Exhibit 10.1

CREDIT AGREEMENT

This Credit Agreement (the “Agreement”) dated August 4, 2016 (the “Effective Date”), is made by and between FIRST HAWAIIAN BANK, a Hawaii corporation (the “Lender”), and MAUI LAND & PINEAPPLE COMPANY, INC., a Hawaii corporation (the “Borrower”).

RECITALS:

A.     The Borrower desires to obtain from the Lender a revolving credit facility (“Credit Facility”), as described in Sections 1.1 and 1.2 of this Agreement; and

B.     Subject to and upon the terms and conditions set forth herein, the Lender is willing to make such Credit Facility available to the Borrower on the terms and conditions set forth hereinbelow;

NOW, THEREFORE, in consideration of the premises, the mutual covenants herein set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Borrower and Lender hereby agree, effective as of the Effective Date (all capitalized terms used herein shall have the meaning specified therefor in Article VIII unless otherwise defined herein), as follows:

I. CREDIT FACILITY

1.1     In General. Subject to the terms of this Agreement and the other Loan Documents, the Lender hereby extends and establishes the Credit Facility in favor of the Borrower pursuant to Section 1.2 hereof. The Borrower acknowledges and agrees that the specific stated purpose of the Credit Facility is to provide financing for the purposes described in Sections 1.2(b) of this Agreement. The Credit Facility is for business purposes and is not a consumer loan.

1.2     Amount and Terms of the Credit Facility.

(a)     Revolving Credit Commitment.

Subject to and upon the terms and conditions herein set forth, and provided that no Event of Default then exists, the Lender agrees and from time to time prior to the Maturity Date to make advances to the Borrower of up to the Revolving Loan Commitment by way of revolving loans as described in this Section 1.2. Each extension of credit under the Credit Facility shall be in such amount permitted by the terms of this Agreement as the Borrower may request, but the aggregate principal amount of all extensions of credit at any one time outstanding under the Credit Facility shall not exceed the Revolving Loan Commitment.

(b)     Purpose of Revolving Loans. The Borrower may use the proceeds of borrowings under the Credit Facility (referred to as “Revolving Borrowings”) for working capital and general business purposes.

(c)     Terms of Credit Facility. The Credit Facility and all Revolving Borrowings: (i) may be borrowed, repaid and reborrowed in accordance with the provisions hereof; (ii) shall bear interest as described in Section 1.4 of this Agreement; and (iii) except as otherwise specified in this Agreement, shall mature and be payable on the Maturity Date. Each Revolving Borrowing, together with the then aggregate outstanding principal amount of all other Revolving Borrowings shall not at any time exceed in principal amount the Revolving Loan Commitment.

(d)     Maturity Date. Unless extended or sooner terminated in accordance with this Agreement the Credit Facility shall terminate on December 31, 2019 (such dated as extended or sooner terminated being referred to herein as the “Maturity Date”, and the period of time between the Effective Date and December 31, 2019 being referred to herein as the “Original Term”).

(e)     Options to Extend Maturity Date.

(i)     Extension Options. The Borrower shall have two (2) consecutive options (each, an “Extension Option”) of one (1) year each to extend the Original Term of the Credit Facility, subject to the following conditions and as more particularly described in this Section 1.2(e):

(A)     No Default or Event of Default shall have occurred and be continuing;

(B)     The Borrower shall have complied with all Debt Yield requirements set forth in Section 4.15(d)

(C)     The Borrower shall provide the Lender with at least forty-five (45) days’ written notice of its intent to exercise each Extension Option; and

(D)     Upon exercise of each Extension Option, the Borrower shall pay an extension fee in the amount of one-fourth percentage points (.25%) of the Revolving Loan Commitment for the applicable Extension Option.

(ii)     First Extension Option Terms and Conditions. The first Extension Option, if duly exercised and if all conditions thereof are duly satisfied, shall extend the Maturity Date by one (1) year from December 31, 2019 (the “First Extension Date”) to December 31, 2020 (said period being referred to herein as the “First Extension Period”). In addition to the terms and conditions set forth in Section 1.2(e)(i) above, the first Extension Option shall be subject to the following additional terms and conditions:

(A)     Prior to the First Extension Date, the Lender shall have received an updated appraisal, dated no earlier than sixty (60) days prior to the First Extension Date, showing the value of the Primary Mortgaged Property (exclusive of any released property and rounded upward to the nearest $1000 increment) to be no less than the amount necessary to cause the Loan to Value Ratio with respect to the Primary Mortgaged Property only, to be no more than sixty-five percent (65%) (i.e., based on a Revolving Loan Commitment of $22,500,000 for the First Extension Period, the required value of the Primary Mortgaged Property would be no less than $34,616,000). If the appraised value is less than such amount, the Borrower may exercise the first Extension Option, but the Revolving Loan Commitment shall be reduced to a level sufficient to cause the Loan to Value Ratio for the First Extension Period to be no more than 65%, and the extension fee for the first Extension Option shall be correspondingly reduced.

(B)     If the then outstanding principal balance of the Revolving Borrowings exceeds the Revolving Loan Commitment for the First Extension Period, the Borrower shall repay the Credit Facility to a level that does not exceed such Revolving Loan Commitment.

(C)     The Borrower shall have at all times prior to the First Extension Date complied with the financial covenants of the Loan, including the Debt Yield requirements described in Section 4.15(d).

(iii)     Second Extension Option Terms and Conditions: The second Extension Option, if duly exercised and if all conditions thereof are duly satisfied, shall extend the Maturity Date by one (1) year from December 31, 2020 (the “Second Extension Date”) to December 31, 2021 (said period being referred to herein as the “Second Extension Period”). In addition to the terms and conditions set forth in Section 1.2(e)(i) above, the second Extension Option shall be subject to the following additional terms and conditions:

(A)     The Borrower shall have duly exercised and complied with the terms of the first Extension Option.

(B)     Prior to the Second Extension Date, the Lender shall have received an updated appraisal, dated no earlier than sixty (60) days prior to the Second Extension Date, showing the value of the Primary Mortgaged Property (exclusive of any released property and rounded upward to the nearest $1000 increment) to be no less than the amount necessary to cause the Loan to Value Ratio with respect to the Primary Mortgaged Property only, to be no more than sixty-five percent (65%) (i.e., based on a Revolving Loan Commitment of $20,000,000 for the Second Extension Period, the required value of the Primary Mortgaged Property would be no less than $30,770,000). If the appraised value is less than such amount, the Borrower may exercise the second Extension Option, but the Revolving Loan Commitment shall be reduced to a level sufficient to cause the Loan to Value Ratio for the Second Extension Period to be no more than 65%, and the extension fee for the second Extension Option shall be correspondingly reduced.

(C)     If the then outstanding principal balance of the Revolving Borrowings exceeds the Revolving Loan Commitment for the Second Extension Period the Borrower shall repay the Credit Facility to a level that does not exceed such Revolving Loan Commitment.

(D)     The Borrower shall have at all times prior to the Second Extension Date complied with the financial covenants of the Loan, including the Debt Yield requirements, described in Section 4.15(d).

(f)     Procedure and Conditions for Revolving Borrowings.

From time to time prior to the Maturity Date but not more than once per month, the Borrower may request that the Lender provide the Borrower with indicative rates, and/or request a draw on the Credit Facility (each such draw being considered a Revolving Borrowing). Each such request shall be made by written notice substantially in the form of Exhibit “C” hereto delivered to the Lender no later than 11:00 a.m. (Hawaii Standard Time) at least two (2) Business Days’ in advance, shall be irrevocable, and shall specify the aggregate principal amount which the Borrower desires to draw, the date of the Revolving Borrowing (which shall be a Business Day and which must be a date no later than two (2) Business Days prior to the Maturity Date).

(g)     Disbursement of Revolving Loan Funds.

No later than 11:00 a.m. (Hawaii Standard Time) on the date properly specified in a Notice of Borrowing, and provided that no Event of Default then exists, the Lender will make available the amount of the Revolving Borrowing requested to be made on such date in U.S. Dollars and in immediately available funds, against delivery to the Lender by the Borrower of any documents and papers provided for herein.

(h)     Note.

(i)     The Borrower’s obligations to pay the principal of, and interest on, the Revolving Credit Line and all Revolving Borrowings shall be evidenced by a single promissory note payable to the order of the Lender substantially in the form of Exhibit “A” hereto (as from time to time amended, modified or replaced, the “Note”) with blanks appropriately completed in conformity herewith. The Note shall: (A) be payable to the order of the Lender and be dated as of the Closing Date; (B) be in a stated principal amount equal to the Revolving Loan Commitment; (C) mature on the Maturity Date; (D) bear interest as provided in Section 1.4 of this Agreement; and (E) be entitled to the benefits, and subject to the terms and conditions, of this Agreement.

(ii)     The Lender shall maintain such records of its making of each Revolving Borrowing, repayment of principal thereof (if any) and interest thereon and other information relating thereto as it shall deem appropriate in accordance with its customary practices, which records shall constitute prima facie evidence thereof. Failure to maintain such records with respect to the Credit Facility or any Revolving Borrowing shall not limit or otherwise affect the obligation of the Borrower hereunder or under the Note with respect to the Credit Facility or any Revolving Borrowing, and payments of principal (if any) or interest by the Borrower shall not be affected thereby. Although the Note shall be dated the Closing Date, interest in respect thereof shall be payable only for the periods during which Revolving Borrowings are outstanding, and although the stated principal amount of the Note shall be equal to the Revolving Loan Commitment, the Note shall be enforceable with respect to the Borrower’s obligation to pay principal thereunder (if any) and interest thereon only to the extent of the aggregate unpaid principal amount of the Revolving Borrowings at the time outstanding.

1.3     Security. The Credit Facility shall be secured by liens on or security interests in the following collateral (“Collateral”), which liens or security interests shall be of first priority unless otherwise agreed by the Lender:

(a)     The Mortgaged Property and the Borrower’s interest as lessor in, and all rents from, leases relating to the Mortgaged Property; and

(b)     The Personal Property, including all of the stock of KWC and KWTC but excluding the stock and membership interests in the other Borrower Subsidiaries.

1.4     Interest.

(a)     Interest on Revolving Borrowings.

The Borrower agrees to pay interest on the outstanding principal balance of each Revolving Borrowing at a rate per annum equal to three and 50/100 percentage points (3.50%) (the “Margin”) higher than the “LIBOR Rate” (as hereinafter defined); PROVIDED, HOWEVER, that until the date that PUC Approval (as hereinafter defined) is issued, the Margin shall be three and 75/100 percentage points (3.75%), and interest shall accrue on the outstanding balance of each Revolving Borrowing at a rate per annum equal to three and 75/100 percentage points (3.75%) higher than the LIBOR Rate. The interest rate shall be adjusted monthly on the first Business Day of each calendar month during the term of the Loan (each such date being referred to as an “Interest Adjustment Date”), to a rate equal to the LIBOR Rate in effect on such date, plus the Margin.

Interest shall be computed on the basis of a year of 360 days, and the actual number of days elapsed.

As used herein, the term “LIBOR Rate” shall mean the offered rate of interest which appears on the Bloomberg Official BBAM LIBOR Rates page as of 11:00 a.m. London Time on the day that is two (2) LIBOR Banking Days prior to the next Interest Adjustment Date, for deposits, in U.S. Dollars, for a period of one (1) month (“LIBOR”); provided that the LIBOR Rate shall not be less than zero, and if the above described offered rate of interest is a negative number, the LIBOR Rate will be zero. A “LIBOR Banking Day” means a day on which London banks are open for business for trading inter-bank U.S. Dollar deposits.

If any law or regulation, or any change therein, shall make it unlawful for interest to be calculated using the LIBOR Rate, the Borrower shall have no right to have interest based on the LIBOR Rate, and interest on the outstanding principal balance shall automatically, upon notice given by the Lender to the Borrower, accrue at a fluctuating rate per annum equal to the Prime Rate. Each change in such fluctuating rate shall take effect simultaneously with the effective date of the corresponding change in the Prime Rate. “Prime Rate” or “Prime” shall mean the lending rate of interest announced publicly by First Hawaiian Bank from time to time as its “prime interest rate”, which rate shall not necessarily be the best or lowest rate charged by First Hawaiian Bank from time to time.

In addition, if no rates appear on the Bloomberg Official BBAM LIBOR Rates page for deposits, in U.S. Dollars, for a period of one (1) month, or if on any date for determining the LIBOR Rate, adequate and fair means do not exist for ascertaining the applicable interest rate by reference to LIBOR, interest shall accrue at a fluctuating rate per annum equal to the Prime Rate in effect from time to time, until the first Business Day of the calendar month next following the date after one or more rates do appear on the Bloomberg Official BBAM LIBOR Rates page for deposits, in U.S. Dollars, for a period of one (1) month and the interest rate is readily ascertainable by reference to LIBOR.

Upon an Event of Default, the interest shall accrue at the rate four percentage points (4.00%) higher than the greater of (i) the rate which would be charged in the absence of default, or (ii) the Prime Rate, fluctuating with the Prime Rate (the “Default Rate”).

(b)     Miscellaneous.

Interest hereunder shall be computed, but not compounded, daily on the basis of the rate of interest then in effect.

Any floating rate of interest will increase or decrease during the term of this Agreement if there is an increase or decrease in the rate to which the floating rate is tied. If the rate to which the floating rate is tied is no longer available, the Lender will choose a new rate that is based on comparable information.

Notwithstanding any provision in this Agreement, the Note, or in any of the other Loan Documents to the contrary, the rate of interest which the Borrower shall be required to pay to the Lender shall in no event exceed the maximum rate which may be permitted under applicable law. If, from whatever circumstance whatsoever, performance by the Borrower of any obligation under this Agreement, the Note, or any of the other Loan Documents, at the time performance thereof shall be due (including, without limitation, the payment of interest at the Default Rate or otherwise, or the payment of any fee, charge or expense to be paid or incurred by the Borrower which shall be deemed to be interest), shall involve transcending the limits of validity prescribed by applicable law, then automatically, such obligation to be performed shall be reduced to the limit of such validity prescribed by applicable law. If, notwithstanding the foregoing limitations, any excess interest shall be determined to have been received, the same shall be deemed to have been held as additional security.

1.5     Repayment of Credit Facility.

(a)     Repayment of Revolving Credit Line.

(i)     Interest Payments. The Borrower shall make monthly payments of all accrued interest on the outstanding principal balance of each Revolving Borrowing on the first day of each calendar month.

(ii)     Maturity of the Revolving Credit Line. All unpaid principal and accrued interest on all Revolving Borrowings will be due and payable on the Maturity Date, without notice or demand, whereupon the Credit Facility will terminate.

(b)     Prepayments and Partial Releases.

(i)     Voluntary Prepayments. The Borrower may prepay all or any portion of principal on any Revolving Borrowing without a prepayment charge, provided that a minimum of three (3) Business Days’ notice is given to the Lender, and provided that at the time of any such prepayment the Borrower shall pay all interest theretofore accrued on all Revolving Borrowings. Until the Credit Facility is paid in full (principal and interest), no optional prepayment shall be credited to or relieve the Borrower to any extent from its obligation thereafter to pay any monthly installment of interest or any other payment required under the Credit Facility.

(ii)     Cash Flow. The Borrower acknowledges that the Credit Facility is being underwritten by the Lender based on the cash flow from the Borrower’s operations and from the operations of the Borrower Subsidiaries, and the Borrower agrees that such cash flow will be used for the repayment of Revolving Borrowings under the Credit Facility.

(iii)     Partial Releases of Mortgaged Property. The Lender shall, upon the request of the Borrower, release portions of the Mortgaged Properties from the Mortgage and Security Agreement, upon the following conditions:

(A)     No Default or Event of Default shall have occurred and be continuing;

(B)     After taking into account the effects of the release, the Borrower shall continue to be in compliance with the terms and conditions set forth in Section 4.15 of this Agreement;

(C)     The Borrower shall pay to the Lender at the time of such partial release, the applicable Release Price therefor, and shall pay to the Lender at the time of such partial release, an administrative release fee of Two Hundred Dollars ($200.00) per mortgage release;

(D)     In addition to the administrative release fee, the Borrower shall pay to the Lender all appraisal costs, all costs of preparing the release documents and all legal and other costs associated with the partial release and any recording costs that have been or will be incurred by the Lender in connection with the partial release.

Upon receipt, the Release Price shall be applied to reduce the outstanding principal balance of the Credit Facility and shall permanently reduce the Revolving Loan Commitment by the amount of the Release Price.

As used herein the term “Release Price” shall mean (a) with respect to the Primary Mortgaged Property or any portion thereof, the greater of the Actual Net Sales Proceeds or eighty-five percent (85%) the Appraised Value of the property being released, and (b) with respect to any Mortgaged Property other than Primary Mortgaged Property, an amount mutually agreed upon by the Borrower and the Lender.

“Actual Net Sales Proceeds” with respect to any Mortgaged Property being released shall mean the actual gross sales price for such property, less (i)  actual sales commissions paid by the Borrower (or charged to the Borrower at closing), if any, not to exceed five percent (5.00%) of the gross sales price for such property; and (ii)  actual customary and standard closing costs paid by the Borrower (or allocated to the Borrower at closing), if any, such as escrow, recording, conveyance tax, and document preparation fees, not to exceed one percent (1.00%) of the gross sales price for such property.

(c)     Currency, Place and Dates of Payments. Payments shall be made in United States money in immediately available funds at the Lender’s address in Section 7.5 of this Agreement, or at such other place as the Lender shall have designated by written notice to the Borrower. Whenever any payment to be made hereunder or under the Note shall be stated to be due on a day which is not a Business Day, as may be applicable, the due date thereof shall be extended to the next succeeding Business Day, and, if a payment of principal has been so extended, the interest shall be payable on such principal at the applicable rate during such extension. Any payment made after 10:00 a.m. (Hawaii Standard Time) may, at the Lender’s option, be credited as paid on the following Business Day.

(d)     Net Payments. All payments under this Agreement shall be made without setoff or counterclaim and in such amounts as may be necessary in order that all such payments of principal and interest (after (i) deduction or withholding for or on account of any present or future taxes, levies, imposts, duties or other charges of whatsoever nature imposed by any government or any political subdivision or taxing authority thereof, other than any tax (except such taxes referred to in clause (ii) below) on or measured by the net income of a lender pursuant to the income tax laws of the jurisdiction where such lender’s principal or lending office is located (collectively the “Taxes”); and (ii) deduction of an amount equal to any taxes, on or measured by the net income, payable by such lender with respect to the amount by which the payments required to be made by this Section 1.5(d) exceed the amount otherwise specified to be paid under this Agreement and the Note) shall not be less than the amounts otherwise specified to be paid under this Agreement and the Note. A certificate as to any additional amounts payable to the Lender under this Section 1.5(d) submitted to the Borrower by such Lender shall show in reasonable detail the amount payable and the calculations used to determine such amount and shall, absent manifest error, be final, conclusive and binding upon all parties hereto. With respect to each deduction or withholding for or on account of any Taxes, the Borrower shall promptly furnish to the Lender such certificates, receipts and other documents as may be required (in the judgment of such Lender) to establish any tax credit to which such Lender may be entitled.

(e)     Late Charges. If any payment under this Agreement is not made within ten (10) calendar days after such payment is due, the Borrower will pay to the Lender, a late charge in respect of that payment, in the amount of five percent (5%) of the overdue payment.

(f)     Application of Payments. Except as otherwise specified in this Agreement, all payments made under this Agreement, the Note and other Loan Documents shall be applied first to advances made by the Lender or costs incurred by the Lender, then to late payment charges, then to interest, and then to principal; provided, however, that in an Event of Default, the Lender shall be entitled to allocate all payments received by the Lender to principal, interest, late payment charges, advances and/or costs in such order as the Lender may elect. The receipt of a check shall not, in itself, constitute payment hereunder unless and until the check is honored.

(g)     Effect of Prepayments. No prepayments (whether voluntary or otherwise) shall reduce or affect any regularly scheduled installment payment or any required prepayment specified in this Agreement.

1.6     Evidence of Indebtedness; Loan Documents. The Credit Facility is or is to be evidenced and/or secured by this Agreement, the Note, the Mortgage, the Assignment of Rents, the Security Agreement, the KWTC Stock Pledge, the KWC Stock Pledge, the Negative Pledge Agreement, the Closing Certificate, and all such other documents as the Lender may require from time to time in order to effectuate the intent of this Agreement, together with all renewals, extensions and modifications thereto (the “Loan Documents”).

1.7     The Borrower’s Obligations. The Borrower’s obligations to pay, observe and perform all indebtedness, liabilities, covenants and other obligations on the part of the Borrower to be paid, observed and performed under this Agreement, the Note and all other Loan Documents, are herein collectively called the “Obligations”.

1.8     Loan Fee. The Borrower agrees to pay to the Lender a non-refundable loan fee (the “Loan Fee”), in an amount equal to Two Hundred Seventy Thousand and No/100 Dollars ($270,000.00), $50,000.00 of which has been earned and paid, and the remaining $220,000.00 of which is earned and payable on the Closing Date. Any portion of the Loan Fee, once earned, is nonrefundable.

II. CONDITIONS PRECEDENT

2.1     First Borrowing. The obligation of the Lender to make the Credit Facility available to the Borrower under this Agreement is subject to the satisfaction of all of the following conditions on or before the Closing Date or dates on which the Lender shall make any disbursement of Credit Facility proceeds to the Borrower:

(a)     Documents Required for Closing. The Lender shall have received, in each case in form and substance satisfactory to the Lender, such fully executed originals or certified copies as the Lender may have requested of each of the following, in each case as amended through the Closing Date:

(i)     Loan Documents. All of the Loan Documents, duly executed by the Borrower, including, without limitation:

(A)     This Agreement;

(B)     The Note;

(C)     The Mortgage, in form and substance acceptable to the Lender;

(D)     The Assignment of Rents, in form and substance acceptable to the Lender,

(E)     Subordination, Nondisturbance and Attornment Agreements from Key Tenants in favor of the Lender, in form and substance acceptable to the Lender, provided that the Sansei SNDA and Outrigger SNDA may be deferred until after the Closing Date, as described in Section 4.17(a) and Section 4.17(b);

(F)     The Security Agreement, in form and substance acceptable to the Lender;

(G)     The KWTC Stock Pledge Agreement, in form and substance acceptable to the Lender;

(H)     One or more Uniform Commercial Code Financing Statement(s) perfecting the security interest in the Personal Property;

(I)     The Negative Pledge Agreement, in form and substance acceptable to the Lender;

(J)     Environmental Indemnity Agreement, in form and substance acceptable to the Lender;

(K)     The Closing Certificate, in form and substance acceptable to the Lender; and

(L)     Notice of Mortgage, Pledge or Purchase, suitable for filing with the Department of Taxation of the State of Hawaii.

(ii)     Consents. Evidence that all parties to the Loan Documents (except the Lender) have obtained all necessary and appropriate authority, approvals and consents to execute and deliver the Loan Documents.

(iii)     Organizational Documents and Tax Clearances. All instruments pursuant to which the Borrower is organized and by which its internal affairs are governed and, if requested by the Lender, a Certificate of Good Standing or other evidence of the Borrower’s good standing and authority to conduct their business in the State of Hawaii, and a tax clearance for the Borrower issued by the Department of Taxation of the State of Hawaii.

(iv)     Evidence of Priority. Evidence acceptable to the Lender that the liens on and/or security interests in the Collateral have the priority required by the Lender.

(v)     Title Insurance, Leasehold Instruments, etc. An ALTA Form Lender’s Title Insurance Policy, assuring to the Lender the validity and agreed-upon priority of the Mortgage, and, if the Mortgage encumbers a leasehold estate, the applicable lease and a lessor’s consent to the Mortgage (if required).

(vi)     Opinion(s) of Counsel. An opinion or opinions of counsel for the Borrower, addressed to the Lender, covering to the Lender’s satisfaction: (1) the due authorization, execution, delivery, binding effect, and enforceability of the Loan Documents; (2) no undisclosed litigation, (3) no consents or approvals required; (4) no conflicts with any agreement or laws; and (5) such other matters as the Lender may require; and

(vii)     Insurance. Evidence of the Borrower’s compliance, in respect of such properties, with the provisions stated below in Section 4.5.

(b)     Certain Other Events. On the Closing Date:

(i)     No Default or Event of Default shall have occurred and be continuing.

(ii)     No material adverse change shall have occurred in the financial condition of the Borrower or any Borrower Subsidiary since the date of the most recent financial statements submitted to the Lender.

(iii)     No material adverse change shall have occurred in the physical condition of the Borrower’s or any Borrower Subsidiary’s assets since the date of this Agreement.

(iv)     All legal matters incidental to the transaction contemplated hereby shall be satisfactory to legal counsel for the Lender.

(v)     The Borrower shall have paid to the Lender all fees described in Section 1.8 above.

(vi)     The representations and warranties contained in Article III shall be true.

(c)     PUC Application. On the Closing Date, the Borrower shall have submitted an application with the PUC for approval of the Borrower’s pledge of the KWC stock to Lender pursuant to KWC Stock Pledge (the “PUC Application”) in form and substance acceptable to the Lender, and the Borrower shall have provided the Lender with a statement of the Borrower’s independent legal counsel acceptable to the Lender, in form and substance satisfactory to the Lender, that based on such counsel’s prior experience in similar matters, such counsel reasonably anticipates that the PUC will approve the PUC Application.

2.2     Subsequent Borrowings. The obligation of the Lender to disburse any draw or Borrowing on the Revolving Credit Line, or to make any subsequent loan or other extension of credit is subject to: (a) the prior satisfaction of all conditions stated above in Sections 2.1(a) and 2.1(c); (b) the satisfaction as of the date of such disbursement, conversion or subsequent loan or other extension of credit of the conditions stated above in Section 2.1(b); and (c) the delivery to the Lender of such additional Loan Documents as may have been reasonably requested by the Lender in respect to such conversion, subsequent loan or other extension of credit.

III. REPRESENTATIONS AND WARRANTIES

To induce the Lender to make the Credit Facility available and to enter into this Agreement, the Borrower makes the following representations and warranties to the Lender, which representations and warranties shall survive the execution of this Agreement and continue so long as the Borrower is indebted to the Lender under the Loan Documents, and until payment in full of the Credit Facility:

3.1     Corporate Status. The Borrower is a Hawaii corporation duly organized, validly existing and in good standing under the laws of the State of Hawaii; the Borrower is authorized, to the extent required under applicable law, to do business and is in good standing in all other States of the United States and in any other jurisdiction wherein the nature of its business requires such qualification; there is no action required of the Borrower which has not already been taken to enable the Borrower to do business as presently conducted by it in the State of Hawaii and all other States and jurisdictions wherein it owns or leases properties or transacts or is engaged in business; the Borrower’s chief executive office is located at the address stated in Section 7.5 of this Agreement; the Borrower’s exact legal name is the name stated in the first paragraph of this Agreement; and the Borrower has all necessary power to execute, deliver and perform the Obligations, this Agreement, the Note, and each of the other Loan Documents to which it is party, to borrow under the Credit Facility hereunder and to incur the Obligations.

3.2     Authority; No Conflict. The execution, delivery and performance by the Borrower of this Agreement, the Note, and each of the other Loan Documents executed and delivered or to be executed and delivered by it as contemplated by this Agreement have been duly authorized by all necessary corporate action by the Borrower and will not immediately, or with the passage of time or the giving of notice, or both: (a) violate any provision of law or regulation, or any decree, order, writ or judgment, or any provision of the charter or articles of incorporation or by-laws (or other organic documents) of the Borrower or result in the breach of or constitute a default under any indenture or other agreement or instrument to which the Borrower is a party or by which its property is bound; or (b) result in the creation or imposition of any security interest in, or lien or encumbrance on, any of the assets of the Borrower, except in favor of the Lender.

3.3     Legality, Etc. This Agreement constitutes and, when executed and delivered, the Note, and each of the other Loan Documents will constitute legal, valid and binding obligations of the Borrower and each of the other parties thereto (other than the Lender) enforceable in accordance with their respective terms.

3.4     Litigation. No litigation, arbitration or administrative or bankruptcy proceeding is pending or, to the knowledge of the Borrower, threatened, which, if determined adversely to the Borrower or any Borrower Subsidiary, would materially and adversely affect the ability of the Borrower to perform any of its obligations under this Agreement, or any of the other Loan Documents, except as disclosed to the Lender from time to time in writing, and the Borrower agrees to provide the Lender with such information in respect thereof as the Lender may reasonably request. There is no litigation, arbitration or administrative proceeding pending or, to the knowledge of the Borrower, threatened which questions the validity of this Agreement, the Note, or any of the other Loan Documents.

3.5     No Violation. No part of the proceeds of the Credit Facility under this Agreement will be used, directly or indirectly, by the Borrower for the purpose of purchasing or carrying any “margin stock” within the meaning of Regulation U of the Board of Governors of the Federal Reserve System, or for any other purpose which violates, or which conflicts with, the provisions of Regulations G, T, U or X of said Board of Governors. The Borrower is not engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying any such “margin stock.”

3.6     ERISA.

(a)     The issuance of the Note hereunder will not cause the Borrower to be engaged in a “prohibited transaction,” as such term is defined in Section 4975 of the Internal Revenue Code and there have not been any “reportable events,” as that term is defined in Section 4043 of the Employee Retirement Income Security Act of 1974, as amended, which would result in a material liability to the Borrower.

(b)     With respect to each Plan, the Borrower and each member of the Controlled Group of which the Borrower is a member have fulfilled their respective obligations under the minimum funding standards of ERISA and the Code and are in compliance in all material respects with the presently applicable provisions of ERISA and the Code, and have not incurred any termination liability to the PBGC under Title IV of ERISA which is currently unsatisfied. With respect to each Plan which is a multi-employer pension plan, the Borrower and each member of the Controlled Group of the Borrower has fulfilled its respective Plan contribution requirements under the applicable collective bargaining agreement and has not incurred any withdrawal liability to the Plan under Title IV of ERISA which is currently unsatisfied.

3.7     Consents. No authorization, consent or approval from governmental bodies or regulatory authorities is required for the making and performance of this Agreement by the Borrower and the execution, delivery and performance of the Note or other Loan Documents issued or proposed to be issued by the Borrower hereunder, except such authorizations, consents and approvals as have been obtained prior to the making of the Credit Facility and are in full force and effect. Without limitation, no authorization, consent or approval is required from the PUC or any other Government Authority for the execution, delivery and performance of the Negative Pledge Agreement or the KWTC Stock Pledge Agreement, and other than PUC Approval no authorization consent or approval is required from the PUC or any other Government Authority for the execution, delivery and performance of the KWC Stock Pledge Agreement.

3.8     Hazardous Substances. With respect to Hazardous Substances: (a) the Borrower and each Borrower Subsidiary is in compliance with all Environmental Laws; (b) neither the Borrower nor any Borrower Subsidiary has engaged in any Hazardous Substance Activity in violation of any Environmental Laws, nor to the best of the knowledge of the Borrower, after due inquiry and investigation, has any Hazardous Substance Activity otherwise occurred in violation of any Environmental Laws; (c) neither the Borrower nor any Borrower Subsidiary will engage in any Hazardous Substance Activity in violation of any Environmental Laws; (d) if at any time Hazardous Substances are discovered on, under, in or about any of the Borrower’s or any Borrower Subsidiary’s premises at levels in excess of the levels at which remedial action is required under applicable laws and regulations, the Borrower, at its sole cost and expense, will inform the Lender of the same and remediate such Hazardous Substances in accordance with a remedial program or corrective action program in accordance with the requirements of the Hawaii Department of Health, the Environmental Protection Agency, or any other entity enforcing any applicable environmental laws; (e) if at any time the Borrower or any Borrower Subsidiary is notified by the Hawaii Department of Health, the Environmental Protection Agency, or any other entity enforcing any applicable environmental laws that it is in violation of any Environmental Laws or named as a “potentially responsible person” under any Environmental Laws, the Borrower, at its sole cost and expense, will inform the Lender of same, take prompt action to correct the violation and come into compliance with all Environmental Laws; and (f) the Borrower shall indemnify, defend and save and hold harmless forever the Lender from and against any and all claims, actions, fines and penalties of whatever nature and kind whatsoever caused by or relating to any breach or violation of any of the foregoing representations or warranties of the Borrower or otherwise any violation of any Environmental Laws. The foregoing obligation set forth in this Section 3.8 shall survive the execution of this Agreement and the performance of all obligations of the Borrower hereunder.

3.9     Investment Company. The Borrower is not an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

3.10     Validity. This Agreement is, and the remainder of the Loan Documents are, or when delivered will be, legal, valid, binding, and enforceable in accordance with their respective terms.

3.11     Financial Statements. All financial statements heretofore given by the Borrower to the Lender, including any schedules and notes pertaining thereto, were prepared in accordance with GAAP and fully and fairly present the financial condition of the Borrower and Borrower Subsidiaries at the dates thereof and the results of operations for the periods covered thereby, and as of the date of this Agreement there have been no material adverse changes in the financial condition or business of the Borrower or any Borrower Subsidiary from the date of the most recent financial statements given to the Lender.

3.12     Taxes. Except as otherwise permitted by this Agreement, the Borrower and each Borrower Subsidiary has filed all tax returns it was required by law to have filed prior to the date of this Agreement, has paid or caused to be paid all taxes, assessments, and other governmental charges that were due and payable prior to the date of this Agreement, and has made adequate provision for the payment of such taxes, assessments, or other charges accruing but not yet payable, and the Borrower has no knowledge of any deficiency or additional assessment in a materially important amount in connection with any taxes, assessments, or charges not provided for on its or any Borrower Subsidiary’s books.

3.13     Compliance With Law. Except to the extent that the failure to comply would not materially interfere with the conduct of its business, the Borrower and each Borrower Subsidiary has complied with all applicable laws in respect of: (a) restrictions, specifications, or other requirements pertaining to products that it sells or to the services it performs; (b) the conduct of its business; and (c) the use, maintenance, and operation of its properties.

3.14     Performance of Other Agreements. The Borrower is not in default in any manner under any other agreements to which the Borrower is a party which would materially and adversely affect its ability to: (a) perform its Obligations under this Agreement or other Loan Documents, (b) preserve and maintain the Collateral granted as security for the Credit Facility, or (c) perform or fulfill of any of its obligations, covenants or conditions contained in any agreement or instrument related to the Collateral to which the Borrower is a party or by which the Borrower or any of its properties is bound. No Borrower Subsidiary is in default in any manner under any other agreements to which it is a party which would materially and adversely affect its operations.

3.15     Title to Properties and Solvency of the Borrower. The Borrower and each Borrower Subsidiary has good and marketable title to all of its properties and assets. The Borrower is not insolvent (as defined in Section 101(32) of Title 11 of the United States Code) and will not be rendered so insolvent as a result of the transactions contemplated hereby or referred to herein.

3.16     Relationship Between Borrower and Subsidiaries. The Borrower is the parent company of and owns one hundred percent (100%) of the voting stock of KWC, KWTC, MPC, KLC and KAC. The Borrower holds fifty-one percent (51%) of the membership interests, including 51% of the voting interests and 51% of the interests in earnings and distributions, of KBHL. KLC owns one hundred percent (100%) of the voting stock of KRC, and KBHL holds one hundred percent (100%) of the membership interests, including voting interest and interest in earnings and distributions, of KBL.

3.17     Each Borrower Subsidiary other than KBHL and KBL is a Hawaii corporation duly organized, validly existing and in good standing under the laws of the State of Hawaii; KBHL and KBL each is a Delaware limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware and duly qualified to do business in and in good standing in the State of Hawaii; each Borrower Subsidiary is authorized, to the extent required under applicable law, to do business and is in good standing in all other States of the United States and in any other jurisdiction wherein the nature of its business requires such qualification; there is no action required of any Borrower Subsidiary which has not already been taken to enable such Borrower Subsidiary to do business as presently conducted by it in the State of Hawaii and all other States and jurisdictions wherein it owns or leases properties or transacts or is engaged in business.

3.18     True and Complete Copies. All copies of documents heretofore furnished by, or on behalf of, the Borrower to the Lender are true and complete copies of the originals thereof, and all amendments and modifications thereto, and are in full force and effect. There have been no amendments or modifications to any such document except as heretofore disclosed in writing to the Lender.

3.19     Statements and Omissions. No representation or warranty by the Borrower contained in this Agreement or in any certificate or other document furnished by the Borrower pursuant to this Agreement contains any untrue statement of material fact or omits to state a material fact necessary to make such representation or warranty not misleading in light of the circumstances under which it was made.

IV. AFFIRMATIVE COVENANTS

For so long as the Credit Facility remains in effect or any of the Obligations remains outstanding, the Borrower will, unless otherwise permitted by the Lender in writing:

4.1     Payments. Punctually pay when due all sums which may be due under the Loan Documents.

4.2     Financial Reporting. Furnish or cause to be furnished to the Lender (in each case prepared in accordance with GAAP and in reasonable detail and form approved by the Lender as follows):

(a)     For each fiscal quarter commencing with the third quarter of 2016 and continuing thereafter, as soon as practicable and in any event no later than sixty (60) days after the end of such fiscal quarter:

(i)     the consolidated balance sheets and statements of shareholders’ equity of the Borrower and the Borrower Subsidiaries as of the end of such fiscal quarter, in comparative form to the figures for the corresponding quarter of the previous fiscal year; and

(ii)     the consolidated statements of income and expenses and statements of cash flow of the Borrower and the Borrower Subsidiaries for such fiscal quarter, in comparative form to the figures for the corresponding quarter of the previous fiscal year.

(b)     For each fiscal year commencing with fiscal year 2016 and continuing thereafter, as soon as practicable and in any event no later than the last day of the first fiscal quarter of the following fiscal year:

(i)     the consolidated balance sheet and statements of shareholders’ equity of the Borrower and the Borrower Subsidiaries as of the end of such fiscal year, in comparative form to the figures for the previous fiscal year; and

(ii)     the consolidated statements of income and expenses and statements of cash flow of the Borrower and the Borrower Subsidiaries, in comparative form to the figures for the previous fiscal year;

all in reasonable detail and accompanied by an unqualified opinion (or an opinion thereon reasonably satisfactory to the Lender) of independent public accountants of recognized national standing selected by the Borrower and satisfactory to the Lender, which opinion shall not contain an adverse report, a disclaimer, or be qualified or limited because of any restricted or limited examination by such accountant of any material portion of the Borrower’s or any Borrower Subsidiary’s records and shall state that such financial statements present fairly the financial condition of the Borrower and the Borrower Subsidiaries as of the dates indicated and the results of their operations and cash flows for the periods indicated in conformity with GAAP applied on a basis consistent with prior years (except as otherwise stated therein) and that the examination by such accountants in connection with such financial statements has been made in accordance with generally accepted auditing standards.

(c)     Concurrent with the quarterly and annual statements required under Sections 4.2(a) and 4.2(b), a compliance certificate of the chief financial officer or the president of the Borrower in the form attached hereto as Schedule 4.2 certifying, among other things, the Minimum Fixed Charge Coverage Ratio, Minimum Liquidity, Maximum Liabilities and Debt Yield of the Borrower and the Borrower Subsidiaries, in each case determined as provided in this Agreement, all in reasonable detail and certified by the chief financial officer of the Borrower that they fairly present the financial condition of the Borrower and the Borrower Subsidiaries as at the dates indicated and the results of their operations and changes in their financial position for the periods indicated, subject to changes resulting from audit and normal year-end adjustments. Said compliance certificate shall also certify: (a) the financial ratios and other requirements referred to in Section 4.15 hereinbelow and set forth such calculations thereof as may be reasonably necessary to confirm the same; (b) the representations and warranties set forth in Article III herein as being true and correct on and as of such date; and (c) that no Default or Event of Default has occurred and is continuing. The Borrower shall provide a revised Compliance Certificate (each, a “Recertification”) within five (5) Business Days after discovery of any error in a previously submitted Compliance Certificate or concurrently with the submittal of audited annual financial statements pursuant to Section 4.2(b) if the audited statements are materially different than the Borrower-prepared financial statements for the last fiscal quarter of the fiscal year.

(d)     For each fiscal year commencing with fiscal year 2016 and continuing thereafter, as soon as practicable and in any event no later than the last day of the first fiscal calendar of such fiscal year: (i) with respect to the Borrower, annual Borrower prepared rent rolls and operating statements for the Primary Mortgaged Property, and 2-year operating and cash flow projections; and (ii) with respect to KWC and KWTC, Borrower prepared operating statements and 2-year operating and cash flow projections.

(e)     Copies of all other detailed financial reports or management letters submitted by certified independent accountants to the Borrower or any Borrower Subsidiary in connection with any audit or examination, annual, interim or otherwise, all promptly upon receipt in final form; and

(f)     From time to time, with reasonable promptness, such further information regarding the business, affairs and financial condition of the Borrower or the Borrower Subsidiaries as the Lender may reasonably request.

4.3     Existence/Chief Executive Office. Preserve and maintain the Borrower’s and Borrower Subsidiaries’ legal existence and timely file all necessary and appropriate documents and exhibits and pay all appropriate fees and charges in connection therewith, and provide the Lender with forty-five (45) days’ prior written notice of any change in the Borrower’s or any Borrower Subsidiary’s name or type of entity or State of legal formation or the state of the Borrower’s or any Borrower Subsidiary’s chief executive office.

4.4     Observance of Laws. Comply, and cause each Borrower Subsidiary to comply, in all material respects with the requirements of all applicable laws, rules, regulations, orders, writs, judgments, decrees, determinations and awards of any Government Authority, non-compliance with which would materially adversely affect it or its operations or the Borrower’s ability to perform its obligations under the Loan Documents, and obtain and maintain all permits, memberships, franchises, contracts and licenses required, and all trademarks, trade names and trade name rights, patents, patent rights and fictitious name rights necessary for the Borrower and the Borrower Subsidiaries to conduct the business they operate during the term of this Agreement without conflict with the rights of others.

4.5     Insurance. Insure and keep insured, and cause each Borrower Subsidiary to insure and keep insured, with good and responsible insurance companies, all of their property of an insurable nature (including, without limitation, all buildings, equipment and fixtures) against damage, fire and other casualties in such manner and to the extent that like properties are usually insured by companies in similar businesses, and insure and keep insured and cause each Borrower Subsidiary to insure and keep insured, at all times with good and responsible insurance companies against liability on account of damage to Persons or property as reasonably required by the Lender, taking into account the nature of the Borrower’s and Borrower Subsidiaries’ business and operations, risk history, and financial condition, and also against liability under all applicable workmen’s compensation laws. The Borrower shall, promptly on demand, furnish the Lender with certificates (ACORD Form 27 or its substantial equivalent) and copies of endorsements (waiver of subrogation, notice of cancellation, additional insured, and mortgagee/loss payable) evidencing the required insurance coverage, and provide the Lender with renewal certificates at least ten (10) Business Days prior to the expiration date of each policy for which a certificate was previously furnished. If the Borrower or any Borrower Subsidiary fails to maintain the required insurance, the Lender is authorized to obtain the insurance at the Borrower’s expense.

4.6     Inspections of Property, Books and Records. Permit any authorized representative(s) designated by the Lender, at the Lender’s expense, to visit and inspect any of the properties of the Borrower and the Borrower Subsidiaries, including the Borrower’s and Borrower Subsidiaries’ financial and accounting records, and to make copies and take extracts therefrom, and to discuss the affairs, finances and accounts of the Borrower and Borrower Subsidiaries with the Borrower’s officers and independent public accountants, all upon reasonable notice and in such reasonable times during normal business hours, as often as may be reasonably requested.

4.7     Accounting Records. Keep, and cause the Borrower Subsidiaries to keep, accurate and proper books of record and account in which full, true and correct entries, in conformity with GAAP (and in conformity with all applicable laws), shall be made in all material respects of all dealings and transactions relating to their respective business and activities.

4.8     Maintenance; Preservation of Properties. Maintain, preserve and keep, and cause Borrower Subsidiaries to maintain, preserve and keep, their respective equipment and properties and every part thereof in good repair, working order and condition and in compliance with all applicable federal, state and local laws, statutes and ordinances, and from time to time make all needed and appropriate repairs, renewals, replacements, additions, betterments and improvements thereto so that at all times the efficiency thereof shall be fully preserved and maintained.

4.9     Taxes. Duly pay and discharge or cause to be paid and discharged, when due, all taxes, assessments and other charges of Government Authorities imposed upon Borrower, the Borrower Subsidiaries and their respective properties, or any part thereof or upon the income or profits therefrom, as well as all claims for labor, materials or supplies which if unpaid might by law become a lien or charge upon any of their respective properties, except such of the foregoing as are being diligently contested in good faith and reserved against on the respective balance sheets, if and to the extent required under GAAP, and by appropriate proceedings. If the Borrower or any Borrower Subsidiary receives a notice of assessment and has not reserved against it, the Borrower shall promptly give notice to the Lender of receipt thereof.

4.10     Governmental Authorizations. Maintain, preserve and protect all Governmental Authorizations, and comply in all respects with the terms of all Governmental Authorizations, and promptly (and in any event within ten (10) Business Days) notify the Lender upon obtaining knowledge of: (a) the termination, cancellation, material modification, lapse, non-renewal or other loss of any Government Authorization relating to Collateral or operation of the Borrower’s or any Borrower Subsidiary’s business; and (b) any proceedings to which the Borrower or any Borrower Subsidiary is a party which involves a material risk of any matters set forth in clause (a) immediately preceding; and promptly furnish the Lender with copies of and information with respect to any new Governmental Authorizations relating to the Collateral or operation of the Borrower’s or any Borrower Subsidiary’s business issued to or acquired by the Borrower or any Borrower Subsidiary.

4.11     Reportable Event. As soon as possible and, in any event, within twenty (20) days after the Borrower knows or has reason to know that a Reportable Event has occurred, that an accumulated funding deficiency has been incurred or an application may be or has been made to

the Secretary of the Treasury for a waiver of the minimum funding standard under Section 412 of the Code with respect to a Plan, that a Plan has been or may be terminated, that proceedings may be or have been instituted to terminate a Plan, or that the Borrower or any ERISA Affiliate of the Borrower will or may incur any liability to or on account of a Plan under Section 4062, 4063, 4064, 4201 or 4204 of ERISA, deliver to the Lender a certificate of the chief financial officer of the Borrower setting forth details as to such occurrence and action, if any, which it is required or proposes to take, together with any notices required or proposed to be filed with or by it, the ERISA Affiliate, the PBGC or the plan administrator with respect thereto. If requested by the Lender, the Borrower will furnish to the Lender a copy of the annual report of each Plan (Form 5500 series), if any, required to be filed with the Internal Revenue Service. Copies of annual reports or any notices required under this Agreement to be delivered to the Lender shall be delivered no later than thirty (30) days after the later of the date such report or notice has been filed with the Internal Revenue Service or the PBGC or the date of receipt thereof. If the Borrower does not maintain a Plan, but shall at any time adopt or become obligated to contribute to a Plan, it shall comply with the foregoing provisions of this 4.11.

4.12     Notices. Promptly give notice to the Lender of: (a) the occurrence of any Default or any Event of Default, including a certificate of an appropriate officer or officers of the Borrower specifying: (i) the nature of such Default or Event of Default; (ii) the period of the existence thereof; and (iii) the actions that the Borrower proposes to take with respect thereto; (b) any change in the name or organizational structure of the Borrower or any Borrower Subsidiary; (c) any uninsured loss suffered by the Borrower or any Borrower Subsidiary through fire, theft, liability or property damage exceeding $100,000; (d) any pending or threatened litigation affecting the Borrower or any Borrower Subsidiary or any Collateral; (e) any change in the Borrower’s or Borrower Subsidiaries’ principal place of business; and (f) change in the location of any Collateral.

4.13     Agreements. Duly and timely perform, within all required time periods (after giving effect to any applicable grace periods), all of Borrower’s obligations and enforce all leases to which the Borrower is a party, when the failure to so perform and enforce would materially adversely affect the Borrower or its ability to perform its obligations under the Loan Documents.

4.14     Supplemental Disclosure. From time to time as may be necessary (in the event that such information is not otherwise delivered by the Borrower to the Lender pursuant to this Agreement), disclose to the Lender in writing any material matter hereafter arising which, if existing or occurring at the date of this Agreement, would have been required to be set forth or described by the Borrower in the Loan Documents (including all appendices, schedules and exhibits thereto) or which is necessary to correct any information set forth or described by the Borrower hereunder or in connection herewith which has been rendered inaccurate thereby.

4.15     Financial Condition. Maintain the financial condition of the Borrower in accordance with GAAP, and as set forth in the applicable Compliance Certificate, as follows:

(a)     Fixed Charge Coverage Ratio. The Borrower shall at all times during the Credit Facility maintain a Minimum Fixed Charge Coverage Ratio of not less than 1.0 to one. The Borrower’s Minimum Fixed Charge Coverage Ratio shall be tested quarterly as of the end of each fiscal quarter and shall be determined on a rolling basis.

(b)     Minimum Liquidity, The Borrower and Borrower Subsidiaries shall on a consolidated basis satisfy the following Minimum Liquidity amounts as of each of the following dates:

(c)     Maximum Liabilities. At all times during the Credit Facility, the Borrower’s and Borrower Subsidiaries’ consolidated Maximum Liabilities shall not exceed Forty-Five Million Dollars ($45,000,000.00). Maximum Liabilities shall be tested quarterly as of the last day of each fiscal quarter.