deficiency Deposit if at any time the Loan is not “In Balance” as a result of a failure of a Facility A Lender to fund its Facility A Pro Rata Share of a Facility A Loan in accordance with the terms of this Agreement and so long as Borrower has funded such Defaulting Lender’s Facility A Pro Rata Share of such Facility A Loan.

ARTICLE XII
CONSTRUCTION PAYOUT REQUIREMENTS

Section 12.1Documents to be Furnished for Each Disbursement.

As a condition precedent to the making of a Facility A Loan by the Facility A Lender (other than Facility A Loans made solely to fund interest due on the Loans in accordance with Section 4.2(e)), Borrower shall furnish or cause to be furnished to the Agent the following documents covering such Facility A Loan, in form and substance satisfactory to the Agent:

(a)               A Requisition, duly executed by an Authorized Representative;

(b)               An AIA form of cost certification, executed by the General Contractor, as to all Hard Costs included within the request for disbursement;

(c)               An Architect’s Certificate with respect to the Improvements completed included within the request for disbursement;

(d)               Such invoices, contracts or other information as the Agent may require to evidence that Borrower has incurred all costs covered by the request for disbursement;

(e)               An executed, acknowledged lien waiver from General Contractor in respect of all Hard Costs covered by the prior disbursement of the Facility A Loans;

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(f)                Paid receipts or other proof of payment of all Soft Costs covered by the prior disbursement of the Facility A Loans;

(g)               An endorsement to the Title Policy though the date of the disbursement, confirming the first priority lien position of the Mortgage, subject only to the Permitted Exceptions;

(h)               Copies of any Change Orders executed since the date of the last disbursement;

(i)                Copies of all Construction Contracts which have been executed since the last disbursement;

(j)                All Permits and all other Governmental Approvals then required in respect of the Construction, all of which must be assigned to the Agent (to the extent permitted under applicable law) as security for the Debt;

(k)               Copies of Contracts of Sale which have been executed since the last disbursement, all of which must be assigned to the Agent as security for the Debt;

(l)                Evidence that Borrower has made or shall simultaneously make an equity contribution for payment of expenses included in the Construction Budget in an amount equal to 3.4730% of the aggregate Facility A Loans to be disbursed pursuant to the applicable submitted Requisition, up to the aggregate amount of the Additional Equity Requirement; and

(m)              Such other instruments, documents and information as the Agent or Title Insurer may reasonably request.

Section 12.2Retainage.

Disbursement of proceeds of Facility A Loans for payment to the General Contractor will be consistent with the retainage provisions to be included in the General Contract. The retainage provisions of the General Contract may be written to allow reduction of retainage at fifty percent (50%) completion of the entire work covered by the General Contract so long as at no point during the course of construction is the retainage less than five percent (5%) of the value of the work completed, except in the case of those components of the work which are one hundred percent (100%) complete, in which case retainage related to such fully completed work can be released.

Section 12.3Disbursements for Stored Materials.

Any requests for disbursements which in whole or in part relate to materials, equipment or furnishings which Borrower owns and which are not incorporated into the Improvements as of the date of the request for disbursement, but are to be temporarily

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stored at the Project or off-site, shall be made in an aggregate amount not to exceed $5,000,000 at any time, unless the Required Lenders consent, in their sole discretion, to a greater amount. Any such request must be accompanied by evidence satisfactory to the Required Lenders that (i) such stored materials and the storage facility are included within the coverage of the Policies, (ii) the ownership of such materials is vested in Borrower free of any liens and claims of third parties, (iii) such materials are properly insured and protected against theft or damage, (iv) unless the Required Lenders have waived such requirement in writing, Agent’s Consultant has viewed and inspected the stored materials, and (v) in the opinion of Agent’s Consultant, the stored materials are physically secured and can be incorporated into the Project within three hundred sixty (360) days. The Agent may require separate Uniform Commercial Code financing statements to cover any such stored materials.

ARTICLE XIII
FINAL DISBURSEMENT FOR CONSTRUCTION COSTS; EXPENSE RESERVE

Section 13.1Final Disbursement for Construction Costs.

The Facility A Lenders will make the final Facility A Loan to Borrower for costs of Construction (including retainages) when the following conditions have been satisfied, provided that all other conditions in this Agreement for disbursements have also been satisfied:

(a)               There shall exist no Default or Event of Default.

(b)               The Improvements have been completed in substantial accordance with the Plans and Specifications, free and clear of Liens, and are ready for occupancy;

(c)               Borrower shall have furnished the Agent with copies of all licenses and permits required by Governmental Authorities for the occupancy of the Improvements, including, without limitation, Certificates of Occupancy in respect of all of the Units;

(d)               Borrower shall have furnished the Agent with final conditional or unconditional lien waivers, executed and acknowledged by General Contractor, Architect and all Subcontractors;

(e)               The Agent shall have received an affidavit, on AIA Form G706 or equivalent, of payment of debts and claims executed by the General Contractor;

(f)                Borrower shall have furnished the Agent with a certificate from the Architect stating that (i) the Improvements have been substantially completed in accordance with the Plans and Specifications, and (ii) the Improvements, as so substantially completed, comply with all Laws;

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(g)               The Agent shall have received a certificate from Agent’s Consultant for the sole benefit of the Agent and the Lenders that the Improvements have been completed substantially in accordance with the Plans and Specifications;

(h)               The Agent shall have received and approved an ALTA Endorsement 100 and such other title insurance endorsements as it may require to the Title Policy insuring that the Improvements have been completed free of mechanics’ liens encumbering all or any portion of the Project;

(i)                At the request of the Agent, Borrower will make available to the Agent a complete set of red-lined “as built” plans for the Improvements, as completed;

(j)                There shall be no statutory Liens filed of record or notice of intent to file such a Lien delivered to Borrower or the Agent for labor or material arising out of the construction of the Improvements; unless, if there are any such Liens, Borrower shall have made arrangements reasonably satisfactory to the Required Lenders for the disposition or bonding thereof pursuant to Section 15.1(g);

(k)               At the Agent’s request, the Agent shall have received the final list of personal property pursuant to Section 15.1(n);

(l)                The Agent shall have received, at Borrower’s expense, a current, certified ALTA “as-built” improvement survey, locating all property lines, building set back lines, easements and the Improvements, parking spaces, and such other matters as shall be required by Lender; and

(m)              The Agent shall have received all agreements, instruments and documents (including control agreements, if necessary, and opinions of counsel), in form and substance reasonably satisfactory to the Agent, evidencing that the Agent has a first priority perfected security interest in the Expense Reserve Account.

If Borrower fails to comply with and satisfy any of the final disbursement conditions contained in this Section 13.1 on or before the Completion Date, such failure shall constitute an Event of Default hereunder.

Section 13.2Retainage.

Notwithstanding the provisions of Section 13.1 above, the making of any Facility A Loans to fund the disbursement of the retainage that has not been released pursuant to Section 12.2 shall be subject to the retention of such sums as Agent’s Consultant shall determine are necessary to assure full completion of punch-list items. Upon the completion of such punch-list items, the Facility A Lenders shall make additional Facility A Loans to Borrower to fund such retainage.

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Section 13.3Expense Reserve.

(a)               Prior to the making of the final Facility A Loan to Borrower, Borrower shall cause the Expense Reserve Account to have been established and an amount equal to the Expense Reserve shall have been deposited into the Expense Reserve Account from (i) proceeds from Facility A Loans and an equity contribution by Borrower made in accordance with Section 12.1(l), or (ii) funds from Borrower (or a combination of (i) and (ii)).

(b)               Once established and funded pursuant to Section 13.3(a), the Expense Reserve shall be maintained until the Debt has been paid in full; provided, however, that upon closing of the sale of Units to Exclusive Resorts under the terms of the ER Purchase Agreement Borrower may deliver to the Agent projections with respect to the Expense Reserve Items for the three-month period immediately following such sale.  If such projections, which shall be in form and substance reasonably satisfactory to the Lenders, show that the aggregate amount of Expense Reserve Items for such three-month period is less than the amount on deposit in the Expense Reserve Account, then the Agent shall withdraw the difference from the Expense Reserve Account and remit such funds to Borrower.  From and after such date, the Expense Reserve required to be maintained hereunder shall equal such reduced amount.

(c)               If Borrower fails to pay when due any of the Expense Reserve Items, the Agent may (and shall at the direction of the Required Lenders) upon not less than two (2) Business Days’ notice to Borrower from the Agent or any Lender withdraw funds in the Expense Reserve Account up to an amount equal to the Expense Reserve to make such payment; provided that so long as the Notes have not been declared due and payable pursuant to Section 20.1, the Required Lenders shall not direct the Agent to withdraw funds from the Expense Reserve Account to pay interest on the Notes unless the amount to be withdrawn is  at least equal to the lesser of (i) an amount sufficient to pay accrued and unpaid interest then due on all Notes or (ii) the remaining amount of the Expense Reserve then available in the Expense Reserve Account; provided further that any such withdrawal to pay interest on the Notes shall be applied pursuant to Section 21.2.  If any withdrawal is made, the Agent shall notify Borrower of such withdrawal, and within fifteen (15) Business Days of receipt of such notice Borrower shall deposit into the Expense Reserve Account the amount of such withdrawal.

(d)               The Agent is hereby authorized and directed with respect to all sums of money and other property and all proceeds thereof held in the Expense Reserve Account to invest in, reinvest or otherwise liquidate Permitted Investments in accordance with instructions of Borrower; provided that no more than fifty percent (50%) of the amount of funds held in the Expense Reserve Account may be invested in Permitted Investments with maturities greater than thirty (30) days from the date of investment and no funds in the Expense Reserve Account shall be invested in Permitted Investments with a maturity greater than one hundred eighty (180) days from the date of investment; provided, further, that upon the occurrence and during the continuance of an Event of Default or after Borrower’s failure to pay when due any Expense Reserve Item Borrower

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shall not have the right to provide the Agent any such investment instructions.  If on the last Business Day of each calendar month the aggregate amount of cash plus the fair market value of Permitted Investments in the Expense Reserve Account exceeds the amount of the Expense Reserve then the Agent shall cause an amount of cash (including cash proceeds from the sale, liquidation or redemption of any Permitted Investments in the Expense Reserve Account) equal to such excess amount (calculated as of the date of withdrawal), less any penalty or charge applicable to the sale, liquidation or redemption of the Permitted Investment in connection therewith, to be withdrawn from the Expense Reserve Account and paid to Borrower.  In addition if on the last Business Day of each calendar month the aggregate amount of cash plus the fair market value of Permitted Investments in the Expense Reserve Account is less than the amount of the Expense Reserve then the Agent shall notify the Borrower of such deficiency and within fifteen (15) Business Days of such notice Borrower shall deposit funds into the Expense Reserve Account equal to such deficiency.  The Agent shall not be liable for any loss resulting from any investment in any Permitted Investments or the sale, liquidation or redemption thereof as contemplated by this Section 13.3(c).

(e)               If thirty (30) or more days have elapsed since the date on which the principal amount of the Notes has been declared due and payable pursuant to Section 20.1, the Agent may (and shall at the direction of the Required Lenders) apply amounts in the Expense Reserve Account up to an amount equal to the Expense Reserve to the payment of the Debt in accordance with Section 21.1.  Upon payment in full of the Debt, all amounts in the Expense Reserve Account shall be immediately transferred by the Agent to Borrower.

ARTICLE XIV
CONDOMINIUM COVENANTS

Section 14.1Contracts of Sale.

(a)               Borrower shall not enter into any Contracts of Sale, other than Qualifying Contracts of Sale. Unless Borrower has theretofore obtained the Lenders’ prior written consent thereto, Borrower may not enter into Contracts of Sale with Guarantor, or Affiliates of Borrower or Guarantor. Notwithstanding the previous sentence, the Lenders hereby consent to the sale of Units pursuant to the ER Purchase Agreement and the Lenders’ consent shall not be required with respect to immaterial amendments to the form Contract of Sale previously approved by the Lenders for sale of each individual Unit to be sold under the ER Purchase Agreement, to conform to the ER Purchase Agreement, provided that no amendment shall be made to the sale price set forth in the ER Purchase Agreement in effect on the date hereof. Lenders shall not unreasonably withhold such consent, provided that the applicable Contract of Sale (i) satisfies the requirements of the definition of “Qualifying Contract of Sale” contained herein and (ii) is otherwise on an arm’s length, commercially reasonable basis. All Contracts of Sale entered into by Borrower after the Original Effective Date shall be

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covered by the Assignment of Purchase Contracts and, in each case, if required by the Agent, by a separate assignment in form and substance similar to the Assignment of Purchase Contracts.  Notwithstanding anything to the contrary in this Agreement, the Lenders hereby consent to the sale of Units pursuant to the ER Purchase Agreement and any individual purchase agreements entered into pursuant to the ER Purchase Agreement so long as the purchaser under each such individual agreement is Exclusive Resorts or any of its Affiliates.

(b)               All Contract Deposits shall be deposited and held in the Condominium Deposit Account until such time as (i) a purchaser becomes entitled to the refund thereof in accordance with the terms of its Contract of Sale or (ii) the closing occurs under a Contract of Sale, whereupon the Contract Deposit shall be applied on account of the payment required under Section 14.4(a)(viii) or Section 14.4(b)(viii), as applicable.  If (x) a purchaser defaults under a Contract of Sale and (y) the Contract Deposit is paid to Borrower, Borrower shall pay such Contract Deposit to the Agent, for application to the Debt in accordance with Section 21.1. Notwithstanding the above, Borrower shall first apply the Available Contract Deposits towards funding the Construction pursuant to the Construction Budget, provided that: (i) Borrower has duly complied with all applicable laws pertaining to the use of such Contract Deposits for construction costs and delivers to the Agent Borrower’s certification as to such compliance in accordance with Section 9.1(j), (ii) Borrower has duly complied with Article IX of this Agreement, and (iii) no Event of Default has occurred and is continuing.

Section 14.2Residential Condominium.

(a)               Borrower has submitted the Development Property to the provisions of the Condominium Act and will satisfy all of the requirements thereof and of any other applicable law or restriction necessary to create a valid residential condominium regime in respect of the Residential Property (the “Residential Condominium”), provided that the form and substance of the Condominium Documents including, without limitation, the Residential Condominium Unit designations, descriptions, floor plans, sale prices and proposed form of Contract of Sale for the Residential Condominium Units, as well as the description of common elements and breakdown of common interests appurtenant to each Residential Condominium Unit, shall be subject to the written approval of the Lenders prior to such submission; provided that if the sale price for any Residential Condominium Unit set forth in the Condominium Documents is lower than the Release Price for such Residential Condominium Unit and such difference is less than ten percent (10%) of such Release Price then the approval of the Required Lenders shall be required with respect to such sale prices.

(b)               From and after the creation of the Residential Condominium, Borrower shall observe and perform the following covenants:

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(i)         Borrower shall pay all common charges and other assessments as required by the Condominium Documents in respect of unsold Residential Condominium Units and shall promptly upon demand exhibit to the Agent receipts for all such payments;

(ii)        Borrower shall not, without first obtaining the Lenders’ prior written consent (which consent, except for item (4), shall not be unreasonably withheld): (1) vote for or consent to any modification of, amendment to or relaxation in the enforcement of any provision of the Condominium Documents; (2) in the event of damage to or destruction of the Residential Property, vote in opposition to a motion to repair, restore or rebuild; (3) partition or subdivide any Residential Condominium Unit; or (4) consent to the termination of the Residential Condominium;

(iii)       Borrower shall fully and faithfully observe, keep and perform, in all material respects, each and every requirement, condition, covenant, agreement and provisions under the Condominium Act and the Condominium Documents on the part of Borrower to be observed, kept and performed. Borrower shall promptly deliver to the Agent a copy of any notice of default received by Borrower with respect to any obligation of Borrower under the provisions of the Condominium Documents or the Condominium Act;

(iv)      Borrower shall promptly submit to the Agent copies of executed Contracts of Sale, notices of cancellation of Contracts of Sale, and monthly reports in writing specifying the number and type of Residential Condominium Units sold, Residential Condominium Unit designation, purchase price for each Residential Condominium Unit, name and address of the purchasers, number of Residential Condominium Units closed during the preceding month, and any other information relevant to the sales program reasonably requested by the Agent from time to time; and

(v)       Except for Permitted Leases, Borrower shall not rent or lease any Residential Condominium Unit or other portions of the Residential Property, without the Lenders’ prior written consent.

Section 14.3Fractional Ownership Units.

(a)               Borrower acknowledges that it has submitted the Fractional Ownership Units to the provisions of the Fractional Ownership Act and agrees that it will satisfy all of the requirements thereof and of any other applicable law or restriction necessary to create a valid fractional ownership regime in respect of the Fractional Ownership Units, provided that the form and substance of the Fractional Ownership Documents including, without limitation, the Fractional Ownership Unit designations, sale prices and proposed form of Contract of Sale for Fractional Ownership Interests and the Fractional Ownership Units, and breakdown of common interests appurtenant to each Fractional Ownership Unit, shall be subject to the written approval of the Lenders prior to such submission; provided that if the sale price for any Fractional Ownership Unit set

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forth in the Fractional Ownership Documents is lower than the Release Price for such Fractional Ownership Unit and such difference is less than ten percent (10%) of such Release Price then the approval of the Required Lenders shall be required with respect to such sale prices.

(b)               Provided that no Event of Default exists, the Agent shall (i) consent to the execution and recording of the Fractional Ownership Declaration, (ii) take such other actions as shall be reasonably necessary to effectively transfer the lien of the Mortgage from the Project to the Fractional Ownership Interests and the Fractional Ownership Units created and covered by the Fractional Ownership Declaration, together with their respective proportionate shares of common elements, and (iii) execute and deliver such reasonable instrument as shall be required to subordinate the lien of the Mortgage to the Fractional Ownership Declaration; provided that Borrower satisfies the following conditions:

(i)         Borrower shall have verified that the Fractional Ownership Documents have been approved by any Governmental Authority from whom approval is required, and Borrower shall have furnished the Agent with executed counterparts of the Fractional Ownership Documents;

(ii)        Borrower shall deliver to the Agent the Fractional Ownership Opinion with respect to the Fractional Ownership;

(iii)       Title Insurer shall have agreed, in writing, to insure that, upon the creation of the Fractional Ownership Units, the Mortgage shall constitute a first priority mortgage lien in respect of each of the condominium units created thereby;

(iv)      Borrower shall deliver to the Agent an assignment of Special Declarant’s Rights under the Fractional Ownership Documents in the form approved by the Agent; and

(v)       Borrower shall have furnished the Agent with the form of Contract of Sale for Fractional Ownership Interests and the Fractional Ownership Units and a summary of any material changes made to executed Contracts of Sale, and a written report specifying the number of Fractional Ownership Interests and Fractional Ownership Units sold, the Fractional Ownership Unit designation, purchase price for each Fractional Ownership Interest and Fractional Ownership Unit, name and address of the purchasers, number of Fractional Ownership Units and Fractional Ownership Interests closed during the preceding reporting period (it being acknowledged that Borrower utilizes a 13-period reporting cycle annually), and any other information relevant to the sales program reasonably requested by the Agent from time to time (the “Fractional Sales Report”); and

(c)               Borrower shall record and/or file the Fractional Ownership Documents in the Office.

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(d)               From and after the creation of the Fractional Ownership Units, Borrower shall observe and perform the following covenants:

(i)         Borrower shall pay all common charges and other assessments as required by the Fractional Ownership Documents in respect of unsold Fractional Ownership Interests and Fractional Ownership Units and shall promptly upon demand exhibit to the Agent receipts for all such payments;

(ii)        Borrower shall not, without first obtaining the Lenders’ prior written consent, (1) vote for or consent to any modification of, amendment to or relaxation in the enforcement of any provision of the Fractional Ownership Documents; (2) in the event of damage to or destruction of the Residential Property, vote in opposition to a motion to repair, restore or rebuild; (3) partition or subdivide any Fractional Ownership Unit or Fractional Ownership Interest in intervals less than one-twelfth (l/12th); or (4) consent to the termination of the Fractional Ownership Interests;

(iii)       Borrower shall fully and faithfully observe, keep and perform, in all material respects, each and every requirement, condition, covenant, agreement and provisions under the Fractional Ownership Act and the Fractional Ownership Documents on the part of Borrower to be observed, kept and performed. Borrower shall promptly deliver to the Agent a copy of any notice of default received by Borrower with respect to any obligation of Borrower under the provisions of the Fractional Ownership Documents or the Fractional Ownership Act;

(iv)      Borrower shall promptly submit to the Agent a Fractional Sales Report monthly; and

(v)       except pursuant to a Permitted Lease, Borrower shall not rent or lease any Fractional Ownership Unit or other portions of the Residential Property, without the Lenders prior written consent.

Section 14.4Releases of Entire Units and Fractional Ownership Interests.

(a)               Provided no Event of Default has occurred and is then continuing, the Agent agrees to release entire individual Units from the lien of the Mortgage in accordance with and subject to all of the following terms, provisions and conditions applicable to such Unit concurrently with the satisfaction of the following:

(i)         The applicable condominium declaration, and all amendments thereto required by Laws, has been filed in the Office;

(ii)        The Unit to be released is a separate tax lot and is not required to be included within the Project, for purposes of any governmental rule or necessary or appropriate to satisfy or facilitate the requirements or terms of any agreement;

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(iii)       Construction of the Unit to be released shall be complete and a Certificate of Occupancy shall have been issued by the appropriate Governmental Authority for such Unit;

(iv)      The Unit and the remaining portion of the Project and the release of the Unit and the conveyance shall be in compliance with all applicable zoning, land use and other governmental rules and regulations of all governmental authorities;

(v)       The condominium association governing the applicable Unit has been properly formed and established;

(vi)      The applicable condominium association shall have furnished to the Agent at no cost or expense to the Agent, the insurance policy or policies which comply in all respects with the requirements set forth in Section 15.2 of this Agreement naming the Agent, said condominium association, and purchasers of each Unit, as their respective interests may appear, as the insureds, provided that the interest of the Agent shall not include any Unit that is being released or has previously been released pursuant to this Section 14.4(a);

(vii)     The Unit to be released is being sold pursuant to a Qualifying Contract of Sale or a Contract of Sale entered into pursuant to the ER Purchase Agreement;

(viii)    Borrower shall have deposited in the Condominium Release Payment Account, concurrently with the delivery of the release, immediately available funds in an amount equal to the greater of (i) the Net Sale Proceeds in respect of the Unit and (ii) the amount which is 100% of the Release Price of such Unit, for application to the Debt in accordance with Section 21.1;

(ix)       Borrower shall have furnished the Agent with a written request for a partial release, accompanied by (i) a release document prepared by Borrower at Borrower’s expense, in form and content satisfactory to the Agent, (ii) a schedule containing a list of those Units previously released by the Agent and those Units remaining to be released and (iii) a photocopy of the final signed closing statement with respect to the sale of the applicable Unit;

(x)        Borrower pays the Agent all recording charges and out-of-pocket costs and expenses of the Agent, including, without limitation, reasonable, out-of-pocket attorneys’ fees, in connection with any such release (the Agent’s out-of-pocket costs and expenses not to exceed $300 per release that is requested and further provided that the Agent will endeavor to cause the Servicer to include such fees, costs and expenses within its Servicing Fees); and

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(xi)       Releases of Units shall not affect or impair the lien of the Mortgage and the Agent’s lien and security interests created by the other Loan Documents as to Units not theretofore released or the remaining portion of the Project, and said liens and security interests shall continue in full force and effect as to the unreleased Units.

(b)               Provided no Event of Default has occurred and is then continuing, the Agent agrees to release Fractional Ownership Interests from the lien of the Mortgage in accordance with and subject to all of the following terms, provisions and conditions applicable to such Fractional Ownership Interest and the applicable Fractional Ownership Unit concurrently with the satisfaction of the following:

(i)         The applicable condominium and fractional ownership declarations, and all amendments thereto required by Law, have been filed in the Office;

(ii)        The Fractional Ownership Interest to be released is not required to be included within the Project, for purposes of any governmental rule or necessary or appropriate to satisfy or facilitate the requirements or terms of any agreement;

(iii)       Construction of the relevant Fractional Ownership Unit to which such Fractional Ownership Interest relates shall be complete and a Certificate of Occupancy shall have been issued by the appropriate Governmental Authority for such Fractional Ownership Unit;

(iv)      The relevant Fractional Ownership Unit, the Fractional Ownership Interest and the remaining portion of the Project and the release of the Fractional Ownership Interest and the conveyance shall be in compliance with all applicable zoning, land use and other governmental rules and regulations of all governmental authorities;

(v)       The condominium and fractional ownership interest associations governing the applicable Fractional Ownership Unit have been properly formed and established;

(vi)      The applicable condominium and fractional ownership interest associations shall have furnished to the Agent at no cost or expense to the Agent, the insurance policy or policies which comply in all respects with the requirements set forth in Section 15.2 of this Agreement naming the Agent, said condominium association, and purchasers of each Fractional Ownership Interest, as their respective interests may appear, as the insureds, provided that the interest of the Agent shall not include any Fractional Ownership Interest that is being released or has previously been released pursuant to this Section 14.4(b);

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(vii)     The Fractional Ownership Interest to be released is being sold pursuant to a Qualifying Contract of Sale;

(viii)    Borrower shall have deposited in the Condominium Release Payment Account, concurrently with the delivery of the release, immediately available funds in an amount equal to the greater of (i) the Net Sale Proceeds in respect of the Fractional Ownership Interest and (ii) the amount which is 100% of the Release Price of such Fractional Ownership Interest, for application to the Debt in accordance with Section 21.1;

(ix)       Borrower shall have furnished the Agent with a written request for a partial release, accompanied by (i) a release document prepared by Borrower at Borrower’s expense, in form and content satisfactory to the Agent, (ii) a schedule containing a list of those Fractional Ownership Interest previously released by the Agent and those Fractional Ownership Interests remaining to be released and (iii) a photocopy of the final signed closing statement with respect to the sale of the applicable Fractional Ownership Interest;

(x)        Borrower pays the Agent all recording charges and out-of-pocket costs and expenses of the Agent, including, without limitation, reasonable, out-of-pocket attorneys’ fees, in connection with any such release (the Agent’s out-of-pocket costs and expenses not to exceed $300 per release that is requested and further provided that the Agent will endeavor to cause the Servicer to include such fees, costs and expenses within its Servicing Fees); and

(xi)       Releases of Fractional Ownership Interest shall not affect or impair the lien of the Mortgage and the Agent’s lien and security interests created by the other Loan Documents as to Fractional Ownership Interests not theretofore released or the remaining portion of the Project, and said liens and security interests shall continue in full force and effect as to the unreleased Fractional Ownership Interests.

(c)               If the purchaser under the ER Purchase Agreement purchases the 10 designated Units pursuant to Section 7(c)(i) of the Omnibus Amendment to ER Agreements (as described in the definition of “ER Purchase Agreement”), such Units shall be released from the lien of the Mortgage pursuant to Section 14.4(a), and concurrently with the delivery of such release Borrower shall deposit into the Condominium Release Payment Account $19,741,850 in immediately available funds for application to the Debt in accordance with Section 21.1 and upon receipt of such deposit, provided no Event of Default has occurred and is then continuing, Agent agrees to release the remaining five “Exhibit A Units” (as defined in such Omnibus Amendment to ER Agreements); provided that it shall be a condition of such release, and Borrower hereby agrees, that such five “Exhibit A Units” may not be sold or transferred to any Person until such time as the Facility A Obligations have been paid in full, except that any one or more of such five “Exhibit A Units” may be sold or transferred (i) to a third party purchaser on the following conditions: (A) the Borrower deposits into the Condominium

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Release Payment Account immediately available funds for application to the Debt in accordance with Section 21.1 in an amount equal to the greater of (1) the minimum release price for such Unit on Schedule A or (2) the minimum release price for the exchange Unit described in clause (B) of this sentence and (B) in exchange for the payment described in clause (A) of this sentence, another Unit designated by Borrower shall be released from the lien of the Mortgage, subject to the sale and transfer restrictions otherwise applicable to the “Exhibit A Units”, or (ii) to MII or any of its directly or indirectly wholly-owned subsidiaries or a trust established by MII or its affiliates for use as part of its time share program, so long as MII and such transferee agree in writing for the benefit of the Agent and the Lenders that such Unit or Units may not be sold or transferred to any Person until such time as the Facility A Obligations have been paid in full, except pursuant to clause (i) of this sentence.

Section 14.5Releases of Facilities.

Provided no Event of Default has occurred and is then continuing, the Agent agrees to release a Facility from the lien of the Mortgage in accordance with and subject to all of the following terms, provisions and conditions applicable to such Facility;

(a)               The Facility to be released is a separate tax lot and is not required to be included within the Project, for purposes of any governmental rule or necessary or appropriate to satisfy or facilitate the requirements or terms of any agreement. Borrower shall have submitted to the Agent proof reasonably satisfactory to the Agent that following the release of a Facility, the Project shall continue to have available to it all necessary utility and other services for the use, occupancy and operation of the Project and same shall continue to have adequate, unimpeded and unencumbered access for pedestrian and vehicular ingress and egress onto adjacent public roads, including, without limitation, any necessary cross-easements for access, parking, and utilities;

(b)               Construction of the Facility to be released shall be substantially complete;

(c)               Each Facility and the remaining portion of the Project and the release of Facility and the conveyance shall be in compliance with all applicable zoning, land use and other governmental rules and regulations of all governmental authorities;

(d)               The Facility to be released is being sold pursuant to the ML&P Agreements;

(e)               Borrower shall have deposited to an account designated by the Agent, prior to the delivery of the release, immediately available funds in an amount equal to the greater of (i) the Net Sale Proceeds in respect of the Facility and (ii) the amount which is 100% of the Release Price of such Facility, for application to the Debt in accordance with Section 21.1;

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(f)                Borrower shall have furnished the Agent with a written request for a partial release, accompanied by (i) a release document prepared by Borrower at Borrower’s expense, in form and content reasonably satisfactory to the Agent, (ii) a schedule containing a list of those Facilities previously released by the Agent and those Facilities remaining to be released and (iii) a photocopy of the final signed closing statement with respect to the sale of the applicable Facility;

(g)               Borrower pays the Agent all reasonable out-of-pocket costs and expenses of the Agent, including, without limitation, reasonable, out-of-pocket attorneys’ fees, in connection with any such release;

(h)               The Release of the Facility shall not affect or impair the lien of the Mortgage and the Agent’s lien and security interests created by the other Loan Documents as to Units and Facilities not theretofore released or the remaining portion of the Project, and said liens and security interests shall continue in full force and effect as to the unreleased Units and Facilities; and

(i)                Borrower and ML&P shall have executed a “Facilities Operations and Standards Agreement” (pursuant to Section 8.3(a)(5) of the Spa Agreement) reasonably acceptable to the Agent and shall have delivered a true and correct copy of same to the Agent.

Section 14.6Breakage Costs.

Borrower may, in its written request for a partial release of the lien of the Mortgage, request that the Agent apply all or any portion of a Release Price to the Debt, to the extent possible (but in any event consistent with Section 21.1), in such a manner as to avoid the imposition of Breakage Costs on Borrower. In such event, (i) Agent shall apply Release Prices to the Debt as Interest Periods expire, in such a manner as to avoid the imposition of Breakage Costs and (ii) interest shall accrue on such amounts at the Adjusted LIBOR Rate until such time as amounts are applied to the Debt as aforesaid.

Section 14.7Indemnification.

Borrower hereby agrees to indemnify, defend, and hold each Indemnified Party harmless against and from (a) any and all liability, loss, damage and expense (including, without limitation, reasonable attorneys’ fees) which it may incur or which may be asserted under or in connection with this Agreement or the Condominium Documents, except to the extent due to such Person’s gross negligence or willful misconduct, and (b) any and all claims and demands whatsoever which may be incurred by or asserted against the Agent or the applicable Lender by reason of any alleged obligations or undertakings on its part to perform or discharge any of the terms, covenants and conditions contained therein, except to the extent due to the Agent’s or the applicable Lender’s gross negligence or willful misconduct. The foregoing indemnification shall survive the payment of the Debt.

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Section 14.8Expenses.

Borrower shall pay promptly upon demand all expenses, including, without limitation, reasonable attorneys’ fees and expenses, incurred by the Agent and any Lender in connection with (i) its review of, and consent to, any of the Condominium Documents, (ii) its subordination of the lien of the Mortgage to any of the Condominium Documents, (iii) the delivery of partial releases and (iv) any other matter contemplated by this Article XIV.

Section 14.9Establishment of Condominium Release Payment Account.

Borrower agrees to established the Condominium Release Payment Account prior to the first date on which the Agent is required to release any Unit, Fractional Ownership Interest or Facility from the lien of the Mortgage pursuant to Section 14.4 or 14.5, as applicable.  In connection with the establishment of the Condominium Release Payment Account, Borrower shall deliver to the Agent all agreements, instruments and documents (including control agreements, if necessary, and opinions of counsel), in form and substance reasonably satisfactory to the Agent, evidencing that the Agent has a first priority perfected security interest in the Condominium Release Payment Account.

ARTICLE XV
COVENANTS

Section 15.1Certain Covenants.

(a)               Zoning/Entitlements.  Borrower represents, warrants and covenants to the Agent and the Lenders that (1) the Project is duly and validly zoned for all of its intended uses, (2) except as specifically set forth on Exhibit B attached hereto and made a part hereof (the “Outstanding Entitlements”), all necessary permits, certificates, licenses, approvals, authorizations, variances and other land use, zoning and subdivision entitlements in order to complete the Project (the “Issued Entitlements”, together with the Outstanding Entitlements, sometimes collectively referred to herein as the “Entitlements”) exist as of the Original Effective Date, are in full force and effect, and are not subject to revocation, suspension, forfeiture or modification; (3) Borrower is in full compliance with all requirements of the Issued Entitlements and is entitled to all rights and privileges thereunder; (4) Borrower shall obtain all Outstanding Entitlements within the specified time periods set forth in Exhibit B and shall deliver to the Agent true and complete copies of all Outstanding Entitlements within five (5) Business Days following the issuance of any such Outstanding Entitlements; (5) Borrower shall at all times, maintain the Entitlements in full force and effect throughout the entire term of the Loans; (6) Borrower shall not agree to any modification or to any termination of the Entitlements without the express prior written consent of the Lenders; and (7) Borrower has delivered to the Agent true and complete copies, including all filed or executed amendments thereto, of the Issued Entitlements. Borrower hereby assigns to the Agent as additional security for the payment in full of the Debt and the observance and performance by Borrower of the terms, covenants and provisions of the Loan Documents all right, title and interest which Borrower may have or may hereafter acquire in and to the Entitlements.

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(b)               Governmental Approvals.  Borrower shall maintain the Governmental Approvals in connection with the Plans and Specifications and for the Project in full force and effect throughout the terms of the Loans and to the extent such Governmental Approvals have not been issued or obtained, Borrower shall (i) take all steps necessary to have such Governmental Approvals issued by or obtained from the appropriate Governmental Authorities within time periods consistent with a construction project of this nature and satisfactory to the Required Lenders in the exercise of the Required Lenders’ reasonable discretion, and (ii) deliver copies of such Governmental Approvals to the Agent and maintain such Governmental Approvals in full force and effect throughout the entire term of the Loans.

(c)               Plans and Specifications.  Borrower has submitted a true and complete copy of the Existing Plans and Specifications to the Agent and the Agent has approved the Plans and Specifications.  A description of the Plans and Specifications approved by the Agent is attached here to as Exhibit E.  The Agent shall, without additional cost or expense, have the use of the Plans and Specifications upon the occurrence beyond any applicable notice and cure period of an Event of Default under the Loan Documents. Upon notice to Borrower, the Agent, Agent’s Consultant and their respective agents and employees, shall have the right of entry and access to the entire Project in connection with their review of the Plans and Specifications or any other aspect of the Project.

(d)               Construction of the Improvements.  Borrower commenced Construction on or before the Construction Commencement Date.  Borrower shall continue to perform the Construction in a good and workmanlike manner with materials of high quality and in substantial accordance with the Plans and Specifications. Borrower shall prosecute the Construction with due diligence and continuity in accordance with the Construction Schedule and shall substantially complete the Construction before the Completion Date.  All work performed in connection with the Property shall comply with all Laws and all Governmental Approvals.

(e)               Change Orders.  No changes will be made in the Plans and Specifications without the prior written approval of the Lenders, which shall not be unreasonably withheld after the Lenders’ initial approval of the final Plans and Specifications; provided, however, that Borrower may make changes to the Plans and Specifications without the Lenders’ consent if (i) Borrower notifies the Agent in writing of such change within five (5) Business Days thereafter; (ii) Borrower obtains the approval of all parties whose approval is required, including sureties and Governmental Authorities; (iii) the structural integrity of the Improvements is not impaired; (iv) no material change in architectural appearance is effected; (v) the performance of the

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mechanical, electrical, and life safety systems of the Improvements is not adversely affected; and (vi) the cost of or reduction resulting from such change (x) does not exceed $250,000 and (y) when added to all other changes which have not been approved by the Agent in writing, the resulting aggregate cost or reduction does not exceed $5,000,000. Changes in the scope of Construction or to any Construction Contract shall be documented with a Change Order on the AIA Form G701.

(f)                Inspections.  Borrower will cooperate with the Agent in arranging for inspections by the Agent, the Lenders and/or Agent’s Consultant of the progress of the Construction from time to time including an examination of (i) the Improvements, (ii) all materials to be used in the Construction, (iii) all plans and shop drawings which are or may be kept at the Construction site, (iv) any contracts, bills of sale, statements, receipts or vouchers in connection with the Improvements, (v) all work done, labor performed or materials furnished in and about the Improvements, (vi) all books, contracts and records with respect to the Improvements and (vii) any other documents relating to the Improvements or the Construction. Borrower shall cooperate with Agent’s Consultant to enable it to perform its functions.  Borrower shall, upon the Agent’s or Agent’s Consultant’s request, correct any defect in the Construction or any failure of the Construction to comply with the Plans and Specifications.

(g)               Liens.  Borrower will not suffer or permit any construction lien claims to be filed or otherwise asserted against the Project or any funds due to the General Contractor, and will promptly discharge the same in case of the filing of any claims for lien or proceedings for the enforcement thereof, provided, however, that Borrower may contest in good faith and with reasonable diligence the validity of any such lien or claim, provided that Borrower posts a statutory lien bond which removes such lien from title to the Project within thirty (30) days after Borrower’s receipt of written notice thereof. The Facility A Lenders will not be required to make any further disbursements of the proceeds of the Facility A Loans until any construction lien claims have been removed (by payment or by posting a bond) and the Agent may, at its option, restrict disbursements to reserve sufficient sums to pay 150% of the lien. If Borrower shall fail timely to (i) discharge any such lien or (ii) post a statutory lien bond, any Lender may, at its election (but shall not be required to), procure the release and discharge of such lien and any judgment or decree thereon and, further, may in its sole discretion, settle or compromise the same, or may furnish such security or indemnity as Title Insurer shall require to insure such Lender against the enforcement thereof, and any amounts so expended by such Lender shall be added to the Debt. In settling, compromising or discharging any claims for lien, such Lender shall not be required to inquire into the validity or amount of any such claim.

(h)               Construction Contracts.  Borrower shall promptly comply in all material respects with all provisions of the Construction Contracts which require approval or action by Borrower in a timely manner to insure completion of the Improvements within the Construction Schedule and in all events by the Completion

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Date. Borrower shall not materially modify or terminate the General Contract or any of the Major Contracts without the prior written approval of the Lenders, which approval shall not be unreasonably withheld. Promptly following its execution or modification thereof, Borrower shall furnish the Agent with a copy of each Construction Contract or modification thereof. Promptly following its receipt thereof, Borrower shall furnish the Agent with a copy of any material notice received or delivered by Borrower in respect of the Construction Contracts, including, without limitation, any notice of default.

(i)                Subsequent Development Matters.  Borrower shall not, subsequent to the Effective Date, enter into easements, covenants or agreements regarding or affecting title to the Land or the Project or the zoning, subdivision or land use classification of the Land without the prior written consent of the Lenders, which consent shall not be unreasonably withheld with respect to easements, covenants and agreements reasonably required to effect the development of the Project for the uses intended by this Agreement.

(j)                Certificate of Occupancy.  Borrower shall obtain a Certificate of Occupancy for all of the Units by no later than December 31, 2009.

(k)               Payment of Taxes.  Borrower shall pay all real estate taxes and assessments and charges of every kind upon the Project before the same become delinquent, provided, however, that Borrower may pay such tax under protest or to otherwise contest any such tax or assessment, but only if (i) such contest has the effect of preventing the collection of such taxes so contested and also of preventing the sale or forfeiture of the Project or any part thereof or any interest therein, (ii) Borrower has notified the Agent of Borrower’s intent to contest such taxes, and (iii) Borrower has deposited security for the payment of contested taxes in form and amount satisfactory to the Required Lenders. If Borrower fails to commence such contest or, having commenced to contest the same, thereafter fails to prosecute such contest in good faith or with due diligence, or, upon adverse conclusion of any such contest, shall fail to pay such tax, assessment or charge, the Agent or any Lender may, at its election (but shall not be required to), pay and discharge any such tax, assessment or charge, and any interest or penalty thereon, and any amounts so expended in excess of any security posted by Borrower shall be added to the Debt. Borrower shall furnish the Agent with evidence that taxes are paid at least ten (10) days prior to the last date for payment of such taxes and before imposition of any penalty or accrual of interest. Notwithstanding the foregoing, the Agent shall not assert a default for failure to pay real estate taxes, provided that (x) there exists no Event of Default and (y) adequate funds for the payment of real estate taxes exist in the Tax Escrow Fund.

(l)                Tax and Insurance Escrow Fund.  From and after substantial completion of the Improvements, in the event the unadvanced portion of the Facility A Commitment is insufficient for payment of real estate taxes and Insurance Premiums, then upon request by the Agent Borrower shall pay to the Agent on each Payment Date

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(i) one-twelfth (1/12) of an amount which would be sufficient to pay the real estate taxes payable, or estimated by the Agent to be payable, during the ensuing twelve (12) months (the “Tax Escrow Fund”) and (ii) one-twelfth (1/12) of the Insurance Premiums payable, or estimated by Lender to be payable, during the ensuring twelve months (the “Insurance Escrow Fund”, and, together with the Tax Escrow Fund, the “Tax and Insurance Escrow Fund”). Notwithstanding the foregoing, the Agent shall advance such amounts from the undisbursed balance of the Tax and Insurance Reserve in accordance with the provisions of Section 10.5 hereof, provided that (i) no Event of Default exists, (ii) no dispute exists in respect of amounts to be disbursed for the payment of real estate taxes or Insurance Premiums and (iii) the line items in respect of real estate taxes and Insurance Premiums set forth in the Construction Budget are in balance. The Tax and Insurance Escrow Fund, the Servicing Fees and the monthly installments of interest payable under the Notes shall be added together and shall be paid as an aggregate sum by Borrower to the Agent. Borrower hereby pledges to the Agent any and all monies now or hereafter deposited in the Tax and Insurance Escrow Fund as additional security for the payment of the Debt. The Agent will apply (i) the Insurance Escrow Fund to insurance premiums required to be paid by Borrower pursuant to Section 15.2 hereof and (ii) the Tax Escrow Fund to real estate taxes required to be paid by Borrower under Section 15.1(k) hereof. If at any time the Tax and Insurance Escrow Fund is not sufficient to pay real estate taxes or insurance premiums, Borrower shall pay to the Agent, within ten (10) days after written demand, the Agent’s estimate of the amount required to remedy the deficiency. Upon the occurrence of an Event of Default, the Agent may (and shall at the direction of the Required Lenders) apply any sums then comprising the Tax and Insurance Escrow Fund to the payment of the Debt in accordance with Section 21.1.  Until expended or applied as above provided, any amounts in the Tax and Insurance Escrow Fund shall constitute additional security for the Debt. To the extent permitted by applicable law, the Tax and Insurance Escrow Fund shall not constitute a trust fund and may be commingled with other monies held by the Agent. No earnings or interest on the Tax and Insurance Escrow Fund shall be payable to Borrower.

(m)              Management Agreements.  Borrower shall not retain any property manager or enter into any management agreement with respect to the management or operation on any portion of the Project without the Lenders’ prior written consent.

(n)               Personal Property.  Except as hereinafter provided, Borrower shall keep all Personal Property incorporated in the Project free of all liens, encumbrances and security interests, other than the liens, encumbrances and security interests in favor of the Agent created by the Loan Documents. Prior to completion of the Improvements, Borrower shall provide to the Agent, when requested but no more frequently than quarterly, an inventory of the Personal Property and shall execute such financing statements as may be reasonably required by the Agent to perfect the Agent’s security interest on the same. No Personal Property shall be purchased or installed in the Improvements by Borrower under any security agreement, conditional sales contract or other agreement wherein the seller reserves a security interest in, or the right to remove or to repossess, such items or to consider them personal property after their incorporation into the Improvements, except for capital leases approved by the Required Lenders.

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(o)               Leases.  Without the prior written consent of the Lenders, Borrower shall not (i) enter into any lease of all or any portion of the Project, except for a Permitted Lease, (ii) materially modify any lease of any portion of the Project or (iii) accept any rental payment in advance of one month of its due date. Borrower shall provide the Agent with a copy of the fully executed original of all leases promptly following their execution. Borrower shall deposit all security deposits under leases in a segregated account with a financial institution reasonably acceptable to the Agent. At the Agent’s request, Borrower shall cause tenants to execute subordination, non-disturbance and attornment agreements reasonably satisfactory to the Agent. The Agent reserves the right (exercisable only at the direction of the Lenders) to subordinate the lien of the Mortgage to any lease.

(p)               Certain Agreements.  Without the prior written consent of the Lenders, Borrower shall not modify or terminate (i) any of the ML&P Agreements, (ii) any of the Marketing Agreements, (iii) the Ground Lease, (iv) the ER Purchase Agreement, (v) the Ritz-Carlton Consent Agreement, (vi) the ML&P Consent Agreement, (vii) any of the Development Documents, or (viii) the Condominium Documents. Borrower shall timely observe and perform all of its obligations under the foregoing agreements. Promptly after receipt thereof, Borrower shall furnish the Agent with a copy of any material notice received or delivered by Borrower under any of the foregoing agreements, including, without limitation, any notice of default. The execution of a Contract of Sale for an individual Unit to be purchased by Exclusive Resorts under the ER Purchase Agreement shall not be deemed such a modification or termination as contemplated under this Section 15.1(p); provided that the purchase price for such Unit is the same as set forth in the ER Purchase Agreement. Notwithstanding anything to the contrary in this Agreement, the Agent and the Lenders acknowledge that (x) the Borrower and Exclusive Resorts have the right to modify the ER Purchase Agreement and individual purchase agreements entered into pursuant thereto prior to the initial execution of the individual purchase agreements without the Lenders’ consent provided that such changes are not inconsistent with the First Amendment to the ER Purchase Agreement between the parties dated June 28, 2006, that the purchase prices identified therein are not modified and further provided that this Section shall not be deemed to waive the Lenders’ consent rights to any amendment negotiated after the individual agreements are signed, and (y) Borrower may make modifications or amendments to the aforementioned agreements without the Lenders’ consent provided that such amendments or modifications will solely affect portions of the Property that are to be released by the Agent pursuant to this Agreement from and after the effective date of such release.

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(q)               Appraisals.  The Agent may obtain a new or updated Appraisal of the Project from time to time. Borrower shall cooperate with the Agent in this regard. Notwithstanding the foregoing, the Agent shall not obtain a new or updated Appraisal more than once in any twelve (12) month period, unless either (i) an Event of Default exists or (ii) such Appraisal is then required under the terms of this Agreement. Borrower shall reimburse the Agent upon demand for the cost of any Appraisal obtained by the Agent in accordance with the terms of this Section 15.1(q).

(r)                Furnishing Information.  Borrower shall deliver or cause to be delivered to the Agent, (1) within one hundred twenty (120) days after the end of each calendar year, with respect to Borrower and Guarantor, an annual financial statement, in a form satisfactory to the Agent, audited by an independent, certified public accountant (or with respect to Exclusive Resorts and Exclusive Resorts Development Company, LLC only, certified by an authorized officer of Exclusive Resorts and Exclusive Resorts Development Company, LLC); (2) within sixty (60) days after the end of each calendar quarter, with respect to Borrower, a quarterly financial statement, in a form satisfactory to the Agent; and (3) within thirty (30) days after the end of each reporting period of Borrower (it being understood that Borrower has a 13 period reporting cycle annually), with respect to Borrower, a monthly financial statement, in a form satisfactory to the Agent, together with a list of existing Permitted Leases and the Net Lease Payments received by Borrower during such reporting period. Within ten (10) days after request by the Agent, Borrower shall deliver to the Agent the most recently filed annual Federal Income Tax Returns with respect to Borrower and Guarantor. Borrower and Guarantor shall provide such additional financial information as the Agent reasonably requires. Upon reasonable advance notice from the Agent, Borrower shall permit the Agent, the Lenders or their representatives to review all of Borrower’s books and records regarding the development and operation of the Project.

(s)               Lost Note.  Upon a Lender’s delivery to Borrower of an affidavit to such effect, Borrower shall, if its Note is mutilated, destroyed, lost or stolen, deliver to such Lender, in substitution therefor, a new note containing the same terms and conditions.

(t)                Indemnification.  Borrower shall indemnify the Agent, each Lender and any party owning an interest in any Loan and their respective officers, directors, employees and consultants (each, an “Indemnified Party”) and defend and hold each Indemnified Party harmless from and against all claims, injury, damage, loss and liability, cost and expense (including reasonable attorneys’ fees and expenses and court costs) of any and every kind to any persons or property by reason of (i) the Construction; (ii) the operation or maintenance of the Project; (iii) any breach of representation or warranty, default or Event of Default; or (iv) any other matter arising in connection with the Loans or the Project. No Indemnified Party shall be entitled to be indemnified against its own gross negligence or willful misconduct. The foregoing indemnification shall survive repayment of the Debt.

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(u)               Compliance With Laws.  Borrower shall comply with all Laws applicable to the Project.

(v)               Furnishing Reports.  Upon the Agent’s request, Borrower shall provide the Agent with copies of all inspections, reports, test results and other information received by Borrower which in any way relate to the Project or any part thereof.

(w)              Furnishing Notices.  Borrower shall provide the Agent with copies of all material notices pertaining to the Project received by Borrower from any purchaser under any Contract of Sale, Governmental Authority, insurance company or tenant within seven (7) days after such notice is received.

(x)               Correction of Defects.  Within five (5) days after Borrower acquires knowledge of or receives notice of a defect in the Improvements or any departure from the Plans and Specifications, or any other requirement of this Agreement, Borrower will proceed with diligence to correct all such defects and departures.

(y)               Hold Disbursements in Trust.  Borrower shall receive and hold in trust for the sole benefit of the Lenders (and not for the benefit of any other person, including, but not limited to, contractors or any subcontractors) all advances made hereunder directly to Borrower, for the purpose of paying costs of the Construction in accordance with the Construction Budget. Borrower shall use the proceeds of the Loans solely for the payment of costs specified in the Construction Budget. Borrower will pay all other costs, expenses and fees relating to the acquisition, equipping, use and operation of the Project.

(z)               Alterations.  Without the prior written consent of the Lenders, Borrower shall not make any material alterations to the Project (other than completion of the Construction in accordance with the Plans and Specifications).

(aa)             Cash Distributions.  Borrower shall not make any distributions to partners, members or shareholders of Borrower.

(bb)            Affiliate Contracts.  Borrower shall not enter into any contracts or agreements after the date hereof with any Guarantor, Member, MII, or MLP/MII Affiliate or any Affiliate of any of the foregoing without the Required Lenders’ prior written consent.

(cc)             Security Interest and Perfection Matters Relating to the Facility A Excess Proceeds Account.  Promptly after the Agent’s request therefor, Borrower agrees to deliver to the Agent all agreements, instruments and documents (including control agreements, if necessary, and opinions of counsel), in form and substance reasonably satisfactory to the Agent, evidencing that the Agent has a first priority perfected security interest in the Facility A Excess Proceeds Account.

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Section 15.2Insurance.

(a)               Borrower shall obtain and maintain, or cause to be maintained, insurance for Borrower and the Project as follows:

(i)         comprehensive all risk insurance on the Improvements and the Personal Property, including contingent liability from Operation of Building Laws, Demolition Costs and Increased Cost of Construction Endorsements, in each case (A) in an amount equal to one hundred percent (100%) of the “Full Replacement Cost,” which for purposes of this Agreement shall mean actual replacement value (exclusive of costs of excavations, foundations, underground utilities and footings) with a waiver of depreciation, but the amount shall in no event be less than the outstanding principal balance of the Loans; (B) containing an agreed amount endorsement with respect to the Improvements and Personal Property waiving all coinsurance provisions; (C) permitting no deductible in excess of $50,000; and (D) containing an “Ordinance or Law Coverage” or “Enforcement” endorsement if any of the Improvements or the use of the Project shall at any time constitute legal non-conforming structures or uses. In addition, Borrower shall obtain: (y) if any portion of the Improvements is currently or at any time in the future located in a federally designated “special flood hazard area”, flood hazard insurance in an amount equal to the lesser of (1) the outstanding principal balance of the Loans or (2) the maximum amount of such insurance available under the National Flood Insurance Act of 1968, the Flood Disaster Protection Act of 1973 or the National Flood Insurance Reform Act of 1994, as each may be amended or such greater amount as the Required Lenders shall require; and (z) earthquake insurance in amounts and in form and substance satisfactory to the Required Lenders in the event the Project is located in an area with a high degree of seismic activity;

(ii)        commercial general liability insurance against claims for personal injury, bodily injury, death or property damage occurring upon, in or about the Project, such insurance (A) to be on the so-called “occurrence” form with a combined limit, of not less than $2,000,000, (B) to continue at not less than the aforesaid limit until required to be changed by the Required Lenders in writing by reason of changed economic conditions making such protection inadequate; and (C) to cover at least the following hazards: (1) premises and operations; (2) products and completed operations on an “if any” basis; (3) independent contractors; (4) blanket contractual liability for all legal contracts; and (5) contractual liability covering the indemnities contained in Loan Agreement;

(iii)       the insurance provided for in subsection (i) above written in a so called builder’s risk completed value form (1) on a non-reporting basis, (2) against all risks insured against pursuant to subsection (i) above, (3) including all building material stored at the designated site (including on-site and off-site storage at specific locations), (4) including all Soft Costs, (5) including permission to occupy the Improvements and (5) with an agreed amount endorsement waiving coinsurance provisions.

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(iv)      workers’ compensation, subject to the statutory limits of the State, and employer’s liability insurance with a limit of at least $1,000,000 per accident and per disease per employee, and $1,000,000 per accident and per disease in the aggregate in respect of any work or operations on or about the Project, or in connection with the Project or its operation (if applicable);

(v)       comprehensive boiler and machinery insurance, if applicable, in amounts as shall be reasonably required by the Agent on terms consistent with the commercial property insurance policy required under subsection (i) above;

(vi)      umbrella liability insurance in an amount not less than $100,000,000, with the primary $1,000,000 on an occurrence basis and the excess $100,000,000 on an aggregate basis, on terms consistent with the commercial general liability insurance policy required under subsection (ii) above;

(vii)     motor vehicle liability coverage for all owned and non-owned vehicles, including rented and leased vehicles containing minimum limits per occurrence, including umbrella coverage, of $101,000,000;

(viii)    insurance for loss resulting from perils and acts of terrorism on terms (including amounts) consistent with the insurance required under subsections (i), (ii), (iii), (v) and (vi) above (subject to a deductible that is satisfactory to the Required Lenders) at all times during the term of the Loans; and

(ix)       marina operations insurance, at such time as operations at any marina shall commence, including; (A) liability insurance arising from loss or damage to private pleasure craft and small commercial watercraft; and (B) bodily injury and property damage liability;

(x)        all-risk marine cargo insurance on an annual basis covering cargo worldwide in the event of physical loss or damage from external causes in the amount of not less than 110% of the C.I.F. value, such insurance to include: (A) while cargo is in the normal course of transit from the point of origin; (B) marine business interruption insurance; (C) processing of cargo in foreign countries; (D) on-site and off-site storage at specific locations; and (E) exhibition coverage;

(xi)       upon thirty (30) days’ written notice from the Agent, such other reasonable insurance, in such reasonable amounts, as the Required Lenders from time to time may reasonably request against such other insurable hazards which at the time are commonly insured against for property similar to the Project located in or around Kapalua, Hawaii.

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(b)               All insurance provided for in Section 15.2(a) hereof shall be obtained under valid and enforceable policies (collectively, the “Policies” or in the singular, the “Policy”), and shall be subject to the approval of the Required Lenders as to insurance companies, amounts, deductibles, loss payees and insureds.  The Policies shall be issued by financially sound and responsible insurance companies authorized to do business in the State and having a claims paying ability rating of “A” or better by S&P or “A2” or better by Moody’s. The Policies described in Section 15.2(a) (other than those strictly limited to liability protection) shall designate the Agent as loss payee. Not less than ten (10) days prior to the expiration dates of the Policies theretofore furnished to the Agent, certificates of insurance evidencing the renewal of the Policies, accompanied by evidence satisfactory to the Agent of payment of the premiums thereunder (the “Insurance Premiums”), shall be delivered by Borrower to the Agent.

(c)               Any blanket insurance Policy shall specifically allocate to the Project the amount of coverage from time to time required hereunder and shall otherwise provide the same protection as would a separate Policy insuring only the Project in compliance with the provisions of Section 15.2(a) hereof.

(d)               All Policies of insurance provided for by Section 15.2(a) hereof, except for the Policy referred to in Section 15.2(a)(iv) hereof, shall name Borrower as the insured and the Agent as the additional insured, as its interests may appear, and in the case of property damage, boiler and machinery, flood and earthquake insurance, shall contain a so-called New York standard non-contributing mortgagee clause (or its equivalent) in favor of the Agent providing that the loss thereunder shall be payable to the Agent.

(e)               All Policies of insurance provided for in Section 15.2(a) hereof shall contain clauses or endorsements to the effect that;

(i)         no act or negligence of Borrower, or anyone acting for Borrower, or of any tenant or other occupant of the Project, or failure to comply with the provisions of any Policy, which might otherwise result in a forfeiture of the insurance or any part thereof, shall in any way affect the validity or enforceability of the insurance insofar as the Agent is concerned;

(ii)        the Policy shall not be materially changed (other than to increase the coverage provided thereby) or canceled without at least thirty (30) days’ prior written notice to the Agent and any other party named therein as an additional insured;

(iii)       the issuers thereof shall give written notice to the Agent if the Policy has not been renewed fifteen (15) days prior to its expiration; and

(iv)      the Agent shall not be liable for any Insurance Premiums thereon or subject to any assessments thereunder.

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(f)                If at any time the Agent is not in receipt of written evidence that all insurance required hereunder is in full force and effect, the Agent or any Lender shall have the right, without notice to Borrower, to take such action as the Agent or such Lender deems necessary to protect its interest in the Project, including, without limitation, the obtaining of such insurance coverage as the Agent or any Lender in its sole discretion deems appropriate. All Insurance Premiums incurred by the Agent and any Lender in connection with such action or in obtaining such insurance and keeping it in effect shall be paid by Borrower to the Agent or the applicable Lenders upon demand and, until paid, shall be secured by the Mortgage and shall bear interest at the Default Rate.

(g)               The Borrower may obtain the insurance required hereunder from any insurance company of the Borrower’s choice that is acceptable to the Required Lenders, which acceptance shall not be unreasonably withheld. The Required Lenders’ nonacceptance of an insurer shall not be deemed unreasonable if it is based upon reasonable standards, uniformly applied, relating to the extent of coverage required and the financial soundness and services of the insurer. Such standards shall not discriminate against any particular insurer nor shall such standards call for rejection of an insurance contract because the contract contains coverage in addition to that required under this Agreement.

Section 15.3Special Purpose Covenants.

(a)               The purpose for which Borrower is organized is and shall be limited solely to (i) owning, developing, holding, constructing, selling, leasing, transferring, exchanging, operating and managing the Project, (ii) entering into this Agreement and the other Loan Documents and (iii) transacting any business that is incident, necessary and appropriate to accomplish the foregoing.

(b)               Except for the hotel previously operated on the Development Land, Borrower has not owned, does not own and will not own any asset or property other than (i) the Project and (ii) incidental personal property necessary for and used or to be used in connection with the ownership or operation of the Project.

(c)               Borrower has not engaged in and will not engage in any business other than the ownership, construction, development, management and operation of the Project.

(d)               Borrower has not entered and will not enter into any contract or agreement with any Affiliate of Borrower, any constituent party of Borrower, any Guarantor of the obligations of Borrower or any Affiliate of any constituent party, owner or guarantor (collectively, the “Related Parties”), except upon terms and conditions that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arms-length basis with third parties not so affiliated with Borrower or such Related Parties and at all times subject to the prior written consent of the Required Lenders. The ML&P Agreements, Marketing Agreements and ER Purchase Agreements are hereby approved by the Lenders.

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(e)               Except for the Loans, Borrower shall neither incur nor guarantee any indebtedness (whether personal or non-recourse, secured or unsecured) other than customary trade payables contemplated by the Construction Budget, aged not in excess of sixty (60) days, and unsecured loans from members of Borrower that are subordinate to the Loans.

(f)                Borrower has not made and will not make any loans or advances to any Person and shall not acquire obligations or securities of any Related Party.

(g)               Borrower is and will remain solvent and Borrower will pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from its assets as the same shall become due.

(h)               Borrower has done or caused to be done and will do all things necessary to observe organizational formalities and preserve its existence, and Borrower will not, nor will Borrower permit any Related Party to, amend, modify or otherwise change the partnership certificate, partnership agreement, articles of incorporation and bylaws, operating agreement, trust or other organizational documents of Borrower or such Related Party without the prior written consent of the Required Lenders.

(i)                Borrower has maintained and will maintain all of its books, records, financial statements and bank accounts separate from those of any other Person and Borrower’s assets will not be listed as assets on the financial statement of any other Person. Borrower has filed and will file its own tax returns and will not file a consolidated federal income tax return with any other Person. Borrower shall maintain its books, records, resolutions and agreements as official records.

(j)                Borrower will be, and at all times will hold itself out to the public as, a legal entity separate and distinct from any other Person (including any Affiliate or other Related Party), shall correct any known misunderstanding regarding its status as a separate entity, shall conduct business in its own name, shall not identify itself or any of its Affiliates as a division or part of the other and shall maintain and utilize separate stationery, invoices and checks.

(k)               Borrower will maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations.

(l)                Neither Borrower nor any Related Party will seek the dissolution, winding up, liquidation, consolidation or merger in whole or in part of Borrower, or the sale of material assets of Borrower.

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(m)              Borrower has not commingled and will not commingle its assets with those of any other Person and will hold all of its assets in its own name.

(n)               Borrower has not guaranteed and will not guarantee or become obligated for the debts of any other Person and does not and will not hold itself out as being responsible for the debts or obligations of any other Person.

(o)               If Borrower is a limited partnership or a limited liability company, at least one (1) general partner or member, or if Borrower is a general partnership at least one (1) general partner (each, an “SPC Party”) shall be a corporation or limited liability company whose sole asset is its interest in Borrower. Each SPC Party will at all times comply, and will cause Borrower to comply, with each of the representations, warranties, and covenants contained in this Section 15.3 as if such representation, warranty or covenant was made directly by such SPC Party. Upon the withdrawal or the disassociation of the SPC Party from Borrower, Borrower shall immediately appoint a new member whose organizational documents are substantially similar to those of the SPC Party.

(p)               Borrower shall at all times cause there to be at least one (1) duly appointed member or manager (“Independent Director”) of Borrower (if Borrower is a corporation or a single member Delaware limited liability company) reasonably satisfactory to the Agent who is not at the time of initial appointment, has not been at any time during the preceding five (5) years and shall not be while serving as an Independent Director: (i) a stockholder, director (other than as an Independent Director), officer, employee, partner, attorney or counsel of Borrower or any Affiliate of Borrower; (ii) a customer, supplier or other Person who derives any of its purchases or revenues from its activities with Borrower or any Affiliate of Borrower; (iii) a Person controlling or under common control with any such stockholder, partner, customer, supplier or other Person; or (iv) a member of the immediate family of any such stockholder, director, officer, employee, partner, customer, supplier or other Person.

(q)               Borrower shall not cause or permit the SPC Party or its members and/or managers to take any action which, under the terms of any of its organizational documents requires the vote of any SPC Party of Borrower unless at the time of such action there shall be at least one (1) member of the board of directors who is an Independent Director.

(r)                Borrower shall allocate fairly and reasonably any overhead expenses that are shared with an Affiliate, including paying for office space and services performed by any employee of an Affiliate or Related Party.

(s)               Borrower shall not pledge its assets for the benefit of any other Person other than with respect to the Loan.

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(t)                Borrower shall maintain a sufficient number of employees in light of its contemplated business operations and pay the salaries of its own employees from its own funds.

ARTICLE XVI
CASUALTY AND CONDEMNATION

Section 16.1Election to Apply Proceeds to the Debt.

(a)               Subject to the provisions of Section 16.1(b) below, if the Lenders so elect in their sole discretion, all proceeds of insurance or condemnation (individually and collectively referred to as “Proceeds”), after deduction of all expenses of collection and settlement, including attorneys’ and adjusters’ fees and charges, shall be applied to the Debt in accordance with Section 21.1.

(b)               Notwithstanding anything in Section 16.1(a) to the contrary, in the event of any casualty to the Improvements or any condemnation of part of the Project, the Lenders agree to make the Proceeds available for restoration of the Improvements if (i) no Event of Default exists that will not be cured upon Borrower’s commencement of restoration, (ii) all Proceeds are deposited with the Agent, (iii) in the Lenders’ reasonable judgment, the amount of Proceeds available for restoration of the Improvements (together with undisbursed portion of the Facility A Commitment, if any, allocated for the cost of the Construction and any sums or other security acceptable to the Lenders deposited with the Agent by Borrower for such purpose) are sufficient to pay the full and complete costs of such restoration, (iv) in the Lenders’ reasonable determination, the Project can be restored to an architecturally and economically viable project in compliance with applicable Laws, (v) Guarantor reaffirms the Completion Guaranty in writing, (vi) in the Lenders’ reasonable determination, such restoration is likely to be completed no later than the Facility A Maturity Date, (vii) in the Lenders’ reasonable judgment, any operating deficits, including all payments of interest and principal due hereunder, that shall be incurred by reason of the casualty or condemnation shall be covered by the Proceeds, the insurance coverage referred to in Section 15.2(a)(i) above, and other funds of Borrower or Facility A Loan proceeds that are available to be disbursed for construction costs in accordance with the Construction Budget, and (viii) in the Lenders’ reasonable judgment, following the restoration of the Project, the Loan to Value Ratio shall not exceed 60%.

Section 16.2Borrower’s Obligation to Rebuild.

(a)               If the Lenders do not elect (or do not have the right) to apply the Proceeds to the Debt, as provided in Section 16.1 above, Borrower shall:

(i)         Proceed with diligence to make settlement with insurers or Governmental Authorities and cause the Proceeds to be deposited with the Agent;

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(ii)        In the event of any delay in making settlement with insurers or Governmental Authorities or effecting collection of the Proceeds, deposit with the Agent such amount as the Required Lenders reasonably deems appropriate to insure the timely completion of Construction as aforesaid;

(iii)       If the Proceeds and the undisbursed portion of the Facility A Commitment are insufficient to maintain the Loans In Balance as calculated pursuant to Section 11.1, promptly make a Deficiency Deposit pursuant to Section 11.1 as necessary to place the Loans In Balance; and

(iv)      Promptly proceed with the resumption of Construction of the Improvements, including the repair of all damage resulting from such fire, condemnation or other cause and restoration to its former condition.

(b)               Any request by Borrower for a disbursement by the Agent of Proceeds and funds deposited by Borrower shall be treated by the Agent as if such request were for an advance of the a Facility A Loan hereunder, and the disbursement thereof shall be conditioned upon Borrower’s compliance with and satisfaction of the same conditions precedent as would be applicable under this Agreement for an advance of a Facility A Loan.

(c)               Notwithstanding the foregoing, the Borrower may, at Borrower’s option, elect to prepay the Loans without any penalty after a Casualty or Condemnation in lieu of restoring the Property, and in such case the proceeds of such prepayment shall be applied in accordance with Section 21.1.

ARTICLE XVII
TRANSFERS AND ASSIGNMENTS AND PARTICIPATIONS

Section 17.1Prohibition of Assignments and Transfers by Borrower.

(a)               Borrower shall not assign its rights under this Agreement and any purported assignment shall be void.  Except as provided in Section 17.1(b) below or in connection with a Permitted Transfer, without the prior written consent of the Lenders (which consent may be withheld by the Lenders in their sole discretion), Borrower shall not suffer or permit (a) any change in the management (whether direct or indirect) of the Project or of Borrower or (b) any Transfer. The Lenders’ consent if given in connection with any transfer request shall not be deemed to be a waiver of the Lenders’ right to require such consent in the future. Any sale, conveyance, alienation, mortgage, encumbrance, pledge or transfer of the Project made in contravention of this Agreement shall be null and void and of no force or effect.

(b)               In connection with any corporate equity or debt financing made by an Institutional Lender for the benefit of any of Maui Land & Pineapple Company, Inc., Exclusive Resorts and MII (each, a “Principal”), Principal shall have the right to

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pledge its respective limited liability company interests in MLP KB Partner LLC, a Hawaii limited liability company, ER Kapalua Investors Fund, LLC, a Delaware limited liability company, and MH Kapalua Venture, LLC, a Delaware limited liability company, as security for such financing; provided, however, that in each such instance, (A) there shall then exist no Default or Event of Default under this Agreement or any of the other Loan Documents; (B) the lender, and any subsequent holder of the note under such loan, must be an Institutional Lender; (C) Principal shall provide the Agent with (i) no less than thirty (30) days’ prior written notice of such financing, (ii) copies of all such financing documents and instruments, and (iii) a “non-consolidation opinion” reasonably satisfactory to the Agent.

(c)               Borrower covenants and agrees that, as a condition to any Permitted Transfer, (A) there shall then exist no Default or Event of Default under this Agreement or any of the other Loan Documents; (B) Borrower shall provide the Agent with thirty (30) days’ prior written notice of such Permitted Transfer; (C) Borrower shall provide the Agent all documents and statements as may be reasonably requested by the Agent in connection with such Permitted Transfer and evidence confirming that such transaction complies with the requirements of a Permitted Transfer and (D) Borrower shall provide updated opinions, including non-consolidation opinions, in form and substance and delivered by counsel reasonably acceptable to the Agent, as may be reasonably required by the Agent. Borrower’s failure to comply with the terms of this Section shall constitute an “Event of Default” hereunder.

Section 17.2Prohibition of Transfers in Violation of ERISA.

In addition to the prohibitions set forth in Section 17.1 above, Borrower shall not assign, sell, pledge, encumber, transfer, hypothecate or otherwise dispose of its interest or rights in this Agreement or in the Project, or attempt to do any of the foregoing or suffer any of the foregoing, nor shall any party owning a direct or indirect interest in Borrower assign, sell, pledge, mortgage, encumber, transfer, hypothecate or otherwise dispose of any of its rights or interest (direct or indirect) in Borrower, attempt to do any of the foregoing or suffer any of the foregoing, if such action would cause any portion of the Loans, or the exercise of any of the Agent’s or any Lender’s rights in connection therewith, to constitute a prohibited transaction under ERISA or the Internal Revenue Code or otherwise result in any Lender being deemed in violation of any applicable provision of ERISA. Borrower agrees to indemnify and hold each Indemnified Party free and harmless from and against all losses, costs (including attorneys’ fees and expenses), taxes, damages (including consequential damages) and expenses such Indemnified Party may suffer by reason of the investigation, defense and settlement of claims and in obtaining any prohibited transaction exemption under ERISA necessary or desirable in such Indemnified Party’s sole judgment or by reason of a breach of the foregoing prohibitions. The foregoing indemnification shall be a recourse obligation of Borrower and shall survive repayment of the Notes, notwithstanding any limitations on recourse contained herein or in any of the Loan Documents.

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Section 17.3Successors and Assigns.

Subject to the foregoing restrictions on transfer and assignment contained in this Article XVII, this Agreement shall inure to the benefit of and shall be binding on the parties hereto and their respective successors and permitted assigns.

Section 17.4Lender Assignments and Participations.

(a)               Each Lender may transfer or assign its interest in its Loans and, in the case of the Facility A Lenders, its Facility A Commitment by assignment in accordance with and subject to the terms and conditions of this Agreement, provided that any transfer by assignment of less than a Lender’s entire interest in the Loans shall be in a minimum amount of $5,000,000 and provided further, that with respect to each Lender, if no Event of Default exists, any such transfer to any Person that is not an existing Lender or an Affiliate of an existing Lender shall be either (i) to a Qualified Transferee or (ii) subject to prior written approval of the Required Lenders, which approval shall not be unreasonably withheld, conditioned or delayed; provided, however, that so long as an Event of Default exists no such approval pursuant to this clause (ii) shall be required.

(b)               The assigning Lender will give notice of such assignment to the Agent, and the Agent will give notice of such assignment to the other Lenders and Borrower. Upon the effectiveness of any such assignment (and after notice to, and (to the extent required pursuant to the terms hereof), with the consent of the Required Lenders, if applicable) the assignee shall become a “Lender” for all purposes of this Agreement and to Loan Documents and, to the extent of such assignment, the assigning Lender shall be relieved of its obligations hereunder to the extent of the Loans being assigned, and in connection therewith, the Agent is authorized to amend Schedule D of this Agreement (if necessary) to reflect the Facility A Commitments of each of the Lenders to take into account such assignment. In connection with such assignment, the Agent agrees upon notice of such assignment and the surrender of the appropriate Note to the Agent by the assigning Lender, it will promptly cause Borrower to provide to the assigning Lender and to the assignee separate promissory notes in the amount of their respective interests substantially in the form of the original Note being assigned (but with notation thereon that it is given in substitution for and replacement of the original Note or any replacement notes thereof). By executing and delivering an Assignment and Assumption Agreement in accordance with this Section 17.4(b), the assigning Lender thereunder and the assignee thereunder shall be deemed to confirm to and agree with each other and the other parties hereto as follows: (i) such assigning Lender warrants that it is the legal and beneficial owner of the interest being assigned thereby free and clear of any adverse claim; (ii) except as set forth in clause (i) above, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement, any of the other Loan Documents or any other instrument or document furnished pursuant hereto or thereto, or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this

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Agreement, any of the other Loan Documents or any other instrument or document furnished pursuant hereto or thereto or the financial condition of the Borrower or the performance or observance by the Borrower of any of its obligations under the Loan Documents or any other instrument or document furnished pursuant hereto or thereto; (iii) such assignee represents and warrants that it is legally authorized to enter into such assignment agreement; (iv) such assignee confirms that it has received a copy of this Agreement, the other Loan Documents and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such assignment agreement; (v) such assignee will independently and without reliance upon the Agent, such assigning Lender or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement and the Loan Documents; (vi) such assignee appoints and authorizes the Agent to take such action on its behalf and to exercise such powers under this Agreement or the Loan Documents as are delegated to the Agent by the terms hereof or thereof, together with such powers as are reasonably incidental thereto; and (vii) such assignee agrees that it will perform in accordance with their terms all the obligations of this Agreement and the other Loan Documents and the Servicing Agreement which by the terms are required to be performed by it as a Lender.

(i)         Each assignment under this Section 17.4 shall be evidenced by an Assignment and Assumption Agreement executed by the assigning Lender and the assignee.  The Agent shall maintain a copy of each Assignment and Assumption Agreement delivered to and accepted by it and shall record in its records the names and address of each Lender and, if applicable, its Facility A Commitment.  No assignment shall be effective until (i) the Agent shall have received a fully executed copy of the Assignment and Assumption Agreement, (ii) satisfaction of the requirements set forth in Section 17.4(a) and (iii) receipt by the Agent from the assigning Lender or the assignee of a process and recordation fee of $3,500.

(ii)        Upon receipt of an Assignment and Assumption Agreement executed by an assigning Lender and an assignee, the Agent shall, if such Assignment and Assumption Agreement has been properly completed and consented to if required herein, accept such Assignment and Assumption Agreement, and record the information contained therein in its records.

(c)               Each Lender may grant a participation interest in its interest in its Loans and in and to its rights and obligations under the Loan Documents in accordance with and subject to the terms and conditions of this Agreement without the consent of the Agent or any other Lender; provided, however, that (i) such Lender provides written notice of any such participation to the Agent, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of its obligations under this Agreement, (iii) the Agent, the Borrower and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement and with regard to any and all payments to be made under this Agreement, and (iv) the holder of any such participation shall not be entitled to voting rights under this Agreement.

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Section 17.5Not a Security.

The Notes shall not be deemed to be securities within the meaning of the Securities Act of 1933 or the Securities Exchange Act of 1934. Each Lender acknowledges that it is (i) (a) a substantial, sophisticated investor having such knowledge and experience in financial and business matters, and, in particular, in such matters related to securities similar to the Notes, such that it is capable of evaluating the merits and risks of investment in the Notes, (b) able to bear the economic risks of such an investment and (c) an “accredited investor” within the meaning of Rule 501(a) promulgated pursuant to Securities Act of 1933; or (ii) a “qualified institutional buyer” as defined in Rule 144A under the Securities Act of 1933.

ARTICLE XVIII
SERVICER

Section 18.1Servicer.

At the option of the Agent, the Loans may be serviced by a servicer or trustee (the “Servicer”) selected by the Agent and the Agent may delegate all or any portion of its responsibilities under this Agreement and the other Loan Documents to the Servicer pursuant to a servicing agreement (the “Servicing Agreement”) between the Agent and Servicer. Borrower shall not be responsible for any reasonable set-up fees or any other initial costs relating to or arising under the Servicing Agreement. Thereafter, Borrower shall pay the monthly servicing fees payable under the Servicing Agreement (“Servicing Fees”). Servicing Fees, along with the Tax and Insurance Escrow Fund, shall be added together with monthly installments of interest payable under the Notes and paid as an aggregate sum by Borrower to the Agent, on behalf of the party entitled thereto, on each Payment Date. Borrower shall further reimburse the Agent upon demand for reasonable out-of-pocket costs and expenses incurred by Servicer in (i) reviewing Borrower’s requisitions for advances of Facility A Loans, (ii) reviewing proposed Leases and subordination, non-disturbance and attornment agreements, (iii) conducting inspections of the Project, (iv) applying the provisions of this Agreement to any casualty or condemnation proceeding affecting the Project, (v) responding to any Default or Event of Default or (vi) otherwise incurred in connection with this Agreement and the other Loan Documents, including, without limitation, in connection with the administration of the Loans.

Section 18.2Servicer and Agent Fees.

Borrower shall pay, monthly, all fees to the Servicer (or to the Agent if there is no Servicer) in respect of servicing the Loan in the amount of twelve and three tenths (12.3) basis points per annum on the outstanding principal amount of the Loans.  Such fees shall

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be added to the interest payment due on the Loans on each Payment Date.  In addition, Borrower shall pay all of Servicer’s and the Agent’s out-of-pocket costs and expenses (including, without limitation, legal fees) incurred in connection with its review of any construction advances or draws, change orders, construction progress reports, leases, subordination and non-disturbance agreements, property and construction inspections, casualty or condemnation matters or loan defaults.

ARTICLE XIX
EVENTS OF DEFAULT

Section 19.1Events of Default.

The occurrence of any one or more of the following shall constitute an “Event of Default” as said term is used herein:

(a)               Failure of Borrower: (i) to make any principal or interest payment when due, (ii) to observe or perform any of the other covenants or conditions by Borrower to be performed under the terms of this Agreement or any other Loan Document concerning the payment of money within ten (10) days after notice, or (iii) for a period of thirty (30) days after written notice from the Agent, to observe or perform any non-monetary covenant or condition contained in this Agreement or any other Loan Documents; provided that if any such failure concerning a non-monetary covenant or condition is susceptible to cure and cannot reasonably be cured within said thirty (30) day period, then Borrower shall have an additional sixty (60) day period to cure such failure and no Event of Default shall be deemed to exist hereunder so long as Borrower commences such cure within the initial thirty (30) day period and diligently and in good faith pursues such cure to completion within such resulting ninety (90) day period from the date of the Agent’s notice; and provided further that if a different notice or grace period is specified under any other subsection of this Section 19.1 with respect to a particular breach, or if another subsection of this Section 19.1 applies to a particular breach and does not expressly provide for a notice or grace period, the specific provision shall control;

(b)               The disapproval by the Agent or Agent’s Consultant at any time of any construction work due to such work being defective or deviating from the approved Plans and Specifications, and failure of Borrower to cause the same to be corrected to the reasonable satisfaction of the Required Lenders within the cure period provided in Section 19.1(a)(ii) above;

(c)               A delay or discontinuance in the Construction for a period of fifteen (15) days for reasons within the control of Borrower, or up to seventy-five (75) days if occasioned by Force Majeure Delays, provided that the aggregate of all such time periods shall not exceed one hundred fifty (150) days, and an additional one hundred twenty (120) days permitted with respect to a tropical storm or hurricane;

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(d)               If Borrower fails to complete the Construction in substantial accordance with the Plans and Specifications on or before the Completion Date;

(e)               If Borrower fails to satisfy the final disbursement conditions under Article XIII on or before the Completion Date;

(f)                If Borrower defaults, beyond any applicable notice or cure period, under the General Contract, the Architect’s Agreement, any Major Contract, any of the Marketing Agreements, any of the ML&P Agreements, the Ground Lease, or the ER Purchase Agreement;

(g)               The bankruptcy or insolvency of the General Contractor and failure of Borrower to procure a contract with a new contractor reasonably satisfactory to the Required Lenders within ninety (90) days from the occurrence of such bankruptcy or insolvency;

(h)               Any Transfer or other disposition in violation of Sections 17.1 or 17.2;

(i)                If any warranty, representation, statement, report or certificate made now or hereafter by Borrower or Guarantor is untrue or incorrect in any material respect at the time made or, subject to the provisions of Section 3.2 hereof, deemed remade;

(j)                Borrower or Guarantor shall commence a voluntary case concerning Borrower or Guarantor under the Bankruptcy Code; or an involuntary proceeding is commenced against Borrower or Guarantor under the Bankruptcy Code and relief is ordered against the applicable party, or the petition is controverted but not dismissed or stayed within sixty (60) days after the commencement of the case, or a custodian (as defined in the Bankruptcy Code) is appointed for or takes charge of all or substantially all of the property of Borrower or Guarantor; or Borrower or Guarantor commence any other proceedings under any reorganization, arrangement, readjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar Law of any jurisdiction whether now or hereafter in effect relating to Borrower or Guarantor; or there is commenced against Borrower or Guarantor any such proceeding which remains undismissed or unstayed for a period of sixty (60) days; or Borrower or Guarantor fails to controvert in a timely manner any such case under the Bankruptcy Code or any such proceeding, or any order of relief or other order approving any such case or proceeding is entered; or Borrower or Guarantor by any act or failure to act indicates its consent to, approval of, or acquiescence in any such case or proceeding or the appointment of any custodian or the like of or for it for any substantial part of its property or suffers any such appointment to continue undischarged or unstayed for a period of sixty (60) days;

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(k)               Borrower or Guarantor shall make an assignment for the benefit of creditors, or shall admit in writing its inability to pay its debts generally as they become due, or shall consent to the appointment of a receiver or trustee or liquidator of all of its property or the major part thereof or if all or a substantial part of the assets of Borrower or Guarantor are attached, seized, subjected to a writ or distress warrant, or are levied upon, or come into the possession of any receiver, trustee, custodian or assignee for the benefit of creditors;

(l)                Any court enjoins Borrower from performing Construction, and such injunction is not removed for a period of twenty (20) days;

(m)              Borrower fails to make any Deficiency Deposit with the Agent within the time and in the manner required by Article XI hereof;

(n)               One or more final, unappealable judgments are entered (i) against Borrower in amounts aggregating in excess of $500,000; (ii) against Exclusive Resorts Development Company, LLC in amounts aggregating in excess of $250,000; (iii) against ML&P or Ritz-Carlton in amounts aggregating in excess of $2,500,000 and said judgments are not satisfied, stayed or bonded over within thirty (30) days after entry;

(o)               If Borrower or Guarantor shall fail to pay any debt owed by it or is in default (beyond any applicable notice, cure or grace period) under any Loan Document with the Agent and such failure or default continues after any applicable grace period specified in the instrument or agreement relating thereto;

(p)               If a Material Adverse Change occurs with respect to Borrower, the Project or Guarantor; or

(q)               The occurrence of any other event or circumstance denominated as an Event of Default in this Agreement or under any of the other Loan Documents and the expiration of any applicable grace or cure periods, if any, specified for such Event of Default herein or therein, as the case may be;

(r)                The Stipulation Order shall be stayed, amended, modified, reversed or vacated without the consent of the Lenders; provided, however, that if the only effect thereof is to prevent LBHI from funding its Facility A Pro Rata Share of any Facility A Loan then no Event of Default shall have occurred pursuant to this paragraph (r) so long as Borrower funds an amount at least equal to the portion of such Facility A Loan not funded by LBHI; or

(s)               Failure of Borrower to deposit funds into the Expense Reserve Account in accordance with Section 13.3(c).

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ARTICLE XX
LENDER’S REMEDIES IN EVENT OF DEFAULT

Section 20.1Remedies Conferred Upon Lender.

Upon the occurrence of any Event of Default, (i) in the case of paragraphs (a), (c), (d), (e) and (f) below, the Agent may (and shall at the direction of the Required Lenders), and (ii) in the case of paragraph (b) below, the Required Lenders may, pursue any one or more of the following remedies concurrently or successively, it being the intent hereof that none of such remedies shall be to the exclusion of any other:

(a)               Take possession of the Project and complete the Construction in accordance with the Plans and Specifications and do anything which is necessary or appropriate in its sole judgment to fulfill the obligations of Borrower under this Agreement and the other Loan Documents, including either the right to avail itself of and procure performance of existing contracts or let any contracts with the same contractors or others. Without restricting the generality of the foregoing and for the purposes aforesaid, Borrower hereby appoints and constitutes the Agent its lawful attorney in fact with full power of substitution in the Project to complete the Construction in the name of Borrower; to use unadvanced funds remaining under the Facility A Commitment or which may be reserved, escrowed or set aside for any purposes hereunder at any time, or to advance funds in excess of the face amount of the Note, to complete the Construction; to make changes in the Plans and Specifications which shall be necessary or desirable to complete the Construction in substantially the manner contemplated by the Plans and Specifications; to retain or employ new general contractors, subcontractors, architects, engineers and inspectors as shall be required for said purposes; to pay, settle or compromise all existing bills and claims which are, or which may become, liens against the Project; to execute all applications and certificates in the name of Borrower, prosecute and defend all actions or proceedings in connection with the Improvements or Project; to take action and require such performance as it deems necessary under the Bond(s) and to make settlements and compromises with the surety thereunder, and in connection therewith, to execute instruments of release and satisfaction; and to do any and every act which Borrower might do in its own behalf, it being understood and agreed that this power of attorney shall be a power coupled with an interest and cannot be revoked;

(b)               Withhold further disbursement of the proceeds of the Loan and/or terminate the Facility A Lender’s obligations to make further disbursements under the Facility A Commitment;

(c)               Declare the Notes to be immediately due and payable;

(d)               Sell Units pursuant to Contracts of Sale;

(e)               Exercise all of Borrower’s rights under the Condominium Documents; and

(f)                Exercise or pursue any other remedy or cause of action permitted under this Agreement or any other Loan Documents, or conferred upon the Agent by Law.

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ARTICLE XXI
INTERCREDITOR ARRANGEMENTS AND APPLICATION OF FUNDS

Section 21.1Application of Funds Other than Interest Payments.

All amounts tendered by or collected from the Borrower or any other Person (including amounts received by any Servicer) or otherwise available for payment of the Loans (excluding amounts representing interest payments on the Loans made anytime prior to the day on which the Notes have been declared due and payable pursuant to Section 20.1, which shall be applied pursuant to Section 21.2), whether received in the form of scheduled payments, foreclosure proceeds, funds received as a result of taking any Enforcement Action, proceeds from the sale of the Mortgaged Property, proceeds under title, hazard or other insurance policies or awards or settlements in respect of condemnation proceedings or similar exercise of the power of eminent domain (other than proceeds, awards or settlements that are required to be applied to the restoration or repair of the Mortgaged Property or released to the Borrower in accordance with the Loan Documents) or otherwise, shall be applied in the following order of priority:

first, to the payment (in such priority and proportion as the Agent shall elect in its sole discretion) of all reasonable legal fees and expenses, indemnities and other reasonable costs and expenses or other liabilities of any kind incurred by the Agent or any Servicer in accordance with the terms of the Loan Documents (including reimbursement of any Lender of any amounts previously advanced by such Lender to the Agent or the Servicer for the payment of any such fees, costs and expenses) and then due and payable to the Agent or such Servicer in accordance with the terms of the Loan Documents, except for Protective Advances; provided, however, that nothing contained herein is intended to relieve the Borrower or any Guarantor of its duties to pay such fees, costs, expenses and liabilities in accordance with the terms of the Loan Documents;

second, to the payment (without duplication of amounts paid under clause first above, and for application in such priority and proportion as the Agent shall elect in its sole discretion) of any fees and expenses then due and payable to the Agent or such Servicer in accordance with the terms of the Loan Documents (including reimbursement of any Lender of any amounts previously advanced or paid by such Lender to the Agent or the Servicer for the payment of any such fees or expenses); provided, however, that nothing contained herein is intended to relieve the Borrower or any Guarantor of its duties to pay such fees and expenses in accordance with the terms of the Loan Documents;

third, to the applicable Lenders to reimburse the amount of any Protective Advances, and accrued and unpaid interest thereon, made in accordance with the terms of the Loan Documents, in the same order and priority in which such Protective Advances were made (and if more than one Lender made a Protective Advance with respect to a particular covenant, agreement or obligation of Borrower, ratably among such Lenders);

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fourth, ratably to the Facility A Lenders to pay all accrued and unpaid interest then due and payable to the Facility A Lenders, pro rata in proportion to their respective Facility A Pro Rata Share;

fifth, ratably to the Facility A Lenders to repay the outstanding principal of the Facility A Loans, pro rata in proportion to their respective Facility A Pro Rata Share;

sixth, ratably to the Facility A Lenders to repay all other amounts then due and owing to the Facility A Lenders under the terms of the Loan Documents in connection with the Facility A Loans, pro rata in proportion to their respective Facility A Pro Rata Share, or if such amounts are not due to all Facility A Lenders ratably to the applicable Facility A Lenders;

seventh, in the case of Prepayment Proceeds, if such Prepayment Proceeds are required to be deposited into the Facility A Excess Proceeds Account pursuant to Section 4.10(b), deposit such Prepayment Proceeds into the Facility A Excess Proceeds Account;

eight, ratably to the Facility B-1 Lenders to pay all accrued and unpaid interest then due and payable to the Facility B-1 Lenders, pro rata in proportion to their respective Facility B-1 Pro Rata Share;

ninth, ratably to the Facility B-1 Lenders to repay the outstanding principal of the Facility B-1 Loans, pro rata in proportion to their respective Facility B-1 Pro Rata Share;

tenth, ratably to the Facility B-1 Lenders to repay all other amounts then due and owing to the Facility B-1 Lenders under the terms of the Loan Documents in connection with the Facility B-1 Loans, pro rata in proportion to their respective Facility B-1 Pro Rata Share, or if such amounts are not due to all Facility B-1 Lenders ratably to the applicable Facility B-1 Lenders;

eleventh, ratably to the Facility B-2 Lenders to pay all accrued and unpaid interest then due and payable to the Facility B-2 Lenders, pro rata in proportion to their respective Facility B-2 Pro Rata Share;

twelfth, ratably to the Facility B-2 Lenders to repay the outstanding principal of the Facility B-2 Loans, pro rata in proportion to their respective Facility B-2 Pro Rata Share;

thirteenth, ratably to the Facility B-2 Lenders to repay all other amounts then due and owing to the Facility B-2 Lenders under the terms of the Loan Documents in connection with the Facility B-2 Loans, pro rata in proportion to their respective Facility B-2 Pro Rata Share, or if such amounts are not due to all Facility B-2 Lenders ratably to the applicable Facility B-2 Lenders;

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fourteenth, ratably to the Facility C-1 Lenders to pay all accrued and unpaid interest then due and payable to the Facility C-1 Lenders, pro rata in proportion to their respective Facility C-1 Pro Rata Share;

fifteenth, ratably to the Facility C-1 Lenders to repay the outstanding principal of the Facility C-1 Loans, pro rata in proportion to their respective Facility C-1 Pro Rata Share;

sixteenth, ratably to the Facility C-1 Lenders to repay all other amounts then due and owing to the Facility C-1 Lenders under the terms of the Loan Documents in connection with the Facility C-1 Loans, pro rata in proportion to their respective Facility C-1 Pro Rata Share, or if such amounts are not due to all Facility C-1 Lenders ratably to the applicable Facility C-1 Lenders;

seventeenth, ratably to the Facility C-2 Lenders to pay all accrued and unpaid interest then due and payable to the Facility C-2 Lenders, pro rata in proportion to their respective Facility C-2 Pro Rata Share;

eighteenth, ratably to the Facility C-2 Lenders to repay the outstanding principal of the Facility C-2 Loans, pro rata in proportion to their respective Facility C-2 Pro Rata Share;

nineteenth, ratably to the Facility C-2 Lenders to repay all other amounts then due and owing to the Facility C-2 Lenders under the terms of the Loan Documents in connection with the Facility C-2 Loans, pro rata in proportion to their respective Facility C-2 Pro Rata Share, or if such amounts are not due to all Facility C-2 Lenders ratably to the applicable Facility C-2 Lenders;

twentieth, any surplus remaining after the payment in full of all obligations owing to the Agent, the Servicer and the Lenders in connection with the Loan Documents, to the Borrower or as a court of competent jurisdiction may direct.

Section 21.2Application of Interest Payments.

All amounts tendered by or collected from Borrower or any other Person representing interest payments on the Loans made anytime prior to the day on which the Notes have been declared due and payable pursuant to Section 20.1, including interest paid from the proceeds of any Facility A Loans, shall be applied in the following order of priority:

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first, ratably to the Facility A Lenders to pay all accrued and unpaid interest then due and payable to the Facility A Lenders, pro rata in proportion to their respective Facility A Pro Rata Share;

second, ratably to the Facility B-1 Lenders to pay all accrued and unpaid interest then due and payable to the Facility B-1 Lenders, pro rata in proportion to their respective Facility B-1 Pro Rata Share;

third, ratably to the Facility B-2 Lenders to pay all accrued and unpaid interest then due and payable to the Facility B-2 Lenders, pro rata in proportion to their respective Facility B-2 Pro Rata Share;

fourth, ratably to the Facility C-1 Lenders to pay all accrued and unpaid interest then due and payable to the Facility C-1 Lenders, pro rata in proportion to their respective Facility C-1 Pro Rata Share;

fifth, ratably to the Facility C-2 Lenders to pay all accrued and unpaid interest then due and payable to the Facility C-2 Lenders, pro rata in proportion to their respective Facility C-2 Pro Rata Share; and

sixth, any surplus remaining after the payment of the foregoing shall be applied in accordance with Section 21.1.

Section 21.3Prohibition on Contest or Interference.

Subject to Section 21.10, each Subordinate Lender, for itself and its successors and assigns, agrees that it shall not, and hereby waives:

(a)               any right to, contest or support any other Person in contesting the priority, validity or enforceability of this Agreement or any other Loan Document or the interest of the Agent in the Collateral, in any manner whatsoever, including in any Enforcement Action or Bankruptcy Proceeding;

(b)               any right to, take any action that would directly hinder, obstruct or delay any exercise of remedies under this Agreement or any other Loan Document, including any sale, lease, exchange, transfer or other disposition of any of the Mortgaged Property or any other security subject to any Loan Document, whether by foreclosure or otherwise;

(c)               any and all rights it may have as a junior or subordinate secured creditor or otherwise to object to the manner in which the Agent seeks or is instructed or directed by the Required Lenders to seek to enforce any of the Mortgaged Property or any other security subject to any Loan Document, to collect any amount owing to the Agent, any Servicer or any Lender, or to exercise any other right, remedy or power under or with respect to this Agreement or any other Loan Document, regardless of whether any action or failure to act by or on behalf of any Senior Lender is adverse to or adversely affects the interest of any Subordinate Lender.

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Section 21.4Direction to the Agent to Enforce.

Subject to Section 21.10:

(a)               Each Subordinate Lender agrees that it shall not contest, protest or object to (i) any foreclosure proceeding commenced by, or any other exercise of remedies relating to the Collateral by the Agent in accordance with this Agreement and the other Loan Documents, or (ii) any forbearance by the Senior Lenders in causing the Agent to commence any such proceeding or exercise any such remedy.  The Senior Lenders shall have the exclusive right to direct and instruct the Agent in accordance with the terms of this Agreement with respect to exercise and enforcement of rights, remedies and powers with respect to the Loan Documents and the Collateral and with respect to determinations regarding release, disposition or restrictions with respect to the Collateral, in each case without consent of any Subordinate Lender.

(b)               The Lenders hereby acknowledge and agree that, except as otherwise expressly provided in this Agreement, no covenant, agreement or other provision of any of the Loan Documents shall be deemed to restrict in any way the rights of the Senior Lenders or the Subordinate Lenders with respect to the Collateral and the Loan Documents.

(c)               The Subordinate Lenders agree that they shall take such actions as the Agent, at the direction of Senior Lenders constituting Required Lenders, may reasonably request in connection with the exercise or enforcement of any right, remedy or power under or with respect to the Loan Documents.

(d)               In the event of any dispute or conflicting written instructions or direction received by the Agent from the Senior Lenders and the Subordinate Lenders with respect to the Collateral, the Debt, this Agreement or any of the other Loan Documents, the Agent shall act upon such written instruction or direction received from the Senior Lenders constituting Required Lenders and shall be fully protected in doing so.

Section 21.5Bankruptcy Proceedings.

Subject to Section 21.10:

(a)               Filing of Motions.  Until the Debt owed to the Senior Lenders has been paid in full and any remaining Facility A Loan Commitments have been terminated, the Subordinate Lenders agree that no Subordinate Lender shall, in or in connection with any Bankruptcy Proceeding, file any pleadings or motions, take any position at any hearing or proceeding of any nature, or otherwise take any action whatsoever, in each case in respect of Borrower, any Guarantor or any of the Collateral,

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including with respect to the determination of any Liens or claims held by the Agent or any Senior Lender (including the validity and enforceability thereof) or the value of any claims of such parties under Section 506(a) of the Bankruptcy Code or otherwise; provided that the Subordinate Lenders may file a proof of claim in a Bankruptcy Proceeding subject to the limitations contained in this Agreement and only if consistent with the terms and the limitations on the Subordinate Lenders imposed hereby.

(b)               Financing Matters.  If Borrower or any Guarantor becomes subject to any Bankruptcy Proceeding, and if the Senior Lenders constituting Required Lenders, directly or through the Agent, desire to consent (or not object) to the sale, use or lease of cash or other collateral under the Bankruptcy Code or to provide financing to Borrower or such Guarantor under the Bankruptcy Code or to consent (or not object) to the provision of such financing by any third party (a “DIP Financing”), then the Subordinate Lenders agree that each Subordinate Lender (i) will be deemed to have consented to, will raise no objection to, nor support any other Person objecting to, the sale, use or lease of such cash or other collateral or to such DIP Financing, (ii) other than in accordance with Section 21.5(d), will not request or accept any form of adequate protection or any other relief in connection with the sale, use or lease of such cash or other collateral or such DIP Financing, (iii) will subordinate (and will be deemed hereunder to have subordinated) the Debt of such Subordinate Lenders and their respective interests in the Loan Documents (A) to such DIP Financing with the same terms and conditions as the Senior Lenders and their respective interests in the Loan Documents are subordinated thereto (and such subordination will not alter in any manner the terms of this Agreement), (B) to any adequate protection provided to the Senior Lenders and (C) to any “carve-out” for professional and United States Trustee fees agreed to by the Senior Lenders constituting Required Lenders, and (D) agrees that notice received five (5) calendar days prior to any hearing seeking entry of an order approving such usage of cash collateral or approving such financing shall be adequate notice.

(c)               Relief From the Automatic Stay.  The Subordinate Lenders agree that none of them will seek relief from the automatic stay or from any other stay in any Bankruptcy Proceeding or take any action in derogation thereof, in each case in respect of Borrower, any Guarantor or any Collateral, without the prior written consent of the Senior Lenders constituting Required Lenders.

(d)               Adequate Protection.  The Subordinate Lenders agree that none of them shall object, contest, or support any other Person objecting to or contesting, (i) any request by the Agent or any Senior Lender for adequate protection or (ii) any objection by the Agent or Senior Lenders constituting Required Lenders to any motion, relief, action or proceeding based on a claim of a lack of adequate protection or (iii) the payment of interest, fees, expenses or other amounts to the Agent or any Senior Lender under section 506(b) or 506(c) of the Bankruptcy Code or otherwise, in each case with respect to Borrower or any Guarantor.  Notwithstanding anything contained in this Section 21.5, in any Bankruptcy Proceeding involving Borrower or any Guarantor, the Subordinate Lenders may seek, support, accept or retain adequate protection only if the Senior Lenders constituting Required Lenders do not object to the adequate protection being provided to the Agent or the Senior Lenders.

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(e)               Asset Dispositions in a Bankruptcy Proceeding.  No Subordinate Lender shall, in any Bankruptcy Proceeding or otherwise, oppose any sale or disposition of any assets of Borrower or any Guarantor or any Collateral that is supported by the Senior Lenders constituting Required Lenders or by the Agent at the direction of the Senior Lenders constituting Required Lenders, and the Subordinate Lenders will be deemed to have consented under Section 363 of the Bankruptcy Code (and otherwise) to any sale supported by the Agent or the Senior Lenders constituting Required Lenders and to have released the interest of the Subordinate Lenders in such assets.

(f)                No Waivers.  Nothing contained herein shall prohibit or in any way limit the Agent or the Senior Lenders from objecting in any Bankruptcy Proceeding with respect to Borrower or any Guarantor or otherwise to any action taken by any Subordinate Lender, including the seeking by any Subordinate Lender of adequate protection or the assertion by any Subordinate Lender of any of its rights and remedies under the Loan Documents or otherwise with respect to Borrower or any Guarantor or the Collateral.

(g)               Plans of Reorganization.  No Subordinate Lender shall support or vote in favor of any plan of reorganization (and each shall vote and shall be deemed to have voted to reject any plan of reorganization) of Borrower or any Guarantor unless such plan (i) pays off, in cash in full, all obligations owing to the Senior Lenders under the Loan Documents or (ii) is accepted by the Senior Lenders.  To the extent that any Subordinate Lender attempts to vote or votes in favor of any such plan or reorganization in a manner inconsistent with this Section 21.5(g), such Subordinate Lender irrevocably agrees that the Agent or any Senior Lender may be, and may be deemed, an “authorized agent” of such party under Bankruptcy Rules 3018(c) and 9010, authorized and entitled to submit a superseding ballot on behalf of such Subordinate Lender that is consistent with this Agreement.

(h)               Other Matters.  To the extent that any Subordinate Lender has or acquires rights under Section 363 or Section 364 of the Bankruptcy Code with respect to any of the Collateral, such Subordinate Lender agrees not to assert any of such rights without the prior written consent of the Senior Lenders constituting Required Lenders; provided that if requested by the Agent or the Senior Lenders constituting Required Lenders, the Subordinate Lenders shall timely exercise such rights in the manner requested by the Agent or such Senior Lenders, including any rights to payments in respect of such rights.

(i)                Effectiveness in Bankruptcy Proceedings.  This Agreement, which the parties hereto expressly acknowledge is a “subordination agreement” under section 510(a) of the Bankruptcy Code, shall be effective before and after the commencement of a Bankruptcy Proceeding.  All references in this Agreement to Borrower or any Guarantor shall include Borrower or such Guarantor as a debtor-in-possession and any receiver or trustee for Borrower or such Guarantor in any Bankruptcy Proceeding.

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Section 21.6Other Rights as Creditors

(a)               Nothing in this Article XXI shall prohibit receipt by any Subordinate Lender of the required payments to be made with respect to the portion of the Debt owed to such Subordinate Lender pursuant to the terms of this Agreement (including Section 21.1).  Without the prior consent of the Senior Lenders constituting Required Lenders, no Lender shall seek to obtain a judgment claim in respect of any of the Debt or any of the Collateral.  If, however, in violation of the immediately preceding sentence any Subordinate Lender becomes a judgment lien creditor in respect of any of the Debt or any of the Collateral, such Subordinate Lender shall forthwith assign such judgment lien to the Agent to be held, enforced, collected and applied by the Agent in accordance with the terms and provisions of this Agreement.

(b)               The Lenders shall not acquire or hold any Lien on any of the assets of Borrower or any Guarantor except under this Agreement and the other Loan Documents.  If any Lender shall nonetheless, and in breach of this Agreement, acquire or hold any Lien on any of such assets of Borrower or any Guarantor, then such Lender shall (i) be deemed to hold such Lien for the benefit of the Agent as security for the Debt and shall assign such Lien to the Agent to be held, enforced, collected and applied by the Agent in accordance with the terms and provisions of this Agreement or (ii) release such Lien if so requested by the Senior Lenders constituting Required Lenders.

Section 21.7Payment Over to the Agent.

Subject to the provisions of Section 23.12, any payment of any portion of the Debt or any proceeds of the Collateral received by any Lender in any manner, whether or not in contravention of this Agreement or the other Loan Documents, shall be segregated and held in trust and forthwith paid over to the Agent in the same form as received, with any necessary endorsements or as a court of competent jurisdiction may otherwise direct, for application by the Agent in accordance with the terms and provisions of this Agreement.

Section 21.8No Duty to Subordinate Lenders.

Subject to Section 21.10:

(a)               None of the Senior Lenders shall have any duty or responsibility to any Subordinate Lender in respect of any exercising or failing to exercise any right under this Agreement, and shall not be required to take into account the interests of any Subordinate Lender or the effect on such interests or the portion of the Debt owed to the

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Subordinate Lenders in exercising or failing to exercise any right under this Agreement.  Without limiting the foregoing, each Subordinate Lender hereby (i) waives all rights to any fiduciary duty, duty of care owing to it by the Senior Lenders or other standard of conduct applicable to the Senior Lenders, and all rights to claim a violation of such duties or standards, (ii) acknowledges and agrees that in connection with any disposition of the Collateral the Senior Lenders constituting Required Lenders may accept a purchase price for the Collateral or any portion thereof in their sole discretion, including, without limitation, a purchase price for less than the aggregate amount of the Debt and that such purchase price may result in the Subordinate Lenders receiving no proceeds of such disposition and (iii) waives all rights to claim a violation of any law in connection with the disposition of the Collateral.

(b)               Other than any reliance on the terms of this Agreement, each Subordinate Lender (i) acknowledges that it has independently and without reliance on any Senior Lender, and based on documents and information deemed by it to be appropriate, made its own credit analysis and decision to enter into and be bound by the terms of this Agreement, and (ii) agrees that it will continue to make its own credit decisions without reliance on any Senior Lender.

Section 21.9Certain Waivers by Subordinate Lenders.

Subject to Section 21.10:

(a)               No right of any Senior Lender to enforce any provision of this Agreement or any other Loan Document shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of Borrower, any Guarantor or any of their Affiliates, or by any act or failure to act by any Senior Lender, or by any noncompliance by any Person (other than a Senior Lender) with the terms, provisions and covenants of this Agreement or any of the other Loan Documents, regardless of any knowledge thereof which any Senior Lender may have or be otherwise charged with.

(b)               The Subordinate Lenders also agree that the Senior Lenders shall have no liability to any Subordinate Lender, and the Subordinate Lenders hereby waive any claim against any Senior Lender, arising out of any and all actions which the Senior Lenders may take or permit or omit to take with respect to (i) the Loan Documents or (ii) the collection of the Debt, in accordance with this Agreement.

(c)               Until the portion of the Debt owing to the Senior Lenders has been paid in full, the Subordinate Lenders agree not to assert and hereby waive, to the fullest extent permitted by law, any right to demand, request, plead or otherwise assert or otherwise claim the benefit of, any marshalling, appraisal, valuation or other similar right that may otherwise be available under applicable law with respect to the Collateral or any other similar rights a junior secured creditor may have under applicable law with respect to the Collateral.

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(d)               The Subordinate Lenders agree not to make any judicial or non-judicial claim or demand or commence any judicial or non-judicial proceeding against Borrower, any Guarantor or any of the Collateral seeking payment or damages or other relief by way or specific performance, injunction or otherwise, other than filing a proof of claim or the equivalent against Borrower or any Guarantor pursuant to Section 21.5(a).

Section 21.10Certain Rights of Subordinate Lenders.

Nothing contained in this Article XXI shall limit or restrict the rights of each Subordinate Lender to object to any actual or proposed action by the Agent or any Senior Lender (i) that would be contrary to the terms of this Agreement or any of the other Loan Documents, (ii) that would violate applicable law or (iii) that would constitute gross negligence or willful misconduct by the Agent.

Section 21.11Obligations Unconditional.

All rights, interests, agreements and obligations of the Senior Lenders and the Subordinate Lenders, respectively, under this Article XXI shall remain in full force and effect irrespective of:

(a)               any lack of validity or enforceability of any Loan Document;

(b)               any change in the time, manner or place of payment of, or in any other terms of, all or any of the Debt, or any amendment or waiver or other modification, including any increase in the amount thereof, whether by course of conduct or otherwise, of the terms of any Loan Document;

(c)               any exchange of any security interest in any Collateral or any other collateral, or any amendment, waiver or other modification, whether in writing or by course of conduct or otherwise, of all or any of the Debt or any guarantee thereof;

(d)               the commencement of any Bankruptcy Proceeding in respect of Borrower, any Guarantor or any of their Affiliates, whether or not an obligor or guarantor, in respect of the Debt; or

(e)               any other circumstances which otherwise might constitute a defense available to, or a discharge of, Borrower, any Guarantor or any of their Affiliates, whether or not an obligor or guarantor, in respect of the Debt in respect of this Agreement and the other Loan Documents.

Section 21.12Actions Upon Breach.

(a)               If any Subordinate Lender, contrary to this Agreement, commences or participates in any action or proceeding against Borrower, any Guarantor or the Collateral, Senior Lenders constituting Required Lenders may interpose this Agreement as a defense or dilatory plea and may intervene and interpose such defense or plea in the name of the Senior Lenders or in the name of the Agent.

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(b)               Should any Subordinate Lender, contrary to this Article XXI, take or attempt to take, any action with respect to Borrower, any Guarantor or the Collateral or fail to take any action required by this Article XXI, the Senior Lenders constituting Required Lenders may obtain relief against such Subordinate Lender by injunction, specific performance or other appropriate legal or equitable relief, it being understood and agreed that (i) the Senior Lenders’ damages may at that time be difficult to ascertain and may be irreparable, and (ii) each Subordinate Lender waives any defense that any Senior Lender cannot demonstrate damage or be made whole by the award of damages.

Section 21.13Purchase Right.

Without prejudice to the enforcement of the remedies by or at the direction of the Senior Lenders, the Senior Lenders agree that at any time after (a) acceleration of the Loans in accordance with the terms of this Agreement, (b) the commencement of a Bankruptcy Proceeding or (c) an Event of Default and the commencement of Enforcement Action in respect thereof (each, a “Purchase Event”), within 120 days of such Purchase Event, one or more of the Subordinate Lenders may request, and the Senior Lenders hereby offer the Subordinate Lenders the option, to purchase all, but not less than all, of the aggregate amount of then outstanding Debt owing to the Senior Lenders at par, plus accrued and unpaid interest and fees, in each case without warranty or representation or recourse (except for representations and warranties required to be made by assigning Senior Lenders pursuant to the relevant Assignment and Assumption Agreement.  If such right is exercised, the parties shall close such transaction promptly after the exercise but in any event within ten Business Days of the request pursuant to documentation mutually acceptable to the assigning Senior Lenders and purchasing Subordinate Lenders.   If Subordinate Lenders of different Facilities exercise such right, the Subordinate Lenders ranking most senior in priority shall be entitled to exercise such right.  If none of the Subordinate Lenders exercise such right, the Senior Lenders shall have no further obligations pursuant to this Section 21.13 for such Purchase Event and may take any further action in their sole discretion in accordance with this Agreement.

ARTICLE XXII
AGENCY

Section 22.1Appointment and Authority.

(a)               Each of the Lenders hereby irrevocably appoints Central Pacific to act on its behalf as the Agent to administer the Loans and to take action or cause such actions to be taken on its behalf with respect to the Loan Documents under the provisions of this Agreement, the other Loan Documents and the Servicing Standards and authorizes the Agent to take such actions on its behalf and to exercise such powers as are delegated

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to the Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto.  The Agent hereby confirms its acceptance of such appointment.  The Agent shall carry out its administrative duties to the Lenders in accordance with the applicable terms of this Agreement, the other Loan Documents and the Servicing Standard.  The relationship between the Agent and each Lender is a contractual relationship only, and the Agent shall not have any duties or responsibilities (except those expressly set forth in this Agreement and the other Loan Documents).  The provisions of this Article are solely for the benefit of the Agent and the Lenders, and neither Borrower nor Guarantor shall have rights as a third party beneficiary of any of such provisions.

(b)               The Agent hereby represents and warrants to the Lenders as of the date hereof:

(i)         The Agent has all necessary banking power and authority to perform all its obligations with respect to this Agreement, the Loan Agreement and the other Loan Documents;

(ii)        Neither the execution and delivery of this Agreement nor performance by the Agent thereunder by the Agent will conflict with or result in a breach of any of the provisions of, or constitute a default under the organizational documents of the Agent, as amended, or any agreement, mortgage, indenture or other instrument to which the Agent is a party, or result in the violation of any law, rule, regulation, order, judgment or decree to which the Agent is subject;

(iii)       There is no litigation or governmental proceeding pending, or to the best of the Agent’s knowledge, threatened which, if determined adversely to the Agent, would adversely affect the enforceability of this Agreement against the Agent, or any other document or instrument executed in connection herewith; and

(iv)      It is (1) in compliance with any and all applicable licensing requirements of the state where the Mortgaged Property is located, if any such requirements are applicable to the Agent, and (2) either (i) organized under the laws of such state, (ii) qualified to do business in such state or (iii) to the best of its knowledge, not required to qualify to do business in such state.

Section 22.2Rights as a Lender.

The Person serving as the Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Agent and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Agent hereunder in its individual capacity.  Such Person and its Affiliates may accept deposits from, lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with Borrower or any subsidiary or other Affiliate thereof as if such Person were not the Agent hereunder and without any duty to account therefor to the Lenders.

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Section 22.3Exculpatory Provisions.

The Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents.  Without limiting the generality of the foregoing, the Agent:

(a)               shall not be subject to any fiduciary or other implied duties, regardless of whether a Default or Event of Default has occurred and is continuing;

(b)               shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents), provided that the Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Agent to liability or that is contrary to any Loan Document or applicable law; and

(c)               shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Affiliates that is communicated to or obtained by the Person serving as the Agent or any of its Affiliates in any capacity unless such information is received in its capacity as Agent hereunder.

The Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Agent shall believe in good faith shall be necessary, under the circumstances as provided in Section 23.2 and Article XX) or (ii) in the absence of its own gross negligence or willful misconduct.  The Agent shall be deemed not to have knowledge of any Default or Event of Default unless and until notice describing such Default or Event of Default is given to the Agent by Borrower or a Lender.

The Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document or (v) the satisfaction of any condition set forth in Articles VIII and IX or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Agent.

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Section 22.4Reliance by Agent.

The Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person.  The Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon.  In determining compliance with any condition hereunder to the making of a Loan, that by its terms must be fulfilled to the satisfaction of a Lender, the Agent may presume that such condition is satisfactory to such Lender unless the Agent shall have received notice to the contrary from such Lender prior to the making of such Loan.  The Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

Section 22.5Delegation of Duties.

The Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by the Agent.  The Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties.  Each such sub-agent and the Related Parties of the Agent and each such sub-agent shall be entitled to the benefits of all provisions of this Article XXII and Sections 14.7 and 14.8 (as though such sub-agents were the “Agent” under the Loan Documents) as if set forth in full herein with respect thereto.  Other than with respect to TriMont and any successor Servicer, the Agent shall be solely responsible for the payment of any fees or other compensation due to any third party it engages to service the Loans in excess of the amounts paid by Borrower therefor.

Section 22.6Resignation of Agent.

The Agent may at any time give notice of its resignation to the Lenders and Borrower.  Upon receipt of any such notice of resignation, the Lenders shall have the right, in consultation with Borrower, to appoint a successor.  If no such successor shall have been so appointed by the Lenders and shall have accepted such appointment within sixty (60) days after the retiring Agent gives notice of its resignation, then the retiring Agent may on behalf of the Lenders, appoint a successor Agent meeting the qualifications set forth above provided that if the Agent shall notify Borrower and the Lenders that no qualifying Person has accepted such appointment, then such resignation shall nonetheless become effective in accordance with such notice and (1) the retiring

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Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except that in the case of any collateral security held by the Agent on behalf of the under any of the Loan Documents, the retiring Agent shall continue to hold such collateral security until such time as a successor Agent is appointed) and (2) all payments, communications and determinations provided to be made by, to or through the Agent shall instead be made by or to each Lender directly, until such time as the Lenders appoint a successor Agent as provided for above in this paragraph.  Upon the acceptance of a successor’s appointment as Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or retired) Agent, and the retiring Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided above in this paragraph).  The fees payable by Borrower to a successor Agent shall be the same as those payable to its predecessor unless otherwise agreed between Borrower and such successor.  After the retiring Agent’s resignation hereunder and under the other Loan Documents, the provisions of this Article and Sections 14.7 and 14.8 shall continue in effect for the benefit of such retiring Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Agent was acting as Agent.

Section 22.7Removal of Agent.

The Agent may be removed as the Agent hereunder pursuant to Section 23.17(c).  The Lenders shall have the right to remove the Agent if Cause occurs, provided that for this purpose if any Lender is Agent or is an Affiliate of Agent, such Lender shall be excluded in determining which Lender’s constitute the Lenders.

Section 22.8Non-Reliance on Agent and Other Lenders.

Each Lender acknowledges that it has, independently and without reliance upon the Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement.  Each Lender also acknowledges that it will, independently and without reliance upon the Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.

Section 22.9Indemnification of Agent.

Each Lender agrees to indemnify, defend, reimburse and hold the Agent, the Servicer and their respective officers, directors, employees and consultants harmless (to the extent not reimbursed by Borrower or any Guarantor), in accordance with such Lender’s Pro Rata Interest, for any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, and reasonable costs, expenses or disbursements

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which may be imposed on, incurred by, or asserted against the Agent, as agent, or the Servicer in any way relating to or arising out of the Loans, or any action taken or omitted by the Agent under this Agreement or the other Loan Documents or the Servicer under the Servicing Agreement and shall make payment with respect thereto within ten (10) Business Days of a request therefor by the Agent or Servicer, provided that the Lenders shall not be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from, related to or arising from the breach of the this Agreement by the Agent (or with respect to the Servicer, breach of the Servicing Agreement by the Servicer) or from the gross negligence or willful misconduct of the Agent or the Servicer, as the case may be, as determined by a final judgment of a court of competent jurisdiction.  The Agent shall be entitled to deduct from any payments to be made to the Lenders under this Agreement, and to retain, amounts due the Agent as reimbursement hereunder provided that the Agent shall have first delivered to the Lenders thirty (30) days prior written notice of such amounts and the circumstances giving rise thereto, and the Lenders have not paid such amounts.  The Agent shall make commercially reasonable attempts to collect such amounts from Borrower and the Guarantors.  If the Agent receives payment of any amount referred to in this Section 22.9 from the Borrower or any third party after a Lender has reimbursed the Agent for such amount, the Agent shall promptly return the amount of the reimbursement to such Lender.  Any loss, cost, liability or expense occasioned solely by the conduct of any one of the Lenders shall be borne solely by such party causing such loss, cost, liability or expense and such party shall indemnify, defend and hold the other Lenders harmless against any and all such losses, costs and liabilities and expenses (including, but not limited to, reasonable attorneys’ fees, costs and expenses) sustained or incurred by the other Lenders as a result thereof.

Section 22.10Delivery of Notices to Lenders.

If the Agent receives any notices, requests or other written information from Borrower, the Agent shall (or cause the Servicer to) promptly, but in any event within one (1) Business Day after receipt thereof, deliver a copy of such notice, request or information to the Lenders.

Section 22.11Borrower’s Dealings With Agent.

Notwithstanding any provision herein to the contrary, (i) if Borrower is required to deliver any notice or information to one or more Lenders, it shall satisfy such obligation by delivering such notice or information to the Agent, and (ii) if Borrower is required to obtain the consent or approval from one or more Lenders, it shall deal directly with the Agent who will coordinate obtaining such consent or approval from the Lenders.

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ARTICLE XXIII
GENERAL PROVISIONS

Section 23.1Captions.

The captions and headings of various Articles, Sections and subsections of this Agreement and Exhibits pertaining hereto are for convenience only and are not to be considered as defining or limiting in any way the scope or intent of the provisions hereof.

Section 23.2Modification; Waiver.

No amendment or waiver of any provision of this Agreement, the Notes, the Mortgage or the other Loan Documents, nor consent to any departure by the Borrower therefrom, shall in any event be effective unless the same shall be in writing and signed by the Borrower and the Required Lenders (other than Defaulting Lenders), and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no amendment, waiver or consent shall, unless in writing and signed by Borrower and all the Lenders do any of the following:

(i)         change or modify the interest rate provisions set forth in the Loan Documents;

(ii)        increase or decrease the principal amount of any of the Loans, except for Protective Advances;

(iii)       alter the Facility A Commitments of any Lender;

(iv)      extend the Facility A Maturity Date or the Facility B/C Maturity Date;

(v)       amend or modify, or waive compliance with, ARTICLE XXI or this Section 23.2;

(vi)      forgive the payment of principal of, or interest on (other than interest at the Default Rate), any Loan or the payment of any other sum or fee due under the Loan Documents to which the Lenders are entitled; provided, however, if any Lender is entitled to any additional amounts described in this Agreement, any such Lender may forgive the payment of such sums only due to such Lender without requiring the consent of the other Lenders;

(vii)     postpone any date for payment of principal of, or interest on (other than interest at the Default Rate), the Loans or the payment of any other sum or fee due under the Loan Documents to which the Lenders are entitled;

(viii)    amend or modify the definition of “Required Lenders”,“Pro Rata Interest”, “Servicing Standard”, “Material Adverse Change” or “Net Sales Proceeds”;

(ix)       enter into, or modify any agreement subordinating any of the Notes to any indebtedness;

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(x)        permit or consent to any Transfer or voluntary or involuntary sale or transfer of all or any portion of the Mortgaged Property or permit any subordinate financing or additional financing of all or any portion of the Mortgaged Property except as expressly permitted under the Loan Documents;

(xi)       consent to any material change in the use of the Mortgaged Property;

(xii)      deliver a written waiver of any claim against Borrower or any Guarantor; or

(xiii)     release all or any portion of the Mortgaged Property or Loan Documents (including guaranties, pledges, required equity contributions, and recourse obligations) for the Loan except as expressly permitted by this Agreement or other Loan Documents or modify any terms with respect to the conditions of release of the Mortgaged Property or Loan Documents (including guaranties, pledges, required equity contributions and recourse obligations) in any respect or release Borrower, Guarantors or any other credit support party or any other Persons liable under any of the Loan Documents from any obligation under the Loan Documents;

(xiv)     reduce the Release Price with respect to any Unit by more than ten  percent (10)%;

(xv)      amend or modify the terms of the Special Management Area Use Permit, the Shoreline Setback Variance or the  Planned Development Approval obtained for the Construction of the Project;

(xvi)     amend or modify, or waive compliance with, Section 11.1 or Section 22.1.

Notwithstanding anything to the contrary herein, (x) no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder, except with regard to those matters described in clauses (i) through (ix) above if such Defaulting Lender is affected thereby, (y) no agreement shall amend, modify or otherwise affect the rights or duties of the Agent hereunder or under any other Loan Document without the prior written consent of the Agent and (z) so long as MH Kapalua is a Lender it shall not have any right to approve or disapprove any amendment, waiver or consent hereunder, except with regard to those matters described in clauses (i), (iii), (iv), (v), (vi), (vii) and (ix) if it is affected thereby.

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Section 23.3Governing Law.

THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY. IN ALL RESPECTS, INCLUDING, WITHOUT LIMITATION, MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE AND APPLICABLE LAW OF THE UNITED STATES OF AMERICA. TO THE FULLEST EXTENT PERMITTED BY LAW, BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS AGREEMENT, AND THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW, BUT WITHOUT REGARD TO ANY OTHER CONFLICTS OF LAW PROVISIONS THEREOF.  NOTWITHSTANDING THE FOREGOING, PROVISIONS IN THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS WITH RESPECT TO THE CREATION, PERFECTION, PRIORITY, ENFORCEMENT AND FORECLOSURE OF THE LIENS AND SECURITY INTERESTS CREATED HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAW OF THE STATE IN WHICH THE PROJECT IS LOCATED.

Section 23.4Acquiescence Not to Constitute Waiver of Lenders’ Requirements.

Each and every covenant and condition for the benefit of the Lenders contained in this Agreement may be waived pursuant to Section 23.2, provided, however, that to the extent that the Lenders may have acquiesced in any noncompliance with any construction or nonconstruction conditions precedent to the Initial Restructuring Loan or to any subsequent disbursement of Facility A Loan proceeds, such acquiescence shall not be deemed to constitute a waiver by the Lenders of such requirements with respect to any future disbursements of Facility A Loan proceeds.

Section 23.5Disclaimer by Lenders and the Agent.

This Agreement is made for the sole benefit of Borrower, the Agent and the Lenders, and no other Person shall have any benefits, rights or remedies under or by reason of this Agreement, or by reason of any actions taken by any Lender or the Agent pursuant to this Agreement. Neither the Agent nor any Lender shall be liable to any contractors, subcontractors, supplier, architect, engineer, tenant or other party for labor or services performed or materials supplied in connection with the Construction. Neither the Agent nor any Lender shall be liable for any debts or claims accruing in favor of any such parties against Borrower or others or against the Project. No Lender, by making any Loans or taking any action pursuant to any of the Loan Documents, shall be deemed a partner or a joint venturer with Borrower or fiduciary of Borrower. No payment of funds directly to a contractor or subcontractor or provider of services shall be deemed to create any third party beneficiary status or recognition of same by any Lender. Without limiting the generality of the foregoing:

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(i)         neither any Lender nor the Agent shall have any liability, obligation or responsibility whatsoever with respect to the Construction. Any inspections of the Construction made by or through any Lender or the Agent are for purposes of administration of the Loans only and neither Borrower nor any third party is entitled to rely upon the same with respect to the quality, adequacy or suitability of materials or workmanship, conformity to the Plans and Specifications, state of completion or otherwise; and

(ii)        neither any Lender nor the Agent undertakes or assumes any responsibility or duty to Borrower to select, review, inspect, supervise, pass judgment upon or inform Borrower of any matter in connection with the Project, including matters relating to the quality, adequacy or suitability of: (x) the Plans and Specifications, (y) architects, contractors, subcontractors and material suppliers employed or utilized in connection with the Construction, or the workmanship of or the materials used by any of them or (z) the progress or course of Construction and its conformity or nonconformity with the Plans and Specifications; Borrower shall rely entirely upon its own judgment with respect to such matters, and any review, inspection, supervision, exercise of judgment or supply of information to Borrower by the Agent or any Lender in connection with such matters is for the protection of the Agent or such Lender only, and neither Borrower nor any third party is entitled to rely thereon.

Section 23.6Partial Invalidity; Severability.

If any of the provisions of this Agreement, or the application thereof to any person, party or circumstances, shall, to any extent, be invalid or unenforceable, the remainder of this Agreement, or the application of such provision or provisions to persons, parties or circumstances other than those as to whom or which it is held invalid or unenforceable, shall not be affected thereby, and every provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.

Section 23.7Definitions Include Amendments.

Definitions contained in this Agreement which identify documents, including, but not limited to, the Loan Documents, shall be deemed to include all amendments and supplements to such documents to and from the date hereof, and all future amendments, modifications, and supplements thereto entered into from time to time to satisfy the requirements of this Agreement or otherwise with the consent of the Required Lenders or the Lenders, as the case may be, subject to Section 23.2. Reference to this Agreement contained in any of the foregoing documents shall be deemed to include all amendments and supplements to this Agreement.

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Section 23.8Execution in Counterparts.

This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.  Delivery of an executed counterpart of a signature page of this Agreement by facsimile or electronic transmission of a PDF file shall be effective delivery of a manually executed counterpart of this Agreement.

Section 23.9Entire Agreement; Replacing Original Construction Loan Agreement.

This Agreement, taken together with all of the other Loan Documents and all certificates and other documents delivered by Borrower to the Agent and the Lenders, embody the entire agreement and supersede all prior agreements, written or oral, relating to the subject matter hereof.  This Agreement replaces and supersedes the Original Construction Loan Agreement, as amended through the Effective Date, in its entirety.  The Notes evidence, in the aggregate, the same outstanding principal indebtedness evidenced by the promissory note issued under the Original Construction Loan Agreement, and subsequently by the Split Notes and do not create any new or further indebtedness.  Nothing contained in this Agreement, the Notes or the other Loan Documents (other than the reduction of the Split Notes pursuant to the Master Assignment Agreement) shall be deemed to extinguish or increase the indebtedness evidenced by, or as a novation of, the promissory note issued under the Original Construction Loan Agreement or the Split Notes.

Section 23.10Waiver of Damages.

In no event shall the Agent or any Lender be liable to Borrower for punitive, exemplary or consequential damages, including, without limitation, lost profits, whatever the nature of a breach by the Agent or such Lender of its obligations under this Agreement or any of the Loan Documents, and Borrower for itself and its Guarantor waives all claims for punitive, exemplary or consequential damages.

Section 23.11Jurisdiction.

TO THE GREATEST EXTENT PERMITTED BY LAW, BORROWER HEREBY WAIVES ANY AND ALL RIGHTS TO REQUIRE MARSHALLING OF ASSETS BY THE AGENT. WITH RESPECT TO ANY SUIT, ACTION OR PROCEEDINGS RELATING TO THIS AGREEMENT (EACH, A “PROCEEDING”), BORROWER IRREVOCABLY (A) SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE CIRCUIT COURT OF THE SECOND CIRCUIT, STATE OF HAWAII, THE FEDERAL DISTRICT COURT FOR THE DISTRICT OF HAWAII, OR ANY FEDERAL OR STATE COURT SITTING IN NEW YORK COUNTY, NEW YORK, AND (B) WAIVES ANY OBJECTION WHICH IT MAY HAVE AT ANY TIME TO THE LAYING OF VENUE OF ANY PROCEEDING BROUGHT IN ANY SUCH COURT, WAIVES ANY CLAIM THAT ANY PROCEEDING HAS BEEN

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BROUGHT IN AN INCONVENIENT FORUM AND FURTHER WAIVES THE RIGHT TO OBJECT, WITH RESPECT TO SUCH PROCEEDING, THAT SUCH COURT DOES NOT HAVE JURISDICTION OVER SUCH PARTY. NOTHING IN THIS AGREEMENT SHALL PRECLUDE THE AGENT OR ANY LENDER FROM BRINGING A PROCEEDING IN ANY OTHER JURISDICTION NOR WILL THE BRINGING OF A PROCEEDING IN ANY ONE OR MORE JURISDICTIONS PRECLUDE THE BRINGING OF A PROCEEDING IN ANY OTHER JURISDICTION. BORROWER FURTHER AGREES AND CONSENTS THAT, IN ADDITION TO ANY METHODS OF SERVICE OF PROCESS PROVIDED FOR UNDER APPLICABLE LAW, ALL SERVICE OF PROCESS IN ANY PROCEEDING IN THE CIRCUIT COURT OF THE SECOND CIRCUIT, STATE OF HAWAII, THE FEDERAL DISTRICT COURT FOR THE DISTRICT OF HAWAII, OR ANY FEDERAL OR STATE COURT SITTING IN NEW YORK COUNTY, NEW YORK, MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO BORROWER AT THE ADDRESS INDICATED BELOW, AND SERVICE SO MADE SHALL BE COMPLETE UPON RECEIPT; EXCEPT THAT IF BORROWER SHALL REFUSE TO ACCEPT DELIVERY, SERVICE SHALL BE DEEMED COMPLETE FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO MAILED.

Section 23.12Set-Offs; Adjustments.

(a)               After the occurrence and during the continuance of an Event of Default, Borrower hereby irrevocably authorizes and directs each Lender from time to time to charge Borrower’s accounts and deposits with such Lender (or its Affiliates), and to pay over to the Agent an amount equal to any amounts from time to time due and payable to such Lender hereunder, under its Note(s) or under any other Loan Document. Borrower hereby grants to the Agent a security interest in and to all such accounts and deposits maintained by Borrower with Lender (or its Affiliates).

(b)               Except to the extent this Agreement expressly provides for payments to be allocated to a particular Lender, if any Lender (a “Benefitted Lender”) shall receive any payment of all or any portion of the Debt owing to such Benefitted Lender, or receives any collateral in respect thereof (whether voluntarily or involuntarily, by set off, pursuant to events or proceedings of the nature referred to in Section 19.1(j), or otherwise), in a greater proportion than such Benefitted Lender would be entitled to under Section 21.1, such Benefitted Lender shall purchase for cash from each other applicable Lender a participating interest in such portion of the Debt owing to such other Lender as shall be necessary to cause such other Lender to receive the amount of such payment received by the Benefitted Lender that such other Lender would have received if such payment had been received in cash by the Agent and applied in accordance with Section 21.1; provided, however, that if all or any portion of such excess payment or benefits is thereafter recovered from such Benefitted Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest.

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Section 23.13Authorized Representative.

The Authorized Representative shall deal with the Agent and each Lender on behalf of Borrower in respect of any and all matters in connection with this Agreement, the other Loan Documents, and the Loans. The Authorized Representative shall have the power, in his or her discretion, to give and receive all notices, monies, approvals, and other documents and instruments, and to take any other action on behalf of Borrower. All actions by the Authorized Representative shall be final and binding on Borrower. The Agent and each Lender may rely on the authority given to the Authorized Representative until actual receipt by the Agent and each Lender of a duly authorized resolution depriving such Authorized Representative of his authority. No more than one person shall serve as Authorized Representative at any given time.

Section 23.14Non-Recourse Provisions.

The provisions of Article IX of the Notes pertaining to the personal liability of Borrower and its members, officers, directors and employees are hereby incorporated herein by reference.

Section 23.15Sole Discretion of Lenders and Agent and Deemed Consent.

Wherever pursuant to this Agreement (a) the Lenders, the Required Lenders or the Agent exercise any right given to it to approve, disapprove or consent, (b) any arrangement or term is to be satisfactory to the Agent, the Required Lenders or the Lenders, or (c) any other decision or determination is to be made by the Agent, the Required Lenders or the Lenders, the decision of the Agent, the Required Lenders or the Lenders to approve, disapprove or consent, all decisions that arrangements or terms are satisfactory or not satisfactory and all other decisions and determinations made by the Agent, the Required Lenders or the Lenders, shall be in the sole and absolute discretion of the Agent, the Required Lenders or the Lenders, as applicable, and shall be final and conclusive, except as may be otherwise expressly and specifically provided herein, and any such decision or determination to be made in “the sole discretion of the Agent”, “the sole discretion of the Required Lenders” or “the sole discretion of the Lenders” or in or at “Lender’s sole discretion”, “the Agent’s sole discretion” or “the Required Lender’s sole discretion” under this Agreement shall be deemed to be in the sole and absolute discretion of the Agent, the Required Lenders or the Lenders, as applicable, and shall be final and conclusive.

If the consent or approval of a Lender is required under this Agreement such consent shall be deemed given by such Lender if such Lender fails to object to the matter for which its consent or approval is sought within twenty-one (21) days of a written

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request by Borrower for such consent (such twenty-one (21)  day period, the “21-Day Period”) or fails to notify Borrower and the Agent within such 21-Day Period that it requires additional information reasonably necessary for such Lender to make an informed decision; provided, that if within such 21-Day Period a Lender has notified the Agent and Borrower that the approval, consent or action is required by a court, Governmental Authority, creditor’s committee or other entity or body having jurisdiction over such Lender (collective, a “Third-Party Approval”) and that such 21-Day Period is not sufficient time for such Lender to obtain such Third-Party Approval, then the failure of such Lender to object to such matter within such 21-Day Period shall not be deemed to constitute such Lender’s consent thereto.

Section 23.16Conflict; Construction of Documents: Reliance.

In the event of any conflict between the provisions of this Agreement and any of the other Loan Documents, the provisions of this Agreement shall control. The parties hereto acknowledge that they were represented by competent counsel in connection with the negotiation, drafting and execution of the Loan Documents and that such Loan Documents shall not be subject to the principle of construing their meaning against the party which drafted same. Borrower acknowledges that, with respect to the Loans, Borrower shall rely solely on its own judgment and advisors in entering into the Loans without relying in any manner on any statements, representations or recommendations of the Lenders or any parent, subsidiary or Affiliate of any Lender. No Lender shall be subject to any limitation whatsoever in the exercise of any rights or remedies available to it under any of the Loan Documents or any other agreements or instruments which govern the Loans by virtue of the ownership by it or any parent, subsidiary or Affiliate of any Lenders of any equity interest any of them may acquire in Borrower, and Borrower hereby irrevocably waives the right to raise any defense or take any action on the basis of the foregoing with respect to any Lender’s or the Agent’s exercise of any such rights or remedies. Borrower acknowledges that the Lenders engage in the business of real estate financings and other real estate transactions and investments which may be viewed as adverse to or competitive with the business of Borrower or its Affiliates.

Section 23.17Defaulting Lender.

(a)               If for any reason, any Lender fails or refuses to abide by its obligations under the Loan Agreement the other Loan Documents and such failure continues five (5) days after written notice from the Agent (or if the Agent, as a Lender, is the one refusing or failing to abide by its obligations, from any other Lender) of such failure (provided that no such written notice and opportunity to cure shall be applicable to the extent that it may, in any way, prejudice or adversely affect the rights or remedies of Agent under the Loan Agreement or any of the other Loan Documents) (each a “Defaulting Lender”), then, in addition to the rights and remedies that may be available to Borrower, the Agent and the other Lenders at law and in equity, such Defaulting Lender’s right to participate in the administration of the Loans and the Loan Documents, including without limitation, any rights to consent to or direct any action or inaction of the Agent shall be suspended during the pendency of such failure or refusal.

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(b)               If for any reason any Defaulting Lender fails to make timely payment of any amount required to be paid by it hereunder or under the Loan Documents, in addition to other rights and remedies which the Agent or Borrower may have under Section 23.17(a) hereof or otherwise, the Agent, on behalf of all Lenders, shall be entitled (i) to collect interest from the Defaulting Lender for the period from (and including) the date on which the payment was due until (but excluding) the date on which the payment is made at the Prime Rate, (ii) pursuant to Section 23.17(d) hereof, to withhold or set off, and to apply to the payment of the defaulted amount and any related interest, any amounts to be paid to the Defaulting Lender under this Agreement, and (iii) to bring an action or suit against the Defaulting Lender in a court of competent jurisdiction to recover the defaulted amount and any related interest.

(c)               If the Agent is a Defaulting Lender, the Lenders (other than the Agent as a Lender hereunder) holding one hundred percent (100%) of the outstanding principal balance of the Notes shall have the immediate right to terminate the Agent as Agent hereunder and appoint a successor Agent.  Until such time as such successor Agent has accepted such appointment, the Agent shall take no action other than upon the consent or direction of the Required Lenders or, if such action requires the consent or direction of all of the Lenders, upon the consent or direction of all of the Lenders, subject to the terms hereof, including Section 23.2.

(d)               If any Defaulting Lender is a Facility A Lender and shall fail to make any Facility A Loan required under the Loan Agreement, the other Facility A Lenders shall have the right to fund such Facility A Loan on behalf of the Defaulting Lender (and if more than one Facility A Lender desires to fund such Facility A Loan, then the funding shall be made in accordance with their respective Facility A Pro Rata Share recalculated for the purposes hereof to exclude the Defaulting Lender).  All Facility A Obligations owing to a Defaulting Lender hereunder shall he subordinated in right of payment, as provided in the following sentence, to the prior payment in full of all principal of, interest on and fees relating to the Facility A Loan funded by the Facility A Lenders in connection with any such Facility A Loan in which the Defaulting Lender has not funded its Facility A Pro Rata Share (or has otherwise failed or refused to abide by its obligations under this Agreement or the other Loan Documents and such failure or refusal has a material adverse affect on the Lenders, the Tranche A Loans or Borrower) (such principal, interest and fees being referred to as “Default Loans” for the purposes of this Section 23.17(d)).  Each Default Loan shall accrue interest at the Prime Rate. All amounts paid by Borrower and otherwise due to be applied to the Facility A Obligations owing to such Defaulting Lender pursuant to the terms hereof shall be distributed by the Agent to the Facility A Lenders holding Default Loans in accordance with the respective balances of the outstanding

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Default Loans until all Default Loans have been paid in full.  At that point, the “Defaulting Lender” shall no longer be deemed a Defaulting Lender . This provision governs only the relationship among the Agent, each Defaulting Lender and the other Facility A Lenders; nothing hereunder shall limit the obligation of Borrower to repay all Facility A Loans in accordance with the terms of this Agreement.  The provisions of this Section 23.17(d) apply and be effective regardless of whether an Event of Default occurs, and notwithstanding (i) any other provision of this Agreement to the contrary, (ii) any instruction of Borrower as to its desired application of payments or (iii) the suspension of such Defaulting Lender’s rights to vote on matters which are subject to the consent or approval of the Facility A Lenders or all Lenders.

Section 23.18Waiver of Lender Defaults.

Borrower, for itself, its Affiliates, successors and assigns, hereby expressly waive and release any defenses, rights of set-off, claims or counterclaims of whatever nature it may have against the Lenders, or any of them, arising from or relating to the failure of any Lender to fund an advance under the Original Construction Loan Agreement, the Split Notes or the Co-Lending Agreement prior to the Effective Date.

Section 23.19USA PATRIOT Act Notice.

Each Lender that is subject to the Patriot Act and the Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower that pursuant to the requirements of the Patriot Act it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender or the Agent, as applicable, to identify the Borrower in accordance with the Patriot Act.

Section 23.20Time is of the Essence.

Time is of the essence under this Agreement.

Section 23.21Replacement of Certain Lenders.

In the event a Lender (an “Affected Lender”) shall be a Defaulting Lender or shall  failed or refused to consent by the relevant time to any amendment, waiver, supplement, restatement, discharge or termination of any provision of this Agreement when requested by Borrower or the Agent and with respect to which (A) the consent of each affected Lender is required under Section 23.2 and (B) each other affected Lender has so consented then, in any such case, Borrower or the Agent may make written demand on such Affected Lender (with a copy to the Agent in the case of a demand by Borrower and a copy to Borrower in the case of a demand by the Agent) for the Affected Lender to assign, and such Affected Lender shall use commercially reasonable efforts to assign, pursuant to one or more duly executed Assignment and Assumption Agreements ten (10) Business Days after the date of such demand, to one or more financial institutions that

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comply with the provisions of Section 17.4 which Borrower or the Agent, as the case may be, shall have engaged for such purpose (a “Replacement Lender”), all of such Affected Lender’s rights and obligations under this Agreement and the other Loan Documents (including, without limitation, all Loans owing to it and, in the case of any Facility A Lender, its Facility A Commitment) in accordance with Section 17.4.  The Agent agrees, upon the occurrence of such events with respect to an Affected Lender and upon the written request of Borrower, to use its reasonable efforts to obtain the commitments from one or more financial institutions to act as a Replacement Lender.  The Agent is authorized to execute one or more Assignment and Assumption Agreements as attorney-in-fact for any Affected Lender failing to execute and deliver the same within ten (10) Business Days after the date of such demand.  Further, with respect to such assignment, the Affected Lender shall have concurrently received, in cash, all amounts due and owing to the Affected Lender hereunder or under any other Loan Document, including, without limitation, the aggregate outstanding principal amount of the Loans owed to such Lender, together with accrued interest thereon through the date of such assignment; provided that upon such Affected Lender’s replacement, such Affected Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 5.1(g), 6.1, 7.2, 14.7, 15.1(t) and 17.2, (and each other provision of this Agreement or the other Loan Documents whereby Borrower or agrees to reimburse or indemnify the Lenders), and shall continue to be obligated under Section 22.9 for such amounts, obligations and liabilities as are due and payable up to and including (but not after) the date such Affected Lender is replaced pursuant hereto.

Section 23.22Termination of Co-Lending Agreement.

The terms and provisions of the Co-Lending Agreement are hereby superseded in all respects by the terms of this Agreement, and the Lenders hereby agree that as of the Effective Date the Co-Lending Agreement is hereby, and shall be without need of further action by any of the parties hereto, irrevocably terminated, canceled and of no further force or effect, except any provision of the Co-Lending Agreement which by the express terms thereof survives the termination thereof.

Section 23.23No Merger of Interest.

Borrower and MH Kapalua acknowledge and agree that it has requested the other parties hereto to enter into this Agreement and that it is Borrower’s and MH Kapalua’s intention that there shall be no merger of interests in the Mortgaged Property by reason of the fact that MH Kapalua may at any time acquire, own or hold, directly or indirectly, in whole or in part (a) more than one interest in the Mortgaged Property and (b) one or more Notes and a Lien or an interest in the Mortgage or any other Loan Document constitute a Lien, on the Mortgaged Property.

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Section 23.24LBHI’s Consent to Amendment to Borrower’s Limited Liability Company Agreement.

By executing this Agreement, LBHI hereby consents to the amendments to Borrower’s Limited Liability Company Agreement as set forth in the First Amendment to Amended and Restated Liability Company Agreement of Kapalua Bay , LLC, dated on or about the date hereof.

Section 23.25Draw #29.

The parties hereto acknowledge and agree that notwithstanding the terms thereof, Draw #29 and all documents delivered in connection therewith shall be deemed to be a Requisition delivered under this Agreement.

ARTICLE XXIV
NOTICES

Any notice, demand, request or other communication which any party hereto may be required or may desire to give hereunder shall be in writing and shall be deemed to have been properly given (a) if hand delivered, when delivered, (b) if mailed by United States Certified Mail (postage prepaid, return receipt requested), three Business Days after mailing (c) if by Federal Express or other reliable overnight courier service, on the next Business Day after delivered to such courier service or (d) if by telecopier on the day of transmission so long as copy is sent on the same day by overnight courier as set forth below:

If to Borrower:

Kapalua Bay, LLC
c/o Maui Land & Pineapple Company, Inc.
120 Kane Street
Kapalua, Maui, Hawaii 69732
Attention: Ryan Churchill
Telecopy: (808) 669-5454
Telephone: (808) 877-1667

With a copy to:

DLA Piper LLP (US)

555 Mission Street

Suite 2400

San Francisco, California  94105

Attention: Stephen A. Cowan

Telecopy: (415)659-7500

Telephone: (415) 615-6000

and

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Teel & Roeper, LLP
ICW Plaza at Torrey Reserve
11455 El Camino Real, Suite 300
San Diego, CA 92130
Attention: Dean E. Roeper, Esq.
Telecopy: (858) 794-2909
Telephone: (858) 794-2900

If to the Agent:

Central Pacific Bank, as Agent
220 South King Street, Suite 2000
Honolulu, Hawaii 96813
Attention: Ryan M. Harada
Telecopy: (808) 544-0719
Telephone: (808) 544-0714

With a copy to:

TriMont Real Estate Advisors, Inc.
Monarch Tower
3424 Peachtree Road NE, Suite 2200
Atlanta, Georgia 30326
Attention: Nancy A. Wilson
Telecopy: (404) 582-8759
Telephone: (404) 954-5284

If to a Lender:

At the address set forth on Schedule G or in the Assignment and Assumption Agreement pursuant to which such Person became a Lender;

or at such other address as the party to be served with notice may have furnished in writing to the party seeking or desiring to serve notice as a place for the service of notice.

ARTICLE XXV
WAIVER OF JURY TRIAL

BORROWER, THE AGENT AND EACH LENDER WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS OR RELATING THERETO OR ARISING FROM THE LENDING RELATIONSHIP WHICH IS THE SUBJECT OF THIS AGREEMENT AND AGREE

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THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.

[remainder of page intentionally left blank; signature pages follow]

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IN WITNESS WHEREOF, this Agreement has been executed by the undersigned as of the date first set forth above.

BORROWER:
KAPALUA BAY, LLC
By:	Kapalua Bay Holdings, LLC, its Managing Member
	By:	MLP KB Partner LLC, its Managing Member
		By:	Maui Land & Pineapple Company, Inc., its Managing Member
			By:	/s/ Adele H. Sumida
			Name:	Adele H. Sumida
			Title:	Controller & Secretary
			By:	/s/ Randall H. Endo
			Name:	Randall H. Endo
			Title:	Vice President

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AGENT:
CENTRAL PACIFIC BANK, as Agent
By:	/s/ Ryan M. Harada
	Name:	Ryan M. Harada
	Title:	Executive Vice President

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LENDER:
LEHMAN BROTHERS HOLDINGS INC., as debtor and debtor in possession in its Chapter 11 case in the United States Bankruptcy Court for the Southern District of New York
By:	/s/ Gerald D. Pietroforte
Name:	Gerald D. Pietroforte
Title:	Authorized Signatory

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LENDER:
CENTRAL PACIFIC BANK
By:	/s/ Ryan M. Harada
Name:	Ryan M. Harada
Title:	Executive Vice President

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LENDER:
DEUTSCHE HYPOTHEKENBANK (ACTIENGESELLSCHAFT)
By:	/s/ Dirk Wilke
Name:	Dirk Wilke
Title:	authorized officer
By:	/s/ Michael Muller
Name:	Michael Muller
Title:	authorized officer

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LENDER:
LANDESBANK BADEN-WÜRTTEMBERG (successor-in-interest to Landesbank Sachsen Girozentrale)
By:	/s/ Dietmar Wilhelm
Name:	Dietmar Wilhelm
Title:	Vice President
By:	/s/ Nicole Schumacher
Name:	Nicole Schumacher
Title:	Assistant Vice President

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LENDER:
SWEDBANK AB (PUBL), NEW YORK BRANCH
By:	/s/ John Matthews
Name:	John Matthews
Title:	General Manager
By:	/s/ Donald Weiss
Name:	Donald Weiss
Title:	Vice President

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LENDER:
MH KAPALUA VENTURE, LLC
By:	Marriott Two Flags, LP, its sole member
	By:	Marriott Ownership Resorts, Inc., its general partner
		By:	/s/ William J. Tennis
		Name:	William J. Tennis
		Title:	Vice President

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EX-10.56

Exhibit 10.56

Execution Version

MASTER ASSIGNMENT AND ASSUMPTION

AND MODIFICATION AGREEMENT

THIS MASTER ASSIGNMENT AND ASSUMPTION AND MODIFICATION AGREEMENT (this “Agreement”) is made as of February 11, 2009 by and among LEHMAN BROTHERS HOLDINGS INC. (“LBHI”), CENTRAL PACIFIC BANK (“Central Pacific”), DEUTSCHE HYPOTHEKENBANK (ACTIEN-GESELLSCHAFT) (“Deutsche Hypo”), LANDESBANK BADEN-WÜRTTEMBERG, successor-in-interest to Landesbank Sachsen Girozentrale (“LBBW”), SWEDBANK AB (PUBL), NEW YORK BRANCH (“Swedbank), MH KAPALUA VENTURE, LLC (“MH Kapalua”), LBHI as agent (in such capacity, the “Agent”) and KAPALUA BAY, LLC (the “Borrower”)

Reference is made to that certain Construction Loan Agreement as modified by that certain First Omnibus Amendment to Construction Loan Documents, each as described in Annex I hereto (the “Loan Agreement”), and that certain Co-Lending Agreement dated as of February 1, 2007 among LBHI, Central Pacific, LBBW, Deutsche Hypo and Agent (the “Co-Lending Agreement”). Unless defined herein or in any Annex attached hereto, terms defined in the Loan Agreement are used herein as therein defined.

Each of the parties listed in the left hand column of Schedule I hereto (together, the “Assignors” and each, an “Assignor”), each of the parties listed in the right hand column of Schedule I hereto (together, the “Assignees” and each, an “Assignee”), the Agent and the Borrower hereby agree as follows:

Section 1.Assignment of Pro Rata Interests.

1.1           The Assignors hereby sell and assign to the Assignees without recourse and without representation or warranty (other than as expressly provided herein or in the Loan Agreement), and the Assignees hereby purchase and assume from the Assignors, the Assignors’ Notes and the Pro Rata Interest in the Loan Documents specified in Column C of Schedule II hereto and the Assignor’s Notes specified in Columns A and B of Schedule II are hereby split, divided and apportioned, such that each Assignee’s Note, Pro Rata Interest, its portion of the current outstanding principal balance of the Loan and remaining undisbursed commitment to fund the balance of the Loan are as set forth on Schedule III hereto. Assignees hereby assume and undertake to perform, pay or discharge, in accordance with the terms and conditions thereof and in accordance with their Pro Rata Interest in the Loan Documents specified in Column C of Schedule III hereto, all obligations of Assignors under the Loan Documents, to the extent such obligations are to be performed, paid or discharged after the date hereof.

1.2           Each Assignor other than LBHI (i) represents and warrants that it is duly authorized by all requisite actions to enter into and perform the terms of this Agreement; (ii) represents and warrants that it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any liens or security

interests; (iii) makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Loan Agreement, the other Loan Documents, or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Agreement, the other Loan Documents, or any other instrument or document furnished pursuant thereto except as set forth in the Co-Lending Agreement; and (iv) makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrower or any of its Affiliates or the performance or observance by the Borrower of any of its obligations under the Loan Agreement, the other Loan Documents, or any other instrument or document furnished pursuant thereto except as set forth in the Co-Lending Agreement. LBHI (i) represents and warrants that the individual executing this Agreement on behalf of LBHI is duly authorized to execute this Agreement on behalf of LBHI; (ii) makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Loan Agreement, the other Loan Documents or the Co-Lending Agreement, or in connection with the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Agreement, the other Loan Documents, or any other instrument or document furnished pursuant thereto including the Co-Lending Agreement; and (iv) makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrower or any of its Affiliates or the performance or observance by the Borrower of any of its obligations under the Loan Agreement, the other Loan Documents, or any other instrument or document furnished pursuant thereto. Attached hereto as Annex I is a true, correct and complete list of all of the Loan Documents as of the date hereof. To each Assignor’s knowledge, there currently exists no default or event which, with the giving of notice or the lapse of time, or both, would constitute an Event of Default under the Loan Documents, except for (a) those arising as a result of entering into the Forbearance Agreement dated as of October 24, 2008 between the Borrower and Nordic/PCL and the other “Documents” (as defined therein), and actions taken pursuant thereto and (b) those arising as a result of LBHI’s failure to fund under the Loan Agreement.

1.3           Each Assignee (i) represents and warrants that it is duly authorized to enter into and perform the terms of this Agreement; (ii) confirms that it has received a copy of the Loan Agreement and the other Loan Documents, together with copies of the financial statements referred to therein and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Agreement and the Co-Lending Agreement, and has not relied on any statements or representations made by any Assignor in connection with its decision to purchase the Pro Rata Interest pursuant to this Agreement; (iii) agrees that it will, independently and without reliance upon the Assignors and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Agreement; (iv) agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Loan Agreement are required to be performed by it as a Lender; and (v) agrees that the interest being assigned hereunder is

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being acquired by it for its own account, for investment purposes only and not with a view to the public distribution thereof and without any present intention of its resale in either case that would be in violation of applicable securities laws.

1.4           Following the execution of this Agreement by the Assignors and the Assignees, an executed original hereof (together with all attachments) will be retained by the Agent for acceptance by it and recording in the records of the Agent. The effective date of this Agreement shall be the date hereof (the “Settlement Date”).

1.5           As of the Settlement Date, (i) each Assignee shall be a party to the Loan Agreement and the Co-Lending Agreement and, to the extent provided in this Agreement, have the rights and obligations of a Lender under the Loan Agreement, and (ii) each Assignor shall, with respect to that portion of its interest assigned hereby relinquish its future rights and be released from its future obligations under the Loan Documents, but shall remain liable for all of its obligations that arose prior to the Settlement Date.

1.6           It is agreed that as of the Settlement Date, each Assignee shall be entitled to all interest on the disbursed amount of its Pro Rata Interest of the Loan at the rates specified in the Loan Agreement and the applicable replacement Notes issued pursuant to Section 4 of this Agreement, accruing on and after the Settlement Date and each Assignor shall be entitled to all interest on the disbursed amount of its Pro Rata Interest of the Loan at the rates specified in the Loan Agreement and the applicable Note accruing to the Settlement Date.

Section 2.Consent; Assignees as Lenders and Split Note Holders.

The Assignors, the Assignees, the Agent and the Borrower hereby consent and agree, and the Assignors hereby consent pursuant to Section 8.01(a)(b) of the Co-Lending Agreement, that each Assignee shall become a “Lender” or “Split Note Holder” for all purposes of the Co-Lending Agreement and the Loan Documents as of the Settlement Date to the extent of the Pro Rata Interest in the Loan Documents assigned to and assumed by such Assignee as set forth on Schedule III hereto.

Section 3.Cancellation of Commitments.

The Assignors, the Assignees, the Agent and the Borrower hereby agree that the Loan is modified as of the Settlement Date to permanently cancel the portion of commitments of the Assignors specified on Schedule IV hereto.

Section 4.Cancellation of Existing Notes and Issuance of Replacement Notes.

4.1           The Assignors, the Agent and the Borrower hereby agree that Promissory Note A-1, Promissory Note A-2, Promissory Note A-3, Promissory Note A-4, Promissory Note A-5 and Promissory Note B are cancelled as of the Settlement Date

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effective upon the issuance of the replacement Notes pursuant to Section 4.2 of this Agreement.

4.2           The Borrower hereby agrees to issue replacement promissory notes to the Assignees on the Settlement Date as set forth in Columns A and B of Schedule III hereto. Each such replacement promissory note shall be a “Note” for purposes of the Loan Documents.

Section 5.Advance by MH Kapalua to Borrower of $10,000,000.

5.1           Notwithstanding the terms of the Loan Agreement and the Co-Lending Agreement, MH Kapalua hereby agrees that on the Settlement Date immediately following the events described in Sections 1 through 4 of this Agreement, it will make an advance of a portion of its undisbursed commitment assumed pursuant to Section 1 above to Borrower in the amount of $10,000,000. Following such advance, MH Kapalua’s portion of the current outstanding principal balance of the Loan shall be $10,000,000 and its remaining undisbursed commitment shall be $10,000,000, and each Assignee’s resulting Note, Pro Rata Interest, portion of the current outstanding principal balance of the Loan and remaining undisbursed commitment to fund the balance of the Loan shall be as set forth on Schedule V hereto. The Borrower shall apply the proceeds of such advance to repay a portion of the equity loans previously made by MH Kapalua to the Borrower.

5.2           The Assignors, the Assignees, the Agent and the Borrower consent to the making of such advance. Such advance shall constitute a portion of the outstanding Loan and shall accrue interest in accordance with the terms of the Loan Agreement and the Promissory Note A-6 from and after the Settlement Date.

Section 6.Partial Repayment of Promissory Note B.

6.1           Notwithstanding the terms of the Loan Agreement and the Co-Lending Agreement, the Borrower hereby agrees that on the Settlement Date immediately following the events described in Sections 1 through 5 of this Agreement, it will make a payment of $699,227.89 to Swedbank, which payment shall reduce the outstanding principal amount owed to Swedbank under its Promissory Note B to $15,036,493.66, and each Assignee’s resulting Note, Pro Rata Interest, portion of the current outstanding principal balance of the Loan and remaining undisbursed commitment to fund the balance of the Loan shall be as set forth on Schedule VI hereto. Such prepayment by Borrower shall not constitute an advance by any Lender under its commitment to fund its Loan and shall be an additional equity investment by the Borrower.

6.2           The Assignors, the Assignees and the Agent hereby consent to such repayment of the Promissory Note B.

Section 7.Amendments to Co-Lending Agreement.

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The Assignors, the Assignees, the Agent and the Borrower hereby agree that the Co-Lending Agreement is amended as follows:

7.1           Exhibit A to the Co-Lending Agreement is hereby replaced by Exhibit A hereto.

7.2           Exhibit B to the Co-Lending Agreement is hereby replaced by Exhibit B hereto.

7.3           Exhibit E to the Co-Lending Agreement is hereby replaced by Exhibit C hereto.

Section 8.Miscellaneous.

8.1           This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or electronic transmission of a PDF file shall be effective delivery of a manually executed counterpart of this Agreement.

8.2           The Borrower, the Agent and each Assignor will, do, execute, acknowledge and deliver all and every such further acts, deeds, conveyances, assignments, notices of assignments, transfers and assurances as any Assignee shall, from time to time, reasonably require, for the better assuring, conveying, assigning, transferring and confirming unto such Assignee the property and rights hereby given, granted, bargained, sold, conveyed, and/or assigned. Each Assignor and each Assignee will, do, execute, acknowledge and deliver all and every such further acts as and reasonably required for carrying out the intention or facilitating the performance of the terms of this Agreement.

8.3           This Agreement shall constitute a “Loan Document” for purpose of the Loan Documents.

8.4           THE BORROWER, THE AGENT, EACH ASSIGNOR AND EACH ASSIGNEE WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS OR RELATING THERETO OR ARISING FROM THE LENDING RELATIONSHIP WHICH IS THE SUBJECT OF THE LOAN DOCUMENTS AND AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.

8.5           THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY. IN ALL RESPECTS, INCLUDING, WITHOUT LIMITATION,

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MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE AND APPLICABLE LAW OF THE UNITED STATES OF AMERICA. TO THE FULLEST EXTENT PERMITTED BY LAW, BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS AGREEMENT, AND THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW, BUT WITHOUT REGARD TO ANY OTHER CONFLICTS OF LAW PROVISIONS THEREOF.

8.6           TO THE GREATEST EXTENT PERMITTED BY LAW, BORROWER HEREBY WAIVES ANY AND ALL RIGHTS TO REQUIRE MARSHALLING OF ASSETS BY THE AGENT. WITH RESPECT TO ANY SUIT, ACTION OR PROCEEDINGS RELATING TO THIS AGREEMENT (EACH, A “PROCEEDING”), BORROWER IRREVOCABLY (A) SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE CIRCUIT COURT OF THE SECOND CIRCUIT, STATE OF HAWAII, THE FEDERAL DISTRICT COURT FOR THE DISTRICT OF HAWAII, OR ANY FEDERAL OR STATE COURT SITTING IN NEW YORK COUNTY, NEW YORK, AND (B) WAIVES ANY OBJECTION WHICH IT MAY HAVE AT ANY TIME TO THE LAYING OF VENUE OF ANY PROCEEDING BROUGHT IN ANY SUCH COURT, WAIVES ANY CLAIM THAT ANY PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM AND FURTHER WAIVES THE RIGHT TO OBJECT, WITH RESPECT TO SUCH PROCEEDING, THAT SUCH COURT DOES NOT HAVE JURISDICTION OVER SUCH PARTY. NOTHING IN THIS AGREEMENT SHALL PRECLUDE THE AGENT OR ANY ASSIGNOR OR ASSIGNEE FROM BRINGING A PROCEEDING IN ANY OTHER JURISDICTION NOR WILL THE BRINGING OF A PROCEEDING IN ANY ONE OR MORE JURISDICTIONS PRECLUDE THE BRINGING OF A PROCEEDING IN ANY OTHER JURISDICTION. BORROWER FURTHER AGREES AND CONSENTS THAT, IN ADDITION TO ANY METHODS OF SERVICE OF PROCESS PROVIDED FOR UNDER APPLICABLE LAW, ALL SERVICE OF PROCESS IN ANY PROCEEDING IN THE CIRCUIT COURT OF THE SECOND CIRCUIT, STATE OF HAWAII, THE FEDERAL DISTRICT COURT FOR THE DISTRICT OF HAWAII, OR ANY FEDERAL OR STATE COURT SITTING IN NEW YORK COUNTY, NEW YORK, MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO BORROWER AT THE ADDRESS INDICATED IN THE LOAN AGREEMENT, AND SERVICE SO MADE SHALL BE COMPLETE UPON RECEIPT; EXCEPT THAT IF BORROWER SHALL REFUSE TO ACCEPT DELIVERY, SERVICE SHALL BE DEEMED COMPLETE FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO MAILED.

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[remainder of page intentionally left blank; signature pages follow]

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[Signature Page to Master Assignment and Assumption and Modification Agreement]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.

ASSIGNORS:
LEHMAN BROTHERS HOLDINGS INC., a Delaware corporation, as debtor and debtor in possession in its Chapter 11 case in the United States Bankruptcy Court for the Southern District of New York
By:	/s/ Gerald D. Pietroforte
	Name:	Gerald D. Pietroforte
	Title:	Authorized Signatory

CENTRAL PACIFIC BANK
By:	/s/ Ryan M. Harada
	Name:	Ryan M. Harada
	Title:	Executive Vice President

DEUTSCHE HYPOTHEKENBANK (ACTIENGESELLSCHAFT)
By:	/s/ Dirk Wilke
	Name:	Dirk Wilke
	Title:	authorized officer
By:	/s/ Michael Muller
	Name:	Michael Muller
	Title:	authorized officer

LANDESBANK BADEN-WÜRTTEMBERG (successor-in-interest to Landesbank Sachsen Girozentrale)
By:	/s/ Dietmar Wilhelm
	Name:	Dietmar Wilhelm
	Title:	Vice President
By:	/s/ Nicole Schumacher
	Name:	Nicole Schumacher
	Title:	Assistant Vice President

SWEDBANK AB (PUBL), NEW YORK BRANCH
By:	/s/ John Matthews
	Name:	John Matthews
	Title:	General Manager
By:	/s/ Donald Weiss
	Name:	Donald Weiss
	Title:	Vice President

ASSIGNEES:
LEHMAN BROTHERS HOLDINGS INC., a Delaware corporation, as debtor and debtor in possession in its Chapter 11 case in the United States Bankruptcy Court for the Southern District of New York
By:	/s/ Gerald D. Pietroforte
	Name:	Gerald D. Pietroforte
	Title:	Authorized Signatory

CENTRAL PACIFIC BANK
By:	/s/ Ryan M. Harada
	Name:	Ryan M. Harada
	Title:	Executive Vice President

DEUTSCHE HYPOTHEKENBANK (ACTIENGESELLSCHAFT)
By:	/s/ Dirke Wilke
	Name:	Dirke Wilke
	Title:	authorized officer
By:	/s/ Michael Muller
	Name:	Michael Muller
	Title:	authorized officer

LANDESBANK BADEN-WÜRTTEMBERG
By:	/s/ Dietmar Wilhelm
	Name:	Dietmar Wilhelm
	Title:	Vice President
By:	/s/ Nicole Schumacher
	Name:	Nicole Schumacher
	Title:	Assistant Vice President

SWEDBANK AB (PUBL), NEW YORK BRANCH
By:	/s/ John Matthews
	Name:	John Matthews
	Title:	General Manager
By:	/s/ Donald Weiss
	Name:	Donald Weiss
	Title:	Vice President

MH KAPALUA VENTURE, LLC
By:	Marriott Two Flags, LP, its sole member
	By:	Marriott Ownership Resorts, Inc.,
		its general partner
		By:	/s/ William J. Tennis
			Name:	William J. Tennis
			Title:	Vice President

AGENT:
LEHMAN BROTHERS HOLDINGS INC., a Delaware corporation, as debtor and debtor in possession in its Chapter 11 case in the United States Bankruptcy Court for the Southern District of New York, as Agent
By:	/s/ Gerald D. Pietroforte
	Name:	Gerald D. Pietroforte
	Title:	Authorized Signatory

BORROWER:
KAPALUA BAY, LLC, a Delaware limited liability company
By:	Kapalua Bay Holdings, LLC, a Delaware limited liability company, its Managing Member
	By:	MLP KB Partner LLC, a Hawaii limited liability company, its Managing Member
		By:	Maui Land & Pineapple Company, Inc., a Hawaii corporation, Managing Member
			By:	/s/ Adele H. Sumida
				Name:	Adele H. Sumida
				Title:	Controller & Secretary
			By:	/s/ Randall H. Endo
				Name:	Randall H. Endo
				Title:	Vice President

SCHEDULE I

Assignors and Assignees

Assignors	Assignees
Lehman Brothers Holdings Inc.	Lehman Brothers Holdings Inc.
Central Pacific Bank	Central Pacific Bank
Deutsche Hypothekenbank (Actien-Gesellschaft)	Deutsche Hypothekenbank (Actien-Gesellschaft)
Landesbank Baden-Württemberg	Landesbank Baden-Württemberg
Swedbank AB (publ), New York Branch	Swedbank AB (publ), New York Branch
	MH Kapalua Venture, LLC

SCHEDULE II

Notes, Pro Rata Interests, Outstanding Principal and Commitments:

Prior to Assignment and Assumption

Lender	Column A Note Class	Column B Face Amount of Note		Column C Pro Rata Interest		Column D Outstanding Principal		Column E Undisbursed Commitment
Central Pacific Bank	A-1	$	30,000,000.00	8.108	%	$	23,603,582.32	$	6,396,417.68
Landesbank Baden-Württemberg	A-2	$	25,000,000.00	6.757	%	$	19,669,651.94	$	5,330,348.06
Deutsche Hypothekenbank (Actien-Gesellschaft)	A-3	$	25,000,000.00	6.757	%	$	19,669,651.94	$	5,330,348.06
Lehman Brothers Holdings Inc.	A-4	$	15,000,000.00	4.054	%	$	8,338,110.51	$	6,661,889.49
Lehman Brothers Holdings Inc.	A-5	$	255,000,000.00	68.919	%	$	141,747,860.32	$	113,252,139.68
Swedbank AB (publ), New York Branch	B	$	20,000,000.00	5.405	%	$	15,735,721.55	$	4,264,278.45
TOTAL:		$	370,000,000	100	%	$	228,764,578.58	$	141,235,421.42

SCHEDULE III

Notes, Pro Rata Interests, Outstanding Principal and Commitments:

After Assignment and Assumption

Lender	Column A Note Class	Column B Face Amount of Note		Column C Pro Rata Interests		Column D Outstanding Principal		Column E Undisbursed Commitment
Central Pacific Bank	A-1	$	36,133,081.90	10.069	%	$	23,603,582.32	$	12,529,499.58
Landesbank Baden-Württemberg	A-2	$	50,944,234.92	14.197	%	$	19,669,651.94	$	31,274,582.98
Deutsche Hypothekenbank (Actien-Gesellschaft)	A-3	$	50,944,234.92	14.197	%	$	19,669,651.94	$	31,274,582.98
Lehman Brothers Holdings Inc.	A-4	$	8,338,110.51	2.324	%	$	8,338,110.51	$	0
Lehman Brothers Holdings Inc.	A-5	$	176,747,860.32	49.255	%	$	141,747,860.32	$	35,000,000.00
MH Kapalua Venture, LLC	A-6	$	20,000,000.00	5.573	%	$	0	$	20,000,000.00
Swedbank AB (publ), New York Branch	B	$	15,735,721.55	4.385	%	$	15,735,721.55	$	0
TOTAL:		$	358,843,244.12	100	%	$	228,764,578.58	$	130,078,665.54

SCHEDULE IV

Cancelled Commitments

Lender	Note Class	Undisbursed Commitments Cancelled
Lehman Brothers Holdings Inc.	A-4	$	6,661,889.49
Lehman Brothers Holdings Inc.	A-5	$	230,587.94
Swedbank AB (publ), New York Branch	B	$	4,264,278.45
Total:		$	11,156,755.88

SCHEDULE V

Pro Rata Interests, Outstanding Principal and Commitments

Following One-Time Advance By MH Kapalua

Lender	Column A Note Class	Column B Face Amount of Note		Column C Pro Rata Interests		Column D Outstanding Principal		Column E Undisbursed Commitment
Central Pacific Bank	A-1	$	36,133,081.90	10.069	%	$	23,603,582.32	$	12,529,499.58
Landesbank Baden-Württemberg	A-2	$	50,944,234.92	14.197	%	$	19,669,651.94	$	31,274,582.98
Deutsche Hypothekenbank (Actien-Gesellschaft)	A-3	$	50,944,234.92	14.197	%	$	19,669,651.94	$	31,274,582.98
Lehman Brothers Holdings Inc.	A-4	$	8,338,110.51	2.324	%	$	8,338,110.51	$	0
Lehman Brothers Holdings Inc.	A-5	$	176,747,860.32	49.255	%	$	141,747,860.32	$	35,000,000.00
MH Kapalua Venture, LLC (after one time advance of $10,000,000.000 pursuant to Section 5)	A-6	$	20,000,000.00	5.573	%	$	10,000,000.00	$	10,000,000.00
Swedbank AB (publ), New York Branch	B	$	15,735,721.55	4.385	%	$	15,735,721.55	$	0
TOTAL:		$	358,843,244.12	100	%	$	238,764,578.58	$	120,078,665.54

SCHEDULE VI

Pro Rata Interests, Outstanding Principal and Commitments Following

Partial Repayment of Promissory Note B

Lender	Column A Note Class	Column B Face Amount of Note		Column C Pro Rata Interests		Column D Outstanding Principal		Column E Undisbursed Commitment
Central Pacific Bank	A-1	$	36,133,081.90	10.089	%	$	23,603,582.32	$	12,529,499.58
Landesbank Baden-Württemberg	A-2	$	50,944,234.92	14.225	%	$	19,669,651.94	$	31,274,582.98
Deutsche Hypothekenbank (Actien-Gesellschaft)	A-3	$	50,944,234.92	14.225	%	$	19,669,651.94	$	31,274,582.98
Lehman Brothers Holdings Inc.	A-4	$	8,338,110.51	2.328	%	$	8,338,110.51	$	0
Lehman Brothers Holdings Inc.	A-5	$	176,747,860.32	49.351	%	$	141,747,860.32	$	35,000,000.00
MH Kapalua Venture, LLC	A-6	$	20,000,000.00	5.584	%	$	10,000,000.00	$	10,000,000.00
Swedbank AB (publ), New York Branch (after payment by Borrower of $699,227.89 pursuant to Section 6)	B	$	15,036,493.66	4.198	%	$	15,036,493.66	$	0
TOTAL:		$	358,144,016.23	100	%	$	238,065,350.69	$	120,078,665.54

EX-10.57

Exhibit 10.57

Execution Version

SECOND OMNIBUS AMENDMENT TO

CONSTRUCTION LOAN DOCUMENTS

Project commonly know as the

“Residences at Kapalua Bay”

THIS SECOND OMNIBUS AMENDMENT TO CONSTRUCTION LOAN DOCUMENTS (the “Second Amendment”) is made as of February 11, 2009, by and among KAPALUA BAY, LLC (“Borrower”), CENTRAL PACIFIC BANK, a Hawaii bank (“Central Pacific”), DEUTSCHE HYPOTHEKENBANK (ACTIEN-GESELLSCHAFT) (“Deutsche Hypo”), LANDESBANK BADEN-WÜRTTEMBERG (“LBBW”), SWEDBANK AB (PUBL), NEW YORK BRANCH (“Swedbank”), MH KAPALUA VENTURE, LLC (“MH Kapalua”), LEHMAN BROTHERS HOLDINGS INC. (“LBHI;” LBHI, Central Pacific, Deutsche Hypo, LBBW, Swedbank and MH Kapalua being referred to herein individually as a “Lender” and collectively as the “Lenders”), Central Pacific as agent for the Lenders (the “Agent”), MAUI LAND & PINEAPPLE COMPANY, INC. (“ML&P”), THE RITZ-CARLTON DEVELOPMENT COMPANY, INC. (“Ritz-Carlton”), EXCLUSIVE RESORTS DEVELOPMENT COMPANY, LLC (“ERDC”; ERDC, ML&P and Ritz Carlton being referred to herein individually as a “Guarantor” and collectively as “Guarantors”), KAPALUA BAY HOLDINGS, LLC (“Holdings”), EXCLUSIVE RESORTS, LLC (“Exclusive Resorts”) and MARRIOTT INTERNATIONAL, INC. (“MII”).

RECITALS

A.            Borrower is the fee owner of that certain tract of land located in Lahaina, Maui, Hawaii, and being more fully described in Exhibit A-1 of the Amended and Restated Loan Agreement (as defined below) (the “Development Land”).

B.            Borrower is the owner of a leasehold interest in that certain tract of land located in Lahaina, Maui, Hawaii, and being more fully described in Exhibit A-2 of the Amended and Restated Loan Agreement (the “Spa Land”; and collectively with the Development Land, the “Land”).

C.            Borrower is developing a residential development on the Development Land and has submitted the Development Land to a condominium property and fractional ownership regime which includes for-sale Residential Condominium Units and Fractional Ownership Units.  The Spa Land is being developed as a Spa for the benefit of the guests and residents of the Project.  The Land, the Spa and the other Improvements and the Personal Property located thereon are collectively sometimes

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referred to as the “Project”.

D.            LBHI, as lender, and Borrower, as borrower, entered into a Construction Loan Agreement, dated as of July 14, 2006, as amended from time to time (the “Original Construction Loan Agreement”), pursuant to which LBHI agreed to make a loan to Borrower in the aggregate amount of up to $370,000,000 to finance in part the construction of the Project (the “Original Loan”).

E.             LBHI and Borrower entered into a Note Splitter and Reaffirmation Agreement, dated as of January 26, 2007, pursuant to which the original note delivered by Borrower pursuant to the Original Construction Loan Agreement was split, divided and apportioned into the following six separate promissory notes delivered by Borrower to LBHI: (i) the Amended, Severed and Restated Promissory Note (Note A-1) in the principal amount of $30,000,000 (the “Split Note A-1”), (ii) the Amended, Severed and Restated Promissory Note (Note A-2) in the principal amount of $25,000,000 (the “Split Note A-2”); (iii) the Amended, Severed and Restated Promissory Note (Note A-3) in the principal amount of $25,000,000 (the “Split Note A-3”); (iv) the Amended, Severed and Restated Promissory Note (Note A-4) in the principal amount of $15,000,000 (the “Split Note A-4”); (v) Amended, Severed and Restated Promissory Note (Note A-5) in the principal amount of $255,000,000 (the “Split Note A-5” and together with Note A-1, Note A-2, Note A-3 and Note A-4, collectively, the “Split A Notes”); and (vi) the Amended, Severed and Restated Promissory Note (Note B) in the principal amount of $20,000,000 (the “Split Note B”, and collectively with the Split A Notes, the “Split Notes”).

F.             Pursuant to Assignment and Assumption Agreements, each dated February 1, 2007, LBHI subsequently assigned the Split Note A-1 to Central Pacific, the Split Note A-2 to Landesbank Sachsen Girozentrale (predecessor in interest to LBBW) and the Split Note A-3 to Deutsche Hypo.  LBHI retained the Split Note A-4, the Split Note A-5 and the Split Note B.  Swedbank subsequently became the assignee and successor-in-interest to the Split Note B.

G.            Pursuant to the Co-Lending Agreement, dated as of February 1, 2007, as amended from time to time (the “Co-Lending Agreement”), among LBHI, as agent, and the holders of the Split Notes, the holders of the Split Notes appointed LBHI as agent for the holders of the Split Notes (in such capacity, the “Prior Agent”).

H.            Pursuant to a Master Assignment and Assumption and Modification Agreement, dated as of the date hereof, among Prior Agent, the holders of the Split

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Notes, the Lenders and Borrower, the holders of the Split Notes assigned their outstanding loans and a portion of their funding commitments under the Original Construction Loan Agreement to the Lenders and the remaining portion of the unfunded loan commitment of the Split Note Holders under the Original Construction Loan Agreement was cancelled, and a portion of the outstanding balance of the Split Note B was repaid.

I.              Pursuant to a letter agreement dated as of the date hereof among Borrower, the Lenders and the Prior Agent as resigning agent and the Agent as successor agent, (i) the Prior Agent resigned as agent for the Lenders, (ii) Agent was appointed the successor agent for the Lenders and (iii) the Prior Agent assigned to the Agent its rights and privileges as agent under the Co-Lending Agreement and the Loan Documents.

J.             Borrower, the Lenders and Agent have entered into an Amended and Restated Construction Loan Agreement (the “Amended and Restated Loan Agreement”), dated as of the date hereof, which amends and restates the Original Loan Agreement in its entirety and supersedes and terminates the Co-Lending Agreement.

K.            Borrower, Agent, the Lenders, Guarantors, Holdings, Exclusive Resorts, and MII hereto desire to modify and amend the Loan Documents in the manner hereinafter set forth.

NOW, THEREFORE, in consideration of the covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Borrower, Agent, the Lenders, Guarantors, Holdings,  Exclusive Resorts and MII, intending to be legally bound, do hereby covenant and agree as follows:

1.             Recitals and Definitions. The recitals set forth herein are true and accurate and are incorporated herein by reference. Capitalized terms which are not specifically defined herein shall have the meanings set forth in the Amended and Restated Loan Agreement.

2.             Amendments to Loan Documents.  The Loan Documents, other than the Amended and Restated Loan Agreement, are hereby amended, supplemented and modified as of the date hereof as follows:

(a)           All references in the Loan Documents to the “Note” shall mean and refer, collectively, to the Facility A Notes, the Facility B-1 Notes, the Facility B-2 Notes,

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the Facility C-1 Notes and the Facility C-2 Notes.

(b)           All references in the Loan Documents to the “Loan” shall mean the Loans.

(c)           All references in the Loan Documents to the “Loan Documents” shall mean the Loan Documents.

(d)           All references in the Loan Documents to the “Loan Agreement” shall mean the Original Loan Agreement, as amended and restated by the Amended and Restated Loan Agreement, as the same may be amended, modified and supplemented from time to time.

(e)           All references in the Loan Documents to the “CM Agreement” shall mean the Project Management Development Agreement between Kapalua Bay, LLC and The Ritz Carlton Development Company, Inc. dated as of October 1, 2004, as amended by the First Addendum to Project Management Development Agreement, dated as of January 21, 2009, as the same may be further amended, modified and supplemented from time to time.

(f)            All references in the Loan Documents to any Loan Document shall be deemed to mean such Loan Document, as modified by this Second Amendment or the Second Omnibus Amendment to Recorded Construction Loan Documents dated as of the date hereof (the “Second Amendment to Recorded Loan Documents”), as the case may be, as the same may be further amended, modified and supplemented from time to time.

(g)           Each reference to “Lender” under any Loan Document, other than the Amended and Restated Loan Agreement and other than the Notes, shall mean (i) in the context of any reference to the Loans or to the Notes, the Lenders or a Lender, as the context may require, and (ii) in all other respects, Central Pacific, as Agent, and its successors and assigns in such capacity.

(h)           All notices to be sent to “Lender” under any Loan Document, other than the Amended and Restated Loan Agreement and other than the Notes, shall be sent to Agent, as follows:

Central Pacific Bank, as Agent

220 South King Street, Suite 2000

Honolulu, Hawaii 96813

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Attention: Ryan M. Harada

Telecopy: 808-544-0719

Telephone: 808-544-0714

With a copy to:

TriMont Real Estate Advisors, Inc.

Monarch Tower

3424 Peachtree Road NE, Suite 2200

Atlanta, Georgia 30326

Attention: Nancy A. Wilson

Telecopy: 404-582-8759

Telephone: 404-954-5284

(i)            The rules of construction set forth in Section 2.2 of the Amended and Restated Loan Agreement shall apply to each Loan Document as if fully set forth therein.

3.             Amendments to Pledge of Accounts, Security Agreement and Rights to Payment.  The Pledge of Accounts, Security Agreement and Rights to Payment is hereby amended as of the date hereof as follows:

(a)               Section 1 is hereby restated as follows:

“1.  PLEDGE OF ACCOUNTS AND GRANT OF SECURITY INTEREST.  For valuable consideration, the undersigned, KAPALUA BAY LLC, a Delaware limited liability company (“Debtor”), hereby assigns and pledges to CENTRAL PACIFIC BANK, a Hawaii bank (“Agent”), and hereby grants, assigns and transfers to Agent a security interest in the following property, rights, agreements, escrow accounts, deposit accounts, accounts receivable, chattel paper, instruments, documents and general intangibles or other rights to payment (collectively called the “Collateral”):

(i)  all Condominium Deposit Accounts, including, without limitation, Escrow Agent’s Account No. 0003-232433 at Bank of Hawaii, in their 130 Merchant Street, Honolulu, HI 96813, branch (collectively, the “Accounts”), which now or hereafter may be

5

held for Debtor, including by First American Title Company, Inc., as agent (“Escrow Agent”) and all certificates and instruments, if any, from time to time representing or evidencing the Condominium Deposits, as well as all Contract Deposits held in the Accounts to the extent permitted under applicable law;

(ii)  the Condominium Release Payment Account and all amounts held in such account;

(iii)  the Facility A Excess Proceeds Account and all amounts held in such account;

(iv)  the Expense Reserve Account and all amounts held in such account; and

(v)  to the extent not otherwise included, all Proceeds and products of any of the foregoing.

For purposes of this Agreement, “Proceeds” shall mean all renewals thereof, including all securities, guaranties, warranties, indemnity agreements, insurance policies, purchase and upgrade agreements, and other agreements pertaining to the same or the property described therein, together with whatever is receivable or received when any of the Collateral or proceeds thereof are sold, collected, exchanged, or otherwise disposed of, whether such disposition is voluntary or involuntary, including without limitation, (a) all accounts, contract rights, chattel paper, instruments, general intangibles and rights to payment of every kind now or at any time hereafter arising from any such sale, lease, collection, exchange or other disposition of any of the foregoing, (b) all rights to payment, including returned premiums, with respect to any insurance relating to any of the foregoing, and (c) all rights to payment with respect to any cause of action affecting or relating to any of the foregoing (hereinafter called “Proceeds”).”

(b)              All references to “Default Interest Rate” shall mean the “Default Rate”.

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(c)               All references to “Purchasers” shall mean the purchasers under any Contract of Sale.

(d)              All references to “Residence Apartments Purchase Agreements” shall mean the Contracts of Sale.

(e)               All references to “Sales Agreement Deposits” shall mean Contract Deposits.

(f)               All references to “Sales Deposit Escrow Account” shall mean the Condominium Deposit Account.

4.             Environmental Indemnity.  The Environmental Indemnity is hereby amended as of the date hereof by deleting “Article 23 of the Loan Agreement” in Section 17 and inserting in lieu thereof “Article XXIV of the Loan Agreement.”

5.             Completion Guaranty.  The Completion Guaranty is hereby amended as of the date hereof as follows:

(a)               Section 4 is amended by deleting “Section 12.1 of the Loan Agreement” and inserting in lieu thereof “Section 11.1 of the Loan Agreement.”

(b)              Section 13 is amended by deleting “Article 23 of the Loan Agreement” and inserting in lieu thereof “Article XXIV of the Loan Agreement.”

6.             Recourse Guaranty.  The Recourse Guaranty is hereby amended as of the date hereof by deleting “Article 23 of the Loan Agreement” in Section 10 and inserting in lieu thereof “Article XXIV of the Loan Agreement.”

7.               Ratification of Loan Documents; No Defenses. Except as expressly modified and amended herein and in the Second Amendment to Recorded Loan Documents, as the case may be, all of the terms, covenants, promises, warranties, representations and conditions of the Loan Documents shall remain in full force and effect.  The Loan Documents, as amended by this Second Amendment and the Second Amendment to Recorded Loan Documents, as the case may be, are hereby acknowledged, ratified, confirmed, authorized, approved and affirmed in all respects. Borrower hereby acknowledges, confirms and warrants to Agent and Lenders that as of the date of this Second Amendment it has no defenses, claims, rights of set-off or counterclaims against Agent or Lenders under, arising out of, or in connection with any

7

of the Loan Documents to which it is a party or against any of the indebtedness evidenced, advanced or secured thereby, any and all of which Borrower hereby expressly waives.

8.               Joinder and Ratification by Guarantors. Each Guarantor hereby acknowledges, ratifies, confirms and affirms that the Facility A Notes, the Facility B-1 Notes, the Facility B-2 Notes, the Facility C-1 Notes and the Facility C-2 Notes have been issued as set forth in the Amended and Restated Loan Agreement.  The Loan Documents, as amended by this Second Amendment, and the Keep Whole Letters are hereby acknowledged, ratified, confirmed, authorized and approved and affirmed in all respects by each Guarantor.  Each Guarantor hereby reaffirms and ratifies its obligations, representations and warranties under the Guaranties to Agent and Lenders with respect to its obligations under each Note. Each Guarantor hereby acknowledges, confirms and warrants to Agent and Lenders that as of the date of this Second Amendment it has no defenses, claims, rights of set-off or counterclaims against Agent or Lenders under, arising out of, or in connection with any of the Loan Documents, to which it is a party, including the Keep Whole Letters and Guaranties, or against any of the indebtedness evidenced, advanced or guarantied thereby, any and all of which each Guarantor hereby expressly waives.

9.               Joinder and Ratification by Holdings. Holdings hereby acknowledges, ratifies, confirms and affirms that the Facility A Notes, the Facility B-1 Notes, the Facility B-2 Notes, the Facility C-1 Notes and the Facility C-2 Notes have been issued as set forth in the Amended and Restated Loan Agreement.  The Loan Documents, as amended by this Second Amendment, including the Pledge and Security Agreement, are hereby acknowledged, ratified, confirmed, authorized and approved and affirmed in all respects by Holdings. Holdings hereby reaffirms and ratifies its respective obligations, representations and warranties under of the Loan Documents to which it is a party to Agent and Lenders with respect to their obligations under each Note. Holdings hereby acknowledges, confirms and warrants to Agent and Lenders that as of the date of this Second Amendment it has no defenses, claims, rights of set-off or counterclaims against Agent and Lenders under, arising out of, or in connection with any of the Loan Documents to which it is a party, including the Pledge and Security Agreement, or against any of the indebtedness evidenced, advanced or guarantied thereby, any and all of which Holdings hereby expressly waives.

10.             Joinder and Ratification by Exclusive Resorts. Exclusive Resorts

8

hereby acknowledges, ratifies, confirms and affirms that the Facility A Notes, the Facility B-1 Notes, the Facility B-2 Notes, the Facility C-1 Notes and the Facility C-2 Notes have been issued as set forth in the Amended and Restated Loan Agreement. The Loan Documents, as amended by this Second Amendment, including the Price Protection Letter and the Keep Whole Letters, are hereby acknowledged, ratified, confirmed, authorized and approved and affirmed in all respects by Exclusive Resorts. Exclusive Resorts hereby reaffirms and ratifies its obligations, representations and warranties under any of the Loan Documents to which it is a party, including the Price Protection Letter and the Keep Whole Letters, to Agent and Lenders.  Exclusive Resorts hereby acknowledges, confirms and warrants to Agent and Lenders that as of the date of this Second Amendment it has no defenses, claims, rights of set-off or counterclaims against Agent and Lenders under, arising out of, or in connection with any of the Loan Documents to which it is a party, including the Price Protection and the Keep Whole Letters or against any of the indebtedness evidenced, advanced or guarantied thereby, any and all of which Exclusive Resorts hereby expressly waives.

11.             Joinder and Ratification by MII. MII hereby acknowledges, ratifies, confirms and affirms that the Facility A Notes, the Facility B-1 Notes, the Facility B-2 Notes, the Facility C-1 Notes and the Facility C-2 Notes have been issued as set forth in the Amended and Restated Loan Agreement. The Loan Documents, as amended by this Second Amendment, including the Keep Whole Letters, are hereby acknowledged, ratified, confirmed, authorized and approved and affirmed in all respects by MII.  MII hereby reaffirms and ratifies its obligations, representations and warranties under any of the Loan Documents to which it is a party, including the Keep Whole Letters, to Agent and Lenders.  MII hereby acknowledges, confirms and warrants to Agent and Lenders that as of the date of this Second Amendment it has no defenses, claims, rights of set-off or counterclaims against Agent and Lenders under, arising out of, or in connection with any of the Loan Documents to which it is a party, including the Keep Whole Letters or against any of the indebtedness evidenced, advanced or guarantied thereby, any and all of which MII hereby expressly waives.

12.             Confirmation of Lien. Borrower acknowledges and agrees that the Mortgage, as amended, constitutes a valid first lien upon the Land in favor of Agent and that the Loan Documents constitute valid and binding agreements of obligations of the parties thereto with respect to the Loans. The Property is and shall remain subject to and encumbered by the respective liens, charges and encumbrances of the Mortgage and nothing herein shall affect or be construed to affect the lien, charge or encumbrance of the

9

Mortgage or the priority thereof or of this Second Amendment over other liens or encumbrances.

13.             No Oral Modification. This Second Amendment may not be amended except upon the written agreement of all of the parties hereto; provided that the foregoing shall not limit or modify the provisions set forth in Section 23.2 of the Amended and Restated Loan Agreement relating to amendments, waivers and modifications of the Loan Documents.

14.             Binding Upon Successors and Assigns. This Second Amendment shall inure to the benefit of, and shall be binding upon, the parties hereto and their respective successors and permitted assigns under the Amended and Restated Loan Agreement.

15.             Headings. The headings of the sections and subsections of this Second Amendment are for convenience of reference only and shall not be considered a part hereof nor shall they be deemed to limit or otherwise affect any of the terms or provisions hereof.

16.             Validity of Provisions. Any provision of this Second Amendment which may prove unenforceable under law shall not affect the validity of the other provisions hereof.

17.             Judicial Interpretation. Should any provision of this Second Amendment, the Amended and Restated Loan Agreement or any of the other Loan Documents require judicial interpretation, it is agreed that a court interpreting or construing the same shall not apply a presumption that the terms hereof shall be more strictly construed against any party by reason of the rule of construction that a document is to be construed more strictly against the party who itself or through its agent prepared the same, it being agreed that all parties hereto have participated in the preparation of this Second Amendment.

18.             Time: Construction; Exhibits and Schedules. All references to the singular or plural number or masculine, feminine or neuter gender shall, as the context requires, include all others. All references to sections, paragraphs, and exhibits are to this Second Amendment unless otherwise specifically noted. The use of the words “hereof’, “hereunder,” “herein” and words of similar import shall refer to this entire Second Amendment and not to any particular section, paragraph or portion of this Second Amendment unless otherwise specifically noted. All exhibits attached hereto are by this reference made a part of this Second Amendment for all purposes.

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19.             Counterparts. This Second Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.  Delivery of an executed counterpart of a signature page of this Second Amendment by facsimile or electronic transmission of a PDF file shall be effective delivery of a manually executed counterpart of this Second Amendment.

20.             Governing Law. THIS SECOND AMENDMENT WAS NEGOTIATED IN THE STATE OF NEW YORK, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY. IN ALL RESPECTS, INCLUDING, WITHOUT LIMITATION, MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS SECOND AMENDMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE AND APPLICABLE LAW OF THE UNITED STATES OF AMERICA. TO THE FULLEST EXTENT PERMITTED BY LAW, EACH OF BORROWER. HOLDINGS, GUARANTOR, EXCLUSIVE RESORTS AND MII HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS SECOND AMENDMENT, AND THIS SECOND AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW, BUT WITHOUT REGARD TO ANY OTHER CONFLICTS OF LAW PROVISIONS THEREOF.  NOTWITHSTANDING THE FOREGOING, PROVISIONS IN THIS SECOND AMENDMENT AND THE OTHER LOAN DOCUMENTS WITH RESPECT TO THE CREATION, PERFECTION, PRIORITY, ENFORCEMENT AND FORECLOSURE OF THE LIENS AND SECURITY INTERESTS CREATED HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAW OF THE STATE IN WHICH THE PROJECT IS LOCATED.

21.             Conflicting Provisions. In the event of any conflict between this Second Amendment or any of the Loan Documents, other than the Amended and Restated Loan Agreement, the terms of this Second Amendment shall govern and control.  In the event of any conflict between this Second Amendment and the Amended and Restated Loan

11

Agreement, the terms of the Amended and Restated Loan Agreement shall govern and control.  Whenever possible, the provisions of this Second Amendment shall be deemed supplemental to and not in derogation of the terms of the Notes, the Amended and Restated Loan Agreement and the other Loan Documents.

22.             Entire Agreement. The Amended and Restated Loan Agreement and the other Loan Documents, as modified by this Second Amendment or the Second Amendment to Recorded Loan Documents, as the case may be, and the other documents executed and delivered in connection herewith constitute the entire agreement among the parties with respect to the subject matter hereof, and all understandings (oral or written) and agreements heretofore had among the parties are merged in or contained in such documents.

23.             SUBMISSION TO JURISDICTION. TO THE GREATEST EXTENT PERMITTED BY LAW, EACH OF BORROWER. HOLDINGS, GUARANTOR, EXCLUSIVE RESORTS AND MII HEREBY WAIVES ANY AND ALL RIGHTS TO REQUIRE MARSHALLING OF ASSETS BY THE AGENT. WITH RESPECT TO ANY SUIT, ACTION OR PROCEEDINGS RELATING TO THIS SECOND AMENDMENT (EACH, A “PROCEEDING”), EACH OF BORROWER. HOLDINGS, GUARANTOR, EXCLUSIVE RESORTS AND MII IRREVOCABLY (A) SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE CIRCUIT COURT OF THE SECOND CIRCUIT, STATE OF HAWAII, THE FEDERAL DISTRICT COURT FOR THE DISTRICT OF HAWAII, OR ANY FEDERAL OR STATE COURT SITTING IN NEW YORK COUNTY, NEW YORK, AND (B) WAIVES ANY OBJECTION WHICH IT MAY HAVE AT ANY TIME TO THE LAYING OF VENUE OF ANY PROCEEDING BROUGHT IN ANY SUCH COURT, WAIVES ANY CLAIM THAT ANY PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM AND FURTHER WAIVES THE RIGHT TO OBJECT, WITH RESPECT TO SUCH PROCEEDING, THAT SUCH COURT DOES NOT HAVE JURISDICTION OVER SUCH PARTY. NOTHING IN THIS SECOND AMENDMENT SHALL PRECLUDE THE AGENT OR ANY LENDER FROM BRINGING A PROCEEDING IN ANY OTHER JURISDICTION NOR WILL THE BRINGING OF A PROCEEDING IN ANY ONE OR MORE JURISDICTIONS PRECLUDE THE BRINGING OF A PROCEEDING IN ANY OTHER JURISDICTION. EACH OF BORROWER. HOLDINGS, GUARANTOR, EXCLUSIVE RESORTS AND MII FURTHER AGREES AND CONSENTS THAT, IN ADDITION TO ANY METHODS OF SERVICE OF PROCESS PROVIDED FOR UNDER APPLICABLE LAW, ALL SERVICE OF

12

PROCESS IN ANY PROCEEDING IN THE CIRCUIT COURT OF THE SECOND CIRCUIT, STATE OF HAWAII, THE FEDERAL DISTRICT COURT FOR THE DISTRICT OF HAWAII, OR ANY FEDERAL OR STATE COURT SITTING IN NEW YORK COUNTY, NEW YORK, MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO EACH OF BORROWER. HOLDINGS, GUARANTOR, EXCLUSIVE RESORTS AND MII AT THE ADDRESS INDICATED IN THE AMENDED AND RESTATED LOAN AGREEMENT, AND SERVICE SO MADE SHALL BE COMPLETE UPON RECEIPT; EXCEPT THAT IF SUCH PARTY SHALL REFUSE TO ACCEPT DELIVERY, SERVICE SHALL BE DEEMED COMPLETE FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO MAILED.

24.             WAIVER OF JURY TRIAL. BORROWER, HOLDINGS, GUARANTOR, EXCLUSIVE RESORTS AND MII, LENDERS AND AGENT HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY FOREVER WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON THIS SECOND AMENDMENT OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS SECOND AMENDMENT, THE AMENDED AND RESTATED LOAN AGREEMENT, THE NOTES OR ANY OTHER DOCUMENTS EXECUTED IN CONJUNCTION HEREWITH OR THEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY OR THE EXERCISE BY ANY PARTY OF ITS RIGHTS UNDER THIS SECOND AMENDMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR IN ANY WAY ARISING OUT OF OR RELATED IN ANY MANNER WITH THE SUBJECT MATTER HEREOF OR THEREOF (INCLUDING, WITHOUT LIMITATION, ANY ACTION TO RESCIND OR CANCEL THIS SECOND AMENDMENT OR ANY OF THE LOAN DOCUMENTS AND ANY CLAIM OR DEFENSE ASSERTING THAT THIS SECOND AMENDMENT OR ANY OTHER LOAN DOCUMENT WAS FRAUDULENTLY INDUCED OR IS OTHERWISE VOID OR VOIDABLE). EACH OF BORROWER. HOLDINGS, GUARANTOR, EXCLUSIVE RESORTS AND MII ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT FOR AGENT AND THE LENDERS TO ENTER INTO AND ACCEPT THIS SECOND AMENDMENT.

25.             Further Assurances. Each party hereto agrees promptly to do, make, execute and deliver all such additional and further acts, things, deeds, assurances, instruments and documents as the other party may reasonably request to vest in and

13

assure to the requesting party its rights (and/or to confirm the agreements and obligations of the non-requesting party) hereunder or under any of the Loan Documents. Without limitation of the foregoing, each party agrees to provide such assurances concerning the effectiveness of this Second Amendment as the other party may reasonably request.

[remainder of page intentionally left blank; signature pages follow]

14

[Signature Page to Second Omnibus Amendment to Construction Loan Documents]

                IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to be executed by their respective officers thereunto duly authorized, as of the date first above written.

KAPALUA BAY, LLC
By:	Kapalua Bay Holdings, LLC, its Managing Member
	By:	MLP KB Partner LLC, its Managing Member
	By:	Maui Land & Pineapple Company, Inc., Managing Member
		By:		/s/ Adele H. Sumida
				Name:	Adele H. Sumida
				Title:	Controller & Secretary
		By:		/s/ Randall H. Endo
				Name:	Randall H. Endo
				Title:	Vice President
CENTRAL PACIFIC BANK, as Agent
By:	/s/ Ryan M. Harada
	Name:		Ryan M. Harada
	Title:		Executive Vice President
CENTRAL PACIFIC BANK
By:	/s/ Ryan M. Harada
	Name:		Ryan M. Harada
	Title:		Executive Vice President

DEUTSCHE HYPOTHEKENBANK (ACTIEN-GESELLSCHAFT)
By:	/s/ Dirk Wilke
	Name:	Dirk Wilke
	Title:	authorized officer
By:	/s/ Michael Muller
	Name:	Michael Muller
	Title:	authorized officer
LANDESBANK BADEN-WÜRTTEMBERG
By:	/s/ Diet Milhelm
	Name:	Dietmar Wilhelm
	Title:	Vice President
By:	/s/ Nicole Schumacher
	Name:	Nicole Schumacher
	Title:	Assistant Vice President
SWEDBANK AB (PUBL), NEW YORK BRANCH
By:	/s/ John Matthews
	Name:	John Matthews
	Title:	General Manager
By:	/s/ Donald Weiss
	Name:	Donald Weiss
	Title:	Vice President

LEHMAN BROTHERS HOLDINGS INC., a Delaware corporation, as debtor and debtor in possession in its Chapter 11 case in the United States Bankruptcy Court for the Southern District of New York
By:	/s/ Gerald D. Pietroforte
	Name:		Gerald D. Pietroforte
	Title:		Authorized Signatory
MH KAPALUA VENTURE, LLC
By:	Marriott Two Flags, LP,its sole member
	By:	Marriott Ownership Resorts, Inc.,
		its general partner
	By:	/s/ William J. Tennis
		Name:			William J. Tennis
		Title:			Vice President
MAUI LAND & PINEAPPLE COMPANY, INC.
By:	/s/ Adele H. Sumida
	Name:			Adele H. Sumida
	Title:			Controller & Secretary
By:	/s/ Randall H. Endo
	Name:			Randall H. Endo
	Title:			Vice President
THE RITZ-CARLTON DEVELOPMENT COMPANY
By:	/s/ William J. Tennis
	Name:			William J. Tennis
	Title:			Vice President

EXCLUSIVE RESORTS DEVELOPMENT COMPANY, LLC
By:	/s/ Brent L. Handler
	Name:		Brent L. Handler
	Title:		President
EXCLUSIVE RESORTS, LLC
By:	/s/ Brent L. Handler
	Name:		Brent L. Handler
	Title:		President
MARRIOTT INTERNATIONAL, INC.
By:	/s/ William J. Tennis
	Name:		William J. Tennis
	Title:		Vice President
KAPALUA BAY HOLDINGS, LLC
By:	MLP KB Partner LLC, its Managing Member
	By:	Maui Land & Pineapple Company, Inc., Managing Member
		By:		/s/ Adele H. Sumida
				Name:	Adele H. Sumida
				Title:	Controller & Secretary
		By:		/s/ Randall H. Endo
				Name:	Randall H. Endo
				Title:	Vice President

EX-10.58

Exhibit 10.58

FIRST AMENDMENT TO EMPLOYMENT AGREEMENT

This First Amendment to Employment Agreement (“Amendment”) is made and entered into effective as of the 8th day of December 2008, by and between MAUI LAND & PINEAPPLE COMPANY, INC. (“Company”), a Hawaii corporation, whose principal place of business is in the State of Hawaii, and DAVID C. COLE (the “Executive”).

WHEREAS, Company and Executive entered into an Employment Agreement, which was made effective as of the 6th day of October 2003 (the “Employment Agreement”), providing for the terms and conditions of the employment of Executive with Company.

WHEREAS, pursuant to Section 20 of the Employment Agreement, Company and Executive wish to amend certain terms and provisions of the Employment Agreement.

WHEREAS, except as specifically amended hereby, the terms and provisions of the Employment Agreement shall continue in full force and effect.

NOW, THEREFORE, in consideration of the premises and promises contained herein, the parties agree as follows:

1.Section 8(g) of the Employment Agreement is hereby amended to read in its entirety as follows:

“Definition of Resignation for Good Reason. A resignation for good reason will occur if Executive resigns his employment due to the occurrence of any of the following conditions, without Executive’s written consent; provided that Executive provides written notice to Company of the existence of any such condition within ninety (90) days of its initial existence and Company fails to remedy the condition within thirty (30) days of receiving such notice.  Notwithstanding the preceding sentence, if Executive does not resign within nine (9) months of the occurrence of a condition described below, Executive is deemed to have consented and acquiesced to the condition which shall not thereafter constitute “Good Reason”:

(i)a material diminution in Executive’s base compensation;

(ii)a material diminution in Executive’s authority, duties, or responsibilities;

(iii)a material diminution in the authority, duties, or responsibilities of the supervisor to whom Executive reports, including a requirement that Executive report to a corporate officer or employee instead of reporting directly to the board of directors of the Company;

(iv)a material diminution in the budget over which Executive retains authority;

(v)a material change in the geographic location at which Executive is required to perform services to the Company pursuant to the Employment Agreement; or

(vi)any other action or inaction that is a material breach by the Company of the Employment Agreement.

2.Except as otherwise set forth in this Amendment, the terms and conditions of the Employment Agreement shall remain in full force and effect.

3.This Amendment and the Employment Agreement contains the entire understanding and agreement between the parties concerning the subject matter of this Amendment and the Employment Agreement, including, but not limited to, Executive’s employment and termination of employment with Company, and supersedes all prior agreements, understandings, discussions, negotiations and undertakings, whether written or oral, between the parties with respect hereto and thereto.

4.No provision in this Amendment may be amended or waived unless such amendment is in writing and signed by Executive and an authorized representative of Company.  No waiver by either party of any breach by the other party of any condition or provision contained in this Amendment to be performed by such other party shall be deemed a waiver of a similar or dissimilar condition or provision at the same or any prior or subsequent time.

5.Company and Executive have each been represented by experienced legal counsel in the negotiation and drafting of this Amendment and the Employment Agreement and agree that this Amendment will not be interpreted as the product of either party alone.

6.This Amendment shall be governed by and construed and interpreted in accordance with the laws of Hawaii without reference to any otherwise applicable principles of conflict of laws.  Any judicial proceeding involving any claim arising out of this Amendment or Executive’s employment with, or termination from, Company shall be conducted in Hawaii.

7.This Amendment may be executed in one (1) or more counterparts, and by facsimile signature, each of which will be deemed to be an original copy of this Amendment and all of which when taken together will be deemed to constitute one and the same Amendment.

[Remainder of Page Intentionally Left Blank; Signature Page Follows]

2

IN WITNESS WHEREOF, the parties have duly executed this Amendment as of the date first written above.

	/s/ David C. Cole
David C. Cole
Maui Land & Pineapple, Inc.
By:	/s/ Walter A. Dods Jr.
Name:	Walter A. Dods Jr.
Its:	Compensation Committee Chairman

3

EX-21

Exhibit 21

Maui Land & Pineapple Company, Inc.—Subsidiaries

As of December 31, 2008

Name	State of Incorporation	Percentage of Ownership
Maui Pineapple Company, Ltd.	Hawaii	100
Kapalua Land Company, Ltd.	Hawaii	100
Kapalua Realty Company, Ltd.	Hawaii	100
Kapalua Advertising Company, Ltd.	Hawaii	100
Kapalua Water Company, Ltd.	Hawaii	100
Kapalua Waste Treatment Company, Ltd.	Hawaii	100
Honolua Plantation Land Company, Ltd.	Hawaii	100
Kapalua Bay Holdings, LLC	Delaware	51
Kapalua Bay, LLC	Delaware	100

1

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statements Nos. 333-133898, 333-121705, 333-119808, and 333-112932 on Form S-8, Amendment No. 1 to Registration Statement No. 333-150244 on Form S-3, and Amendment No. 2 to Registration Statement No. 333-153203 on Form S-3 of our report dated March 30, 2009, relating to the consolidated financial statements and financial statement schedule of Maui Land & Pineapple Company, Inc. and subsidiaries (which report expresses an unqualified opinion and includes an explanatory paragraph relating to changes in accounting for assessing the continuing investment requirements for sales of condominiums, uncertainties in income taxes, and pension and postretirement benefits),  and the effectiveness of Maui Land & Pineapple Company, Inc. and subsidiaries’ internal control over financial reporting appearing in this Annual Report on Form 10-K of Maui Land & Pineapple Company, Inc. for the year ended December 31, 2008.

/s/ DELOITTE & TOUCHE LLP

Honolulu, Hawaii
March 30, 2009

EX-23.2

Exhibit 23.2

CONSENT OF INDEPENDENT AUDITORS

We consent to the incorporation by reference in Registration Statements Nos. 333-133898, 333-121705, 333-119808, and 333-112932 on Form S-8, Amendment No. 1 to Registration Statement No. 333-150244 on Form S-3, and Amendment No. 2 to Registration Statement No. 333-153203 on Form S-3 of Maui Land & Pineapple Company, Inc. of our report dated March 30, 2009, relating to the consolidated financial statements of Kapalua Bay Holdings, LLC (which report expresses an unqualified opinion and includes an explanatory paragraph relating to changes in accounting for assessing the continuing investment requirements for sales of condominiums), appearing in this Annual Report on Form 10-K of Maui Land & Pineapple Company, Inc. for the year ended December 31, 2008.

/s/ DELOITTE & TOUCHE LLP

Honolulu, Hawaii
March 30, 2009

EX-23.3

Exhibit 23.3

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

We hereby consent to the incorporation by reference in the Registration Statement on Form S-3 (Nos.333-150244 and 333-153203) and Form S-8 (Nos. 333-112932, 333-119808, 333-121705, and 333-133898) of Maui Land & Pineapple Company, Inc. of our report dated March 31, 2008 relating to the financial statements of W2005 Kapalua/Gengate Hotel Holdings, LLC, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP

Fort Lauderdale, Florida

March 30, 2009

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Robert I. Webber, certify that:

1.I have reviewed this Annual Report on Form 10-K of Maui Land & Pineapple Company, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:March 30, 2009

	/s/ Robert I. Webber
Name:	Robert I. Webber
Title:	President & Chief Executive Officer
	(Principal Executive Officer and Principal Financial Officer)

EX-32.1

Exhibit 32.1

The following certifications are being furnished solely to accompany the Report pursuant to 18 U.S.C. § 1350 and in accordance with SEC Release No. 33-8238.  These certifications shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall be incorporated by reference in any filing of the Company under the Securities Act of 1933, as amended, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

In connection with the Annual Report of Maui Land & Pineapple Company, Inc. (the “Company”) on Form 10-k for the year ended December 31, 2007 as filed with the Securities and Exchange Commission (the “Report”), I, Robert I. Webber, the President & Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Robert I. Webber

Robert I. Webber

President & Chief Executive Officer

(Principal Executive Officer and Principal Financial Officer)

March 30, 2009

Date

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-99

Exhibit 99

Kapalua Bay Holdings, LLC and Subsidiary

(A Delaware Limited Liability Company)

Consolidated Financial Statements as of December 31, 2008 and 2007, and for the Years Ended December 31, 2008, 2007, and 2006, and Independent Auditors’ Report

INDEPENDENT AUDITORS’ REPORT

To the Members of
Kapalua Bay Holdings, LLC:

We have audited the accompanying consolidated balance sheets of Kapalua Bay Holdings, LLC and subsidiary (a Delaware limited liability company) (the “Company”) as of December 31, 2008 and 2007, and the related consolidated statements of operations, members’ capital, and cash flows for the years ended December 31, 2008, 2007, and 2006. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Kapalua Bay Holdings, LLC and subsidiary as of December 31, 2008 and 2007, and the results of its operations and its cash flows for the years ended December 31, 2008, 2007, and 2006, in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 2 to the consolidated financial statements, the Company adopted the provisions of the Emerging Issues Task Force of the Financial Accounting Standards Board Issue No. 06-8, Applicability of the Assessment of a Buyer’s Continuing Investment under FASB Statement No. 66 for Sales of Condominiums, on January 1, 2008.

/s/ DELOITTE & TOUCHE LLP

Honolulu, Hawaii

March 30, 2009

KAPALUA BAY HOLDINGS, LLC AND SUBSIDIARY

(A Delaware Limited Liability Company)

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2008 AND 2007

	2008			2007
ASSETS
CASH AND CASH EQUIVALENTS	$	500,518		$	1,719,440
RESTRICTED CASH	8,687,745			8,861,321
CONTRACT RECEIVABLES — Net of deposits	156,846,187			75,259,974
OTHER ASSETS	1,193,579			544,688
PROPERTY — Net:
Buildings, other improvements, and equipment	4,081,373			2,995,463
Less accumulated depreciation and amortization	(1,347,889		)	(310,510		)
Property — net	2,733,484			2,684,953
PROJECT DEVELOPMENT COSTS	358,413,395			201,097,564
TOTAL	$	528,374,908		$	290,167,940
LIABILITIES AND MEMBERS’ CAPITAL
LIABILITIES:
Accounts payable, accrued expenses, and other liabilities	$	40,549,704		$	36,680,761
Contract retainage payable	21,941,292			13,668,090
Insurance premium obligations	—			1,714,872
Construction loan and notes payable	279,317,788			85,000,000
Total liabilities	341,808,784			137,063,723
COMMITMENTS AND CONTINGENCIES (Note 10)
MEMBERS’ CAPITAL	186,566,124			153,104,217
TOTAL	$	528,374,908		$	290,167,940

See notes to consolidated financial statements.

2

KAPALUA BAY HOLDINGS, LLC AND SUBSIDIARY

(A Delaware Limited Liability Company)

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2008, 2007, AND 2006

	2008		2007		2006
REVENUES:
Real estate	$	115,507,171	$	120,196,959	$	—
Other income	6,711,132		1,032,467		61,578
Total revenues	122,218,303		121,229,426		61,578
COSTS AND EXPENSES:
Real estate cost of revenues	73,714,805		79,242,798		—
Sales and marketing	15,588,636		14,552,178		9,658,812
General and administrative	1,689,698		864,487		665,509
Total costs and expenses	90,993,139		94,659,463		10,324,321
INCOME (LOSS) FROM CONTINUING OPERATIONS	31,225,164		26,569,963		(10,262,743		)
LOSS FROM DISCONTINUED OPERATIONS	—		—		(221,142		)
NET INCOME (LOSS)	$	31,225,164	$	26,569,963	$	(10,483,885	)

See notes to consolidated financial statements.

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KAPALUA BAY HOLDINGS, LLC AND SUBSIDIARY

(A Delaware Limited Liability Company)

CONSOLIDATED STATEMENTS OF MEMBERS’ CAPITAL

FOR THE YEARS ENDED DECEMBER 31, 2008, 2007, AND 2006

							ER Kapalua
	MLP KB			MH Kapalua			Investors
	Partner, LLC			Venture, LLC			Fund, LLC			Total
BALANCE — January 1, 2006	$	24,491,821		$	16,277,881		$	7,137,299		$	47,907,001
Capital contributions:
Cash	11,734,763			7,823,177			3,451,401			23,009,341
In-kind	225,000			100,000			—			325,000
Total capital contributions	11,959,763			7,923,177			3,451,401			23,334,341
2006 net loss	(5,346,781		)	(3,564,521		)	(1,572,583		)	(10,483,885		)
BALANCE — December 31, 2006	31,104,803			20,636,537			9,016,117			60,757,457
Capital contributions:
Cash	33,217,997			22,688,800			9,770,000			65,676,797
In-kind	—			100,000			—			100,000
Total capital contributions	33,217,997			22,788,800			9,770,000			65,776,797
2007 net income	13,550,681			9,033,787			3,985,495			26,569,963
BALANCE — December 31, 2007	77,873,481			52,459,124			22,771,612			153,104,217
Cumulative impact of adoption of EITF Issue No. 06-8 (Note 2)	(6,389,131		)	(4,259,421		)	(1,879,157		)	(12,527,709		)
Capital contributions:
Cash	7,756,040			4,627,224			2,281,188			14,664,452
In-kind	—			100,000			—			100,000
Total capital contributions	7,756,040			4,727,224			2,281,188			14,764,452
2008 net income	15,924,833			10,616,556			4,683,775			31,225,164
BALANCE — December 31, 2008	$	95,165,223		$	63,543,483		$	27,857,418		$	186,566,124

See notes to consolidated financial statements.

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KAPALUA BAY HOLDINGS, LLC AND SUBSIDIARY

(A Delaware Limited Liability Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2008, 2007, AND 2006

	2008			2007			2006
OPERATING ACTIVITIES:
Net income (loss)	$	31,225,164		$	26,569,963		$	(10,483,885	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization	1,037,379			310,510			548,944
Changes in operating assets and liabilities:
Accounts receivable — net	—			—			1,298,631
Other assets	(648,891		)	(531,522		)	454,061
Restricted cash	173,576			21,355,325			(25,266,646		)
Project development costs	(125,520,274		)	(67,456,187		)	(53,365,251		)
Customer deposits	—			—			(714,056		)
Contract retainage payable	8,273,202			11,494,070			2,174,020
Accounts payable, accrued expenses, and other liabilities	3,850,051			8,950,966			20,853,225
Contract receivables (net of deposits)	(115,647,404		)	(75,259,974		)	—
Deferred revenue	—			(25,266,646		)	25,266,646
Net cash used in operating activities	(197,257,197		)	(99,833,495		)	(39,234,311		)
INVESTING ACTIVITIES:
Purchases of property	(246,491		)	(2,995,463		)	—
Funding of insurance collateral account	—			(3,712,500		)	(618,750		)
Net cash used in investing activities	(246,491		)	(6,707,963		)	(618,750		)
FINANCING ACTIVITIES:
Proceeds from construction loan and notes payable	187,362,570			43,410,921			47,016,104
Payments on construction loan and notes payable	(4,027,384		)	—			(34,920,124		)
Members’ capital contributions	14,664,452			65,676,797			23,009,341
Proceeds from insurance premium obligations	—			2,719,036			4,682,094
Payments on insurance premium obligations	(1,714,872		)	(4,135,264		)	—
Net cash provided by financing activities	196,284,766			107,671,490			39,787,415
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	(1,218,922		)	1,130,032			(65,646		)
CASH AND CASH EQUIVALENTS:
Beginning of year	1,719,440			589,408			655,054
End of year	$	500,518		$	1,719,440		$	589,408
							(Continued		)

5

KAPALUA BAY HOLDINGS, LLC AND SUBSIDIARY

(A Delaware Limited Liability Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2008, 2007, AND 2006

	2008		2007		2006
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION — Cash paid for interest capitalized	$	—	$	5,563,394	$	3,249,199
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Capitalized interest added into construction loan and notes payable	$	10,982,602	$	—	$	—
Members’ capital contributions for services	$	100,000	$	100,000	$	325,000
Payments on insurance premium obligations by an affiliate	$	—	$	844,478	$	706,516
Reclassification of land to project development costs	$	—	$	24,590,000	$	—
Payments to fund collateral account paid by an affiliate	$	—	$	—	$	618,750
See notes to consolidated financial statements.					(Concluded		)

6

KAPALUA BAY HOLDINGS, LLC AND SUBSIDIARY

(A Delaware Limited Liability Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2008 AND 2007, AND FOR THE YEARS ENDED
DECEMBER 31, 2008, 2007, AND 2006

1.ORGANIZATION AND PURCHASE TRANSACTION

Kapalua Bay Holdings, LLC (“Bay Holdings”) was formed on August 31, 2004, as a Delaware limited liability company whose members are MLP KB Partner, LLC, an affiliate of Maui Land & Pineapple Company, Inc. (MLP); MH Kapalua Venture, LLC, an affiliate of Marriott International (“Marriott”); and ER Kapalua Investors Fund, LLC, an affiliate of Exclusive Resorts (“Exclusive Resorts”). Bay Holdings formed a wholly owned limited liability company, Kapalua Bay LLC (“Kapalua Bay”).

On August 31, 2004, Kapalua Bay completed the purchase of the leasehold interest in the land (“ground lease”) and hotel improvements of the Kapalua Bay Hotel (KBH) from YCP Kapalua L.P. and YCP Kapalua Operator Inc. (collectively, YCP) for $48.3 million. The KBH was located in Lahaina, Maui, and had 196 oceanfront rooms. MLP was the lessor under the ground lease with YCP. Bay Holdings operated the hotel and adjacent retail shops (“Shops”) for approximately 19 months and were closed for business in April 2006 (see Note 11). During this 19-month period, Bay Holdings prepared the development plans, obtained the required governmental approvals, and prepared marketing and sales plans. During 2006, the hotel and shops were demolished, and, in April 2006, Bay Holdings began to redevelop the site and started to construct 146 whole and fractional ownership residential units for sale to the public (the “Project”).

The purchase price of $48,300,000 was allocated as follows: $2,635,000 to the hotel improvements (including furniture and equipment) and $45,665,000 to development rights (project development costs on the balance sheet). The fair value of the hotel improvements (and the Shops’ improvements discussed below) considered Bay Holdings’ plan to demolish the improvements within two years. The fair value was based on the present value of the hotel’s net operating income (cash flows). The development rights represent the costs to secure the Project site and enable Bay Holdings’ development of the luxury residential units. The fair values of the hotel improvements and development rights were based on an independent appraisal.

In connection with the formation of Bay Holdings and Kapalua Bay, MLP contributed $500,000 of cash to Bay Holdings and contributed to Kapalua Bay (1) its lessor’s interest under the ground lease, (2) its fee interest in the 21-acre land parcel underlying the KBH (ground lease concurrently canceled), and (3) its rights and interests as landlord of the Shops, including the retail leases. The Shops is a retail complex located adjacent to the KBH, and has approximately 22,000 square feet of gross leasable area. In 2006, the Shops’ improvements were demolished, and Bay Holdings began construction of an ocean-side spa and beach club on the site. MLP will purchase the spa and beach club at Bay Holdings’ actual construction costs. The members (owners) valued these nonmonetary contributions at $25 million through arms-length negotiations, of which $24.59 million was allocated to the land and $410,000 was allocated to the Shops based on an independent appraisal. In exchange for its $25.5 million contribution to Bay Holdings and Kapalua Bay, MLP received 51% of the outstanding membership interests of Bay Holdings. Marriott contributed $17 million of cash to Bay Holdings for 34% of the outstanding membership interests in Bay Holdings, and Exclusive Resorts contributed $7.5 million of cash to Bay Holdings for 15% of the outstanding membership interests in Bay Holdings.

7

In connection with the transaction, Kapalua Bay secured a $45 million credit agreement with two lenders. The credit agreement had an initial term of two years and was secured by a mortgage on the hotel and other improvements. Kapalua Bay drew down $26 million under the credit agreement and, with the cash contributions made by the members, concluded the purchase of the hotel and other improvements. In July 2006, Bay Holdings entered into a construction loan agreement with Lehman Brothers Holdings Inc. (“Lehman”). Upon closing of the loan, the lender disbursed an initial advance of $40.1 million, which was used to repay the original credit agreement. In September 2008, Lehman filed for bankruptcy and ceased funding under the construction loan agreement. In order to provide the continuing construction financing as required under the construction loan agreement, the Syndicate Lenders and Swedbank continued to provide funding (see Note 6). In addition, two of Bay Holdings’ members, MLP and Marriott, agreed to advance funds to Bay Holdings at an interest rate of 16%. In February 2009, Bay Holdings, Lehman, the Syndicate Lenders, Swedbank, and Marriott entered into an Amended and Restated Construction Loan Agreement (“Amended Loan Agreement”). Under the terms of the Amended Loan Agreement, the maximum amount that Bay Holdings may borrow, including amounts previously funded under the original Construction Loan Agreement is $354.5 million (see Note 6).

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting — Bay Holdings’ policy is to prepare its financial statements using the accrual basis of accounting.

Principles of Consolidation — The accompanying consolidated financial statements include the accounts of Bay Holdings and its wholly owned subsidiary. All significant intercompany balances and transactions have been eliminated in consolidation.

Statement of Cash Flows— Expenditures relating to the development and construction of whole and fractional ownership residential units for sale to the public are reflected as “operating activities.”

Use of Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Future actual amounts could differ from those estimates.

Cash and Cash Equivalents — Cash and cash equivalents include cash and liquid investments with an original maturity of three months or less from the date acquired. The majority of cash and cash equivalents are held at major commercial banks.

Restricted Cash — Restricted cash principally includes customer sales deposits and cash held at an intermediary that serves as collateral for a Bay Holdings’ insurance policy.

Contract Receivables — Contract receivables represent amounts recognized as revenues to date less deposits received, which is due and collectible upon closing of the whole and fractional units.

Concentration of Credit Risk — The financial instruments that potentially expose Bay Holdings to concentrations of credit risk consist primarily of cash deposits. Bay Holdings maintains portions of its cash in bank deposit accounts which, at times, may exceed federally insured limits. Management believes that Bay Holdings is not exposed to any significant credit risk related to cash.

8

Property— The contributed land and Shops’ improvements, and the acquired hotel improvements, were stated at their fair values (acquisition costs) at the date of acquisition (see Note 1). Subsequent additions of property and equipment, consisting primarily of a sales office, are recorded at acquisition costs. Major renewals and betterments are capitalized, while expenditures for maintenance and repairs are charged to operations. Depreciation is computed using the straight-line method over the sales office’s estimated useful life of approximately three years.

Long-Lived Assets — Long-lived assets held and used by Bay Holdings include the sales office building, improvements, and equipment, and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When such events or changes occur, an estimate of the future cash flows expected to result from the use of the assets and their eventual disposition is made. If the sum of such expected future cash flows (undiscounted and without interest charges) is less than the carrying amount of the asset, an impairment loss is recognized in an amount by which the asset’s net book value exceeds its fair value.

Project Development Costs— Project development costs relate to the planned Project. Costs include the acquisition of the development rights for the Project site, planning and design costs, interest and real property taxes, and development and construction costs incurred to develop the Project.

Project development costs are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When such events or changes occur, an estimate of the future cash flows expected to result from the use of the assets and their eventual disposition is made. If the sum of such expected future cash flows (undiscounted and without interest charges) is less than the carrying amount of the asset, an impairment loss is recognized in an amount by which the assets’ net book values exceed their fair value. Bay Holdings has evaluated its project development costs for impairment; however, no impairment charges were recorded as a result of this process. These asset impairment loss analyses require management to make assumptions and apply considerable judgments to, among others, estimates of the timing and amount of future cash flows, expected useful lives of the assets, uncertainty about future events, including changes in economic conditions, changes in operating performance, changes in the use of the assets, and ongoing cost of maintenance and improvements of the assets, and thus, the accounting estimates may change from period to period. If management uses different assumptions or if different conditions occur in future periods, Bay Holdings’ financial condition or its future operating results could be materially impacted.

Deferred Financing Costs— Loan fees and other costs are being capitalized as part of project development costs.

Revenue Recognition — Sales of units (less estimated cancellations) are recognized as real estate revenues in the period in which sufficient cash has been received, collection of the balance is reasonably assured, construction is beyond a preliminary stage and aggregated sales proceeds and costs can be reasonably estimated, and when sufficient units have been sold to assure that the entire property will not revert to rental property. Beginning in 2007, the Project had progressed beyond the preliminary stage and Bay Holdings met the criteria to begin recognizing sales using the percentage-of-completion method.

Real estate revenues are reduced by estimated contract cancellations which represent Bay Holdings’ best estimate of future defaults on sales contracts that have been entered into. Deposits received on canceled contracts are recognized as other income in the consolidated statements of operations.

Interest Capitalization — Interest costs are capitalized during the development period of the Project.

9

Sales and Marketing — Sales and marketing activities are expensed as incurred. Costs incurred to sell the units are capitalized if they are expected to be recovered from the sale of the units and are incurred for tangible assets that are used directly throughout the selling period to aid in the sale of the Project. Other costs incurred to sell the units are also capitalized if they are directly associated with, and their recovery is reasonably expected from, sales that will be accounted for using the percentage-of-completion method.

Income Taxes — Bay Holdings is not subject to federal and state income taxes. The distributive shares of income or loss and other tax attributes from Bay Holdings are reportable by the individual members in their separate tax returns; accordingly, Bay Holdings’ financial statements do not include a provision for income taxes.

The Company files federal and state income tax returns in jurisdictions with varying statutes of limitations. The 2005 through 2008 tax years remain subject to examination by federal and state authorities.

Recently Issued Accounting Pronouncements — As of January 1, 2008, the Bay Holdings adopted the provisions of the Emerging Issues Task Force (EITF) of the Financial Accounting Standards Board (FASB) Issue No. 06-8, Applicability of the Assessment of a Buyer’s Continuing Investment under FASB Statement No. 66 for Sales of Condominiums. EITF Issue No. 06-8 requires condominium sales to meet the continuing investment criterion in FASB Statement No.66, Accounting for Sales of Real Estate, in order for profit to be recognized under the percentage-of-completion method. For sales through 2007 that do not meet the continuing investment criteria in FASB Statement No. 66, EITF Issue No. 06-8 requires that such transactions be accounted for using the deposit method with profits being deferred until the sales qualify for percentage-of-completion, or full accrual accounting in later periods. The cumulative effect for the Bay Holdings of applying EITF Issue No. 06-8 was $12,527,709 and is reported as a reduction to members’ capital, a reduction to contract receivables of $34,061,191, and an increase to project development costs of $21,533,482 as of January 1, 2008. As of December 31, 2008, these sales qualified for percentage-of-completion and are no longer deferred.

In September 2006, the FASB issued FASB Statement No. 157, Fair Value Measurements, which defines fair value, establishes guidelines for measuring fair value, and expands disclosures regarding fair value measurements. FASB Statement No. 157 does not require any new fair value measurements, but rather eliminates inconsistencies in guidance found in various prior accounting pronouncements. FASB Statement No. 157 is effective for Bay Holdings’ financial assets and liabilities on January 1, 2008, and its nonfinancial assets and liabilities on January 1, 2009. FASB Statement No. 157 is not expected to significantly impact the manner in which Bay Holdings determines the fair value of its assets and liabilities, but may require certain additional disclosures.

In February 2007, the FASB issued FASB Statement No. 159, The Fair Value Option for Financial Assets and Financial Liabilities — Including an amendment of FASB Statement No. 115. FASB Statement No. 159 permits entities to measure many financial instruments and certain other assets and liabilities at fair value on an instrument-by-instrument basis. Bay Holdings did not elect the fair value option for any of its existing eligible financial instruments upon adoption of FASB Statement No. 159, and has not determined whether it will elect this option for any new financial instruments acquired in the future.

In July 2006, the FASB released FASB Interpretation (FIN) No. 48, Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement 109. FIN No. 48 provides guidance for how uncertain tax positions should be recognized, measured, presented, and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken in the course of preparing Bay

10

Holdings’ tax returns to determine whether tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax benefits of positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax expense in the current year. Bay Holdings adopted FIN 48 effective January 1, 2007, and it was applied to all open tax years as of the effective date. The adoption of FIN 48 resulted in additional disclosures, but had no impact on Bay Holdings’ consolidated financial statements.

Reclassification — Certain liabilities related to payable to affiliates included in the consolidated balance sheet as of December 31, 2007, were reclassified to accounts payable, accrued expenses, and other liabilities to conform to the presentation in the consolidated balance sheet as of December 31, 2008.

3.ALLOCATION OF NET INCOME (LOSS) AND CASH DISTRIBUTIONS

Net losses are allocated to the members based on their membership interests: MLP — 51%, Marriott — 34%, and Exclusive Resorts — 15%. Net income (loss) is allocated based on the estimated distributions of “Net Cash Flow” (as defined in the agreement) to the members. The cash distributions are based on each member’s “Priority Contribution Account” (PCA), as defined in the agreement, and MLP’s “Subordinated Contribution Account” (SCA), as defined in the agreement. Under the agreement, only 50% of MLP’s $25 million nonmonetary capital contribution was considered PCA. The initial PCA and SCA balances are as follows:

	PCA		SCA
MLP	$	13,000,000	$	12,500,000
Marriott	17,000,000		—
Exclusive Resorts	7,500,000		—
	$	37,500,000	$	12,500,000

The distributions of net cash flow to the members shall be made in the following priorities:

·A specified percentage return on PCA balances

·Reduce PCA balances to zero

·A specified percentage return on SCA balances

·Reduce SCA balance to zero

·Pro rata in proportion to membership interests

4.MANAGEMENT AGREEMENTS

Bay Holdings has a Development Management Agreement with Marriott (the “Development Manager”) over the term of the Project. Under the agreement, the Development Manager is conducting activities to support the planning, designing, construction, furnishing, and equipping of the Project until its completion. As part of the Development Management Agreement, the Development Manager makes payments directly to vendors and charges amounts back to Bay Holdings on a monthly basis. Accordingly, amounts due to the Development Manager related to this agreement are included in accounts payable, accrued expenses, and other liabilities in the consolidated balance sheets and amounted to $3,061,000 and $24,868,000 at December 31, 2008 and 2007, respectively. Bay Holdings pays to the Development Manager a fee in the amount of $2,700,000 in equal installments of $54,000 per month. The development management fee was $648,000 in 2008, 2007, and 2006. Upon successful completion of the Project, the Development Manager is entitled to a one-time incentive fee of $300,000 and a performance fee equal to 15% of the cost savings of the Project, as defined in the agreement.

11

MLP is the managing member of Bay Holdings and is responsible for managing its business affairs. Under the Limited Liability Company (LLC) agreement, “ordinary major decisions” (as defined in the agreement) require the approval of at least 75% of the membership interests, and “extraordinary major decisions” (as defined in the agreement) require the approval of 100% of the membership interests. The LLC agreement also contains provisions to deal with “deadlock” situations.

Kapalua Bay (“Owner”) had a Hotel Management Agreement with KB Hotel Operator Inc. (“Operator”), an affiliate of Marriott. The initial term of the agreement was three years, and Operator was responsible for the operation and management of the hotel. Hotel personnel were employees of Operator, and Owner was responsible for all hotel costs and expenses. Operator received a base management fee equal to 3% of gross revenues (as defined in the agreement), and an incentive management fee based on operating profit (as defined in the agreement). The base management fee for 2006 was $217,000, and there was an incentive management fee of $31,000 in 2006. Operator also billed Owner $25,000 in 2006 for chain services (e.g., reservations and advertising) and other services. Owner was also required to establish a cash reserve fund equal to 1% of gross revenues for the replacement of furniture, fixtures, and equipment. In 2006, Owner exercised its right to terminate the agreement in conjunction with the closure of the hotel to commence construction of the Project.

Kapalua Land Company, Ltd. (KLC), a subsidiary of MLP, had an agreement to manage the Shops for an initial term of four years. Owner reimbursed KLC $26,000 in 2006 for KLC’s cost incurred to manage the Shops. In 2006, Owner exercised its right to terminate the agreement in conjunction with the closure of the Shops to commence construction of the Project.

5.OTHER AGREEMENTS WITH MEMBERS

In 2006, Bay Holdings entered into an agreement to sell a portion of the whole ownership residential units to Exclusive Resorts. The agreement was amended in February 2009 to reduce the number of units sold to Exclusive Resorts and the total contract price to $57,973,000. Exclusive Resorts provided deposits of $20,844,000 to Bay Holdings under the original agreement. These deposits will be applied to the purchase of the new units and the balance is due in cash upon closing in 2009.

In 2006, Bay Holdings entered into agreements with MLP and Marriott for the marketing and sale of whole and fractional ownership residential units in the Project (excluding units to be sold to Exclusive Resorts). MLP and Marriott receive commission fees and additional fees based on percentages of the gross sales price of each whole ownership residential unit sold through MLP and Marriott’s marketing and sales efforts. Bay Holdings paid $173,000, $98,000, and $341,000 to MLP in 2008, 2007, and 2006, respectively, and $356,000, $1,663,000, and $1,679,000 to Marriott in 2008, 2007, and 2006, respectively, under the whole ownership marketing and sales agreements. In 2008 and 2007, Bay Holdings incurred marketing and sales fees of $3,392,000 and $2,318,000, respectively, under the fractional ownership residential unit marketing and sales agreement with Marriott. Because the fees will not be paid until the units close in 2009, such amounts due to affiliates are included in accounts payable, accrued expenses, and other liabilities in the consolidated balance sheets and amounted to $7,613,000 and $6,109,000 at December 31, 2008 and 2007, respectively.

In 2006, Bay Holdings entered into agreements with MLP to sell the spa, beach club improvements, and the sundry store to MLP upon completion of construction at Bay Holdings’ actual construction cost.

12

Bay Holdings had an agreement with MLP for entitlement services relating to the receipt of governmental permits and authorizations required for the Project. In 2006, Bay Holdings received entitlement services from MLP with an agreed-upon value of $225,000, which was recorded as project development costs and a corresponding credit (in lieu of cash payment) to the members’ capital account of MLP KB Partner, LLC.

Bay Holdings has a technical services agreement with Marriott for design and construction services relating to the whole and fractional ownership residential units and ancillary improvements. In 2008, 2007, and 2006, Bay Holdings received services from Marriott with an agreed-upon value of $100,000 each year, which was recorded as project development costs and a corresponding credit (in lieu of cash payment) to the members’ capital account of MH Kapalua Venture, LLC.

6.FINANCING ARRANGEMENTS

Construction loan and notes payable at December 31, 2008 and 2007, consisted for the following (interest rates represent the rates at December 31):

	2008		2007
Construction loan payable — 3.6%—12.85% and 6.925%—16.175%	$	229,162,889	$	85,000,000
MLP member note payable — 16%	3,749,226		—
Marriott member note payable — 16%	2,499,484		—
Marriott bridge loan payable — 16%	43,906,189		—
Total	$	279,317,788	$	85,000,000

Bay Holdings had a $45 million bank credit agreement, which was secured by a mortgage on the hotel and other improvements. The maximum loan commitment was adjusted to $42.3 million during 2005, and the outstanding loan balance was $29.5 million at December 31, 2005.

Bay Holdings refinanced the loan agreement in July 2006 with Lehman, a third-party lender, prior to the end of the term of the loan. The construction loan agreement (the “Construction Loan Agreement”) was for the lesser of $370 million or 61.6% of the total projected cost of the Project (the “Loan”). Upon closing of the Loan, the lender disbursed an initial advance of $40.1 million to Bay Holdings. In January 2007, Lehman and Bay Holdings entered into a Note Splitter and Reaffirmation Agreement wherein the original construction loan agreement was split into six separate promissory notes: (1) Note A-1 for $30 million, (2) Note A-2 for $25 million, (3) Note A-3 for $25 million, (4) Note A-4 for $15 million, (5) Note A-5 for $255 million, and (6) Note B for $20 million. Notes A-1, A-2, and A-3 were assigned to three different banks (the “Syndicate Lenders”), Notes A-4 and A-5 were retained by Lehman, and Note B was assigned to a different bank (“Swedbank”) as part of a repurchase agreement. During 2007, Bay Holdings borrowed an additional $43.4 million for a total advance of $85 million outstanding as of December 31, 2007. Interest was accruing on the Loan at a floating rate equal to the one-month LIBOR, plus 2.2%. All principal and interest due on the Loan was due and payable in full on August 1, 2009.

In September 2008, Lehman filed for bankruptcy and ceased funding under the construction loan agreement (at which point Swedbank retained all rights and obligatons under Note B). In order to provide the continuing construction financing as required under the construction loan agreement, the Syndicate Lenders and Swedbank continued to provide funding. In addition, two of Bay Holdings members, MLP and Marriott, agreed to advance funds to Bay Holdings at an interest rate of 16% under notes payable and a bridge loan payable.

13

On February 11, 2009, Bay Holdings, Lehman, the Syndicate Lenders, Swedbank, and Marriott entered into an Amended and Restated Construction Loan Agreement. Under the terms of the Amended Loan Agreement, the maximum amount that Bay Holdings may borrow, including amounts previously funded under the original construction loan agreement is $354.5 million.

Under the terms of the Amended Loan Agreement, the original loan was modified by creating the following tranches of notes: (1) a new facility A in the amount of $120.1 million consisting of $35 million to be funded by Lehman, $20.1 million to be funded by the Syndicate Lenders pursuant to existing obligations under the original Construction Loan Agreement, $55 million to be funded by the Syndicate Lenders pursuant to new obligations, and $10 million to be funded by Marriott; (2) a new facility B-1 in the amount of $28 million consisting of $16.2 million of advances from the Syndicate Lenders following Lehman’s bankruptcy filing, $10 million of loans previously advanced by Bay Holdings’ members following Lehman’s bankruptcy filing, and $1.8 million of interest advances by Lehman following Lehman’s bankruptcy filing; (3) a new facility B-2 in the amount of $4.1 million consisting of advances made by Swedbank under Note B following Lehman’s bankruptcy filing; (4) a new facility C-1 in the amount of $191.4 million consisting of the amounts outstanding under Notes A-1 through A-5 prior to Lehman’s bankruptcy filing; and (5) a new facility C-2 in the amount of $10.9 million consisting of the balance of Note B prior to Lehman’s bankruptcy filing.

Interest accrues on the note facilities as follows: (1) facility A at a floating rate equal to the one-month LIBOR, plus 5%; (2) facilities B-1, B-2, and C-1 at a floating rate equal to the one-month LIBOR, plus 1.7%; and (3) facility C-2 at a floating rate equal to the one-month LIBOR, plus 10.95%.

The maturity dates of the facilities are as follows: (1) facility A — February 11, 2010, and (2) facilities B-1, B-2, C-1, and C-2 — August 11, 2011. Bay Holdings may prepay the loans upon payment of certain costs and fees, as set forth in the Amended Loan Agreement.

The Amended Loan Agreement is collateralized by the Project’s assets, including the fee simple interest in the land owned by Bay Holdings, the adjacent spa parcel owned by MLP, and all of the sales contracts.

MLP, Marriott, and ER Kapalua Investors Fund, LLC have guaranteed to the lender completion of the Project and each member’s pro-rata share of costs and losses incurred by the lender as a result of the occurrence of specified triggering events during the term of the Construction Loan Agreement. The members’ guarantee to the lender does not include payment in full of the Loan.

Interest costs incurred during 2008, 2007, and 2006 were $10,983,000, $5,563,000, and $2,763,000, respectively, and were capitalized as project development costs. The Construction Loan Agreement contains covenants that, among other matters, restrict (or require prior approval by the lenders of) additional borrowings, guarantees, liens, transfers, changes in the provisions of existing agreements, and leases.

In 2006, Bay Holdings entered into an agreement to finance premiums for its owner-controlled insurance policy. In 2007 and 2006, premiums of $2,719,000 and $4,682,000, respectively, included in project development costs were financed through a third-party lender and recorded as insurance premium obligations. Future minimum payments under the agreements were paid through 2008 and accrued interest at 6.363%.

14

7.LEASES

Lessor — Bay Holdings leased space to retail tenants in the hotel and Shops, and also had a lease agreement with a concessionaire at the hotel. These operating leases provided for minimum rents and percentage rents based on revenues. For 2006, minimum rents were $244,000, and percentage rents were $268,000. Rental income received from MLP totaled $112,000 in 2006. The hotel and Shops were demolished in 2006 in conjunction with the construction of the Project. In January 2006, Bay Holdings terminated an existing lease with a tenant in the hotel, which required termination payments to the tenant of approximately $87,000 in 2006. At December 31, 2008 and 2007, there were no outstanding operating lease agreements.

Lessee — Bay Holdings leased equipment under operating lease agreements. Rent expense for 2006 was $52,000 and, at December 31, 2008 and 2007, there were no outstanding operating lease agreements.

8.EMPLOYEE BENEFIT PLANS

Hotel employees were participants of a multiemployer defined benefit pension plan. The expense for 2006 relating to contributions to this plan was $16,000. There were no contributions made in 2008 and 2007.

Certain Bay Holdings’ employees are participants of a Marriott defined contribution plan. Matching employer contributions to the plan totaled $9,000 in 2006. There were no contributions made in 2008 and 2007.

9.DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

The construction loan payable has adjustable interest rates based on LIBOR or base rates and, accordingly, the carrying value approximates fair value at December 31, 2008 and 2007. The carrying value of Bay Holdings’ member notes payable and bridge loan payable approximates fair value at December 31, 2008.

10.COMMITMENTS AND CONTINGENCIES

Bay Holdings had commitments under signed sales contracts totaling approximately $314 million at December 31, 2008, which primarily relate to sales of the residential units.

In December 2006, construction was temporarily halted in two areas of the Project due to the discovery of ancient human remains. The authorities were notified and Bay Holdings worked with those agencies to determine the extent of the burials and the proper course of action. Construction continued on the unaffected areas, but was delayed in the affected areas. In 2007, Bay Holdings completed the excavation and reburial of the remains and continued with the Project as planned.

15

11.DISCONTINUED OPERATIONS

KBH was closed in April 2006 (see Note 1) and the results of operations of KBH have been presented as discontinued operations in the consolidated statements of operations. The results of the discontinued operations were as follows:

Operating revenues	$	6,803,014
Operating expenses	(7,024,156		)
Loss from discontinued operations	$	(221,142	)

* * * * * *

16

EX-99.1

Exhibit 99.1

W2005 Kapalua/Gengate Hotel Holdings, LLC

UNAUDITED Consolidated Financial Statements

As of December 31, 2008

W2005 Kapalua/Gengate Hotel Holdings, LLC

Index

	Page(s)
UNAUDITED Consolidated Financial Statements
UNAUDITED Balance Sheet	1
UNAUDITED Statement of Operations and Changes in Members’ Deficit	2
UNAUDITED Statement of Cash Flows	3
UNAUDITED Notes to Consolidated Financial Statements	4-12

W2005 Kapalua/Gengate Hotel Holdings, LLC

UNAUDITED Consolidated Balance Sheet

December 31, 2008

Assets
Current assets
Cash and cash equivalents	$	3,964,614
Restricted cash	3,047,043
Accounts receivable, net of allowance for doubtful accounts of $120,676	4,857,371
Due from related parties	635,734
Condo inventory held for sale	92,053,429
Inventories - hotel	742,912
Prepaid expenses and other current assets	171,558
Total current assets	105,472,661
Property and equipment, net	185,826,229
Deferred financing costs, net	500,564
Total assets	$	291,799,454
Liabilities and Members’ Deficit
Current liabilities
Accounts payable and accrued expenses	$	11,866,696
Due to related parties	935,394
Due to hotel operator	682,153
Advance deposits	6,654,779
Interest on long-term debt	6,401,387
Other liabilities	6,388,062
Total current liabilities	32,928,471
Long-term liabilities
Long-term debt	292,009,066
Commitments and contingencies (Note 7)
Members’ deficit	(33,138,083		)
Total liabilities and members’ deficit	$	291,799,454

The accompanying notes are an integral part of these consolidated financial statements.

1

W2005 Kapalua/Gengate Hotel Holdings, LLC

UNAUDITED Consolidated Statement of Operations and Changes in Members’ Deficit

For the Year Ended December 31, 2008

Revenues
Rooms	$	32,746,841
Food and beverage	24,307,230
Other hotel	8,212,272
Real estate revenue	70,672,318
Other revenue	3,460,522
Total revenues	139,399,183
Cost of sales	57,106,453
Impairment loss - condo inventory held for sale	13,041,538
Total cost of sales	70,147,991
Operating expenses
Hotel operations	39,052,060
General and administrative	17,618,102
Sales and marketing	9,035,931
Commission expense	9,623,094
COA fees	2,288,936
Property operation and maintenance	3,578,632
Property taxes	1,874,081
Management fees	2,967,272
Building fire and casualty insurance	1,317,034
Depreciation	9,403,600
Total operating expenses	96,758,742
Loss from operations	(27,507,550		)
Interest expense, net	19,977,958
Change in fair value of derivative financial instrument	4,412
Net loss	$	(47,489,920	)
Members’ capital, beginning of year	$	6,100,438
Members’ contribution	8,251,399
Net loss	(47,489,920		)
Members’ deficit, end of year	$	(33,138,083	)

The accompanying notes are an integral part of these consolidated financial statements.

2

W2005 Kapalua/Gengate Hotel Holdings, LLC

UNAUDITED Consolidated Statement of Cash Flows

For the Year Ended December 31, 2008

Cash flows from operating activities
Net loss	$	(47,489,920	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation	9,403,600
Amortization of deferred financing cost	2,292,171
Impairment loss - condo inventory held for sale	13,041,538
Change in fair value of derivative financial instrument	4,412
Changes in assets and liabilities
Accounts receivable, net	(3,751,611		)
Accounts receivable - Other	2,700,000
Condo inventory held for sale	56,539,001
Inventories - hotel	(381,903		)
Prepaid and other current assets	(24,237		)
Accounts payable and accrued expenses	(21,083,300		)
Due to related parties	(448,114		)
Due to hotel operator	276,112
Advance deposits	(374,374		)
Interest payable	2,315,024
Net cash provided by operating activities	13,018,399
Cash flows from investing activities
Additions to property and equipment	(27,159,400		)
Increase in restricted cash	95,335
Net cash used in investing activities	(27,064,065		)
Cash flows from financing activities
Cash contributions from members	8,251,399
Payment of financing costs	(227,175		)
Payment on capital leases	(79,332		)
Payment of long-term debt	(11,540,934		)
Proceeds from borrowings under long-term debt	14,914,037
Net cash provided by financing activities	11,317,995
Net decrease in cash and cash equivalents	(2,727,671		)
Cash and cash equivalents, beginning of year	6,692,285
Cash and cash equivalents, end of year	$	3,964,614
Supplemental disclosure of cash flow information
Cash paid for interest	$	16,273,029

The accompanying notes are an integral part of these consolidated financial statements.

3

W2005 Kapalua/Gengate Hotel Holdings, LLC

Notes to UNAUDITED Consolidated Financial Statements

1.Organization and Business

W2005 Kapalua/Gengate Hotel Holdings, LLC, a Delaware limited liability company (the “Company”), was formed on February 9, 2006 by and between Whitehall Street Global Real Estate Limited Partnership 2005; 51.4% (“Whitehall Street”), Whitehall Street Global Employee Fund 2005, LP; 13.6% (“Whitehall Employee Fund”), Gengate Kapalua Holdings, LLC; 35% (“GKH”) and Gengate Kapalua Holdings GP, LLC; 0% (“GHGP”), to acquire The Ritz-Carlton Kapalua, (the “Hotel”) located on the Island of Maui, Hawaii.  The Hotel is managed through an operating agreement (the “Management Agreement”) with the Ritz-Carlton Hotel Company, LLC (the “Hotel Operator”).

On March 27, 2007, MLP RCK LLC, a wholly owned subsidiary of Maui Land & Pineapple Company, Inc. (“MLPC”) acquired a 21.4286% interest in the Company.  As a consequence, initial members’ interest became:  Whitehall Street; 40.4234%, Whitehall Employee Fund; 10.648%, GKH; 27.5%, and GHGP; 0%.  Whitehall Street, Whitehall Employee Fund and GKH are designated as the Managing Members of the Company (together with MLPC and GHGP, the “Members”).  On December 15, 2007, the Company made a $12,000,000 capital call request to its Members and MLPC declined to fund its pro rata share of $2,571,432 (“MLPC Share”) .  Accordingly, on May 28, 2008, certain existing Members, through GENLB Kapalua LLC, a Delaware limited Liability Company, (“GENLB”), entered into a member interest purchase agreement whereby it agreed to contribute to the Company an amount equal to the MLPC Share.  In consideration, the Company issued a 5.47% interest to GENLB.  As a result of this transaction, MLPC’s interest in the Company was diluted to 15.96%.

Major decisions, as defined in the Third Amended and Restated Limited Liability Company Agreement (the “Company Agreement”), require the consent of either Whitehall Street or Whitehall Employee Fund, and either GKH or MLPC.

Allocation of Net Profit and Loss

Profits and losses are allocated pro rata among all Members in proportion to their percentage interests.

Distributions to Members

Distributions to Members are made pro rata in accordance with their relative percentage interests in the Company.  No distributions have been made to the Members since inception of the Company.

2.Liquidity

The weakening of macroeconomic conditions and vacation and travel industries, has adversely affected hotel market conditions and demand for purchases of condominiums.  It is expected this trend will continue into 2009 and further impact results of hotel operations and condominium sales.

For the year ended December 31, 2008, the company generated net cash inflows from operating activities of $13,018,399 but incurred a net loss of $47,489,920. At December 31, 2008, excluding condominium inventory held for sale of $92,053,429, the Company had a deficit in working capital of $19,509,239.

4

W2005 Kapalua/Gengate Hotel Holdings, LLC

Notes to UNAUDITED Consolidated Financial Statements

As discussed in Note 6:

1)The Company was granted certain modifications on its debt terms and conditions, providing for among other things, additional funding for hotel operating deficits, incremental interest reserves drawn from condominium sales proceeds, less restrictions on use of condominium proceeds and more liberal discretion regarding sales incentives and pricing.

2)On January 27, 2009, the Company exercised its option and requested a one (1) year extension on the maturity of its long-term debt that became due and payable on February 27, 2009.  The extension has not yet been granted.   Two (2)  additional one (1) year extensions are also available to the Company if i) a fee is paid, equal to .125% of the outstanding loan balance, ii) an aggregate cumulative sales threshold of $132 million has been achieved and iii) delivery of a certificate of  estoppel from the hotel operator that there are no events of default.

3)The Company has not funded interest payments on its long-term debt due March 9, 2009, which, upon notice from the lender, would constitute an event of default.

Although Management believes that it will be able to continue to fund the operating needs of the Company for a reasonable period of time with cash generated from operations, continued adverse market conditions could negatively impact the Company’s liquidity, thereby requiring additional financial support either through Member contributions or loans or other potential financing sources, such as debt or equity, to achieve working capital needs and achieve business objectives.   However, there can be no assurance that such additional financing will be available or, if available, that such financing can be obtained on terms satisfactory to the Company.  Based on the foregoing, there is substantial doubt about the Company’s ability to continue as a going concern.

3.         Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements include the accounts of W2005 Kapalua/Gengate Hotel Holdings, LLC and its wholly owned subsidiaries, W2005 Kapalua/Gengate Hotel Mezzanine, LLC (“W2005 Mezzanine”), and W2005 Kapalua/Gengate Hotel Realty, LLC, each a Delaware limited liability company. All significant intercompany transactions have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the balance sheet date and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Revenue Recognition

Hotel operating revenues are from room rentals, food and beverage sales, spa sales and retail merchandise sales.  Revenues are recorded as services are rendered or goods are provided.  Additionally, the Company collects sales, use, occupancy and similar taxes which are presented on a net basis (excluded from revenues) in the accompanying consolidated statement of operations. Amounts received in advance of guest stays are reflected as advance deposits in the accompanying balance sheet.  These advance deposits are recognized as revenue when the service is provided.  As of December 31, 2008, interest expense is net of $246,698 of interest income.

Real estate revenues are derived from the condo inventory held for sale (“condos”).  During 2008, the Company sold 33 of the total 107 condos.  Revenues are recorded, net of incentives, as the condos are closed and the title is transferred.

5

W2005 Kapalua/Gengate Hotel Holdings, LLC

Notes to UNAUDITED Consolidated Financial Statements

Fair Value of Financial Instruments

Financial instruments include cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued expenses, advance deposits and long-term obligations.  The carrying amounts of financial instruments other than long-term obligations approximate fair value due to their short term nature.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

Restricted Cash

Restricted cash represents amounts reserved for payment of real estate taxes, repairs, insurance and funding of furniture, fixture and equipment purchases.  These restrictions are required under the Mortgage Loan and by the Management Agreement.  In addition, at December 31, 2008 restricted cash includes a deposit on a condominium unit under contract of approximately $337,000.

Accounts Receivable

The Company records trade accounts receivable in the normal course of business related to the sale of products and services.  The Company does not charge interest on past due accounts receivable.  The allowance for doubtful accounts is based on review of specific accounts that have been identified as at risk for non-collection and prior collection history.  Write-offs are evaluated on a case-by-case basis.

During 2008, the Company extended seller financing totaling $538,000, in the form of mortgages representing 10% of the purchase price of two (2) condos sold.  The mortgages mature on July 29, 2009 and bear interest at an annual rate of 6%.  Total accrued interest over the life of the mortgage is due and payable upon maturity and at December 31, 2008 amounts to $13,898.

Concentration of Credit Risk

A significant portion of the Company’s cash and cash equivalents are maintained at various financial institutions in amounts that exceed federally insured limits.  The Company has not experienced any losses and believes it is not exposed to significant credit risk in this area.

Inventories

Hotel inventories consist of food, beverages and merchandise held for resale and operating supplies.  Amounts are valued on a first in first out basis.

Condos are valued at the lower of cost or fair market value and in 2008, the Company recorded an impairment loss totaling $13,041,537.  Condos are relieved to cost of sales, using the relative sales value method.  As of December 31, 2008, the total unsold inventory was $92,053,429.

During 2008, the Company was assessed Condominium Owner Association Fees totaling $2,288,936 on unsold condos.

6

W2005 Kapalua/Gengate Hotel Holdings, LLC

Notes to UNAUDITED Consolidated Financial Statements

Derivative Financial Instruments

As of December 31, 2008, the Company had an interest rate cap which is a derivative financial instrument.  This derivative is $0, and is recorded on the consolidated balance sheet at fair value.  The interest rate cap was not designated as a hedging instrument; therefore changes in the fair value of this instrument are recognized in the results of operations in the period that the change occurs.

Property and Equipment

Property and equipment are carried at cost, net of accumulated depreciation.  Routine repairs and maintenance are expensed as incurred.  Expenditures that improve the functionality of the related equipment or extend its useful life are capitalized.  When property and equipment are retired or otherwise disposed, the related gain or loss is included in the determination of income.  Depreciation is calculated on the straight-line method based on the following useful lives:

Land improvements	20 years
Buildings and improvements	15-39 years
Furniture, fixtures and equipment	3-7 years

Deferred Financing Costs

Costs incurred in conjunction with obtaining the debt instruments are included as deferred financing costs.  Deferred financing costs are amortized over the respective lives of the applicable debt issues on a straight-line basis, which approximates the effective interest method as a component of interest expense.

Long-lived Assets

The Company evaluates potential impairment of long-lived assets in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, which requires the Company to (a) recognize an impairment loss if the carrying amount of a long-lived asset is more than the value of its undiscounted projected cash flows and (b) measure an impairment loss as the difference between the carrying amount and fair value of the asset less cost of sales.  No impairments of long-lived assets occurred during the years ended December 31, 2008.

Income Taxes

The Company has elected to be a limited liability company for federal tax purposes.  Limited liability companies are not taxable entities under provisions of the Internal Revenue Code and, accordingly, the accompanying consolidated financial statements do not reflect a provision for federal or state income taxes.  The tax effects of the Company’s transactions are the responsibility of the Members.

7

W2005 Kapalua/Gengate Hotel Holdings, LLC

Notes to UNAUDITED Consolidated Financial Statements

4.Property and Equipment

Property and equipment consist of the following at December 31, 2008:

Land	$	20,908,777
Building and improvements	164,687,480
Furniture, fixtures and equipment	16,376,202
	201,972,459
Less accumulated depreciation	(16,146,231		)
Net property and equipment	$	185,826,229

Included in furniture, fixtures, and equipment is approximately $86,365 of equipment under capital leases where payments are due through 2009.

Depreciation expense for the year ended December 31, 2008 $9,403,600.

5.Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consist of the following at December 31, 2008:

Accounts payable	$	3,496,180
Accrued payroll, payroll taxes and benefits	2,607,203
Accrued sales, use and local taxes	491,574
Accrued other - Hotel	2,305,308
Other	2,966,431
Total	$	11,866,696

6.Long-Term Debt

Long-term debt at December 31, 2008 is as follows:

Luxury loan (a)	$	20,000,000
Mortgage loan (b)	260,159,066
MI FFE Loan (c)	5,000,000
Whitehall Loan (d)	6,850,000
	292,009,066
Less current maturities	—
	$	292,009,066

8

W2005 Kapalua/Gengate Hotel Holdings, LLC

Notes to UNAUDITED Consolidated Financial Statements

(a)On March 13, 2006, the Company entered into a $20,000,000 term loan agreement (the “Luxury Loan”) with Luxury Finance LLC, maturing on April 13, 2011.  The Luxury Loan bears interest at an annual rate equal to prime rate plus 350 basis points (4.695% at December 31, 2008).  On September 11, 2008, the Luxury Loan agreement was amended to include a mandatory interest repayment clause, whereby all accrued interest through June 1, 2009, is due and payable on such date.   As of December 31, 2008, total accrued interest on the Luxury Loan was $4,490,682.

(b)On March 27, 2007, the Company entered into a $271,700,000 loan (the “Lehman Loan”) with Lehman Brothers Holdings Inc (“Lehman”), primarily to: (i) refinance the outstanding balance of the loan provided by Lehman to acquire the Hotel, (ii) finance the hotel renovation and condominium conversion, (iii) acquire the Hotel land, which was subject to a long-term ground lease and (iv) make deposits into reserve fund accounts for renovation holdbacks, condominium conversion holdbacks, operating deficit holdbacks, marketing cost holdbacks, interest holdbacks and tax holdbacks.  The Lehman Loan matures on February 27, 2009 and may be extended for one (1) year, at the Company’s option and for two (2) additional periods of one (1) year each, also at the Company’s option and provided nominal fees are paid and certain condo sales thresholds are met.  On January 27, 2009, the Company exercised its first option and requested a one (1) year extension on maturity.  The extension has not yet been granted.  Interest on the Lehman Loan is payable monthly and on February 21, 2008 the Mortgage Loan was amended to increase the interest rate from prime plus 220 basis points to prime plus 300 basis points (4.195% at December 31, 2008).  The Company has not funded interest payments on its long-term debt due March 9, 2009, which, upon notice from the lender, would constitute an event of default.  The Company has assigned to Lehman all of its rights, title and interest to receive any and all payments under an interest cap of 6% with a notional amount equal to the outstanding principal.  The Company has granted Lehman first priority security interest in its equity interest in the Company. Lehman is also a related party by virtue of its member interest in the Company, via GENLB (see Note 1).

On September 11, 2008, an amendment to the Lehman Loan was made to stimulate condo sales demand and provide additional liquidity to the Company.  The primary changes included: i) the use of condo incentives, ii) revisions to the stipulated minimum release prices and ii) easing of restrictions with regard to condo sales proceeds, including the deployment of funds towards reducing hotel operating deficits, as well as creating additional interest reserves.

(c)On February 21, 2008, the Company entered into a $5,000,000 loan with Marriott International Corporation (the “MI FFE Loan”), maturing on February 21, 2011.  Interest on the MI FFE Loan is payable monthly and bears an annual rate equal to prime plus 350 basis points (4.695% at December 31, 2008).

(d)On March 31, 2008,  Whitehall Employee Fund and Whitehall Street (collectively, “Whitehall”), funded a loan to the Company totaling $6,850,000 (“Whitehall Loan”).  Under the terms of the Company Agreement, as long as the internal rate of return to Whitehall remains at least at 20%, Whitehall shall forebear from exercising the right to convert the Whitehall Loan to a capital contribution.  The Whitehall Loan bears interest at a minimum rate of 20% per annum and at December 31, 2008, total accrued interest amounts to $1,384,903.

7.Commitments and Contingencies

The Company may, from time-to-time, be a party to various lawsuits arising in the ordinary course of business. Management believes the Company has adequate insurance coverage for all such matters and that, although the ultimate outcome of such claims cannot be ascertained, current

9

W2005 Kapalua/Gengate Hotel Holdings, LLC

Notes to UNAUDITED Consolidated Financial Statements

pending and threatened claims are not expected to have a material adverse impact on the Company’s financial position, results of operations or cash flows.

One of the Company’s vendors (“the Vendor”) filed a mechanic’s and materialman’s lien on the the Hotel.  As of December 31, 2008, the Company has recorded a liability of approximately $1,320,000 related to this lien.  A court hearing has been scheduled for April 23, 2009, but based on ongoing settlement negotiations with the Vendor, the Company expects to obtain full and mutual releases for claims, prior thereto and settle for a total amount equal to $750,000.

8.Indemnifications and Guarantees

The Company has entered into certain indemnification agreements under which it could be required to make payments to third parties upon the occurrence or non-occurrence of certain future events.  These indemnities primarily include 1) the indemnification of Members and officers of the Company for certain events or occurrences while a Member or officer is, or was serving, at the Company’s request in such capacity and 2) all claims and demands which may be asserted against the lenders under the Company’s loans for obligations to be performed by the Company.  The duration of these indemnities generally is for the length of the contracts.  These indemnifications generally do no limit the future payments the Company could be obligated to make.  The Company has not recorded any liabilities for these indemnities in the accompanying financial statements, based upon the current facts and circumstances that would trigger a payment.

9.Related Party Transactions

The following related party transactions between the Company and various related entities could have a different financial statement impact had they occurred in arms length transactions between unrelated entities.

Services Agreement

On March 13, 2006, the Company entered into an Asset Management Agreement (“Services Agreement”) with Gencom Asset Management Company, LP, (“Gencom”), an affiliate of GHGP and GKH.  The Company engaged Gencom to perform services related to the asset management and development of the Hotel. Under the terms of the Services Agreement, the Company is charged an asset management fee of one percent (1.00%) of hotel gross revenues payable monthly in arrears, during each fiscal year plus all out of pocket expenses (including reasonable travel expenses), disbursements and advances incurred by Gencom in connection with its duties under the Services Agreement.  The Company incurred $1,073,828 in asset management fees for the year ended December 31, 2008 and these amounts are included as a component of “Management fees” in the accompanying consolidated statement of operations.  At December 31, 2008, there were $110,621 of unpaid asset management fees and were included as a component of “Due to related parties” in the accompanying consolidated balance sheet.

Gencom receives a Development Management Fee in an amount equal to four percent (4%) of the aggregate hard and soft costs of renovation, exclusive of land costs.  The Development Management Fee is payable monthly in arrears on the tenth business day following the month during the time in which the property is undergoing renovations.  The Company incurred $739,929 in Development Management Fee for the year ended December 31, 2008.  At December 31, 2008, these fees were paid in full.  In addition, during 2008 Gencom charged the Company approximately $591,625 for payroll and out of pocket expenses related to Gencom employees’ involvement in the Hotel renovation and condo sales.  At December 31, 2008, there were $123,108 of unpaid payroll

10

W2005 Kapalua/Gengate Hotel Holdings, LLC

Notes to UNAUDITED Consolidated Financial Statements

and out of pocket expenses and were included as a component of “Due to related parties” in the accompanying consolidated balance sheet.

Gencom is also entitled to a Residential Unit Sales Fee upon the closing of the sale of condos, by the Company or one of its subsidiaries to any third-party purchaser.  The Residential Unit Sales Fee is equal to one percent (1%) of sales price paid and is payable when there is available cash flow or available capital event with proceeds sufficient to pay the fee.  As of December 31, 2008, Residential Unit Sales Fees totaled $660,831 and were paid in full.

During December 2008, a condo was sold to related parties comprising certain members, at an arm’s length sale price of $2,535,900, as approved by Lehman.

10.Agreements with Hotel Manager

Hotel Management Agreement

The Hotel Operator manages the Hotel’s day to day operations.  The Management Agreement with the Hotel Operator extends through December 31, 2041 and may be extended for an additional ten years (up to a total of three additional ten-year periods). Under the Management Agreement, the Company is required to pay the Hotel Operator a base management fee of 3.00% of hotel gross revenues during each fiscal year plus an incentive fee based on the operating profit of the Hotel, distributed to the Company and the Hotel Operator after 1) first, to the Company, until the Company has received an amount equal to the First Owner’s Priority (“FOP”) (FOP shall mean the sum of (i) seventeen million dollars ($17,000,000) plus (ii) ten and three-quarters percent (10.75%) of Total Capital Investment (calculated as of the last day of such fiscal year); 2) second, to the Hotel Operator and Company, on a pari passu basis, as follows: (a) eighty percent (80%) of First Available Cash Flow (“FACF”) (FACF shall mean an amount, with respect to each fiscal year or portion thereof during the term, equal to the excess, if any, of operating profit (up to an amount equal to Second Owner’s Priority (“SOP”) (SOP shall mean the sum of (i) nineteen million dollars ($19,000,000) plus (ii) ten and three-quarters percent (10.75%) of Total Capital Investment (calculated as of the last day of such fiscal year)) to Company and (b) twenty percent (20%) of FACF to the Hotel Operator, until the Company shall have received an amount equal to SOP; and 3) third, to the Hotel Operator and Company, on a pari passu basis, as follows: (a) seventy-five percent (75%) of Second Available Cash Flow (“SACF”) (SACF shall mean an amount, with respect to each fiscal year or portion thereof during the term, equal to the excess, if any, of operating profit over SOP) to Company and (b) twenty-five percent (25%) of SACF to the Hotel Operator.  As part of the Management Agreement, the Company is entitled to receive from the Hotel Operator a (“Key Money”) payment of $5,000,000 in two installments.  During July 2007 the Company received the initial $2,500,000 and the second installment was received on March 2008.  The Key Money is amortized using the straight line method over the life of the Hotel Management Agreement and it is included as a component of “Management fees” in the accompanying consolidated statement of operations.

The Company incurred $2,063,845 in base management fees for the year ended December 31, 2008, and these amounts are included as a component of “Management fees” in the accompanying consolidated statements of operations.  No incentive fees were incurred during this year.  As of December 31, 2008, base management fees of $153,083 were unpaid and are included as a component of “Due to hotel operator” in the accompanying consolidated balance sheet.

11

W2005 Kapalua/Gengate Hotel Holdings, LLC

Notes to UNAUDITED Consolidated Financial Statements

Under the terms of the Management Agreement, the Hotel Operator employs and provides all employees for the Company’s hotel operations. While these employees are employees of the Hotel Operator and not legally employees of the Company, the Company pays the payroll costs and related taxes and benefits for these employees.  The Company records the associated expense as an operating expense in the accompanying consolidated statement of operations.

Throughout the term of the Management Agreement, the Company is to have $22,500,000 in net worth calculated in accordance with generally accepted accounting principles.  Accordingly, the Hotel Operator has the right to terminate the Management Agreement by written notice and seek other remedies permitted by law.  To date, the Hotel Operator has not provided written or constructive notice to the Company.

Marketing Agreement

The Company is required to pay a group marketing services fee of 1.00% of hotel gross revenues during each fiscal year.  The Company incurred $687,948 in group marketing services fees for the year ended December 31, 2008, and these amounts are included as a component of “Sales and marketing” in the accompanying consolidated statement of operations.  As of December 31, 2008, $59,606 in group marketing services fees was unpaid and is included as a component of “Due to hotel operator” in the accompanying consolidated balance sheet.

Shared Expenses

The Hotel Operator has billed the Company for its share of certain goods and services acquired on group basis with other hotels managed by the Hotel Operator.

Residential Condominium License and Development Agreement

On March 27, 2007, the Company entered into a Residential Condominium License and Development Agreement (“License and Development Agreement”) with the Hotel Operator.  This agreement entitles the Hotel Operator to receive a Royalty Fee (“Royalty Fee”) equal to 4% of the total sales price of each condo unit sold.  The Royalty Fee is paid in full upon the closing of each condo unit.  As of December 31, 2008, the Royalty Fee totaled $2,643,324 and has been paid in full.

Rental Program Agreement

The Company has established a Rental Program (“Rental Program”) with each individual condo Unit Owner (“Unit Owner”), whereby the Unit Owner may elect to make their unit available for rental to guests of the hotel.  The Hotel Operator manages the Rental Program on behalf of the Company.  The Net Rental Income (“Net Rental Income”), defined as the gross room rental revenue less a 10% service fee will be divided between the Company and the Unit Owner using the applicable percentages.  The applicable percentages are 45% to the Company, 45% to the Unit Owner and 10% service fee to Hotel Operator.  The Unit Owner remains responsible for all costs and expenses to third parties.  During 2008, the Company’s net rental income earned amounted $3,460,522.

*    *    *    *    *

12

EX-99.2

Exhibit 99.2

W2005 Kapalua/Gengate Hotel Holdings, LLC

Consolidated Financial Statements

December 31, 2007

W2005 Kapalua/Gengate Hotel Holdings, LLC

Index

	Page(s)
Report of Independent Certified Public Accountants	1
Consolidated Financial Statements
Balance Sheet	2
Statement of Operations and Changes in Members’ Capital	3
Statement of Cash Flows	4
Notes to Consolidated Financial Statements	5-13

Report of Independent Certified Public Accountants

To the Members of
W2005 Kapalua/Gengate Hotel Holdings, LLC

In our opinion, the accompanying consolidated balance sheet and the related consolidated statements of operations and changes in members’ capital and cash flows present fairly, in all material respects, the financial position of W2005 Kapalua/Gengate Hotel Holdings, LLC and its subsidiaries at December 31, 2007, and the results of their operations and their cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.  These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these financial statements based on our audit.  We conducted our audit of these statements in accordance with auditing standards generally accepted in the United States of America.  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation.  We believe that our audit provides a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP

Fort Lauderdale, Florida

March 31, 2008

1

W2005 Kapalua/Gengate Hotel Holdings, LLC

Consolidated Balance Sheet

December 31, 2007

Assets
Current assets
Cash and cash equivalents	$	6,692,285
Restricted cash	3,142,378
Accounts receivable, net of allowance for doubtful accounts of $197,820	1,105,760
Other receivable	2,700,000
Inventories	361,009
Prepaid expenses and other current assets	147,321
Total current assets	14,148,753
Property and equipment, net	329,704,395
Deferred financing costs, net	2,569,972
Total assets	$	346,423,120
Liabilities and Members’ Capital
Current liabilities
Accounts payable and accrued expenses	$	26,361,349
Accrued construction in progress	10,556,038
Due to related parties	747,775
Due to hotel operator	406,041
Advance deposits	7,029,153
Interest on long-term debt	4,086,363
Other liabilities	2,500,000
Total current liabilities	51,686,719
Long-term liabilities
Long-term debt	288,635,963
Commitments and contingencies (Note 7)
Members’ capital	6,100,438
Total liabilities and members’ capital	$	346,423,120

The accompanying notes are an integral part of these consolidated financial statements.

2

W2005 Kapalua/Gengate Hotel Holdings, LLC

Consolidated Statement of Operations and Changes in Members’ Capital

For the Year Ended December 31, 2007

Revenues
Rooms	$	23,245,341
Food and beverage	16,003,567
Other hotel	5,563,248
Total revenues	44,812,156
Operating expenses
Hotel operations	26,483,735
General and administrative	15,327,218
Sales and marketing	6,683,766
Property operation and maintenance	3,189,458
Property taxes	518,956
Management fees	1,792,486
Ground lease	542,381
Building fire and casualty insurance	1,184,647
Depreciation	3,051,077
Loss on disposal of fixed assets	3,832,473
Total operating expenses	62,606,197
Loss from operations	(17,794,041		)
Interest expense, net	7,714,974
Change in fair value of derivative financial instrument	198,618
Other expense	56,764
Net loss	$	(25,764,397	)
Members’ deficit, beginning of year	$	(1,883,767	)
Members’ contribution	33,748,602
Net Loss	(25,764,397		)
Members’ capital, end of year	$	6,100,438

The accompanying notes are an integral part of these consolidated financial statements.

3

W2005 Kapalua/Gengate Hotel Holdings, LLC

Consolidated Statement of Cash Flows

For the Year Ended December 31, 2007

Cash flows from operating activities
Net loss	$	(25,764,397	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation	3,051,077
Amortization of deferred financing cost	1,415,189
Loss on disposal of fixed assets	3,832,473
Change in fair value of derivative financial instrument	198,618
Changes in assets and liabilities
Accounts receivable, net	6,399,552
Inventories	561,033
Prepaid and other current assets	(105,258		)
Accounts payable and accrued expenses	15,445,780
Due to related parties	66,629
Due to hotel operator	(3,728,266		)
Advance deposits	3,094,765
Interest payable	2,156,028
Other liabilities	2,500,000
Net cash provided by operating activities	9,123,223
Cash flows from investing activities
Additions to property and equipment	(141,216,279		)
Proceeds from the disposal of fixed assets	586,365
Use of restricted cash to purchase property and equipment	2,060,254
Net cash used in investing activities	(138,569,660		)
Cash flows from financing activities
Cash contributions from members	26,248,602
Payment of financing costs	(4,280,793		)
Payment to acquire interest rate cap	(75,900		)
Payment on capital leases	(193,774		)
Payment of long-term debt	(160,500,000		)
Proceeds from borrowings under long-term debt	268,635,963
Net cash provided by financing activities	129,834,098
Net increase in cash and cash equivalents	387,661
Cash and cash equivalents, beginning of year	6,304,624
Cash and cash equivalents, end of year	$	6,692,285
Supplemental disclosure of cash flow information
Cash paid for interest	$	14,367,831
Non-cash financing and investing activities
Increase in retainage payable used for funding construction activities	$	3,616,939
Increase in accounts payable used for funding construction activities	$	7,067,983
Land contributed by member	$	7,500,000

The accompanying notes are an integral part of these consolidated financial statements.

4

W2005 Kapalua/Gengate Hotel Holdings, LLC

Notes to Consolidated Financial Statements

1.Organization and Business

W2005 Kapalua/Gengate Hotel Holdings, LLC, a Delaware limited liability company (the “Company”), was formed on February 9, 2006 by and between Whitehall Street Global Real Estate Limited Partnership 2005; 51.4% (“Whitehall Street”), Whitehall Street Global Employee Fund 2005, LP; 13.6% (“Whitehall Employee Fund”), Gengate Kapalua Holdings GP, LLC; 0% (“GHGP”) and Gengate Kapalua Holdings, LLC; 35% (“GKH”).

The Company was formed to acquire and own The Ritz-Carlton Kapalua, (the “Hotel”) located on the Island of Maui, Hawaii.  The Hotel is managed through an operating agreement (the “Management Agreement”) with the Ritz-Carlton Hotel Company, LLC (the “Hotel Operator”).

On March 27, 2007, MLP RCK LLC, a wholly owned subsidiary of Maui Land & Pineapple Company, Inc. (“MLPC”) acquired a 21.4286% interest in the Company.  As a consequence initial members’ interest became the following:  Whitehall Street; 40.4234%, Whitehall Employee Fund; 10.648%, GKH; 27.5%, and GHGP; 0%.  Whitehall Street, Whitehall Employee Fund and GKH are designated as the Managing Members of the Company (together with MLPC and GHGP, the “Members”).  Major decisions, as defined in the Second Amended and Restated Limited Liability Company Agreement (the “Company Agreement”), require the consent of either Whitehall Street or Whitehall Employee Fund, and either GKH or MLPC.

On July 1, 2007, the Hotel was closed for a major renovation and conversion of 250 hotel rooms into 107 condominium units.  The Hotel was issued a temporary certificate of occupancy on December 28, 2007.

Allocation of Net Profit and Loss

Profits and losses are allocated pro rata among all Members in proportion to their percentage interests.

Distributions to Members

Distributions to Members are made pro rata in accordance with their relative percentage interests in the Company.  No distributions have been made to the Members since inception of the Company.

2.Liquidity

The Hotel was closed on July 1, 2007 for an extensive renovation and residence conversion construction and reopened on December 28, 2007.  For the year ended December 31, 2007, the Company incurred a net loss of $25,764,397 and had net cash inflows from operating activities of $9,123,223.  At December 31, 2007, the Company had a deficit of $37,537,966 in working capital.  Management believes that it will be able to continue to fund the operating needs with cash currently on hand, operations, sale of condominium units and additional debt or equity.  As of March 28, 2008, Whitehall Street, Whitehall Employee Fund and GHGP have confirmed to the Company that they have the ability and intent to fund, if required, through at least March 31, 2009, an amount necessary to meet the Company’s obligations as they come due.  The amount of cash to be funded is dependent upon the profitability of the hotel and management’s ability to close on condominium sales.  MLPC has not confirmed its intent to fund the Company.

5

W2005 Kapalua/Gengate Hotel Holdings, LLC

Notes to Consolidated Financial Statements

3.Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements include the accounts of W2005 Kapalua/Gengate Hotel Holdings, LLC and its wholly owned subsidiaries, W2005 Kapalua/Gengate Hotel Mezzanine, LLC (“W2005 Mezzanine”), and W2005 Kapalua/Gengate Hotel Realty, LLC, each a Delaware limited liability company. All significant intercompany transactions have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the balance sheet date and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Revenue Recognition

Hotel operating revenues are from room rentals, food and beverage sales, spa sales and retail merchandise sales.  Revenues are recorded as services are rendered or goods are provided.  Additionally, the Company collects sales, use, occupancy and similar taxes which are presented on a net basis (excluded from revenues) in the accompanying consolidated statement of operations. Amounts received in advance of guest stays are reflected as advance deposits in the accompanying balance sheet.  These advance deposits are recognized as revenue when the service is provided.  Interest expense is net of $474,337 of interest income.

Fair Value of Financial Instruments

Financial instruments include cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued expenses, advance deposits and long-term obligations.  The carrying amounts of financial instruments other than long-term obligations approximate fair value due to their short term nature.  The Company’s mortgage loan obligations at fair value is advantageous (LIBOR plus 220 basis points) when compared with the February 2008 recapitalization, as described in Note 6, where variable rate debt increased to LIBOR plus 300 basis points. Such obligations approximate fair value. Other long term debt approximates market value, based upon rates currently available for similar instruments. The Company has an interest rate cap that is carried at fair value.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

Restricted Cash

Restricted cash represents amounts reserved for payment of real estate taxes, repairs, insurance and funding of furniture, fixture and equipment purchases.  These restrictions are required under the Mortgage Loan and by the Management Agreement.  In addition, and as part of the restricted cash balance, the Company has on deposit, $2,895,700 to support an irrevocable standby letter of credit expiring on July 26, 2008, which was used to obtain a building permit application.

Accounts Receivable

The Company records trade accounts receivable in the normal course of business related to the sale of products and services.  The Company does not charge interest on past due accounts receivable. 

6

W2005 Kapalua/Gengate Hotel Holdings, LLC

Notes to Consolidated Financial Statements

The allowance for doubtful accounts is based on review of specific accounts that have been identified as at risk for non-collection and prior collection history.  Write-offs are evaluated on a case-by-case basis.

Concentration of Credit Risk

A significant portion of the Company’s cash and cash equivalents are maintained at various financial institutions in amounts that exceed federally insured limits.  The Company has not experienced any losses and believes it is not exposed to significant credit risk in this area.

Inventories

Inventories consist primarily of food, beverages and merchandise held for resale and operating supplies.  Amounts are valued on a first in first out basis.

Derivative Financial Instruments

As of December 31, 2007, the Company had an interest rate cap which is a derivative financial instrument.  This derivative is $4,400 and is recorded on the consolidated balance sheet at fair value.  The interest rate cap was not designated as a hedging instrument; therefore changes in the fair value of this instrument are recognized in the results of operations in the period that the change occurs.

Property and Equipment

Property and equipment are carried at cost, net of accumulated depreciation.  Routine repairs and maintenance are expensed as incurred.  Expenditures that improve the functionality of the related equipment or extend its useful life are capitalized.  When property and equipment are retired or otherwise disposed, the related gain or loss is included in the determination of income.  Depreciation is calculated on the straight-line method based on the following useful lives:

Land improvements	20 years
Buildings and improvements	39 years
Furniture, fixtures and equipment	3-7 years

Deferred Financing Costs

Costs incurred in conjunction with obtaining the debt instruments are included as deferred financing costs.  Deferred financing costs are amortized over the respective lives of the applicable debt issues on a straight-line basis, which approximates the effective interest method as a component of interest expense.

Long-lived Assets

The Company evaluates potential impairment of long-lived assets in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, which requires the Company to (a) recognize an impairment loss if the carrying amount of a long-lived asset is more than the value of its undiscounted projected cash flows and (b) measure an impairment loss as the difference between the carrying amount and fair value of the asset.  No impairments of long-lived assets occurred during the year ended December 31, 2007.

Income Taxes

The Company has elected to be a limited liability company for federal tax purposes.  Limited liability companies are not taxable entities under provisions of the Internal Revenue Code and, accordingly, the accompanying consolidated financial statements do not reflect a provision for

7

W2005 Kapalua/Gengate Hotel Holdings, LLC

Notes to Consolidated Financial Statements

federal or state income taxes.  The tax effects of the Company’s transactions are the responsibility of the Members.

4.Property and Equipment

Property and equipment consist of the following at December 31, 2007:

Land	$	33,444,471
Building and improvements	164,971,293
Furniture, fixtures and equipment	2,130,635
	200,546,399
Less accumulated depreciation	(6,742,631		)
	193,803,768
Construction in progress	135,900,627
Net property and equipment	$	329,704,395

On March 27, 2007, the Company purchased 49 acres of land (“Hotel land”) underlying the Hotel condominium and amenities from MLPC for $32.5 million plus closing costs.  The acquisition was financed through a debt facility provided by Lehman Brothers Holdings, Inc. The Company was, prior to acquisition, the lessee under a long-term ground lease with MLPC.

During 2007, the Company began construction of 107 condominium units by renovating 250 hotel rooms in four low-rise clusters adjacent to the Hotel.  All condominiums will be offered for sale in 2008.  Construction in progress includes capitalized interest costs of $10,521,768 and taxes of $518,956 for the year ended December 31, 2007.

Included in furniture, fixtures, and equipment is approximately $152,000 of equipment under capital leases where payments are due through 2009.

Depreciation expense for the year ended December 31, 2007 was $3,051,077.

8

W2005 Kapalua/Gengate Hotel Holdings, LLC

Notes to Consolidated Financial Statements

5.Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consist of the following at December 31, 2007:

Accounts payable	$	19,459,590
Accrued payroll, payroll taxes and benefits	2,894,453
Accrued real estate and personal property taxes	114,407
Accrued sales taxes	13,805
Accrued other - Hotel	3,463,739
Other	415,354
Total	$	26,361,349

6.Long-Term Debt

Long-term debt at December 31, 2007 is as follows:

Luxury loan (a)	$	20,000,000
Mortgage loan (b)	268,635,963
	288,635,963
Less current maturities	—
	$	288,635,963

(a)On March 13, 2006, the Company entered into a $20,000,000 term loan agreement (the “Luxury Loan”) maturing April 13, 2011 with Luxury Finance LLC.  The Luxury Loan bears interest at an annual rate equal to prime rate plus 350 basis points (8.53% at December 31, 2007).

(b)On March 13, 2006, the Company entered into a $180,500,000 term loan agreement (the “Lehman Loan”) initially maturing April 1, 2008 with Lehman Brothers Holdings Inc. (“Lehman”).  The Lehman Loan provided for two (2) extensions of one (1) year each, at the Company’s option. Monthly payments of interest commenced on May 9, 2006.  The loan was collateralized by the first deed of trust on the Hotel.  On March 27, 2007, this loan was repaid.

On March 27, 2007, the Company entered into a $271,700,000 mortgage loan (the “Mortgage Loan”) with Lehman to, among other matters,: (i) refinance the outstanding balance of the Lehman Loan, (ii) acquire the Hotel land, which was subject to a long-term ground lease, (iii) finance the Hotel renovation and condominium conversion, (iv) make deposits into reserve fund accounts for renovation holdbacks, condominium conversion holdbacks, operating deficit holdbacks, marketing cost holdbacks, interest holdbacks and tax holdbacks; and (v) construct the condominium units.  The Mortgage Loan initially matures on February 27, 2009 (the “Maturity Date”).  The term of the Mortgage Loan may be extended for three additional periods of one (1) year each at the Company’s option.  Interest is payable monthly at an

9

W2005 Kapalua/Gengate Hotel Holdings, LLC

Notes to Consolidated Financial Statements

annual rate equal to prime plus 220 basis points (7.23% at December 31, 2007).  The Company has assigned to Lehman all of its rights, title and interest to receive any and all payments under an interest cap of 6% with a notional amount equal to the outstanding principal.  The Company has granted Lehman first priority security interest in its equity interest in the Company.

On February 21, 2008, the Company, Whitehall Street, MLPC and Karim Alibhai, Manager-GHGP and GKH, entered into a Consent and First Amendment to the Mortgage Loan, (the “First Amendment Agreement”) with Lehman to evidence a $5,000,000 loan from Marriott International Corporation to the Company.  In addition, the Company received $6,850,000 as a short term loan from Whitehall Street and Whitehall Employee Fund and deposited these funds in the equity reserve account as required by the First Amendment Agreement.  The Company is required to deposit $10,000,000 in reserve accounts with Lehman to fund construction or deficits in operating the Hotel.  As part of the First Amendment Agreement the interest rate was increased to LIBOR plus 300 basis points and principal payments in addition to monthly interest-only payments are required as follows:

An amount equal to the greater of the net sale proceeds per sold condominium unit or the release price of the unit stipulated in the First Amendment Agreement is to be used to increase certain loan reserves to $55,000,000, then to reduce the principal balance on the Mortgage Loan to $150,000,000.  Subsequent proceeds of approximately $15,000,000 are to be used to repay all or defined amounts of other indebtedness and then the remainder to the Company.

7.Commitments and Contingencies

The Company may, from time-to-time, be a party to various lawsuits arising in the ordinary course of business.  Management believes the Company has adequate insurance coverage for all such matters and that, although the ultimate outcome of such claims cannot be ascertained, current pending and threatened claims are not expected to have a material adverse impact on the Company’s financial position, results of operations or cash flows.

8.Indemnifications and Guarantees

The Company has entered into certain indemnification agreements under which it could be required to make payments to third parties upon the occurrence or non-occurrence of certain future events.  These indemnities primarily include 1) the indemnification of Members and officers of the Company for certain events or occurrences while a Member or officer is, or was serving, at the Company’s request in such capacity and 2) all claims and demands which may be asserted against the lenders under the Company’s loans for obligations to be performed by the Company.  The duration of these indemnities generally is for the length of the contracts.  These indemnifications generally do no limit the future payments the Company could be obligated to make.  The Company has not recorded any liabilities for these indemnities in the accompanying financial statements, based upon the current facts and circumstances that would trigger a payment.

10

W2005 Kapalua/Gengate Hotel Holdings, LLC

Notes to Consolidated Financial Statements

9.Related Party Transactions

The following related party transactions between the Company and various related entities could have a different financial statement impact had they occurred in arms length transactions between unrelated entities.

Services Agreement

On March 13, 2006, the Company entered into an Asset Management Agreement (“Services Agreement”) with Gencom Asset Management Company, LP, (“Gencom”), an affiliate of GHGP and GKH.  The Company engaged Gencom to perform services related to the asset management and development of the Hotel. Under the terms of the Services Agreement, the Company is charged an asset management fee of one percent (1.00%) of hotel gross revenues payable monthly in arrears, during each fiscal year plus all out of pocket expenses (including reasonable travel expenses), disbursements and advances incurred by Gencom in connection with its duties under the Services Agreement.  The Company incurred $448,121 in asset management fees for the year ended December 31, 2007 and this amount is included as a component of “Management fees” in the accompanying consolidated statement of operations.  At December 31, 2007, there were no unpaid asset management fees.

Gencom receives a Development Management Fee in an amount equal to four percent (4%) of the aggregate hard and soft costs of renovation, exclusive of land costs.  The Development Management Fee is payable monthly in arrears on the tenth business day following the month during the time in which the property is undergoing renovations.  The Company incurred $1,467,371 in Development Management Fee for the year ended December 31, 2007 and this amount is included in construction in progress as a component of “Property and Equipment, net” in the accompanying consolidated balance sheet.  At December 31, 2007, Development Management Fees of $896,101 were unpaid and were included as a component of “Due to related parties” in the accompanying consolidated balance sheet.  In addition, during 2007 Gencom charged the Company approximately $787,000 for payroll and out of pocket expenses related to Gencom employees’ involvement in the Hotel renovation.

Gencom is also entitled to a Residential Unit Sales Fee upon the closing of the sale of a residential unit by the Company or one of its subsidiaries to any third party purchaser.  The Residential Unit Sales Fee is equal to one percent (1%) of sales price paid and is payable when there is available cash flow or available capital event with proceeds sufficient to pay the fee.  As of December 31, 2007 no residential unit sales have closed and thus the Company has not incurred any Residential Unit Sales Fees for the year ended December 31, 2007.

In addition, Gencom charged the Company a monthly accounting fee of $4,000 per month.  The Company incurred $48,000 in accounting fees for the year ended December 31, 2007 and this amount is included as a component of “General and Administrative” expenses in the accompanying consolidated statement of operations.  At December 31, 2007, $16,000 in accounting fees was unpaid and is included as a component of “Due to related parties” in the accompanying consolidated balance sheet.

Credit Enhancement and Other Fees

In accordance with the Company Agreement the Company pays a fee in connection with a loan guaranty or other recourse obligation provided or incurred by a Member (or an affiliate of a Member) to a lender providing financing to the Company.  The Member providing or incurring a guaranty or other recourse obligation is paid by the Company a fee equal to two percent (2%) per

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W2005 Kapalua/Gengate Hotel Holdings, LLC

Notes to Consolidated Financial Statements

annum of the $15 million guaranty or other recourse obligation. For the year ended December 31, 2007, the Company paid to Whitehall Street a credit enhancement fee of $300,000 which is reflected as a component of interest expense.

In conjunction with the land acquisition and debt modification on March 27, 2007, the Company paid to Gencom $686,165 for a transaction fee and paid Whitehall and its parent $1,169,880 as a loan origination fee.  These amounts have been capitalized as deferred financing costs.

Operating Revenues

At December 31, 2007, $194,869 is included as a component of “accounts receivable, net of allowance for doubtful accounts” in the accompanying consolidated balance sheet for amounts that are due to the Company for unpaid room rentals as a result of various affiliates of the Company renting hotel rooms throughout the year.

10.Agreements with Hotel Manager

Hotel Management Agreement

The Hotel Operator manages the Hotel’s day to day operations.  The Management Agreement with the Hotel Operator extends through December 31, 2041 and may be extended for an additional ten years (up to a total of three additional ten-year periods). Under the Management Agreement, the Company is required to pay the Hotel Operator a base management fee of 3.00% of hotel gross revenues during each fiscal year plus an incentive fee based on the operating profit of the Hotel, distributed to the Company and the Hotel Operator after 1) first, to the Company, until the Company has received an amount equal to the First Owner’s Priority (“FOP”) (FOP shall mean the sum of (i) seventeen million dollars ($17,000,000) plus (ii) ten and three-quarters percent (10.75%) of Total Capital Investment (calculated as of the last day of such fiscal year); 2) second, to the Hotel Operator and Company, on a pari passu basis, as follows: (a) eighty percent (80%) of First Available Cash Flow (“FACF”) (FACF shall mean an amount, with respect to each fiscal year or portion thereof during the term, equal to the excess, if any, of operating profit (up to an amount equal to Second Owner’s Priority (“SOP”) (SOP shall mean the sum of (i) nineteen million dollars ($19,000,000) plus (ii) ten and three-quarters percent (10.75%) of Total Capital Investment (calculated as of the last day of such fiscal year)) to Company and (b) twenty percent (20%) of FACF to the Hotel Operator, until the Company shall have received an amount equal to SOP; and 3) third, to the Hotel Operator and Company, on a pari passu basis, as follows:   (a) seventy-five percent (75%) of Second Available Cash Flow (“SACF”) (SACF shall mean an amount, with respect to each fiscal year or portion thereof during the term, equal to the excess, if any, of operating profit over SOP) to Company and (b) twenty-five percent (25%) of SACF to the Hotel Operator.

The Company incurred $1,344,365 in base management fees for the year ended December 31, 2007, and this amount is included as a component of “Management fees” in the accompanying consolidated statement of operations.  No incentive fees were incurred during this year.  As of December 31, 2007, base management fees of $15,941 were unpaid and are included as a component of “Due to hotel operator” in the accompanying consolidated balance sheet.

Under the terms of the Management Agreement, the Hotel Operator employs and provides all employees for the Company’s hotel operations. While these employees are employees of the Hotel Operator and not legally employees of the Company, the Company pays the payroll costs and related taxes and benefits for these employees.  The Company records the associated expense as an operating expense in the accompanying consolidated statement of operations.

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W2005 Kapalua/Gengate Hotel Holdings, LLC

Notes to Consolidated Financial Statements

Throughout the term of the Management Agreement, the Company is to have $22,500,000 in net worth calculated in accordance with generally accepted accounting principles.  Accordingly, the Hotel Operator has the right to terminate the Management Agreement by written notice and seek other remedies permitted by law.  To date, the Hotel Operator has not provided written or constructive notice to the Company.

Marketing Agreement

The Company is required to pay a group marketing services fee of 1.00% of hotel gross revenues during each fiscal year.  The Company incurred $448,122 in group marketing services fees for the period ended December 31, 2007, and this amount is included as a component of “Sales and marketing” in the accompanying consolidated statement of operations.  As of December 31, 2007, $5,101 in group marketing services fees was unpaid and is included as a component of “Due to hotel operator” in the accompanying consolidated balance sheet.

Shared Expenses

The Hotel Operator has billed the Company for its share of certain goods and services acquired on group basis with other hotels managed by the Hotel Operator.

11.Subsequent Events

On December 15, 2007, the Company made a $12,000,000 capital call request pursuant to the Company Agreement.  One of the Members, MLPC, declined to fund its $2,571,432 pro rata share (the “MLPC Share”).

In connection with the acquisition of the Hotel in 2006, a dispute arose regarding the amount of the closing date adjustment, between the Company and RCK Hawaii, LLC ( the “Seller”) &  BCM/CHI Kapalua, INC. (the “Option Seller”), (collectively, the “Sellers”). On February 14, 2008, a settlement agreement was reached and as a result, the Sellers paid the Company $2,700,000 on February 19, 2008, in full satisfaction of the closing date adjustment.  This amount is included in “Other receivable” in the accompanying balance sheet.

On February 21, 2008, the Company entered into a $5,000,000 loan agreement (the “FF&E loan”) maturing on February 21, 2011 with Marriott International Capital Corporation.  The FF&E loan bears interest at LIBOR plus 350 basis points.  The FF&E loan is collaterized by: (a) FF&E reserves, (b) all funds, money and other items of payment held or deposited in the FF&E reserves, (c) FF&E Records, and (d) to the extent not otherwise included above, all proceeds, products and profits of or in respect of any of the foregoing.

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