Negative Pledge Agreement

LAND COURT SYSTEM REGULAR SYSTEM - - ------------------------------------------------------------------------------- AFTER RECORDATION, RETURN BY MAIL ( ) PICK UP ( )


FIRST HAWAIIAN BANK
1132 Bishop Street, 19th Floor
Honolulu, Hawaii 96813
Attention: Commercial Real Estate Dept.


- - ------------------------------------------------------------------------------- Tax Map Key: See Exhibit "A" attached hereto


NEGATIVE PLEDGE AGREEMENT


KNOW ALL MEN BY THESE PRESENTS THAT:
SCHULER HOMES, INC., a Delaware corporation, hereinafter called the "Company", in order to induce FIRST HAWAIIAN BANK, a Hawaii corporation, whose address is 1132 Bishop Street, Honolulu, Hawaii 96813 (hereinafter called the "Agent"), as agent for Bank of America NT&SA, NBD Bank, Bank of Boston, Bank of Hawaii and First Hawaiian Bank (collectively called the "Banks"), to lend to the Company the sum of $110,000,000.00, pursuant to the terms and conditions contained in that certain Credit Agreement dated March 29, 1996, executed by the Company, the Agent and the Banks (the "Credit Agreement") hereby warrants and represents to the Banks that the Company owns the real property more particularly described in Exhibit "A" attached hereto and made a part hereof (the "Property") and agrees that, unless waived in writing by the "Majority


Banks" (as defined in the Credit Agreement), the Company shall not create, incur, assume, or suffer to exist any lien, encumbrance, mortgage, security interest, pledge, or charge of any kind (including. without limitation, any negative pledge, or any "secret", "springing", or other unrecorded lien) upon any of the Property or any of its assets of any character, whether now owned or hereafter acquired, or transfer any of the Property or any of such assets for the purpose of subjecting the same to the payment of any indebtedness or performance of any other obligation, or acquire or have an option to acquire any property or assets upon conditional sale or other title retention agreement, device or arrangement; provided, however, that the Company may create or incur or suffer to be created or incurred or to exist: (i) liens for taxes or assessments for governmental charges or levies if payment thereof shall not at the time be required to be made; (ii) liens in respect of pledges and deposits under workers' compensation laws or similar legislation, and in respect of pledges or deposits in connection with appeal or similar bonds incidental to the conduct of litigation; (iii) liens incidental to the conduct of the business of the Company not incurred in connection with the borrowing of m ...